Overview

[1] The parties were married to one another on November 16, 1996 and separated on February 1, 2004. They were divorced in 2011.

[2] They have two children namely Rachel, 15 years of age, born October 18, 1999 and Nicole, 13 years of age, born December 21, 2001.

[3] The parties entered into a comprehensive Separation Agreement, (“the Separation Agreement”) dated October 1, 2004. At that time, they were each represented by experienced counsel who gave them independent legal advice with respect to the same.

[4] In or about January, 2012, a Motion to Change was commenced by the Respondent mother. She was seeking a variation of spousal support and child support as well as arrears of each. In his response to the Motion to Change, the Applicant sought equal time with the children.

[5] The process of the Motion to Change proceeded through the court. At the outset, both parties were represented by experienced counsel. Their evidence is that collectively they spent approximately $300,000 in legal fees in dealing with that Motion to Change. By May 2014, the Respondent mother was self-represented while the Applicant father continued to be represented by experienced counsel.

[6] On May 1, 2014, the matter was scheduled for a motion but there is an indication that at that time, the parties were advised that the financial issues would not be dealt with on a final basis at a motion and a trial would be required. On consent, the parties had previously agreed to a 50/50 co-parenting/time sharing of the children.

[7] The evidence of both parties is that they spent most, if not all of that day negotiating a resolution.

[8] Those negotiations culminated in Minutes of Settlement being signed that day which formed the basis of a Consent Order of Justice Douglas of May 1, 2014.

[9] A very short time later (the Respondent’s evidence being that it was within two weeks of that time), the Applicant indicated that he was seeking from the Respondent monies that he alleged were owed to him by the Respondent for section 7 expenses for a period of time from 2010 until May 1, 2014.

[10] The Applicant commenced this Application dated July 9, 2014. In the Application, he sought an enforcement of a paragraph of the Separation Agreement dealing with contributions to the children’s RESP’s. In addition, he sought arrears of section 7 expenses that he alleges are owed to him by the Respondent. In his Application, he seeks a reimbursement of $2,499.96. He also asked for an adjudication on a “go forward basis” with respect to recurring section 7 expenses.

[11] The Respondent in her Answer seeks an order dismissing the Applicant’s claim for retroactive section 7 expenses based on the May 1, 2014 Minutes of Settlement. With respect to the RESP issue, she seeks a dismissal of the Applicant’s claim that she be required to contribute “the maximum amount to the children’s RESP plan annually” Further, she seeks a determination of the percentage to be paid by each party with respect to future section 7 expenses.

[12] The parties advise the court that they consented to the following:

(b) The determination of the “Guideline income” for the Applicant is based on a line 150 total income for 2014 of $262,267.16 less rental income of $1,602.16 less schedule 3 expenses of $14,561.25. (That amount is 75% of $19,415.68).

(c) For the period May 1, 2015 to April 30, 2016, the parties agree that the percentage to be paid by each for any future section 7 expenses is to be 78% (Applicant) and 22% (Respondent). This is based on the “Guideline income” for the Applicant and based on an agreed “Guideline income” of the Respondent in the amount of $68,971.18. That amount is based on her line 150 income of $72,071.32, minus RRSP overpayment of $2,132.78 and minus schedule 3 expenses of $967.36.

(d) The parties further agree that the Temporary Order made by Justice Nicholson dated December 12, 2014 shall be made final.

(e) The parties further agree that the Respondent owes to the Applicant $80 to reconcile section 7 expenses (not including the Applicant’s claim for Rachel’s cell phone expense) owed by her from May 2, 2014 to the present date.

Are there any retroactive section 7 expenses owing as of May 1, 2014 or, do the Minutes of Settlement of May 1, 2014 extinguish any claim for retroactive section 7 expenses prior to that time?

[13] The Applicant submits that he is owed by the Respondent the sum of $2,548.56 being section 7 expenses that he alleges were owed to him as of May 1, 2014.

[14] In support of his claim he produced Exhibit 4 being a reconciliation table which sets out his determination of the amount that he claims was owed to him as at May 1, 2014.

[15] In support of his claim that the May 1, 2014 Minutes of Settlement did not extinguish his right to claim these “arrears” he testified as follows:

(a) Exhibit 1 is an e-mail from the Respondent to the Applicant dated September 1, 2013, in which she references the Applicant’s e-mail of February 12, 2013, in which he purportedly stated “in terms of section 7… we agreed to reconcile once court proceedings are completed or a negotiated settlement is reached.” She then goes on to indicate that in a further e-mail, he appears to indicate that “you wished to reconcile section 7 expenses through the court process.” She then states “you have since altered your position and now would like to reconcile expenses outside of the court process.” She then goes on in the e-mail to indicate “if you wish to reconcile section 7 expenses please provide the following…”

(b) Exhibit 2 consists of two e-mails. The first from the Respondent to the Applicant dated October 19, 2013, in which she states “we agreed that we would reconcile the above amounts after our litigation process is complete.”

(c) As well, in that Exhibit there is an e-mail dated March 4, 2014, from the Respondent which the Applicant indicates was sent to him in which she states “I have already agreed to pay my portion of section 7 when the proceedings are complete.”

(d) Exhibit 3 is an e-mail from the Applicant to the Respondent dated March 23, 2014, in which he sets out his position with respect to section 7 expenses claiming at that time that he was owed $1,793.63. As well, as part of that Exhibit there is a responding e-mail of the same date from the Respondent in which she indicates her list of section 7 expenses. She goes on to say “I will need to see receipts.”

(e) The Applicant’s evidence is that section 7 expenses were not discussed during the day long negotiations on May 1, 2014. He testified that, it was his understanding that section 7 expenses would be dealt with “outside the court process.”

[16] The Respondent takes the position that the May 1, 2014, Minutes of Settlement, and the Consent Order based on those Minutes of Settlement, dealt with all outstanding matters between the parties as at that date. She takes the position that the Applicant is estopped from claiming any section 7 expenses prior to May 1, 2014.

(a) In support of her argument, she points to the fact that the Minutes of Settlement contain the following preamble: “the parties, neither of whom suffer any disability hereby agree to resolve all matters in dispute on the following terms” (emphasis added).

(b) She further points out that the Applicant was represented by experienced counsel at the time of the negotiation of the Minutes of Settlement while she was self- represented. In addition, she testified that the Minutes of Settlement were drafted and are in the handwriting of the Applicant’s lawyer (which evidence was not disputed by the Applicant).

(c) Further, she testified that she has not received receipts as requested for the expenses claimed by the Applicant; In addition, she challenges the percentages utilized by the Applicant to determine his reconciliation of expenses prior to May 1, 2014.

[17] I can well understand why the Applicant may have believed that the issue of section 7 expense arrears was not addressed on May 1, 2014, but was preserved to be addressed at a later time.

[18] However, I find that the following factors vitiate that argument:

(i) The Minutes of Settlement were drafted by the Applicant’s lawyer and any ambiguity as a result should be resolved in favour of the Respondent.

(ii) The Minutes of Settlement on their face in the preamble state that they are intended to resolve “all matters in dispute” (emphasis added).

(iii) In any negotiations, as was testified by both parties, there are concessions made by each and I find that it is reasonable for the Respondent to have concluded that one of the concessions made by the Applicant in the negotiations was to forgo any claim for retroactive section 7 expenses in the May 1, 2014 negotiations.

[19] For the reasons set out above, I find that the Applicant’s claim for section 7 expenses prior to May 1, 2014 is dismissed.

Contributions to Children’s RESP’s

[20] The Applicant seeks an order requiring the Respondent to make the maximum contributions to the children’s RESP’s. In support of that claim, he makes reference to paragraph 7.8A of the Separation Agreement. He asks the court to find that the interpretation of that paragraph should mean that the parties should be required to contribute to the children’s RESP’s so as to gain maximum government grants. He testified that his understanding of the government grants is such that grants are available only for contributions to and including the year the child attains the age of 17 years. Therefore, according to his evidence, to gain the maximum government grants, contributions should be made for Rachel for 2015 and 2016 and for Nicole for 2015, 2016, 2017 and 2018.

[21] Paragraph 7.8A of the Separation Agreement provides “the husband and wife will equally contribute to both children’s RESP’s to the maximum allowable amount on an annual basis.”

[22] The Respondent asks the court to find that this provision of the Separation Agreement was based on the then circumstances of the parties and in particular refers to paragraph 6.3 of the Separation Agreement that provides that spousal support was to be adjusted annually such that “the wife shall receive an amount that once received, gives her 52% of the parties’ net disposable incomes, inclusive of child support received by her and her own employment income.”. She testified that the May 1, 2014, Minutes of Settlement resulted in her releasing any future claims to spousal support. She asks that the court find that this represents a material change in circumstances. Based on her current income and the current income of the Applicant, she submits the court should find that this represents a material change in circumstances and that she should not be required to continue to make the contributions to the RESP’s in accordance with paragraph 7.8A.

[23] She does, however, agree to pay into the RESP’s the amount required to equalize the contributions to date made by the Applicant and herself. She submits in future, neither the Applicant nor she should be required to make any further contributions to the children’s RESP’s.

[24] The Applicant gave evidence setting out reconciliations that he has prepared with respect to RESP contributions. Exhibit 8 sets out, that to date, he has contributed $18,125 to Rachel’s RESP. Exhibit 9 sets out that the Respondent has contributed $17,137.90 to Rachel’s RESP. The difference between their contributions to Rachel’s RESP is $987.10 (the Respondent in her submissions and in her evidence indicated that she was willing to make a further $1,000 contribution to Rachel’s RESP to equalize their contributions to date).

[25] To date, the Applicant has contributed $14,400 to Nicole’s RESP as set out in Exhibit 8 and the Respondent has contributed $12,200.22 to Nicole’s RESP as set out in Exhibit 9. The difference is $2,199.78. The Respondent has indicated that she is agreeable to contributing $2,200 to Nicole’s RESP.

[26] The Applicant submits that the Respondent should be required to make future contributions based on paragraph 7.8A of the Separation Agreement and points to the fact that there is no clause in the Separation Agreement indicating specifically that paragraph 7.8A is subject to a material change in circumstance. He points out that there is a specific material change paragraph in paragraph 6 of the Separation Agreement which deals with spousal support.

[27] I note that in paragraph 7.3 of the Separation Agreement that “extraordinary expense disputes” are to be resolved in accordance with the dispute resolution provisions of the Agreement. Paragraph 12 of the Separation Agreement sets out a dispute resolution mechanism which provided for mediation and binding arbitration. However, it is apparent that the parties did not utilize that dispute resolution mechanism, at least not the binding arbitration, but chose to bring their disputes to court. I therefore find that the parties have agreed to the court dealing with a dispute arising out of a material change in circumstances.

[28] I find that an issue of RESP contribution and the methodology of dealing with post- secondary expenses is something that falls within “child support” and therefore I may decide that issue if I find that there is in fact a material change in circumstances.

[29] I find that there has, in fact, been a material change in circumstances and accept the Respondent’s argument that the Separation Agreement and in particular paragraph 7.8A was premised on her having 52% of the parties’ net disposable income.

[30] The parties have agreed that the Applicant’s “Guidelines income” is $246,103.75 and that the Respondent’s “Guideline’s income” is $68,971.18. The Applicant is paying child support of $3,108 per month ($37,296 per year). Including the child support, her total would be $106,267.18 while the Applicant’s would be $208,807.75 after deducting the child support. This of course does not take into account income taxes and is not reflective of their actual net disposable income.

[31] The fact that in the May 2014, Minutes of Settlement, the Respondent released future spousal support claims and that the Separation Agreement provided for the Respondent to receive spousal support “until she dies,” I find is a material change in circumstances relating to paragraph 7.8.

[32] In making this determination, I take into account that although the children spend roughly equal time with each of the parties, the Applicant voluntarily agreed to pay table amount of child support for the children and did not seek a set off from the Respondent for the table amount of child support the Respondent could have been required to pay. However, that obligation will be for a finite time whereas the spousal support (and 52% net disposable income) clauses in the Separation Agreement indicated that it would continue until the Respondent died.

[33] Based on the foregoing I find as follows:

(a) The Respondent shall contribute $987.10 to Rachel’s RESP within 60 days.

(b) The Respondent shall contribute $2,199.78 to Nicole’s RESP within 60 days.

[34] Following these contributions, each party will have contributed an equal amount to each child’s RESP.

[35] Those RESP’s, together with any interest accrued thereon, which will include any government grants that have been deposited into those RESP’s as a result of the parties contributions, shall be utilized in accordance with paragraph 7.8A and 7.8B of the Separation Agreement. In accordance with paragraph 7.8A of the Separation Agreement, if either child does not attend post-secondary education, the monies in that child’s RESP will be split equally between the husband and the wife when the child finishes high school or reaches the age of 20, (which ever later occurs).

[36] In accordance with paragraph 7.8B, if the child does attend post-secondary education, then the amount in the RESP shall be utilized in accordance with that paragraph.

[37] Neither party shall be required to make any further contributions to the RESP for either child. If however, the Applicant does make a further contribution to an RESP for either child, then that contribution together with any interest accruing thereon, or other income earned based on that contribution, together with any government grants that may result from that contribution shall be credited to the Applicant’s contribution towards the child’s post-secondary expenses.

[38] I have not made that paragraph reciprocal given that the Respondent submits that she should not be required to make any further contributions to either child’s RESP.

[39] As set out in paragraph 7.8B of the parties’ Separation Agreement the parties shall share in proportion to their then income, a child’s post-secondary educational expenses. As earlier set out, any future contribution that the Applicant makes to a child’s RESP together with the income earned thereon and government grants that may be deposited as a result of his future contributions shall be credited to him against any post-secondary expense obligations that he would otherwise have for that child.

Rachel’s Cell Phone

[40] The Applicant seeks contribution from the Respondent for the cost of Rachel’s iPhone. His evidence is that the current plan which includes telephone calls, texting and data, costs approximately $80 per month. His evidence is that approximately one and a half years ago he purchased this new iPhone for her and took out a two-year plan.

[41] Previously, Rachel had a cell phone that included telephone calls and texting and had a cost of approximately $30 per month. The current cost of Nicole’s cell phone for telephone calls and texting is also approximately $30 per month.

[42] The Applicant submits that the cost of Rachel’s cell phone is reasonable given the parties’ incomes and given the fact that Rachel’s peer group has similar plans.

[43] The Respondent takes the position that a $30 per month plan is reasonable for Rachel. She testified that she, herself, has a $30 per month plan and does not believe that it is necessary for a 15 year old to have an $80 per month plan. In addition, her evidence is that the Applicant purchased this iPhone for Rachel as part of a gift. The Applicant acknowledges that this is the case, but says that it was only part of the gift that he gave her and that in order to not be required to pay in excess of $600 for the iPhone he was required to enter a contract for 2 years at $80 per month.

[44] In addition, the Respondent testified that she was not consulted by the Applicant prior to him purchasing this phone and therefore this expense was not “agreed in advance.”

[45] I find that for a 15-year-old, in all of the circumstances of this case, an $80 per month cell phone expense is not something that falls within the parameters of a reasonable section 7 expense. I accept the Respondent’s position on this matter that a $30 per month expense is reasonable. Should the Applicant wish to provide Rachel with an $80 per month plan, I find that only $30 of this expense should be considered to be a section 7 extraordinary expense and that the Applicant shall be liable for any additional costs on his own.

[46] As a result of the findings that I have made, Order To Go as follows:

(a) Based on a determination that the Applicant’s income for 2014 for child support purposes is $246,103.75, the Applicant shall pay to the Respondent commencing May 1, 2015 and on the first day of each month thereafter, (to be adjusted each May 1,commencing May 1, 2016) child support for the two children in the amount of $3,108 per month. The determination of the “Guideline income” for the Applicant is based on a line 150 total income for 2014 of $262,267.16 less rental income of $1,602.16, less schedule 3 expenses of $14,561.25 (that amount is 75% of $19,415.68).

(b) For the period May 1, 2015 to April 30, 2016, the percentage to be paid by each for any future section 7 expenses is to be 78% (Applicant) and 22% (Respondent). This is based on the agreed “Guideline income” of the Applicant in the amount of $246,103.75 and based on an agreed “Guideline income” of the Respondent in the amount of $68,971.18. That amount is based on her line 150 income of $72,071.32, minus RRSP overpayment of $2,132.78 and minus schedule 3 expenses of $967.36.

(d) The Respondent shall pay to the Applicant $80 within 60 days to reconcile section 7 expenses ( not including the Applicant’s claim for Rachel’s cell phone expense) owed by her from May 2, 2014 to the present date.

(e) For the reasons set out above, I find that the Applicant’s claim for section 7 expenses prior to May 1, 2014 is dismissed.

(f) The Respondent shall contribute $987.10 to Rachel’s RESP within 60 days.

(g) The Respondent shall contribute $2,199.78 to Nicole’s RESP within 60 days.

(h) Following these contributions, each party will have contributed an equal amount to each child’s RESP. Those RESP’s, together with any interest accrued thereon, and including any government grants that have been deposited into those RESP’s as a result of the parties’ contributions, shall be utilized in accordance with paragraph 7.8A and 7.8B of the Separation Agreement.

(i) In accordance with paragraph 7.8A of the Separation Agreement, if either child does not attend post-secondary education, the monies in that child’s RESP will be split equally between the Applicant and Respondent when the child finishes high school or reaches the age of 20 (whichever later occurs).

(j) In accordance with paragraph 7.8B, if the child does attend post-secondary education, then the amount in the RESP shall be utilized in accordance with that paragraph.

(k) Neither party shall be required to make any further contributions to the RESP for either child. If however, the Applicant does make a further contribution to an RESP for either child then, those contributions together with any interest accruing thereon or other income earned based on that contribution and together with any government grants that may result from that contribution shall be credited to the Applicant’s contribution towards the child’s post-secondary expenses.

[47] As set out in paragraph 7.8B of the parties’ Separation Agreement, the Applicant and Respondent shall share in proportion to their then income, a child’s post-secondary educational expenses. As earlier set out, any future contribution that the Applicant makes to a child’s RESP together with the income earned thereon and government grants that may be deposited as a result, shall be credited to him against any post-secondary expense obligations that he would otherwise have.

[48] A maximum of $30 per month for each child’s cell phone or iPhone plan shall be considered a section 7 expense and shall be shared by the parties proportionately. Unless both parties consent in writing to any increased amount, any costs that either party incurs with respect to the child’s cell phone or iPhone in excess of the $30 per month shall not be considered a section 7 expense.

[49] Support Deduction Order to issue.

[50] For as long as child support is to be paid, the payor and recipient, if applicable must provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with section 24.1 of the Child Support Guidelines.

[51] This order bears post-judgment interest at the rate of 3% per year effective from the date of this order. Where there is a default in payment, the payment in default shall bear interest only from the date of default.

[52] Unless this order is withdrawn from the Director’s Office, at the Family Responsibility Office, it shall be enforced by the Director and amounts owing under the order shall be paid to the Director, who shall pay them to the person to whom they are owed. Where sufficient deductions are not being made by support deduction order, payments may be remitted to the Director, Family Responsibility Office, P. O. Box 2204, Station P, Toronto, Ont. M5S 3E9.

[53] The parties may make submissions in writing not to exceed 3 pages in length with respect to costs. In addition, the parties may file any Offers to Settle that they made in this matter for my consideration with respect to the issue of costs. The Respondent shall serve and file any costs submissions within 20 days. The Applicant shall serve and file any costs submissions within 20 days of being served with the Respondent’s submissions. The Respondent may then, within 10 days of service of the Applicant’s cost submissions serve and file any reply costs submissions.

Justice R.T. Bennett

Released: June 15, 2015

MacFarlane v. Schweitzer, 2015 ONSC 3600

Case Summary

Overview

Are there any retroactive section 7 expenses owing as of May 1, 2014 or, do the Minutes of Settlement of May 1, 2014 extinguish any claim for retroactive section 7 expenses prior to that time?

Contributions to Children’s RESP’s

Rachel’s Cell Phone

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Overview

Matters on Consent

Issues not on Consent and to be Determined by the Court

Are there any retroactive section 7 expenses owing as of May 1, 2014 or, do the Minutes of Settlement of May 1, 2014 extinguish any claim for retroactive section 7 expenses prior to that time?

Contributions to Children’s RESP’s

Rachel’s Cell Phone

On Consent

Not on consent

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues