Oshawa COURT FILE NO.: FC-13-1546-00
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN
Alison Doughty
Applicant
- and -
Dean Doughty
Respondent
COUNSEL:
T. Wharton, for the applicant
S. Skolnik, for the respondent
HEARD: July 18, 2016
Timms J.
ENDORSEMENT
Background
1The application herein was issued on August 27, 2013. The parties had separated in October 2011 but were still living under the same roof. The respondent filed an answer on June 17, 2014. In between those two dates not much happened.
2The parties have two children: Dane Theodore Robert Doughty, born July 17, 2000, and Dallin Scorgie Gregory Doughty, born May 20, 2005. Dallin was born with a weak left side and mild cerebral palsy. He is now permanently disabled as a result of a brain bleed when he was just three years old. He is unable to walk or talk and requires full support at all times. He is tube-fed. He does attend a public school but obviously requires considerable special assistance there. Support workers from Community Care Access Centre (CCAC) assist in the morning to get Dallin up and ready for school.
3On the first appearance in front of me on December 8, 2014, I made an order requesting the involvement of the Office of the Children’s Lawyer (OCL). The OCL accepted the appointment and assigned an investigator, Naa Armstrong. When she had completed her report, Ms. Armstrong held a disclosure meeting with the parties and their counsel on July 9, 2015. She issued her report on July 22, 2015.
4The parties were still living together when Ms. Armstrong issued her report. Ms. Armstrong recommended that they move into separate homes to reduce the conflict between them. Conditional on that occurring, and on the respondent’s implementing his proposed new work plan, she recommended joint custody with the children going back and forth on an alternating week basis, plus some mid-week access for dinners. The respondent’s new work plan was discussed on page 17 of the OCL report. The respondent was proposing that he adjust his work schedule such that he would work on alternating weeks, or reduce his work hours to a couple of days during the week when he had the children. That would allow him to be the primary caregiver of the children during the week on an alternating week basis.
5After the OCL disclosure meeting, the applicant herself suggested a week-about schedule to the respondent, to take immediate effect. The parties started the week-about arrangement in November 2015. From then until January 28, 2016, (the date when the closing of the sale of the matrimonial home took place), in those weeks when the children were in the care of the respondent, the applicant cared for the children during the day while the respondent was working and the children were not in school. Since January 28, 2016, the respondent has been entirely responsible for the care of the children during his weeks.
6Although the applicant says that the week-about arrangement was arrived at on a without prejudice basis, as far as I know, this new arrangement was not “papered”. In other words, there was no consent to an order of this court with any terms or premises set out, nor was there a written agreement imposing any conditions or setting any understanding as to any premises that might govern that arrangement in any way. Additionally, nothing was agreed upon regarding child or spousal support before the new arrangement was put into effect. I find that quite surprising in the circumstances.
7By late February 2016, the applicant had apparently decided that the then current financial arrangements between the parties were unsatisfactory. As a result, she brought a motion first returnable on March 10th. The relief sought in that motion included:
the imputation of an annual income to the respondent of not less than $73,000;
an order for monthly child support in the amount of $1,080, based on that income;
an order for spousal support in the amount of $1,703 based on that income;
an apportionment of section 7 expenses for the children, with the respondent to pay 72% of those expenses; and
an order that the respondent retain an expert to provide an opinion as to his income.
8On June 8, 2016, the applicant made several amendments to her original notice of motion. The first amendment was a request that the court order that both Dane and Dallin reside primarily with her. The residential schedule of the children would be determined in accordance with their best interest such that the respondent would be able to earn the income he earned prior to January 28, 2016. In the alternative, the applicant sought that the court impute an income to the respondent in an amount deemed just.
9There were other amendments to the notice of motion; however, in the main they related to various alternative orders. The only other substantive relief sought by the applicant related to the immediate release to her of the sum of $35,000 from the proceeds of the sale the matrimonial home, or in the alternative the immediate release to her of all of the proceeds of the sale of the matrimonial home.
10The respondent replied to the first notice of motion with his own motion returnable on March 10, 2016. In his cross-motion, he sought:
an order for joint custody of the children;
an order that any child and spousal support be based on his current income which he said should be imputed to be $23,288.67;
an order that the applicant be attributed with an income of $10,238 as well as an obligation to become self-sufficient;
an order for ongoing child support in the amount of $491 per month and for ongoing spousal support in the amount of $291 per month;1
an order for the apportionment of section 7 expenses such that he would pay 53.7% thereof; and
an order that the above temporary child and spousal support continue until his 2016 income was established, or until the applicant obtained employment, whichever came first.
11After the applicant amended her original motion, the respondent too amended his notice of cross-motion. The additional relief that he sought mainly related to issues of disclosure. As well, he sought an order that the applicant comply with the terms of a consent signed by her on December 8, 2014, regarding attending at Psychemedics Corporation for a hair analysis.
12Both parties of course sought costs.
13On the first return date, the applicant's motion and the respondent’s cross-motion were adjourned until after the settlement conference scheduled for April 15, 2016. The judge presiding on that day endorsed that the time “between that day and the hearing of the motions shall not be considered to establish a status quo”. Both motions were brought back on June 13, 2016. They could not be heard that day because the judge presiding on motions was the case management judge, and because the two motions combined would have to be set down as long motions. Consequently they were adjourned to July 18, 2016, when they were heard by me.
Custody
Custody
14I have carefully considered the affidavit filed by the applicant on her original motion. There is not one word in there indicating her dissatisfaction with the week-about schedule, except as it affects the respondent’s income and her ability to find employment. All of the 19 exhibits attached to that affidavit relate to income issues.
15Formally in any event, it was not until her amended motion filed on June 9, 2016, that the applicant raised the issue of custody and even then it was phrased as an alternative to the respondent being attributed an income of not less than $73,000 for the purposes of child and spousal support. If the applicant got the support that she wanted, then the parenting arrangement could stay as it was.
16The applicant’s affidavit filed in support of her amended motion did at least touch upon a couple of matters that could relate to the best interests of the children. She said that Dane had expressed to her a number of times that he did not want to have an alternating week schedule but instead wanted to choose with whom he would live at any given time. Additionally, she said that she was concerned that if a final order was made granting the parties joint custody with equal time, the practical reality would likely be quite different. In other words, that she would bear the burden of most of the childcare.
17I infer that the applicant raised similar concerns on both March 10, 2016, and at the settlement conference on April 15, 2016. On the latter occasion, Justice Fryer made an order requesting the re-involvement of the OCL. The OCL later declined that request as they felt that the issues were essentially money related. That is a conclusion with which I agree. A careful reading of all of the applicant’s materials makes it clear that her focus is the money. If the respondent earned what he used to earn (at least according to the applicant), and paid her support accordingly, then there would be no need for her to be the primary parent. With respect to the endorsement made by the judge presiding at the motion on March 10, 2016, again it is clear from the totality of what is written there that the applicant’s concern about the week-about arrangement not being in the best interests of the children was based primarily on the issue of the respondent’s reduced income.
18The applicant asserts that when she originally offered to try a week-about custodial arrangement back in July 2015, and later when it was actually implemented, it was on a without prejudice basis.2 Consequently, she argues that the status quo is that the children are in her primary care. She relies upon the case of Button v. Konieczny and the cases cited therein, in that regard.3 As far as I can tell, in all of those cases there was an actual without prejudice order, which was not the case herein. Additionally, with all respect to my colleague in that case, I am of the belief that some of his statements are simply too absolute. For example, he appears to agree with the proposition that “the only status quo that counts is the one that existed prior to the separation”.4 But having said that, he also says that “it needs to be made clear that the decision to look at the pre-separation situation for the status quo does not mean that the court will ignore the current situation or what has transpired over the past five months.”5
19I will not ignore what has transpired over the almost past seven months, or indeed, what has transpired since the disclosure meeting held by Ms. Armstrong last July. Notwithstanding the endorsement of the judge who presided at the motion on March 10, 2016, time has continued its inevitable march forward.6 In my view, a new status quo has been established since at least November 2015. That is the reality of the situation. Nothing that the applicant has filed, and nothing that has been argued on her behalf, convinces me that the best interests of the children require changing that status quo.
20My order is that the parties share custody of the children as per the current arrangement.
Child and Spousal Support
Child and Spousal Support
21As I set out above in paragraph [5], the applicant was the one who suggested a week-about schedule to take immediate effect. The applicant alleges that the respondent’s reaction was that he could not take the time off that summer when the children were not in school. She then suggested that the week-about arrangement take effect in September. She alleges that the respondent again demurred. His position was that until the matrimonial home was sold, and his share of the funds from that sale was available to him, he would not be able to switch his work schedule. That would result in a decrease in his income. In her first affidavit, the applicant alleged that she believed that this is different from what he had advised Ms. Armstrong. She sets out no basis for such a belief. In her second affidavit, the applicant went further and said that her agreeing to an equal parenting arrangement was a result of assurances given by the respondent to Ms. Armstrong that he could adjust his work schedule without this having a negative economic impact on the children. The OCL report contains nothing to that effect. It also appears to contradict what she said the respondent told her when she suggested a September start date for the week-about arrangement.
22In his affidavit material, the respondent denies telling Ms. Armstrong that changing his work schedule would not result in any reduction of his income. In fact, he says that his reduction in work hours was fully canvassed during the OCL disclosure meeting, and that Ms. Armstrong's recommendation that the parties share the children on a week-about basis was conditional on his changing his work schedule such that he would be available to the children during his weeks. He further says that the issue of the applicant working was brought up within the context of that discussion and that the applicant accepted that she would have to find employment for the weeks that she did not have the children. In the final analysis, I can see no evidentiary foundation for the applicant’s alleged belief. Moreover, logic would dictate otherwise. It would be strange indeed if someone could work half-time, or greatly reduced hours, and still earn the same amount of money. If there is an eventual trial, either party will be free to cross-examine Ms. Armstrong regarding what the respondent did and did not say.
23The respondent did in fact reduce his time at work after the sale of the matrimonial home. He now works only a few hours a day during the weeks when the children are in his care and they are in school. As well, this summer when the children are not in school, he cannot work at all when they are in his care.
24The respondent works as a carpenter in the film industry. His position is unionised. He had to change crews to get reduced hours for those weeks when the children are in his care. His evidence was that even if he wanted to, he could not rejoin his previous crew as it is fully subscribed. He would have less seniority and have substantially reduced income even if he returned to work full-time. Nothing in the applicant’s material contradicted that.
25As I wrote above, the applicant's March 10th motion appears to have been triggered by her dissatisfaction with the financial impact on her of the new arrangement. In her affidavit in support of that motion, she said that she was "happy" to work herself, but that given her time out of the work force and given her responsibilities for the children during her weeks, she was nervous and worried about finding employment.
26The current parenting arrangement is the one recommended by the OCL. With the assistance of counsel, the parties agreed to implement it. It is my finding that the applicant must have known and understood the likely economic impact to the family of the respondent taking on alternate week responsibility for the children. Equally, she must have known and understood that she would have to seek employment during that time that the children were with the respondent. It is too late now for her to say that she cannot manage on the money that the respondent pays her for child and spousal support, and that she cannot work herself except for minimal pay, for minimal hours. As well, it is too late for her to argue that the solution is to have the respondent go back to doing what he did before. On the uncontradicted evidence of the respondent, that bridge has long since been burned.
27As it relates to support, I see only two real issues that are required to be determined now. First, are the respondent’s earnings greater than he sets out, or could they be? And second, should the applicant be earning more money than she is currently?
28As I wrote above, the respondent works as a carpenter in the film industry building sets. He is considered a subcontractor by Entertainment Partners Canada (EPC). He (his company) gets paid hourly. EPC deducts union dues and a mandatory amount for a Registered Retirement Savings Plan (RRSP). Because he is a subcontractor, harmonised sales tax (HST) is paid on his gross fee, but the only HST credits that he receives relate to travel and tools. In 2009, in an attempt to reduce his tax liability, he took the not-too-wise advice of a bookkeeper/accountant and incorporated a company under federal legislation in order to claim HST paid on his wages and his expenses. Thereafter that same individual prepared and filed all corporate and individual tax returns for both parties. What he did not do was to file HST returns as required, which led to monies owing to the Canadian Revenue Agency (CRA). That was compounded by the respondent not filing personal tax returns for two years. In 2014, the respondent hired a new accountant to straighten up his situation. This individual incorporated a new provincial company in 2015. However, the respondent still owed a great deal of money to the CRA. Liens totaling over $56,000 were registered against the matrimonial home and paid off from the proceeds of its sale.
29I agree that the personal tax returns for the respondent up until 2014 are never fully explained in his affidavit material. Even though he had an incorporated company, his tax returns contain a statement of business activities for a "construction partnership" and rental income for a theoretical rent paid to him by that partnership for the use of a portion of the matrimonial home. It does appear as if the respondent was income splitting his so-called partnership income with the applicant. He was deducting significant operating expenses against the business income, including bank charges, phone, vehicle expenses, capital cost allowance on his vehicle and other equipment, advertising and promotion, maintenance and grooming, and the same rent that he was reporting as personal income. Unfortunately, in the otherwise copious materials filed on the motion, neither party included copies of a statement of income and expenses for the corporation for any year before 2014. As a result, I was unable to determine what, if any, expenses the corporation itself deducted as against income.
30I do have the respondent's personal tax return and the corporation's statement of income and expenses for 2014. Presumably these were prepared by the new accountant. They make far more sense than those for the previous years. The corporation's statement of income and expenses shows all income, including HST. The expenses previously deducted in the respondent's personal tax return from the so-called partnership income, are now deducted from the corporation's income. That net amount, $43,200, is then shown on the respondent's personal tax return as "business income". There are no deductions as against that except for a small tax credit for Canada Pension Plan (CPP) contributions.
31I also have the respondent's personal tax return for 2015, but as of the date that I heard the motion, the 2015 corporate financial statements had not been completed. His personal tax return showed business income of $59,000. Again, there are no deductions as against that amount except for union dues, an RRSP contribution, and small tax credit for CPP contributions.
32I agree with the applicant that if nothing had changed in the respondent's employment situation, one would have to look carefully at the expenses claimed by the respondent's company, whether in the corporate financial statements or in his personal tax return. It appears to me as if there is a strong argument that for the purposes of determining both child and spousal support, the majority of those expenses should be ignored. However, as outlined above, things did change. For that reason, I see no reason to examine the cases given to me by counsel regarding imputing income.
33EPC pays the respondent’s company an amount based on the hours worked (both regular time and overtime), plus an amount for vacation, plus HST. The respondent is projecting that his income for 2016 will total $28,570.20, not including HST. In arriving at that figure, he did not deduct any of the expenses outlined in paragraph [29] above. In addition, the respondent had some small income - $1,396 - working for Adanac, a company owned by a friend. The significant reduction in the respondent's income results entirely from his reduced hours due to his childcare responsibilities during his weeks. The respondent's calculations in that regard are set out in an exhibit attached to his affidavit of March 6, 2016. Those calculations were never directly addressed by the applicant in any of her subsequently filed affidavits.
34What no one addressed is the question of the respondent's overtime. From my examination of all of the paystubs and time sheets from EPC to his companies, there is never an occasion when there was no overtime. I am including in that observation periods after February of this year. Overtime appears to range from 35% to over 50% of his earnings. In my view, it would be fair to increase the respondent's projected earnings by a factor of 40%. I do so keeping in mind that this is a motion and not a trial, where greater precision will presumably prevail. That takes the respondent’s income from $28,570.20 to roughly $40,000, plus the amount from Adanac. Therefore, for the purpose of calculating child and spousal support I am going to use $41,396 as the respondent's income.
35The applicant filed two financial statements after the new childcare arrangements went into effect. The last one dated June 7, 2016, showed next to no income: $470 per month from Ontario Disability Support Program (ODSP) for Dallin, and another $250 per month for the child tax credit. She also receives $3,500 to $4,000 a year for respite expenses relating to Dallin. I agree with her that that amount cannot be considered income unless she were to include the costs of the care in her expenses, which she did not do.
36In her first affidavit, the applicant said that she was nervous about how and where she might be able to find employment when she did start to look for work. She said that now that she had alternate weekly time when she would not be busy caring for the children, she intended to start looking for employment as a waitress or with a catering company. In her second affidavit, the applicant said that she had found a part-time job working as a lunchroom supervisor at Dallin’s school. She is paid $14 per hour but works on an “on-call” basis for very limited hours. She did not estimate what her income might be from that employment. She said nothing further about looking for work as a waitress or with a catering company. In neither affidavit did the applicant outline any attempts to seek employment, to seek employment counselling, or to investigate any schooling or training that might lead to employment.
37The applicant has been out of the work force for over 16 years. She stopped working outside the home when pregnant with Dane. After that, her primary responsibility was the children, and after Dallin suffered the brain bleed she was the parent who attended to his needs at home during the day and at school as needed. No doubt that was exhausting and at times overwhelming. But that ceased to be the case five months ago, and as the applicant herself said in her first affidavit, as of February of this year she has had the time to at least seek employment. There is a complete absence of evidence that she has done so.
38I accept the respondent’s evidence that the need for the applicant to find employment was discussed at the OCL disclosure meeting. That was an obvious corollary to the contemplated reduction in the respondent’s income. If the applicant worked only 35 hours a week for minimum wage, for only 24 weeks a year, she would earn over $9,000 a year. In my view, it would be fair to attribute at least that amount to her.
39Using $41,396 as the respondent’s income and $9,000 as the applicant’s income, child support would be $604 per month and the range of spousal support would be $210 per month at the low end to $528 at the high end. The mid-point, which would create a 50/50 split of the parties’ net disposable incomes, is $364 per month. That will be my order.
40Section 7 expenses are to be shared according to the above figures.
Forensic Income Valuation
Forensic Income Valuation
41I see no need to order a forensic analysis of the respondent’s finances. Unlike many of the individuals in the cases relied upon by the applicant’s counsel, the respondent is not really self-employed. As the applicant herself sets out in her factum, “However, for all intents and purposes, the Respondent’s work is much more a kin (sic) to an employment type job.” The fact that his income flows through a corporation, and that he has in the past deducted expenses that perhaps he should not have, hardly justify the expense of such a measure. It is not necessary to get at the truth of his income. That part of the applicant’s motion is hereby dismissed.
Further Advances from the Proceeds of the Sale of the Matrimonial Home
Further Advances from the Proceeds of the Sale of the Matrimonial Home
42After the parties’ matrimonial home was sold and various debts paid off, each party received $30,000, and their lawyers each received $35,000.7 There remains approximately $100,000 in trust. As I set out in paragraph [27] above, the respondent’s debts to the CRA for unpaid personal taxes and HST in the amount of $56,000 were taken from the proceeds. The applicant says in her factum that she should get equal credit for that. The CRA debt, assuming that it existed on the valuation date, should go in the respondent’s column in his net family property (NFP) statement. Subject to whatever other assets and debts the parties had on the valuation date, the parties would be sharing the debt in any event. That is how equalisation of the spouses’ NFP works. Having considered the NFP worksheet submitted by counsel for the applicant as part of her supplementary factum, I agree that she has properly dealt with the CRA debts.
43If nothing else was at play in determining who owes what to whom on the equalisation, then there would be no issue about giving the applicant a further advance of $35,000 from the sale proceeds. However, the respondent argues that doing that would “diminish the assets that are required to pay the CRA” [for further sums owing by him relating to the time period prior to the valuation date] and that sharing that debt would be impossible and unfair “due to the fact that the applicant would have no assets.”
44The applicant says that he still owes $30,170 (not including penalties and interest at 5%) for HST covering the period 2010 to 2014. In that regard, I note that the applicant has credited the respondent with $30,710 for an additional CRA debt in her NFP worksheet. That would certainly take care of the issue. However, the respondent says that he owes approximately another $23,000 for HST, and that that amount accrued subsequent to 2014. Clearly, this is well after the valuation date. When I asked counsel about this, his reply was that the debt had accrued when the parties were living under the same roof and benefiting from the monies earned by the respondent. Therefore, it would be unfair for them not to have to share the debt. As I said to counsel during his argument, in my view that amounts to an argument pursuant to subsection 5(6) of the Family Law Act (FLA), where the test is not just fairness but unconscionability. Whether the respondent is able to clear that hurdle is a matter best left for trial.
45Although counsel for the respondent did not raise it in his argument, based on the applicant’s NFP worksheet, the respondent is also apparently claiming reimbursement for one-half of the mortgage payments made by him after the date of the separation until the home was sold, and an adjustment for roughly $13,837.22 taken by the applicant from the joint line of credit between January 9, 2014 and April 9, 2014.
46Given that on her own figures the applicant would owe the respondent $31,990.14 as an equalisation payment, and given these other issues that could impact any payment, in my view it would be unsafe for the time being to release a further $35,000 to the applicant. I decline to order any further advances.
The Psychemedics Testing
The Psychemedics Testing
47On December 8, 2014, as per the handwritten consent filed, I ordered the applicant undergo “hair follicle testing for use of percodans (sic) or prescription medications, marijuana”. There was no time limit set for such testing. The applicant now denies the need for such testing. It is not my practise to repeat orders already made, as that would be redundant. However since the parties set no time limit for the applicant to undergo the testing, it is reasonable to now set one. She must attend for testing within 30 days from the release of these reasons.
Disclosure
Disclosure
48The applicant did not spend any time addressing the respondent’s disclosure requests in his amended notice of motion. Therefore, I am making the order requested in paragraphs 10 through 13 of the respondent’s amended notice of motion.
Costs
49Counsel for the respondent may serve and file cost submissions, restricted to five pages, exclusive of a bill of costs, by forwarding that to my secretary within ten days of the release of this judgment. Counsel for the applicant may serve and file her response, restricted to five pages, within seven days thereafter and counsel for the respondent may serve and file his reply, restricted to five pages, within four days thereafter.
The Honourable Mr. Justice D.R. Timms
DATE RELEASED: August 24, 2016
Footnotes
- The respondent has been paying those amounts since the sale of the matrimonial home on a without prejudice basis.
- As I pointed out above in paragraph [6], apparently no one took the time to draw up a consent to a temporary order, or any kind of temporary domestic contract, setting out exactly what the parties were agreeing to.
- 2012 ONSC 5613, 221 A.C.W.S. (3d) 138.
- Ibid at para. 16.
- Ibid at para. 18.
- Given that only the respondent had formally raised the issue of custody at that point, if anyone was prejudiced by a delay, technically it would have been he.
- The applicant later received an additional $7,500 and the respondent an additional $3,500 when Justice Fryer adjourned the motions.