Court File and Parties

COURT FILE NO.: FC-03-1421-1 DATE: 2016-05-03 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Robert Andrew Crowther, Applicant AND Lorena Maria Pasian, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Linsey Sherman, for the Applicant Rod Cross, for the Respondent

HEARD: April 19, 2016

Endorsement

[1] The Respondent mother, Lorena Maria Pasian, brings a motion to change a support agreement dated July 3, 2003 in which the parties agreed that the Applicant, Robert Andrew Crowther, would pay $1,150 US for child support plus an annual indexation. At this time the amount payable is $1,545 US per month (approximately $2,000 CDN per month).

[2] The mother also seeks a sharing of post-secondary expenses, an order compelling the father to provide evidence of a life insurance policy designating Ms. Pasian as irrevocable beneficiary and costs. She is prepared to update the father with the children’s school transcripts, attendance and other information to ensure that they are entitled to continue to receive financial aid for their university education.

[3] The father objects to the motion and indicates that his financial circumstances have changed as he is unemployed save and except for some teaching contracts. He is not in a position to pay child support and he is requesting a retroactive adjustment as he has continued to pay child support up to and including April 1, 2016 even though he is not working full time.

[4] The issues are as follows:

(i) Has there been a material change of circumstance?

(ii) If so, what is the father’s income for the purposes of determining child support?

(iii) What amount of child support is payable?

(iv) Should there be a retroactive adjustment?

(v) How much should the father contribute to post-secondary education costs?

(vi) Has the father provided proof that he has a life insurance policy in place in accordance with the separation agreement?

Background Facts

[5] The parties were married on April 8, 1994. They have two children, Aidan born June 8, 1996 and Sara born September 23, 1997. The parties separated on May 1, 2000.

[6] At the time of separation, the parties were teaching in Southeast Asia. The mother was a teacher with Saigon South International School and the father was the head of the school. After the separation, the mother was dismissed from her employment and returned to Canada and the father remained in Southeast Asia.

[7] The parties’ separation agreement dated July 3, 2003 provided for the following:

(i) The parties acknowledged that the mother’s 2003 income was $20,000 and the father’s income while employed at Australian International School in Jakarta, Indonesia was approximately $62,700 CDN received on a tax-free basis.

(ii) The parties released their spousal support claims.

(iii) The mother would have sole custody of the children and the father would have regular and frequent access to them.

(iv) The father would pay child support in the amount of $1,050 US per month tax-free to the mother.

(v) The parties acknowledged that child support included the costs of the children’s daycare and summer camp of up to $200 CDN per child and extraordinary extracurricular activities.

(vi) Commencing February 1, 2004, the father would increase the child support by the indexing factor of February of the previous year.

(vii) The parties agreed to maintain a life insurance policy in the minimum amount of $300,000 CDN and each would designate the other party as irrevocable beneficiary in trust for the children.

(viii) In the event that there was a change in the quantum of child support, there would be deemed to be a material change of circumstances that would permit the father to seek a variation for the amount of life insurance.

(ix) The parties agreed that it would be in the best interest of the children to pursue post-secondary education to the fullest. The parties would encourage the children to obtain summer employment so that they can contribute to their own post-secondary educational costs and the parties would encourage the children to apply for loans and bursaries and scholarships. The parties also agreed as follows:

“to the extent that the children are unable to pay for their own post-secondary educational expenses after using their income from summer employment, if any, and having applied for such loans, bursaries and scholarships as may be available to them, the husband and wife contribute to such costs in proportion to their incomes determined in accordance with the child support guidelines”.

[8] Until the end of July 2015, the father was working as the deputy principal in Ho Chi Minh City, Vietnam and earned the following:

• Approximately $80,520 US as a salary;
• $13,200 US for housing;
• $2,900 US for a flight allowance;
• $1,200 US for health insurance as required as a resident of a foreign country; and
• $300 US as a bonus.

[9] In April 2015, the father’s current spouse was advised by her employer that her position as senior director of a market research company in Vietnam would be eliminated and that she had an option to relocate to London, England or Seattle, Washington.

[10] The father states she did not have any other options for work in Vietnam. She chose to accept the job in England.

[11] The father states that he and his wife wanted their children to be raised in England and that they had stayed in Vietnam longer than they had expected. The family members are British citizens and the children now can spend time with extended family in England. They live 90 minutes from their maternal grandmother and an hour away from their maternal great-grandmother. They have an aunt in Amsterdam. His wife has the Power of Attorney of her 98 year old grandmother.

[12] The family moved so that the children could have the support of his wife’s family and grow up in their home country. He states that it was a family decision, based on his wife’s employment, the best interests of his children and the changing life circumstances experienced as expatriates in a foreign country.

[13] The father’s counsel advised the mother’s counsel by letter dated April 28, 2015 that the father would be relocating from Vietnam to London, England as a result of his wife’s employment. The father completed his work in Vietnam until the end of the school year on July 31, 2015. He joined his wife and children in August 2015.

[14] He has been searching for employment in England and obtained a short-term teaching contract from January 26, 2016 to March 24, 2016 where he earned 130 GBP per day for a total of approximately $9,000 CDN. At the time of the hearing of the motion, he had another teaching contract. He hopes that he will have permanent employment in September 2016.

[15] The mother is working as a teacher with the Ottawa Catholic School Board and her 2015 income was $99,000 per year.

[16] The father has been paying child support to the mother in the amount of $1,545 US (or approximately $2,000 CDN) per month.

[17] In addition, over the years, the father contributed to some of the children’s extracurricular activities including Sara’s dance school, cheer leading camps and ski trips.

[18] The parties dispute how often the father contacted the children or visited the children. There is a dispute as to whether the mother supports the relationship between the children and their father. The mother states that Sara struggles with the fact that her father is not in her life and states that Sara suffers from emotional turmoil and has suffered from depressive episodes and anxiety. Sara gave up modeling and other activities and has exhibited self-harming behavior and is seeing a psychologist. According to the mother, the father only became aware of the daughter’s issue through the affidavits.

[19] At this time, the father has visits with the children when he is in Ottawa visiting some of his wife’s family. This occurs once or twice per year and he has email contact. He has taken the children to the wife’s family’s cottage.

[20] In July 2014, the father was contacted by the mother who was asking for contribution to Aidan’s post-secondary education of $2,000 CDN per year. The father indicates that he asked for disclosure with respect to the expenses and the children’s contribution. The mother provided some documentation including Aidan’s tuition receipt, his OSAP application and his bank statement showing a balance of $67 CDN. The father requested further information regarding the expenses for the university and Aidan’s contributions in accordance with the separation agreement. The mother indicates that she did send financial information; however, no agreement was reached.

[21] The mother commenced a motion to change on November 17, 2014 requesting financial disclosure for the past three years, contribution towards the children’s post-secondary education and an order requiring the father to produce evidence that the insurance policy designation is in place as required in the separation agreement.

[22] A printout of the payments made by the father show that he paid regularly and increased payments without consultation with the mother. He also paid certain extra expenses that he states was his contribution to some s. 7 expenses. The mother states that he did not assist with certain activities such as dance, driver’s education, modeling and swimming certification.

[23] Aidan commenced attending Carleton University in September 2014. He has just completed his second year of a five-year program. The 2014 fall tuition was $5,435.99. Aidan had saved $800 to pay towards that academic year.

[24] The mother has been building up savings in RESP accounts on behalf of the children.

[25] In October 2015, the father paid $4,000 to the mother for Aidan’s university expenses for 2014-2015 and 2015-2016.

Mother’s position

[26] At the motion, the mother requested that the provisions of the separation agreement continue to be followed, that the father continue to pay the child support he was paying of $1,545 US per month, and that he contribute $2,000 CDN per year per child. For Aidan, the amounts would be paid in the fall of 2016, 2017 and 2018. For Sara, it will be on a “if and when” basis, if she attends university or college, the father would contribute $2000 per year towards her post-secondary education.

[27] Although, the mother had other s. 7 expenses set out in Schedule C of her financial statement dated April 7, 2016 including life guard courses, drivers’ education and drivers’ tests, she is not claiming the same. Regardless, the father disputes that these are s. 7 expenses.

[28] The mother is requesting that the Court impute income to the father pursuant to s. 19 (1) of the Child Support Guidelines, S.O.R./97-175, as amended (“Guidelines”). The mother submits that the father should not have left an excellent job while he has two dependants in Ottawa. She states that he does not have the “luxury” of leaving his lucrative teaching job. She is also unaware of the details of his wife’s income and why his wife did not file an affidavit corroborating the reason for the family’s move to England.

[29] She has calculated that he owes $407.17 US in retroactive support.

[30] She states that she is fully responsible for the children and the father’s infrequent visits place the bulk of the parenting on her and submits that the father’s cross-motion should be dismissed with costs.

Father’s position

[31] The father brought a motion requesting a variation of paragraph 12 of the parties’ separation agreement by reducing his monthly child support, asking for a retroactive adjustment for overpayment of his child support, and an order that his proportionate share of post-secondary expenses be payable only after proof of the expense with a consideration of the child’s contribution to the expense.

[32] The father states that he and his wife were expatriates residing in Vietnam with their two young children. He completed his school teaching term there in July 31, 2015 and has been searching for employment in London. He has continued to make his monthly child support payments.

[33] The father indicates that the Court should order child support pursuant to section 2(3) of the Child Support Guidelines, which provides that a party’s most recent income information is to be used in calculating support and that he has overpaid child support since August 2015 as he had very little income.

(i) Has there been a material change of circumstances?

[34] Paragraph 17 of the separation agreement indicates that:

The husband and wife intend the provisions of sections 9, 12, 13, 14 and 16 of this Agreement dealing with custody of the children and financial support for the children to be final in all respects and subject only to annual review and yearly Canadian Cost of Living increases or to a variation in the event of a material change of circumstances, whether foreseen or unforeseen, or forseeable or unforseeable, affecting the financial ability of either party, or the best interests of the children, or the spouse’s ability to have custody of or exercise [access] to the children.

[35] The Court notes that there have been two material changes of circumstances since the agreement was executed: i) both parents have had significant changes in their respective incomes. Most notably the father’s income has increased from $62,700 CDN in 2003 to approximately $103,000 CDN per annum; and ii) Aidan is now attending university and the sharing of his post-secondary expenses needs to be dealt with by the Court.

[36] Given the material change, the Court can determine support and s. 7 expenses.

(ii) What is the father’s income for the purpose of determining child support?

Law

[37] The relevant provisions in the Child Support Guidelines are as follows:

2(3) Where, for the purposes of these Guidelines, any amount is determined on the basis of specified information, the most current information must be used.

19(1) The Court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:

(a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse;

[38] In Drygala v. Pauli (2002), 61 O.R. (3d) 771, at para. 23, the Ontario Court of Appeal set out the test for determining whether income should be imputed:

i) Is the spouse intentionally under-employed or unemployed?

ii) If so, is the intentional under-employment or unemployment required by virtue of his reasonable educational needs?

iii) If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?

[39] The onus is on the party seeking to impute income to show a prima facie case by establishing the evidence that the other party is intentionally under-employed or unemployed. Intentional, given its ordinary meaning, “means a voluntary act”: Drygala, at para. 28; and Homsi v. Zaya, 2009 ONCA 322, 65 R.F.L. (6th) 17, at para. 28.

[40] The Court must ask whether the evidence establishes that the payor has made a personal choice to earn less than he is capable of earning: Riel v. Holland (2003), 61 O.R. (3d) 417 (C.A.). There is no requirement for a finding that the payor has acted in bad faith and with a specific intent to avoid child support obligations.

[41] As stated by Justice Pazaratz in Jackson v. Mayerle, 2016 ONSC 72, at para. 715:

“Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of their children”.

[42] Mother’s counsel has referred the Court to a number of cases where the factors in imputing income were considered.

[43] In Duffy v. Duffy, 2009 NLCA 48, 73 R.F.L. (6th) 233, at para. 35, the Newfoundland and Labrador Court of Appeal summarized several general principles regarding financial support of children under the Child Support Guidelines:

1. The fundamental obligation of a parent to support his or her children takes precedence over the parent’s own interests and choices.
2. A parent will not be permitted to knowingly avoid or diminish, and may not choose to ignore, his or her obligation to support his or her children.
3. A parent is required to act responsibly when making financial decisions that may affect the level of child support available from that parent.
4. Imputing income to a parent on the basis that the parent is “intentionally under-employed or unemployed” does not incorporate a requirement for proof of bad faith. “Intentionally” in this context clarifies that the provision does not apply to situations beyond the parent’s control.
5. The determination to impute income is discretionary, as the Court considers appropriate in the circumstances.
6. Where a parent is intentionally under-employed or unemployed, the Court may exercise its discretion not to impute income where that parent establishes the reasonableness of his or her decision.
7. A parent will not be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations or interests. Nor will it be acceptable for a parent to choose to work for future rewards to the detriment of the present needs of his or her children, unless the parent establishes the reasonableness of his or her course of action.
8. A parent must provide proper and full disclosure of financial information. Failure to do so may result in the Court drawing an adverse inference and imputing income.

[44] Drygala referred to Donovan v. Donovan, 2000 MBCA 80, 150 Man. R. (2d) 116, where the Manitoba Court of Appeal found that there was no need to find a specific intent to avoid child support obligation before income can be imputed.

[45] The second step is treated as a general test of reasonableness that goes beyond the educational needs of the parent. Once intentional underemployment is shown, the onus shifts to the payor to demonstrate that the decision is reasonable.

[46] Finally, when imputing income, in Lawson v. Lawson (2006), 81 O.R. (3d) 321 (C.A.), at para. 36, the Court stated that when determining imputation of income, the Court must consider what is reasonable in the circumstances, having regard to the age, education, experience, skills and health of the payor and the payor’s past earning history and the amount of income the payor could earn if he/she worked to his/her capacity.

Analysis

[47] When applying s. 19 of the Guidelines and the general principles set out in the leading authorities, the Court must exercise its discretion based on the facts of this case and the evidence before the Court.

[48] Firstly, the evidence supports a finding that the father is intentionally unemployed or under-employed. The father left his job of his own volition. His termination from his teaching position in Vietnam was within his control. He was not laid off, nor fired.

[49] The father Court made a personal choice to earn less than he is capable of earning. Bad faith does not need to be established.

[50] If the Court finds that the father is intentionally unemployed or under-employed, the Court may exercise its discretion to impute income if it is found that the parent’s decision was not reasonable.

[51] The burden now shifts to the father to establish that, due to the circumstances, his decision was reasonable.

[52] In considering whether the father’s decision to leave his lucrative job in Vietnam was reasonable, the Court considers the following:

i) The father has been working in the teaching field in Southeast Asia for many years (at least since 2000)

ii) He has two adult children to support in Canada

iii) He has a new family and his wife lost her employment and all family members are British citizens and have family in the UK and Europe

iv) The father chose to leave Vietnam due to his wife’s work and the family’s perception of what is their children’s best interests

v) Rather than stay on in Vietnam, seek employment in England and move once he found work, he chose to leave a well-paying job when he has a legal obligation to pay a monthly payment of $1,545 US. This payment is essential to the mother who has two adult children who have continuing financial needs.

vi) The father has made many efforts to find contracts and is hopeful that he will have work in September 2016. The Court finds he has been diligent in pursuing work in England.

vii) There is no information of the father’s wife’s income and whether that formed the basis for the move, i.e. her income was substantial and could not be replicated in Vietnam.

viii) The father is requesting relief from his financial obligation to his children from this marriage until he can settle into the English education system.

[53] He obtained another short-term teaching contract through an agency until the end of March 2016. Up until March 24, 2016 he earned $9,069 CDN. He expected to have another contract from April to July.

[54] He states that he is “currently in discussions with an international school in London, and … hope[s] to be able to confirm this over the next few months”. He indicates that he would start in August 2016 and he estimates his income would be approximately 45,000 GBP per year, or $83,000 CDN. He notes that when he is working full time he will be incurring daycare costs for his two children.

[55] He has paid child support up to and including April 2016.

[56] The Court is not aware of the income of the wife at the time of the termination of her employment in Vietnam and what if any role the wife’s income played in the family’s decision to move to England. There was no evidence from the father’s wife before the court.

[57] The Court finds that it was not reasonable for the father to quit his job in Vietnam when he did not have a full time position available in England. He could have made some arrangements to locate employment before he actually terminated his employment in Vietnam.

[58] By doing so, he abdicated his financial responsibility for his two adult children. He has placed his needs and his circumstances over his children’s needs.

[59] By choosing to become unemployed, he has forced the financial burden for the two children on the mother. The children have a right to be supported by both parents.

[60] Step three of the Drygala test requires the Court to determine what income should be imputed to the father based on his skills, experience and work history.

[61] He has worked for at least 16 years in Southeast Asian countries with a reasonable income. As stated above, there was no reason to leave the employment without having first obtained other employment in England. Also, there were no details of the severance package that he may have received upon his departure.

[62] There is a paucity of evidence regarding a number of the components of the father’s income.

[63] Regarding taxes paid, while the evidence demonstrates that tax was paid to the Vietnam government, it is not clear who paid it. There was insufficient evidence as to whether the father paid less tax than one earning comparable income in Canada, which would invite the Court to impute further income.

[64] Regarding the issue of whether the flight, medical benefits and housing allowance should be part of income, no evidence was provided as to whether these are taxable benefits. Certainly housing benefits could be imputed into income, but the Court has no evidence of the nature of this benefit and the cost of living in Vietnam, or the terms of his contract.

[65] Therefore, the Court finds that income should be imputed to him as what he would have earned in Vietnam had he not arbitrarily left his employment. This includes his salary of $80,520 US and his bonus of $3000 US for a total of $106,212 CDN per annum. Given the lack of evidence regarding his benefits and whether they should be included in income, the Court declines to include them in income for the purposes of determining child support.

(iii) What amount of child support is payable?

[66] The Court finds his income to be $106,212.36 CDN and the child support for two children is $1,492 CDN per month commencing August 1, 2015.

(iv) Should there be a retroactive adjustment?

[67] The evidence establishes that he earned this income until July 2015 when he left his employment.

[68] The father is requesting that there be a retroactive adjustment to August 1, 2015.

[69] There is no request from either party to readjust child support based on his income to the time the application was commenced or when he gave notice.

[70] Therefore, the amount of $1,491.50 CDN per month is retroactive to August 2015. This will result in a credit to the father as he has overpaid.

[71] The amount payable will continue until the father obtains full time employment in England at which time the child support will be adjusted on the first day of the month that he commences his new employment. If the parties cannot agree on the adjusted amount, then the matter can be returned before me.

(v) How much should the father contribute to post-secondary educational costs?

[72] According to the mother’s financial statement schedule, Aidan’s post-secondary educational costs, in Canadian dollars, are as follows:

• $11,336 per year for tuition
• $1,500 to $1,800 per year for books, internet, computer, lab costs and stationery
• $12,836 minus $1,800 tax credit = $11,000 rough yearly expenses

The child contributes through earnings, grants, etc. and the mother contributes through the RESP’s she has saved.

[73] The mother is requesting a $2,000 contribution from the father. This is not unreasonable given the above information. It is less than 1/3 of the total budget allotted for one year of Aidan’s education.

[74] The father will pay the amount of $2000 for the fall of 2016, 2017 and 2018 for Aidan so long as he is attending school on a full time basis. The mother must provide regular status reports including transcripts and confirmation of attendance at school in September and January of each year.

[75] If Sara attends a post-secondary educational institution, the mother must provide the following to the father if she is seeking his contribution:

• Sara’s earnings, including tax documents
• Up to date income statement and paystubs
• Course of study and the courses taken
• Cost of Tuition, books, etc. with receipts
• Budget for each academic year
• Any bursaries or scholarships available to Sara
• Any loan applications.

[76] The father will have to keep the mother advised of his efforts to find work and advise of any contract work. Once he finds full time employment, the child support can be varied at that time. If the parties do not agree on the amount, then the matter can be returned before me.

(vi) Has the father provided proof that he has life insurance policy in place in accordance with the separation agreement?

[77] The father has provided the Court with statements indicating the existence of a life insurance policy. The mother is indicated as beneficiary. The document does not indicate that the designation is irrevocable nor does it indicate the face amount.

[78] Therefore, the father will comply with the separation agreement to provide proof that he has maintained a life insurance policy with the face amount of $300,000 designating the mother as irrevocable beneficiary.

[79] As per the separation agreement, if child support changes, the parties may adjust the face amount of the policy.

[80] If the parties cannot agree on what the face amount of the policy should be, they can schedule a hearing before me by contacting the Trial Coordinator’s office. The proper evidence with respect to the amount requested and basis for the amount should be filed with the Court.

[81] If the parties cannot agree on the new adjusted amount of child support once the father obtains employment, the motion can be returned before me. The date can be arranged with the Trial Coordinator’s office.

[82] If the parties cannot agree on costs, the mother can provide her two page submissions by May 13, 2016 and the father can provide his two page response by May 27, 2016.

Madam Justice A. Doyle Date: 2016/05/03