COURT FILE NO.: F1890/11

DATE: April 4, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Scott Anthony Rogers

Applicant

– and –

Linda Ann Rogers

Respondent

Self-Represented

Self-Represented

HEARD: March 25 and 26, 2013

THE HONOURABLE MR. JUSTICE PAZARATZ

1. If breaking the law over and over again eventually gets you fired, can you use your unemployment as an excuse to stop paying child support? That was the primary issue on this motion to change.

BACKGROUND

2. The Applicant husband is 50 years old. The Respondent wife is 49. The parties have two children Alyson, age 21, and Michael, age 18.

3. The parties were married on March 9, 1991. They separated on October 9, 2007. On September 7, 2008 they resolved all issues in a separation agreement which was subsequently filed with the court.

4. The Applicant brought this motion to retroactively reduce his child support obligation. The Respondent brought a cross-motion, asking that the Applicant’s motion be dismissed; and also asking to quantify significant arrears owing by the Applicant for extraordinary expenses.

5. Pursuant to the endorsement of Justice Chappel dated July 12, 2012, the motions proceeded by oral evidence, because of the credibility issues involved. Only the parties testified.

SEPTEMBER 7, 2008 SEPARATION AGREEMENT

6. The comprehensive agreement included the following terms:

a. Respondent’s income as a teacher identified as $76,462.50.

b. Applicant’s income as a sales associate with Leon’s identified as $74,500.00.

c. Mutual spousal support releases.

d. Joint custody, primary residence with Respondent.

e. Applicant to have access to Michael as arranged between father and son.

f. Applicant to respect Alyson’s current wish not to have any access.

g. Applicant not to consume drugs or alcohol 12 hours prior to or during any visit.

h. Applicant not to be permitted to transport any of the children in a motor vehicle while he is exercising access.

i. Matrimonial home transferred to Respondent wife’s name. She is to have exclusive possession of the home for herself and the children for a period of five years. Thereafter the home is to be sold. The agreement specified how the mortgage balance would be divided. The balance of the net proceeds would be divided equally between the parties.

j. Applicant to pay $800.00 per month reduced child-support for both children rather than the $1,098.00 per month commensurate with his income of $74,500.00. This reduced level of child support would continue for so long as the Respondent and the children reside in the former matrimonial home. After the home is sold with net proceeds distributed, the Applicant would pay the full amount of guideline support based upon his annual income.

k. Extraordinary expenses to be shared between the parties on a 50-50 basis, with such expenses to be discussed between the parties before they are incurred.

l. Educational expenses for the children to be shared on a proportionate basis, after taking into consideration scholarships, summer employment, RESP’s, or other third-party income received by the children reducing the cost of post-secondary education.

m. Child support provisions [including special or extraordinary expenses] to be subject to variation in the event of a material change in circumstances.

n. Dispute resolution provisions including the requirement of attending mediation prior to court.

o. Respondent’s employment pension as a teacher to be evaluated by a qualified pension actuarial within 10 years of the execution of the agreement. Respondent to pay Applicant a lump sum of 50% of his entitlement on the 10 year anniversary of the separation agreement. The remaining 50% to be paid monthly to the Applicant, with a set- off for any child support arrears outstanding.

p. Apart from those specific provisions relating to the matrimonial home and the Respondent’s pension, no further redistribution of property or equalization of net family property.

APPLICANT’S INCOME

7. The basis for the Applicant’s motion is that his income decreased on February 22, 2011, and it has remained low (and uncertain) since then. His income summary:

2008: $74,500.00

2009: $89,691.00

2010: $92,425.00

2011: $26,865.00

2012: $33,068.00

2013: $33,000.00 (estimated)

8. The Applicant proposes he pay the guideline amount for each of those years -- which would amount to current payments of $481.00 per month for two children. According to his calculations, if support is adjusted to reflect his actual income from March 17, 2011 onward, the Respondent owes him an overpayment of approximately $11,059.58.

9. The Respondent does not dispute the Applicant’s income has likely gone done. She admits he lost his job in 2011. But she says it’s his own fault. He had a good job. He broke the law repeatedly. He knew he was risking incarceration, which would cause him to miss work and likely get fired. He knew if he got a criminal record it would make it difficult to find replacement employment.

10. She argues the Applicant has lived an irresponsible life for many years, flaunting the law, and getting deeper and deeper into trouble. For many years his misconduct was confined to violations of Provincial driving offences. More recently he has started accumulating convictions under the criminal code (relating to misconduct toward her).

11. The Respondent says the Applicant has no one to blame but himself for his financial problems. In many ways, I agree with that assessment:

a. The Applicant has been successful in retail sales for many years, primarily selling furniture. He built such a successful and lucrative career, there is no logical reason why he allowed it all to slip away.

b. His main problem relates to driving offences. He has a long history of failing to pay parking tickets, having his license suspended for unpaid fines, continuing to drive, and then accumulating more fines, license suspensions, and charges for driving while suspended.

c. Between 2002 and 2012 the Applicant has driven – almost continuously during that period – without a licence, and at times without insurance.

d. He has been convicted of driving while suspended 12 times. Under cross-examination he admitted he was only caught a fraction of the number of times he has actually driven without a licence. He would do so routinely. He said usually he drove to get to work. But often he drove for personal errands.

e. With each conviction the Applicant would accumulate more fines and more suspensions. He’d keep driving.

f. He has $17,000.00 in fines outstanding.

g. This pattern of driving without a licence and risking serious penalties already existed when the separation agreement was signed in 2008. That’s why the agreement included restrictions that the Applicant was not to drive the children during access.

h. The Applicant’s violations continued even after the separation agreement was signed. He kept ignoring the convictions, fines, and suspensions. He kept driving.

i. But in February 2011 it all caught up with him. He was sent to jail for eight months.

j. The Applicant already had a minor problem with absenteeism. When he missed work from February 22, 2011 until October 20, 2011 as a result of incarceration, his employer Leon’s refused to take him back.

12. But that was only part of the Applicant’s problems with the law:

a. After separation he started harassing and threatening the Respondent.

b. In 2008 he was convicted of one count of uttering threats, and two counts of failing to comply with terms of his recognizance.

c. He was placed on probation. But he committed more offences, and again the Respondent was the victim.

d. On April 13, 2013 the Applicant returns to criminal court for sentencing in relation to guilty pleas he recently entered for making harassing telephone calls and breaching more terms of a recognizance. He may be facing more jail time – which would again preclude him from working.

13. In the meantime, even since October 2011 when the Applicant was released from his eight month jail stint, he has been convicted of more driving offences. He still has no licence. He’s not supposed to be driving at all.

14. The Applicant says he accepts part of the blame for how things have turned out. He admits he’s made some mistakes. But he also blames the Respondent. He says she knew he drove without a licence when they lived together, and she didn’t disapprove. He says he continued to drive after separation to earn money to pay child support.

15. To a large extent the Applicant blames the Respondent for his criminal record. He says she set him up and manipulated the system against him. He admits he always pleaded guilty But he felt he had no choice but to accept a plea bargain.

16. From the Applicant’s perspective, the cumulative effect of all of this:

a. By going to jail, he missed so much work he lost his job.

b. He can’t find another good job because he’s got a criminal record, so most retailers won’t hire him.

c. With no immediate prospect of having his driver’s licence reinstated, his lack of transportation rules out any sort of travelling sales representative position. Without a licence or car, he’ll have trouble finding and maintaining any sort of job.

17. The Applicant says he has made the best of his bad situation by finding another sales job with a much smaller furniture retailer – at much lower pay.

18. His bottom line: His income is down. There’s nothing he can do about it now. He can’t afford the old child support payments he agreed to. He’s still got a life to live with his girlfriend and her two children. So the Respondent will have to face reality: support for Alyson and Michael will simply have to go down.

19. Understandably, the Respondent questions why she and the children should suffer as a result of the Applicant’s reckless disregard of the law and his obligations. Through very effective cross-examination she elicited a number of important admissions from the Applicant:

a. He acknowledged his misfortune was entirely foreseeable – and avoidable.

b. He knew he had a good job. A secure career.

c. He knew if he kept driving while under suspension, they’d keep catching him; the fines would increase; the penalties would increase; and ultimately he’d go to jail.

d. He knew if he went to jail he’d be unavailable for work and he’d lose his job.

e. He knew that – even without a criminal record – it would be difficult to find comparable employment to Leon’s.

f. He knew that – after he committed criminal offences which he pleaded guilty to – having a criminal record would only make it that much harder for him to find employment.

g. He knew committing more criminal offences, after he had been given probation, would only make things worse – with more jail time looming, perhaps jeopardizing even the lower paying position he has now been able to secure.

h. He knew he had two children and support obligations set out in a separation agreement.

i. He knew he has a new relationship with a girlfriend he’s living with and hopes to build a life with.

j. He had lots of incentive to stay out of trouble and keep his job.

20. The Respondent’s basic question: If the Applicant knew all these things, why did he keep digging himself deeper and deeper into trouble? And why should he be allowed to avoid his financial obligations – and impose financial hardship on his children --through his deliberate reckless behaviour?

21. The Applicant testified he didn’t really think his children needed support anyway because:

a. The Respondent is a well-paid teacher earning $90,000.00 per year. She’s spending money irresponsibly, so she doesn’t need any of his.

b. The children won’t have anything to do with him. They’re basically strangers to him. He doesn’t know anything about them or their needs. He questions why he should pay support for children who have rejected him.

22. The Respondent disputes the Applicant’s characterization that he is the victim. She points to more admissions he made during cross-examination, which raise doubts about his veracity and good faith:

a. After the Applicant signed the separation agreement in 2008, his income went up in 2009 and 2010. He never disclosed the increases to the Respondent. With an income of $92,000.00 in 2010 he was underpaying base guideline support by approximately $500.00 per month.

b. The Applicant testified he “wasn’t required to” disclose changes in his income or produce ongoing disclosure – even though section 14 of the separation agreement clearly requires annual disclosure by May 1st in each year.

c. The Applicant’s initial financial statement set out no sources of income during the period February 22, 2011 to October 20, 2011. However, bank records showed that he received ongoing payments from Leon’s, for past commissions owing.

d. He testified he is in a new relationship, living with a woman who has two children. They have a home and a mortgage. They hope to marry. He feels a moral obligation to assist her and her children. He does not feel a moral obligation to assist his own children since they have turned on him.

e. The Applicant said the commissions he failed to disclose on his first financial statement went into a joint account he held with his girlfriend. The girlfriend also contributes to the account, so it is their money. While he was in jail she had the right to spend the money on their ongoing expenses. He admitted he made no provision for any support to be paid for his children, while he was in jail.

f. He admitted his first financial statement was inaccurate because it did not list his expenses – or how he was disbursing his cash flow.

g. The Applicant acknowledged that on a recent unsworn financial statement he served, he said he spends $250.00 per month on entertainment for his girlfriend’s children. He acknowledged he is not making any direct payments for entertainment or extraordinary expenses for his own children. He said his own children have nothing to do with him – “I don’t know them” – so he didn’t feel they needed or deserved support.

h. Even though the Applicant kept insisting he had made full disclosure, under cross-examination he reluctantly acknowledged that he hadn’t provided proper proof of his Employment Insurance earnings.

i. The Applicant said he earned $33,068.00 in 2012 and projected that in 2013 he would earn the same. Under cross examination he admitted the 2012 income was for 11 months of employment, so it wasn’t representative of a full year.

FUTURE SUPPORT ISSUES

23. Both parties acknowledged that whatever the result of this motion, support will have to be revisited in the fall of 2013, when the former matrimonial home is sold:

a. The separation agreement specifies the Applicant is to start paying full guideline child support after the Respondent and the children move out of the home.

b. The Applicant remains committed to this formula. But he proposes guideline support should be based on his actual reduced income ($33,000.00) rather than the former $74,500.00 which the Respondent seeks to impute.

c. The Applicant speculated that based on the formula set out in the separation agreement it’s unlikely the Respondent will be entitled to any portion of the net proceeds of sale. He estimated he will likely receive about $75,000.00 from the house sale.

d. The Respondent argued that whatever the Applicant will receive from the house later this year, that money should be used to pay (and secure) ongoing support pursuant to the imputed $74,500.00 income level.

e. The Respondent also noted that pursuant to the separation agreement, in about five more years she will have to start paying the Applicant substantial funds relating to her teacher’s pension entitlement. The agreement specified any arrears of support are to be set off from any monies the Applicant is to receive from the house or pension. In answer to the Applicant’s question: “How can I afford to keep paying support when I lost my job?”, the Respondent offers a suggestion: “From the house and pension money.”

f. Indeed, the Respondent speculated the Applicant may have been more care-free about risking his livelihood through repeated traffic and criminal violations, because he knew he had house and pension money coming in a few years

EXTRAORDINARY EXPENSES

24. The Respondent referred to various provisions in the separation agreement setting out sharing the children’s extraordinary expenses. She asked that the Applicant’s section 7 arrears fixed at $14,711.42 as of February 28, 2012.

25. However, while the Respondent very effectively refuted the Applicant’s request for a reduction of support based on job loss, her presentation of her cross-motion for extraordinary expenses was less compelling:

a. The Respondent’s request for compliance with the separation agreement was somewhat selective. The agreement said the Applicant was to share expenses equally – but it also very clearly specified that there was to be extensive information sharing. The Applicant was to be kept fully informed and consulted prior to expenses being incurred.

b. The Applicant admitted she never consulted the Respondent about anything. She said they couldn’t communicate because of his criminal court bail and probation orders.

c. But through cross-examination it became evident that on various occasions the Respondent did indeed communicate with the Applicant on a number of topics – with no mention of extraordinary expenses.

d. At one point she even had a lawyer send the Applicant a letter which included a request that he contribute to certain future expenses which never materialized.

e. I do not accept the Respondent’s evidence that she was completely unable to convey information to the Applicant about the children’s extraordinary expenses. She could have sent him necessary information about the children and their expenses – as mandated by the separation agreement – without exposing herself to danger, or breaching any orders. This would not have required direct contact.

f. The Respondent didn’t advise the Applicant before she incurred expenses. She didn’t tell him afterward either. It was only after these motions were brought that the Respondent provided the Applicant with about five years’ worth of receipts, claiming retroactive reimbursement.

g. I accept the Applicant’s evidence that he could have reduced or defrayed some of the expenses claimed by the Applicant, had he been asked in a timely manner. For example, the Respondent has requested the Applicant contribute toward several items of furniture for the both children. As noted, the Applicant was a very successful sales representative in the retail furniture business. I accept his evidence that he could have obtained any required furniture for the children, quite inexpensively. Perhaps even at no cost.

h. The Respondent has requested a contribution toward Alyson’s post-secondary expenses. Alyson has an acquired brain injury. There was some disagreement between the parties as to the extent of her recovery. In any event, the Applicant acknowledged she remains entitled to support. Alyson lived at home for her first year at Brock University. In September 2012 she started her second year at Ryerson in Toronto, meaning she lives away from home during the school year. The Respondent says Alyson’s first and second year (to date) school expenses total more than $18,600.00. Calculating the Applicant’s contribution toward those expenses is difficult, because the Respondent has not complied with the information sharing provisions of the separation agreement.

i. For example, Alyson has employment income. This has not been disclosed.

j. Alyson obtained a scholarship described as $10,000.00. The details and application of those funds have not been fully disclosed.

k. The Respondent said she applied $4,000.00 of RESP’s toward Alyson’s expenses. She said there’s still about $25,000.00 left in RESP’s to be shared between the children. None of this information was shared.

l. The Respondent is requesting full year-round guideline support for both children, in addition to a contribution Alyson’s away-from-home living expenses during the school year. She provided no breakdown of reduced or actual expenses in the home during those months when Alyson is away at school.

m. The Respondent has requested reimbursement for a number of significant expenditures – such as Alyson’s vacation to Punta Cana – which are not properly included under s.7.

26. Toward the end of the two day trial, the Respondent’s lack of disclosure took a more dramatic twist:

a. The parties started exchanging affidavits on this motion in November 2011. From the outset, the only issue was quantum. Despite the Applicant’s expressions of frustration about paying support for children who won’t have anything to do with him, the Applicant did not formally dispute entitlement.

b. Alyson’s situation and expenses were more complex, with away-from-home post-secondary school expenses.

c. Michael’s situation was more straightforward. He had just turned 17 when this motion started. He was home, attending school, with no post-secondary school expenses. The Respondent was simply seeking ongoing base guideline support, together with some relatively minor s.7 expenses.

d. However, toward the end of her cross-examination the Respondent revealed 18 year old Michael’s status has changed. He’s still living with her, but he left school in October 2012. Since then he’s been working full time in an apprenticeship program earning $11.65 per hour. He also sometimes has a second part-time job, details of which were not disclosed.

e. She said periodically during the five years of his apprenticeship he will have to return to school, but she didn’t know the details.

f. She provided no disclosure about his finances or expenses.

g. She presumed he should still be entitled to support from the Applicant because he’s still trying to get established and he isn’t earning very much.

h. She said when Michael left school and started working five months ago, this court case was already underway. She wasn’t sure when or how to provide the Applicant or the court with an update – so she said nothing.

i. Upon learning this, the Applicant changed his position: he was no longer prepared to pay support for Michael.

CREDIBILITY

27. As stated, this motion proceeded as an oral hearing because of anticipated credibility issues. Both parties testified at length. Both had credibility challenges.

28. The Applicant was not a good witness:

a. He was vague, disorganized and often deliberately evasive.

b. He glossed over his horrendous and foolish driving record.

c. He blamed the Respondent for his criminal convictions, and didn’t seem to think pleading guilty to criminal offences meant he had actually done anything wrong.

d. He attempted to deflect blame onto his children. When he had trouble explaining some failing on his part, he would try to change the subject and comment that the children didn’t deserve his support.

e. He minimized inconsistencies and gaps in his disclosure.

f. He was hostile and arrogant with the Respondent.

g. He showed no insight. No sense of taking responsibility for his actions – for his mistakes.

h. His basic attitude: It didn’t matter how badly (or how many times) he had screwed up. His family would have to face reality. They would have to live with the consequences.

29. The Respondent is a very smart lady. Her cross-examination of the Applicant was focussed, efficient, and highly effective. She clearly demonstrated she understands the law; she understands her separation agreement; and she understands the dynamics and burden of proof on a motion to change.

30. In that context, her lack of candor and evasiveness in relation to her own cross-motion was somewhat conspicuous:

a. She appeared to have almost memorized the Applicant’s responsibilities under the separation agreement -- but she seemed unaware (or disinterested) with respect to her own obligations under that same agreement.

b. The Respondent knew of the conflict and animosity between the parties when she signed a “joint custody” agreement.

c. She knew she had made a commitment to share information about the children and allow the Applicant to participate in decision making. She knew he was to be informed about expenses as they arose.

d. But by her own admission, she basically told him nothing. She appeared to be quite content that he have no involvement in Alyson’s life and little involvement with Michael.

e. She didn’t even tell him about her section 7 claims until long after the fact – and only in response to his motion to reduce support.

f. I have no doubt that the Applicant has been a very abusive, difficult person to deal with. His criminal convictions – and his demeanor on the witness stand – provide powerful evidence.

g. But the Respondent’s portrayal that it was impossible to convey information about the children to the Applicant, is simply unconvincing.

h. She denied that e-mails were an option – until the Applicant established in cross-examination that she had been e-mailing him frequently on property or other issues. She even gave him her employment e-mail address to facilitate those communications.

i. She denied that retaining a lawyer to pursue s.7 claims was an option – until the Applicant reminded her that she had retained a lawyer to send a single letter (which included claims for expenses which never materialized). She didn’t follow up on that option.

j. She was vague and defensive about why she hadn’t revealed Michael had left school and was working full time. At one point she said she wasn’t sure when to mention it. At another point she said she didn’t think she was under any obligation to disclose this change in the adult child’s status.

k. During her cross-examination of the Applicant, she was calm and well spoken. But under cross-examination she became hostile, argumentative and at times evasive.

ANALYSIS

31. This was a difficult case involving extremely bitter self-represented parties, neither of whom did everything they were supposed to do.

32. I make the following findings:

a. The parties entered into a valid separation agreement on September 7, 2008.

b. At the time, each party was aware of certain dynamics which came to be the subject of this motion.

c. The Applicant knew he had a problem with driving while suspended. That he would keep getting caught. That the cycle would perpetuate itself. The suspensions would get longer. The fines would get more unmanageable. Eventually he’d go to jail.

d. He knew he had a good job, doing something he’s really good at: selling furniture. He knew if he had to miss a lot of work as a result of incarceration he would likely lose his job. That’s exactly what happened.

e. He knew if he misbehaved and acquired a criminal record, it would make it much more difficult for him to find another job. That’s exactly what happened.

f. He knew his children were relying on him for support – and yet he deliberately, recklessly, and repeatedly broke the law, knowing the inevitable consequences: knowing that his children would suffer, because he had thrown away his livelihood.

g. The Applicant knew the amount of child support is tied to his income – that’s why he brought a motion to lower support once his income decreased.

h. But when it worked the other way – when the Applicant’s income went up in the years following execution of the 2008 separation agreement, the Applicant suppressed that information, despite a legal obligation to make annual disclosure. He underpaid support for at least two years.

i. The Applicant has not been candid in making disclosure in these proceedings. His first financial statement was completely misleading about income and expenses. He did not make complete income disclosure, despite repeated requests by the Respondent.

j. For her part, the Respondent entered into the separation agreement in good faith. She has a right to rely on it. But she also has a responsibility to adhere to it.

k. The Respondent did not share necessary information about the children with the Applicant, as required in the agreement. She did not discuss or disclose expenditures as they arose. She didn’t even tell the Applicant after the fact.

l. The Respondent’s lack of disclosure does not negate the fact that Alyson and Michael really did have extra expenses – particularly in relation to Alyson’s more recent post-secondary education.

m. But the Respondent’s incomplete disclosure makes it difficult to quantify the Applicant’s fair share of section 7 expenses (within the formulas set out in the agreement). Some of the amounts claimed do not fall within section 7. Some of the expenditures could have been reduced or avoided if the Applicant had been given an opportunity to use his employment connections to get better deals.

n. And the very much delayed disclosure of these expenses made it difficult for the Applicant to budget for this retroactive claim.

o. The child Alyson continues to be entitled to support by virtue of her continued enrolment in full-time post-secondary studies.

p. Based on the limited last-minute disclosure, the child Michael ceased to be entitled to child support as of October 2012 when he stopped attending school and starting working full-time in an apprenticeship program. His status – his potential entitlement to child support – may change if he returns to school. But the court was given virtually no information about that contingency.

THE LAW

33. The separation agreement which the parties executed on September 7, 2008 provides that child support is among the topics which may be subject to variation. The agreement sets out criteria for consideration on a variation

34. Pursuant to section 35(1) of the Family Law Act the effect of filing a Separation Agreement with the court is to give child support provisions in the Agreement the same status as an order made under the Act. Section 35(2) allows support provisions in an agreement to be varied under section 37 of the Act.

35. Section 37 of the Act provides that an application to vary an order for child support may be made by a parent of a dependant named in the order to be varied. “Dependant” is defined in section 29 of the Act as a person to whom another has an obligation to provide support under Part III of the Act. Section 31 of the Act establishes the obligation of a parent to support a child.

36. The test to be applied on a motion to change a child support order under the Act, and the powers of the court on such a motion, are set out in subsections 37(2.1) to 37(3). The threshold test to be met in a motion to change child support is to determine whether there has been a change in circumstances within the meaning of the Child Support Guidelines since the order was made; or that evidence that was not available at the hearing respecting the order has now become available. Subsection 37(2.1) also authorizes the court to vary a child support order retroactively.

37. The court has broad power under section 37(2.1) to change or suspend a support order, prospectively or retroactively, and rescind some or all of any arrears outstanding. It may also order that obligations be satisfied through a variety of methods, as set out in section 34.

38. In this case, the Applicant has based his claim for a reduction of child support – retroactively and prospectively – on a change in his income. The Respondent does not dispute that the Applicant’s actual income may have changed. She challenges the reason why his income changed. The resulting issues for the court to determine:

a. Whether the Applicant’s new financial situation – his self-created situation – constitutes a “material change in circumstances” justifying a variation of his support obligation.

b. Whether income should be imputed to the Applicant based on the income he could and should still be making.

39. Section 19 of the Child Support Guidelines allows the court to impute such income to a spouse as it considers appropriate in the circumstances, which circumstances include:

(a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;

(b) the parent or spouse is exempt from paying federal or provincial income tax;

(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;

(e) the parent's or spouse's property is not reasonably utilized to generate income;

(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;

(g) the parent or spouse unreasonably deducts expenses from income;

(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and

(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

40. The list of categories set out in section 19 is not exhaustive. The court has the discretion to impute income in circumstances that are not only analogous but also those in which imputation would be consistent with legislative intent. Bak v. Dobell 2007 ONCA 304, 86 O.R. (3d) 196 (C.A.)

41. The wording of section 19 of the Guidelines is open-ended (“which circumstances include”), indicating that the categories listed in that section are merely examples of situations in which income may be imputed. There are, therefore, other potential scenarios in which income can and should be imputed. Riel v. Holland, 67 O.R. (3d) 417 (C.A.)

42. The Applicant was initially unemployed when he went to jail in February 2011. He remained unemployed for a few months even after being released in October 2011. He started his current position (at approximately one-third his usual salary) in late January 2012. Accordingly, we are dealing with a situation of acknowledged unemployment, followed by alleged under-employment. Both scenarios are contemplated in section 19(a).

43. The leading case in Ontario is the Court of Appeal decision in Drygala v. Pauli, 61 O.R. (3d) 711 (C.A.) which sets out at paragraph 23 a three-part test: First, determine whether the spouse is intentionally under-employed or unemployed. If so, the second part of the test asks whether the intentional under-employment or unemployment is required by virtue of his or her reasonable educational needs, the needs of a child or reasonable health needs? If the answer to the second part of the test is negative, the third part of the test requires a determination of what income is appropriately imputed in the circumstances?

44. In Drygala at paragraph 28, the Court determined that "intentionally" means a voluntary act: "The parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. ... The word ‘intentionally’ makes it clear that this section does not apply to situations in which, through no fault or act of their own, spouses are laid off, terminated or given reduced hours of work."

45. There is no requirement of bad faith or need to find a specific intent to evade child support. Rather, as the objectives of the Child Support Guidelines state, parents have a joint and ongoing obligation to support their children. Imputing income is one method which courts can use to give effect to this obligation.

46. The onus is on the person requesting an imputation to establish an evidentiary basis for such a finding. Homsi v. Zaya 2009 ONCA 322, 2009 CarswellOnt 2068 (C.A.). Once the onus to provide that evidentiary basis is met, the burden then shifts to the Respondent to disprove imputation of income. Bekker v. Bekker 2008 CarswellOnt 173 (S.C.J.) at paragraph 25; Joy v. Mullins [2010] O.J. No. 4202 (S.C.J.) at paragraph 15.

47. In ascertaining whether a change in circumstances has occurred for the purposes of a motion to change child support, the court must consider whether the alleged change was “significant and long lasting; whether it was real and not one of choice.” Brown v. Brown 2010 NBCA 5, 2010 CarswellNB 30 (N.B.C.A.); Haisman v. Haisman 1994 ABCA 249, 1994 CarswellAlta 179 (C.A.); leave to appeal to the S.C.C. refused, [1995] 3 S.C.R. (S.C.C.)).

48. The determination to impute income is discretionary, based on the circumstances of each case. The reasonableness of the payor’s behavior – the extent to which he or she created (or failed to guard against) their financial hardship -- will be central to the court’s analysis. Parents have an obligation to act responsibly when making decisions which may – directly or indirectly – affect their ability to meet their child support obligations. As a general rule a parent cannot avoid a child support obligation by a self-induced reduction in his or her income. Trottier v Prud’homme 2012 ONCJ 641 (O.C.J.); Hanson v. Hanson, 1999 CarswellBC 2545 (B.C.S.C.); Weir v. Therrien, [2001] O.J. No. 2612 (S.C.J.); DePace v. Michienzi, 5 R.F.L. (5th) 40. (Ont Fam. Ct.).

49. Many cases have held that where a payor quits his or her employment, their previous level of income will continue to be imputed to them, irrespective of whether they have become unemployed or employed at a lower wage. At the other end of the continuum, the caselaw has generally held that where a payor loses employment through no fault of their own, the resulting change in income will generally constitute a material change in circumstances, justifying adjustment of the support order.

50. In some cases, it is difficult to determine if a payor is a victim of unfortunate financial circumstances, or whether he or she is the author of their misfortune.

51. But in the Applicant’s case, there is no uncertainty as to cause and effect. He may not have quit his job. But he created and controlled the circumstances under which his job was terminated. He made conscious decisions to do things – illegal things – with the full knowledge that his reckless and anti-social behavior would make him unavailable (let alone, unacceptable) for employment. The net result is the same as if he’d handed in his resignation.

52. A very similar situation was dealt with by Zisman J. in Costello v. Costello 2012 ONCJ 399 (O.C.J.). A father sought to reduce support for two children (pursuant to a separation agreement) and rescind arrears, on the basis that he was no longer earning $70,941.00. He had lost his employment as a probation officer because of two criminal convictions for impaired driving.

53. As in the case at bar, the father in Costello had credibility problems, and his disclosure was lacking and unconvincing. But Justice Zisman focused on the public policy issue of whether a support payor’s child support obligation should be reduced when the reasons for loss of employment are due to his own conduct. The court’s summary starts at paragraph 34:

34 In this case, the father lost his employment because he chose to drink and drive and was subsequently arrested and convicted.

35 The mother testified that after the father was charged with his first drinking and driving offence in February 2008, she assisted him in covering this up with his employer by suggesting that he obtain a medical leave of absence. The father did not deny this evidence.

36 Knowing that his job may be in jeopardy, nevertheless the father then again drove while under the influence of alcohol and was charged again about 10 months later. When questioned about the circumstances of the offences he stated that with respect to the first offence, his father had died and he was distraught. With respect to the second offence, he testified that he had broken up with a girlfriend and was upset. He denied that he had a problem with alcohol.

37 The father testified that when he entered into the Amended Separation Agreement he believed that he might be able to keep his job. The mother disputed this evidence and testified that the father was aware that he would lose his job. She testified that when the father was 17 or 18 years old he had been convicted of a drinking and driving offence and had to apply for a pardon to obtain a position as a correctional officer. She testified that he was aware that it was the policy of the Ministry of Children and Youth Services that an employee could not have a criminal record.

38 Even if the father hoped that he might somehow keep his position, at the very least he must have known that he faced a serious risk of losing his job otherwise why did he cover up the first offence. As a common sense proposition it is unlikely that a youth probation office whose job it is to monitor his clients' compliance with the terms of probation and assist youths on probation would be allowed to keep his job if he himself was being monitored and assisted by another probation officer, even if it was in the context of the adult criminal justice system.

39 Further, I note that the father's obligation to pay child support, in the Amended Separation Agreement, was not contingent on him retaining his employment.

40 I adopt the reasoning of Justice Czutrin in the case of Luckey v. Luckey wherein he stated as follows:

Should the dependent children also have to pay the price of this loss of employment? A court will grant relief of support where the payor loses the ability to provide support for reasons beyond the payors' control.

The courts have long recognized that where a payor parent quits his or her employment for selfish or for "bad faith" reasons, the courts will not grant a variation of support based on a material change in the means of the Applicant. After all, as the court comments in Ronan v. Douglas Walsh, 5 R.F.L. (4th) 235 (Ont. Prov.Div.) at page 238: .....a payor spouse who has contracted to pay child support in a separation agreement and then quits his or her employment or changed the nature of his or her employment in bad faith should not be able to rely on that change.

41 In the case of Luckey v. Luckey, the support payor lost his employment because he was convicted of assaulting a co-worker. The court did not vary his support obligation as this was an event over which he had control. The court found that it could not condone the parent's actions of assaulting a co-worker to create legitimate inability to pay support that justified a variation.

42 Similarly, in the case of Myatt v. Myatt, 45 R.F.L. (3d) 45, 1993 CarswellBC 595, a police officer who lost his job as a result of a drug conviction could not rely on such a loss of employment to reduce his support arrears.

43 I find that as the father lost his job because of his criminal behaviour, that occurred not just once but twice, he is the author of his own destiny and he should not be able to rely on his own misconduct as an excuse to avoid his obligations to his children. Even though I accept that the father did not commit these offences to avoid his obligation to pay child support, the court should not condone such conduct.

54. At paragraph 60 Justice Zisman concluded:

60 Based on all of these factors, I would not exercise my discretion to vary the father's current support obligation. The father certainly cannot expect a court to exercise its discretion to reduce his child support obligation, when he loses a well paying job because of his own reckless behaviour, fails to abide by court orders for disclosure, fails to provide any proof of any sincere efforts to find alternate employment and when he is content to work part-time for minimal income.

55. Notably, the court in Costello also considered the payor’s ability to satisfy missed payments through a pension asset. Similarly, in the case at bar, the Applicant has approximately $75,000.00 of net proceeds coming later this year from the sale of the matrimonial home; and more money coming in a few years from the Respondent’s pension.

56. Other courts have taken a similar approach, concluding that where unemployment or under-employment is created by the payor’s actions or misconduct, support obligations should not be reduced or cancelled. Maurucci v. Maurucci, [2001] O.J. No. 4888 (Ont. Fam. Ct.); Sherwood v. Sherwood, [2006] O.J. No. 4860 (S.C.J.); Alderson v. Alderson 1992 CarswellAlta 702 (Alta. Q.B.).

57. In Khentov v. Bieler 2007 CarswellOnt 1832 (S.C.J.) Justice Czutrin found that the payor’s incarceration did not justify altering child support arrangements.

58. In Baldini (Connolly) v. Baldini, 46 R.F.L. (4th) 407 (B.C.S.C.), the court imputed income to the payor because he had been fired for doing personal work on company time and using company material without permission. The court found that the consequences of the payor’s actions should be borne by him and not by his dependants.

59. I find the Applicant is solely responsible for the financial difficulties he now submits as the basis for significantly reducing his support obligations. His unemployment (and eventual underemployment) did not arise through mix-up, honest mistake, bad luck, or even isolated error in judgment. The Applicant knowingly and intentionally made very bad decisions. He broke the law -- over and over again. His choices have resulted in unquestionably painful consequences. But why should the Respondent and her children share any portion of that pain? Why should a support recipient suffer from a payor’s misconduct?

60. The expectations placed on the Applicant were not terribly onerous: Obey the law. Support your children. It would be counter to public policy to allow the Applicant to deliberately breach the first obligation, and then use his own misconduct to avoid the second.

61. On this motion to change child support, the Applicant cannot rely on a material change in circumstances, where he created the circumstances he complains of.

62. Applying the three-part Drygala test, I find that:

a. The Applicant is intentionally under-employed. His intentional behavior caused him to lose employment, and limit his opportunities to find replacement employment.

b. His under-employment is not required by virtue of his reasonable educational needs, the needs of a child, or reasonable health needs.

c. I believe it is reasonable to impute to the Applicant his 2008 income of $74,500.00 – the base amount he would still be earning had he not lost his employment. (Oxley v. Oxley 2010 ONSC 1609 (S.C.J.)).

63. I am mindful of the fact that in 2009 and 2010 the Applicant’s income was higher than $74,500.00. But I believe it is reasonable to take into account the fact that the Applicant was in commission sales, with inevitable income fluctuations from year to year. I dismiss the Applicant’s motion for a reduction of support. There was no cross-motion for an increase. To the extent that the Applicant’s failure to disclose his 2009 and 2010 increases resulted in an underpayment to the Respondent, I will factor that into the remaining analysis.

RESPONDENT’S CROSS-MOTION

64. The Respondent’s cross-motion is more difficult to address with any level of precision and fairness.

a. The Respondent asks that section 7 arrears owing by the Applicant for the period September 2008 to February 2013 be fixed in the sum of $14,711.42.

b. But the Applicant was only recently advised of that request. He only received the supporting documentation a few months prior to argument of the motion.

c. The Respondent did not communicate with the Applicant about these expenses as they arose – despite the requirements set out in the separation agreement.

d. The Respondent did not give the Applicant an opportunity to mitigate any of those expenses, or budget for payment.

e. A number of the expenses do not properly qualify under section 7.

f. Of the expenses included under section 7, the Respondent has failed to provide relevant information relating to Alyson’s income, her budget, the application of funds from a scholarship and RESP’s.

g. She has requested a continuation of full support for Alyson, even for the period when the daughter was living away at school.

65. There are other complications:

a. The $800.00 per month child support payments set out in the September 7, 2008 separation agreement were almost $300.00 less than the $1,098.00 commensurate with the Applicant’s income. This was to compensate for the benefit the Respondent and the children would obtain by continuing to reside in the former matrimonial home until the fall of 2013.

b. The Applicant’s undisclosed increases in income in 2009 and 2010 mean that the actual underpayment each month was even greater.

c. But Michael stopped being entitled to support when he left school in October 2012.

d. In the fall of 2013, after the house is sold, the parties will have to recalculate the Applicant’s support for Alyson only, based on a continuing imputed income of $74,500.00. Hopefully all necessary information will be available at that time to calculate the correct amount.

66. Balancing all of these countervailing considerations, I find that the correct result is for the Applicant to continue to pay the $800.00 per month – the same figure the parties agreed to in the separation agreement – until the aforementioned recalculations are made in approximately September 2013. The $800.00 represents an increase in the support apportioned for Alyson (since payments for Michael have discontinued). This includes a contribution toward poorly articulated section 7 expenses, and some correction for the Applicant’s underpayment in 2009 and 2010.

67. This short-term solution – continuing the status quo for perhaps half a year – is not terribly precise. But the reality is that given the deficiencies in each party’s presentation, their respective motions are both dismissed. Despite the complication of Michael ceasing to be a dependant child, the Applicant doesn’t get to pay any less. He doesn’t have to pay any more.

THE ORDER

68. The Applicant’s motion to reduce child support and rescind arrears is dismissed.

69. The Applicant’s income is imputed to be $74,500.00 on an ongoing basis. This is based on the Applicant being responsible for any actual decrease in his employment income or prospects, since September 2008 when he acknowledged that his income from employment was $74,500.00.

70. The Applicant shall continue to pay to the Respondent child support in the sum of $800.00 per month, although as of November 1, 2012 those payments shall be only in relation to the child Alyson.

71. Support for the child Michael shall terminate effective November 1, 2012, without prejudice to reinstatement.

72. Quantum of support shall be subject to redetermination in conjunction with the sale of the former matrimonial home, as provided for in the parties’ separation agreement. It is anticipated that this readjustment shall occur in the fall of 2013.

73. The Respondent shall provide the Applicant with updated disclosure with respect to her support claim for Alyson no later than August 1, 2013. This shall include proof of income for the Respondent and Alyson respectively; their respective budgets; proof of academic enrolment, progress and expenses; particulars of any sources of funding including scholarships and loans; and application of RESP funding.

74. Subject to any material change in circumstances arising after this date, the Applicant’s income shall continue to be imputed in the sum of $74,500.00 when child support is re-determined.

75. Any arrears of child support shall be payable by the Applicant from his share of the net proceeds of sale with respect to the former matrimonial home. This is without prejudice to any application by the Respondent for security, as against the house proceeds, in relation to future child support obligations.

76. Support Deduction Order to Issue.

77. If any other issues still need to be address on these motions, the parties should contact the trial co-ordinator to arrange a time to see me.

Pazaratz, J.

Released: April 4, 2013

COURT FILE NO.: F1890/11

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SCOTT ANTHONY ROGERS

Applicant

And

LINDA ANN ROGERS

Respondent

REASONS FOR JUDGMENT

Pazaratz, J.

Released: April 4, 2013