ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALEXEY LAVRINENKO
Applicant
– and –
MARIA LAVRINENKO
Respondent
Self-represented
Norman F. Williams – Counsel for the Respondent
HEARD: July 3rd and 4th 2014
THE HONOURABLE MR. JUSTICE PAZARATZ
The Applicant father is 39 years old. The Respondent mother is 35. The parties have an eight year old son Stephen.
This has been a high conflict file.
On October 25, 2010 the Office of the Children’s Lawyer (OCL) issued a detailed report pursuant s.112 of the Courts of Justice Act.
On June 29, 2011 Justice McLaren issued a detailed final order based upon minutes of settlement. That order included the following terms:
a. Joint Custody.
b. Primary residence with the mother.
c. A detailed timesharing plan for the father including alternate weekends, and alternating Wednesday or Monday overnights.
d. Generous times for other access.
e. Applicant father to pay child support of $422.00 per month commencing July 1, 2011 based upon his annual income of $45,693.00.
f. Section 7 expenses to be shared in proportion to incomes.
g. Applicant to pay spousal support in the sum of $100.00 per month commencing July 1, 2011, reviewable as of January 1, 2014. The review period was identified as being “due to the fact that the Respondent is planning on attending an educating facility which could involve a three year program and then she would be seeking employment”.
h. Parties to exchange tax returns and notices of assessment by June 1 annually, with child support to be adjusted in accordance with the previous year’s income, as of July 1 each year, commencing July 1, 2012.
On July 16, 2012 Justice Gordon made an order – also on consent – reducing child support to $308.80 per month based upon the Respondent’s annual income of $35,540.00.
The Applicant commenced a motion to change child support and terminate spousal support on June 27, 2013. His arguments were basically two-fold:
a. His income was down so he should be paying less child support.
b. In any event, the Respondent should no longer be entitled to any spousal support. He equated the “review date” in Justice McLaren’s order with a termination date. He said the Respondent had been given enough time and should no longer be entitled to receive any spousal support, irrespective of his income.
- The Respondent brought a cross-motion, challenging the Applicant’s requests, and also seeking to change parenting arrangements:
a. She asked that joint custody be changed to sole custody.
b. She asked that the Applicant’s time with the child be reduced.
c. She also requested further relief relating to her basic assertion that the child has serious health or behavioural issues which the Applicant is not acknowledging or properly dealing with.
The matter was set for a two day trial which commenced before me yesterday. Pursuant to previous orders, the trial would be based on oral evidence in addition to the affidavits filed by the parties.
However, yesterday both parties agreed the parenting issues could not proceed for a number of reasons including:
a. The Respondent would not be able to have a paediatrician available to testify for at least a few weeks.
b. The Respondent doubted she would be able to have a witness from the child’s school attend for the trial.
c. Most importantly, there was no independent evidence available as to the child’s perspective, wishes and preferences.
On September 25, 2013 Justice Reid made an order asking the OCL to again become involved. For reasons which are unclear to me, the OCL declined to become involved.
Nonetheless, in my view the situation has worsened; the conflict has intensified; and there are disputed allegations that the child continues to be negatively impacted by the existing arrangements. The parties also have differing views as to the child’s wishes and preferences, and whether the child has verbalized a preference for a change in the existing timesharing arrangement.
Even if we could have arranged for the medical and educational witnesses to attend trial, I would still have felt it inappropriate to proceed without independent evidence relating to the child.
As a result, on consent of the parties, the parenting issues are adjourned to August 5, 2014 10 a.m. to be spoken to. I am again requesting that the OCL consider becoming involved. The parties are to submit their OCL intake forms within 14 days.
The trial then proceeded on financial issues, but on the second day of the hearing the parties settled the issue of arrears and ongoing spousal support. The Applicant agreed he should be paying full guideline child support. The only issue was the income level upon which ongoing child support should be based.
I will summarize my view as to the relevant facts relating to the determination of income:
a. The Applicant came to Canada in 2006.
b. He was then steadily employed in the logistics industry. He described this as a field which involves transportation, production and warehousing of products.
c. The June 29, 2011 support order was based upon the Applicant’s income of $45,693.00 from his employment at Hensall Global Logistics.
d. He was fired from that position in the spring of 2011, after more than three years with the firm.
e. He had always worked as an employee, and prior to being terminated he had never considered self-employment other than as a “dream”.
f. After he was suddenly fired, he says he considered both self-employment and seeking replacement employment. However, approximately one week after his termination, he elected to follow up on self-employment in the logistics industry. He admitted that since then he has never applied for traditional employment.
g. His self-employment has taken various forms, always within the logistics business. He says at first he had some success, although he didn’t generate as much income as in his former employment. But within a year his success dissipated. He has been struggling financially since then. Nonetheless, he has thus far rejected the idea of seeking out traditional employment because he feels running his own business will be successful in the long run and it best addresses the immediate needs and goals of himself and his current wife (who does not work outside of their home).
h. The Applicant asks that he pay child support based strictly upon his line 150 taxable income from self-employment. This would mean the following fluctuations:
i. 2010: $45,693.00 (from traditional employment).
j. 2011: $35,540.00 (a combination of part of the year traditional employment, and part self-employment).
k. 2012: $6,906.00 (from self-employment).
l. 2013: $30,026.00 (net personal income based on $43,246.00 gross business income).
m. The Applicant’s June 18, 2014 financial statement sets out gross income of $43,246.00 but again the Applicant says that after business expenses his income for child support purposes should be no more than $30,000.00.
n. In keeping with the Applicant’s view that his line 150 income should in itself automatically determine his support payments, on July 1, 2013 the Applicant unilaterally stopped making any support payments whatsoever – either spousal or child – because in his view his $6,906.00 declared income should prevail, and based on this income he cannot afford to pay any support.
As stated, the parties have settled the issues of arrears and spousal support. The Applicant has been successful in reducing arrears and obtaining a time limit with respect to spousal support.
The Applicant fully acknowledges that when he made the decision to start his own business (rather than seek out employment at a rate comparable to the job he was fired from) he anticipated that it would take a while for the business to become secure and profitable. Whether a paying spouse has the right to unilaterally create a period of inability (or reduced ability) to pay support while they “grow” a fresh business is a separate issue. In any event, the Applicant has already had a break:
a. On July 16, 2012 he obtained a reduction of child support, when his income was down because of his termination and decision not to seek replacement employment.
b. The Applicant owes considerable arrears even under this reduced financial obligation, and based upon the settlement between the parties, he will now be getting a further reduction of his support obligation by way of reduced arrears.
- The Applicant has made personal and career decisions without regard to his court-ordered obligations toward dependants:
a. When he was fired, the Applicant knew he had ongoing spousal and child support obligations pursuant to a court order.
b. He acknowledged he could have looked for replacement employment.
c. He acknowledged he might have been able to get a new job generating approximately the same income as his old job.
d. Instead he opted for self-employment.
e. He started his business in 2011.
f. By early 2012 he knew the business was in trouble. He was working 60 hours a week and hardly making any money.
g. The business is still struggling. He has no idea when (or whether) it will generate an income comparable to his previous employment.
h. To the contrary, he says he and his business partner are seriously questioning whether to shut down the business because it’s just not making much money.
i. But for the moment he’s still committed to self-employment. He’s not even looking for a regular job.
The Applicant testified that one of the reasons he kept the unsuccessful business going was out of a sense of obligation to his business partner and his employees. He appears to have prioritized those self-imposed obligations to others over the existing court ordered obligations in relation to child and spousal support.
I find that the Applicant is entirely responsible for the financial hardship he complains of. Even if there was a brief moment when self-employment looked like a good idea, within a year it should have been clear to him that self-employment wasn’t working out – and that he was no longer generating enough income to satisfy support obligations which he had no right to unilaterally extinguish.
On consent of the Respondent, the Applicant has already received many financial breaks and accommodations in relation to a reasonable period of trying to get his business off the ground. But when a support payor deliberately forgoes opportunities for secure income from employment, for the uncertainties of self-employment, at most they should be given a finite amount of time to get back to a reasonable level of income.
In my view that period of grace for the Applicant is now more than expired.
Section 19 of the Child Support Guidelines allows the court to impute an amount of income to a spouse as it considers appropriate in the circumstances, including if the spouse is intentionally under-employed or unemployed.
In Drygala v. Pauli 2002 41868 (ON CA), [2002] O.J. No. 3731 (C.A.), the Ontario Court of Appeal set out the three-part test in applying the provision under s. 19.
a. The first part of the test is to determine whether the spouse is intentionally under-employed or unemployed.
b. If so, the second part of the test asks, is the intentional under-employment or unemployment required by virtue of his or her reasonable educational needs, the needs of a child or reasonable health needs?
c. If the answer to the second part of the test is negative, the third part of the test is what income is appropriately imputed in the circumstances?
In Drygala the Court of Appeal determined that "intentionally" means a voluntary act. The Court also stated that "[t]he parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. ... The word 'intentionally' makes it clear that this section does not apply to situations in which, through no fault or act of their own, spouses are laid off, terminated or given reduced hours of work." The Court also found that there was no requirement of bad faith.
In Thompson v. Thompson 2013 ONSC 5500 (SCJ) Chappel J. provided a helpful analysis:
99 In determining a party's capacity to earn income, some of the principles which the court should consider and which are relevant to this case include the following:
a) There is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their children. Drygala v. Pauli, Supra.; L. (N.) v. P. (B.), 2000 22516 (ON SC), 2000 CarswellOnt 2487 (Ont. S.C.J.).
b) The court will not excuse a party from their child support obligations or reduce these obligations where the party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations. A self-induced reduction of income is not a basis upon which to avoid or reduce child support payments. Hanson v. Hanson, 1999 6307 (BC SC), 1999 CarswellBC 2545 (B.C. S.C.); L. (N.) v. P. (B.), Ibid.
c) If a party chooses to pursue self-employment or an alternative income earning path, the court will examine whether this choice was a reasonable one in all of the circumstances, and may impute an income if it determines that the decision was not appropriate having regard for the parent's child support obligations. Lawson v. Lawson, Supra.; Blake v. Blake, 2000 CarswellOnt 2477 (Ont. S.C.J.).
d) A party may be imputed income if their unemployment or under-employment are self-induced. Examples include where the payor quits their employment for selfish or bad faith reasons, Ronan v. Douglas-Walsh (1994), 1994 3826 (ON CJ), 5 R.F.L. (4th) 235 (Ont. Prov. Div.). or engages in reckless behaviour which affects their income earning capacity. Rogers v. Rogers, 2013 ONSC 1997, 2013 CarswellOnt 4068 (Ont. S.C.J.).
I find that the Applicant’s decision to leave the traditional workplace to pursue self-employment was inappropriate. By his own admission he knew that operating his own business would not generate sufficient income to meet his support obligations for at least the first few years. He unilaterally decided to impose the vagaries and hardships of self-employment on those persons dependent on him for support. In any event he has had more than enough time to either make self-employment profitable, or revert to more reliable income.
I find that the Applicant is now under employed, and the appropriate income to be imputed to him is the $45,693.00 which he was earning in his last year of traditional employment.
My order:
Order per Minutes re spousal support and arrears.
Commencing July 1, 2014 the Applicant shall pay base guideline support to the Respondent for the child Stephen in the sum of $410.00 per month based upon an imputed income of $45,693.00.
The previous annual disclosure provisions of Justice McLaren’s order continue.
Support deduction order.
The Applicant shall pay to the Respondent costs on today’s financial issues fixed in the sum of $500.00 – the amount requested by the Respondent’s counsel.
Pazaratz, J.
Released: July 4, 2014
COURT FILE NO.: F2222/09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ALEXEY LAVRINENKO
Applicant
-and-
MARIA LAVRINENKO
Respondent
REASONS FOR JUDGMENT
The Honourable Mr. Justice Pazaratz
Released: July 4, 2014