minicounsel

ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 30442/08
DATE: 2013-06-05

BETWEEN:

C.A.S.

Todd Jenney, for the Applicant

Applicant

– and –

Robert McQueen, for the Respondent

Respondent

HEARD: February 6, 7 & April 5, 9, 2013

M.J.Donohue, J.

Issues

(a) Should Income be imputed to N.A.S. after his termination from employment?

(b) What s. 7 expenses are extraordinary expenses?

(d) What is the value of the contents left at the house?

(e) What life insurance should be put in place for child support payments?

BACKGROUND

Background

1N.A.S. and C.A.S. married in 1990. They lived in a historic house on a large property with a barn/workshop which they had purchased from C.A.S.’s mother. They have two children. A.S. was born in 1995 and is now 18. C.S. was born in 1999 and is now 14.

2The parties separated on September 17, 2007. C.A.S. reported to the police that N.A.S. had child pornography in his possession. The police investigated and did not find any. The parties then lived separately under the same roof until November, 2007.

3At that time, C.A.S. reported to the police that N.A.S. had sexually abused their eldest child. N.A.S. was arrested and taken from the home. He had a brief opportunity some weeks later to pick up his clothes under police escort but otherwise was prohibited from returning to the home for his possessions.

4N.A.S. retained a defence lawyer. The charge of sexual assault was withdrawn by the Crown a few months later in March, 2008.

5N.A.S. has not seen his children since he left the home. He attempted to attend a skating show and a school concert but there was a family confrontation. The Children’s Lawyer recommended sole custody of the children to C.A.S.. N.A.S. consented.

6There has been no relationship between N.A.S. and his children since separation, a period of over five years. Apart from lawyers letters regarding late support payments, there appears to have been almost no communication between the parties themselves.

7Battle lines have been drawn between the extended families as well, with N.A.S.’s sister removing her two children from the school where the S. children attended.

8The background is relevant to the main issue being adjudicated, that of the s. 7 expenses that been incurred, accumulated, and not discussed by either party over the years.

IMPUTED INCOME

Imputed Income

9C.A.S. seeks to have income imputed to N.A.S. of $100,000 per year for the years 2008, 2009 and 2010. In the last year of their marriage, 2007, N.A.S. earned an income of $99,935 derived from his employment at Company “A”.

10The basis for imputing income is set out in s. 19(1)(a) of the Federal Child Support Guidelines, SOR/97-175, in circumstances which may include where the spouse is intentionally under-employed or unemployed.

11C.A.S. relies on the employer’s, Company “A”’s, termination letter of March 6, 2008, which states the reason for termination was lack of performance.

12Evidence by N.A.S. was that he was hired as a salesman for I.T. contracts by Company “A”, filling a temporary maternity leave position the previous year. Much of the job was based on making commission income from sales. When the person returned from leave she took back the clients N.A.S. had been handling. The employer kept him on a few months while N.A.S. attempted to build up a book of business but he did not meet their expectations.

13The tone of the termination letter, however, is friendly, providing a one month severance and wishes N.A.S. the best in his future endeavours.

14No one was called from Company “A” to testify. I did not have his employment file to consider.

15N.A.S. conceded that his performance may not have been what it could have been in those last few months because he was in such a hostile separation. In November 2007, the police arrived at his employment to arrest him for child abuse. He had to retain a defence lawyer and had a trial date set for March, 2008. This was also at a time when he had been ejected from the family home.

16There is evidence that N.A.S. promptly found work with Company “B” on April 2, 2008. He was unemployed for only a month. He again was in a job requiring him to obtain clients and gain commission income. His base salary was $55,000. Since beginning at Company “B”, his commission income has steadily risen. This suggests sincere efforts by N.A.S. as a salesman.

17N.A.S.’s income history before the temporary job at Company “A” was $67,095 in 2005 and $87,343 in 2006. His actual income in 2008, $56,823; 2009, $62,186; and 2010, $85,506, is consistent with his income earned during the marriage.

18Being “intentionally underemployed” has been defined in Drygala v. Pauli (2002), 2002 41868 (ON CA), 61 O.R. (3rd) 711 (C.A.), at para 28, as when one “chooses to earn less than he or she is capable of earning.” See also Lawson v. Lawson (2007), 2006 26573 (ON CA), 81 O.R. (3d) 321 (C.A.), at para 36.

19I find that the evidence does not support a finding that N.A.S. was intentionally under-employed in 2008, 2009 and 2010. I find that there was a reasonable excuse for his lack of performance in this temporary position at Company “A” that led to his termination.

20I consider the income set out in N.A.S.’s tax returns to fairly reflect what he could earn.

21The child support should therefore be in accordance with his line 150 income which amounts to arrears of $16,128 as agreed. This amount is to be paid forthwith from N.A.S.’s share of the funds in trust from the sale of the matrimonial home, as proposed by both parties.

22As N.A.S. has not always been open with providing his tax return information which resulted in the arrears accumulating, I order production of his annual tax returns on June 1.

23The respondent, in closing submissions, sought an order to terminate support for A.S. who is now an adult. This was not an issue raised at the trial and should be dealt with on motion with notice and evidence to support the termination.

SECTION 7 EXTRAORDINARY EXPENSES

Section 7 Extraordinary Expenses

24Although N.A.S. has paid child support over the years there has been no payment toward s. 7 extraordinary expenses since separation in September 2007.

25As N.A.S. has no relationship with the children and there is almost no communication apart from infrequent correspondence between lawyers referring to what reasonably should be incurred by C.A.S. and what the proportionate payments would be between them. N.A.S. did not regularly disclose his tax return information; however, C.A.S. did not provide her tax returns until trial. Further, C.A.S. did not disclose the bills for 2007, 2008, 2009 until March 8, 2010. Finally, the bills for 2010, 2011 and 2012 were disclosed in April 2012. The quantum was produced on May 18, 2012, pursuant to the order of Justice Coats.

26At trial, C.A.S. produced careful documentation of the bills incurred for all the expenses. They largely related to skating for the two children. The costs are $3,050 for the four months in 2007 following the separation; $14,879 in 2008; $14,185 in 2009; $22,082 in 2010; $16,930 in 2011 and $18,121 in 2012 for a total of $89,247 over five years and four months.

27The combined annual taxable income for their two households in the last year of their marriage, 2007 was $232,031. After separation their combined annual taxable income was $158,676 in 2008; $178,824 in 2009; $200,680 in 2010; $234,076 in 2011; and $274,979 in 2012.

28C.A.S. gave precise credible evidence of what she had spent. An extensive brief was prepared with the dates and expenses and, where possible, the bills. One of the skating coaches testified to all bills being paid and her coaching of the children. Letters were provided by many of the clubs and coaches confirming that there were no bills outstanding from C.A.S.. I am satisfied that she spent the monies that have been claimed.

29Pursuant to the Federal Child Support Guidelines under s. 7(1)(f), “the court may, on either spouse’s request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation: (f) extraordinary expenses for extracurricular activities.”

30“Extraordinary expenses” is defined in the Federal Child Support Guidelines. The court considers any special needs and talents of the child or children. (Section 7 (1.1) (b) (iii) of the Federal Child Support Guidelines.) Where a child shows exceptional talent in a sport the courts have at times recognized that those expenses would likely have been honoured if the family had stayed together and that sacrifices would be made to ensure that a particular child was able to succeed.

31Neither party gave very clear evidence of what the similar expenses were prior to separation. C.A.S. is an accountant and, although she retained possession of the house and contents after separation, did not produce any receipts or bills of pre-separation spending patterns. This remarkably contrasts to her careful production of post-separation expenses.

32C.A.S.’s evidence of their expenses were estimates. She testified that in 2005 they spent about $3,500 for both children. In 2006, when the children began to compete, with better lessons and better equipment, the costs rose to between $7,000 and $8,000. In 2007, she estimated the costs were probably $9,000 to $10,000 as both children were competing.

33Both C.A.S. and the trainer, A.M., testified that it was N.A.S. who hired her to give private lessons to the children beginning in 2004. N.A.S. sat on the board of the local skating club. He also skated with both children.

34N.A.S.’s evidence of their spending pattern pre-separation was also vague. His estimate was that the expenses were $4,000 to $5,000 in total for both girls. His position for the post-separation expenses is that they should be $5,000 per year.

35C.A.S.’s evidence of the cost before separation of $9-10,000 is consistent with the bills she produced for the last four months in 2007. The costs were $3,050. For much of that time N.A.S. was still residing in the matrimonial home and would be aware of the children’s activities and expenses. That amount annualized would be $9,150. As there were other charges for school uniforms noted in the expenses, I find that the spending pattern of the parties pre-separation was approximately $10,000 per year.

36Initially after separation both parties’ income decreased. Had they remained a family, in my view, I find a reasonable family would not have increased their children’s extracurricular expenses. In this case, C.A.S. increased the extra-curricular expenses by a third or more. The evidence of C.A.S. was that the children were training five days a week. Ms. A.M.’s evidence was six days a week. C.A.S.’s mother, Ms. Y., testified that skating has been the children’s “world”. C.A.S. concedes, however, that they will never be Olympic level skaters. There was no evidence that they were even promising provincial competitors.

37Many families consider saving for college or university at this time. C.A.S. gave evidence of A.S. planning on going to university. Reasonably, I would not have expected this family to increase their extra-curricular expenses to this extent when their family income had reduced and there were other obligations such as their mortgage.

38C.A.S. testified how much the skating was a positive experience in the children’s lives. She described it as good for their self-esteem, helped with life skills and team building; taught the children to win with pride and lose with grace.

39These are good things for children. It is only the price-tag that causes difficulty.

40The children were involved with skating as their family activity in the years leading up to the separation. It kept them active and busy. I find it reasonably necessary that they should continue with the activity after separation to lessen the disruption in their lives after the separation, the sale of their home and the loss of their father. The skating would be necessary in relation to the best interests of these children.

41As the parties had almost no communication between them, C.A.S. made all the choices for how and what expenses would be incurred for the children. The receipts were not produced for two and a half years for consideration by N.A.S..

42When costs were produced to N.A.S. he made no comment about the costs nor did he assist in forwarding some payment to recognize the needs for the children.

43In this trial the evidence is convincing that the children really enjoyed the sport and it occupied most of their evenings and weekends.

44The evidence fell short of establishing that the children were competing at a high level or were capable of achieving any provincial or national renown in the sport. They won prizes as “best dressed skaters” at their club and placed in some competitions with other clubs. There was no evidence that either child would be pursuing skating professionally that would justify the much higher amount claimed by C.A.S..

45I was asked to calculate what s. 7 expenses are payable since separation. I find that that the s. 7 expenses claim from the date of separation to the end of 2012, to be shared in proportion to their respective incomes to be $10,000 per year. I calculate that for five years and four months the total to be shared would be $53,333.

46The evidence is strong that C.A.S. incurred these expenses and incurred a debt to do so. Payment of a portion of the reasonably incurred expenses will not result in a windfall for her but will allow her to retire some of her debt. Although there was significant delay in her production in 2010, of the first two and a half years of expenses, there was no corresponding response from N.A.S. that he considered the expenses unreasonable at the time. Rather the correspondence from his lawyer suggested he would be paying his share once he knew what C.A.S.’s income was for each year.

Braces

47C.A.S. provided evidence that she paid $3,100 for A.S.’s braces and $3,500 for C.S.’s braces. N.A.S. did not give any contrary evidence or argument as to why those expenses should not be considered proper s. 7 extraordinary expenses. He did comment that if he had received them in a timely manner a portion of them might have been covered by his insurance plan. This is an argument for more inquiry and communication between the parties. It does not change the reasonableness of the expense.

48I find that the $6,600 for braces is reasonable in light of the parties’ joint incomes and order that it be a shared expense according the parties income at the time the expense was incurred.

49Counsel offered to provide the calculations of what payments would be owing on the s. 7 expenses as I have determined them to be on the respective incomes of the parties in each year. They may provide their submissions within 14 days.

HOUSEHOLD CONTENTS AND VEHICLES

Household Contents and Vehicles

Household Goods & Furniture

50The parties have agreed on all other entries in their NFPS with the exception of household goods and furniture.

51Both parties allowed the other party a wide degree of latitude in the admissibility of evidence as to value of the contents and vehicles.

52C.A.S. assesses the value of the household contents at no commercial value.

53C.A.S. and her mother Ms.Y. testified that the household contents were a gift with the sale of the house. The evidence was that the gift was intended for the family as a whole.

54N.A.S.’s evidence was that he was allowed back to the house only once to get his clothes. The officer would not allow him to take anything else. He testified that left behind were such things as a large hand-made Mennonite hutch, a stereo, a 53 inch big screen television, a surround sound system, a digital movie camera, beds, a cherry wood dresser and drawers, a couch and chair, lamps, bunk beds, and other decorations. He estimated the value at separation to be $15,000.

55N.A.S.’s sister, E.T., testified that she had been in the house many times as she lives close by. She described a pine antique cabinet, a nice family room set with an antique pine table set as well as a dining room set with a cabinet hutch.

56N.A.S.’s friend and neighbour, B.S., visited the family home weekly. He was examined by both counsel regarding the household contents. He testified that at a farm auction he estimated there were enough quality items to fetch $10, $12 or $13,000.

57I am not prepared to accept that an entire household of items had no commercial value. Items such as these are sold at auction for value at estate sales. I recognize that C.A.S.’s mother did not consider the furniture of much value when she gifted it.

58I find a household of furniture and other household items would reasonably amount to $10,000.

Barn Items

59The matrimonial property had a large barn in which N.A.S. had various pieces of equipment, tools and parts, left over from his earlier small engine repair business.

60The Agreement of Purchase and Sale for the property was signed on December 2, 2007. The completion date was to be January 15, 2008.

61On January 7, 2008, N.A.S.’s lawyer sent a detailed list of the items in the barn which he wanted. Most of these items are listed on his NFPS as items that he wished to have; garden tractor, generator, power & air tools; two snow blowers, drill press, table saw, Makita grinder; sockets sets, impact socket driver, tool cabinet, air compressor, brad nailer; jumping castle. He valued these items at $20,000.

62C.A.S.’s evidence is that she sold the garden tractor for $1,500; the generator for $1,200; and a snowblower for $800. She believes she donated a number of the other items such as the drill press, the Makita grinder, the socket sets; the tool cabinet and the brad nailer to a school. In her evidence she did not know what many of the items were.

63No evidence was provided as to why N.A.S. was not allowed on to the property to clean out his workshop before the sale. There was no evidence of violence by N.A.S. to C.A.S.. C.A.S. had a friend come to clean out the barn. A great deal was put in a dumpster which her friend, Mr. H., assured the court was only garbage. He left tools in the corner of the workshop. The difficulty remains that N.A.S. is testifying that he is missing things he could use.

64C.A.S.’s counsel argues that N.A.S. did not provide evidence that he purchased these things, nor did he have any receipts. As N.A.S. was not allowed to take anything from the house other than his clothes, and while under police escort, that level of proof is not possible.

65N.A.S.’s sister, E.T. testified that the workshop area of the barn was stocked full of equipment for the repair business. As she ran her own farm, she knew N.A.S. would have any equipment she ever needed.

66C.A.S.’s evidence is that she left his things under a tarp to be picked up by his family. She did not make an inventory. N.A.S.’s evidence is that these remaining listed items were not there. As C.A.S. could not identify many of the items I accept N.A.S.’s evidence that the items listed were not returned to him.

67N.A.S. provided evidence of replacement cost for a lot of the tools and values on various websites for value of the items listed. A total of what research he did for the items listed amounts to less than $15,000. As the items are used I would anticipate their value would be reduced by one third to $10,000.

68I value the tools and equipment in the barn at $10,000.

EXLUSIONS TABLE 4: PART 7

Exclusions Table 4: Part 7

69C.A.S. claims an exclusion under Part 7 stating that the Marquis and Dodge motor vehicles were gifts from her mother. Ms. Y. gave evidence that when she sold the house to Mr. and C.A.S. she gifted all the contents including the fridge, stove, washer, dryer, dishwasher, pool accessories and furniture to the new owners, Mr. and C.A.S.. Ms. Y. testified that she gave C.A.S. the vehicles.

70She gave no reason why she was choosing to give the vehicles only to C.A.S. and not for the family use. I do not accept her evidence that she intended that this gift be restricted to only her daughter.

Cars & Boats

71C.A.S. has in her possession an aluminum boat with a 9.5 hp motor, a Mercury Grand Marquis, and a Dodge Caravan.

72C.A.S.’s estimated the boat and motor had a value of $500. N.A.S. in his NFPS estimated it at $1,500. His on line research showed a boat and motor in good shape for sale for $1,000.

73I value the aluminum boat at $1,000.

74C.A.S. values the used Marquis that was a gift at $1,000 and the Dodge at $1,500. N.A.S. values them at $1,500 and $2,000. I have no evidence why he thought the vehicles were more valuable. Neither party provided a book valuation.

75As the vehicles are in her possession I accept C.A.S.’s valuation of the Marquis and the Dodge.

76N.A.S. has in his possession a 1989 Jeep, a Power Boat and trailer, and Dinghy with a 15 hp motor. He valued those items at $500, $1,500 and $1,500 respectively.

77C.A.S. valued the Jeep at $1,000 because she testified that they purchased the vehicle for $2,000. As N.A.S. had no evidence to support his valuation for so low a figure as $500 one year after the vehicle purchase I accept C.A.S.’s evidence. I value the Jeep at $1,000.

78C.A.S. valued the Dinghy and motor at $2,000 on the basis that they purchased the items for $4,000. I have no evidence as to when it was purchased. As the boat and motor are in his possession I accept N.A.S.’s valuation of the Dinghy and motor at $1,500.

79C.A.S. valued the Doral boat and trailer at $4,500 as the family had purchased it, used, for $5,000 in 2006. N.A.S. had no evidence to support his valuation for so low a figure as $1,500. I accept C.A.S.’s evidence. I value the Doral boat and trailer at $4,500.

Guns

80N.A.S. admitted at trial that he owns guns valued at $1,000 at the date of separation.

81As Counsel have agreed to the balance of the figures on the Net Family Property I request counsel to finalize the statements and provide their submissions for the equalization payment required.

LIFE INSURANCE

Life Insurance

82Both parties agreed there on an order that N.A.S. obtain a life insurance policy sufficient to honour his child support responsibilities.

83N.A.S.’s counsel proposed that the order provide for a policy of life insurance for both parents. In light of the history of this family, that the children and their father have had no communication it is unlikely that, on the death of C.A.S., N.A.S. would become the custodial parent.

84Accordingly, I find it unnecessary to order life insurance on C.A.S.’s life but it is appropriate to order a life insurance policy be purchased on N.A.S.’s life, sufficient to honour his child support responsibilities.

CONCLUSION

Conclusion

85Accordingly I order that:

(a) N.A.S.’s income is the line 150 income for the purposes of calculating child support arrears. N.A.S. is to pay the arrears of $16,670 forthwith from his share of the proceeds in trust from the sale of the matrimonial home. This covers the arrears of child support for 2009, 2010, and 2011. On consent, the Respondent, N.A.S., waives any claim he may have for an overpayment of child support for 2008;

(b) Reasonable future s.7 claims are to be submitted quarterly with receipts and shared proportionate to their line 150 incomes of the previous year;

(c) N.A.S. is to pay his proportionate share of the s. 7 skating expenses of $53,333 based on his income each year and annual expenses of $10,000. N.A.S. is to pay his proportionate share of the s. 7 braces expenses of $6,600 according to his income in the year in which the expense was incurred; Counsel are to provide their submissions within 14 days on the calculations of these amounts unless they are able to agree;

(d) There is no excluded property under Part 7 of the NFPS;

(e) Part 4(b) of the NFPS is to show as follows: C.A.S. had (a) household goods of $10,000; (b) Tools & Equipment of $10,000; (c) an Aluminum boat and motor at $1,000; (d) a Marquis at $1,000 and a Dodge at $1,500 for a total of $23,500. N.A.S. had (a) a Jeep at $1,000, (b) a Doral boat and trailer at $4,500 (c) a Dinghy and motor at $1,500 and (d) guns at $1,000 for a total of $8,000;

(f) N.A.S. shall maintain the children as beneficiaries of a policy of life insurance in an amount that is sufficient to secure his child support obligation until each child has attained the age of 18 years old. N.A.S. shall designate C.A.S. as the trustee of the policy of life insurance and he shall provide C.A.S. with proof of the designation annually;

(g) Mr. and C.A.S. are to produce annual tax returns on June 1 to one another;

(h) Counsel shall provide the court with the calculations on the final NFPS and the equalization payment which is owed within 14 days; and

(i) Counsel shall provide the court with written submissions on costs, of three pages or less plus bills of costs and any offers to settle, within 30 days. Any responding submissions may be submitted within seven days thereafter.

M.J. Donohue, J.

Released: June 05, 2013