Court File and Parties

Citation: Carmichael v. Carmichael, 2016 ONSC 4336 Court File No.: 1028-16 ML Date: 20160629 Superior Court of Justice – Ontario

Re: Krista-Nadean Carmichael, Applicant And: Robert Jonathon Carmichael, Respondent

Before: R. D. Gordon, RSJ Counsel: Don C. Wallace, Counsel, for the Applicant Edward Rae, Counsel, for the Respondent

Heard: In writing

Endorsement

Introduction

[1] The Respondent seeks leave to appeal from the order of Nadeau J. dated April 4, 2016. In that order, the motion judge ordered the Respondent to pay child support of $628 per month for his two young children.

[2] The issue before Nadeau J. was the determination of the Respondent’s income for the purposes of calculating child support. The Respondent is unable to work due to head injuries suffered in a car accident when he was 15 years of age. He settled his claim for statutory accident benefits in 2001, receiving a net settlement of $662,828.75. It is unclear what portion of that settlement was allocated to loss of earning capacity.

[3] The funds from the Respondent’s settlement are administered by his mother who, it seems, is guardian of his property. Over time he has been paid a monthly amount from the funds. Initially he was paid $1,500 per month. For at least 20 months prior to separation he was being paid $3,000 per month. The actual income generated by the funds is considerably less than either of these amounts and is typically between $7,000 and $14,000 per year depending on investment returns. The settlement funds have decreased over time to approximately $395,000.

[4] The decision of the judge hearing the motion did not provide a detailed analysis of how the amount of child support was arrived at. However, an examination of the transcript from the argument makes it apparent that he imputed income of $36,000 per annum to the Respondent and grossed that up to $42,000 to reflect that it would be tax-free income. He then applied the Child Support Guidelines to arrive at $628 per month for the two children.

[5] The Respondent argues that the motion judge erred by confusing income with capital. The position of the Applicant is that the judge was entitled to impute what income he considered appropriate in the circumstances and made no error in principle in doing so.

Test for Leave to Appeal

[6] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met before leave may be granted.

[7] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted”. A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 7 O.R. (3d) 542 (Div. Ct.).

[8] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., [2003] O.J. No. 3442 (S.C.J.); Ash v. Lloyd’s Corp. (1992), 8 O.R. (3d) 282 (Gen. Div.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 57 O.R. (2d) 569 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div. Ct.).

Analysis

[9] I have considered both tests in coming to my conclusion. I am satisfied that leave to appeal ought to be granted. I reach that conclusion for the following reasons.

[10] On the second test, I have reason to doubt the correctness of the order because the Child Support Guidelines are premised on the notion that child support is to be calculated on the basis of income. As set out in Bak v. Dobell 2007 ONCA 304, [2007] O.J. No. 1489 (Ont. C.A.), while income from investments is part of a payor’s total income, his or her underlying investments are not. A payor is not expected to sell capital assets, such as a house and car, for the purpose of generating income from which to pay support unless the property is not reasonably utilized to generate income. Although the court went on to indicate that capital can sometimes be relevant to the issue of support, it is not clear in this case that the Respondent, who is unemployable and has limited and modest capital funds to last him the rest of his life, should have capital included as income for the purposes of calculating his child support obligation. It is important to remember that the test does not require that I find the order from which leave is sought is in error; it merely requires me to be satisfied that there is good reason to doubt its correctness.

[11] I am also satisfied that the issues involved in this appeal are matters of sufficient importance that leave to appeal ought to be granted. In that regard, I have been referred to no appellate authority which defines the circumstances, if any, under which it is appropriate to include capital receipts as income for the purposes of calculating child support. It is a situation which is not confined to these parties, and an issue upon which the direction of an appellate court would be of benefit to other family law litigants and their counsel.

[12] Accordingly, I grant leave to appeal on the issue of whether the motion judge erred by including capital in the income of the Respondent for the purposes of applying the Child Support Guidelines and determining the amount of child support payable by him.

[13] The disposition of costs is reserved to the panel of Judges hearing the appeal. As to quantum, neither party submitted a costs outline; however having regard to the narrow issues presented, the nature of the documents submitted for my consideration and the modest means of the parties, the appropriate quantum of costs once awarded would be $1,750 all inclusive.

Regional Senior Justice R. D. Gordon

Date: June 29, 2016