SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: FC-11-2827-2
DATE: 2015/11/13

RE: TRACY LEIGH CRUISE, Applicant

AND

SHAWN WALTER CRUISE, Respondent

BEFORE: Shelston J.

COUNSEL:
Jennifer M. Reynolds, counsel for the Applicant

Jeremy Dolgin, counsel for the Respondent

HEARD: September 17, 2015 (at Ottawa)

ENDORSEMENT

Overview

[1] This motion to change deals with the retroactive and prospective variation of child support in a shared custody arrangement where the payor’s income increased substantially after the parties signed a Separation Agreement dated July 13, 2012. Both parties agree that the monthly child support should be readjusted effective June 1, 2012. The questions are in what monthly amount and what are the arrears?

Background

[2] The parties were married to each other on April 7, 2000. They separated on January 2, 2010. The parties were divorced by divorce judgment dated August 19, 2012.

[3] There are two children of the marriage, namely, Noah, born August 25, 2001 and Jordan, born August 31, 2003. The parties resolved all issues arising out of their marriage and subsequent separation by Separation Agreement dated July 13, 2012.

[4] The parties agreed to a shared custody arrangement set out at paragraph 4.1 as follows:

4.1 Following their separation, Tracy and Shawn were sharing custody of the children on the basis of 5 days with Tracy, 2 days with Shawn, followed by 2 days with Tracy, 5 days with Shawn, rotating by-weekly, so that each parent had the children for the two day period including Saturday and Sunday. Commencing on February 21, 2011, the parents will share custody on a weekly rotating basis with the exchanges occurring after school each Monday or Monday morning if Monday is a vacation day, at the children’s school/daycare. During the week with one parent, the children shall be with other parent from Thursday after school to Friday morning at school. In addition to this regular schedule, the children shall spend time with the parents on holidays and special occasions as follows, to supersede the regular schedule …

[5] With respect to child support, the Separation Agreement provided a straight set-off calculation for the years 2010, 2011 and up to May 2012. Further, there was no reduction in the set-off amount even though the respondent earned more than $150,000 and actually earned $300,300 in 2011. They agreed as follows:

5.1 For purposes of determining child support for Noah and Jordan, Tracy’s 2010 annual income is $109,476 and Shawn’s annual income is $229,369, resulting in a set-off payment by Shawn to Tracy of $1393 per month for that year. For the year 2011 and so far in 2012, Tracy’s 2011 income was $110,598 and Shawn’s 2011 income was $300,300, resulting in a set-off payment of $2180 per month. Shawn has paid the appropriate amount of child support for 2010. However, as of the date of this agreement, Shawn owes Tracy the amount of $13,379 to correct child support payable for the 17 months from January 1, 2011 to and including May 1, 2012. Shawn’s annual income will now and henceforth be calculated based on his Line 150 income as determined by a review of his Notice of Assessment on an annual basis pursuant to paragraph 5.17 … Using Line 150 rather than his net (after employment and child care deductions) has been determined by the parties to be appropriate, given Tracy has agreed not to pursue spousal support from Shawn.

[6] Going forward, the parties agreed to a monthly sum of $1,400 as well as 50% of all section 7 expenses. The actual set-off amount would have been $2,180 per month and the sharing of the section 7 expenses would have had the respondent pay 77% and the applicant 23%. Taking everything into consideration, they agreed as follows:

5.2 The parties share custody of the children. In determining the appropriate child support to be paid, the parties have considered the Table amounts for each parent, the increased cost of this shared custody arrangement (including appropriate housing, transportation, and the duplication of toys, equipment and clothes), and the condition, means, needs and other circumstances of each parent and the children. To satisfy each party’s obligation to pay child support in accordance with the Guidelines, Shawn will pay to Tracy as child support for the children:

(a) $1400 per month commencing June 1, 2012, and then payable on the first day of each month commencing August 1, 2012;

(b) 50% of all special or extraordinary expenses sections below; until a terminating event under section 5.5 or a change under section 5.12 or section 5.18.

5.3 The children’s current special or extraordinary expenses are:

(a) All the children’s extra-curricular activities,

(b) Summer camp, and

(c) Daycare.

5.4 By August 15th each year, the parties will provide reasonable evidence, in writing, of the amounts they incurred for the children’s special or extraordinary expenses for the previous 12 month period. A party who has not contributed his or her proportionate share of the special or extraordinary expenses will immediately reimburse the other.

5.12 Once a year, if either party asks in writing, Tracy and Shawn will review the child support arrangements in this Agreement and, if they do not agree about any change, they will use the section of this Agreement entitled “Dispute Resolution” to resolve the issue(s).

5.13 If either party asks in writing for disclosure, both will, in writing, provide the following information to the other, within 30 days of the request:

(a) the documents required in s. 21(1) of the Guidelines that have not previously been provided,

(b) current information about the children’s special or extraordinary expenses,

(c) current information about a party’s claim of undue hardship, if any, and his or her household’s standard of living,

(d) details of Canada Child Tax Benefits or other child benefits received in the previous year and anticipated in the coming year, and

(e) any other information needed to review child support.

This may be asked for once a calendar year.

[7] According to the applicant, an annual review of child support was inserted to top up the child support based on the commissions and other employment benefits, like stock options that the respondent would receive in the calendar year. The plan was to give the respondent a break until he made the income and then he could reconcile what he owed in child support the following year. The applicant states that the base amount of $1,400 was approximately the set-off amount using the respondent’s base salary and the applicant’s actual income for 2012. Neither party exchanged budgets to arrive at the sum of $1,400.

[8] The parties agreed to adjust the Table child support as follows:

5.15 Effective June 1st 2012 and every following June 1st, as long as child support is owing, Shawn will continue to pay $1400 as a base amount of support each month. However, the parties will adjust the Table amount of child support paid in the previous twelve months based on the parties’ actual incomes for the previous taxation year. They shall exchange copies of their income tax returns, as soon as they are filed, for the applicable calendar year, together with the corresponding notices of assessment. The parties shall then determine the appropriate Table amount of the parties’ child support obligation for the previous twelve months in accordance with the Child Support Guidelines. If either party has underpaid the Table amount of his child support obligation for the previous twelve months, he or she shall immediately provide the other party, within 90 days, the additional amount owing. If one party has overpaid the Table amount of his child support obligation for the previous twelve months, he or she may deduct the overpayment from his or her current child support over 12 months in equal instalments.

[9] Since the agreement was signed in 2012, the child support has not been adjusted despite requests by the applicant to do so. In the spring of 2013, the parties started discussing the review of child support. The parties were not able to reach an agreement.

[10] The issue of reviewing child support was raised again by the applicant in January, August, September and October 2014, all without an agreement. In October 2014, the respondent indicated he had commission payments coming and would be in a position to pay what he owed. He did not and the applicant commenced the proceeding before the court.

[11] The respondent did not disclose his income information until 2015 after proceedings were commenced.

[12] The respondent’s evidence is that he had difficulty in making the monthly payments on time, particularly in 2014, as a result of a change in the payment of commissions by his employer. He also indicates that he exercised stock options in 2014 in order to settle outstanding support arrears to Ms. Schroeder (his former wife) which complicated his cash flow.

[13] The respondent stated that much of his income was generated from stock options which have now been completely exhausted. The respondent indicates that in 2015 he expects to earn $365,000 in a combination of both employers and he indicates that in 2016 he hopes to earn the maximum of $491,014.

[14] On September 4, 2015, the respondent ceased working for Adobe and started a new position with TIBCO Software with a base salary of $245,507 plus the greater of $10,229 per month or a commission of 1% of sales up to an additional $245,507 per year with no stock options and no bonuses.

[15] The respondent has two children from a previous marriage, namely, Madison and Nicholas. As of June 2014, Madison resides primarily with the respondent and Nicholas resides with his mother. The respondent pays $1,000 per month as child support to the mother of Madison and Nicholas (Ms. Schroeder) and 100% of Madison’s extra-curricular activities. In the consent order of Justice Kershman, dated June 2, 2014, the respondent agreed to the following at paragraph 15:

Commencing June 1st, 2014, Mr. Cruise shall pay to Ms. Schroeder monthly child support in the amount of $1,000.00. This is based on the offset amount in the child support for Madison payable by Ms. Schroeder to Mr. Cruise in the amount of $544 per month based on an income of $59,767 and an amount of $1544 payable by Mr. Cruise to Ms. Schroeder based on a discretionary agreement as Mr. Cruise’s income is approximately $480,000.

[16] I note that the respondent used an “offset” method in calculating child support for Madison and Nicholas in June 2014 going forward and including all his income of $480,000 in determining his Table amount of child support.

[17] The respondent cohabits with Ms. Forrest who earns $40,000 per year and she contributes $1,800 per month towards the household expenses. The applicant lives alone with the two children.

Proceedings

[18] On December 31, 2014, the applicant commenced a motion to change against the respondent seeking retroactive variation of child support to June 1, 2012, in accordance with the Separation Agreement dated July 13, 2012. The applicant seeks the following orders:

(a) An order fixing the respondent father’s arrears of child support under the Separation Agreement to be $98,160.02 as of August 31, 2015;

(b) An order that, in accordance with the Separation Agreement, based on the respondent father’s estimated 2015 income of $386,677.03 and the applicant mother’s income of $115,357, the respondent father shall pay the applicant mother $3,107 per month for support for Noah Alexander Cruise (born August 25, 2001) and Jordan Olivia Cruise (born August 31, 2003), effective September 1, 2015;

(c) An order that, effective September 1, 2015, the respondent father shall pay $3,000 per month towards the arrears until the full amount owing is paid;

(d) An order that the parties shall exchange their income tax returns each year no later than May 1st in order to recalculate child support. The parties shall then determine the appropriate Table amount of the parties’ child support obligations for the previous calendar year in accordance with the Guidelines, and determine the “set-off” amount of support. If the respondent has underpaid his child support obligation for the previous calendar year, based on a set-off calculation, he shall provide the applicant with the amount owing within 90 days. If he overpaid his obligation, he may deduct the overpayment from his current child support over 12 months in equal instalments; and

(e) An order for costs against the respondent father on a full recovery basis pursuant to Rule 24 of the Family Law Rules, O. Reg. 114/99.

[19] The respondent’s position is that the appropriate orders are as follows:

(f) The respondent shall pay child support for two children in the amount of $2,144 per month commencing on October 1, 2015;

(g) The respondent shall pay to the applicant $28,272 on account of arrears of support;

(h) The parties shall share, proportionate to their incomes, the cost of all section 7 expenses including all extra-curricular activities and school expenses, as well as the cost of the children’s cell phones. Currently, the respondent should pay 81% of these expenses and the applicant should pay 19%; and

(i) Costs.

Applicant’s Position

[20] She submits that the Respondent should pay child support every year based on a straight set-off calculation based on the parties’ line 150 incomes.

[21] In support of her argument that a set-off calculation was agreed to in the separation agreement, she submits that paragraph 5.15 does not mention the factors set out in paragraph 5.2 being that the parties have considered:

(a) the Table amounts for each parent;

(b) the increased cost of this shared custody arrangement (including appropriate housing, transportation, and the duplication of toys, equipment and clothes); and

(c) the condition, means, needs and other circumstances of each parent and the children.

[22] The applicant pleads that the children did not have the benefit of the additional income that should have been paid by the respondent when he was earning significantly more money than what was the basis of the July 2012 Separation Agreement. Further, she indicates that there should be no hardship on the respondent as he has significant discretionary expenses, some of which are for his children from a previous relationship and incurred during a period of time when he earned significantly more income.

[23] Further, the respondent paid the full set-off amount in 2010 and up to May 31, 2012.

Respondent’s Position

[24] The respondent submits that the straight set-off calculation of support would be unjust in that it would have the respondent paying a significantly higher percentage of the children’s expenses than the parties’ proportionate incomes suggest and that the payment would be a wealth transfer and not child support.

[25] The respondent’s position is that the Separation Agreement only used the set-off amount for the retroactive support calculated up to May 31, 2012, but going forward it envisaged an analysis based on the factors set out in s. 9 of the Federal Child Support Guidelines, S.O.R./97-175, as am. [“Guidelines”]. He indicates that the agreement requires that the factors set out at sections 9(a), 9(b), and 9(c) of the Guidelines be read together.

[26] Further, paragraph 5.2 of the Separation Agreement does not mandate the use of a set-off amount. He argues that in 2012 the set-off amount would have been $2,180 per month but that the parties agreed that the respondent would pay $1,400 per month.

[27] He states that the agreement at paragraph 5.15 mentions the Table amount of support to be paid but does not refer to the set-off amount and does not refer to s. 9 of the Guidelines. In addition, he indicates that the real analysis requires the exchange of budgets as one factor in arriving at the proper amount of child support.

[28] Based on a budget analysis, his position is that his monthly budget for the children is $3,456 x 2 = $6,912 (total combined expenses for the children) x 81% (his proportional share) = approximately $5,600 - $3,456 (his expenses) = $2,144 a month. He agrees to pay arrears of $28,272.

[29] Based on the above, the child support should be $2,144 a month, retroactive to June 1, 2012; arrears set at $28,272 and ongoing support of $2,144 per month.

[30] Finally, the respondent admits that there is no claim to vary the terms of the Separation Agreement by the respondent and there is no suggestion that there is not a material change in circumstances.

The Law

[31] Sections 1, 3(1), 4, and 9 of the Guidelines, read as follows:

Objectives

1. The objectives of these Guidelines are

(a) to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation;

(b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective;

(c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders and encouraging settlement; and

(d) to ensure consistent treatment of spouses and children who are in similar circumstances.

Presumptive rule

3. (1) Unless otherwise provided under these Guidelines, the amount of a child support order for children under the age of majority is

(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the spouse against whom the order is sought; and

(b) the amount, if any, determined under section 7.

Incomes over $150,000

4. Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is

(a) the amount determined under section 3; or

(b) if the court considers that amount to be inappropriate,

(i) in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;

(ii) in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and

(iii) the amount, if any, determined under section 7.

Shared custody

9. Where a 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 child support order must be determined by taking into account

(a) the amounts set out in the applicable tables for each of the spouses;

(b) the increased costs of shared custody arrangements; and

(c) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought.

[32] Section 26.1(2) of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), reads as follows:

Principle

(2) The guidelines shall be based on the principle that spouses have a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation.

[33] In Contino v. Leonelli-Contino, 2005 SCC 63, [2005] 3 S.C.R. 217, the Supreme Court of Canada provided a step-by-step method of calculation of child support in shared custody arrangements as follows:

1. Determine the incomes of the parties;

2. As a starting point, determine the simple set-off amount of child support;

3. Review the child expense budgets considering both fixed and variable costs;

4. Assess the ability of each parent to assume any increased cost of shared custody by considering income levels, disparity in incomes and the assets and liabilities and net worth of each party;

5. Distinguish between variation proceedings and originating applications particularly in considering the variation of the standard of living enjoyed by the children.

[34] The principles of Contino are as follows:

(a) All three factors in subsections (a), (b), and (c) of section 9 of the Guidelines must be given equal weight.

(b) It is not appropriate to apply any form of fixed mathematical formula to calculate child support in shared custody cases.

(c) The starting point is the set-off described in section 9(a) of the Guidelines.

(d) Appropriate evidence must be provided to the court to enable the consideration of subsection 9(b) and 9(c).

(e) There is no presumption that the quantum of child support in a shared custody case should be more or less than the table amount of child support payable by the payor.

Analysis

Income over $150,000

[35] The respondent submits that I should exercise my discretion in determining the respondent’s income in calculating the Table child support as part of the respondent’s income exceeds $150,000.

[36] In Francis v. Baker, 1999 659 (SCC), [1999] 3 S.C.R. 250, the Supreme Court of Canada at para. 40 indicated:

40 A proper construction of s. 4 requires that the objectives of predictability, consistency and efficiency on the one hand, be balanced with those of fairness, flexibility and recognition of the actual ‘condition, means, needs and other circumstances of the children’ on the other. Furthermore, this balancing must take into account the ordinary meaning of the word ‘inappropriate’, as well as its use elsewhere in the statute. In my opinion, the plain language of s. 4 is consistent with such an interpretation. Accordingly, the word ‘inappropriate’ in this section must be broadly defined to mean ‘unsuitable’ rather than merely ‘inadequate’. …

[37] There is a presumption in favour of the Table amounts. Accordingly, the Guidelines figures can only be reduced under section 4 of the Child Support Guidelines if the party seeking a deviation has rebutted the presumption that the applicable Table amount is appropriate. The evidence in its entirety must be sufficient to raise a concern that the applicable Table amount is inappropriate. There must be “clear and compelling evidence” for departing from the Guidelines figures.

[38] The onus is not on the recipient parent to justify the appropriateness of the Guideline figures. Instead, the payor parent must demonstrate their budgeted child expenses are so high as to “exceed the generous ambit within which reasonable disagreement is possible” as set out in paras. 42-43, 49, and 52 of Francis v. Baker.

[39] In D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231, at para. 46, Justice Bastarache reiterated his position in Francis:

As I wrote in Francis, presumptively applicable Table amounts listed for payor parents earning over $150,000 may be altered when they ‘are so in excess of the children’s reasonable needs so as no longer to qualify as child support’ (para. 41 [of Francis]).

[40] The respondent submits that because of the $150,000 provision in s. 4 of the Guidelines the corresponding Table amount to be used in the set-off analysis is excessive and constitutes a transfer of wealth from him to the applicant and would not be reflective of the needs of the children. As stated in Francis, it is only in those rare cases where the presumptive Table amount is so in excess of the child’s reasonable needs that the support can be seen as a transfer of wealth.

[41] Justice Shaw in Mayer v. Mayer, 2013 ONSC 7099, was faced with a circumstance of shared custody with an income over $150,000. In that case, Justice Shaw concluded that paying the respective Table amounts and using the set-off method available to the court would provide both families with a fair standard of living for the children. In Mayer, the payor’s income was approximately $201,000 and the recipient’s was $27,000. In considering it was a shared custody arrangement, the court ordered the set-off amount of child support adjusted only for the child support the recipient received from another payor for one of the children in question.

[42] In this case, the parties used the straight set-off amount for the years 2010, 2011 and part of 2012 which included all of the respondent’s income. The respondent never raised the issue of him earning more than $150,000 per year and seeking a variation of his Table amount when calculating support for the years 2010, 2011 and part of 2012.

[43] In considering all the circumstances, I find that the respondent has not discharged the onus to justify the inappropriateness of the Guideline figures.

Step 1 – Determine Incomes

[44] There is a dispute as to the respondent’s projected income in 2015. The respondent states he anticipates to earn $365,000 between both employers. The applicant submits that the respondent will earn $386,677.03. I find that the respondent’s year to date gross income from Adobe was $263,929.02 as of the end of August 2015. Further, I find that the respondent will earn a monthly income of $30,687 for each of September through December 2015. I conclude that the respondent’s income for 2015 will be $386,677.02.

[45] The applicant’s income has been as follows:

2010
$ 60,241.00

2011
$110,443.23

2012
$103,066.91

2013
$109,317.97

2014
$115,357.00

[46] The respondent’s income has been as follows:

2010
$229,369.00

2011
$300,300.00

2012
$461,516.00

2013
$468,658.63

2014
$537,454.16

[47] At the time the Separation Agreement was signed in 2012, the basis was that the applicant earned $110,443.23 per year and the respondent earned $300,300 per year.

Step 2 – Determine the Set-off Amount of Child Support

[48] The next step is to calculate the amount owed by each parent for child support based on their income and having sole custody of the children. I make the following findings:

Year 2012 - June to December

1. Applicant’s income $103,066.91
2. Respondent’s income $461,516
3. Monthly set-off amount $4,110
4. Paid $3,537.14 per month leaving a balance of $572.86 per month.
5. Total owing $572.86 x 7 = $4,010.02 (7 months)

Year 2013

1. Applicant’s income $109,317.97
2. Respondent’s income $468,658.63
3. Monthly set-off amount was $4,115
4. Respondent paid $1,400 leaving a shortfall of $2,715 per month
5. Total owing $2,715 x 12 = $32,580

Year 2014

1. Applicant’s income $115,357
2. Respondent’s income $537,454.16
3. Monthly set-off amount was $4,826
4. Respondent paid $1,400 leaving a shortfall of $3,426
5. Total owing $3,426 x 12 = $41,112

Year 2015 - January to September

1. Applicant $115,357
2. Respondent $386,677.02
3. Monthly set-off amount was $3,107
4. Respondent paid $1,400 leaving a shortfall of $1,707
5. Total owing $1,707 x 8 = $13,656 (8 months)

[49] Using the set-off method, the respondent owes $91,358.02 as of August 31, 2015 as set out in the Table below.

Year
Respondent’s Table Amount
Applicant’s Table Amount
Monthly Set-Off Amount
Amount Paid Monthly
Monthly Amount Owing
Annual Amount Owing

2012 (June 1 to Dec 31)
$5,563
$1,453
$4,110
$3,537.14
$572.86
$4,010.02 (7 months)

2013
$5,645
$1,530
$4,115
$1,400
$2,715
$32,580

2014
$6,429
$1,603
$4,826
$1,400
$3,426
$41,112

2015 (Jan 1 to Aug 31)
$4,710
$1,603
$3,107
$1,400
$1,707
$13,656 (8 months)

Total Owing
$91,358.02

[50] Based on the calculation of the support from June 1, 2012 up to and including August 31, 2015, the arrears of support are $91,358.02. Going forward as of September 1, 2015, the child support is $3,107 per month based on a set-off calculation.

Step 3 – Child Care Budgets

[51] Both parties have prepared budgets for the children’s expenses for me to consider and conduct the required analysis set out in paragraphs 9(b) and 9(c) of the Guidelines as contemplated by the Contino decision.

[52] The respondent’s budget indicates that he spends $3,456 per month related to the children plus the cost of extra-curricular activities, school, health and cell phones. I find that this is a reasonable budget for household expenses.

[53] In her affidavit dated August 21, 2015, the applicant prepared a budget of what she would spend if she had more money from the respondent. In that budget she indicated that $6,285.09 of the monthly expenses of $9,522.86 are related to the children’s household expenses plus $2,831 for children’s expenses. I find that $6,285.09 per month for household expenses is unreasonable.

[54] I find that $3,500 per month for each party, for a total of $7,000, is a fair and reasonable budget for the children’s household expenses not including their other expenses.

[55] As well the applicant pays the majority of the children’s expenses estimated at $2,831 per month. She acknowledges that the respondent contributes to special and extraordinary expenses, but he does not incur all of the expenses that she incurs for the children.

[56] In addition, the parties are to share the extra-curricular activities, summer camp and daycare expenses.

[57] Using a budget of $7,000, the applicant would be responsible for 23% of $7,000 being $1,610 per month. As I have found that her actual budget is $3,500 per month, this leaves a difference of $1,890. However that calculation does not include the children’s other expenses.

[58] The applicant’s budget indicates that her monthly expenses are $2,831. From that amount, I have deducted the agreed on special expenses being extra-curricular activities of $525, summer camp of $85 and daycare expenses of $75 leaving a balance of $2,146 paid by the applicant for children expenses. The applicant should be paying 23% of those expenses of $2,146 totalling $493.58. She is actually paying $2,146 which would require a payment of $1,652.42 from the respondent.

[59] The respondent’s evidence set out in his financial statement dated September 11, 2015, indicates that he pays $410 for activities, $40 for summer camp, and zero for daycare. The total expense of $450 and the applicant’s share is 23% being $103.50.

[60] To summarize, the applicant requires a payment of $1,890 plus $1,652.42 less $103.50 totalling $3,438.92 from the respondent.

[61] The respondent proposes to use the budget analysis for the years 2012, 2013, 2014 and 2015. However, the proposed budget is only for 2015. It was only in 2014 that he started to have Madison with him full time. I have no information as to his circumstances in the years 2012 to 2014. The burden of proof is on the respondent and he has not discharged his burden.

[62] I conclude that the applicant pays more of the children’s expenses.

Steps 4 & 5 – Ability to Bear the Increased Costs of Shared Custody and Standard of Living

[63] At this stage of the analysis, I must consider the parties’ incomes, the disparity in incomes, the assets and liabilities and the current financial situation of each parent.

[64] The applicant is employed with an annual income in 2015 estimated at $115,357. She lives with Noah and Jordan in the former matrimonial home worth $350,000. She has filed two financial statements in this proceeding. Her second financial statement dated August 21, 2015, indicates monthly expenses have increased to $12,135.25. The biggest increase is $2,000 a month for debt payments while her debts have remained approximately the same except that her visa has increased by $5,000 and a second visa card is indebted in the amount of $6,050.

[65] The respondent resides with Noah, Jordan, his daughter Madison and with Ms. Forrest in a new residence worth $650,000. He anticipates that this year he will earn $365,000. Coupled with the income of Ms. Forrest his total family income is over $400,000. The respondent’s financial statement dated March 25, 2015, indicates monthly expenses of $43,175.94 of which $20,490 is related to income tax. His net worth is $183,509.90. In that financial statement, there is no disclosure of any other person living with the respondent or sharing in his expenses.

[66] The respondent’s financial statement dated September 11, 2015, indicates monthly expenses of $35,437.94 related mainly to a reduction in income tax by $6,000 per month. His net worth has decreased to $13,808 because his debts have increased by adding unpaid support of $47,000; his partner’s equity in his home at $65,000 and his partner’s equity in furniture and assets $15,000 as well as an increase in his debt to CRA from $16,250 to $52,400. The respondent failed to indicate that his partner is co-owner of his residence and rather than prepare the financial statement disclosing that fact, the respondent disclosed her interest as a debt. While I do not believe that the respondent was attempting to deceive the court, the financial statement is improperly completed.

[67] The respondent admits that he is earning almost double of what he earned when the applicant and respondent lived together, but indicates that his lifestyle has not changed. He indicates that he has two children from a previous relationship, Madison and Nicholas, and as of June 2014, Madison was living with him and Nicholas was living with his mother. The respondent still pays support for Nicholas to his mother as well as all schooling expenses and he does receive some support from Madison which off-sets the support he pays for Nicholas resulting in a net payment by him of $1,000. He also covers 100% of Madison’s expenses including horseback riding expenses of $1,400 per month.

[68] He admits that he has a boat which is currently up for sale since July of 2014. He has a boat loan and insurance of $940.

[69] Both Noah and Jordan do not have the use of the boat or the use of horseback riding lessons which apparently the respondent enjoys for himself and the horseback riding lessons for his daughter Madison.

[70] I find that the children do not enjoy the same lifestyle at the applicant’s home as they do at the respondent’s home.

[71] The respondent states at paragraph 18 of his affidavit sworn September 11, 2015:

When the applicant and I lived together we lived in a nice middle class home, we were able to feed and clothe our children with comfort, to take the odd vacation and to go out to dinner with the children as a special treat from time to time. We lived a fairly average middle class life.

[72] The British Columbia Court of Appeal addressed this issue in Hollenbach v. Hollenbach, 2000 BCCA 620, at para. 41, where the court held:

… [t]he fact that the children have never lived in a style usually associated with the kind of wealth possessed by this father is not a reason for doubting the appropriateness of the Guidelines. The children should not receive treatment different than other children of wealthy parents … based on a pre-separation lifestyle. This defeats the objectives of the Guidelines to “ensure consistent treatment of spouses and children who are in similar circumstances.”

[73] I find that the respondent enjoys a better standard of living than the applicant. The Guidelines mandate that the parents make a fair contribution and provide for a fair standard of living for the children. There is a large disparity in the parents’ incomes since separation.

[74] Section 9(c) seeks to achieve a goal that the children enjoy a comparable standard of living in each home.

Net Disposable Incomes

[75] I requested that the parties provide calculations indicating the parties’ respective net disposable incomes. I received same but they did not provide the calculations indicating the respondent’s child support obligations to his children by previous marriage and did not provide various scenarios so they were of little assistance.

Interpretation of the Separation Agreement

[76] In my view, deference should be afforded an agreement made by the parties as long as it complies with the principles set out in the Guidelines. The terms of such an agreement are just one factor to consider in arriving at a decision in this case.

[77] In Miller v. Volk, 2009 41356 (Ont. S.C.), Blishen J. stated at para. 19:

Although Contino, supra, emphasizes that a determination of the set-off amount is only a starting point, in this case, it is important to note that the parties agreed to payment of child support based on the simple set-off amount when they signed their Separation Agreement in January 2003. It has been the set-off amount that Ms. Volk has been paying ever since. However, given changes in the incomes of the parties and Ms. Volk’s payment of the majority of the children’s expenses, an adjustment to the set-off amount, having regard to the factors listed under ss. 9(b) and 9(c) of the Guidelines must be considered.

[78] Justice Blishen concluded after reviewing the Separation Agreement and indicated at para. 35(6) “[t]he Separation Agreement between the parties must be carefully considered and deference paid to the Agreement with respect to the formula to be applied.” In Miller, Justice Blishen considered the following points:

1. The respondent’s income is six times higher than the applicant’s;

2. The respondent lives and shares household costs with a new partner;

3. The applicant lives with a new spouse, with whom he is expecting a child, in a home worth significantly less than the home in which the children reside one-half the time with the respondent;

4. The respondent’s net worth is six times that of the applicant; and

5. From the beginning of the separation, the respondent has paid the majority of the children’s expenses. A comparison of the children’s budgets reveals that if the respondent pays the set-off amount based on the parties’ incomes, the applicant will have an approximate $562 per month of surplus.

[79] Justice Blishen ordered the set-off amount to be paid retroactively and prospectively and that the special and extraordinary expenses be paid in proportion to the parties’ respective incomes. Finally, given the disparity in the incomes, the household incomes and the respective net worths, the court found that the respondent continue to be responsible for the majority of children’s expenses to be a fair and equitable distribution of the costs as contemplated in Contino.

[80] In this case the Separation Agreement provides a method of reconciling support at paragraph 5.15:

However, the parties will adjust the Table amount of child support paid in the previous twelve months based on the parties’ actual incomes for the previous taxation year. They shall exchange copies of their income tax returns, as soon as they are filed, for the applicable calendar year, together with the corresponding notices of assessment. The parties shall then determine the appropriate Table amount of the parties’ child support obligation for the previous twelve months in accordance with the Child Support Guidelines…

[81] I find that the Separation Agreement in paragraph 5.15 regarding annual reviews contemplated a calculation of child support using the set-off method based on the following factors:

(a) Paragraph 5.15 does not repeat the specific language in paragraph 5.2. If the parties intended to have a Contino analysis undertaken as alleged by the respondent, they should have repeated the language of paragraph 5.2. They did not;

(b) The parties used the set-off method to calculate child support from 2010 to May 2012;

(c) Paragraph 5.15 refers to an adjustment of the Table amount of child support based on the parties actual incomes for the previous year; and

(d) Paragraph 5.15 does not require the exchange of budgets between the parties to follow the “nuanced approach as set out in s. 9 of the Guidelines and case law” as alleged by the respondent.

Children’s Expenses

[82] Regarding s. 7 expenses, the respondent proposed that the court determine the children’s expenses at Exhibit B of the applicant’s affidavit dated August 21, 2015 and that those expenses be shared in proportion to the parties’ incomes.

[83] I find that based on the parties’ incomes for 2015 that the pro rata share is currently 77% for the respondent and 23% for the applicant.

[84] The following expenses are to be shared by the parties on a monthly proportional basis. These expenses are in addition to the expenses set out at paragraph 5.3 of the Separation Agreement being extra-curricular activities such as hockey-related expenses, soccer expenses, hockey pictures, summer camp and daycare set out herein:

1. Cellphone for Jordan
2. Cellphone for Noah
3. School fees, supplies, activities, trips and school pictures
4. Dance for Jordan
5. Noah’s braces

Disposition

[85] I have considered the terms of the Separation Agreement, set-off amount of the child support, the budgets, the parties’ standard of living, their assets and liabilities and the children’s expenses in arriving at my decision based on a reasonable amount of child support that is fair and equitable on the facts of this case.

[86] I find that the set-off method requested by the applicant will provide a fair standard of living for the children. Further, I do not find compelling evidence to adjust the set-off amount upwards or downwards.

[87] I order that:

(a) Commencing June 1, 2012, to December 1, 2012, the respondent should pay set-off support of $4,110 and that the respondent owes the applicant the sum of $4,010.02 as arrears for child support;

(b) Commencing January 1, 2013, to December 1, 2013, the respondent should pay set-off support of $4,115 and that the respondent owes the applicant the sum of $32,580 as arrears for child support;

(c) Commencing January 1, 2014, to December 1, 2014, the respondent should pay set-off support of $4,826 and that the respondent owes the applicant the sum of $41,112 as arrears for child support;

(d) Commencing January 1, 2015, to August 1, 2015, the respondent should pay set-off support of $3,107 and that the respondent owes the applicant the sum of $13,656 as arrears for child support;

(e) Commencing September 1, 2015, and on the first day of each subsequent month the respondent will pay to the applicant set-off child support in the amount of $3,107 based on the applicant’s income of $115,357 and the respondent’s income of $386,677.02;

(f) Arrears of child support are fixed at $91,358.02 and commencing September 1, 2015, and on the first day of each month thereafter the respondent shall pay to the applicant the sum of $2,000 per month until said arrears are paid in full;

(g) Interest shall accrue on the arrears of child support effective September 1, 2015, in accordance with the Courts of Justice Act, R.S.O. 1990, c. C. 43;

(h) Commencing September 1, 2015, the applicant shall pay 23% and the respondent 77% of the extra-curricular activities, summer camp and daycare expenses for the children pursuant to the Separation Agreement;

(i) In addition, commencing September 1, 2015, and on the first day of each subsequent month, the following additional expenses are to be paid in proportion to the parties respective incomes currently 23% for the applicant and 77% for the respondent:

(i) Cellphone for Jordan

(ii) Cellphone for Noah

(iii) School fees, supplies, activities, trips and school pictures

(iv) Dance for Jordan

(v) Noah’s braces

(j) The parties shall exchange their income tax returns each year no later than May 1st in order to recalculate child support. The parties shall then determine the appropriate Table amount of the parties’ child support obligations for the previous calendar year in accordance with the Guidelines, and determine the “set-off” amount of support. If the respondent has underpaid his child support obligation for the previous calendar year, based on a set-off calculation, he shall provide the applicant with the amount owing within 90 days. If he overpaid his obligation, he may deduct the overpayment from his current child support over 12 months in equal instalments.

Costs

[88] If the parties are unable to agree on the issue of costs, the applicant may file submissions not exceeding three pages in length plus attachments within 15 days of the release of my endorsement. The respondent may file his submissions within a further 15 days with a right of reply within a further 5 days.

Shelston J.

Released: November 13, 2015

ONTARIO
SUPERIOR COURT OF JUSTICE

RE: TRACY LEIGH CRUISE, Applicant

AND

SHAWN WALTER CRUISE, Respondent

BEFORE: Shelston J.

COUNSEL: Jennifer M. Reynolds, counsel for the Applicant

Jeremy Dolgin, counsel for the Respondent

ENDORSEMENT

Shelston J.

Released: November 13, 2015