SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: FS-02-665-02

DATE: 2013-03-13

RE: Eric David Eagleton, Applicant

AND:

Anna Celeste Lombardi, Respondent

BEFORE: The Honourable Mr. Justice Robert Nightingale

COUNSEL:
Sandra Harris, Counsel, for the Applicant

Ian Gerald Smits, Counsel, for the Respondent

HEARD: February 28, 2013

ENDORSEMENT

[1] The Respondent mother brought a motion to retroactively change the child support provisions of the order of Justice Kent of May 2, 2008 under the Divorce Act starting on September 1, 2011.

[2] Justice Kent’s order required the Applicant father to pay child support of $1484 per month based on his annual income of $78,311.51 plus a further $160 on account of extraordinary expenses. This support was for their three children Alysha born October 19, 1993 (19), Andrew born August 16, 1995 (17), and Austin born November 25, 1997 (15), all of whom resided then and since that time to the present with the Respondent mother.

[3] The request for the change is on the basis that the Applicant father should contribute towards the significant orthodontic expenses incurred by the children Andrew and Austin and Driver’s Education expenses of Alysha and Andrew.

[4] In addition, the Respondent’s request is for increased support payable by the Applicant to contribute towards the university costs of the eldest child Alysha since September 2011 and for the university costs of Andrew potentially commencing September 2013 when he will be 18 years of age.

[5] The Applicant father brought a cross-motion to change the order of Justice Kent suggesting that he should be entitled to a credit of approximately $6686 for the time period of June 2008 to August 2011 because of his decreased earnings annually during that time being significantly less than the $78,311.51 annual figure used by Justice Kent.

[6] He also asks that child support be awarded for the two children Andrew and Austin since September 2011 based on the calculation of his annual income since then of $65,736.22.

[7] He also requested proof of the section 7 expenses claimed for all children by the Applicant since June 2008 and an order to determine the proper amount of support for the eldest child Alysha regarding her post-secondary expenses taking into account her own ability to contribute towards those expenses.

Material Changes

[8] The Respondent suggests that the material changes since the order of Justice Kent consist of the orthodontic expenses for Andrew of $6200 and for Austin of $5900 she incurred from 2008 to 2011. The Respondent’s common-law spouse’s insurance plan paid $2500 towards each of these two bills leaving a shortfall for Andrew of $3700 and for Austin of $3400 which was paid by the Respondent and for which she seeks a contribution from the Applicant.

[9] The Applicant was originally concerned that the expenses may have been in whole or in part for cosmetic purposes only. The evidence of the attending dental specialist Dr. Dugas confirmed that they were to treat a malocclusion because of dental crowding, cross bites excess, overbite and excess over jet and that the removal of some teeth was to establish a functional occlusion.

[10] These expenses in my view are both reasonable and necessary orthodontic expenses for the children and are properly claimable as extraordinary expenses under section 7 of the Child Support Guidelines.

[11] The Respondent also incurred $645 and $789.87 for driver’s education courses for her children Alysha and Andrew while they were attending school in 2012 which in my view are also proper expenses for the children under section 7 of the Guidelines.

[12] Lastly, the evidence established that Alysha commenced her post secondary education at Brock University in September 2011 in a five-year program leading to a teachers degree. There is no dispute that she incurred approximately $16,000 of reasonable university education costs while she resided at Brock University in the first school year starting in September 2011 until the end of April 2012. There is also no dispute that she is incurred $18,000 of reasonable education costs for her second year there commencing September 2012.

Income of the Applicant Father

[13] A determination of the respective incomes of the parties is necessary because of the Respondent’s request that the Applicant contribute towards these extraordinary expenses since 2008 and because of the Applicant’s motion to reduce his child support obligations since that date because of his alleged lower annual income.

[14] The Applicant father has had essentially no contact with his children since the date of the order of Justice Kent. He nevertheless paid his monthly support obligations of $1484 as well as the monthly $160 on account of their extraordinary expenses.

[15] His evidence was that although he maintained work at the same employer since the order of Justice Kent in 2008, he has not made the same income there that Justice Kent projected of $78,311. His income tax return confirmed he made $64,813 in 2008. His evidence is that he requested a reduction of his child support in 2009 by writing to the Respondent based on this lower income in 2008 but the Respondent did not agree to it. Given the finding of his income for that year by Justice Kent and with no details as to whether he had wrong information before him at the time of the granting of his order, I do not feel it is appropriate for me nor am I prepared to substitute a significantly different annual income for the Applicant for that one year for the purpose of calculating his child support obligations in 2008.

[16] In 2009, he earned $77,291 in employment income.

[17] In 2010, he earned $63,325 in employment income and suggested he had a financial loss of $2223 in a new self-employed chocolate sales business and that his income accordingly should be $61,510.

[18] His 2011 tax return confirmed employment income of $76,383 and a self-employed business loss of $11,361 for tax purposes suggesting a net income of $65,736 for child support calculation purposes.

[19] Similarly in 2012, he had $80,606 of employment income and an alleged financial loss of $12,000 from his self-employed business suggesting an income of only $68,000 for the purpose of calculating his child support obligations.

[20] The Applicant provided very little information with respect to that self-employed business other than to say that he started to run it in late 2010 whereby he purchased chocolate product and then endeavoured to sell it to people who resold it. He suggested it was less stressful than his present job and that he hoped to be making a profit by now. He suggested that with the stress of this present lawsuit adding to his agenda, he has not been able to cover the cost of the operation although he expects it will change down the road as he devoted more energy to it.

[21] However, his sales were only $102.50 in 2010 and $455 in 2011 and no details were provided of his sales in 2012. His tax returns before 2012 confirmed that his losses were essentially for his car expenses allegedly incurred for this business including a write-off for capital cost allowance. No details or evidence was provided by him regarding his alleged $12,000 “anticipated loss from the business for 2012” as he asserted in his affidavit.

[22] In my view, it would not be reasonable or appropriate to permit the Applicant to reduce his income for the purpose of calculating child support by allowing these alleged self-employment losses from his employment income for any of those years. He has not provided the required evidence to confirm an actual loss in the first place and that this is a legitimate business proposal for the purpose of earning significant income in the near future as opposed to his simply having the benefit of a loss for income tax purposes. The fair and reasonable assessment of his income for child support purposes is to be based on his actual income from his employment as noted above from his tax returns which this court is entitled to find under section 17 of the Child Support Guidelines.

[23] The Respondent has suggested that for the purposes of calculating monthly support and S. 7 expenses the appropriate figure for the Applicant’s income for the years 2009 to 2011 would be an average of his employment income for those three years of $77,291, $63,325 and $76,383 respectively, being $72,333. That assessment in my view is fair and in particular more than fair to the Applicant Payor given that Justice Kent’s support order is based on the higher figure of $78,311.51. I am prepared to accept that figure as appropriate for those three years in this case.

[24] I find that his 2012 income is $80,606 for the purpose of calculating his child support obligations.

Respondent’s Income

[25] The Respondent’s employment income has been very consistent and stable for each of these years as follows:

• 2009-$39,119
• 2010 -$39,180
• 2011-$39,373

[26] The reasonable inference would be that her 2012 income from the same employer would be approximately $39,400.

THE LAW

[27] In this case, the appropriate way of calculating the Applicant’s child support obligations for the three children would be to apply the standard guideline approach for all three children until Alysha commenced her university education on September 1, 2011.

[28] After that time, although there is a presumption that the standard guideline approach to determining support for children over the age of majority should be used, it is probably not appropriate to do so where the child is away at university for eight months of the year. Lewi v. Lewi 2006 15446; Coghill v. Coghill (2006) 2006 21778 (ON SC), 27 R.F.L 434.

2009 and 2010 Monthly Child Support

[29] The Applicant has been paying monthly child support of $1484 for his three children for each of these two years based on an annual income of $78,311. His total support paid was $35,616. Based on his average annual income for those two years of $72,333, he should have been paying $1397 per month for a total of $33,528. He is entitled to a credit of the difference of $2088.

Accounting of extraordinary expenses from 2008 to 2011

[30] The Applicant was ordered to pay $160 per month on account of the extraordinary expenses by Justice Kent in May 2008 and he has paid those amounts since that time. The Respondent has provided details of the extraordinary expenses incurred for the children for their school sports and other activities which total $2734.95 for 2008, $2700 for 2009, $3650 for 2010 and $2746 for 2011. Not all of the claimed expenses were supported by receipts including the $140 per month she paid for hockey fees alone during hockey season for the two boys which is not unusual and I accept her evidence that those extraordinary expenses were all incurred and paid by her.

[31] For the same reasons noted above, I am not prepared nor do I feel it appropriate to make an adjustment for the year 2008, the year of the court order. The 2009 to 2011 extraordinary expenses paid total $9096 with his 65% share being $5912. The Applicant has paid $1920 for each of those three years towards those expenses totalling $5760 and accordingly is not entitled to a credit for any payment made those three years. The Respondent is not asking for the difference as an additional payment by him.

Calculation of Child Support for Section 7 Extraordinary Expenses (Orthodontics and Driver Education)

[32] Based on the average income of the Applicant of $72,733 for 2009 to 2011 and the Respondent’s average income of $39,224, the Applicant is to pay to the Respondent 65% of the children’s net orthodontic expenses of $7100 or $4615.

[33] In addition, his 65% share of the children’s driver education courses of $1434.87 is $932 which he is also required to pay to the Respondent.

2011 Monthly and Section 7 Expenses Support (Alysha’s University Costs)

[34] As indicated, Alysha left home in September 2011 to attend Brock University as a full-time student.

[35] Given the principles in the Lewi and Coghill decisions and given the relatively modest means of the parents who both wish their children to attend university, in my view the appropriate method in determining the Applicant’s child support obligations for Alysha as of September 2011 and thereafter is to consider the condition, means, needs and other circumstances of the child Alysha and the financial ability of each parent to contribute to her support and her university expenses under Section 3(2)(b) of the Child Support Guidelines. The child support for the two other children is to be calculated in accordance with the Guidelines.

[36] For the months in 2011 while Alysha is attending Brock University, the appropriate calculation as noted below would be to require the Applicant to contribute towards those S.7 university expenses while she is away at school for those months taking into account the respective contributions of Alysha and Respondent. In addition to that, the Applicant should pay the Guideline amount of support for all three children while living at home with the Respondent up to August 2011 and for the two boys for the remaining four months of the year.

[37] Accordingly, the Applicant based on his average annual income of $72,333 for 2011 should have paid monthly child support according to the Guidelines for the three children for the first eight months of 2011 of $1397 per month totalling $11,176. For the balance of the remaining four months, he ought to have paid Guideline support for the two youngest children of $1069 per month totalling $4276.

[38] The evidence established and the parties agreed that the extraordinary expenses for Alysha’s education costs at Brock University commencing September 2011 are $16,000 for the first year and $18,000 for the second year commencing September 2012.

[39] Alysha is presently 19 years of age and was almost 18 when she started at Brock in September 2011.

[40] In order to consider the required contributions by Alysha towards her own post secondary school education, it appears that she received an entrance scholarship of $1000 for her first year and has obtained student loans which total approximately $7500 for each of her two years. However, she has received approximately $930 in grants for the first year from government funding and a similar amount for the second year. She also earned in 2012 summer employment total income of approximately $5000.

[41] The Applicant has suggested that the entire amount of the student loans obtained by Alysha must be considered in determining her “means”. I agree that a portion of a student loan may constitute a required contribution from the child towards her post secondary school education expenses especially if the parents are of modest means. Considering all of the financial circumstances of the child Alysha, on a global basis, it is appropriate that she be required to contribute from all of her resources the sum of $6000 for each of her university academic years commencing September 2011.

[42] As indicated above, the Applicant father had an average annual income of $72,333 for each of the years 2009 to 2011 and presently in 2012 earned $80,606 in employment income with no evidence to suggest he will not be earning a similar amount in 2013. He appears to be a one third owner of a townhouse residence and other than the $76,000 mortgage on it which requires him to pay $961 per month, he has no significant debts other than a modest line of credit and has been able to contribute to a retirement savings plan since the original court order. He appears to be living within his means.

[43] The Respondent is living in a relationship and is fortunate to have the benefit of some health and medical and dental coverage towards her and her children’s expenses. She also since the order has become an owner of a house along with their partner and is living within her financial means given her annual income of $39,300 per year. She also has no significant debts other than the mortgage on her house and a modest line of credit.

[44] In the circumstances, it is appropriate that each party contribute towards the annual university costs for Alysha after her own contribution of $6000 based on the percentage allocation of their own incomes.

[45] In order to calculate the Applicant’s contribution for the 2011 university costs, it is reasonable to simply consider one half of those expenses of $16,000 being $8000 less one half of the financial contribution of Alysha of $3000 and then applying the Applicant’s 65% share of that. That works out to $3250 for his section 7 expenses contribution in 2011 for Alysha.

[46] Accordingly, the total child support the Applicant ought to have paid in 2011 is as follows:

a. $11,176-monthly support to August 1
b. $4,276-monthly support from Sept. 1 to Dec 1.
c. $3,250-Alysha’s S. 7 university expenses
d. $18,702 Total

[47] The Respondent paid total monthly support of $17808 in 2011 and accordingly owes a further sum of the difference of $894 for that year.

2012 Monthly and S.7 Expenses Support

[48] For 2012, the Applicant’s income had increased to $80,606 .Accordingly, his support obligations for the children Andrew and Austin commencing January 1 are fixed in the Guideline amount of $1179 for eight months totalling $9432 and $1540 for three children for each of the four months while Alysha resided with the Respondent totalling $6160.

[49] Alysha’s university costs in 2012 are the balance of her first year costs of $8000 plus one half of her second year expenses of $18,000 being $17,000. Less her contribution of $6000, the Applicant’s pro-rata share is 67% of that $11,000 or $7370.

[50] In addition, a reduction in the total extraordinary expenses for the two boys to $1800 per year appears reasonable given the elimination of those expenses for Alysha while being away from home. The Applicant’s 67% share is $1206 for 2012.

[51] The Applicant in 2012 paid total monthly support of $17,832 and S. 7 support totalling $1,920 for an overall total of $19,752.

[52] The Applicant’s total remaining support obligation for 2012 after credit for his payments made is $4416 calculated as follows:

a. $9,432- 8 months for Andrew and Austin
b. $6,160 - 4 months for all 3 children
c. $7,370- S.7 Alysha university expenses
d. $1,206- S.7 Expenses for Andrew and Austin
e. $24,168 –Total
f. $19,752 –less payments made
g. $4,416-Total owing for 2012

2013 Monthly and S. 7 Expenses Support

[53] The Applicant shall pay monthly support commencing January 1 based on his annual income of $80,606 for Andrew and Austin in the amount of $1179 increasing that to $1540 per month from May 1 to August 1 assuming Alysha resides at home with her mother during those summer months.

[54] In addition, he will pay to the Respondent 67% of Alysha’s annual university expenses for 2013 and thereafter of $18,000 after deduction of Alysha’s contribution of $6000 or $8040. He shall pay this amount by two equal payments of $4020 on June 30 and December 31, 2013 or by monthly payments of $670 commencing January 1, 2013.

[55] Lastly, he shall pay $100 per month towards the S. 7 extraordinary expenses for Andrew and Austin commencing January 1, 2013

[56] The Applicant is entitled to credit for all support paid to date in 2013.

Arrears of Support

[57] The total lump sum arrears of support of $8769 owing up to the end of 2012 are calculated as follows:

i. $4,615 – orthodontic expenses
ii. $932- driver’s education expense
iii. $894- 2011 support
iv. $4,416- 2012 support
v. $10,857 – Total support arrears
vi. $2,088- Less credit for overpayment in 2009 and 2010
vii. $8,769- Total net arrears owing as of December 31, 2012 (exclusive of any additional previous arrears that may be outstanding).

[58] These arrears of $8,769 are to be paid by the Applicant to the Respondent by way of an additional monthly sum of $350 commencing January 1, 2013 without interest.

Andrew’s 2013 University Costs

[59] It is not known for certain at this time if Andrew will in fact attend university commencing September 2013 although that indeed is his hope. It is not likely that he can earn and save much income from his summer employment for this year and he also does not know what sources of funding he may have from student loans, grants and bursaries to contribute towards those costs. Lastly, it is not certain if he will be living at home during his university education although it appears he will reside at university outside of his hometown.

[60] It is accordingly not possible to determine now exactly what contribution the Applicant ought to make towards those potential expenses at this time. The determination of the amount of his contribution can hopefully be made by the parties themselves in a manner similar to the formula implemented for Alysha’s university expenses in this decision once the university costs and financial ability of Andrew to contribute towards those costs are known. If the parties cannot agree, the matter may be returned to this Court for a determination.

[61] If either party is making a claim for costs of this proceeding, I will receive brief written submissions on costs including a Bill of Costs and copies of any relevant offers to settle within 5 days from the date of these reasons.

The Honourable Mr. Justice R. Nightingale

Date: March 13, 2013