ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: FS-11-0185-00
DATE: October 11, 2013
B E T W E E N:
Kimberly Rose Kelly
Chris Arnone, for the Applicant
Applicant
- and -
Michael Lawrence Kelly
Self Represented
Respondent
HEARD: October 01, 2013,
at Thunder Bay, Ontario
Regional Senior Justice H.M. Pierce
Reasons For Judgment
Introduction
[1] The parties are the parents of one child, Hunter Lawrence Kelly born April 12, 2003. They separated on July 7, 2010, after five years of marriage. Mr. Kelly appeared at the case conference but not at the settlement conference. Although the father filed an Answer, and was advised of the date of trial, he did not appear or file a financial statement as ordered. Mr. Kelly’s Answer seeks access to the child but does not contest custody. The application was commenced in June, 2011.
[2] The father has not paid child support since separation. The mother was forced to make an assignment in bankruptcy as a result of the fathers failure to assume financial responsibility upon separation. The matrimonial home was lost because of the fathers default.
[3] For reasons given orally at the trial, the applicant mother was awarded custody of the child. Because the father is struggling with addictions and because he has not seen the child in more than three years, I ordered that the father not have access to the child without consent of the mother or further order of the court. The balance of the reasons for corollary relief was reserved. The following are those reasons.
The Father’s Income
[4] The mother asks the court to impute income of $60,000 to the father for purposes of calculating current and retroactive child support and section 7 expenses, based on his qualification and work history as a journeyman electrician. In the alternative, she requests that the court impute income at that level from January 1, 2012, to September 30, 2012, and thereafter, in the amount of $12,480 based on income from the Ontario Disability Support Plan (“ODSP”). She seeks an order vesting in her one half of the father’s locked in RRSP to pay or secure support and costs, as set out in s. 12 of the Child Support Guidelines. It is her position that it is unlikely, because of his addiction and his failure to support the child or to pay costs, that he will voluntarily pay any order of the court. After a discussion with counsel, the mother also asked for a charging order against the RRSP in order to secure the payment of current and future support.
[5] The evidence before the court about the father’s income is scanty, due to the father’s failure to file a financial statement and proof of income, despite being ordered to do so. In these circumstances, the court can draw an adverse inference against the father. Exhibit 3 is the father’s record of employment from Resolute where he was employed as a journeyman electrician between July 20, 2012, and September 10, 2012. The record shows that Mr. Kelly was dismissed. His total insurable earnings were $9,862.12.
[6] I agree that the father, with his journeyman credentials, is capable of earning $60,000 per year. As there is some record that the father has been employed as a journeyman during 2012, I impute income to him of $60,000 per year for the period January – September, 2012.
[7] It is impossible to know the father’s complete earning history since separation without his cooperation. However, he produced proof of ODSP income at the case conference he attended in October, 2012. Exhibit 4 is the father’s ODSP benefit stub for October, 2012 showing a basic needs benefit of $590 paid plus shelter benefit of $450 for a total of $1,040 per month. The stub indicates that the actual amount paid to the father is $590, as the shelter amount is paid directly to the landlord. On an annual basis, I find the father’s income to be $12,480, commencing October 1, 2012. This is substantially below the poverty line.
[8] Section 4 of Schedule III to section 16 of the Guidelines provides that the father’s income will be reduced by any amount of social assistance that is not attributable to the spouse. There is no evidence that the father has income attributable to others in his household.
[9] Unfortunately, the Child Support Guidelines afford the court very little discretion to award less than the table amount for payors with income below the poverty line unless there is a claim for hardship or other factors are present that are not relevant in this case. Here, the father has not appeared; nor has he pleaded hardship in his Answer. Although significantly impoverished while on OSDP, the Child Support Guidelines dictate that the father is still liable to pay child support, in that his income exceeds the table amount. Liability for child support starts with an annual income of $10,900. Whether demonstrably impoverished individuals should be liable for child support which deepens their poverty is a question of policy for Parliament.
Retroactive Child Support
[10] The father is liable for child support arrears from January to September 2012 of $546 per month x 9 months for a total of $4,914, based on imputed income of $60,000 per year.
[11] Commencing October 1, 2012, the father is liable for child support arrears of $48 per month x 12 months for a total of $576, based on ODSP income of $12,480 per year.
[12] Total arrears of child support payable by the father to the mother for the period between January 1, 2012, and September 30, 2013, are therefore $5,490.
Retroactive Section 7 Expenses
[13] The mother is employed in a permanent part-time position with annual income of $39,093 in 2012. Her position does not offer health insurance. She and Hunter live with her parents who assist with housing and child care when she works evening shifts. She, too, is struggling.
[14] Hunter suffers from asthma for which he requires medication. In 2012, the mother paid $632.55 for his drug expenses; of that sum, $509.63 was incurred between January and September. The balance, $122.92, was incurred after that time. In 2013 to the date of trial, she paid $432.49 for Hunter’s drugs.
[15] In addition, the mother arranged for Hunter to have counselling to deal with his feelings around the parties’ separation. Her account for counselling in 2011 was $420. She paid a further $240 for counselling services between January and April, 2012. Total expenses for counselling are $660.
[16] Finally, the mother has incurred expenses for child care while she works during professional development days at school, March Break and summer vacation. Expenses incurred from March – June 2012 are $595. During 2013, the costs to date are $515.
[17] There is no evidence as to the father’s income in 2011. The first indication he was receiving ODSP was at the case conference, a year ago. In the absence of evidence, I infer that the father was earning or was capable of earning $60,000 during 2011 and impute income of that amount to him for 2011.
[18] During periods when the father earned or had the capacity to earn $60,000 per year, his share of section 7 expenses is 61% while the mother’s is 39% based on each parent’s pro rata share of their combined incomes. The father is therefore liable for 61% x $509.63 = $310.87 for Hunter’s drug expenses from January to September, 2012.
[19] When the father is in receipt of ODSP, his pro rata share of responsibility for section 7 drug expenses is 24% while the mother’s share is 76%. The father is liable to pay 24% x $122.92 = $29.50 for drug expenses from October – December, 2012. The father is also liable for Hunter’s drug expenses during 2013 to the date of trial as follows: 24% x $423.49 = $101.64.
[20] With respect to counselling expenses, the father is liable to pay 61% x $660 = $402.60.
[21] As well, the father is responsible for child care expenses for 2012 of 61% x $595 = $362.95. For 2013, his share is 24% x $515 = $123.60.
[22] In summary, the father is liable for retroactive section 7 expenses in the amount of $1,331.16 from 2011 to September 2013.
Current Child Support
[23] The father is ordered is pay on-going child support commencing October 1, 2013, of $48 per month based on ODSP income of $12,480 per year. In addition, if the child and mother are eligible for coverage under any health, drug or dental plan for which the father is eligible, whether through his employment, ODSP, or otherwise, he is ordered to provide such coverage for them forthwith and provide the mother with proof of such coverage. Further, if the mother and/or child are, or become, eligible for medical coverage under the fathers plan, the father shall provide to the mother all required information, claim forms or cards to allow her to claim reimbursement of medical costs directly from the fathers medical plan.
Current Section 7 Expenses
[24] The child incurs average drug expenses of $50.71 per month based on total drug costs between January 2012 – September 2013 (21 months). The mother asks that the father pay 100% of these costs. There is no rationale for this submission, in my view. It is contrary to the statutory scheme in s. 7 of the Child Support Guidelines. The mothers income is modest, but far exceeds that of the father, so far as can be ascertained. I find the fathers obligation to pay the child`s drug expenses is 24% x $50.71 = $12.17 per month commencing October 1, 2013.
[25] The mother’s child care expense for the whole of 2012 was $595. Her expenses for 2013 are similar over 9 months of the year. The father takes no part in child care. It is probable that the mother will continue to incur child care expenses on this scale going forward. Her average monthly expense is about $50. The father is ordered to pay $50 x 24% = $12 per month commencing October 1, 2013, and monthly thereafter.
[26] The father is ordered to advise the mother forthwith of any change in his income and verify his income. Variation in child support shall be effective fifteen days after any change in the father’s income.
[27] Each party shall exchange income tax returns and notices of assessment annually, commencing May 1, 2014, for the purposes of calculating child support obligations.
Costs
[28] The father was previously ordered to pay costs of a settlement conference at which the father did not appear fixed at $750. Costs of a case conference for which the father was not prepared were reserved to the disposing judge. Because the case conference was not as productive as it could have been, had the father been prepared, he is ordered to pay costs fixed at $250.
[29] The mother seeks full indemnity costs of the application in the range of $3,500 - $4,000, including the uncontested hearing, the case conference, correspondence and preparation. There were no motions and no questioning. Disbursements are minimal. The trial took less than two hours. Conference costs have been dealt with. The father is of modest means. He has not appeared at the trial nor at the settlement conference. There is no reprehensible conduct on his part in the conduct of the litigation; he is simply absent. His absence has not unduly delayed the case. In view of the costs orders already made, costs of the application are fixed at $1,000. All costs in this proceeding are enforceable as child support by the Family Responsibility Office.
Securing Child Support
[30] Section 12 of the Child Support Guidelines authorizes the court to order an amount payable under a child support order be paid or secured, or paid and secured, as specified in the order.
[31] The mother seeks an order enforcing and securing the payment of child support by the father purchasing a life insurance policy, naming the child as beneficiary, and the mother as trustee. As well, she asks for vesting of one half of the father’s sole remaining asset in the mother in order to enforce the support judgment. The Court of Appeal approved of a vesting order in circumstances where the husband took deliberate steps to place his assets out of the reach of the wife so that she could not realize on an equalization payment due to her. An order was granted vesting the husband’s land in the wife: Lynch v. Segal, (2006) 2006 42240 (ON CA), 82 O.R. (3d) 641.
[32] The father’s asset is a Primerica Concert Series RRSP, account #80006387 in the approximate amount of $20,276.41 as of September 30, 2013. The RRSP is a locked-in investment, sometimes referred to as a LIRA.
[33] Prima facie, pensions are not subject to seizure. Section 66(1) of the Pension Benefits Act, R.S.O.1990, c. P.8 provides:
Money payable under a pension plan is exempt from execution, seizure or attachment.
[34] Section 66(4) of the Act limits the scope of s. 66(1) but caps the amount that may be transferred from the pension at one-half. Section 66(4) provides:
Despite subsection (1), payments under a pension or that result from a purchase or transfer under section 42 or 43, clause 48 (1) (b), section 67.3 or 67.4 or subsection 73 (2) are subject to execution, seizure or attachment in satisfaction of an order for support enforceable in Ontario to a maximum of one-half the money payable.
[35] This approach was used in Belton v. Belton, [2010] O.J. No. 1691 (S.C.J.) where the court determined that the court was limited by section 51 of the Pension Benefits Act from transferring more than 50% of a LIRA pension to a spouse for purposes of equalization. However, the court adopted the reasoning in Nicholas v. Nicholas, 1998 14871 (ON SC), [1998] O.J. No. 1750 (Gen. Div.), and concluded that section 51 of the Act deals with equalization of property, leaving transfer of the remaining half of the pension to satisfy support claims under section 65 of the Act: para. 25. Thus, in Belton, the court transferred half of the pension to the wife on account of property claims and the second half on account of support claims.
[36] In Thompson v. Gilchrist, (2012) 27 R.F.L. (7th) 83 (S.C.J.), there was no property claim. The court relied on the reasoning of the Court of Appeal in Trick v. Trick (2006), 2006 22926 (ON CA), 81 O.R. (3d) 241 in concluding that vesting 100% of the husband’s pension in the wife for purposes of support enforcement contravened subsection 66(4) of the Pension Benefits Act. The court in Thompson declined to transfer more than half the value of the husband’s pension to the wife.
[37] At trial, I asked counsel whether the remaining half of the RRSP might be subject to a charging order as a means of securing child support. I have now had the opportunity to review s. 65(1) of the Act which states:
Every transaction that purports to assign, charge, anticipate or give as security money payable under a pension plan is void.
[38] In my view, section 65(1) acts as an absolute bar to charging a pension in respect of child support ordered, or accruing in future. However, s. 66(4) of the Act permits one half of a pension to be seized to satisfy support enforceable in Ontario. In view of the father’s failure to support the child or to pay related costs, a vesting order to secure support is appropriate in this case. I agree with counsel that, because tax on an RRSP is a deferred, but inherent feature of the investment, the credit to the father on account of this judgment should be reduced by 20% to take account of the tax the mother will pay on it in her hands.
[39] The father is liable to the mother for retroactive support and section 7 expenses, current support and section 7 expenses from October, 2013, and costs of in the amount of $9,919.49. The value of his RRSP was approximately $20,276.41 as of September 30, 2013. One half its value is $10,138.20.
[40] One half of the value of the Primerica Concert RRSP, account #80006387 registered to the father shall be transferred to and vested in the mother, Kimberly Kelly on account of outstanding child support arrears (including section 7 expenses), current child support and section 7 expenses and costs incurred in pursuit of child support. Upon vesting of one half the RRSP in the mother, the father shall receive credit for this payment in the sum transferred less 20% for notional tax reduction. The court will retain jurisdiction to give directions or issue ancillary orders necessary to effect transfer and vesting of the RRSP in the mother.
[41] In the event that Primerica requires forms or other necessary documents to be executed to effect transfer, the mother is authorized to sign such documents in accordance with this judgment, as agent for the father.
[42] The father’s only remaining asset, the RRSP, is not sufficient to secure future child support payments. The father is therefore ordered to obtain and maintain life insurance on his life in the minimum amount of $150,000 with the child as the irrevocable beneficiary so long as he qualifies as a child of the marriage within the Divorce Act. The mother shall be irrevocably named as trustee of the policy. The father shall forthwith provide proof that he has obtained such insurance coverage and shall do so annually, commencing May 1, 2014.
[43] A support deduction order shall issue.
“original signed by RSJ H. Pierce”
Regional Senior Justice H.M. Pierce
Released: October 11, 2013
COURT FILE NO.: FS-11-0185-00
DATE: October 11, 2013
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Kimberly Rose Kelly
Applicant
- and –
Michael Lawrence Kelly
Respondent
REASONS FOR JUDGMENT
Pierce J.
Released: October 11, 2013
/ket