Reasons for Decision
Editor’s Note: Addendum released on March 20, 2014. Original judgment has been corrected with text of addendum appended.
BARRIE COURT FILE NO.: FC-04-1893
DATE: 20140319
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEFFERY DORION
Applicant
– and –
LISA MERKLEY (DORION)
Respondent
Jeff Dorion, Self-represented
Lisa Merkely (Dorion), Self-represented
HEARD: March 13, 2014
REASONS FOR DECISION
EBERHARD J.:
[1] The parties married on July 10, 1993.
[2] There are three children born of the relationship, namely: Meghan Alisa Dorion born October 9, 1992 (age 21), Scott Jefferey Dorion born September 6, 1995, (age 18), and Michael Theo Christopher Dorion born February 12, 1998 (age 15).
[3] The parties separated on June 1, 2004.
[4] The parties have joint custody in respect to the children (Meghan, Scott and Michael Dorion). The primary residence is with the father.
[5] Meghan is just finishing her fourth year of university and intends to enter an MA program next fall. She returns to the Applicant Father’s residence when school is not in session except in the summer of 2012 she volunteered in Africa for a month and in 2013 taught in Africa for two months. Scott plays hockey in Hamilton where he is billeted and the team pays room and board of $500 a month while he is there. He returns to the Applicant Father’s residence when hockey is not in session. Michael is in grade 10 and resides with the Applicant Father year round.
(a) History of Motions to Change
[6] The parties have been through much litigation over the years but this summary trial ends a period begun when in May 2011 (Tab 1) the Respondent Mother moved to vary the order of Wood J. dated April 25, 2009 in which the Respondent Mother was to pay Child Support Guideline table support of $1000/month for three children based on income of $50,800, half registration for hockey, and to negotiate Meghan’s post-secondary education expenses to replace guideline support commencing September 2010.
[7] The parties attended first appearance May 25, 2011, a DRO May 30, 2011, and a further DRO June 17, 2011 at which time “Temp” Minutes of Settlement were signed into an order by Olah J. varying the Wood order by requiring the Respondent Mother to pay “$823/month based on income of $54,700 for Scott and Michael for twelve months commencing July 1, 2011 and $253/month for each of the months commencing May 1, 2011 to September 1 of each year thereafter until May 1, 2014 at which time the support for the child Meghan shall cease.” The Wood order was also varied to address Meghan’s post-secondary education providing that “Each September Meghan’s school year expenses shall be calculated and from that sum will be deducted and funds (earnings) Meghan can contribute plus any RESPs, scholarships available to her. The difference payable for her school year will be paid by the parties in proportion to their incomes- Respondent at an average at $54,700 and the Applicant father at an average $80,000 at this time. The Respondent shall pay 40% and the Applicant shall pay 60% of the difference in school expenses.”
[8] The Respondent Mother acknowledges that in relation to the 2012/2013 school year there was agreement that she pay $4,400, Megan pay $4,400 and the Applicant Father pay $5,600.
[9] I find, from wording in various Minutes of Settlement from time to time and from the way they spoke in court about the issues, that when the parties spoke of “support” they were referring to “table support” in the Child Support Guidelines. They spoke separately of section 7 expenses and in particular separately as to the expenses for post-secondary education.
[10] In July and August 2012 an administrative dismissal had to be set aside (see Divorce Volume of the continuing record). On September 25, 2012 the Applicant Father brought a Motion to Change (tab 9) asserting the Respondent Mother had income from rental properties and seeking recalculation of support back to 2009.
[11] On January 28, 2013 the parties had a settlement conference before Olah J. The endorsement demonstrates procedural chaos as mediation “agreements” had occurred but not been converted into an order. Hence the Respondent Mother’s Motion to Change was still alive concerning Megan’s post-secondary education but new issues arising from Scott’s absence from the Applicant Father’s house for hockey season required a new Motion to Change. The Applicant Father brought the second Motion to Change on February 6, 2013 (tab 15). The parties had a DRO attendance February 20, 2013. The Respondent Mother had transferred her interest in the rental properties immediately following the discussion before Olah J. to her co-owner common law spouse, Mark Turcotte.
[12] On June 12, 2013, Olah J made recommendations in settlement conference which the Applicant Father discloses but which I must ignore. During the discussion however the Respondent Mother did accept an income figure including her rental income at $75,000. She has resiled from that admission based on legal and accounting advice. A November 6, 2013 settlement conference and Trial Management Conference followed, leading to the trial before me.
[13] I set out some of the history of the Motion to Change activity as the affidavits forming part of the evidence before me are confusing because they deal with evolving circumstances. I am much assisted by written opening statements which set forth the issues and what each party seeks. I heard oral evidence from the Applicant Father, the Respondent Mother and her two witnesses, Owen Quilty and Mark Turcotte to supplement the evidence contained in the affidavits in the continuing record and exhibits filed.
[14] Neither party produced 2013 income documentation though clearly relevant. The Applicant Father was late producing 2011 and 2012 T4 information and when produced it disclosed higher income than he had reported. The Respondent Mother was later producing her opening argument and has taken unilateral steps to set off one obligation against another. In general the most striking thing about disclosure was that the documents produced by either were not nearly so determinative as their confident assertions suggested. In focusing on trivial arguments they missed the big picture. For instance, the meaning of the documentation to prove payment of $750 as half of registration for hockey is disputed. Neither party explained the receipt in relation to the issue of whether the Applicant Mother’s half of registration was paid. I am unable to make a finding. The parties would like precise findings on issues between them involving small amounts but they did not marshal their evidence sufficiently to allow me to do so. Nor would I, because the results of this trial turn on broader themes.
(b) The Applicant Father’s income:
[15] The Applicant Father is a T4 employee. Any overtime is included in his T4. He is not permitted to take outside employment and none other is suggested. In 2011 he earned 86,062 and in 2012 he earned $95,755. He states he expects 2013 and thereafter to be in the range of $96,000-100,000. This is a foolish assertion for someone who says he wants the litigation to end. He could surely have supplied accurate 2013 information. I draw an adverse inference from late disclosure and the fact that in May 2011 he asserted $80,000 in a year that turned out to be $86.000 to find that his true income is likely to be at the high end of a range he states.
[16] The June 17, 2011 ratio (see paragraph 6 supra) was established using incomes of $54,700 for the Respondent Mother and $80,000 for the Applicant Father. He earned somewhat more in 2011 and substantially more in 2012 and expects to do so.
(c) The Respondent Mother’s income
[17] The Respondent Mother’s 2012 T4 shows $53, 170, 2011 $53,738.52, 2010 T4 income was $67,735.
[18] In her financial statement sworn October 19, 2012 she deposed her income from all sources was $54,700 and declared the rental properties as assets and their mortgages as debts. These rental properties raise the potential of income which was explored in court conferences.
[19] Owen Quilty is a CPA who prepares the tax returns for the Respondent Mother and Mr Turcotte. He did not testify as an expert but indicated that the only deductions taken from the gross revenues from the rental properties were mortgage interest, insurance and tax. This resulted in a loss or minimal income all reported on Mr. Turcotte’s tax returns. Naturally, the returns were completed on information received from Mr Turcotte. I have no reason to doubt Mr. Quilty’s evidence that only the interest component of the mortgage payment was expensed.
[20] The case law was presented to me in commentary form citing the Ontario case of Eager v Greaves (cited hereafter) and Alberta case of Hargrove v Holliday (2010 CarswellAlta 174). I located a recent SCJ case, Appu v. Appu [2014] O.J. No. 33 which nicely gathers together the manner courts have approached the analysis:
14 The applicant points to a line of cases commencing with Eager v. Graves (2002), 2002 45104 (ON CA), 29 R.F.L. (5th) 313 (Ont. C.A.) in support of the proposition that, with respect to rental property, only "hard costs" consisting of mortgage interest, property taxes and insurance are appropriate to deduct for child-support purposes. Eager was cited with approval in Wilkinson v. Wilkinson, 2008 ONCJ 96 (O.C.J.) and in Crabtree v. Crabtree 2009 16296 (Ont. S.C.J.).
15 I am not satisfied that that there is binding authority that, in all cases involving rental property, proper deductions for child-support purposes are necessarily limited to mortgage interest, property taxes and insurance.
16 It is noted that in Eager the trial judge, [2001] O.J. No. 4920, had attributed 70% of the rental income to the appellant, as payor, but gave no reasons for doing so. The appellant took the position that 40% was the more appropriate figure to use, taking into account mortgage interest, property taxes and insurance -- so-called "hard costs". The appellant did not claim deduction of any expenses beyond such "hard costs" and accordingly, the Court of Appeal was not called upon to consider whether any additional expenses, such as for repairs and maintenance, were properly deductible.
17 In Wilkinson, McSorley, J. applied Eager in holding that deductions for "hard costs" of mortgage interest, property taxes and insurance were appropriate, without carrying out any analysis as to why expenses beyond those categories should not be deductible.
18 In Crabtree, Blishen J., similarly applied Wilkinson and Eager without giving any express consideration to the deductibility of any expenses beyond mortgage interest, property taxes and insurance.
19 In the case of Murphy v. Bert, 2007 NSSC 376, [2007] N.S.J. No. 543, 2007 CarswellNS 611 (N.S.S.C.) at para. 34 (which was not cited by either counsel in argument on the present case), it was held that, in addition to mortgage interest, property taxes, water and insurance, expenses for ongoing repairs which were "necessary to maintain the rental properties" were properly deductible.
20 In my view, a determination must be made on the facts of each case as to whether a claimed expense was necessary in order to maintain the stream of rental income, or whether it was made to either acquire the property or to increase its value. An expenditure which, although necessary, is of a capital nature and may be said to increase the value of the property, such as a furnace or roof replacement, would not ordinarily be deductible in determining income for child-support purposes. The provision of support for a child should not be sacrificed for the purpose of acquiring property or building equity.
25 The onus is on the Respondent to show that the proposed deductions are reasonable within the meaning of the Child Support Guidelines. … [Emphasis added.]
[21] The fact finding regarding these factors is complicated by Mr. Turcotte’s evidence. He is bent on defeating the Applicant Father’s claims such that, by demeanour and by content, he did not present as a credible or reliable witness. Further, after the potential inclusion of rental income was discussed in court conferences not only did he and the Respondent Mother immediately arrange for the transfer of the properties to himself for $1 to “protect” the Respondent Mother, he also taunted the Applicant Father with emails which speak for themselves as to his belief that the wealth of the couple was increasing due to these investments.
[22] The onus is on the Respondent Mother payor to “show that the proposed deductions are reasonable within the meaning of the Child Support Guidelines” (Appu, para. 25, supra).
[23] I accept the evidence of Owen Quilty who testified that only “hard costs” of mortgage, insurance and taxes” were deducted and even so the income was negligible or a loss. He conceded that the revenue information he relied on came from Mr. Turcotte.
[24] No mortgage tables or evidence of any kind was placed before me to assess whether the interest component was consistent merely with maintaining the properties or enhanced to accelerate reduction of principal owed.
[25] Having regard to the patent animus and motive to protect the Respondent Mother, I draw an adverse inference that the management of these properties was designed so as not to enhance income potential available to the Respondent Mother to support her children in like manner as it would be if her first priority was to support her family. Mr. Turcotte’s taunt supports the opposite conclusion and the fact that they transferred title immediately after the potential inclusion into income was discussed demonstrates conduct by the Respondent Mother for the express purpose of avoiding any amount being included in her income. I draw an adverse inference that her income is higher than she is prepared to state.
[26] So, I am left with a conclusion that Mr. Turcotte and the Respondent Mother acted to mask whatever income component there may be in the rental properties but no evidence to assist in quantifying that income. While it is tempting to impute income in accordance to the apparent admission in a settlement conference, to do so would clash with the general principal that settlement discussions should not be used in the finding of disputed facts. In line with totality of my ruling and exercising a caution from Eager v. Graves as explained in Appu, supra, I impute the Respondent Mother’s income at $60,000. That would require table support for one child of $546 and for two children $892.
(d) Meghan
[27] The order of June 17, 2011 is final with respect to Meghan’s table support. It was for four months each year - May, June, July, August and terminates May 1, 2014. That means there is one further payment of $253 due May 1, 2014.
[28] I do not find it necessary or even consistent with the Child Support Guideline principles that her absence from the Applicant Father’s home for pro social activities enhancing her personal growth disentitles Meghan to support. Both parents participated in fund raising so she could go. That is good. The Applicant Father continued to provide a residence for her homecoming. That is good. End of story. There will be no deduction in the table support owing for May to August in either year so no refund owing to the Respondent Mother.
[29] The agreed termination of “support” in May 1, 2014 was not intended to say that parental contribution to her post-secondary education terminates then. As found in paragraph 8, the reference to termination relates to Child Support Guideline table support.
[30] Neither the June 17, 2011 Minutes of Settlement nor the oral agreement is specific to one post-secondary education degree. No parental contribution was paid for Meghan’s fourth year of university as it was covered by a Metis grant. She may again be entitled to that grant for next year’s post graduate work but must apply at the university she attends. I require the parents to co-operate with that application. If she does not get it then I continue the agreed formula to deduct all available RESPs bursaries and grants then deduct $5,500 which I find to be a reasonable contribution for a graduate student and consistent with a proportionate increase from Meghan’s expected $4,400 contribution in the 2011/2012 school year in an oral agreement which the Applicant Father asserts and the Respondent Mother acknowledges. Meghan shall prepare a budget for such expenses. Thereafter the parents shall contribute according to a ratio which I fix, for these parties who demonstrate they require adjudication as they are unable to benefit from the services they have repeatedly used to attempt resolution. The Applicant Father pays 60% the Respondent Mother pays 40%.
[31] This contribution is required for one more year of school expense, not including any year when the expense is met by Metis grant.
[32] I find that both parents have generally honoured the agreement to contribute to Meghan’s post-secondary education except that the Respondent Mother is short for the 2012/13 school year. There was no agreed set off as asserted by the Respondent Mother and she cannot deprive Meghan to unilaterally enforce disclosure disputes. Meghan says her mother paid $3,200 instead of $4,400. The Respondent Mother provides evidence of $3,400. Precision is not possible on the evidence before me. I find the Respondent Mother owes $1,100 for that school year. That is a finding based on compromise in the face of inconclusive evidence. The parties would do well to approach future disputes using that principle.
(e) Scott
[33] Tab 11, Exhibit 6 the Applicant Mother files a letter from the billet parents that Scott was resident with them from Aug 26, 2012. This resolves the time consuming argument whether the subsidized hockey season began in August or September. I find full child support was due up to and including the month of August 2012.
[34] Similarly, the time consuming issue of when the season ended and Scott returned to the Applicant Father’s residence in 2013 was solved by Mr. Quilty, father of another player on the team, who assisted us, while in the witness box, by looking up the schedule on his cell phone. The team was out of the playoffs as of Friday March 22, 2013. He was therefore at the Applicant Father’s residence by April so full guideline support for two children is due from April to August (five months) in 2013.
[35] The Respondent Mother seeks return of table support for Scott for periods while he is billeted (September 2012 to March 2013), (September 2013 to March or April 2014). I find that those periods are seven months in the 2012/213 season and seven months in the 2013/2014 season. The Respondent Mother errs by supposing that she should pay half of the table amount of $823 for two children, $411. Based, in the June 17, 2011 order, on income of $54,700 current Child Support Guideline show $823 as the table amount for 2 children for income of $55,400. At the same income of 55,400 table support for Michael alone is $502. Relief based on her argument is limited to a refund of $823 - $502 = $321/month if Scott is entitled to no table support whatsoever. I have found hockey season to be seven months a year so a maximum refund would be 14 x $321 = $4494. However, I have imputed the Respondent Mother to be $60,000 making support for Michael alone $546 such that the maximum refund from what she has paid is $823 - $546 = $277/month x 14 months = $3878. She was underreporting her income during the period so I am not inclined to provide relief based on sympathy for her argument.
[36] If mother should been paying full Child Support Guideline table support for both children at imputed income of $60,000 she should have paid $892 x 12 she would owe $828 per year. The Applicant Father was underreporting his income during the period so I am not inclined to provide relief based on sympathy for his argument to go further back in time.
[37] The Respondent Mother asserts that the $500 paid to the billets for room and board along with other meals provided on practice and game days completely covers all Scott’s financial needs. The Applicant Father mentions other types of expense that he has covered. He doesn’t claim those expenses as section 7 extras but argues that such ordinary costs as would normally be paid by the primary care parent assisted by table support should require table support from the Respondent Mother. She points out that the Applicant Father presents only partial proof of the quantum of the financial assistance that he provides Scott.
[38] Unfortunately, the Respondent Mother has lost touch with the relentless expenses of teenagers that go well beyond food and a bed. No-one asserts that Scott’s needs are unattended. Rather, I find, the Applicant Father meets them as they arise.
[39] Mr Quilty, a witness with whom I find no testamentary fault, has a son on the same team but cannot assist much with Scott’s particular circumstances. Mr. Quilty’s son receives other financial support from the team because of his seniority and stats. For instance, he was lured back from another team by a bonus of $3,000. That is truly terrific. But it doesn’t tell us anything about how Scott’s needs are met.
[40] The Respondent Mother gives, by way of example, evidence that she arranged for second hand school uniforms for Scott. That is good. But the communication difficulties between parents and timely need meant that the expense had been incurred.
[41] Scott had some “off-ice conduct” problem that impacted his living arrangements but he continues his education on line with support from his new billet. A “victory lap” as a second year in grade 12 to improve marks has come to be known, is common and often encouraged by educators. He is entitled to support under the Child Support Guideline though he has now reached the age of 18. That he has his own resources through his hockey skill, is relevant under s. 3(2) of the Child Support Guidelines, but does not disentitle an otherwise entitled child to support.
[42] Next year Scott may be playing hockey at the next level. His entitlement to support in those circumstances is beyond the evidence before me so I make no comment.
[43] He may be in college. If so, he is likely to qualify for the Metis grant that has assisted his sister. If it leaves any remnant of need or if he does not receive it, the same formula as operated for Meghan’s post-secondary education expenses comes into play. Total post-secondary education expense (education and living expenses) is to be calculated, less any grant, bursary, RESP, less a contribution from Scott of $1000 (before 1st year) or a proportion of his summer earnings as agreed, then the same 60/40 ratio as above declared applies as between the parents.
[44] Until it is known that he will not be attending post-secondary education in September 2014, Child Support Guideline table support for 2 children continues for the 5 non-hockey months if he resides at the home of the Applicant Father or elsewhere supported by this father as children readying themselves for post-secondary education will sometimes do. Otherwise, summer earnings are used up by the student to support himself in the summer months rather than be available to contribute to post-secondary education expense for the next year leaving more of a contribution for parents to make. Such decisions about returning to a parental home during summer benefit from discussion including both parents about finances but also what is in the best interests of the student. There are too many variables for a court to predict. The criteria is to find what the parents would approve on the basis of good parenting if they were in a family not embroiled in dispute.
[45] Taking all of the foregoing into account I am left with this. The Respondent Mother wants a refund for table support during hockey season which I find to be seven months in each of the last two years. I have found she is not entitled to a full refund as the amount paid to the billet does not cover all his needs. I have found that full table support is required for two children, Scott and Michael for 5 non-hockey months in each of those years. If Scott goes to college in September there would be no gap in the 5 months of May-August 2014 and table support for two children would continue during that period. In September 2014 the post-secondary education formula would begin commencing September 2014 with the Respondent Mother paying 40% and the Applicant Father paying 60%. I cannot predict whether Scott will come to reside with his father in summers between school beyond that but would expect support for him during the summer months to follow the pattern already developed for Meghan when she was at that stage which is to bump up table support from one child to two during those months.
(f) Orders of support and support arrears
[46] Respondent Mother is to pay monthly table support for two children (Michael and Scott) commencing April 1, 2014 to August 1, 2014 fixed at $892.
[47] Respondent Mother is to pay the final table support payment for Meghan of $235 on May 1, 2014.
[48] Respondent Mother is to pay monthly table support for Michael of $546/month year round from September 1, 2014.
[49] No monthly table support is payable for Scott on September 1, 2014 or thereafter if he is in post-secondary education but shall resume May 1, 2015 to August 2015 if he intends to return to school the following September as set forth in paragraphs 43 and 44. Additional table support payable pursuant to that pattern is fixed at $346 which is the difference between table support for one and two children. This pattern will repeat in years that Scott attends post-secondary education, immediately or interrupted, up to four years.
[50] Post-secondary education for Scott and section 7 expenses for Michael will be paid by the parents, 60 Applicant Father/40 Respondent Mother as set forth in paragraphs 43 and 44.
[51] Post-secondary education for Meghan will be paid by the parents for one year as set out in paragraphs 30 and 31, 60 Applicant Father/40 Respondent Mother.
[52] In spite of the extravagant claims of the parties for who owes arrears or refund, I have imputed the Respondent Mother’s income to be $60,000 making her maximum claim for refund $3,878 if she paid no table support for Scott.
[53] I agree that her payment for Scott while he had his room and board paid for him might properly be somewhat moderated.
[54] The maximum arrears for underpayment if full support for two children year round is $828 per year. The Respondent Mother’s financial statement referenced rental properties by 2012 and tax returns earlier than that. So the claim for underpayment may be upwards of three years. At three years the claim is $2,484.
[55] I have found that she owes $1,100 for Meghan’s tuition.
[56] Neither disclosed honestly to each other nor even now to the court.
[57] What is clearly demonstrated that for very little discrepancy between the realistic claims and in circumstances that defy precision, neither party assessed their own position for weakness nor realistically considered whether the dispute generated was disproportional to the issues. I refer to the numerous conferences, mediation, DRO and trial resources.
[58] For the reasons summarized at paragraphs 52 – 57, my judgment is that the Applicant Father owes no refund. The Respondent Mother owes no underpayment.
[59] I have set forth the payments to be made from April 1, 2014 on circumstances as they now exist.
[60] Order to issue for the ongoing support payments set out in paragraphs 46-51. Support Deduction Order to issue.
EBERHARD J.
Released: March 19, 2014
ADDENDUM
BARRIE COURT FILE NO.: FC-04-1893
DATE: 20140321
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JEFFERY DORION
Applicant
– and –
LISA MERKLEY (DORION)
Respondent
Jeffery Dorion, Self-represented
Lisa Merkley (Dorion), Self-represented
HEARD: March 13, 2014
ADDENDUM
EBERHARD J.:
[61] Paragraph 58 of my judgment released March 19, 2014 presumes that the Respondent Mother has paid all amounts owing under the June 17, 2011 order in force until the release of my judgment, specifically the full $823 for table support for two children each month up to and including March 1, 2014, and the $235 table support for Meghan for each of the four required summer months. I ordered there is no refund of those amounts on the basis that the Respondent Mother had paid what the order required. If the full amount has not been paid, then there are arrears of table child support owing based on the order of June 17, 2011. I do not intend to extinguish arrears for unpaid table support pursuant to that order.
[62] When I ordered there were no arrears in paragraph 58, I was referring to my finding that there would be no retroactive increase (that is, March 2014 or before) in table support in spite of imputing greater income to the Respondent Mother.
EBERHARD J.
Released: March 21, 2014