COURT FILE NO.: FS-10-16764-00

DATE: 20130628

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

ERIC JENSEN

Applicant

• and -

CATHERINE LEMIEUX

Respondent

Eric Jensen, acting in person

Catherine Lemieux, acting in person

HEARD: June 20, 21, 24, 25 and 26 2013

C. HORKINS J.

introduction

[1] For a period of nine years, from September 2001 until the summer of 2009, the parties lived together in a common law relationship. Catherine Lemieux is 37 years old and Eric Jensen is 43 years old. They now live separate and apart in Toronto and have two daughters ages 9 and 6 who live with their mother Catherine.

[2] During the common law relationship, Eric was self-employed in the car racing industry. His business was called Jensen Motorsport Inc. (“JMS”). Initially, he raced cars but eventually he moved away from racing the cars into the management and training of other drivers.

[3] By the fall of 2011, JMS and Eric had accumulated significant debt and Eric could no longer keep the company operating. Eric has been unemployed since his business came to an end.

[4] Several court orders for support have been issued. In March 2010, the Family Responsibility Office (“FRO”) started to record the accumulation of unpaid support. As of November 2011, Eric owed $41,556.53 in child support and spousal support arrears. This amount was paid in full on November 23, 2011 when proceeds from the sale of the family home were used to satisfy the arrears. Since that time, significant arrears have once again accumulated. As of May 1 2013, the FRO confirms that Eric owes $33,587.17 in support. Most of this represents child support.

[5] At the Trial Management Conference on May 24 2013, Justice Kiteley ordered that the trial would be limited to a determination of the following issues:

1. Whether Eric is obliged to pay ongoing child support and if so how much.

2. Whether Eric is obliged to pay ongoing spousal support and if so how much.

3. Whether the arrears of child support and spousal support should be rescinded.

[6] There is no dispute that in addition to the support arrears, Eric has significant debt (about $300,000). Since the sale of the family home he has not had a place to live. He relies on friends who offer him a place in their homes. Because of the support arrears he has lost the use of his driver’s license and passport.

[7] Eric has not worked since JMS ceased operating in the fall of 2011. He recently accepted an offer of employment with Cue Digital Media Inc to start in July as an Online Editor with a yearly salary of $35,000.

[8] Eric asks the court to discharge his support arrears and order that he pay child support based on the income he will earn in his new job. He states that no spousal support order going forward should be made.

[9] Catherine accepts that Eric has considerable debt. However, she says that this is no different than the financial circumstances that existed when the last support order was made. As a result, Catherine says that there has not been a change in circumstances to justify a change to the existing support order. It is her position that Eric’s actions in 2011 sabotaged his ability to earn an income in the car racing business. She argues that he deliberately stopped running his business and has intentionally decided not to earn any income.

the facts

[10] The parties testified and were cross-examined. No other witnesses were called. Numerous documents were accepted as evidence. The facts that I find are as follows.

Before Separation

[11] In 1993, Eric graduated from the University of Toronto with a degree in Economics. After graduating he had a few jobs in the financial industry but was not successful. He worked as a stockbroker for what was then Midland Walwyn but was let go from this job. Eric then moved home to Newcastle and worked in his family’s nursery business for around 2 years earning about $30,000. When the family business was sold, Eric worked for the new owners for a few months before moving back to Toronto to work at Scotia Capital for about a year. He worked in a mutual funds call center and did not enjoy the work.

[12] Around this time, Eric decided to pursue a career in the car racing industry. His father had some experience in the field and so it was not foreign to him. Eric started as a racing car driver and found sponsors who paid him to race. Eventually, he shifted his focus and started to train drivers and manage their racing pursuits. In this role, he was like a general contractor. He rented racing cars to drivers, trained them if required and provided them with the technical services they needed to race. He recalls that in the first 2 years as a driver, he generated about $60K in revenue but was losing money.

[13] When the parties met in 1999, Catherine was an undergraduate student at the University of Montreal working on a degree in classics and anthropology. She graduated in 2001 and was then accepted into the Master’s program for anthropology. Catherine is multi lingual. Her first language is French. She has a superb mastery of English and is competent in Spanish. As well, she has some proficiency in German.

[14] The parties began living together in Montreal in the fall of 2001. Catherine worked on her Masters degree in anthropology while Eric continued to pursue his racing car business. Catherine’s area of study was well funded and she was able to secure research funding and work as a teaching assistant. The parties shared living expenses in a Montreal apartment.

[15] Part way through her Master's degree, Catherine was offered a job as a full time research assistant in her field, with a salary of $40,000. It is clear from her evidence that she had opportunities available to her in Montreal in the world of academic research. The possibility of pursuing a PHD in her field was also an option.

[16] While Catherine was working on her Master's degree they decided to start a family together. Catherine explained that when she revealed to her academic colleagues that she was expecting a child she was told that the research job was no longer available. There was an expectation that other opportunities would be available when Catherine was ready to return to work.

[17] In 2003-2004, Eric was not earning any income in his business. Catherine recalls that the business was starting to do well in 2002 as Eric was securing sponsorship money and was doing some event planning work. However, even on Catherine’s evidence, it is clear that the business encountered problems in late 2003. Eric explained that some of his sponsors decided not to renew their contracts. Catherine also recalls that there was a problem with one of Eric’s big clients. As well, the Indy car series in Toronto was cancelled in 2003. Going into the 2004 racing season, Eric was still looking for clients. He had no steady income. The racing season ran from January through to early fall. Clients committed to contracts in the fall for the following year. During the winter months the races were held in Florida and other warm destinations.

[18] Catherine completed her Masters degree in September 2003 and a few weeks after their first child was born on Sept 14, 2003. By November 2003, Eric explained that they could no longer afford to stay in Montreal. He was not earning any income in his racing car business and they could not pay the rent in their Montreal apartment. The family moved to Newcastle and stayed at Eric’s parents’ home while they were in Florida. This was a difficult time for Eric and Catherine. Catherine was very unhappy living in Newcastle and Eric’s racing car business was not working out. He decided to stop racing and devote all of his time to managing other drivers. By this point, Eric owned two racing cars that he rented to clients.

[19] Catherine felt alone and stranded in Newcastle while Eric was away on business. She took the baby and went to live with her mother in Quebec. At one point that winter, Eric, Catherine and the baby moved to Orlando, Florida for three months during the racing season. In May 2004, the couple settled in Toronto and rented an apartment.

[20] When the family moved to Toronto Catherine decided that she needed to “do something” to earn some money. She contacted her colleagues in Montreal and for one year worked on a research project from her apartment in Toronto. When this project ended Catherine worked as a translator for about 8 months before she quit. Catherine quit because the owner of the company was an alcoholic and was harassing her. Eric states that he started to pay Catherine a salary through JMS.

[21] The parties were continuing to accumulate debt on credit cards. Credit cards funded their lifestyle. To run JMS and pay the family bills, Eric had one line of credit and numerous credit cards. He heavily relied on his credit cards as did Catherine. It was Eric’s practice to pay the minimum monthly payments on the credit cards and as he did the limits on the cards grew.

[22] In the spring of 2006, they bought a home in Toronto. Eric’s father gave them some money towards a down payment. Eric took money from his credit cards to fund the rest of the down payment. Their second daughter was born on November 10, 2006. Catherine did not return to work after the second child was born.

[23] Through their relationship, Catherine had a general appreciation for the erratic and unreliable flow of revenue in Eric’s business. While she certainly had a sense of what was going on in the business she was not aware of the details. As a result, during the trial she was not in a position to refute the specific evidence that Eric gave about JMS.

[24] On the one hand, it was Catherine’s belief that Eric earned enough money to support their lifestyle. At the same time, she was aware of their debt load and having to constantly bug Eric for money. Catherine knew that Eric had significant expenses in the business and also knew that the revenue he collected from clients was concentrated in certain months of the year.

[25] In advance of the next racing season, Eric signed contracts with clients to cover the services he was going to provide. Clients paid large sums of money to have Eric manage various aspects of their racing activities: supply the racing cars, deliver the cars to race sites, train the driver, hire mechanics etc. This gross revenue was then used to hire staff and fund all of the racing activities that the contract required JMS to provide. The JMS business model had fixed costs such as racing cars, travel and mechanical staff. The net profit of the business was obviously better if these costs could be spread among several clients.

[26] With this cycle of business, the cash flow from JMS was generally good from January through April when clients were paying large sums of money for the services they had hired JMS to provide. As Eric and JMS performed the contract, the revenue was depleted. If Eric did not secure enough clients for the racing season, his net income would fall and it he was more dependent on the credit cards to get through the fall to the next season.

[27] Eric often travelled for work and Catherine found that she had no money of her own. The family regularly relied on credit cards to fund their personal needs and to run JMS. Slowly, Catherine began to accumulate debt on her credit card and she had to rely on Eric to pay the minimum each month. On occasion, the family would travel together to Europe or the US for Eric’s business. These trips were funded by JMS. The financial needs of the family and JMS were all comingled.

[28] Business for JMS started to improve in 2005. The year ending February 2006 was the single best year for revenue. Problems started to impact the business in 2007 as the economy started to slide downwards. Car racing was a luxury and by August of 2007, Eric had lost all of the contracts he had the previous season. Relying on credit cards and his reputation, he secured some work but the revenue dropped significantly as did the net income. The business was also hurt when the Champ racing car series closed down in February 2008.

[29] In May 2008, Eric took out a second mortgage on the family home (approx. $300,000). He used these funds to pay off all of the debt that had accumulated. That summer he decided to spend more time with Catherine and the children because he sensed the Catherine was unhappy and he wanted to get his family “in a good place”. However, because he had no income coming in, the debt began to accumulate again.

[30] In the fall of 2008, Eric started to look for new contracts for the upcoming racing season. He managed to get his business back on track by securing deals with a group of clients. By late 2008 into 2009, he had money coming in as clients made payments on their contracts. However, as the financial statements reveal, there was not enough revenue to cover the expenses. The bottom line of JMS suffered.

JMS Financial Statements and Eric’s Earnings

[31] Financial statements for JMS for the years ending February 2008, 2009 and 2010 reveal the declining revenue and profit:

February 2007 Revenue $2,582,009 Expenses $2,400,768 Net Income $ 151,126 Retained earnings $279,343

February 2008 Revenue $1,863,805 Expenses $1,847,055 Net Income $14,143 Retained Earnings $228,486

February 2009 Revenue $1,010,454 Expenses $1,047,491 Net Income (loss) $ 30,327 Retained Earnings $153,159

February 2010 Revenue $1,563,040 Expenses $1,756,924 Net Income (loss) $ 163,284 Retained Earnings $153,159

February 2011 Revenue $307,284 Expenses $337,810 Net Income (loss) ($30,526) Retained Earnings $0 Liabilities and Shareholder Deficiency/Long Term Debt $344,235

[32] Eric income tax returns and notices of assessment confirm the following line 150 income:

2008 $81,500 2009 $56,250 2010 $10,866 2011 $ 0

After Separation

[33] In 2008, Catherine was very unhappy. She was often alone at home with the children while Eric worked and travelled and she was increasingly anxious about their debt load. In the summer of 2009, the parties separated when Eric discovered that Catherine had cheated on him.

[34] The separation was not amicable. Catherine left the family home without the children and rented a two bedroom apartment nearby. Eric had full responsibility for the children until November 2009 when the Ontario Court of Justice (“OCJ”) made an order for joint custody. The order gave Eric temporary access and directed that the children’s primary residence was with Catherine. Eric was ordered to pay child support of $1,171 based on his reported income of $81,000.

[35] The break up and being left to care for the children, affected Eric’s ability to run his business. It was busy season for racing and Eric usually travelled at this time of the year. While he went to some racing events, he relied on his staff to cover others while he cared for the children.

[36] Before the separation Catherine had decided that she needed to do something to earn income and build a stable future for herself and the children. Catherine decided to pursue a PHD degree in anthropology and religion. After researching the specific focus of a possible PHD, she applied to U of T and was accepted to start her PHD in September 2009.

[37] In late 2009, Eric managed to sign some clients for the 2010 racing season. Once again, he had revenue coming into the business. Shortly after the OCJ order, Eric and Catherine agreed to try and reconcile. Catherine kept her apartment as a term of her agreement to try and reconcile. For a few months, they went back and forth between the apartment and family home. Eric recalls that they were happy as a family. He took Catherine and the children away with him as he flew to various places for races. He also spent money on gifts and restaurants to try and make the family happy.

[38] The year 2010 was a disaster for Eric’s business. His main contract that season was a $1 Million deal with a single client. As usual, the client paid for part of the contracted work in advance and Eric spent all of the money that the client gave him. This was a problem because in early March 2010, the Atlantic racing series was cancelled. This effectively meant that his contract with the client came to an end.

[39] Shortly after, on March 7 2010, Eric’s attempt to reconcile with Catherine abruptly ended after a fight between them. Eric was charged with assaulting her (this was later resolved with a peace bond and the charges were dropped).

[40] There have been no further attempts to reconcile. The relationship was clearly over as of March 2010.

[41] After the assault charge Eric was in custody for a few days and unable to reach his clients. While Eric was held in custody, the $1 Million client negotiated a deal with a competitor who was able to place the client in another racing series. Eric lost the business and fell into a dispute with this client who wanted his money returned. Eric could not return the money because he had already spent all of it.

[42] After Eric was released from custody, a term of his release prevented him from returning to the family home. This was a problem because he ran his business from the home and needed access. It took a couple of weeks before he gained access to the home.

[43] Eric struggled to keep his business afloat and Catherine struggled because Eric was not paying support. Eric managed to sign a few contracts for the 2011 race season. Desperate to keep the business going, Eric attracted clients by underpricing the work. He signed deals because he badly needed cash flow. As Eric explained he made bad decisions to try and save himself financially. The revenue from these deals was not enough to cover the expenses needed to fulfill the contracts. Eric was unable to secure additional contracts to share the expense burden.

[44] By the fall of 2011, JMS could no longer operate. To use Eric’s words the company was insolvent. He could no longer pay his staff and could not perform the remaining work under his contracts. His main client that season sued him. The client had paid what he owed and Eric had failed to perform. Eric’s credibility in the business was damaged.

Court Orders

[45] As Eric struggled to keep his business afloat he was not paying child support. He brought a motion to vary the OCJ child support order of $1,171. On March 28, 2011, Justice Backhouse dismissed Eric’s motion to vary child support and rescind the arrears. She increased the child support to $1,876 and ordered monthly spousal support of $776. This was based on a yearly imputed income of $140,000. The court arrived at this yearly salary after analyzing the available evidence. Arrears at that point were fixed at $11,710. The court rejected Eric’s evidence that he had no income and that his business was operating at a loss. At para. 15 the court stated:

15 If the father's financial position is as he represents, one would expect to see him fold his business, sell the house, pay off the credit card debt and seek employment that would allow him to support his family. If, as it is submitted the father pays an employee $120,000/year, it would seem feasible for him to earn at least that amount himself as an employee. In my opinion, the $200,000 he received in fiscal 2010 but has allocated to fiscal 2011 means that his corporate income was $170,000. In addition, there are the payments made on his behalf through the corporation.

[Emphasis added]

[46] Over the following year, Eric did fold the business, sell his house and pay off the debt. On May 26 2011, Justice Harper granted Catherine sole custody of the children with access to Eric.

[47] On December 9, 2011, Eric brought another motion to vary or rescind the existing orders dealing with custody and requiring him to pay support. He relied on the financial statement for the year ending February 2011 (the same one that had been before Backhouse J.). No up to date evidence was provided about JMS. In fact, there are no further financial statements for JMS.

[48] Justice Greer concluded that Eric simply did not want to support his children. She varied the income for support because the evidentiary foundation to support the imputed income of $140,000 no longer existed. Greer J. took the average of Eric’s line 150 income for 2008, 2009 and 2010 ($49,538). She based her decision on an imputed income of $95,538. She arrived at this by adding $5,000 from the sale of the family home and $40,000 from the sale of JMS’s assets. As a result, this reduced monthly child support to $1,343 and spousal support to $500. Eric has not paid any of this support.

[49] By the time of the motion before Greer J., Eric had sold the family home for $775,510.19. He listed the house for sale in the spring and it took several months before it sold. After payment of the mortgages, taxes, real estate and legal fees, all of the child support and spousal support arrears were paid ($41,556.53). Eric received the balance of $27,480.43. What did he do with this money? He did not save any of it for payment of ongoing support. Eric used $15,178.96 to pay the balance on his Amex credit card. The three JMS employees had not been paid for two months and so he paid them in total about $8,500. Eric used the remaining money (about $3,000) to pay the minimum owing on various credit cards.

[50] Since issuance of the Greer J. order, Eric has not paid any support. No further support orders have been made. It is the arrears under this order that Eric asks the court to discharge.

Eric’s Current Circumstances and Search for Work

[51] Eric’s current debt is significant. His financial statement dated May 22, 2013 documents debt of $317,610.30. Of this amount, $284,289.88 is debt owed on 10 credit cards and two lines of credit. The balance represents arrears of support. There is no dispute that this debt exists. Because of the support arrears, his driver’s license and passport have been suspended.

[52] Since the sale of the family home, Eric has been living with friends and a girlfriend that he no longer dates. His neighbor next to the family home also gives him a room to use. He has no fixed address and no source of income aside from a small social assistance payment. He has no money to pay for first and last month rent on an apartment. All of his credit cards have been cancelled.

[53] He used to send his mail to a PO Box but this was cancelled because he cannot afford this or a cell phone. When he had a mailing address and a PO Box numerous credit agencies were pursuing him for collection of the debt. He has not considered bankruptcy because he says he cannot afford the fee to commence the process. He says that these circumstances have made it difficult to pursue employment. That is true to the extent that he has focused his search for a job among people that he knew from the car racing world. When he talks to old contacts it becomes quickly apparent to them that his business is gone and his circumstances are uncertain, especially when he cannot provide them with a cell number to reach him at.

[54] I accept that Eric has made reasonable efforts to find a job using the skills he developed from years in the racing car world. He knew that he could no longer resurrect JMS and he was tired of trying to run a business so dependent on debt. Eric spent most of his working years in the car racing world. He had to figure out how he was going to apply his skills from running this business to finding a job.

[55] Initially, Catherine argued that the court should impute an income of $55,000 - $65,000 on the assumption that Eric could earn this salary as a financial analyst because he worked in the financial world when he graduated from university. Catherine withdrew this position during the trial. This was a reasonable concession to make since she had no evidence that Eric was qualified for such a job. In fact, he has never worked as a financial analyst and any experience he had in the financial world was very limited and is obviously out of date.

[56] Eric worried that his search for a job would be difficult because he had basically worked in the racing car world for most of his life. To organize his search for a job, he focused on skills that he had learned running JMS. He believed that he was good at marketing and sales and dealing with internet media. Through JMS, he had set up sponsors for his clients and increasingly this was becoming internet sponsorship.

[57] Eric used his Linkedin profile to apply for jobs. He contacted numerous people that he knew through JMS and others. He used Facebook and email searching for opportunities. He did not use an employment agency. With time he increased his focus on social media companies with the idea that he might be hired in some role to work in the digital media world. He produced copies of various communications he had with what he hoped might be prospective employers or those who might have advice for where he could seek employment. He received offers from a few friends to work solely on a commission basis. Eric rejected these offers because he needed a guaranteed salary. He received an offer on June 19, 2013 from Cue Digital Media Inc in Toronto to work as an Online Editor with a salary of $35,000. Eric has accepted this job offer and will start next week.

Catherine’s Circumstances

[58] Since the end of the attempted reconciliation in March 2010, Catherine and the children have continued to live in her Toronto apartment. She has been working on her PHD and is on track to complete it within 1½ to 2 years.

[59] It is admirable that Catherine has been able to pursue her goal to obtain a PHD while caring for two children with no financial support from Eric since November 2011. I fully recognize that this has been an exceedingly difficult journey. She is obviously a bright and capable young woman.

[60] Catherine has finished all of her PHD course work. This spring she passed her written exams and the oral examination. She must complete a paper this summer and prepare a thesis proposal due this fall. She will spend the summer at her mother’s home in Quebec. Here she will complete her paper and thesis proposal and can rely on her mother to help care for the children.

[61] Assuming her thesis proposal is accepted, Catherine will commence her field work and final thesis this fall. She expects to be ready to defend her thesis by September 2015. When her thesis proposal is accepted, she will be eligible to apply for paid teaching positions while working on completion of her PHD.

[62] With a PHD, Catherine plans to apply for a University professorship. Her area of study is a growing field in university religion departments that are expanding into the non-traditional religious studies. Her thesis looks at the use of hypnosis in the field of religion, social studies and anthropology. She is well positioned to succeed and has one of the top researchers in this field acting as her mentor. In addition, Catherine’s multi-linguistic skills will be an asset as she applies for professorships. Starting salaries for professors run from $60K to 70K and the five year average for professors in Ontario is $95K.

[63] Her June 6, 2013 financial statement confirms she has a monthly income of $2,690.17 or $32,282.04 yearly. This consists of monthly income of $770 (child tax benefit) and on average $1,920.17 a month in funding that she receives as a PHD student. Catherine has one guaranteed year left of the PHD funding. Five years of funding are guaranteed. This means that her last year of study will not be funded. However, Catherine explained that the University usually covers the tuition for this last year and paid instructor positions are usually offered.

[64] The expenses listed in Catherine’s financial statement are projected expenses assuming she could afford to incur them. She testified that her actual expenses are about $4,529 a month which exceeds her monthly income of $2,690.17.The largest monthly expense is rent of $1,894.74. After separation, Catherine entered into a consumer proposal to settle all of her credit card debt. She has been paying $300 a month since entering into the proposal. Currently, she owes $9,000. She owes her lawyer $32,967.33. He has said that she can pay it when able to do so. Lastly she owes her mother $15,000.

[65] An earlier financial statement from Catherine revealed that she borrowed $15,000 from her friend Jeff Rabin. He has waived the debt and has provided Catherine with considerable financial help since separation. Other friends who are financially able to help have also given Catherine money. On occasion Eric’s parents send her money. This winter, his mother paid $1,000 for Catherine’s hydro bill. Catherine has received considerable help from her own mother. Recently, Catherine has been relying on her mother to pay her rent. Her mother took out a small mortgage so that she could give Catherine some money. This of course worries Catherine because her mother is not working full time. Catherine is on a waiting list for an apartment at the University that would be somewhat less expensive than her current apartment.

[66] I will now turn to the issues to be decided

Should Eric pay Ongoing Child Support?

[67] The issue is not whether Eric should pay child support but rather what income should be used to determine the amount of child support.

[68] Eric agrees that he should pay child support. He asks the court to set child support using his new income of $35,000. The Child Support Guideline (“CSG”) amount for two children is $508.

[69] Catherine disagrees. She is suspicious of Eric. In her view, Eric deliberately stopped running his business as soon as he was faced with the court orders to pay support. She argues that he could have continued earning an income through JMS but says that he sabotaged his ability to earn an income based on the way he ran the company.

[70] She believes that he has intentionally concealed income but there is no evidence to support this belief.

[71] Catherine admits that JMS was insolvent in 2011 because of the huge debt load that existed. She argues that Eric always carried this debt load and, as a result, there has been no change in circumstances that would allow the court to vary the Greer J. support order. As a result, she says that Greer J’s order must not be varied.

[72] Section 37(2.1) of the Family Law Act, R.S.O. 1990, c. F.3 gives the court the power to change a child support order. It states:

(2.1) In the case of an order for support of a child, if the court is satisfied that there has been a change in circumstances within the meaning of the child support guidelines or that evidence not available on the previous hearing has become available, the court may,

(a) discharge, vary or suspend a term of the order, prospectively or retroactively;

(b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and

(c) make any other order for the support of a child that the court could make on an application under section 33.

[73] A change in circumstances under the meaning of the CSG is dealt with in s. 14 of the CSG as follows:

14. For the purposes of subsection 37 (2.2) of the Act and subsection 17 (4) of the Divorce Act (Canada), any one of the following constitutes a change of circumstances that gives rise to the making of a variation order:

15. In the case where the amount of child support includes a determination made in accordance with the table, any change in circumstances that would result in a different order for the support of a child or any provision thereof.

16. In the case where the amount of child support does not include a determination made in accordance with a table, any change in the condition, means, needs or other circumstances of either parent or spouse or of any child who is entitled to support.

17. In the case of an order made under the Divorce Act (Canada) before May 1, 1997, the coming into force of section 15.1 of that Act, enacted by section 2 of chapter 1 of the Statutes of Canada, (1997).

18. In the case of an order made under the Act, the coming into force of subsection 33 (11) of the Act.

[74] When Greer J. made her order, she had three years of income that she was permitted to average pursuant to s. 17 of the CSG. As well, she had evidence that allowed her at the time to impute additional income to Eric. Those circumstances that Greer J. relied on no longer exist. Eric has not worked since September 2011. As of July 2013, he will be employed and earn an income of $35,000. In my view, this new income is a change in circumstances pursuant to s. 14(1) of the CSG.

[75] Going forward, I order that Eric pay child support of $508 a month for two children based on an income of $35,000. This order is effective as of August 1 2013. A support deduction order will be issued.

Should Eric Pay Ongoing Spousal Support ?

[76] Justice Greer’s order requires Eric to pay $500 a month for spousal support.

[77] Section 37(2) of the Family Law Act provides for a variation of a spousal support order as follows:

(2) In the case of an order for support of a spouse or parent, if the court is satisfied that there has been a material change in the dependant’s or respondent’s circumstances or that evidence not available on the previous hearing has become available, the court may,

(a) discharge, vary or suspend a term of the order, prospectively or retroactively;

(b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and

(c) make any other order under section 34 that the court considers appropriate in the circumstances referred to in section 33.

[78] In my view, there has been a material change in Eric’s circumstances since the Greer J order was issued. Catherine is correct that Eric carried considerable debt when this order was made and the debt still exists today. However, Eric’s personal circumstances have materially changed. The circumstances of his debt have grown worse. His credit cards have been cancelled, he has no fixed address, he relies on social assistance and has no cell phone or PO Box. He has searched for a job and, but for the offer he has accepted, he has had no success in securing a job.

[79] As noted above, Catherine believes that Eric deliberately stopped running his business and could have continued earning an income in the car racing industry. I appreciate that she may be suspicious of Eric but suspicion alone is not enough to conclude that he deliberately made decisions to avoid paying support. The evidence that Eric produced confirms that the debt is real. The financial statements of JMS confirm that the financial health of the business was declining every year. He owes over $300,000 to numerous creditors and all of his credit cards have been cancelled. I do not accept that Eric would intentionally run his business into the ground or that he would chose to shut it down rather than generate income and create a situation where he is on social assistance, has no fixed address and no money to even own a cell phone or rent a PO Box.

[80] Section 37 of the Family Law Act allows the court to grant a variety of relief. Before turning to what relief is appropriate, it is important to consider ss. 33(8) and (9) of the Family Law Act. Section 33(8) sets out the purpose of a spousal support order and s. 33(9) provides a list of the factors that the court should consider when determining the amount and duration if any of spousal support. These sections are out below:

33 …

(8) An order for the support of a spouse should,

(a) recognize the spouse’s contribution to the relationship and the economic consequences of the relationship for the spouse;

(b) share the economic burden of child support equitably;

(c) make fair provision to assist the spouse to become able to contribute to his or her own support; and

(d) relieve financial hardship, if this has not been done by orders under Parts I (Family Property) and II (Matrimonial Home).

(9) In determining the amount and duration, if any, of support for a spouse or parent in relation to need, the court shall consider all the circumstances of the parties, including,

(a) the dependant’s and respondent’s current assets and means;

(b) the assets and means that the dependant and respondent are likely to have in the future;

(c) the dependant’s capacity to contribute to his or her own support;

(d) the respondent’s capacity to provide support;

(e) the dependant’s and respondent’s age and physical and mental health;

(f) the dependant’s needs, in determining which the court shall have regard to the accustomed standard of living while the parties resided together;

(g) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures;

(h) any legal obligation of the respondent or dependant to provide support for another person;

(i) the desirability of the dependant or respondent remaining at home to care for a child;

(j) a contribution by the dependant to the realization of the respondent’s career potential;

(k) Repealed: 1997, c. 20, s. 3 (3).

(l) if the dependant is a spouse,

(i) the length of time the dependant and respondent cohabited,

(ii) the effect on the spouse’s earning capacity of the responsibilities assumed during cohabitation,

(iii) whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents,

(iv) whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents,

(v) any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse were devoting the time spent in performing that service in remunerative employment and were contributing the earnings to the family’s support,

(v.1) Repealed: 2005, c. 5, s. 27 (12).

(vi) the effect on the spouse’s earnings and career development of the responsibility of caring for a child; and

(m) any other legal right of the dependant to support, other than out of public money.

[81] Since payment of the initial arrears in November 2011, Catherine has received no child support or spousal support and has been solely responsible for the care of the children while working on her PHD. Fortunately, she has had help from friends and family, but a parent should not have to rely on these sources of financial help.

[82] For the reasons that follow, I order that Eric pay Catherine monthly spousal support fixed at $192. This payment is to start on August, 1 2013 and the last payment will be July 1 2015. On this date spousal support will terminate.

[83] At the outset of this trial, Eric stated that with his new job he is “sure” that he “can live with paying $700 a month” to Catherine. He views this as child support and recognizes that this is more than the table amount under the CSG. He suggested this amount because at the start of their relationship he says that they signed an agreement that $700 would be paid for child support if they had two children and they separated. An unsigned copy of the agreement was provided by Eric during the trial.

[84] The table amount of child support and a spousal support order of $192 a month is $700 a month. I am not ordering Eric to pay this additional $192 in spousal support because of the agreement. Catherine was never questioned about the agreement and a signed copy was not produced. In the context of testifying about this agreement, Eric expressed his willingness to pay a total of $700 in support. This provides me with evidence of his capacity to contribute to spousal support.

[85] Spousal support in this case will assist Catherine and the need for spousal support is clear. She cannot meet all of her expenses on the minimal income she receives and her guaranteed PHD funding will end after this academic year.

[86] Catherine has a promising academic career ahead of her and she is confident that she will find employment. She needs assistance over the next 2 year period while she finishes her PHD and applies for teaching positions. I have fixed a termination date for the spousal support because Catherine will be eligible to apply for a paid teaching position once her thesis is accepted. When she achieves her PHD in 2015 as expected, she can apply for a professorship and her capacity to earn an income in this role is significant.

[87] I appreciate that $192 is a minimal contribution to Catherine’s daily expenses. Given Eric’s dire financial circumstances I have some reluctance even making this order. However, I do so in the face of Catherine’s real need and Eric’s willingness to make the extra payment.

Should the Arrears be Rescinded?

[88] I have the power to discharge the arrears under ss. 37 (2) and (2.1) of the Family Law Act. This discretion exists even when the party seeking the relief has not complied with an existing order. I rely on Friend v. Paul [2006] O.J. No. 5315 at paras. 20-21 as follows:

20 The court has the discretion to rescind arrears even where a party has not complied with an existing order.

21 The factors to be considered in determining whether arrears should be rescinded or varied are: the nature of the obligation to support, whether contractual, statutory or judicial; the ongoing financial capacity of the respondent spouse; the ongoing need of the custodial parent and the dependent child; unreasonable and unexplained delay on the part of the custodial party to enforce the support obligations; unreasonable and unexplained delay on the part of the payor to seek relief from the support obligation; and whether the payment of substantial arrears will cause undue hardship (Gray v. Gray, 1983 4531 (ON SC), [1983] O.J. No. 2313 at para. 8; referred to in DiFrancesco v. Couto (2001), 2001 8613 (ON CA), 56 O.R. (3d) 363 (C.A.) at para. 23).

[89] Catherine is adamant that the arrears must not be discharged. She would rather have the arrears stand and receive no support going forward. She wants to keep the pressure on Eric because she believes his family will come to the rescue. She says that his parents will never allow a situation to develop that would place Eric in jail for non-payment. This is Catherine’s belief. I have no evidence to support the belief and in any event Eric’s parents are not obliged to pay the arrears. I have little if any evidence about Eric’s relationship with his parents. They obviously know about his bleak circumstances and yet they have offered minimal financial support for the children.

[90] The arrears in this case are substantial. There is no evidence to show that there is any prospect of the arrears being paid. To require Eric to pay the arrears would cause him undue hardship. This is because of the extreme financial circumstances that he is faced with. His debt is significant. While he has a new job, his income is modest and he must pay child and spousal support as I have ordered. He needs to find a place to live and start putting the pieces of his life back together again. If the arrears stand, his license and passport would still be suspended and he would likely face further enforcement sanctions.

[91] Simply put, Eric does not have the financial capacity to pay the arrears. Continued enforcement of the arrears will jeopardize his ability to earn an income. He needs his driver’s license and passport so he can travel as required for work.

[92] I appreciate Catherine’s frustration with Eric. I do not minimize the difficult circumstances that she has faced since separation. Fortunately, Catherine has hope and a promising future as a professor. While in large part Eric has himself to blame for his financial ruin, he is a broken man. With a job starting next week, Eric has the opportunity to get back on his feet and start earning an income. It is critically important that he rebuild his life as a parent and a responsible income earner. His children need his support. In my view, there is no prospect of him succeeding if the arrears are not rescinded.

[93] While I recognize the need of the children and Catherine for support, continued enforcement of arrears in the circumstances of this case will not help. Instead, Eric can start to contribute to these needs by paying $700 a month as I have ordered.

[94] Lastly, Eric has not delayed in his request to rescind the arrears. Previous motions for this relief before Justices Backhouse and Greer were dismissed. They were not satisfied on the evidence before them that rescission of arrears was justified and frankly they questioned Eric’s evidence that he was unable to generate income in his business to pay support. These were interim motions where the court only had affidavit evidence. As the trial judge, I have had the benefit of oral testimony and extensive documentary evidence. I have received up to date evidence about Eric’s circumstances and I have been able to assess the credibility of the parties. I add that this is not a case where one party is credible and the other is not. I consider them both to be credible. As I have explained, the facts demonstrate that Eric is in a very precarious and difficult financial situation. He is desperate to try and start over. I acknowledge that Catherine is suspicious of Eric and does not believe him, but this is not evidence.

conclusion

[95] I make the following orders:

(1) The order of Justice Greer dated December 9, 2011 is terminated.

(2) Effective June 30, 2013, I discharge and rescind all existing arrears of child support and spousal support together with any interest and administrative fees that have accrued.

(3) Effective August 1, 2013, I order Eric Jensen to pay child support for two children in the amount of $508 a month based on his current salary of $35,000 a year until further order of this court.

(4) Effective August 1, 2013, I order Eric Jensen to pay Catherine Lemieux spousal support of $192 a month until July 1, 2015, after which time spousal support is terminated. The last spousal support payment is to be made on July 1, 2015.

(5) A support deduction order is issued.

(6) Pursuant to the Child Support Guidelines, commencing on June 1, 2014, and every year thereafter on the 1^st day of June, the parties will exchange income tax returns and notices of assessment for as long as child support is owing.

(7) Eric Jensen may take out an order consistent with paragraph 95 of this judgment without the need to obtain the approval of the respondent as to the form and content of the order. He will deliver a copy of the order to the respondent.

C. Horkins J.

Released: June 28, 2013

COURT FILE NO.: FS-10-16764-00

DATE: 20130628

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

REASONS FOR JUDGMENT

C. Horkins J.

Released: June 28, 2013