ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Constance Dagg
Applicant
– and –
Gilles Chenier
Respondent
Josée J. Paquette, for the Applicant
Uncontested Hearing
HEARD: January 13 and 14, 2014
decision on application
cornell j.:
1This application involves claims by the applicant for retroactive child support, ongoing child support including the imputation of income, arrears of certain s. 7 expenses and a request for some form of security for any obligations which may be found to be outstanding. These claims were presented by the applicant within the framework of an uncontested hearing which originated as a motion to change brought by the respondent.
Background
2The applicant is 42 and the respondent is 45 years of age. The parties were married in May 1999 and separated in June 2005. There are three children of the marriage, Gillian Dagg Chenier, born March 1, 1997, Benjamin Dagg Chenier, born March 27, 2000 and Hannah Dagg Chenier, born June 26, 2003. Following the separation, the applicant had primary care and control of the children until 2010. Thereafter, various forms of shared custody arrangements have been in place.
Court Orders / Proceedings
3On July 25, 2007, a final order was made on consent. Among other things, this order provides that the applicant shall have sole custody of the children subject to reasonable access in favour of the respondent. The respondent was to pay child support in an amount of $1,934 per month based upon an estimated annual income of $106,972.
4There was a requirement that the parties exchange copies of their income tax returns and notices of assessments on or before June 1st in each year. The applicant provided her notice of assessment in June 2008. The respondent provided his notice of assessment in September 2008 showing that his taxable income for 2007 was $150,486.
5On February 24, 2009, the respondent brought a motion to change seeking expanded access to the children. The motion to change discloses his 2007 income and asks for an order that child support be increased to $2,588 commencing March 1, 2009.
6A response to the motion to change was delivered on April 27, 2009.
7In July 2009, Vale went on strike. As the respondent was employed in the mining sector, his income was substantially reduced. On February 4, 2010, an order was made which reduced the respondent’s child support obligation to $470 per month based upon an estimated annual income of $23,000 from employment insurance benefits. The respondent was to provide written notice to the applicant of any material change in his financial circumstances.
8On July 30, 2012, the matter was to proceed to trial. Instead, a discussion in the nature of a settlement conference took place which resulted in a consent order. The order required that the respondent pay child support in an amount of $2,619 commencing August 1, 2012.
Residential Arrangements
9During the time that these orders were made, various changes were taking place with respect to the residential arrangements for the children. In 2007, 2008 and 2009, all three children had their primary residence with the applicant.
10In 2010, the respondent had the children more than 40% of the time from May until December. This arrangement continued in 2011 until the end of August. At that time, Gillian began a week-about arrangement. The other two children had their primary residence with the applicant. This arrangement continued until September 2013 when Benjamin also began a week-about residential schedule. The youngest child has maintained her primary residence with the applicant. The respondent has access to Hannah from Wednesday after school to Monday morning at school, every second week. Detailed arrangements for holiday and vacation access were also put in place pursuant to a final consent order dated July 8, 2013.
Uncontested Trial
11It is against this background that the various claims are to be considered. My ability to do this was adversely affected by the fact that although the respondent had been an active participant in this litigation for some five years, he was not permitted to participate in the trial as a result of an order made in November 2013 on the eve of trial, that provides that his pleadings would be struck out if he did not pay costs in an amount of $1,705.69. These costs were not paid with the result that the respondent did not participate in the trial. As a trial judge, I found myself in the unusual position of yearning for a self-represented litigant. The respondent’s absence has made my task that much more difficult as important financial budget information is absent and I was only provided with one side of the story. These difficulties underly the reasoning that in a family law case, a party’s pleadings should be struck out only in exceptional circumstances, where no other remedy would suffice: see Purcaru v. Purcaru, 2010 ONCA 92, 265 O.A.C. 121 at paras. 47-48.
Annual Income
12Evidence was presented by way of an affidavit for an uncontested trial as well as by viva voce evidence from the applicant. This evidence indicated the income for the parties is as follows:
Year Applicant Respondent
2007
$52,592
$150,486
2008
$51,297
$185,294
2009
$50,596
$78,067
2010
$49,910
$101,499
2011
$52,107
$183,242
2012
$51,021
$186,988
2013
$52,193
$125,321
Applicant’s Circumstances
13The applicant has and continues to work in a veterinarian’s office. In the summer of 2009, she began to cohabit with Marc Thibeault. At that time, he began to provide financial assistance although no formal arrangement was put in place. He did help with renovations to the applicant’s home. Approximately two years ago, he obtained employment with Vale. He now earns approximately $100,000 per year.
14The applicant and Marc Thibeault were married in August 2011. Since that time, the financial arrangements have been such that Mr. Thibeault contributes the sum of $1,000 to the household expenses.
15The applicant and her husband purchased a cottage that has an estimated value of $195,000. It has an outstanding mortgage of approximately $119,000. Mr. Thibeault pays the monthly cottage mortgage payment in an amount of $807.
16The applicant testified that Mr. Thibeault acts as a parent towards all three children. He is involved in minor discipline as well as taking the children to and attending at their various activities. The evidence makes it clear a new family unit has been established.
Applicant’s Financial Statement
17After certain concerns came to light, the applicant presented a revised financial statement on the second day of trial. After taking into account the interim child support payment in an amount of $2,916 as well as her husband’s contribution of $1,000, the applicant’s monthly income was determined to be $8,273. Her monthly expenses are $5,967. No proposed budget was submitted. When asked if there had been financial hardship as a result of the amount of child support actually paid for the years in question, she responded by saying that if you were to ask her children, the answer would be “yes”. From her perspective, the children’s needs, as opposed to their wants, had been adequately met.
18No separate budget for the children’s expenses was provided. When the applicant was asked to provide such a budget, she reviewed the expenses contained in her financial statement and determined that the additional expenses directly attributable to the three children amounted to approximately $1,200 per month.
Delay
19The original child support order was made in July 2007. Although two months late, the respondent provided his 2007 notice of assessment in September 2008. This income was confirmed when the respondent brought the variation application in February 2009. It was conceded that additional financial disclosure was made by the respondent during the course of the litigation from time to time. When asked why there was such apparent delay in addressing the amount of child support to be paid, the applicant responded by saying that the focus of the litigation was on the custody and access arrangements that were to be made for the children from time to time, coupled with the fact that the respondent changed legal representatives on four separate occasions during the course of the litigation.
The Law
Retroactive Child Support
20In the case of retroactive claims for child support, it has been determined that the court should consider:
(1) whether there is a reasonable excuse to explain any delay;
(2) the conduct of the payor parent;
(3) the circumstances of the children; and
(4) any hardship occasioned by a retroactive award.
See D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry vs. Henry; Hiemstra v. Hiemstra, 2006 SCC 37, [2006] 2 S.C.R. 231 (“Alberta Trilogy”).
Shared Custody
21Section 9 of the Federal Child Support Guidelines (the “Guidelines”) states:
Where a parent or spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,
(a) the amounts set out in the applicable tables for each of the parents or spouses;
(b) the increased costs of shared custody arrangements; and
(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.
22Various approaches to this provision were undertaken until the Supreme Court of Canada’s decision in Contino v. Leonelli-Contino, 2005 SCC 63, [2005] 3 S.C.R. 217. In rejecting many of the mistaken propositions that had come into use to that point in time, Bastarache J. proceeded to outline the steps to be taken to determine the appropriate amount of child support in shared custody cases:
(1) determine the simple set off amount;
(2) review the child expense budgets;
(3) consider the ability of each parent to bear the increased costs of shared custody and the standard of living for the children in each household; and
(4) distinguish between initial orders or agreements and variations.
23As helpful as this decision is, there remained some outstanding questions, some of which were canvassed in the Manitoba Court of Appeal decision, Stewart v. Stewart, 2007 MBCA 66, 40 R.F.L. (6th) 1. In his annotation to that decision, Professor Thompson identifies four issues:
(1) What sort of expenses and budgets are sufficient for s. 9(b) purposes?
(2) When should s. 7 expenses be dealt with separately and when should they be considered within the child expense budgets?
(3) How should the standard of living be measured in each household?
(4) How should new partners and spouses be considered under the s. 9 analysis?
24In an article entitled “The TLC of Shared Parenting: Time, Language and Cash,” presented at the Law Society of Upper Canada’s 7th Annual Family Law Summit 2013, Professor Thompson undertook a review of the 2012 cases which considered Contino. He found that of the thirty-two reported decisions, twenty ended up at the straight set-off amount, five were above the set-off and five were below the set-off amount. He summarizes his findings at p. 21 as follows:
What this brief survey reveals is that the straight or simple set-off has become the default solution in many s. 9 cases, despite the wide discretion espoused by Contino. Child expense budgets are avoided. Section 7 expenses are dealt with separately. Courts make adjustments up or down from the set-off based upon some sense of “fairness”. Only rarely do courts appear to consider net disposable income or other measures of household standard of living, despite the Supreme Court’s emphasis upon that concern. We do not see the emergence of any formulaic solution in the cases to date, hardly surprising given the holdings in Contino.
Child Support in Hybrid Cases
25“Hybrid” is the word which has come to be used where only some of the children fall within s. 9, but not all. In Sadkowski v. Harrison-Sadkowski, 2008 ONCJ 115, [2008] O.J. No. 1013, Zisman J. made the following observations at paras. 24, 25 and 30:
24In any analysis of child support, a court must keep in mind the overall objectives of the guidelines, namely, “to establish fair levels of support for children from both parents upon marriage breakdown in a predictable and consistent manner” and to ensure that a divorce will affect the children as little as possible. The goals of predictability, consistency and efficiency must be balanced with those of fairness, flexibility and recognition of the actual financial circumstances of the parents and children. The court approves the discretionary approach in section 9 with its emphasis on flexibility and fairness even if it is to the detriment of predictability, consistency and efficiency, to some degree. As stated at paragraph [39] in Contino v. Leonelli-Contino:
39The specific language of s. 9 warrants emphasis on flexibility and fairness. The discretion bestowed on courts to determine the child support amount in shared custody arrangement calls for the acknowledgement of the overall situation of the parents (conditions and means) and the needs of the children. The weight of each factor under s. 9 will vary according to the particular facts of each case.
25The particular circumstances of children’s living arrangements requires the exercise of discretion, consistent with the Child Support Guidelines, in order to achieve a standard of support that is fair to both parents and to all the children of the marriage. Accordingly, it appears to me that dealing with “hybrid” custody situations under an “economies of scale” approach and applying a section 9 analysis, in accordance with the principles in Contino v. Leonelli-Contino, gives the court the most discretion to arrive at a fair and proper quantum of child support. It is my view, this is the approach most consistent with the principles of the guidelines.
30Further, clause 9(c) vests the court with the broad discretion to conduct an analysis of the resources and needs of both the parents and the children. The court can take into account extraordinary expenses when considering 9(c) and presumably also include them in the base child support amount. The court retains the discretion then to modify the set-off amounts when considering whether the financial realities of the parties would lead to any significant variations in the standard of living for the children.
26The approach suggested in Sadkowski has been followed in Murphy v. Murphy, 2012 ONSC 1627, [2012] O.J. No. 1235, Shurvell v. Shurvell, 2012 SKQB 380, [2012] S.J. No. 603 and Carrigan v. Brewer, 2012 ONSC 6952, [2012] O.J. No. 5858.
Analysis
Imputation of Income
27The evidence disclosed that the respondent quit his job on April 30, 2013. He was rehired on July 12, 2013 by the same employer on the same terms and conditions including the income he was to receive. The reason that the respondent quit his employment was apparently due to stress. The applicant took the position that income should be imputed to the respondent for this period of interruption in his employment.
28The respondent has been steadily employed for many years. The interruption was brief. I find that the interruption in the respondent’s employment was not so unreasonable as to warrant the imputation of income for the period of time in question.
Ongoing Child Support
29The respondent’s payslips entered into evidence indicate that up to October 31, 2013, the respondent had earned $100,321. After taking into consideration the time that was lost during the interruption in his 2013 employment, an extrapolation calculation results in him currently earning approximately $12,500 per month. This results in actual 2013 income of $125,000 and estimated income for 2014 in an amount of $150,000. The actual amount to be earned by the respondent will depend upon his bonus which in his offer of employment is stated to be “based on project performance and will increase-decrease depending on performance achieved.”
30The applicant earns $52,000. After taking into account her spouse’s annual income of approximately $100,000, the applicant’s total household income is $152,000.
31I now turn to the task at hand by reviewing the considerations set out in Contino.
(1) Determine the Simple Set-Off Amount
32Based upon the respondent’s income of $150,000 per year, the Guidelines require monthly child support for three children in an amount of $2,611. The applicant is required to pay $773 per month for two children based upon an annual income of $52,000. The set-off amount is $1,838. This is where the inquiry appears to end in many of the reported shared custody cases.
(2) Review of the Child Expense Budgets
33Under s. 9(b), it is necessary to determine the increased costs of the shared custody arrangements, if any. Although the applicant did not present an actual child expense budget, she undertook a line by line review of the expenses contained in her financial statement and determined that the additional costs that she incurred in connection with the custody of one child and the shared custody arrangement for two children are in an amount of $1,200 per month.
34Unlike the applicant mother in Contino, there was no evidence offered that a house had been purchased or other significant capital outlay made to provide for the needs of the children based upon the amount of child support being received.
35Both parents live in modest homes. The applicant indicated that all of the additional costs for the care of the children related to day-to-day expenses for such things as groceries, meals outside the home, additional vehicle costs, children’s clothing and activities. No evidence was offered of increased capital costs for a larger home for example.
36In view of the respondent’s inability to participate in the trial, I did not have the benefit of the respondent’s child expense budget.
37The evidence that was put before me indicates that there do not appear to be any over-all increased costs as a result of the shared custody arrangement.
38A partial final consent order that was made on July 8, 2013 provides, among other things, that the respondent shall pay all of the children’s s. 7 expenses including all sports and recreational activities, daycare, orthodontics, school trips and cell phone bills. The reason for this was not made apparent at the trial. At the moment, daycare costs for the youngest child are in an amount of $200 per month. Additional costs are incurred each year for soccer, ringette, gymnastics and school trips. Although these expenditures are such that they are not special or extraordinary expenses within the true meaning of s. 7, the parties have been treating them as such and the final consent order requires the respondent to be responsible for these expenses. To the extent that the respondent has assumed this obligation, it represents a disproportionate assumption of spending by him.
(3) Ability to Pay / Standard of Living
39When considering this issue, Professor Thompson had this to say at p. 18 of “The TLC of Shared Parenting”:
The consideration of these two factors lies at the heart of the s. 9(c) analysis. In assessing each parent’s ability to bear the increased costs of shared custody, a court should look at the incomes of the parents, the disparity in incomes, and their assets and liabilities. Most importantly, children should not experience a significant variation in the standard of living as they move from one household in another. [Emphasis added.]
40During her marriage to the respondent, there were constant financial challenges to such an extent that bankruptcy proceedings were undertaken in the form of a consumer proposal. Following the separation, the applicant was able to gain control of her finances with a result that at the time of trial, she had a net worth in an amount of $187,884. This included ownership of the matrimonial home having a value of $180,000, a one-half interest in a cottage valued at $195,000, a late model vehicle worth $12,000, an RRSP in an amount of $37,194, an RESP in an amount of $15,333 and a TFSA in an amount of $14,119. There is a mortgage on the matrimonial home in an amount of $105,800, a mortgage on the cottage in an amount of $119,000, a line of credit in an amount of $8,294 and modest amounts for credit card debt.
41The respondent’s continued inability to manage money is in full evidence as set out in his financial statement of July 29, 2013. He values his residence at $190,000. He has a 2005 truck worth $3,500, household contents of $5,000 and an RRSP in an amount of $19,000. He has a first and second mortgage which total $184,000 with the result that his financial statement indicates a net worth of $34,719. This figure is inflated as it includes household items worth $5,000 which in all likelihood have little or no realizable value. No deduction is made for the tax which would be required if withdrawals were made from the RRSP.
42It is readily apparent that a consideration of the parties’ respective assets and liabilities indicates that the applicant is in a much better financial position.
43Assuming that the set-off amount of $1,838 is used, the applicant would have an annual income of $86,340. This does not take into consideration her spouse’s income in an amount of $100,000 apart from his monthly contribution of $1,000 towards household expenses and payment by him of the cottage mortgage in an amount of $800 monthly.
44The applicant’s financial statement shows expenses in an amount of $71,604 which would result in surplus income of $14,736. As previously indicated, the applicant’s evidence was that her needs and the needs of the children were being met within her listed expenses of $71,604. Lest there be any doubt about this, it is rebutted by the fact that not only is there no accumulated debt, she is well on the way to a secure financial future.
45I have already determined that the respondent’s current income amounts to $12,500 per month. His financial statement indicates monthly expenses of $15,567. This includes a first mortgage payment including taxes of $1,909, a debt payment in an amount of $900 (which I assume is secured by the second mortgage) as well as the current amount of child support of $2,619. If the set-off amount of support of $1,838 is used, the respondent’s expenses are $14,786 per month. Using the set-off amount, the net result is that the respondent is currently showing a deficit of $2,286 per month.
(4) Initial Order / Variation
46There is a concern that where one parent assumes various financial obligations to ensure proper care for the children based upon a given amount of child support being paid, that caution must be exercised when a variation application is brought as a result of a change in the custody arrangement in order to prevent financial hardship to the original recipient.
47Given the financial position of the parties which reflects a monthly surplus for the applicant and the fact that the household incomes are now virtually identical, this is not a consideration which applies in this case.
Summary
48This review makes it clear that the applicant is currently in a much better financial position than the respondent. The applicant’s own evidence indicates that if the set-off amount is awarded, it would result in her receiving $14,736 on an annual basis surplus to her expenses. In stark contrast, the respondent’s financial statement indicates a monthly deficit of $2,286 for an annual deficit of $27,432.
49I have already made note of the fact that the respondent is responsible for all of the s. 7 expenses which appear to include recreational expenses which would otherwise fall outside of the scope of s. 7.
Standard of Living
50The applicant has remarried. Divorcemate Schedule 2 calculations (Appendix “A”) using the set-off amount indicates that the Adjusted Household Income for the respondent is $76,103 and for the applicant is $134,360. The Household Income Ratio is 4.312 for the respondent and 5.627 for the applicant.
51In Contino, the court clearly indicated that s. 9(c) necessarily involves a consideration of the impact of the new support order on the standard of living of the children. Given the respective financial positions of the parties and the fact that household incomes are effectively identical, how can it possibly be said that the set-off amount is appropriate? The simple fact is it cannot on the facts of this case.
52I am required by Contino to consider the standard of living in each home. The disparity in household income using the set-off amount is simply too vast to allow for any semblance of an equal standard of living in each home. If I am not simply to pay lip service to standard of living considerations, then it is necessary that the amount of child support to be paid be reduced from the set-off amount.
53A simple case would involve a true shared custody arrangement where each parent earned the same amount of money. In that case, ordinarily no support would be payable. In this hybrid case, the answer is obviously not so easy.
54One approach would be to order a one-child table amount for the one child that has her primary residence with the applicant plus the set-off amount for two children. This approach was taken in Shoukri v. Mishriki, 2012 ONSC 7336, [2012] O.J. No. 6153. The problem with this approach is that it ignores the economies of scale built into the table amounts. It also ignores the s. 9(b) and (c) requirements mandated by the Guidelines.
55Another approach would be to determine the shortfall experienced by the recipient. In this case, according to her own evidence, the shortfall of expenses over income amounts to $634 per month. If a need/ability to pay analysis is appropriate in cases of this nature, then that is the appropriate award. I have been unable to find any case which suggests this approach.
56When I take into account all of the factors including the relative financial position of the parties, the essentially equal household income, the surplus available to the recipient, the deficit position of the respondent, as well as the assumption of all of the s. 7 expenses by him, I have determined that the proper amount of child support to be paid by the respondent is $800 per month.
57Schedule 2 calculations (Appendix “B”) indicate that this results in Adjusted Household Income for the respondent of $88,559 and $121,904 for the applicant.
58The difference in Adjusted Household Income amounts to $33,345. In my opinion, this is sufficient to provide for the additional financial needs created by their being one additional child and one additional adult in the applicant’s home while at the same time, providing a comparable standard of living in the home of both the applicant and the respondent.
59This new support obligation shall be effective as of January 1, 2014.
Retroactive Support
60The applicant is claiming retroactive support in an amount of $79,229.47 from and including 2007 to and including 2013. The applicant used the straight set-off amount in arriving at this figure.
61It is not appropriate that a retroactive adjustment be made for 2007.
62I now turn to a consideration of the factors to be taken into account for retroactive child support claims.
Delay
63The applicant knew about the significant increase which had occurred in the respondent’s 2007 income in a relatively timely fashion.
Conduct of the Payer Parent
64This is not a case where the payor parent went to great lengths to conceal his income.
65Full financial disclosure was made by the respondent at the time that the motion to change was initiated in February 2009 and at various points in time during the ensuing years.
66With the exception of the two month hiatus in 2013, the respondent has maintained steady employment.
Circumstances of the Children
67This issue has been largely canvassed in the discussion dealing with the claim for ongoing support.
Any Hardship Occasioned by a Retroactive Award
68In view of this, I am of the opinion that payment of retroactive child support will involve financial hardship for the respondent.
Conclusion
69After weighing and considering all of the factors to be taken into account when considering a claim for retroactive child support, I have determined that it is appropriate to award retroactive support for 2011, 2012 and 2013.
Calculations
70The calculations in Appendix “C” set out the amount of retroactive support that I have calculated to be owing.
Summary
71The calculations outlined in Appendix “C” result in the following determination:
2011 Amount owing $ 5,549
2012 Amount owing $ 8,567
2013 Credit for overpayments ($22,910)
Balance Owing $ 1,206
72I therefore order that the respondent owes retroactive child support for the three children of the marriage in an amount of $1,206 for the years 2011, 2012 and 2013.
Arrears of s. 7 Expenses
73Paragraph 6 of the final order made on July 25, 2007 requires the parties to contribute to the children’s special or extraordinary expenses in proportion to their respective annual incomes. Exhibit “3” sets out the proportionate share of each party for the s. 7 expenses which were incurred. In accordance with these calculations, I find that the respondent owes the applicant the sum of $8,421.71 for arrears of his portion of s. 7 expenses.
Payment
74I have determined that the respondent owes retroactive child support in an amount of $1,206. The respondent also owes arrears of s. 7 expenses in an amount of $8,421.71 for a total of $9,627.71. I order that this amount shall be paid at a rate of $200 per month commencing January 1, 2014 and monthly thereafter until such time as the arrears have been paid.
Family Responsibility Office
75As the calculation of retroactive support has effectively determined the amounts that should have been paid, I order that the amount of outstanding child support owing by the respondent be adjusted to $9,627.71 as of December 31, 2013.
Security
76The applicant asked that any amounts found to be owing by the respondent be secured by a charge against his home.
77It is appropriate that I order that any amounts owing by the respondent to the applicant for child support shall be a first charge on the respondent’s estate.
Costs
If the applicant wishes to make submissions about costs, she may do so by submitting such submissions not to exceed two pages plus supporting documentation within 15 days of the release of this decision. If no submissions are received by that date, it shall be assumed that the applicant is not seeking any costs.
The Honourable Mr. Justice R. Dan Cornell
Released: March 19, 2014
Appendix “A”
Appendix “A” page 2
Appendix “B”
Appendix “B” page 2
Appendix “C”
Calculation of Retroactive Support
Appendix “C” page 2
Calculation of Retroactive Support