COURT FILE NO.: FC-99-410-01
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Alison Jane Scarrow
Applicant
– and –
Brian Jack Cowan
Respondent
Joyce Faria
Unrepresented
HEARD: January 2, 2014
McDermot J.
Introduction
1The Applicant and the Respondent in this proceeding, Alison Scarrow and Brian Cowan, have a very special daughter named Bronwyn Cowan. Bronwyn is 17 years of age, and is quite involved in the arts, especially music. In late 2012, she was chosen as the only representative from Northern Ontario for a long term exchange program in Austria sponsored by the Rotary Club. She has been in Austria since August, 2013, and will be returning to Canada in September, 2014.
2Unfortunately, Bronwyn’s parents are separated. Bronwyn and her mother live in Parry Sound and her father lives in Barrie. Both parties have new families. A further misfortune for Bronwyn is that her relationship with her father broke down in October, 2009 and they have seen very little of each other since. Each party blames the other for this and Mr. Cowan especially blames Bronwyn herself. Apart from blame, the person who has been deprived of a relationship with her father is Bronwyn, and that is undeniably tragic.
3Although access to Bronwyn was raised as an issue in this Motion to Change by the Applicant, it is now largely irrelevant. Bronwyn is now in Europe and will be 18 by the time she returns to Canada in September of this year. The issues before the court are therefore financial in nature as the Respondent is in arrears of support and feels that he has overpaid support because he continued to pay daycare costs even though Bronwyn obviously has not needed daycare for years. He also states that his income has dropped and that support should be reduced. I cannot help but ask whether this motion would even have been brought had the Respondent maintained the relationship that he should have had with Bronwyn; financial issues are often the only way that a parent with a failed relationship with a child can express his or her frustration.
4In any event, the Respondent’s Motion to Change was argued in front of me on January 2, 2014. For the reasons set out below, I have determined that the following order shall issue:
a. The Respondent’s motion to rescind arrears is dismissed.
b. The Respondent’s motion to terminate child support is dismissed.
c. The Applicant’s motion for payment by the Respondent of a one half share of the child’s European exchange trip is dismissed.
d. Paragraph 4 of the final order of Goodman J. dated August 18, 2003 is varied as follows:
i. The Respondent shall pay the Applicant base guideline child support in the amount of $245 per month commencing December 1, 2012.
ii. Child support is payable for one child and is based upon a finding that the Respondent’s income is $30,000 per annum;
iii. The allowance for day care in the amount of $74 per month is terminated as of November 30, 2012.
iv. The Respondent shall pay pursuant to s. 7 of the Child Support Guidelines a one half share of the child’s orthodontic expenses, being $2,915 (one half of $5,830), which is payable by the Respondent to the Applicant in installments of $125 per month commencing March 1, 2014.
e. Other than as set out herein, all other terms and conditions of the said order shall remain in full force and effect.
Background Facts
5These parties were married on September 16, 1995. They were divorced on August 17, 2004. Their daughter, Bronwyn, was born August 16, 1996. As mentioned above, after separation, Bronwyn remained with her mother who now lives in Parry Sound. Mr. Cowan lives in Barrie.
6Mr. Cowan is an investment advisor. He advised the court that he worked for an investment firm known as W.H. Stuart Mutuals Inc., which is now in receivership; in fact, he and his accounts are now with a company known as Keybase Financial Group Inc.
7Ms. Scarrow, until recently worked for a credit union in Parry Sound. She presently works part time and operates a bed and breakfast in Parry Sound with her husband.
8The parties originally settled their affairs through the final consent order of Goodman J. dated August 18, 2003 which is in issue in this proceeding. That order gave Ms. Scarrow full custody of Bronwyn; it also gave the Respondent fixed access to Bronwyn, which appeared to be fairly limited in scope. The relevant provisions in the agreement which are in issue in this proceeding were the child support provisions, which are as follows (emphasis in original order):
The Respondent Father shall pay as child support for Bronwyn commencing September 1st, 2003 the sum of $296.00 as base child support in accordance with the Federal Child Support Guidelines for one child, the Respondent Father’s income having been determined to be $33,792.00 per year, and $74.00 per month on account of the day care expenses incurred by the Applicant Mother for Bronwyn, for a total amount payable by the Respondent Father of $370.00 per month.
The Respondent Father shall maintain life insurance in the amount of $82,500.00 as security for his child support obligation, naming Bronwyn as the irrevocable beneficiary of such policy for so long as the Respondent Father is obligated to pay child support to the Applicant Mother for Bronwyn. Should the Respondent Father fail to maintain such a policy of insurance, his obligation for child support shall, in the amount of $82,500.00, constitute a first charge against the estate of the Respondent Father
The parties shall exchange financial information and in particular complete income tax returns, including attachments, enclosures and Notices of Assessment by June 1st of each year commencing in 2004. The parties shall thereafter determine the appropriate amount of base child support to be paid by the Respondent Father to the Applicant Mother for Bronwyn, including their proportionate contribution on account of the day care expenses.
9Ms. Scarrow says that the Respondent has defaulted on all three of these paragraphs of the order. She notes that the Respondent is in default of his obligation to pay child support in the amount of $3,756.50 as of September 18, 2013. She also says that the Respondent has never provided or obtained the life insurance which he agreed to in the consent order; based upon the financial disclosure, she says that the first charge on the Respondent’s estate means exactly nothing as he has nothing. Finally, until well after this motion to change was commenced by the Respondent, she has also never been provided with his “complete income tax returns” as required under paragraph 6 of the order.
10Indeed, had Mr. Cowan made that disclosure as required under the consent order for 2009 and 2010, he may very well have been now paying more in support as his annual income for each of those two years, according to his Notices of Assessment, was $43,864 and $50,403 respectively. However, he did not make the disclosure and does not deny that he failed to make annual disclosure as required by the consent order. He notes, however, that neither did the Applicant and also that the Applicant never requested financial information from him.
11Mr. Cowan also acknowledges that he is in arrears of child support, and indeed, he has lost his driver’s license as a result. He says, however, that because of his income decreases, he cannot pay the support under the agreement, and that, in any event, he has overpaid support by paying for the daycare for the past five or so years (since Bronwyn turned 12). He was somewhat cavalier about the life insurance; he does not deny that he has failed to obtain the life insurance, but he says that there is very little support to secure in any event because of Bronwyn’s age and because of his decreases in income.
12As noted in the Respondent’s material, he has continued to pay for Bronwyn’s day care long after that obligation would have come to an end. Mr. Cowan estimates that he has now overpaid $4,662 as of November, 2013; he says that the day care expense should have come to an end as of August, 2008, when Bronwyn turned 12.
13Ms. Scarrow says that that may be so; however, she says that there have been other expenses for Bronwyn that more than make up the overpayment for day care. Throughout her school career, it appears that Bronwyn was very talented in music, and there were costs associated with that activity. As well, since 2010, there have been school trips and other school expenses, such as Bronwyn’s Grade 8 Graduation expenses. More significantly, there are Bronwyn’s orthodontic costs, which total $5,830 as well as the costs of the Austrian exchange trip, which total $6,339. Ms. Scarrow seeks reimbursement by the Respondent of half of both of these expenses.
14As noted above, during all of this time, the Respondent’s relationship with his daughter has broken down. It is common ground that after a disagreement about Bronwyn cleaning up the dinner dishes during an access visit in October, 2009, the regular access visits between she and her father ceased. They did not see each other for seven months after that. The next weekend visit took place in April, 2010; the Respondent says that this visit was an excuse for Bronwyn to ask for money for her elementary school prom dress. The Respondent refused. There have been very few visits and little communication since.
15It is difficult for me to determine whether the Respondent has been more or less childish than was Bronwyn. Ms. Scarrow deposes that the Respondent has since failed to give Bronwyn Christmas or birthday gifts; the Respondent’s response was that Bronwyn has also failed to buy him or her stepsisters gifts. When the Applicant requested that the Respondent sign Bronwyn’s passport application and a visa application for Austria, the Respondent refused; he did so, according to his affidavit because he “had not seen daughter for at least a year” and was not involved in the decision making process concerning the European exchange trip. I simply cannot understand that response; whether or not the Respondent was involved in the decision to go to Europe or whether or not he had seen his daughter, it strikes me as mean-spirited to obstruct the exchange trip, again whether or not he has to pay for it. And although Bronwyn may very well have been immature, she is an adolescent under the age of 18; the Respondent is an adult aged 51.
16In any event, there have been a number of significant expenses for Bronwyn not normally covered by base guideline child support, which the Respondent objects paying for. Firstly, in May of 2012, Bronwyn paid a visit to the orthodontist in Sudbury; she requires remedial work estimated to cost $5,473.62. The Applicant continues to pay some $253.17 per month towards this treatment. Although the dental work was removed for the European trip, further work may be required on Bronwyn’s return.
17More contentious to the Respondent is the fact that Bronwyn was chosen by the Rotary Club for a student exchange to Austria. As noted, she was the only student chosen from Northern Ontario for this exchange. The terms appear to be that the Rotary Club will cover room and board; Ms. Scarrow agreed to cover air fare and activities in Vienna. The exchange began in August, 2013 and Bronwyn will return in September, 2014. Unfortunately, Bronwyn loses a year of school as a result and will enter her Grade 12 year in September when she returns; there is little doubt, however, that a year in Europe improving her musical talents and learning German is in Bronwyn’s best interests.
18As previously mentioned, the cost of the European exchange is estimated to be in the range of some $6,339. Unfortunately, after Bronwyn was accepted for the program in late 2012, Ms. Scarrow was downsized out of her job with the Kawartha Credit Union in January, 2013. She obtained several part time bookkeeping jobs which effectively gave her full time hours until July, 2013; she received some Employment Insurance benefits, and has been assisting her husband in setting up a bed and breakfast in Parry Sound. The last financial statement filed by her and dated September 13, 2013 states that her annual income is $25,181.64.
19Mr. Cowan has also undergone financial reversals. As noted, his income as an investment advisor earned him income in 2009 and 2010 in the range of between $40,000 and $50,000 per annum, well beyond the amount upon which child support was based in the 2003 consent order. However, in June, 2013, the Mutual Fund Dealers of Canada suspended the membership of his brokerage house, W.H. Stuart Mutuals Ltd. W.H. Stuart is now in receivership, and Mr. Cowan lost his commissions for May, 2013 as there was nothing in the W.H. Stuart account to pay those commissions. During argument, Mr. Cowan said that the firm is now undergoing an extensive audit and his own Book of Business is in the hands of the auditors; he says he cannot even switch brokerages. His last financial statement filed states that his income is in the range of between $18,000 and $20,000 per year.
20I am extremely concerned as to whether Mr. Cowan was being honest with me when he said that he cannot change brokerages and that his Book of Business is unavailable to him. According to the news releases from the Mutual Fund Dealers Association of Canada:
The accounts of clients of W. H. Stuart were transferred to Keybase Financial Group Inc. (Keybase) effective June 1, 2013. Most Approved Persons of W. H. Stuart who handle client accounts have become Approved Persons of Keybase.1
21It appears that Mr. Cowan was one of those “Approved Persons” as he provided a Commission Statement from Keybase dated November 15, 2013.2 Mr. Cowan appears to have already switched brokerages and is no longer associated with W.H. Stuart. That does not jibe with the impression that Mr. Cowan left with me at court, which was that he was caught up in the receivership of W.H. Stuart and as such he was losing clients and his income was also limited by this fact.
22Much of this has occurred since the Respondent began this Motion to Change in November, 2012. This may explain why the Respondent’s Motion only requests that he pay base guideline child support in the amount of $245 per month based on income in the amount of $30,353; at the hearing of the motion, he requested a substantial reduction in child support based upon the reduction of his income below $19,000 per year notwithstanding the fact that his Motion to Change does not request that reduction and was never amended. He also requested during argument an order that child support cease during the European trip because Bronwyn did not qualify as a dependent while in Europe; again that relief was not set out in the Respondent’s Motion to Change as it predated Bronwyn’s acceptance into that program. The Motion does request orders that the day care expenses terminate and that the day care expenses incurred be applied to arrears which have accrued under the Goodman J. consent order. He requests a further order that child support terminate when Bronwyn turns 18.
23The issue of the apparent inadequacies in the Respondent’s pleadings were not raised by Applicant’s counsel during argument; this may be because there was a clause in the Motion to Change which requested that the court “Change support payment according to guidelines” which may cover the issue of the Respondent’s subsequent decrease in income. The Response to Motion to Change does not request a retroactive increase in base child support but does request that child support be increased based upon the Respondent’s averaged income commencing February 1, 2013. It also requests an equal sharing of the expenses for the European trip and the orthodontic work; however, it only sets out the cost of the exchange as being $2,700 rather than the actual costs incurred as set out in the Applicant’s affidavit. As well, although the Applicant does not request a retroactive increase in the base Guideline child support, she requests that the Respondent’s request to rescind arrears be dismissed; alternatively she asks that any overpayment in day care from 2008 on be applied to the extraordinary expenses which were incurred in the years since then that the Respondent did not or would not contribute to as well as the base support that he should have paid. According to the Response, the termination of child support should not take place until Bronwyn graduates with one undergraduate or college degree or when she otherwise completes school.
Analysis
24As the parties are divorced, jurisdiction to change the child support under the within order lies under s. 17 of the Divorce Act,3 which permits a change in child support in the event of a “change in circumstances as provided for in the applicable guidelines.” No real issue was taken by either party as to whether such a change had taken place. It was apparent that the Respondent’s income has changed substantially since the order was made, and the day care expenses came to an end no later than when Bronwyn turned 12. There are now substantial extraordinary expenses not contemplated when the original order was completed. I have no difficulty in finding that there has been a change in circumstances which gives this court jurisdiction to vary the support terms contained in the 2003 consent order.
25That being said, the pleadings and argument between the parties raise the following issues:
a. Should the Respondent’s arrears of child support be rescinded through a credit of the overpayment of daycare expenses by the Respondent as against support otherwise payable?
b. What ongoing child support should the Respondent pay the Applicant taking into account the special expenses claimed by the Applicant?
26I shall consider each of these issues in turn.
(a) Should the Respondent’s arrears of child support be rescinded through a credit of the overpayment of daycare expenses by the Respondent as against support otherwise payable?
27Under the present order, the Respondent paid a total of $370 per month made up of base support in the amount of $296 per month plus day care expenses of $74 per month. The Applicant does not deny that these day care expenses came to an end in August, 2008, when Bronwyn turned 12.
28It is unclear what the arrears actually are. The Applicant’s affidavit states that, according to the statement obtained through telephoning in through the director of the Family Responsibility Office, the Respondent was in arrears in the amount of $3,756.50 as of September 18, 2013. The Respondent acknowledges arrears of about $4,000 taking into account a $400 charge for removal of his driver’s license. He says that the overpayment in day care expenses is about $4,662 (63 months @ $74 per month) and even acknowledging the claim by the Applicant for one half of the special expenses incurred in 2010, 2011 and 2012 excluding the orthodontic and trip expenses (the Applicant says the Respondent owes $1,642; the Respondent states that his share is $821), he still owes no support arrears.
29If I understand the Applicant’s position correctly, she does not want to claim any special expenses before 2010, and does not request anything other than a dismissal of the Respondent’s claim for rescission of arrears. She states firstly that the Respondent has no basis at law for a retroactive rescission of arrears prior to his commencement of these proceedings in November, 2012 being the date of effective notice of the Respondent’s claim for rescission of arrears. If, however, I should find he is entitled to a retroactive reduction in child support, Ms. Scarrow then seeks to set off the arrears that the Respondent seeks to rescind against the amount that would otherwise have been payable by the Respondent for support for those years in light of his actual income and Bronwyn’s special expenses during those years.
30Therefore, I must first consider whether the Mr. Cowan has a good claim for a retroactive rescission of arrears and reduction of support, considering the fact that it is acknowledged that the he could have applied for a cessation of day care expenses in August, 2008, but apparently took no step in that direction until November, 2012, more than four years later. If I should find that the Respondent’s claim for a retroactive rescission of arrears is ill founded, I need not consider the Applicant’s claim for set off against what the Respondent should have paid.
31As noted in the Applicant’s factum, different legal criteria apply to a retroactive claim for rescission of arrears from a retroactive claim for child support. This was confirmed in D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231 when Bastarache J. stated [at paragraph 98]:
Before canvassing the myriad of factors that a court should consider before ordering a retroactive child support award, I also want to mention that these factors are not meant to apply to circumstances where arrears have accumulated. In such situations, the payor parent cannot argue that the amounts claimed disrupt his/her interest in certainty and predictability; to the contrary, in the case of arrears, certainty and predictability militate in the opposite direction. There is no analogy that can be made to the present cases.
32In Corcios v. Burgos, 2011 ONSC 3326, [2011] O.J. No. 2422 (S.C.J.), D.L. Chappel J. appeared to disagree with this statement, and stated that Bastarache J. was solely speaking of a situation where the payor fails to establish a change in circumstances during the period that child support arrears accrued, but seeks to reduce or rescind arrears based on current hardship and inability to pay the arrears: see paragraph 53. Although that might be debatable, the case has value as it discusses on a comprehensive basis the “special circumstances” which might establish a retroactive rescission of child support arrears prior to the date of effective notice of the claim. These criteria are set out at paragraph 55 of the report and appear to surround the past and present circumstances of the payor spouse, as well as his or her conduct:
The mere accumulation of arrears and present inability to pay them is insufficient, on its own, to warrant a retroactive variation of support. There must be evidence of significant hardship on the payor spouse or evidence that the payor cannot, nor will he or she ever be able, to repay the arrears: see also Haisman v. Haisman (1994), 1994 ABCA 249, 116 D.L.R. (4th) 671 (Alta. C.A.) and DiFrancesco v. Couto (2001), 2001 8613 (ON CA), 207 D.L.R. (4th) 106 (Ont. C.A.);
The conduct of the payor is important in determining whether to grant relief. Where there has been inordinate delay in prosecuting the motion to change, there must be a reasonable excuse for doing so. As well, the court may review the payment history of support, whether the payor has made adequate financial disclosure and his or her general compliance with the court order or orders in question: see also DiFrancesco v. Couto, supra and Hennings v. Hennings Estate (1999), 1999 14989 (ON SC), 48 R.F.L. (4th) 346 (Ont. S.C.J.);
Relief may be granted where a “child support payor can establish a change in circumstances during the time that arrears were accumulating which rendered them (sic.) unable for a substantial period of time to make child support payments”. These circumstances must be significant and long lasting and such that the court, at the time of the change in circumstances, would have then at least granted a stay of proceedings: see also Buckingham v. Buckingham, 2013 ABQB 387 and Haisman v. Haisman, supra
33In reviewing the present case, it is obvious that there was a point in time where the payor was entitled to stop paying the day care expenses connected with Bronwyn as this was an expense that was no longer being accrued. The Respondent was presumably aware of the fact that Bronwyn turned 12 in August of 2008 and that the expense was no longer chargeable; rather than doing something, he chose not to take any steps to vary the support or even broach the subject with the Applicant. He has failed to explain his delay in acting, and considering that he failed to provide the financial disclosure as required by the court order, he may very well have been earning income at that time which would have warranted an increase in his guideline support in 2008. He certainly was making income in 2009 and 2010 which would have warranted such an increase. This all begs the question of whether he failed to bring his motion to change because he was well aware of the fact that the recipient, Ms. Scarrow, would have then received financial disclosure and requested an increased amount of base guideline support. By 2009, based upon the e-mails from Ms. Scarrow, the Respondent was also aware that he would have confronted significant claims for add-on extraordinary expenses were he to take steps. In my view, the evidence supports the contention that Mr. Cowan only waited until his income fell by a sufficient amount to bring the application because at that point, he knew that he stood a good chance of reducing support. The delay can therefore only be explained by Mr. Cowan’s concern for his own financial well-being and because he knew that to bring an application to reduce support in 2008, 2009 or 2010 may very well have resulted in an increase in his obligation to pay child support for Bronwyn.
34Moreover, I also do not find that enforcement of the $4,000 or so in arrears would cause significant financial hardship to the Respondent in this case. His financial statement and income tax returns indicate that, although his income has dropped, his lifestyle has not changed. He appears to have been able to maintain an interest in a rental property that is now sold. He lives a middle class lifestyle; although I understand that he does not own the Jaguar that he uses, he lives in a suburban home and has all of the accoutrements of that lifestyle. The amount of arrears owed is not an unmanageable or excessive amount, especially considering that he acknowledges holding $78,000 in mutual funds in his financial statement which could be applied to payment of the arrears. He has not demonstrated severe financial hardship in the present case which would warrant a retroactive reduction in support under the circumstances.
35It would therefore be unfair to grant a retroactive reduction in support. The reasons for this are largely conduct based. The Respondent has not explained his delay in proceeding, but it is likely because he did not want to risk a higher amount of guideline child support when he was entitled to bring these proceedings. As well, he failed to make financial disclosure, or, for that matter, to provide the life insurance, both of which were required under the consent order. Finally, I do not find the amount of arrears that have accrued to date to be sufficiently significant to cause the Respondent hardship.
36I would note that this case is distinguishable from that of Spillman v. Brndjar, 2010 ONSC 6086. In that case, the moving party had been demanding receipts for day care expenses as early as 2003; Healey J. found that “both the table amount of support and the section 7 add-ons from 2004 onward have been concerns which the parties both knew were live issues that remained unresolved, and knew that the opposing interested party wished to address them.” [paragraph 11]. Based upon that, Healey J. granted a retroactive adjustment and a credit of the overpayment of day care expenses back to 2004. In the present case, however, Mr. Cowan did nothing and demanded nothing until November 20, 2012, in my view, purposefully, until his income decreased to the point to make it worthwhile bringing this motion to change. That was not the case in Spillman.
37Accordingly, the Respondent does not meet the legal criteria necessary to warrant a retroactive rescission of arrears as requested. As such, I do not have to consider the criteria for the Applicant’s retroactive increase in support to be set off against the arrears to be rescinded.
38The Respondent’s motion to reduce support retroactively is accordingly dismissed. The day care expenses shall cease only as of the date of effective notice of the within Notice to Change, which appears to be dated November 29, 2012 and presumably served on or after that date.
(b) What ongoing child support should the Respondent pay the Applicant taking into account the special expenses claimed by the Applicant?
39There are a number of issues to be canvassed under this heading. Firstly, the income of the Respondent, and if necessary the Applicant, must be determined for child support and extraordinary expense purposes. In addition, the Respondent has requested that child support cease during the exchange trip that Bronwyn ins presently on, and this ties into the issue of the present extraordinary expenses presently being incurred by the the Applicant. Finally, the Respondent has requested that the child support come to an end as of Bronwyn turning 18 years old.
(i) Income Issues
40As noted above, Mr. Cowan has suffered business reversals. Until recently, he was an investment advisor for a company known as W.H. Stuart Mutuals Ltd. In 2013, that company has had its license suspended for unspecified irregularities and is now in receivership. Mr. Cowan says his Book of Business is being reviewed by the auditors that he is losing clients, although, as noted above, I have some doubts about this representation. Although Mr. Cowan’s income in 2009 and 2010 had increased well beyond the income attributed to him in the Goodman J. consent order, he says his income is now decreasing and support should be reduced accordingly.
41Mr. Cowan says that child support should be set according to his 2012 line 150 income in the amount of $18,939.16 as provided for in s. 16 of the Child Support Guidelines.4 It is his position that his income is decreasing based upon what he calls “negative economic conditions.” He does not specify what those negative conditions are. He states that his last years’ 150 income is reflective of what his actual income presently is. He projects his income in 2013 to be $21,000;5 this takes into account the fact, presumably, that he was not paid his commissions for May of this year due to the receivership. He said during argument that when he gets his Book of Business back from the auditors, he will be moving to another brokerage firm.
42Prior to accepting Mr. Cowan’s contention that I should just accept his Line 150 income as being determinative, I must take into account s. 19 of the Child Support Guidelines, which allow imputation of income under certain circumstances. Mr. Cowan appears to acknowledge that this was done when the 2003 order was made; he says that in 2003 he actually did not make the money attributed to him in the order.6 In particular, I need to review the issue of imputation of income in light of Mr. Cowan’s self-employed income and deductions for business purposes as permitted under s. 19(1)(g), which allows for imputation of income where “the parent or spouse unreasonably deducts expenses from income”.
43A review of Mr. Cowan’s income tax returns for 2010, 2011 and 2012 raise serious concerns about the calculation of his Line 150 income. Firstly, he deducts in 2011 and 2012 significant rental losses from a rental property during those years. In argument, he said that he did not actually own this property and that it had now been sold; he said it was always in his wife’s name. When asked about how he could claim deductions for a rental property that he did not own, he said that he did not know, but that he took his accountant’s advice in those matters.
44As well, Mr. Cowan claims business expenses which also raise several areas of concern. He claims his home expenses in each of these years; the amount was negligible in 2010 but increases substantially in the following two years. Mr. Cowan fails to explain why or whether he needs a home office. Of greater concern, Mr. Cowan claims significant vehicle expenses including the depreciation of his vehicle. In 2013, he lost his license due to non-payment of child support and presumably is not driving; yet he does not raise this as a reason why his income has dropped; the only place where he says it has affected him is in his inability to meet half way to sign Bronwyn’s visa application or to visit Bronwyn. The necessity of his vehicle to his employment is highly problematic.
45I am therefore going to exclude from Mr. Cowan’s income his home office expenses and rental loss/income expenses. Accordingly, I can calculate his income for the past few years as follows:
Year
Line 150 Income
Plus Rental Losses
Plus Home and Vehicle Expense Deductions
Income for Support Purposes
20097
$43,864.00
2010
$50,403.15
($1,409.54)8
$3,920.00
$52,913.75
2011
$30,352.94
$9,437.52
$7,521.93
$47,312.39
2012
$18,939.16
$5,568.55
$5,434.82
$29,942.53
20139
$21,000.00
46I have concerns about the veracity of Mr. Cowan’s income estimates or for that matter, the information contained in his materials in respect of his income. The material discloses that his evidence is simply not trustworthy. He failed to disclose the reasons why his income has dropped, attributing it “to the ongoing economic decline in his industry”10 without further explanation. In my view, he did not give me the entire story on his brokerage firm’s receivership, or as to his present employment situation. He claimed rental losses on a property that he acknowledged on the record that he did not actually own and blamed his accountant for that. He is in breach of the 2003 consent order, insofar as he has failed to fund and obtain life insurance as required in that order; he also failed to provide annual financial disclosure and pay the proper amount of child support according to the Child Support Guidelines as he should have.
47That being said, his income has, in fact, declined over the past five years. I am going to presume that this was not purposeful; it would make no financial sense to do so unless there was some ulterior reason to do so, and I do not find this litigation to be sufficient motivation for that. He could have kept on paying the child support under the 2003 order without change based upon the fact that it appeared unlikely that the Applicant would not have taken steps as she had not taken steps to change the child support since that order was made. It simply was not worthwhile intentionally reducing his own income based upon past history. Section 19(1)(a) of the Guidelines has no application to this case and I do not find that the Respondent has intentionally reduced his income.
48Under s. 17(1) of the Child Support Guidelines, where the line 150 income does not reflect the parties’ correct income for child support purposes, I may review income in light of the income patterns over the last three years:
- (1) If the court is of the opinion that the determination of a parent’s or spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the parent’s or spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.
49The three years for which a complete income calculation was possible were 2010, 2011 and 2012. Ms. Faria urged me to average those three years to calculate income for support purposes. However, although Mr. Cowan’s gross business income has fluctuated slightly between 2010 and 2011, it has fallen drastically since then and it is unfair to ask Mr. Cowan to pay more than he can afford based upon an averaging of income. As I have found that Mr. Cowan did not intentionally reduce his income, I adopt the statement of Sandormirsky J. in Hill v. Preston, 2010 SKQB 221 at paragraph 14: “that position is not tenable where [the Respondent’s] income declines steadily for the last three years due to employment factors beyond his control.”
50I do not accept that the Respondent’s 2013 income should be part of that calculation. The information provided is simply incomplete, and 2013 is an aberration because of the receivership of W.H. Stuart. Accordingly, I am going to use the Respondent’s 2012 income for support purposes as calculated by me for ongoing child support. His income for support purposes is therefore $29,942 per year, rounded up to $30,000 per year.
51Ms. Scarrow’s income is relevant only for the purposes of determining the proportionate share of section 7 expenses. Her income has fluctuated between $34,000 and $35,000 per year when employed; there is no doubt that her income has decreased and that she is no longer employed on a full time basis due to circumstances beyond her control. There is no possibility in my mind that her income is in excess of that of the Respondent. As such, an equal sharing of section 7 expenses, as requested by Ms. Scarrow, is appropriate and I need not go beyond that in determining Ms. Scarrow’s income.
(ii) Base Guideline Child Support
52Based upon my income findings above, the Respondent would pay base guideline child support in the amount of $245 per month. The varied base guideline child support amount would commence as of the date of effective notice, being December 1, 2012.
53The real major issues to be decided are whether the guideline support would continue while Bronwyn was on her exchange trip, as well as whether that support would come to an end as of Bronwyn’s 18th birthday. As Bronwyn will be 18 when she returns from her exchange trip, the net effect of the Respondent’s request would be that child support would come to an end as of August, 2013, when Bronwyn left the Applicant’s home to go on her exchange trip.
54In reviewing the Respondent’s factum, he says that both of these issues concern when Bronwyn ceases to be a dependent under the Family Law Act.11 In fact, as these parties are divorced, jurisdiction for child support and variation of child support arises from s. 17 of the Divorce Act. Under that statute, child support is payable so long as a child remains “a child of the marriage” which is defined in s. 2 as follows:
“child of the marriage” means a child of two spouses or former spouses who, at the material time,
(a) is under the age of majority and who has not withdrawn from their charge, or
(b) is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life;
55It stands to reason that during the time that a child is on an exchange trip to another country, he or she is unable to work and remove herself from the charge of her caregiver or obtain the necessities of life. Bronwyn is not able to work and intends to come back to the care of the Applicant when she returns. She is pursuing educational interests there, even if she is not going to obtain high school credits there. Although she receives a living allowance in Austria, the Applicant’s evidence confirms that this does not cover all of her expenses and the Applicant continues to provide her with funds, not only for programs while she is there, but for some of her necessities as well. Notwithstanding the fact that she is operating a bed and breakfast, she will have to have a bedroom available for Bronwyn upon her return to Canada, and Bronwyn is intent upon returning to school at that time.
56The case law has confirmed that children generally remain within the definition of a “child of the marriage” while on an exchange trip such as in the present case: see Gluska v. Gluska¸[2011] B.C.J. No. 2186 (S.C.), Piper v. Piper, [2010] B.C.J. No. 2417 (S.C.) and Pitroff v. Pitroff, [2005] S.J. No. 640 (Q.B.). I can do no better than to repeat the words of R.E. Powers J. in Gluska [at paragraph 55]:
The child T. had completed high school before she was 19. She then was sponsored by a rotary club program and went to Thailand for the school year until August of 2010. Her plan was to continue in post secondary education when she returned to Canada. Her involvement in the rotary club program was optional, but part of improving her resume for applications for university and ultimately medical school. Ms. Rae continued to provide support for her during that time. I am satisfied that although she was not registered in a post secondary education program, she was registered in a school program in Thailand. I am satisfied that it was a reasonable thing for her to do and that she was unable to remove herself from the charge of her parents because of advancing her education. I find that she was a child of the marriage, up to September of 2010.
57I note that in Gluska, the case for termination of support was even stronger than in the present case as the child had completed high school prior to embarking on the program.
58As I noted above, the exchange trip is something which I find reasonable and enriching to Bronwyn. She will be returning to school after her return, and this program is as much a part of her education as would be a post secondary university program. As such, I find that she remains a child of the marriage while on her exchange trip to Austria. Furthermore, base child support should continue to be paid by the Respondent during the exchange program, notwithstanding the fact that Bronwyn is not living under the Applicant’s roof during that period. There is ample evidence that the Applicant continues to bear significant costs for Bronwyn notwithstanding the fact that she does not live with the Applicant; she continues to pay Bronwyn a monthly allowance, and she pays for activities that Bronwyn participates in in Europe. And there is little doubt that the Applicant will have to provide accommodation and pay the not insignificant expenses of Bronwyn when she returns to Canada in September, 2014.
59It is also premature to cut Bronwyn off of support as of the age of 18. When she returns, she will be returning to high school. If she does not, the Respondent may renew his application. However, he should bear in mind the definition of “child of the marriage” noted above, which usually includes a child who is participating in a post secondary educational program to at least the first undergraduate degree or certificate. It is unknown what the future holds and the Respondent’s application to terminate child support is premature and must be dismissed.
(iii) Section 7 Expenses
60There are two issues to be considered in this case. The first is the orthodontic expenses of Bronwyn, which the Applicant states are $5,830. Secondly are the costs of the Austrian exchange trip, which the Applicant says cost her $6,339.
a. Orthodontic Expenses
61The Applicant asks that these expenses be borne by the parties on an equal basis. She says that she is paying $252.95 per month and has been doing so since October, 2012. She requests reimbursement of one half of this amount by monthly payments from the Respondent in the amount of $125 per month.
62The Respondent denies that he should have to pay any of these expenses. He says that neither party was in a financial condition to enter into the orthodontic commitment when it was made in September, 2012. He also says that it is unclear why she would enter into this treatment plan when the treatment would have to be suspended in August, 2013 when Bronwyn went on exchange.
63The Child Support Guidelines speak specifically to orthodontic treatment being included as a section 7 expense: see s. 7(1)(c). The only issue is whether these expenses are reasonable considering the “means of the spouses and …the family’s spending pattern prior to separation”.
64It is apparent to me that both of these families live a middle class lifestyle. That may be because of the spouses of the parties, but at the time that the expense was incurred, being in September, 2012, the Applicant had received no financial disclosure from the Respondent that would lead her to believe that he was in any financial straits at the time. Bronwyn had not been accepted into the exchange program at that time, and the Respondent does not deny the assertion that more funds were then flowing from him. The Applicant herself had a long term position with the credit union and there is no evidence that she was aware that she was subject to a downsizing at that time. Based upon all of these circumstances, it appears to me that the expense was a reasonable expense to be incurred when the commitment was made in September, 2012. That is especially so where this expense is for orthodontic work and if the work was not done, there might be serious future consequences for Bronwyn as an adult.
65The Respondent complains that more expenses may be incurred because the decision was unwise considering the European exchange. That issue may go to the question of whether the Respondent is liable or not liable for further expenses if Bronwyn is found to need further work at further expense after her return. However, the only issue before me is the present expense of $5,830. The Respondent owes the Applicant one half of this amount, and accordingly, in addition to the base support, the Respondent shall pay the Applicant the s. 7 expense of $2,915, repayable by payments of $125 per month commencing March 1, 2014 until repaid.
b. Exchange Trip
66The Applicant requests reimbursement of one half of the cost to her of Bronwyn’s exchange trip to Austria, which presently totals, according to her materials, $6,339.
67The Respondent objects on the basis that he was not consulted about this trip. He states that he would never have agreed to the expense based upon his own financial circumstances. He says that the expense is not reasonable considering the means of the parties at this point in time.
68I do not believe that the lack of consultation is a relevant factor. Based upon the Respondent’s material and his submissions, I believe that the Respondent would not have agreed to the exchange trip even were he able to afford it. He does not appear to accept the obvious benefits of the program, and in fact took the position that her departure meant that Bronwyn was no longer a dependent entitled to child support. He appears to have little understanding of the value of the trip or any comprehension as to what would or would not be in the best interests of Bronwyn.
69That being said, I do not find the expense of the European exchange trip to be a valid s. 7 expense under the circumstances. There are a number of reasons for this. Firstly, I agree with Mr. Cowan when he expresses a concern as to the reasonableness of the expense under the circumstances. Both parties had suffered financial reverses when it came time to make the commitment, and the combined income of the parties was no more than $60,000, and was perhaps less. Under the circumstances, and considering the means of the parties, I do not believe that it was reasonable to make a commitment to pay an expense which was well over $6,000.
70As well, the amount of the expense is problematic. In the Applicant’s Response, she says the expense was $2,700; later in her affidavit it has more than doubled. Although the Applicant deposed that Bronwyn quit her “dream job” to work to pay her expenses in Europe, there was no evidence provided as to what money that Bronwyn had managed to save towards the trip or as to what her actual contribution was.12
71Finally, base support is continuing to flow during Bronwyn’s absence, and this should cover part of the costs of Bronwyn when she is in Europe as the Applicant will not have the costs of food or other necessities that she would have to pay were Bronwyn living under her roof during the time when she is on the exchange trip.
72As such, the Applicant’s claim for reimbursement for the European exchange trip as a s. 7 expense is dismissed.
Order
73There will therefore be a final order to go on the following terms:
a. The Respondent’s motion to rescind arrears is dismissed.
b. The Respondent’s motion to terminate child support is dismissed.
c. The Applicant’s motion for payment by the Respondent of a one half share of the child’s European exchange trip is dismissed.
d. Paragraph 4 of the final order of Goodman J. dated August 18, 2003 is varied as follows:
i. The Respondent shall pay the Applicant base guideline child support in the amount of $245 per month commencing December 1, 2012.
ii. Child support is payable for one child and is based upon a finding that the Respondent’s income is $30,000 per annum;
iii. The allowance for day care in the amount of $74 per month is terminated as of November 30, 2012.
iv. The Respondent shall pay pursuant to s. 7 of the Child Support Guidelines a one half share of the child’s orthodontic expenses, being $2,915 (one half of $5,830), which is payable by the Respondent to the Applicant in installments of $125 per month commencing March 1, 2014.
e. Other than as set out herein, all other terms and conditions of the said order shall remain in full force and effect.
74The parties may make submissions as to the costs of this motion in writing. Costs submissions to be no more than five pages in length not including bills of costs or offers to settle. Costs submissions shall be made on a ten day turnaround, and to be served and filed firstly by the Applicant and then the Respondent.
McDERMOT J.
Released: February 11, 2014
Footnotes
- See http://www.mfda.ca/news/releases13/release-WHStuartIPC.pdf
- Paystub attached as Exhibit “A” to the Respondent’s affidavit sworn November 27, 2013
- R.S.C. 1985, c. 1 (2d Supp.)
- https://www.canlii.org/en/ca/laws/regu/sor-97-175/latest/sor-97-175.html
- Paystubs attached as Ex. A to the Respondent’s affidavit sworn November 27, 2013, Op. cit. In that Exhibit, Mr. Cowan says that his income is $18,350 up to November 15, 2013. Projecting the income from Keybase to the end of the year, that would work out as being $21,007 for 2013.
- Respondent’s affidavit sworn November 27, 2013, para. 13
- The only income document for 2009 is a Notice of Assessment. Losses or income from the rental property and other deductions are unknown.
- In 2010, the income tax return shows net rental income rather than a loss. For consistency’s sake, the rental income should be deducted from Mr. Cowan’s Line 150 income if the losses are to be added back in for subsequent years.
- Projected estimate only: see footnote 5.
- Respondent’s affidavit sworn November 27, 2013 @ paragraph 14.
- https://www.canlii.org/en/on/laws/stat/rso-1990-c-f3/latest/rso-1990-c-f3.html
- Applicant’s affidavit sworn September 24, 2013, paragraph 60