Gordon v. Gordon, 2016 ONSC 3611

CITATION: Gordon v. Gordon, 2016 ONSC 3611

COURT FILE NO.: 85/14

DATE: 2016-09-30

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Angela Bell Gordon Applicant

– and –

Shawn A. Gordon Respondent

Matt Milczarczyk, Counsel for the Applicant

Raymond J. Wrubel, Counsel for the Respondent

HEARD: May 12, 2016

THE HONOURABLE MR. JUSTICE R.J. HARPER

JUDGMENT

Issues

[1] Motion to change brought by the Applicant, Angela Bell Gordon, (mother).

[2] The mother seeks to have the order of Justice Kaufman, terminating her child support, dated January 3, 2014, set aside and to replace it with the parties’ separation agreement of 2004. This agreement relates to the parties’ understanding surrounding the respondent (father) paying the child’s post-secondary tuition.

[3] The Respondent seeks an order for a retroactive adjustment to section 7 child support payments, which he alleges were an overpayment of special expenses for the child from 2011 to date.

[4] Both the mother and father seek a finding that the other is underemployed or purposely unemployed. Both mother and father seek a finding that income should be imputed to the other.

Agreement of the Parties

[5] The parties agree that the mother is not seeking retroactive section 7 expenses prior to 2014. The father agrees that he is responsible for child support in accordance with the guidelines from May 2014 to August 2014 and for the months of May to August 2015, in accordance with his income. He is also responsible for his share of the education costs, properly calculated, and in accordance with his income and the imputed income of the mother for the school years 2013/2014 and 2014/2015.

[6] Both parties seek an order for the court to set child support from May 1, 2016 forward.

[7] The following issues require a number of findings by the court:

a. What is the income of the mother and the father for the years 2013 to the present?

b. What are the proper tuition and other education costs of the child from 2013?

c. What is the proper ratio of contribution by the parents, given a finding as to what their income is?

d. What contribution should the child make to his own education costs?

e. Should there be a time limitation on the child support?

Background

[8] The mother and father were married on July 8, 1995.

[9] They separated in October, 2002.

[10] They were divorced April 12, 2004.

[11] There is one child of the marriage, Shawn Alistair Gordon Jr., born November 6, 1995. The mother had a child from a previous union who is independent and not the subject of these proceedings.

[12] The parties entered into a separation agreement on January 30, 2004. This agreement provided for joint custody of the child with the primary residence of the child to be with the mother, and it also provided a liberal access regime.

[13] According to the mother, the father exercised access to the child for only a few months. In 2005 he stopped seeing the child. On September 11, 2006 by order of Justice Wildman, the father was restrained from having any contact with the child unless such contact was under supervision. The father was also restrained from communicating either directly or indirectly with the mother, and from coming within 500 meters of her home and any place of employment. From that point forward he did not exercise any access to the child.

Litigation Chronology

The Separation Agreement

[14] The parties’ separation agreement of January 30, 2004 provided in the preamble as follows:

And whereas the parties acknowledge that they are aware of the possibilities of fluctuation of their respective incomes and assets and each is prepared to accept the terms of this agreement as full and final settlement except for custody, access and child support.

[15] Section 10 of the agreement provided that child support would be paid by the father to the mother in the amount of $625 per month, based on an income of $78,000 per annum.

[16] Section 11 provided for their agreement relative to “Extra-Ordinary Expenses”. It reads as follows:

11. The parties recognize that they shall be obliged to share the extraordinary expenses of the child, as defined by s.7 of the Federal Child Support Guidelines Act. The parties shall share the cost, proportionate to their respective incomes, of the child’s extra-curricular activities, provided that such activities have been agreed to in advance. The parties recognize that Post-Secondary Education is an extraordinary expense as defined by the Act. The husband/father shall pay the child’s tuition for his post-secondary education, and the balance of post-secondary education expenses shall be shared proportionate to income by the parties, respectively. The amount to be shared shall be determined by first deducting the amount of any Registered Education Savings Plan funds, the child’s own contribution and the tuition being paid by the husband/father. (my emphasis)

[17] It is significant to note that the tuition costs were treated separately, and they were to be the father’s responsibility. The balance of the post-secondary expenses were to be divided in proportion to the parties’ respective incomes. The shared expenses were determined only after deducting the amount of any RESP, the child’s own contribution and the tuition being paid by the father.

[18] Paragraph 22 of the separation agreement reads:

Divorce Proceedings at Newmarket

The wife has commenced an Application to the Ontario Superior Court of Justice at Newmarket, Ontario. The Court file number is: 17353/03. The named applicant is Angela Bell Gordon; the named Respondent is Shawn Anthony Gordon. The husband shall withdraw his Answer, forthwith following the execution of this Agreement. The wife shall then proceed expeditiously to obtain a Divorce Judgment, wherein no Corollary Relief is claimed. The costs associated with the obtaining of the Divorce Judgment, and Certificate of Divorce for each party respectively, shall be shared equally by the parties. The terms of this Separation Agreement shall survive the obtaining of a Divorce.

Order Number 1

[19] Subsequent to the above agreement of January 30, 2004, the parties were back in court and that litigation resulted in an Order of Justice Wildman dated February 2, 2005. The order is noted to be court file 17353/03.

[20] Paragraph 1 of the order reads:

1. On consent, the respondent will pay ongoing child support to the applicant on behalf of the child of the marriage, namely Shawn Alistair Gordon born November 6, 1995 in the amount of $705 per month, based on the table amount for his 2003 income of $89,900 per annum, to commence November 1, 2004. Section 10 – Child Support of the Separation Agreement executed January 30, 2004 to be set aside. (My emphasis).

[21] Paragraphs 3, 4 and 5 of that order were also noted to be “on consent”. Paragraph 3 set the section 7 expenses to be shared pro rata on the basis of the parties current income and the incomes were set out to be as follows:

Income of the mother - $76,000;

Income of the father - $89,900.

[22] Paragraph 4 provided that the father was to pay retroactive child support in the amount of $310 and the section 7 expenses were to be shared for the period up to November 1, 2004 on a pro rata basis, based on their prior year tax returns.

[23] Paragraph 5 provided that on consent, the section 7 expenses are limited to his pro rata share of the sum of $1,500 per year in total, with respect to extracurricular activities, but not to include day care, counselling or to other expenses not related to an extra-curricular activity.

[24] The 2005 order deleted the section with respect to child support, but did not delete the section with respect to Extraordinary Expenses relative to post-secondary expenses. The 2005 order made reference to the section 7 expenses to be paid according to the changes in the parties’ incomes at that time. The order also capped the father’s contribution to “extra-curricular activities”.

[25] The order is designated as a “Final Order”. However, paragraph 23 of the order provides for a case conference “may be arranged through the Trial Coordinator”. This suggests that the order was not final.

Order Number 2

[26] The next order made within these proceedings was the order of Justice Rogers, dated September 11, 2006.

[27] This order also is designated as a “Final Order”. However, it makes no reference to setting aside any portion of the separation agreement or the order of Justice Wildman of February 2, 2005.

[28] Despite the fact that there is no reference to the setting aside or deleting the separation agreement or the order of Justice Wildman dated February 2, 2005, the order of Justice Rogers provides for a different amount of child support based on new income set for the father at $103,000 per annum. The child support was changed to $940 per month in accordance with the CSG’s.

[29] None of the pleadings filed with the court in 2005 and 2006 were placed in evidence before me. It was merely represented that the matter was before the court by way of a motion to change. There were changes to the child support given the changes to incomes. There was the specific reference to the child support section of the agreement being deleted. However, no reference was made in the subsequent order deleting and changing the requirement of the father to pay the post-secondary tuition of the child. There were changes to amounts of contribution to certain section 7 expenses due to changes in income. There was one reference to capping the father’s contribution to extracurricular activities. There was also a subsequent reference to a requirement of the mother to obtain prior consent of the father for section 7 expenses.

[30] The latter requirement was rendered meaningless due to the fact that there was also a provision in the September 11, 2006 order that restrained the father from communicating with the mother either directly or indirectly. There were no exceptions to this restraint.

[31] If a subsequent order to vary the terms of a separation agreement of a court order makes a specific reference to a particular section of the agreement or court order that is to change, but makes no reference to other sections to be changed, can the court have recourse to the legal maxim of expressio unius est exclusio alterius? That is, if the subsequent order only deletes one section then it is intended that the other sections must remain in full force and effect unless they are specifically referred to?

[32] The Court of Appeal of Saskatchewan in Dorval v. Dorval, 2006 SKCA 21 commented on this as it related to statutory interpretation. The same logic and considerations apply to the interpretation of written instruments and court orders varying written instruments. Commencing at para. 13 the Court of Appeal stated:

[13] Still, the maxim expressio unius est exclusio alterius is only an aid to statutory construction. As Laskin C.J. noted in Jones v. A.G. of New Brunswick, 1974 CanLII 164 (SCC), [1975] 2 S.C.R. 182, “This maxim provides at the most merely a guide to interpretation; it does not pre-ordain conclusions.” And its application calls for a considerable measure of caution lest too much be made of it, a point developed in detail in P.-A. Côté, The Interpretation of Legislation in Canada, 3rd ed. (Scarborough: Carswell, 2000) at pp. 337-339. As Côté observes at p. 337:

A contrario [reasoning], especially in the form expressio unius est exclusio alterius, is widely used. But of all the interpretive arguments, it is among those which must be used with the utmost caution. The courts have often declared it an unreliable tool, and, as we shall see, it is frequently rejected.

[14] In significant part, these observations are grounded in what was said of expressio unius in Turgeon v. Dominion Bank 1929 CanLII 47 (SCC), [1930] S.C.R. 67, per Newcombe J. at pp.70-71, and Alliance des Professeurs Catholiques de Montréal v. Québec Labour Relations Board, 1953 CanLII 45 (SCC), [1953] 2 S.C.R. 140, per Rinfret C.J. at pp. 154, citing Farwell L.J. in Re Lowe v. Darling & Son, [1906] 2 K.B. 772. What was there said of this guide to interpretation is that caution is required in its application and that, while it can be a valuable servant; it can be a dangerous master to follow for a number of reasons. First, much depends on context, including the particular subject-matter. Second, express reference to a matter may have been unnecessary and been made only out of abundant caution. Third, the lack of express reference may have been the product of inadvertence. Fourth, the express and the tacit, incongruous as they may be, must still be such as to make it clear they were not intended to coexist. And, finally, the indiscriminate application of expressio unius to the particular subject-matter may lead to inconsistency or injustice.

[33] In my view, there were sufficient amendments to the previous separation agreement in the subsequent order of 2005 and 2006 that made the original intent of the separation agreement – which the father would pay all of the tuition of post-secondary expenses – unclear at best.

[34] The mother testified that she entered into the agreement specifically after discussions with the father about the importance of the child gaining a post-secondary education. She never wanted the child strapped with a large debt from education. The father committed to the tuition funding and the mother was always of the impression that he would live up to his bargain.

[35] The father took the position that the agreement was changed by subsequent orders. He submitted that the 2006 order made reference to both the mother and the father being responsible for the child’s education, and it was only then that he realized he should prepare for that. He subsequently put money into an RESP. I do not find this position credible. He knew that he was responsible for the tuition costs when he entered into the separation agreement. His assertion that he did not realize his responsibility until the 2006 order is not supported in the evidence.

[36] Nevertheless I will focus on the separation agreement terms as one factor in my consideration of what post-secondary expenses should be paid by the parents at this stage.

Circumstances at the time of the order of 2006

The Mother

[37] The mother has a master’s degree in business. Since the date of marriage, she worked in the banking and financial consulting field.

[38] Her earnings at the time of the order in 2006 were approximately $97,000 per annum. She worked for a company called White Clark. She was laid off from White Clark in 2012, and she was unemployed for nine months. In or about 2013 she moved with her son to Kitchener. She obtained employment at Verax Inc. on Adelaide Street in Toronto. According to her, she had a 2 hour commute each way to and from work.

[39] The mother stated that she became sick and actually fainted while commuting on the Go Train. She stated that she was in hospital for about a week. She did not file any medical reports or clinical notes from any medical doctor to support her claim that she was medically disabled. This is in spite of her undertaking, given at questioning, to produce any reports or clinical notes and records to support her claim that she is presently unable to work due to medical disability. She stated that she is seeing a specialist and they are investigating her illness. The mother applied but was denied ODSP and short term disability from her employer. She stated that she has reapplied to ODSP with further medical information and it is her hope that she will be successful at getting ODSP.

[40] The mother testified that she has been living off of savings including cashing in of her RRSPs and other investments.

The Father

[41] The father was employed at Brookfield Corp. He has a master’s degree in the field of computer science. He was originally employed at the same bank in Jamaica that the mother was employed at. He claimed that the Applicant mother was his boss. The mother denied this. He started to work at Brookfield in or around 2000. It is not clear when he came to Canada. However, when he came to Canada, he secured employment almost immediately. At the time of Justice Wildman’s order, his income was represented to be $103,000.

[42] Since the order of 2006, he was fired from Brookfield in or about January 2009. He stated that he was fired because he had created software that did not do back up customer data as it should have. He did not get any severance. He was only paid vacation pay that was owed to him. He went on employment insurance and, although he contacted many head hunters that he knew, no one would hire him. He decided to start his own business.

[43] In direct examination, the father stated he started SVK Software Corp. in or about the end of 2009. He has been working in this business ever since. He incorporated SVK and the share structure has always been 33.340% each to his mother, his present wife Tanya LaBonte Gordon and himself. He stated that he wanted to have an equal shareholding to the two women in his life.

[44] The above representation of the circumstances of his termination from Brookfield and his lengthy and disappointing attempts to get a job that finally led to his decision to start up a business for himself, did not survive cross examination. He insisted, at the outset of his cross examination, that he did not incorporate SVK or do any work in a business for himself until 2009.

[45] He was then confronted with his own sworn affidavit of February 19, 2013 wherein he stated at paragraph 10:

I registered SVK Software Corp. on May 4, 2006. I always had a dream of having my own software company. The software we started selling in 2006 was one that I worked on in my basement for 3 years prior and wrote single-handedly. The company did well for its small size and held its own against much larger companies selling similar software.

[46] He was then confronted with corporate documents from the Ontario Government that clearly demonstrated that SVK was incorporated in 2006 with the above noted shareholding. SVK also had financial statements that demonstrated that there was activity in the company between 2006 and 2009. This glaring disregard for the truth is just one example of the father’s extreme lack of credibility. His claim, that he was very active in his job search and it was only after approximately one year of rejection that he decided to work for himself in his own start-up company, was a blatant misrepresentation. He started SVK approximately three years prior to his termination from Brookfield.

[47] The Respondent father did not disclose that he had this company when the matter was before Justice Rogers on September 1, 2006. This is despite the fact that SVK was incorporated 3 months earlier. He did not tell Justice Rogers that he had been “selling this software for 3 years prior to SVK being incorporated. It is difficult to separate what is true and what is fabrication in the father’s evidence.

The Financial Relationship Between: Victoria Gordon, Shawn Gordon and Tanya LaBonte-Gordon

[48] Victoria Gordon is the respondent, Shawn Gordon’s, mother. She is a citizen and resident of Jamaica. Tanya LaBonte-Gordon is Shawn Gordon’s present wife.

[49] It is clear that the father is the sole operator and controller of SVK. He stated that his wife does not know anything about his business and never participates in it. The father also stated that his mother does not participate in the business and rarely comes to Canada. He also stated that he has a relationship with his mother that vacillates between being good and bad. There are periods of time when they do not even communicate.

[50] The father’s evidence with respect to SVK’s finances is vague, confusing and at times, inconsistent. He made numerous inconsistent representations with respect to how much money was put into the company by his mother and himself. He stated that the company did not borrow money from a lending institution. The father stated that he borrowed money from the bank by getting a line of credit against his present home. The loan was in the amount of approximately $140,000.

[51] The father stated, in his direct examination, that one of the reasons that he gave his wife equal shareholding of the company was that she allowed the home, that they had equal ownership in, to be used to borrow money for the company. However, he did not provide any mortgage or collateral mortgage documentation to that effect. Later, in his direct examination, he stated that the financial representations that he made in his loan application were only reflective of his finances, and not those of his wife. He claimed that he did not include his wife in the application due to the fact that his wife had a bad credit rating.

[52] He later stated that his wife had investments and other resources of her own that she used to contribute to living expenses. He also stated that his wife’s gift shop business was losing money and had to be closed.

[53] The father’s testimony, relative to his family finances, was equally inconsistent and contradictory. In direct examination he stated that all of the expenses shown on his financial statement represent his portion of the expenses only. He stated that his wife paid half. He later retracted that and stated that his wife pays a part of the expenses. However, he could not state what that contribution was. If his financial statement was an accurate reflection of his expenses, the father would be running a significant deficit. This deficit is not explained by increasing debt or reduction of assets.

[54] Despite the fact that the father stated that his income for the years 2007 through 2015 was far less than the $103,000 that the child support order of 2006 was based on, he stated that he continued to make the child support payments in accordance with the order until 2013. He stated that he made those payments out of investments that he had. There was no evidence showing the correlation between a reduction of his investments and payments that he made for support and his own living expenses.

Imputing Income: The Law and Analysis

[55] In Trang v.Trang, 2013 ONSC 1980, Pazaratz J outlined many of the considerations dealing with Motions to Change and imputing income. He stated commencing at Para. 40:

40. The starting point for any motion to change support is that the party seeking the change must establish that some important facts or circumstances have changed since the date the order was made. A “material change in circumstances” must be established. This generally entails some new facts or circumstances which, if known at the time, would likely have resulted in different terms in the order.

41. Quite often, motions to change can entail complex and countervailing allegations that more than one thing has changed. Entitlement, need, and ability to pay can all get thrown into the mix.

42. But almost invariably, an alleged change with respect to the payor’s income becomes a central issue. Often it is the only real issue. Simplistically, this part of the analysis might be summarized:

a. What was the payor earning then?

b. What is the payor earning now?

c. When did the payor’s income change – and why?

43. The first question – “what was the payor earning then?” – requires a fundamental (and often overlooked) determination:

a. Was the support order based upon the court accepting the payor’s “declared” income?

Or,

b. Was the support order based upon the court “imputing” income to the payor?

47. Section 19 of the Child Support Guidelines allows the court to impute such income to a spouse as it considers appropriate in the circumstances, which circumstances include:

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

(b) the parent or spouse is exempt from paying federal or provincial income tax;

(c) the parent or spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;

(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;

(e) the parent's or spouse's property is not reasonably utilized to generate income;

(f) the parent or spouse has failed to provide income information when under a legal obligation to do so;

(g) the parent or spouse unreasonably deducts expenses from income;

(h) the parent or spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and

(i) the parent or spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.

48. The list of categories set out in section 19 is not exhaustive. The court has the discretion to impute income in circumstances that are not only analogous but also those in which imputation would be consistent with legislative intent. Bak v. Dobell (2007) 2007 ONCA 304, 86 O.R. (3d) 196 (C.A.)

49. The wording of section 19 of the Guidelines is open-ended (“which circumstances include”), indicating that the categories listed in that section are merely examples of situations in which income may be imputed. There are, therefore, other potential scenarios in which income can and should be imputed. Riel v. Holland (2003) 2003 CanLII 3433 (ON CA), 67 O.R. (3d) 417 (C.A.)

[56] In Korman v. Korman, 2015 ONCA 578, the Ontario Court of Appeal stated, commencing at paragraph 46:

[46] Under s. 19(1) of the Federal Guidelines, the court is empowered to impute “such amount of income to a spouse as it considers appropriate in the circumstances”. The section lists a number of circumstances in which such imputation may be appropriate. None of these specifically includes monetary gifts or other direct parental financial assistance received by a payor spouse.

[47] In Bak v. Dobell, 2007 ONCA 304, 86 O.R. (3d) 196, this court considered s. 19(1) of the Ontario Child Support Guidelines, O. Reg. 391/97 (the “Ontario Guidelines”) – a provision that is virtually identical to s. 19(1) of the Federal Guidelines. Bak is instructive in several respects.

[48] First, Bak holds that the circumstances listed in s. 19(1) of the Ontario Guidelines – and, by analogy, those listed in s. 19(1) of the Federal Guidelines – are simply examples of situations in which the imputation of income to a payor spouse may be appropriate. There are also other circumstances in which the court may conclude that income can, and should, be imputed: Bak, at para. 35; Riel v. Holland (2003), 2003 CanLII 3433 (ON CA), 67 O.R. (3d) 417, 42 R.F.L. (5th) 120 (C.A.), at para. 36. The Bak court observed, at para. 34:

The list of circumstances in s. 19(1) is not exhaustive: the legislature only provides that the list “include” items (a) – (i). Further, there is nothing in the provision that suggests other appropriate circumstances must be analogous to those specifically enumerated, although similarity of circumstance to one listed in s. 19(1) would support the imputation of income, simply because such a circumstance would be consistent with legislative intention. The absence of analogy to a listed circumstance is simply a factor to be considered in interpreting the provision.

[49] Second, Bak recognizes that the imputation of income to a payor spouse is a fact–specific exercise that “depends on the circumstances of the family at issue”: at para. 73. For this reason, the court observed, “the legislature provided the courts with a residual discretion [under the Ontario Guidelines] to be exercised by a trial judge based on his or her factual findings”: at para. 73.

[50] Third, Bak confirms that “income” for support purposes is presumptively the payor’s income as it appears on line 150 of his or her income tax return: at para. 30. Consequently, under the Ontario Guidelines, income is presumptively restricted to that which is subject to taxation. Since gifts are not subject to taxation, they are not included in a payor’s presumptive income: at para. 31.

[51] However, whether income should be imputed to a payor spouse does not depend solely on the determination of that spouse’s presumptive income. The courts retain discretion to impute income to a payor spouse in excess of that spouse’s presumptive income where the imputed income is supported by the evidence and is consistent with the objective of establishing “fair support based on the means of the parents in an objective manner that reduces conflict, ensures consistency and encourages resolution”: Bak, at para. 36; Drygala v. Pauli (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711, 29 R.F.L. (5th) 293 (C.A.), at para. 44.

[57] In the case of Decker v. Fedorsen, 2011 ONCJ 850 Justice Sherr made the following comments, commencing at para. 18:

18. Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this obligation, the parties must earn what they are capable of earning. If they fail to do so, they will be found to be intentionally under-employed. Clause 19(1)(a) of the guidelines is perceived as being a test of reasonableness: Drygala v. Pauli, 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711, 164 O.A.C. 241, 219 D.L.R. (4th) 319, 29 R.F.L. (5th) 293, [2002] O.J. No. 3731, 2002 CarswellOnt 3228 (Ont. C.A.).

19. The test for imputing income for child support purposes applies equally for spousal support purposes: Rilli v. Rilli, 2006 CanLII 34451 (ON SC), 151 A.C.W.S. (3d) 1130, [2006] O.J. No. 4142, 2006 CarswellOnt 6335 (Ont. Fam. Ct.); Perino v. Perino, 2007 CanLII 46919 (ON SC), 46 R.F.L. (6th) 448, [2007] O.J. No. 4298, 2007 CarswellOnt 7171 (Ont. S.C.).

20. Section 19 of the Guidelines is not an invitation to the court to arbitrarily select an amount as imputed income. There must be a rational basis underlying the selection of any such figure. The amount selected as an exercise of the court's discretion must be grounded in the evidence: Drygala v. Pauli, supra, para 44.

21. A self-employed person has the onus of clearly demonstrating the basis of his net income. This includes demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes: Whelan v. O’Connor, 2006 CanLII 13554 (ON SC), 28 R.F.L. (6th) 433, [2006] O.J. No. 1660, [2006] O.T.C. 409, 2006 CarswellOnt 2581 (Ont. S.C.). This principle also applies where the person's employment income is derived from a corporation that he fully controls: MacKenzie v. Flynn, 2010 ONCJ 184, [2010] O.J. No. 2145, 2010 CarswellOnt 3450 (Ont. C.J.).

[58] In Rodrigues v. de Sousa, 2008 ONCJ 807, Justice Sherr was faced with the issue of whether or not he should impute income to someone who chose self-employment in a losing business when he had the capacity by way of education and occupation skills. He stated, commencing at para. 17:

[17] It makes no sense to me that someone with the father’s skills and experience would, for six years, choose to continue a self-employed venture that provides him with an income that would make him eligible for social assistance. The one job application he referred to was only made in April of 2008. His failure to seek employment in these circumstances is unreasonable. The first part of the test in Drygala v. Pauli is met. I find that the father is intentionally under-employed.

[18] Moving next to the second part of the test in Drygala v. Pauli, the father was unable to prove that his intentional under-employment was due to either the reasonable needs of the child or his reasonable educational or medical needs. His efforts to justify his inability to earn income can best be described as feeble. To a large extent, he focused his blame on the mother, which was entirely irrelevant, except to the extent that it revealed to the court his hostility towards paying her any reasonable level of child support. He claimed inability to work due to medical reasons, but provided absolutely no medical evidence in support. Further, his statements during his questioning about how hard he works contradicted the medical excuse. He offered no evidence that the economic climate in his field had deteriorated in any way. He offered no evidence that he would be unable to obtain employment if he actively sought it. He offered no valid reason why he has not sought employment when his business ostensibly loses money.

[19] The third part of the test in Drygala v. Pauli is a little more difficult to assess at this stage. What income should be imputed to the father? Although a more accurate determination will be made at trial after all of the evidence is heard and tested, this should not preclude the court from assessing income on a temporary basis if the first two parts of the test in Drygala v. Pauli are met. To do otherwise would be unfair to the child and would send the wrong message to payors. The message that I want to clearly send to this father is that he has a child to support and the court expects him to take reasonable steps to earn what he is capable of earning to meet his obligation as a father. This father’s position in his submissions, “that it is the mother’s turn to support the child and do her share, because I mainly supported the child while I was working” is not acceptable. The child deserves much better from him.

Income Imputed to the Father

[59] In this case, I find that the father has not conducted himself in a manner that is consistent with the objective of the guidelines. That objective is to establish “fair support based on the means of the parents in an objective manner that reduces conflict, ensures consistency and encourages resolution”.

[60] I find that the father has resolutely followed his dream of self-employment without regard to what his earnings can and should be. He stated in his evidence that last year he made an income from SVK in the amount of $40,000. He stated that he was satisfied with this income. That must be compared to what he was earning when the parties were before the court in 2006. At that time he earned, from employment, the sum of $103,000.

[61] He has spent the last 10 years attempting to make his business from self-employment work. Although his company SVK apparently went from the loss column to the positive income column in 2015, according to the statements filed by the father, this company still owed shareholders’ loans in in excess of $550,000.

[62] The Respondent claims that those shareholders’ loans represent money that is owing to both his mother and himself. However, there is no evidence of any breakdown of what money is owed to his mother, Victoria or the Respondent. There is no evidence of any loan document that sets out the terms of any loans. The Respondent stated that there was term, interest rate, payment scheme. The only evidence the Respondent gave with respect to alleged terms or repayment is his statement that repaying his mother’s loan is a priority. He also stated that he told his mother that he would not draw a salary until she is paid back.

[64] The father claims that his company went into a significant downturn in or around 2011 and 2012, due to a major shift in technology platforms. He stated that his problems were similar to the problems that Blackberry faced as a result of this same event. He needed funds to continue his business while, at the same time, reconfiguring his technology platform. However, the money transferred from his mother was not received until 2015. The only evidence of transfers from his mother is that she transferred $140,000 USD in January 2015. The Respondent’s sister transferred this money from an account the Respondent stated was his mother’s account, which his sister had access to. That amount was $37,000 USD.

[65] A party who is relying on debts that are interfamilial must provide proof of those debts. The Respondent has not. The Respondent’s mother did not testify, nor did his sister. I find that this evidence should have been placed before the court. There was no explanation as to why this evidence was not presented at trial.

[66] In Barber v Magee, 2015 ONSC 8054, Fitzpatrick J. commented on the issue often faced by the courts in family law cases with respect to whether money advanced between family members is a loan or a gift. He stated commencing at paragraph 72:

[72] This is a cautionary tale for inter family advances. This is an issue that arises frequently in family law cases. Spouses and their families can easily avoid disputes by exercising common sense. The simple solution is to document any advances as loans in a manner similar to what any lender would do, especially where, as here, the advances are significant.

[73] If at all possible, the lender should retain counsel to prepare documentation confirming the loan amounts, the applicable interest rates and the repayment schedule or a stipulation that the loan is repayable on demand, along with any other material details. If the loan repayment is held in abeyance then that too should be documented. The borrowers should have their own counsel and if the loan is to one spouse alone then each spouse should have independent counsel. It remains a mystery to me why parties would fail to undertake the modest efforts required to document and thereby secure monies advanced if they are truly meant to be in the form of a loan, especially where the amounts advanced are significant.

[74] In summary, the closer the advance is structured to an arm’s length transfer for consideration, the more likely it is to be recognized as a loan.

[67] I cannot find that the money advanced by the mother, Victoria, to the company, SVK, which is shown in corporate documents to be owned equally with the Respondent and his wife, represents a loan or loans to that company. I find that this company is, in reality, a vehicle that was structured and is used by the Respondent to reflect income and assets available to him in a manner that suits his own personal designs. In this case he has conducted his affairs through this company in order to artificially lower his income that would be available for support purposes. The Respondent testified that he gave his mother, “a very rich woman”, according to him, priority of payment of repayment of money he wrongly characterized as a debt to SVK. A parent cannot structures his affairs in manner that prioritizes others over his duty to his or her children.

[68] This is not a case in which the Respondent father is in a minority position and that must be considered when determining how much money can be assigned to him from the company SVK. This is a case that properly lends itself to piercing the corporate veil. I find that the Respondent’s mother and his wife are shareholders of SVK in name only. They have nothing to do with that company. It is a vehicle for the Respondent father to use as he chooses.

[69] In 2015, the Respondent father paid himself a salary of $40,000; he caused the company SVK to transfer $37,000 USD ($48,000 CDN based on a 30% exchange); there was a balance of approximately $54,000 in cash on hand at the end of the company year end.

[70] I find that the father is purposely under-employed. He complains that his son, who has a significant learning disability, is failing in school, and his time to get a degree should be limited. At the same time, the Respondent father has been operating a business at a loss for over 10 years. His income in 2009 was approximately $103,000. He is highly educated and should be able to earn at least what he earned in 2009. He chooses to continue to operate his business in way that makes it difficult to determine what his exact achievable earnings are. Under these circumstances, I impute income to him in the amount of $100,000.

Income of the Applicant Mother

[71] The mother is also highly educated. For many years she was in a managerial position in the investment banking field. She claims that she is no longer works, as she is disabled. However, the Applicant mother did not provide the court with any evidence to substantiate her claimed disability. This is despite her undertaking, which was given at questioning, that she would produce any medical reports, notes and records that she intended to rely on. In addition, the Applicant mother stated that she had applied for ODSP and she was turned down. She stated that she is in the process of reapplying.

[72] The Applicant mother was earning $84,631.33 based on an average of her last three years of income prior to 2013. From that point on she went on sick leave. She states that she is still an employee of this company. I impute income to the mother in the sum of $84,000 annually.

Resources of the Child

[73] With respect to the child, I find that he can only earn approximately $3,500 from his part time employment. The parties agree that he should contribute the sum of $1,750 of these earnings toward his education. I find that this child has significant learning disabilities. He is working with the school in order to obtain appropriate accommodations that will allow him to be successful in his chosen field of nursing.

[74] The availability of student loans does not necessarily negate or reduce the obligation of parents to support a dependent child who is attending university: N. (W.P.) v. N. (B.J.), 2005 BCCA 7, [2005] B.C.J. No. 12 (C.A.); B. (Y.H.) v B. (J.P.), 2014 BCSC 618; Rebenchuk v. Rebenchuk, 2007 MBCA 22; Selig v. Smith, 2008 NSCA 54; Thompson v. Thompson 1988 CanLII 8679 (ON SCDC), [1988], 13 R.F.L. (3d) 372 (Ont. Div. Ct.); Smith v. Smith, 2010 SKQB 2; compare with Molloy v. Molloy, 2001 YKSC 548. However, it may do so where the parents are of limited means: Klotz v. Klotz, [1999] B.C.J. No. 148 (S.C.).

[75] With respect to any requirement that this child apply for student loans in order to contribute to his education, I do not feel that the child should be burdened with excessive debt given the resources I have found that the parents have. In addition, I do take into consideration that the original intention of the parties when they entered into the separation agreement was not to burden the child with debt.

[76] For the months the child was living with the mother, May to September 2015, child support shall be $880 per month based on an annual income of the father imputed at $100,000.

[77] The above base amount of child support shall be the same from May 1, 2016, so long as the child continues to reside with his mother. If the child lives elsewhere to continue his education, the base amount shall only apply for the months the child his living with the mother.

[78] The post-secondary expenses shall be paid as follows:

a) The child shall contribute the sum of $1,750 toward his education costs.

b) The parents shall contribute to the tuition and reasonable accommodation costs, books and necessary education incidental expenses as follows:

i. The father’s share shall be 54.35 per cent

ii. The mother’s share shall be 46.65 per cent.

[79] Counsel may provide written submissions with respect to costs within 30 days if costs cannot be settled.

Harper, J.

Released: September 30, 2016