ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mark David Elliott
Moving Party
– and –
Deirdre Ann Elliott
Responding Party
Jerome C. Gardner, for the Moving Party
Matti E. Mottonen, for the Responding Party
Trevor H.A. Kestle, for FRO, excused
HEARD: May 18, 2016
Ruling ON Motion
1Mr. Elliott brought a motion to change the child support order of Gauthier J. made October 3, 2013, on the basis of a material change in his income since the time of the order. In that order, Mr. Elliott was required to pay monthly child support for two children in the amount of $1,051, based on an income of $71,000 commencing December 15, 2013. He was also ordered to pay costs of $8,400 to Mrs. Elliott.
Background
2Since the 2013 Order, Mr. Elliott has only paid three months of support to Mrs. Elliott. Arrears have been accumulating since April 2014. In addition, the father has paid for items for the children, either on his own or at the request of the mother, from time to time: ski boots, orthodontics, hunting and other courses. The father is currently in arrears in the amount of $24,000 plus the outstanding cost award. He is currently not paying regularly through the Family Responsibility Office (“FRO”).
3In 2015, FRO sought to enforce arrears by taking Mr. Elliott’s driver’s license. The father sought and obtained a six months stay of enforcement. The stay was extended and is scheduled to end June 16, 2016.
Position of the Father
4The father argues that there has been a material change in his income since the hearing before Justice Gauthier in September 2013 when he projected his income for the year. He now states that his income for 2014 did not meet his expectation. The evidence before Justice Gauthier was that the father’s projected income for 2013 was $71,000 based on information available at the time.
5In fact, the father’s gross revenue and personal income plummeted following this order. It is on this basis that the father seeks a reduction of the original order retroactively based to the date of the original order.
6The father seeks leave to proceed with this motion notwithstanding his failure to pay costs as ordered, a reduction in the child support retroactive to the date of original order, a rescission of arrears or a stay of enforcement of arrears.
7Counsel for the father notes that Justice Gauthier’s decision recognized at paragraph 48 that the evidence before her on the father’s income was incomplete and made provision in the order to adjust support if necessary. Gauthier J. said:
For purposes of this temporary order, the Husband’s income shall be deemed to be $71,000 per year. The Husband shall pay child support based on that amount commencing December 15, 2013. Any deviation from the amount of support can be dealt with by the trial judge readjusting the child support.
8It is not completely clear to me what the last sentence means, but given the context of addressing incomplete evidence with respect to income, I read the last sentence of that excerpt to mean that any deviation from the income as found can be dealt with by way of readjustments by the trial judge.
9Counsel also submits that this motion was originally brought in October 2014, but has been delayed while the father obtained and produced financial statements, attended examinations and fulfilled undertakings. The support arrears have continued to accrue during this period.
Position of the Mother
10Counsel for the mother submits that this motion should not be heard unless and until the costs order is satisfied; that there has been no material change in the father’s income or in the alternative that the father is intentionally underemployed and an income should be imputed to him at the same level of income he reported in 2013.
11Counsel for the mother argues that the financial information provided by the father is not credible, not complete and should not be accepted by this court. It is further submitted that the arrears should not be expunged nor should their enforcement be stayed.
Discussion
12The father is a landscape architect with a professional designation and 20 years’ experience as the sole proprietor and employee of a business providing landscape design services. The mother is employed full time and resides in the matrimonial home with the two children who are now teenagers.
13The case conference judge noted that the separation was a situation of high conflict and that neither party would leave the family home. It does not appear that the conflict has decreased significantly since then, although now it is focused on money issues as opposed to custody issues.
14The father’s personal income history at the time of the original hearing in October 2013 was as follows:
2008 $110,000
2009 $92,500
2010 $125,000
2011 $64,000.
15Justice Gauthier noted as well that ‘other evidence indicates a drop in the Husband’s revenues from his business.’ At that time, the mother took the position that the husband’s income should be based on the three-year average income information. The father argued that because his revenues had dropped, his income for the purpose of determining support should be fixed at $71,000, which was calculated as the sum of $64,000 declared personal income plus $7,500 for tax deduction he received for his vehicle. Justice Gauthier accepted this suggestion with the caveat that I have noted above.
16In the two years since the order, the father’s business has floundered. The reported gross revenues for the company are as follows:
2014 $67,325
2015 $66,142.
17The corresponding declared personal income is:
2014 $39,042
2015 $47,200.
Is the father’s evidence credible?
18Mr. Mottonen argues that the figures just do not make any sense. The father filed evidence that his residential gas was cut off, his residential rent was overdue and that his credit card was locked. This is at odds with Mr. Elliott’s position at examinations when he said that he was meeting his financial obligations. Mr. Mottonen further argued that the fact that Mr. Elliott did not pay any support in a year in which he made some income and cashed in some RSP’s shows that he is not prepared to allocate the income available to him to pay support.
19Mr. Gardner argues that the evidence of unpaid utility bills and overdue rent is consistent with Mr. Elliott’s position that his income from landscape design is significantly reduced. He argues that the financial statements of the business clearly show the reduced revenues and that business expenses are appropriate and modest.
20I accept this argument. In the absence of any evidence showing the business expense to be unreasonable, or where other income might be hidden or unreported, I accept Mr. Elliott’s income position as based on the independently prepared financial statements. I do not accept the argument that his business expenses are simply a means to reduce his personal income so as to reduce his support or that he has other unreported income.
Has there been a material change in income?
21The motion judge on the original order clearly distinguished between the gross revenues of the company and the personal income. In support of his argument that there was no material change, Mr. Mottonen argued that the court should not distinguish between personal and corporate earnings. Thus, he urged the court to compare the 2013 personal declared income against the gross revenues of the company for 2015 and noted that there is little difference. (2013 $64,000 and 2015 $66,000).
22I find this argument disingenuous, particularly when the first order is specifically based on personal income and the motion judge had the information before her of both gross company revenues and declared personal income.
23The material change is from a projected personal income of $71,000 on which the 2013 support order is based and a declared personal income of $39,000 and $47,000 in the two years following. That is approximately a 40 percent reduction in earning.
24I find that there has been a material change in Mr. Elliott’s income since the order of Gauthier J. in October 2013.
Should income be attributed to Mr. Elliott?
25I am not satisfied that there is sufficient evidence before me to find that Mr. Elliott is deliberately unemployed or is not telling the truth. If I could make such findings, they would justify an imputation of income to Mr. Elliott. The only information before the court is Mr. Elliott’s own history of earnings and the assertion of Mr. Elliott that competition in the market has grown. In order to impute an income, there must be findings grounded in evidence, for example on the availability of work or opportunities. I find that there is no rational basis for imputing an income.
26On the other hand, I find it difficult to accept that a person with Mr. Elliott’s experience cannot overcome the business challenges he describes.
27This is not to say that parents cannot raise children on modest incomes. However, as I told the father during the hearing, if he believes his earning capacity is limited to his current levels of income earning, then his living expenses must also reflect this modest income. For example, Mr. Elliott should be looking to reduce his housing costs and recognize that downhill skiing may not be affordable and holidays at resorts are outside of his limits. He may also be at the point where he can no longer justify maintaining a business that has business expenses to earn such a modest annual income.
28While the evidence before me was insufficient to impute an income, I presume that this question can be more fully explored on an expanded evidentiary record. Mr. Elliott remains vulnerable to adjustments being made retroactively to these temporary orders should there be good evidence that contracts or income opportunities were available to him to increase his income to at least $71,000 per annum.
Should this motion be heard even though the cost award has not been paid?
29I have heard some evidence that Mr. Elliott will be entitled to a significant equalization payment when this matter is finally resolved. In the circumstances, where his income is so reduced, he seeks to pay the cost award from the ultimate equalization. It is not necessary to go as far as making an order identifying the source of the cost award. However, I am satisfied that this motion should have been heard notwithstanding the outstanding cost award.
30In the circumstances that exist at this time, the unpaid cost award should not operate as a bar to continued proceedings on this matter. However, as Mr. Elliott’s debt load decreases and his plans for increasing his income continue to bear fruit, he should make efforts to satisfy this cost award. He is vulnerable to a decision by a court considering a future question, to find that circumstances are now favourable to payment of the cost award and further delinquency on this obligation should bar Mr. Elliott’s participation in this matter.
31The motion to change child support is granted. The Order of October 3, 2013, is varied as follows:
Child support for two children shall be set at the guideline amount based on income of $39,042 for the 2014 calendar year and $47,200 for the 2015 calendar year.
Arrears shall be calculated on that basis.
Enforcement of arrears is stayed for a further six months or until trial, whichever comes first. Should the parties not be ready for trial within six months, arrears should be addressed.
32I urge the parties and counsel to move expeditiously to a settlement and trial management conference to address all outstanding matters.
33Counsel may arrange an appointment to speak to me if they need any assistance with the order.
34In the circumstances, I would not order costs, subject to receiving any offers that were made. If offers had been exchanged, counsel should forward them to me by May 31, 2016.
The Honourable Madam Justice Patricia C. Hennessy
Released: May 24, 2016
CITATION: Elliott v. Elliott, 2016 ONSC 3384
COURT FILE NO.: D-20,127/2012
DATE: 20160524
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Mark David Elliott
Moving Party
– and –
Deirdre Ann Elliott
Responding Party
ruling on motion
Hennessy J.
Released: May 24, 2016