Court File and Parties

CITATION: Quiquero v. Quiquero, 2016 ONSC 6696

COURT FILE NO.: FC-12-42187-00

DATE: 2016-12-07

SUPERIOR COURT OF JUSTICE – ONTARIO – FAMILY COURT

RE: Sandra Quiquero, Applicant

AND:

James Quiquero, Respondent

BEFORE: The Honourable Madam Justice A.M. Mullins

COUNSEL: Reesa Heft, Counsel, for the Applicant Annalisa Pressaco, Counsel, for the Respondent

HEARD: October 26, 2016

Endorsement

[1] The applicant has brought this motion seeking to have child support and spousal support adjusted from that ordered by Justice Kaufman on June 3, 2013.

[2] The endorsement of Kaufman J. indicates that the respondent should pay the applicant $109 commencing August 1, 2013. There are three children. The parties agree that this is to be interpreted to mean $109 per month in child support. The Applicant asks that child support be adjusted to accord with the income of the respondent as it has now been determined to be by an expert retained by the respondent. According to the expert, the respondent’s income was $59,000 in 2012; $84,000 in 2013 and $69,000 in 2014. The respondent is self-employed. These income figures are higher than the income the Respondent reported to CRA and upon which support was originally ordered. These same experts delivered a supplementary report which determined the respondents’ income for 2015 to be a substantially lower sum than in previous years: $23,500.

[3] The respondent has served affidavits in response to the applicant’s motion. In his affidavit of October 24, 2016 he makes reference to a financial statement and its contents. The financial statement was not filed.

[4] The respondent wishes to have the court hear a cross-motion. The cross-motion seeks to amend the Answer. The Respondent seeks changes to the parenting arrangements that were ordered. The order governing parenting was final. The cross-motion material was not served and filed in time for hearing today. The parties seek to avoid his having to bring a motion to change, attend a first appearance and attend a DRO case conference regarding the proposed changes to the parenting arrangements. The timelines for the delivery of materials for any motion were prescribed by the order of Kaufman J. These do not appear to have been respected by the parties.

[5] The applicant seeks to file a reply affidavit to respond to the cross-motion

[6] Counsel for the OCL is present. She was unaware of the final order regarding parenting. She has an open file, but the final order is, perhaps, an impediment to having standing. She submits that there are concerns that warrant an examination of the child care arrangements.

[7] In the circumstances, I ruled that the applicant’s motion would proceed on the material filed. The cross-motion shall be addressed once the material has been properly filed and a hearing scheduled.

[8] The three children range in age from 17 to 11. The residential arrangements are week about. When they are with their mother, they share a household with the maternal grandparents. The applicant says this strains the family. The respondent has his own home to shelter the children while they are with him.

[9] When Justice Kaufman made his order, it was based on a set-off approach. Counsel made their submissions today based on the same model. At Exhibit “E” to the applicant’s affidavit, the income of each of the parties over the relevant time (2012-2015) is helpfully set out. Her income is based on her Notices of Assessment, his from the experts’ (PMVI) income report analysis found at Exhibit “A”, with the exception of 2015, in respect of which an average is used.

[10] The applicant submits that the sharp decrease in the respondent’s income for 2015, from an average of $69,000 over previous years to $23,000, raises a red flag. The applicant asks that child and spousal support be awarded from June 1, 2012 onwards based on the respondent’s actual income and for 2015, onwards based on an imputed income. The amount which should be imputed submits the applicant should be an average of previous years.

[11] The respondent submits that if an average is used it should be based on the entire period.

[12] Both parties rely upon s.17 of the Federal Child Support Guidelines.

[13] Prior to November 1, 2000, s. 17(1) of the FCSG explicitly provided that a court may average a spouse’s income over three years when determining income for support purposes. The current version does not mention averaging incomes, but provides that “the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income”.

[14] Since the November 2000 amendment, courts have continued to invoke s. 17(1) of the FCSG to calculate a spouse’s income at the three-year average. The section FCSG grants discretionary authority; it does not require the court to average income. The case law discussed below has helped to define the scope of this discretionary power.

Old Section 17 - Federal Child Support Guidelines

[15] Prior to November 1, 2001, s.17(1) of the FCSG read as follows:

17. (1) Where the court is of the opinion that the determination of a spouse's annual income from a source of income under section 16 would not provide the fairest determination of the annual income from that source, the court may determine the annual income from that source

(a) where the amount in respect of the source of income has increased in each of the three most recent taxation years or has decreased in each of those three years, to be the amount from that source of income in the spouse's most recent taxation year;

(b) where the amount in respect of the source of income has not increased or decreased as described in paragraph (a), to be the average of the amount received by the spouse from that source of income in the three most recent taxation years, or such other amount, if any, that the court considers appropriate; or

(c) where the spouse has received a non-recurring amount in any of the three most recent taxation years, to be such portion of the amount as the court considers appropriate, if any.

Current Section 17 of the Federal Child Support Guidelines

[16] After November 1, 2001, the reference to income averaging was removed from s. 17(1). Instead, the current section simply provides that a court “may have regard to the spouse’s income over the last three years.” The current FCSG s. 17(1) is effectively identical to s. 17(1) of the Child Support Guidelines (Ontario), O. Reg. 391/97, (OCSG).

Section 17(1) of the FCSG currently reads as follows:

17(1) Pattern of income

If the court is of the opinion that the determination of a spouse's annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of non-recurring amount during those years. [Emphasis added.]

Averaging Income and Section 17(1) of the Federal Child Support Guidelines

[17] Even after the November 2000 amendment, courts have invoked s. 17(1) of the FCSG to take a three-year average as the spouse’s income for child support purposes: see Roloson v. Roloson, 2016 ONSC 4035, 2016 CarswellOnt 10596, at para. 17; Roberts v. Roberts, 2004 CanLII 18250 (ON SC), at paras. 13 and 17; and Surana v. Surana, 2016 ONSC 3790, 2016 CarswellOnt 11201, at para. 19.

[18] In Decaen v. Decaen, 2013 ONCA 218, 2013 CarswellOnt 3922, at para. 50, the Court of Appeal affirmed that the language of s. 17(1) is permissive, not mandatory. Even if a judge considers the past three years of income, there is no requirement that it be averaged (at para. 50).

[19] In Fung v. Lin, 2001 CanLII 28193 (ON SC), Perkins J. held that the payor spouse bears the onus to (1) justify any deviation from the usual guidelines approach, and (2) show that a three-year income average is appropriate (at paras. 11 and 21).

[20] In Earnshaw v. Earnshaw, 2011 ONSC 4386, 2011 CarswellOnt 6644, the Court held that recent income increases should be averaged with past years only if the increase results from a ‘nonrecurring gain’ (at para. 18). In Earnshaw, the Court felt it was inappropriate to average past years’ income with the income increase that accompanied the payor spouse’s recent promotion to partner at his law firm (at paras. 18-19).

[21] In Bond v. Bond, 2007 CanLII 41898 (ON SCDC), rev’d on other grounds 2008 ONCA 560, 2008 CarswellOnt 4180, the Divisional Court held that s. 17(1) cannot be invoked to apply a three-year income average on a motion to vary (at para. 31). The average must be calculated and applied at the first instance (at para. 32).

[22] The Court in Bond also held that an income average should be limited to including the most recent three years (at para. 32). At the Superior Court, the judge applied a five-year average to calculate the husband’s income. The Divisional Court held that a five-year average was outside the jurisdiction bestowed by s. 17(1) of the FCSG (at para. 32).

[23] Notwithstanding Bond, Courts have settled on an average income amount that includes more than three years when the calculation was previously agreed to by the parties. In Dias v. Dias, 2015 ONSC 7512, 2015 CarswellOnt 18756, the parties agreed, and the court affirmed, that a four-year average was appropriate for calculating the husband’s income for support purposes (at paras. 3 and 57). In Harras v. Lhotka, 2016 BCCA 246, 2016 CarswellBC 1554, the chambers judge calculated the husband’s income at the three-year average, when the parties’ separation agreement provided that a five-year average would apply (at para. 1). The British Columbia Court of Appeal overturned the chambers judge’s decision, and calculated the income at the five year average (at para. 41).

[24] Even without previous agreement by the parties, the Court in Harras said that “averaging over a five year period may be an appropriate exercise of the court’s discretion under s. 19 where it would more accurately reflect the income available to a payor spouse than a three year average would,” (at para. 37). Section 19 of the FCSG outlines circumstances where a court may impute income to a spouse.

[25] The respondent submits that the expert’s reports are the best evidence available to the court. The evidence of the respondent is that his business income fluctuates.

[26] The amounts payable if the applicant’s method is adopted are as set out in Exhibit E. If the method adopted by the Respondent is adopted, the respondent would be obliged to pay child support of $357/monthly from January 1, 2012.

[27] I accept that the best evidence available to the court as to what the respondent’s income was, for the purposes of calculating support, is that of the experts’. The only explanation for why the respondent’s income has declined is within the addendum report. The explanation ought to have been given under oath by the respondent himself. In my view, the respondent ought to pay child support in accordance with the calculations set out in Exhibit E of the Applicant’s affidavit, up to the month of December 2014.

[28] Counsel for the Applicant was not able to direct the court to any difference in the basis upon which the experts valued the respondent’s income in 2015, as compared to 2012-2014. The respondent is self-employed. The experts’ reports do indicate that his business affairs may be entangled with those of his brother. It is possible that the respondent’s income for support purposes may prove to be something other than the experts’ findings which are presently before this court and constitute an estimate of his income. In the absence of other evidence and having accepted that the best evidence of the respondent’s income for the years 2012-2014 is that determined by the experts it would be incongruous for this court to reject the figure estimated for 2015.

[29] As Exhibit E summarizes, the Applicant has earned a very modest income since the parties separated. Given the modest income of the parties, most particularly that of the applicant, this has meant that she is unable to establish a household that is independent of her parents. Her living circumstances may be serving to undermine her relationship with the three children.

[30] I accept that the applicant has been in need of support. Based on the income of the parties from 2012 to date, which I have found accords with the experts’ valuation, the respondent shall pay support, child and spousal, in accordance with the table at Exhibit E to the applicant’s affidavit, from January 1, 2012 to December 1, 2014. From January 1, 2015 onwards, the respondent shall pay child support for three children in accordance with the guidelines, premised on his income of $23,000.00 and offset with the applicant’s reciprocal obligation. Until the respondent’s actual income for 2015 has been determined, spousal support shall be suspended as it does not appear he has an ability to pay based on his estimated income for that year.

[31] Following Justice Kaufman’s earlier ruling, this temporary order for spousal and child support may be adjusted and this order is without prejudice to the parties, as and when the parties’ income may be determined reliably.

[32] The respondent shall pay the arrears calculated in accordance with this order, together with post judgment interest, from the net proceeds of sale currently being held in trust. The parties may address this court should there be any dispute as to the manner in which arrears are to be calculated.

[33] The parties may make submissions as to costs, within 10 days.

Madam Justice A.M. Mullins

Date: December 7, 2016