Rueter v. Childs, 2016 ONSC 391
CITATION: Rueter v. Childs, 2016 ONSC 391
COURT FILE NO.: FS-11-17368
DATE: 20160129
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sandra Doreen Rueter
Applicant
– and –
Ken Harold Childs, Kelly Childs, 1743699 Ontario Limited and 1812295 Ontario Limited o/a Kindfood and Lettuce Love Cafe
Respondents
Harold Niman and Sarah Strathopolous, for the Applicant
Evelyn Kohn Rayson, for the Respondent Ken Childs
Ella Bernhard, for the Respondent Kelly Childs
HEARD: October 6, November 3, 2015
Harvison Young J.
Overview
[1] In her application commenced in 2011, Sandra Rueter (“Sandra”) seeks various heads of relief arising from her marriage to and divorce from Ken Childs (“Ken”) in 2003. The heart of the application, as she seeks to amend it, is the claim that Ken Childs and his current wife Kelly Childs (“Kelly”) have systematically organized their financial and business affairs so as to avoid Ken’s child support obligations.
[2] Sandra seeks, inter alia, to name as a party, or have recognized as already being a party, Ken’s current wife, Kelly, and a number of corporate entities. She seeks full disclosure from Ken and Kelly, and she also seeks damages “as a result of the Respondents’ conspiracy to shelter and/or conceal the Respondent, Ken Childs’ income and/or assets to deprive the Applicant of child support entitlement”.
[3] Both the applicant and the respondent brought motions and cross motions that were heard over 1.5 days as a long motion.
[4] The applicant sought the following orders:
a. An order that Kelly Childs, 1743699 Ontario Limited (“174”), 1812295 Ontario Limited (“181”), 2115942 Ontario Limited (“942”) 2333665 Ontario Limited, as represented by Kelly Childs, and 1432022 Ontario Limited (“143”), as represented by Ken Childs, be made respondents in these proceedings;
b. An order that the respondent Kelly Child provide full disclosure as set out in the draft order on her own behalf and that of the corporations she represents;
c. That Ken and Kelly attend for questioning following the production of the disclosure;
d. That child support be paid according to the Minutes of Settlement dated May 2, 2005, in the amount of $1,500 per month on a go forward basis as well as the amount of $86,800 in arrears (to September 1, 2009), and $44,000 in s. 7 arrears, retroactive to May 2, 2005 and s. 7 expenses going forward, pending determination of Ken Childs’ income for support purposes and without prejudice to the final determination of his income.
[5] The respondent, Ken Childs, moved to remove Niman Gelgoot and Associates as solicitor of record. I heard this motion at the beginning of the hearing of the long motion and dismissed it: see my endorsement dated July 28, 2015.
[6] Kelly Childs moved to dismiss or stay these proceedings as against herself personally and her businesses.
[7] In sum, the central issues for these motions may be summarized as follows:
a. Are Kelly Childs and the companies named proper parties to this application?
b. Should the disclosure orders issue as sought against the respondents?
c. Should an interim child support order be made at this stage in the proceedings?
Background
[8] There is an extensive background to this litigation, much of which is directly relevant to the relief claimed in this motion and application, and of particular relevance to whether Kelly Childs is or should be a party to this application. The background is relevant in particular to the claim that Ken has, since the original divorce, systematically organized his affairs to avoid his support obligations, and that the present arrangements with Kelly are the most current iterations of the pattern.
[9] Sandra and Ken were married on May 31, 1992 and separated on June 28, 1999. There are two children of the marriage, Jenna Elizabeth Rueter, born February 10, 1993, and Connor Michael Rueter, born May 26, 1995. They have lived with Sandra since their parents’ separation.
[10] It is an understatement to say that the divorce was acrimonious, costly and protracted.
[11] According to the application, the most contentious issue in the matrimonial proceeding was the ownership and valuation of Ken’s primary asset during the marriage, the Black Dog Pub located in Scarborough, Ontario, operated through Ken’s wholly owned corporation. It had been very successful at and around the date of separation, generating revenues of around $2.4 - $2.8 million annually. The Black Dog Pub operated in a building owned by Ken’s father Erik (through Blackhorn Steakhouse Limited). Ken’s own business valuator had concluded that Ken’s income, when management fees and dividends were averaged together over three years, was around $158,869 in the years immediately following the 1999 separation. After Ken and Sandra separated, Ken operated another restaurant called 180 degrees (which ultimately failed). Sandra alleges that this was funded by taking $557,000 out of the Black Dog Pub.
[12] According to Sandra, Ken did not renew the Black Dog Pub lease when it came due and in 2002 he stopped paying the rent. The bank, which had a general security agreement, put the company into receivership, but did not operate the business as Erik had terminated the lease. Erik continued to operate the Black Dog Pub and pursuant to an employment agreement between Erik and Ken, Ken earned $45,000 per year for managing the Pub. The following month, in August 2002, Ken declared bankruptcy. The full details of these events need not be repeated here.
[13] After a mediation conducted by Philip Epstein, Sandra and Ken entered into Minutes of Settlement on May 2, 2005, which were filed with the court on July 1, 2007. Sandra was entitled to an equalization payment in the amount of $591,090.58. In the Minutes, Sandra agreed that her equalization claim would be extinguished by Ken’s discharge from bankruptcy and her acceptance of a payment in the amount of $250,000 from Ken’s parents, Erik and Erica Rueter in settlement of a civil action Sandra had brought.
[14] Following his discharge from bankruptcy and shortly after settlement with Sandra, Ken resumed full control of the Black Dog Pub. Sandra, in her application, states that she now does not believe that Ken ever gave up control of the pub. She further alleges that Ken, as controlling mind of 201, the company that owned and operated the Black Dog between August 1, 2002 and December 2005, sold the Black Dog Pub for approximately $1,600,000. In his affidavit sworn July 23, 2015, Ken states that he sold the Black Dog Pub for $1,000,000.
[15] Pursuant to the Minutes, Ken was to pay fixed child support in the amount of $1,500 per month and two-thirds of the children’s section 7 expenses from October 1, 2004 to September 1, 2009, at which time there would be a review. Further, the Minutes provided that the amount of child support payable and Ken’s contributions towards the children’s section 7 expenses would be fixed and non-variable until adjusted in mediation/arbitration.
[16] There is no dispute that Ken has never paid any section 7 expenses. In September 2010, Ken unilaterally decided to pay child support for Connor only, on the basis that his income had dropped and that Jenna had turned 18. He has not paid any child support for either child since September 2012.
[17] Ken and Kelly began cohabiting in 2007 and married in February, 2008. Sandra alleges that Ken has transferred various personal and real property into Kelly’s sole name, and that they “own several very successful businesses together, which Ken has transferred and\or put in Kelly’s name alone to shelter and\or conceal his assets to deprive Sandra of child support entitlements”. Paragraph 114 of Sandra’s amended amended application claims that:
Ken has strategically arranged his financial affairs to disassociate himself from the businesses which he started with Kelly and continues to be intricately involved in the operation of 174, 181 (o/a Kindfood and Lettuce Love Café), 2115185 Ontario Limited (o/a Reuter Holdings Ltd., Two Childs Holdings Ltd. and GFV Baking Co.), 211942 Ontario Limited (o/a Caveman Health Foods Inc. and Kelly Childs Inc.) and 2333665 Ontario Limited (o\a Kelly’s Bake Shoppe Inc.).
The 2011 Application
[18] Sandra began this application in 2011. In the original application filed on May 6, 2011, she sought to set aside the 2005 Minutes of Settlement on the principal basis that Ken had misrepresented his true financial circumstances at the time the Minutes were negotiated and executed. She also alleged that Ken had wilfully severed his relationship with the children as of June 2007. She claimed then, and claims now, that he has never been honest about his true income, that he in fact operates the businesses held by Kelly, and that his lifestyle belies his claims as to his and Kelly’s actual incomes.
[19] By his answer in February 2012, Ken pleaded that the Minutes had resolved all issues between them. He denied wilfully severing his relationship with the children and denied breaching any of the terms of the Minutes.
[20] By order dated April 30, 2013, Stevenson J. allowed Sandra to amend her application to limit her claims to retroactive and go-forward child support and s. 7 expenses, and costs of the application. Stevenson J. dismissed Sandra’s claim with respect to the validity of the Minutes of Settlement.
[21] In this motion, Sandra seeks to amend her amended application to (a) add the claim of conspiracy between Ken and Kelly to hide his assets and defeat Sandra’s claim for child support; and (b) add Kelly and her corporations as parties to the extent that they are not already parties.
The Issues in this Motion
[22] A central issue in this motion is whether Kelly Childs is a proper party and whether she was served with an amended application as the applicant claims, on December 7, 2013. Kelly’s position is that she is not a proper party because she has never stood in loco parentis to the children, and because Ken has no interest in any of her companies nor does he own shares. Moreover, she claims that she and Ken are separate as to property pursuant to a marriage contract. In her affidavit dated July 16, 2015, shortly before the hearing of this motion, she claims that she and Ken had recently separated.
[23] A related issue is whether, as Kelly submits, the claims against Kelly are statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B. Kelly claims that, relating to Sandra’s conspiracy claim and motion to add a party, the limitation period has expired and thus these claims cannot succeed. In addition, Kelly claims that the relief sought by Sandra is unavailable to her as a result of the principles of res judicata and issue estoppel.
[24] The other issues to be determined on this motion are a disclosure request by Sandra, and her claim for ongoing child support and child support arrears.
[25] As I am not fully satisfied on the evidence that Kelly was served in December 2013, I will consider the question of whether the parties may be added at this point in the proceedings. Because this issue is very fact-specific and questioning has not yet taken place, I emphasize that this is a triable issue, which is without prejudice to any findings that the judge hearing the application may make.
[26] For the following reasons, I find that Kelly Childs and her companies are proper parties and that the application should be amended as proposed. As I will detail below, the Limitations Act does not apply to support claims, and to the extent that Kelly is a party to the child support claims, the claim is not statute-barred. While the conspiracy claim may be statute-barred, that is an issue that depends on discoverability and, particularly given the disputed facts in this case, it is a triable issue.
Amending the Application
[27] Sandra seeks to amend her application by adding the conspiracy claim and, if necessary, by adding Kelly and her companies as respondents. She asserts that it is not necessary to add Kelly because Kelly is already a party, having been served in 2013. In response, Kelly submits that she was not served and that Sandra’s claims against her are statute-barred. Kelly also submits that to the extent that the proposed amendment is aimed at enforcing Ken’s child support obligations, it should not be permitted. Ken, in his affidavit of July 23, 2015, at para. 28, says that he has no objection to the proposed amendments to add the parties and the conspiracy claim.
[28] The starting point is the amendment of the application. Pursuant to Rule 11(3) of the Family Law Rules, O. Reg 114/99, “the court shall give permission to a party to amend an application, answer or reply, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate.” [Emphasis added.]
[29] This provision is mandatory, absent prejudice or disadvantage to another party that cannot be cured by costs or an adjournment: see Stefureak v. Chambers (No. 3), 2005 16090 (ON SC), [2005] O.J. No. 1949 (Ont. S.C.), at paras. 10-20. It does not matter whether the amendment is prompted by a change in the case or is merely an afterthought. The fact that the amendment raises a new issue is also irrelevant. The burden of demonstrating prejudice lies with party opposing the amendment.
[30] The threshold, then, to amend an application is low. Here there is no prejudice, as it is not the “eve of trial”, and there is enough time to question the parties, and so the applicant should be allowed to amend her application at this point in the proceedings.
[31] The other argument raised by both Ken and Kelly in relation to the proposed amendment to add the conspiracy claim is that the material facts upon which the conspiracy claim is founded are not pleaded to the requisite standard. Ms. Bernhard on behalf of Kelly relies on the recent decision of Pattillo J. in Mitchell v Lewis, 2015 ONSC 4614, in support of her argument that these pleadings do not meet the test articulated in that decision, at para. 31, as follows:
In order to plead civil conspiracy, the statement of claim must plead with precision and clarity material facts in respect of:
a) The parties to the conspiracy and their relationship to one another;
b) The agreement between the defendants to conspire, including particulars as to time, place and mode of agreement;
c) The precise purpose or object of the conspiracy;
d) The overt acts alleged to have been done by each of the alleged conspirators in furtherance of the conspiracy, including the time, and place and nature of the acts; and
e) The injury and damage caused to the plaintiff as a result of the conspiracy.
[32] I do not agree with the respondents that the amendment to the application should not be permitted because it is insufficient. First, this was not a motion to strike a pleading but to amend it. Leave to amend as noted above is mandatory in the absence of prejudice not compensable by costs or an adjournment. As D. Brown J. (as he then was) stated in Brookfield Financial Real Estate Group Limited v. Azorim Canada (Adelaide Street) Inc., 2012 ONSC 3818, 111 O.R. (3d) 580, at para. 23, citing passages from Morden and Perell, The Law of Civil Procedure in Ontario, 1st ed. (Toronto: LexisNexis, 2010), at pp. 359-361:
On a motion to amend a pleading, the court does not examine the factual merits of the proposed amendments or the moving party's motives for seeking the amendment, but it does examine whether as a matter of law, the amendment raises a tenable claim or defence and whether the proposed amendment has been properly pleaded in the sense of complying with the rules that govern pleadings, including sufficient particularity. Put somewhat differently, it makes little sense to grant an amendment that will immediately be challenged as legally unsound, and the court may inquire into the merits to ensure that the amendment is tenable in law and compliant with the rules of pleading. The case law establishes that proposed amendments are to be read generously with allowance for deficiencies in drafting[.]
[33] While, as Pattillo J. set out in Mitchell, conspiracy pleadings must be clear and precise, that case was a motion to strike. The respondents here did not bring such a motion. Proposed amendments are to be read generously. While precise dates have not been alleged at this stage, the amended amended application makes clear that the conspiracy allegation is that Ken and Kelly have conspired to transfer and maintain assets into Kelly’s name alone and to structure their affairs so as to make Ken appear to be almost entirely without assets and without income for child support purposes. Further, the proposed amendments contain the claim that the businesses, which are ostensibly Kelly’s, are in fact owned and operated by both Kelly and Ken and that this has been done for the purpose of depriving Sandra of child support entitlements. There is some evidence to support these claims, for example a number of asset transfers including the Audley Road property purchased jointly by Ken and Kelly in 2007 and transferred to Kelly in 2008 for $2.00, and Ken’s Porsche that he purchased in 2006 and transferred to Kelly in 2008.
[34] In my view, any deficiencies in this conspiracy claim do not justify derogating from the mandatory rule to permit the amendment of pleadings. As per the test in Brookfield Financial, there seems to be here a legally tenable claim.
Adding a Party
[35] Given that Sandra has satisfied the low threshold to amend her application, the issue turns on whether Kelly and her companies should be added as parties at this point in the proceedings
[36] Pursuant to the Family Law Rules and Rules of Civil Procedure, R.R.O. 1990, Reg. 194, a person may be named as a respondent in a matrimonial application if that person would enable the Court to decide all the issues in the case. If the respondents are “involved” or if their financial affairs are inextricably intertwined and naming them would not prejudice or disadvantage them in any way, then they may be named as parties: see Rule 7(3) of the Family Law Rules. In addition, Rule 5.03 of the Rules of Civil Procedure provides that “every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding”.
[37] The general principle of amendment and adding parties is set out in Seaway Trust Co. v. Markle (1988), 25 C.P.C. (2d) 64 (Ont. Master) affirmed on appeal, and Burmi v. Dhiman, [2001] O.J. No. 2010 (Ont. S.C.), at para. 4. The court is not to consider the factual and evidentiary merits of the proposed new claim against an added party. Rather, the court should consider such factors as the state of the action, whether there is proper joinder, whether there is an improper purpose for adding the party, and other special problems.
[38] Here, examinations for discovery have not yet been held. The action is at a relatively early stage. The novelty of the claims and the likelihood or lack of likelihood of success on the merits are not sufficient reasons to refuse to add the parties.
[39] The alleged causes of action against the proposed parties are intertwined with the claims against Ken. It is appropriate they be dealt with in the same proceeding to avoid multiplicity of proceedings. The heart of the claim is that Ken and Kelly have arranged their financial and business affairs so as to avoid Ken’s child support obligations. The allegations necessarily involve Kelly as an active participant. It would be impossible to adjudicate these claims without the proposed parties as respondents. This is not a case where an applicant simply seeks to impose a child support obligation upon a payor’s new partner. Here, at least according to the social media evidence contained in Sandra’s affidavit evidence, the professional and business lives of Ken and Kelly have been inextricably intertwined. For example, in an article on marketersmedia.com dated May 11, 2015, Ken is listed as the “spokesperson” and contact person for Lettuce Love Café and discusses his launch of a mobile app for the restaurant: “spokesperson Ken Childs has launched their new mobile appl. Childs affirmed, “We’re extremely excited about this last aspect of our restaurant…” [Emphasis added.]
[40] The difficulty, however, arises with the question of whether the claims are statute-barred. It is clear as a matter of law that the expiry of a limitation period constitutes prejudice that can or should defeat a motion to add parties. As I have indicated above, both Ken and Kelly submit that the claims are statute-barred.
[41] Sandra indicates that she wishes to add the proposed parties both in order to enforce a child support order and with respect to the conspiracy to shelter assets claim.
[42] With respect to the child support claim, however, it is clear that s. 16(1)(c) of the Limitations Act applies. It provides:
There is no limitation period in respect of a proceeding to obtain support under the Family Law Act or to enforce a provision for support or maintenance contained in a contract or agreement that could be filed under section 35 of that Act….
[43] In Stravino v. Buttinelli, 2015 ONSC 1768, 2015 CarsewellOnt 3809, the applicant sought to amend his application pursuant to Rule 11(3) of the Family Law Rules to add three respondents - his two adult children and his former mother-in-law, in order to seek spousal support from them. Horkins J., at para. 34, permitted this, noting that there is no limitation period applicable to support.
[44] As I have indicated above, this is not a case in which the parties are sought to be added merely for the purposes of questioning or discovery. This is a case in which the core of the allegations are that Kelly and her companies have been part of a strategy on the part of Ken, or Ken and Kelly, to arrange their financial and business interests so as to render him “child support proof”. Adding the proposed parties to claim child support against them is, therefore, not statute-barred.
[45] The conspiracy claim as against Kelly and the companies, however, is clearly subject to the two-year limitation period set out in the Limitations Act. The question is when it began to run. This depends on when the claim in conspiracy was discoverable: s. 5(1) of the Act. Section 5(2) of the Act provides that “a person with a claim shall be presumed to have known of the matters referred to [in s. 5(1)] on the day the act or omission on which the claim is based took place, unless the contrary is proved”.
[46] Sandra claims that although she has long suspected Ken of actively sheltering income, she was unaware of, and continues to be unaware of, the full extent of Ken and Kelly’s actions in this regard. She submits that over the last few years, she has spent significant time searching and gathering the evidence necessary to support her claim that Ken is intricately involved in the businesses and that Ken and Kelly conspired to shelter Ken’s income and assets in an attempt to minimize his income for child support purposes. She states that she seeks to amend her application at this time because she has “finally been able to obtain enough evidence over the last few years to show Ken’s involvement in the businesses” (Factum of the Applicant, at para. 53).
[47] Sandra’s affidavit sworn July 7, 2015 goes into significant detail about each business, and Ken’s alleged involvement and interest in each business. Further, at para. 217, it cites a number of articles from 2010 until 2013 which reference Ken’s involvement in the businesses. It is not clear when Sandra saw these articles, although most of them are from more than two years ago. Had she seen them when they were published, she arguably would have known she had a claim against Kelly and the businesses at that time. However, as I have mentioned, Sandra argues that it has taken her time to find the articles and collect the evidence about Ken’s interests in Kelly’s businesses. She argues that she has been working with reasonable diligence to collect information about Ken and Kelly to determine whether she has a claim against Kelly, and after a few years of collecting information, she finally now has enough evidence to show Ken’s involvement in Kelly’s businesses. According to her, the limitations period has only recently begun.
[48] However, through her counsel, Ms. Bernhard, Kelly claims that Sandra knew or ought to have known as of January 2012 that Ken had no interest in Kelly’s businesses when he delivered his answer and financial statement saying “the business is strictly Kelly’s”. In any event, she claims, Sandra “certainly knew that Kelly was the shareholder of Kindfood (now Lettuce Love Café Inc.) and Kelly’s Bake Shoppe Inc., in 2013 when Sandra agreed to dismiss all claims other than child support” (Kelly Childs’s Factum, at para. 14). This is not responsive to the question of when Sandra knew or should have known that Ken and Kelly were conspiring together to avoid his child support obligations.
[49] The parties’ positions with respect to when Sandra knew or ought to have known she potentially had a claim are thus in dispute. The question of whether Kelly was served in 2013 is also relevant to this consideration and as I have indicated earlier, I am not satisfied on the record before me that Kelly was served in December 2013 in light of the contradictory evidence before the court. While the process server’s affidavit is very persuasive (e.g. the evidence that he had a photo with him of Kelly because of the perception that she had been evading service), there is some evidence in the record which suggests that the applicant was not treating Kelly as a party and did not assume she had been served. This is a triable issue.
[50] Most importantly, the issue of discoverability is, in this case, very fact specific and one that should be left for determination by the trial judge: see Austin v. Overs Estate, 2010 ONSC 7194. As the Divisional Court stated in Skrobacky (Litigation Guardian of) v. Frymer, 2014 ONSC 4544, at para. 9:
a court may refuse to amend pleadings where the defendant demonstrates prejudice that cannot be compensated by costs, or where the proposed claim is untenable at law. Prejudice is presumed where the claim is brought beyond the expiry of the limitation period. However, where there is an issue of fact or credibility relating to the discoverability of the proposed claim, the matter will usually be left to the trial judge to determine. [Emphasis added.]
[51] In short, it is clear as a matter of law that it is not appropriate for a motions judge to resolve a limitations issue where the application of the discoverability principle is central to its resolution. The question of when Sandra learned or ought to have learned that she had a cause of action against Kelly in conspiracy are facts that constitute genuine issues for trial, particularly at a stage when questioning has not taken place: see Conflitti v. Dhaliwal, 2010 ONSC 3218, at paras. 18-19.
Res judicata and Issue Estoppel
[52] Kelly also submits that the doctrines of res judicata and issue estoppel apply to preclude the proposed amendments to the application. I do not agree. The issues of Ken’s child support and s. 7 obligations, retroactive to September 2009 and going forward, and Kelly’s alleged involvement in sheltering Ken’s income and assets in an attempt to reduce his child support obligations, have not been determined by this court. Stevenson J.’s order dated April 30, 2013 dismissed the claim challenging the validity of the 2005 Minutes of Settlement. The current and proposed iteration of the application does not purport to challenge the Minutes. The Minutes set child support in the amount of $1,500 per month and provided for a review in September 2009. In short, it provided for the reexamination of Ken’s income and related issues as of that date.
Disclosure
[53] Having determined that Kelly and her companies are proper parties to this application, I see no basis for limiting the disclosure as Ken has sought to do in the past. I note that Ken and Kelly have submitted that disclosure of assets are not relevant to this application given that the Minutes have been upheld. I do not agree. Assets are relevant because they may generate income available for support purposes. Accordingly I would grant the disclosure order as sought by the applicant.
Child Support
[54] In this motion, Sandra seeks both arrears of and ongoing child support and s. 7 expenses. The originating application asks that the support and proportion of s. 7 expenses be based on Ken’s “true” income.
[55] The circumstances in this “interim” motion for child support are unusual. While this is “interim” relative to Sandra’s current application, there is a final order for child support that remains in effect. The source of this obligation is the 2005 Minutes which provided that Ken was to pay child support in the amount of $1,500 per month for both children for a five-year period until September 2009, as long as the children continued to live with Sandra. In addition, he was to pay two thirds of the children’s s. 7 expenses within 5 days of Sandra’s delivery to him of proof of such expenses. The Minutes provided that if they were not able to agree by July 15, 2009, child support would be reviewed by a mediator\arbitrator. Section 19 of the Minutes states that:
The amount of child support payable and Ken’s contribution towards special and extraordinary expenses shall be fixed and non-variable until the child support is adjusted by mediation/arbitration. Until the child support is adjusted by mediation/arbitration, Ken will continue to pay the child support and his contribution to the children’s special and extraordinary expenses pursuant to these Minutes of Settlement.
[56] Ken stopped paying the agreed-upon child support amounts, as he acknowledges in his own affidavit, in September 2010. He claims that he did not have an income to justify it any longer. Ken seems to assume that he was able to unilaterally reduce the child support payable at that point to only Connor who was still in high school, and to reduce the amount to $211 per month on the basis that this was the appropriate amount given his income. While he was critical of Sandra for failing to suggest mediation\arbitration pursuant to the Minutes and instead launching litigation to challenge it, Ken’s unilateral actions do not find justification in the Minutes. Sandra’s 2011 amended application does, in effect, seek to collect arrears and\or vary the child support based on Ken’s “true” income, and this answers, in my view, Ken’s criticism that Sandra is litigating instead of respecting the Minutes. As discussed earlier, the amended claim does not seek to set aside the Minutes.
[57] The Family Responsibility Office began to enforce, and advised Ken in March 2012 that it would request that the federal government deny and\or suspend his passport and that the provincial authorities suspend his driver’s licence.
[58] However, on May 14, 2012, Paisley J. granted an order refraining the Family Responsibility Office from taking any steps “to enforce against alleged arrears” owing to Sandra. In his affidavit in support of that motion, Ken stated that “my child support obligation ended September 1, 2009” which he referred to as the “termination date” provided for child support.
[59] Ken submits that he should not be required to pay child support as he has not been satisfied that his children have remained in full-time school and, particularly with respect to Jenna, that she is 22 and that he should not be required to support more than one programme of post-secondary study. In my view, the material in the record is more than sufficient to establish both the fact that the children remain full-time students and to document the cost of the programs as they relate to (and clearly constitute) legitimate s. 7 expenses. Whether they continue to be children of the marriage, and Jenna in particular, is an issue for trial. Ken’s objections ring somewhat hollow in the context of his long-standing failure to pay any s. 7 expenses whatsoever since the Minutes were executed in 2005.
[60] Although in his written material, Ken claimed that the children had withdrawn from parental control, his counsel Ms. Rayson did not pursue that claim in oral argument. This was prudent, because it is clear from the record that it was Ken who terminated his relationship with the children. There is a long and poignant chain of email correspondence between the children and Ken in 2007-2008. While it is clear that they did not like or get along with Kelly, which was undoubtedly stressful and challenging for Ken and Kelly, it is also clear that Ken is the one who advised the children by email that he had “decided to take a break from parenting” and did not respond to their attempts to contact him.
[61] There is a dispute about the authorship of nasty, vitriolic messages purportedly from the children to the father and Kelly. However, even if these children were the authors of such messages, the fact remains that it was he who ended the contact with them and not the other way around. Moreover, they were children. He was and remains their father.
[62] In short, there is no basis pursuant to the Minutes for the non-payment of the amounts set out in it, and for the non-payment of the arrears further to it. One of the central bases underpinning the refraining order was clearly wrong, i.e. the assertion that Ken’s obligation to pay support pursuant to the Minutes terminated on September 1, 2009. Ken has never brought an application to vary the provisions set out in the Minutes and there has been no mediation/arbitration pursuant to its provisions. His materials have continued to rely on the Minutes. None of the triggering events necessary to change the amounts of child support has ever taken place. The provisions requiring Ken to pay $1,500 per month and two thirds of s. 7 expenses remain in force. Thus while Justice Paisley’s order refrains the Family Responsibility Office from taking steps to enforce arrears, it does not extinguish the underlying obligation on Ken to pay child support, as set out in the Minutes.
[63] As far as the quantum of child support is concerned, the central issue is Ken’s income. He claims in his affidavit dated July 23, 2015 that his income consists only of CPP disability payments of around $14,000 annually that he has been receiving on the basis of mental health issues, and that he has no assets. However, Sandra’s affidavit material includes various web and social media postings that appear to show that Ken and Kelly have travelled to over 55 cities in 45 countries since 2010, staying in high end accommodations and dining at fine restaurants with respect to which Ken, as “forktravels” has posted reviews on Trip Advisor. In his affidavit Ken readily acknowledges that he lives a nice lifestyle and is fortunate enough to go on nice vacations. He states that this is entirely due to the generosity of his wife who works “incredibly hard at building and running her businesses”. At para. 55 he states “…I readily admit I reap the benefits of her successful enterprises.”
[64] However, Ken’s financial statement dated July 23, 2015 reports his annual income as consisting only of his disability pension of $14,000, and his spouse’s contribution as $24,000 per year. Clearly the total income reported could not possibly support the lifestyle that emerges from the postings. The travel alone would appear to amount to more than the combined income reported.
[65] Ken also claims in his affidavit that he is unable to work although he occasionally helps out with menial tasks such as clearing tables. He denies that he is a partner or “or in any way involved with the operation\ownership of these businesses”. Various blogs and web postings collected by Sandra and appended to her affidavit appear to paint a different picture that shows Ken much more involved. One posting refers to “the couple”, Ken and Kelly, opening Kindfood after Ken sold the pub. The same article states:
Childs credits her husband as being the marketing mastermind, and he has designed some truly effective campaigns….Ken has also created an incredibly successful social campaign in which customers can tweet a picture of themselves inside Kindfood or Kelly’s Bake Shoppe. Owning a business is no easy task. Ken, Kelly, and Erinn [Kelly’s daughter] face the same staffing, distribution and scheduling issues that make business ownership a 24\7 gig. However, through intelligent marketing and constant creation, they have managed to create a lifestyle brand that is sustained and supported by its customers.
[66] Another blog refers to Ken as the spokesperson for Lettuce Love Cafe, says that he has launched Lettuce Love Café’s new mobile app, includes a lengthy quote from him and gives his name as the contact person for the Café. In others he is referred to as “Kindfood co-owner…who runs the café with his wife”. In a “Valentine’s Day” blog, Kelly refers to Ken as her “#1 cheerleader”, saying that he “created and orchestrated the space for Kelly’s Bake Shoppe”. In a 2013 “Happy Birthday Ken” blog, Erinn states that she feels “so blessed to be able to work with him every day”. On a listing of new and downtown Burlington businesses, Kindfood is listed and the owners are named as Ken & Kelly Childs. These paint a picture of someone who plays a much more significant role than that of occasional busboy as he asserts.
[67] This does not of course establish the issues that form the basis of the application. The nature of Ken’s role and extent of his interests, if any, in Kelly’s businesses are triable issues. Disclosure is incomplete and questioning has yet to take place. However, the volume of the evidence provided by Sandra does not support Ken’s description of his role in Kelly’s businesses as very minimal. I am satisfied on the record before me that Ken has a lifestyle that is not merely supported by the generosity of his spouse but rather is one that he has actively contributed to. This finding is, of course, interim and without prejudice to any findings with respect to his income at trial.
[68] This is a situation, however, where Ken’s failure to make full and candid disclosure prevents the court from making an accurate assessment of his income. As an interim measure, the fairest step is to set child support at $1,500 per month which is the amount he had agreed to in 2005 for the purpose of the Minutes. This agreement was reached when Ken was an undischarged bankrupt and was similarly asserting an income much lower than the guideline amount that would support such an award for two children.
[69] In short, the most appropriate interim support award is one that continues the child support at the rate of $1,500 per month until trial as long as the children are full-time students. This award is without prejudice to the right of either party at trial, and to the ultimate findings of the trial judge as to Ken’s income and the question of whether the children have remained children of the marriage and/or until what point.
[70] There are two reasons for this award. First, as I have noted, the consent order setting the amount of $1,500 per month pursuant to the Minutes has never been changed. While Ken obtained a refraining order that appears to remain in effect, the underlying order is still valid.
[71] Second, while I am satisfied that Ken’s available income for support purposes is higher than he has stated, I am not able to fix the precise amount of imputed income on the record before me. For these reasons I am satisfied that the status quo, consisting of the $1,500 amount agreed upon by the parties in the 2005 consent order, which has yet to be varied, is the appropriate amount pending trial. On the basis of the foregoing, I see no reason that the support should not be enforced or enforceable in the usual manner. Having said that, the refraining order was not appealed and there has been no request to either set aside or to obtain a fresh Support Deduction Order so that enforcement may recommence.
[72] The arrears of $1,500 per month, retroactive to September 1, 2009, totalled $86,800 as of August 1, 2015 and as of January 1, 2016, the arrears amount to $94,300.
[73] I find that the s. 7 expenses for which Sandra seeks retroactive reimbursement at this stage are reasonable and necessary pursuant to s. 7. I also note that, as I have already indicated, Ken has failed to pay any amount of s. 7 expenses for his children. Ken disputes the legitimacy of many of the s. 7 expenses and also states that he cannot afford to contribute two-thirds of these expenses. Again, I do not accept, at this point, that his income is as low as he says it is and see no reason that the proportion that he agreed to in the Minutes should be changed on an interim motion. The s. 7 expenses over the last 10 years for both children total $66,000, or an average of $6,600 per year. Two-thirds of that amount is $44,000 for the ten-year period. This amount is well within the amounts that would be considered reasonable for a family in which the payor husband was paying $1,500 per month. The record is replete with receipts and requests from Sandra for expenses ranging from tuition to orthodontic bills. In any event, his failure to ever pay any of the amounts sought is entirely unreasonable.
Conclusion
[74] Accordingly, orders shall issue in accordance with the applicant’s draft order filed, subject to the following changes:
a. The amount set out in para. 12 shall read “$94,300”and not “$86,800”; and
b. The parties may make written submissions to the court as to costs within 30 days, on a timetable to be agreed upon between themselves.
[75] As of January 1, 2016, Ken shall pay ongoing support in the amount of $1,500 per month pending agreement between the parties or determination at trial.
Harvison Young J.
Released: January 29, 2016
CITATION: Rueter v. Childs, 2016 ONSC 391
COURT FILE NO.: FS-11-17368
DATE: 20160129
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Sandra Doreen Rueter
Applicant
– and –
Ken Harold Childs, Kelly Childs, 1743699 Ontario Limited and 1812295 Ontario Limited o/a Kindfood and Lettuce Love Cafe
Respondents
REASONS FOR JUDGMENT
Harvison Young J.
Released: January 29, 2016