ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
GILLES LEVESQUE
Applicant
– and –
KRISTY SOREL (CHARKO)
Respondent
Ross C. Stewart, for the Applicant
Judy L. Antymniuk, for the Respondent
HEARD at Ottawa: June 18, 2013
REASONS FOR JUDGMENT
Kane J.
1The Respondent mother, on January 29, 2013, filed a motion to change the final consent Order of McLean J. dated June 3, 2008 (“2008 Order”).
2Specifically, the mother in that motion requested that the Applicant father pay to her the offset Guideline amount of child support, retroactive to 2008, together with his proportionate share of s. 7 expenses. The mother further sought compliance with the obligation to transfer an R.E.S.P. into her name, pursuant to the final Order of MacKinnon J. dated December 10, 2007 (“2007 Order”). The mother finally sought an order that she be named as beneficiary in trust of an insurance policy sufficient to secure child support.
3Paragraph 22(b) of the 2007 Order prohibits the Respondent mother from seeking to vary the amount of child support prior to March 1, 2013.
4The mother served a new Notice of Motion dated June 5, 2013, seeking an order:
(a) varying the 2008 Order, such that the father is to pay child support in accordance with the Guidelines commencing January 1, 2013;
(b) that the father pay his proportionate share of s. 7 expenses;
(c) that the father transfer an R.E.S.P. (CIBC-34979), which has a current value of some $17,000 into her name only; and
(d) that the father pay her support arrears owing as of December 31, 2012, in the amount of $22,183, less the current $17,000 value of the R.E.S.P., resulting in a balance of some $5,183.
5The father opposes the variations being requested and seeks a dismissal of this motion together with costs.
6The parties lived in a common law relationship from 2001 until 2005 whereupon they separated. They had one child together, a son, born October 19, 2003. This child is currently 9 years of age, and according to the mother, has been diagnosed with Attention Deficit Disorder.
7On consent, this son resides 50 percent of the time with each parent.
8Subsequent to their separation, each party entered into a new relationship or marriage. The mother and her partner have one or more children of that relationship.
9Each of the parents was employed at the time they separated in 2005. They continue to be gainfully employed. The mother’s and the father’s current annual income respectively is $57,000 and $104,000. At the time of the 2007 Order, the annual income of the mother and the father, respectively, was $39,000 and $91,000.
Variation Terms Now Consented To
10On consent, the parties hereby agree that the 2007 and the 2008 Final Orders shall be varied by the following provisions.
11Commencing June 1, 2013, the father is to pay to the mother offset Guideline Child Support based upon their above current income levels, in the amount of $421 per month. The current ratio of income between the parties to establish this offset amount is 65.6 percent in the case of the father, and 34.4 percent in the case of the mother.
12Commencing June 1, 2013, and thereafter, the father shall pay 65.6 percent of the extraordinary s. (7) expenses of the child. The mother shall pay 34.4 percent of such expenses. Such expenses are to be agreed upon between the parents. The father must be reasonable as to which expenses shall be accepted as extraordinary.
13On June 1st of each year, each of the parties shall provide financial disclosure to the other consisting of a photocopy of their previous year’s income tax return, including all enclosures and a copy of the Notice of Assessment in relation thereto.
14The mother may re-file her previous income tax returns back to and including the period commencing January 1, 2008 and claim as a deduction, full daycare costs associated with the child.
15Any refund entitlement resulting from such re-filing by the mother of income tax returns shall, upon receipt, be shared with the father in proportion to their respective incomes for the year of such refund.
16As security for their obligation to contribute towards their son’s support, each of the parties shall obtain life insurance on their life. Such policies shall name the other parent as beneficiary, in trust for the child. The amount of life insurance coverage shall be $100,000 in the case of the father and $50,000 in the case of the mother.
Issues
17The issues to be determined by this court consists of;
(a) the mother’s claim for arrears of offset child support and the proportionate cost of daycare expenses for the period January 1, 2008 until May 1, 2013. Those arrears total $24,420;
(b) in whose name the current R.E.S.P. should be registered; and
(c) which of the parents is entitled to what proportion of the current principal and interest balance of such R.E.S.P.?
Final 2007 Order
18The 2007 Order is comprehensive. It was entered into after extensive negotiations with each party at the time represented by legal counsel, on consent, and was a final order.
19The provisions in the 2007 Order provide that:
(a) the child is to spend an equal amount of time with each parent;
(b) the father is to have final authority regarding education and religious upbringing. The mother is assigned final authority on issues as to healthcare, including counseling;
(c) the child is to remain enrolled in Katimavik Elementary school until June, 2009, at which point the selection of the child’s school shall be reviewed;
(d) the father is required to pay $400 child support monthly to the mother commencing March 1, 2008, notwithstanding the Federal Child Support Guidelines. The $400 per month is agreed to be the appropriate amount to provide for the needs of the child. $400 was then $48 less than the amount payable under such Guidelines;
(e) the father consents to pay off the loan on a motor vehicle with the vehicle to be transferred into the mother’s name;
(f) the mother agrees not to seek to vary the $400 per month child support payment before March 1, 2013. That five year period of fixed child support payments is meant to indemnify the applicant for debts assumed by him during the course of the relationship;
(g) the eligible Dependent Tax Credit and the Child Federal Tax Credit were to be claimed in alternate years by each parent;
(h) the parties were joint holders of an R.E.S.P. with a value of some $4,000. The father was to resign as a joint account holder, with the mother to be the sole holder thereof. The value of that R.E.S.P. was to be maintained by the mother, solely for the benefit of the child;
(i) there was to be no sharing of any s. 7 extraordinary expenses less than $200. Any such expense in excess of $200 was to be paid on a proportionate basis;
(j) other than the father’s obligation to pay-off the automobile bank loan, all assets and debts were divided between the parties; and
(k) each party waived and abandoned any current or future claim against the other for the payment of money.
Final 2008 Order
20Five months after entering into the 2007 Order, the parties re-attended in court and obtained the 2008 Order on consent. Each party was represented by counsel.
21The 2008 Order varies the 2007 Order.
22There is correspondence between the parties disclosed by the father leading up to the agreement and issuance of the 2008 Order. That correspondence reflects that the parties at the time each had R.E.S.P. accounts. The father was suggesting possible ways to maximize the tax benefits for government paid subsidies in relation to their son.
23That correspondence discloses a negotiation between the parties. The father suggested alterations regarding child support, daycare costs and an R.E.S.P. The father accepted points insisted upon by the mother which include that the child remain in his existing school until the end of grade 8 which is a variation of the 2007 Order which retained the child at that school for two years only.
24The 2007 Order prohibiting the mother from seeking a variation of child support did not prohibit the father from suggesting changes.
25It is not accurate to suggest that the father forced amendments to the 2007 Order as contained in the 2008 Order. The father may have initiated the discussions however the mother was negotiating and obtaining her objectives as to keeping the child in the same school, notwithstanding the father’s exclusive authority as to education.
26The mother, in her affidavit states, “Gilles told me that if I wanted Sebastian to remain at Katimavik elementary school, I had to agree to the proposed changes to child support.” The father’s February 8, 2008 email states:
I am reluctant of wording to a specific school if either of us moves. Would the following wording be acceptable to you? “Sebastian will continue to attend an early French-emersion within the boundaries of the Ottawa-Carleton School Board until grade 8. Obviously, we are both committed to the Katimavik area as well as the school, but I don’t think it’s wise to mention a specific school.
27The mother rejected this position.
28On February 14, 2008, the mother said she would agree to nothing unless the father extended the 2 years school guarantee to 8 years, namely 2017.
29On February 21, 2008, the mother said she refused to change the 2007 Order.
30These are not statements of someone who is unaware of her options, rights or is being bullied into accepting change.
31It is not accurate as suggested by the mother that she had no other option but to agree to the amendments contained in the 2008 Order and thereby was forced to consent. The mother persisted and obtained her goal prohibiting a change of school one year before the expiration of the negotiated certainty of 2009.
32The mother’s insistence on the school issue effectively varied the following provisions in the 2007 Order, namely:
(a) the father was to decide educational matters;
(b) the assurance as to school ended in 2009; and
(c) the requirement to discuss school selection after June, 2009.
33The 2008 Order contains the following provisions:
(a) the 2008 Order varies the 2007 Order, and provides that the child will remain in his present school until June, 2017;
(b) the father’s obligation to pay $400 child support each month to the mother was terminated. That obligation was replaced by a provision by which the father:
(i) Assumed responsibility for 100 percent of the childcare costs, then $600 per month (mother’s share of which would be $200 under the 2007 Order).
(ii) In addition to the father paying the mother’s above $200 share of monthly childcare costs, the father was required to make a monthly contribution into a R.E.S.P. for the benefit of the child.
(iii) The father releases his interest in, and the mother thereafter was entitled to the full benefit of the Universal Childcare Benefit, the Canada Child Tax Benefit, and the Federal Child Tax benefit.
(iv) The R.E.S.P. account then in the mother’s name was amended to place it in the joint name of the parents to permit the father to contribute into the same.
(v) The mother acknowledges that the result of the 2008 Order was that the father paid the mother’s share of the childcare costs, or $200 per month, but he was to contribute $200 monthly into an R.E.S.P. registered in both of their names.
34The mother was represented by counsel at the time of entering into the consent 2008 Order. She had a prior existing relationship with her legal counsel. The father contributed $200 towards her legal fees. It is inaccurate as she suggests to state that the value of legal services she received upon entering into the 2008 Order was limited to $200 of legal advice as there is no evidence of that.
35The father’s “costs” under the 2007 Order included $400 in child support plus $400 of a $600 cost of childcare, totalling approximately $800 per month.
36The 2008 Order resulted in a comparable monthly $800 cost to the father of:
(a) $600 for daycare; and
(b) $200 payment into an R.E.S.P.
37The important advantages however to the father obtained via the 2008 Order was that the $200 monthly payment into an R.E.S.P. was:
(a) diverted from the mother and invested to offset otherwise future s. 7 university expense for the child for which the father would be primarily liable; and
(b) such contributions could attract government contributions and market interest to offset such future educational expenses.
38What the mother received in return was:
(a) her first priority of school certainty until 2017 which was a better result than she realistically could have anticipated through negotiations in 2009 as the father had ultimate authority on the subject;
(b) elimination of her existing monthly $200 childcare expense; and
(c) transfer to her of all benefits to the two tax credits which were shared under the 2007 Order, plus sole entitlement to the childcare benefit.
39A subsequent R.E.S.P. account (CIBC-34979) was later opened in the father’s name only into which the father was to pay $200 per month under the 2008 Order. That amount has increased by contributions under government programs and interest earned.
40The evidence is insufficient to establish that the provisions in the 2008 Order, including the father’s obligations to pay joint debt obligation, was an unfair or unreasonable agreement.
41The threshold to set aside the prohibition against seeking to vary child support until 2013 or to set aside the 2008 Order has not been met.
42The mother is prohibited from claiming arrears of child support commencing January 1, 2008, because:
(a) she consented to the 2007 Order that she would make no such claim before March 1, 2013;
(b) in accordance with the 2007 Order, she agreed $400 was the limit until she did not seek such remedy prior to January, 2013; and
(c) she sought no such entitlement prior to January of 2013.
43To hold otherwise is to annul provisions in the 2008 Order and set aside the principal thrust of the 2007 Order, namely $400 per month with no variation thereof until 2013.
R.E.S.P. ACCOUNT
44The mother’s inability to recover arrears of child support does not however address the father’s sole ownership and control of payments pursuant to the 2008 Order in the form of $200 per month contributions into an R.E.S.P., who may withdraw how much from the R.E.S.P. and the registered ownership of that account.
45It appears that the father has not made monthly but rather annual contributions into the R.E.S.P. opened in his name only.
46The mother has repeatedly requested the father to produce copies of the R.E.S.P. statements reflecting his payments under the 2008 Order. The father has not included those statements among the documents he has filed on this motion.
47Under the provisions of the Income Tax Act:
(a) contributions made by a parent into an R.E.S.P. are not tax deductible;
(b) income earned within the R.E.S.P. is not subject to tax;
(c) payments out of the R.E.S.P. to the beneficiary child/student are considered as income and subject to income tax in the hands of the child;
(d) R.E.S.P.’s are created through a contract between a subscriber parent and a financial institution;
(e) depending upon the terms of that contract, income earned within the R.E.S.P. may be made payable to the subscribing parent;
(f) payments into an R.E.S.P. entitle modest income families entitled to the national child benefits supplement to an annual supplement paid into the R.E.S.P.; and
(g) there is no income tax liability to the father or the mother created:
(i) if the registered owner of the R.E.S.P. into which the father has been contributing is changed from the father alone to the father and mother jointly; or
(ii) if the mother opens a new R.E.S.P., with the child as beneficiary, and the father cause the transfer of a portion of the value in his R.E.S.P. into the mother’s R.E.S.P.
48The mother recovered one-half and not the full contributions reflected in paragraph 25 of the 2007 Order.
49The father obtained the mother’s consent to replace his obligation to pay child support partially by the requirement in the 2008 Order that he pay $200 per month thereafter into an R.E.S.P. which is now registered in his name only.
50The issues undecided in the 2008 Order include:
(a) the R.E.S.P. will be in which parent’s name?
(b) which parent is credited with how much from future R.E.S.P. withdrawals against future educational costs of the child?
(c) who decides how much should be withdrawn annually as these educational costs are incurred (eg. 100% vs. 50% of actual annual costs)?
(d) may the father withdraw any portion of the income earned to date from the R.E.S.P. for his personal benefit?
51The parties have now reinstituted payment of child support to the mother without advising how that impacts on the father’s obligations under paragraph 1(c) of the 2008 Order.
52It would be unfair if;
(a) either party was credited with 100 percent of annual partial withdrawals from the R.E.S.P. for annual education costs thereby requiring the other party to pay his or her proportionate share of those annual costs; and
(b) the father withdrew any money from the R.E.S.P. for his personal benefit.
53In the interest of avoiding further litigation the R.E.S.P. with a current balance of almost $17,000, shall be amended in that the mother and the father shall become the joint owners thereof with the child remaining as beneficiary.
54The result of the above order:
(a) maintains the child as sole beneficiary of the R.E.S.P.;
(b) respects the intended agreement in 2008 by which the father’s obligation to pay child support was substituted by his assumption of the obligation to pay childcare costs and his undertaking to pay the other $200 monthly into an R.E.S.P.;
(c) maintains the parties intention that the portion of child support payable in 2007 be diverted and saved within an R.E.S.P.;
(d) prevents any withdrawals without consent from the R.E.S.P. and
(e) avoids the potential of an unintended windfall benefit to the father when the child incurs future educational costs.
55Annual education costs shall be paid in full from the R.E.S.P. until extinguishment of the funds therein. Educational costs thereafter will be paid by the parties based on their then proportionate income levels.
56The parties by June 30th of each year will send a copy of their full income tax return and notice of assessment from the previous year to the other party.
COSTS
57The parties within 30 days may submit brief written submissions as to costs keeping in mind that it appears, subject to offers, that success has been divided considering all terms consented to and decided.
Kane J.
Released: August 21, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GILLES LEVESQUE
Applicant
– and –
KRISTY SOREL (CHARKO)
Respondent
REASONS FOR JUDGMENT
Kane J.
Released: August 21, 2013