Court File and Parties

CITATION: Martins v. Benson, 2016 ONSC 7535

COURT FILE NO.: FC-14-272-00

DATE: 2016-12-02

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

TONY MARTINS Applicant

– and –

DANIELLE NICOLE MELODY BENSON Respondent

COUNSEL:

John Craig, for the Applicant

Kara-Lynne Chapman, for the Respondent

HEARD: October 13, 2016

REASONS FOR JUDGMENT

DOUGLAS, J.

Overview

[1] The parties have resolved most of the issues arising from the breakdown of their relationship on terms incorporated into the order of the Honourable Justice Eberhard dated October 30, 2015.

[2] The parties agreed, and the court ordered, that "financial issues relating to child and spousal support shall be adjudicated by way of long motion." The parties confirmed to me that it was their joint expectation that my order resulting from this motion would be a final judgment on these particular issues.

[3] Issues pertaining to contempt and access raised in the motion were resolved by the parties following a case conference on those issues conducted by me after I received submissions on the support issues.

Background

[4] The parties commenced co-habitation in May 2011. They separated on June 2, 2014.

[5] There is one child of the relationship, namely Emma Nicole Benson born May 17, 2012. She is four years old.

[6] On September 22, 2014 the parties consented to an order that the Applicant pay to the Respondent child support of $379.00 per month (consistent with income of $42,000.00) commencing September 1, 2014 on a without prejudice basis and subject to "verification" of the Applicant's income. The order made no mention of spousal support.

[7] On November 20, 2014, following an argued motion, Justice Stong found, on a temporary basis, that the Applicant's income was $49,159.00 resulting in child support for Emma payable in the amount of $442.00 per month commencing December 1, 2014 and spousal support in the amount of $500.00 per month.

[8] The order of March 27, 2015 addressed proportional sharing of s.7 expenses and was based upon the earlier income finding of Justice Stong for the Applicant father plus income for the Respondent mother of $3,814.00.

[9] The order of October 30, 2015 is silent with respect to the financial issues of child and spousal support except for directing that they proceed by way of long motion.

[10] The parties have agreed that there should be no spousal support payable following December 31, 2015 and to ongoing child support commencing November 1, 2016.

[11] The sole issues before me are child support payable by the Applicant in 2014, 2015 and 2016 through October 31, 2016, and spousal support payable by the Applicant through December 31, 2015.

[12] The Applicant is self-employed as the owner/operator of Print Media Group (hereinafter "PMG"). PMG is a sole proprietorship.

[13] The evidence demonstrates the following gross income history for PMG:

a. 2011 - $122,889.00;

b. 2012 - $211,571.00;

c. 2013 - $225,074.00;

d. 2014 - $172,963.00; and

e. 2015 - $140,171.00.

[14] The Applicant's line 150 incomes (confirmed by his Notices of Assessment) are summarized as follows:

a. 2011 - $42,520.00

b. 2012 - $47,724.00

c. 2013 - $37,060.00

d. 2014 - $25,973.00.

[15] The Applicant did not provide a copy of his 2015 Notice of Assessment but a copy of his 2015 income tax return with schedules was provided. His line 150 income shows a net loss of ($5,570.29).

[16] The Respondent's Line 150 incomes are as follows:

a. 2011 $9,952.00

b. 2012 $2,455.00

c. 2013 $3,814.00

d. 2014 $1,200.00

e. 2015 $6,071.00

Applicant's Income for Support Purposes

2014

[17] It is the Applicant's position that his income in 2014 should be found to be $28,520.00. This is achieved as follows:

a. Net business income of $25,708.00

b. 30% of the claimed business phone expense ($3,212.00 x .3) and grossing up 25% for tax, total additional amount $1,205.00

c. 30% of the claimed business vehicle expense ($4,284.00 x .3) and gross up 25% for tax for an additional amount of $1,666.00.

Total: $28,520.00 ($25,708.00 + $1,205.00 + $1,666.00)

[18] The Respondent submits that the Applicant's income commenced a dramatic decline upon separation of the parties. It is submitted that this was by design in order to reduce his exposure to support. The Respondent further argues that the most significant drop in the Applicant's income occurred in the year that the parties separated, that he is under-employing himself in an effort to limit his support obligations and that his income should not be treated as at or near minimum wage when the Applicant has been operating his business for five years while sales have declined for three years demonstrating that his efforts are not being met with success. The Respondent refers to the Pay Scale website which shows the median annual income for a "Sales Associate in Barrie" as $36,528.00. She deposes that the report is based on someone with a five years sales experience, no post-secondary education.

[19] It is further submitted by Respondent that the Applicant's income for support purposes should be treated as $45,205.00 in 2014. This number is achieved by starting with his Line 150 income of $25,973.00 and adding thereto expenses unreasonably deducted from rental income in the amount of $7,672.00 and expenses unreasonably deducted from business income in the amount of $7,440.00, these last two amounts being subject to gross up for tax (27.29% approximately), resulting in a total amount of $45,205.00.

[20] With respect to the Applicant's 2014 rental income, his statement of real estate rentals attached to his 2014 income tax return shows gross rent of $15,000.00 plus "reimbursement of expenses for utilities" in the amount of $1,750.00 for total gross rental income of $16,750.00. From that the Applicant has deducted expenses of $17,818.00 resulting in a net loss of ($1,068.00).

[21] The $7,672.00 that the Respondent seeks to add back to the rental income is comprised of the following components:

a. 50% of the insurance expense of $210.00;

$105.00

b. 50% of the interest expense of $5,417.00;

$2,709.00

c. 100% of the maintenance and repairs expense of $600.00;

$600.00

d. 50% of the property tax expense of $3,848.00; and

$1,924.00

e. 100% of the utilities expense of $2,334.00.

$2,334.00

Total: $7,672.00

[22] With respect to the business expenses, the add back of $7,440.00 submitted by the Respondent is comprised of the following components:

a. 100% of the meals and entertainment expense of $713.00;

$713.00

b. 50% of the total office expenses of $926.00;

$463.00

c. 33% of the total legal, accounting and other professional fees expense of $600.00;

$200.00

d. 50% of the total telephone and utilities expense of $3,214.00;

$1,607.00

e. 50% of the total motor vehicle expenses of $4,284.00;

$2,142.00

f. 50% of the total bank charges and interest of $1,368.00; and

$684.00

g. 25% of the total business use of home expense of $6,518.00.

$1,629.50

Total: $7,438.50

[23] In the Applicant's Affidavit sworn March 2, 2016 he addresses the issue of his business expenses. With respect to those relevant to this decision he deposed as follows:

a. "bank service charges – these are 100% business expenses as they include bank account fees on the account that I use for my business, as well as credit card processing and interest fees for my business credit card;"

b. "meals and entertainment – these expenses relate to lunches and dinners for customers/clients;"

c. "office supplies – these are 100% business expenses as they include paper, envelopes, toner, file and folders;"

d. "professional fees – these are accounting fees for my business;"

e. "telephone expense – my business is sales and as a result a business telephone and cellphone are critical. This expense includes my home/office phone, my cell phone, my fax line and my internet expense. I respectfully suggest that this expense is at a minimum 70% business related;"

f. "vehicle expense – once again, my business is sales and travel is a huge component of any success in my business. From 9:00 a.m. to 6:00 p.m. Monday to Friday my vehicle is primarily in use for business purposes. I respectfully suggest that this expense is at a minimum 70% business related;"

g. "business use of home – quite obviously I have to have an office somewhere to conduct my business. I choose to operate it out of my home as it is less expensive to do so than it would be to rent office space somewhere and pay rent, utilities, etc. at that location."

[24] In the Respondent's Affidavit sworn May 4, 2016 she discloses no evidence in contradiction of the Applicant's evidence regarding his business expenses. Simply put it is her position that the expenses deducted include personal expenses and are thus overstated for business purposes and do not represent proper deductions from income.

[25] Section 19(1)(g) of the Ontario Child Support Guidelines (hereinafter the "Guidelines") provides that "the court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include…the spouse unreasonably deducts expenses from income…".

[26] When a party alleges that expenses have been unreasonably deducted from income under s.19(1)(g) of the Guidelines the party making the allegation bears the onus of providing evidence of what expenses are being unreasonably deducted; however once the support claimant presents evidence that the benefit was paid for or by the company, the value of such benefit, and that the expense was paid was unreasonable, the onus then shifts to the controlling shareholder spouse to prove that the payments were reasonable. (see Bekkers v. Bekkers, [2008] 49 R.F.L. 6 119 S.C.J.; see also Joy v. Mullins, [2010] O.J. No. 4202 (S.C.J.).)

[27] In Homsi v. Zaya, 2009 ONCA 322, [2009] Carswell Ont 2068 O.N.C.A., G. J. Epstein, J.A. stated at para. 28:

"The onus is on the person requesting an imputation of income to establish an evidentiary basis for such a finding."

[28] Notwithstanding the statements of principle set out in Joy, Bekkers and Homsi, "it is inherent in the circumstances of those who are self-employed or who have irregular income and expenses, that they have a positive obligation to put forward not only adequate, but comprehensive records of income and expenses." (see Meade v. Meade, 2002 CanLII 2806 (O.N.S.C.) at para 81).

[29] Under the Guidelines income is determined in accordance with s.15 to s.20.

[30] The starting point is the sources of income set out under the heading "Total Income" in a party's Income Tax Return (adjusted per Schedule III and subject to s.17 to s.20.) In this case I am only asked by the Respondent to consider imputing income to the Applicant under s.19(1)(g) on the basis that the Applicant "unreasonably deducts expenses from income." In this regard pursuant to s.19(2), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada).

[31] While the Respondent bears the onus of establishing an evidentiary basis for her assertion that the Applicant is unreasonably deducting expenses from his business income, this in my view presumes compliance by the Applicant with his positive disclosure obligation per Meade. The information summarized in para. 23 herein represents the extent of the Applicant's compliance in this regard.

[32] I note that the Applicant's rental income in 2014 was reduced due to default by his tenant who was eventually evicted.

[33] As to the add-backs to the rental income urged upon me by the Respondent, I have no evidentiary basis to conclude that these are not proper and reasonable expenses incurred for the purpose of generating the gross rental income.

[34] As to the add-backs to the business income, the Applicant's evidence summarized above, meagre though it may be, is un-contradicted by the Respondent's evidence and supports the conclusion that such are reasonable deductions, except in the following respects:

a. Meals and entertainment: there is no evidence that this expense is necessary for the Applicant to conduct business; therefore, 100% should be added back ($713.00) subject to gross up for tax;

b. Telephone expenses: the Applicant acknowledges 70% is business-related; therefore 30% should be added back ($964.00) subject to gross up for tax;

c. Vehicle expenses: the Applicant acknowledges 70% is business-related; therefore, 30% should be added back ($1,285.00) subject to gross up for tax;

d. Business use of home: this expense is somewhat illusory. There is no evidence that the Applicant secured a larger residence, and thus incurred increased carrying cost, in order to accommodate his business office. In other words, there is no evidence that the expense was necessary in order to generate business income. (see Moran v. Cook, 2000 CanLII 22542 (ON SC), [2000] O.J. No. 2583, 9 R.F.L. (5d) 352 (Ont. S.C.J)). 100% should be added back ($6,518.00) subject to gross up for tax.

[35] The parties have applied differing gross up rates in their respective calculations (the Applicant 25% and the Respondent 27.27%). I received no evidence on the issue, nor did I receive submissions. In absence of evidence to support either approach I shall utilize the approximate midpoint of 26%.

[36] As to the evidence presented by the Respondent obtained from the Pay Scale website, such does not represent proper evidence. The source of this information is wholly speculative. It is essentially hearsay with dubious provenance and reliability. It is not admissible and I do not rely upon same.

[37] As a consequence of the foregoing the Applicant's income in 2014 is calculated as follows:

a. 2014 Line 150

$25,973.00

b. plus (100% of the total meals and entertainment expense of $713.00) (gross up for tax) = 713x1.26

$898.00

c. plus (30% of the total telephone expense of $3214.00) (gross up for tax) 964x1.26

$364.00

d. plus (30% of the total vehicle expense of $4284.00) (gross up for tax) 1285x1.26

$1,619.00

e. plus (100% of the total business use of home expense $6518.00) (gross up for tax) 6518x1.26

$8,213.00

Total:

$37,067.00

[38] I also note that there is no evidence of a lifestyle enjoyed by the Applicant meaningfully out of sync with the income so calculated.

[39] While s.19 of the Child Support Guidelines applies to determining income for child support purposes only, the principles developed thereunder in relation to imputing income apply readily to determining income for spousal support purposes as well; thus, I intend to use my income findings for both child and spousal support purposes.

2015

[40] The Applicant father submits that his total income for 2015 for support purposes should be treated as $23,807.00 following the same approach he used in establishing his income for 2014.

[41] In achieving this figure he starts with a Net Business Income of $20,358.00. To that he adds 30% of the total phone expense ($3,232.00 x.3) and gross up for 25% for tax resulting in $1,212.00 addition, plus 30% of vehicle expense ($11,299.00 x .3) and gross up for tax resulting in an addition of $4,237.00 resulting in a total amount of $25,807.00. From this the Applicant submits that a further $2,000.00 ought to be deducted for business use of home noting that his 2015 tax return only claimed $2,020.00.

[42] The Applicant concedes that his net loss of rental income in the amount of ($25,110.00) should not be incorporated into the calculation of his income for support purposes.

[43] The Respondent's submissions with respect to the Applicant's income in 2015 are similar to those regarding his income in 2014 and she seeks similar additions back to the Applicant's income of those expenses identified in relation to the calculation of the 2014 income. It is the Respondent's position that when the requested add backs are totalled with income, same amount to $31,731.00 which, grossed up, results in Guidelines income of $37,382.00.

[44] There is no reason to adopt a different approach in establishing the Applicant's 2015 than I utilized in establishing his 2014 income; thus, the Applicant's 2015 income is calculated as follows:

a. 2015 Net Business Income

$20,358.00

b. plus 30% of total phone expenses 3232x1.26 (gross up for tax)

$1,222.00

c. plus 30% of total vehicle expenses 11299x1.26 (gross up for tax)

$4,271.00

d. plus 100% meals and entertainment 382.97 x1.26 (gross up for tax)

$483.00

e. plus 100% business use of home 2020x1.26 (gross up for tax)

$2,545.00

Total:

$28,879.00

2016

[45] In determining the Applicant's income for 2016, we do not have the benefit of a complete income tax year. The best guidepost for this is the immediately preceding year (see Vanos v. Vanos, [2010] ONCA 876 (O.C.A.) and s.2(3) of the Child Support Guidelines).

[46] Therefore, for the period January 1, 2016 through October 31, 2016 I will treat the Applicant's income as consistent with my finding for his income in 2015.

Additional Arguments Raised by Respondent regarding Applicant's Income

[47] The Respondent argues that the Applicant's request for a predictable "formula" in determining his income is inappropriate given that he is self-employed and his income has varied over the past few years. In response the Applicant proposes the addition of $3,000.00 to his Line 150 Income to account for his business related deductions. The Respondent argues that this would create a real risk that the parties' child would not receive the child support to which she is entitled.

[48] In my view the parties should follow the approach I have set out herein for determining the Applicant's income hereafter, subject to the parties' further agreement in writing or court order upon Motion to Change. This will preserve both an element of consistency and the parties' rights to pursue a different approach should circumstances suggest such would be appropriate.

[49] It is further argued by the Respondent that the Applicant's Financial Statement shows annual expenses in excess of $76,000.00 and that such expenses cannot be supported by the income that the Applicant urges the court accept. I note in this regard that the Applicant has extensive debts which would be consistent with the Applicant's stated history of living beyond his income means. I do not find the Respondent's submissions compelling on the evidence before me.

[50] The Respondent argues that the Applicant's lifestyle is inconsistent with his income. It is noted that he owned BMW and Porche motor vehicles and, after the 2014 motion purchased a 2012 Audi for $31,000.00 with monthly payments of $517.00. The Applicant deposes that the BMW and Porche motor vehicles were vehicles that he owned prior to the parties commencing co-habitation and that the vehicles were sold prior to purchase of the newer but used motor vehicle that he currently drives. As observed above, the evidence in this regard falls short of demonstrating a lifestyle that is meaningfully inconsistent with the incomes I have found.

Respondent's Income for Support Purposes

[51] There appears no dispute that the Respondent's line 150 income tax history is as follows:

a. 2011 $9,952.00

b. 2012 $7,455.00

c. 2013 $3,814.00

d. 2014 $1,200.00

e. 2015 $6,071.00

[52] While the Applicant says the Respondent was employed at four or five different jobs during cohabitation it appears conceded that she returned to school during cohabitation. The evidence further confirms that the Respondent terminated her schooling in spring 2015 for financial reasons whereas she undertook an unpaid internship. She obtained fulltime employment in June, 2016 with income annualized to $32,000.00. In April 2016 she commenced fulltime employment at Volkswagen, earning $35,000.00 per year.

2014

[53] I find in the circumstances that it was reasonable for the Respondent to pursue schooling and the subsequent internship. With a young child in her primary care in 2014 I see no basis to attribute any additional income to her for 2014.

[54] The Respondent's Line 150 for 2014 is $1,200.00. She received $9,697.00 in grants in 2014 which she concedes should be treated as income. Doing so, her total income in $10,897.00 in 2014. I find this to be her income in 2014.

2015

[55] The Applicant father argues that in the 2013/2014 and 2014/2015 school years the Respondent mother received $15,674.00 in grants and $46,480.00 in loans for a total of $62,154.00; however, she was only required to repay $18,250.00 of the $46,480.00 in loans. Therefore the Applicant argues that the total funds received without the requirement of repayment for the two school years is $43,904.00, resulting in $21,952.00 per year, grossed up minimally to $22,077.00. It is this income that the Applicant seeks to impute to the Respondent in each of 2014 and 2015.

[56] The Respondent mother accepts that the grants should be treated as income to her; however, she further argues that as she only learned in 2015 that only $18,250.00 was to be repaid, the forgiven portion of the loan (i.e. $28,230.00) should only be attributed to her as income in 2015.

[57] In my view the appropriate approach is to treat the forgiven loans as income in the years in which the debt was forgiven as until forgiveness the funds provided continue to carry the character of debt and the concomitant obligation to repay (see Baerg v. Baerg, [1997] Carswell Sask. 745 (S.C.Q.B.)).

[58] Accordingly the $28,230 that was forgiven in 2015 should be attributed as income to the Respondent in 2015. It needs to be grossed up as it appears not to have been included in the Respondent's 2015 Income Tax Return and was thus received by her on a tax-free basis. Therefore, total income for the Respondent in 2015 is her line 150 of $6,071.00 plus $31,079.00 ($28,230.00 grossed up as per DivorceMate) = $37,150.00.

2016

[59] Given the Respondent's recent income history summarized above, for the period January through March 31, 2016 I find the Respondent's income to be $32,000.00 and for the period commencing April 1, 2016 I find the Respondent's income to be $35,000.00 per year.

Child Support

[60] Based on the Applicant's income of $37,067 in 2014, he should have paid child support of $326 per month according to the Child Support Guidelines.

[61] Based on the Applicant's income of $28,879 in 2015, he should have paid child support of $236 per month according to the Child Support Guidelines.

[62] Based on the Applicant's income of $28,879 in 2016, he should have paid child support of $236 per month according to the Child Support Guidelines, through October 31, 2016 after which the consent order of October 13, 2016 provides for child support.

[63] I will comment further below regarding the propriety of retroactive implementation of these child support amounts.

Spousal Support

[64] This issue is governed by s.33 of the Family Law Act.

[65] The Respondent is a spouse within the meaning of s.29. The issue of entitlement was not argued before me and I thus assume same not to be disputed. The parties wished me to make findings as to income for support purposes, following which I would establish the quanta for the relevant periods.

2014

[66] For 2014, I have found the parties' incomes to be:

a. Applicant $37,067.00

b. Respondent $10,897.00

[67] The Spousal Support Advisory Guidelines suggest a range of monthly spousal support in 2014 as follows:

a. low $0.00

b. mid $0.00

c. high $128.00

[68] The high figure achieves a 50/50 division of Net Disposable Income. This result is not reasonable given that the Respondent is maintaining a two person household while the Applicant is maintaining a one person household. A spousal support payment of $250.00 per month results in Respondent receiving 52.87% NDI. This is a more reasonable result given the factors to consider set out in s.33 of the Family Law Act.

2015

[69] For 2015 I have found the parties' incomes to be:

a. Applicant $28,879.00

b. Respondent $37,150.00

[70] The Spousal Support Advisory Guidelines suggest no spousal support should be payable. This is reasonable as the division of NDI is 68.3% in the Respondent's favour.

[71] I am not asked to make an award of spousal support beyond December 31, 2015.

[72] As indicated above, entitlement was not an issue, only quantum. While the Spousal Support Advisory Guidelines do not determine the issue, both parties provided calculations based upon the Spousal Support Advisory Guidelines as the focus of my consideration. In this regard I am also mindful of the factors set out in s.33(9) of the Family Law Act. The Respondent's means have been addressed above. Her financial statement does not disclose significant assets.

[73] The parties cohabited for just over three years. They have a dependent four year old child. When the parties separated their child was less than two years of age. It was reasonable for the Respondent to assume child care responsibilities. When a parent does so, there is inevitably a sacrifice by that parent absenting him/herself from school or the workforce. Having said that, in her Answer the Respondent only claimed spousal support for a period of 18 months and her claim is therefore restricted in any event to a duration of 18 months.

[74] Keeping the above considerations in mind I find a reasonable amount of spousal support to be $250 per month commencing April 1, 2014 and ending December 31, 2014 and based on the income findings for 2015, but subject to my further reasons below regarding retroactivity.

Retroactivity

[75] This application was commenced February 26, 2014. The only claim advanced by the Applicant is for custody of the child. The Answer dated April 14, 2014 includes claims for child support, and spousal support "for a duration of 18 months". As outlined above, temporary support orders were made.

[76] I have no evidence of a claim for support prior to the Respondent's Answer dated April 14, 2014; therefore, a claim for retroactivity to April 1, 2014 might be considered reasonable and I make this assumption for this part of my analysis.

[77] My calculations indicate that in 2014 the Applicant paid a total of $1579 in child support (3 months at $379/mo and 1 month at $442/mo).

[78] In 2015 the Applicant paid a total of $5304 in child support (12 months at $442/mo).

[79] In 2016 the Applicant paid a total of $4420 in child support (10 months at $442/mo) prior to the consent order of October 13, 2016.

[80] The total child support paid or payable by the Applicant through October 31, 2016 is $11,903.

[81] Applying the quanta for child support found above and resulting from the incomes I have found for the Applicant in 2014, 2015 and 2016 I calculate the total payable would be $8,126. The difference between what the Applicant has paid and what I have found payable results in a possible overpayment of child support of $3,777 to the Respondent.

[82] Regarding spousal support, the Applicant has been paying $500 per month since December 1, 2014. I understand that the parties agreed in October, 2016 that there would be no spousal support obligation after December 31, 2015. From this I presume no spousal support would be required to be paid by the Applicant pursuant to the November 20, 2014 order for the months of November and December, 2016. Thus there would have been 1 payment of $500 in December, 2014, 12 payments in 2015 and 10 payments in 2016 for a total of $11,500 paid by the Applicant in spousal support.

[83] As set out above and based on my findings regarding the parties' incomes and spousal support, the Applicant should have been required to pay $250/mo commencing April 1, 2014 for the balance of that year, but nothing thereafter. The total entitlement is thus $2,250 to the Respondent. The difference between what she received and what I have determined she was entitled to is $9,250 ($11,500 - $2,250), representing an overpayment of spousal support.

[84] To summarize the Respondent has arguably been overpaid $3,777 in child support and $9,250 in spousal support.

[85] Section 34(1)(f) of the Family Law Act confers upon the Court the authority to make an order "requiring that support be paid in respect of any period before the date of the order…" No guidance is defined as to how this discretion is to be exercised. For such guidance I consider cases decided under the Divorce Act (which confers similar authority to make retroactive awards) and in particular the concept of hardship arising from a retroactive award (see S. (D.B.) v G. (S.R.) [2006] SCJ No. 37, 2006 SCC 37(SCC)). While there are appropriate distinctions to be drawn regarding of retroactivity of child versus spousal support orders, the concept of hardship is one of common application.

[86] In this case I am satisfied upon review of her financial statement and affidavit evidence that the Respondent's resources are minimal. Were I to make my support orders retroactive the result would be to further erode the Respondent's resources and thus hinder her ability to provide for the parties' child.

[87] While I am not bound by the findings of the Court on motions for temporary orders, the parties themselves have been guided by the support orders in this proceeding, the first of which was on consent and the second of which was not. They have structured their affairs accordingly while awaiting trial. While the September 22, 2014 consent order was "without prejudice" regarding the quantum of child support, it included a statement that "…the annual gross income of Mr. Martins is estimated to be $42,000…" There was no appeal of the order made on motion before Justice Stong which found the Applicant's income to be $49,159. On the evidence advanced at this trial I have concluded that the Applicant's income was $37,067 in 2014 and $28,879 in 2015.

[88] I note that at Settlement Conference on March 27, 2015 the Applicant was ordered to provide significant disclosure to the Respondent pertaining to his income. Clearly there was a significant issue regarding the Applicant's income which, by its nature, was difficult to define with accuracy.

[89] If I make an order for child or spousal support retroactively to 2014, 2015 and 2016 the effect will be to impose an obligation upon the Respondent to repay or credit to the Applicant overpayments of support occasioned by my determination of his lower incomes for support purposes than those relied upon in determining his temporary child support obligations.

[90] Were I to make my order retroactive such would result in a significant overpayment owing to the Applicant. The Respondent's financial circumstances do not suggest an ability to absorb the resulting obligation in my view. The hardship imposed by such an order would be onerous to the Respondent and would diminish her ability to provide for the parties' child.

[91] The foregoing analysis has been predicated upon a non-compensatory, needs and means assessment of spousal support. The basis of the claim in this regard was not addressed in argument before me. The evidence at trial also supports to some extent a claim for compensatory spousal support; therefore, alternatively, I also find that any compensatory basis for spousal support in favour of the Respondent is addressed by the overpayment of support by the Applicant.

[92] I conclude therefore that my support orders should not be retroactive in application.

Conclusion and Order

[93] For the foregoing reasons judgment to issue:

a. In light of the findings herein and the consent final order of October 13, 2016 regarding ongoing child support and sharing of s.7 expenses, claims for child support in 2014, 2015 and 2016 through October 31, 2016 are dismissed.

b. In light of the findings herein and the parties' agreement that no spousal support be payable after December 31, 2015, claim for spousal support is dismissed.

c. Until otherwise agreed in writing or ordered on Motion to Change, the parties shall determine the Applicant's income for support purposes by including in his Line 150 income 100% of his claimed Meals and Entertainment business expense, 30% of his claimed telephone business expense, 30% of his claimed vehicle business expense and 100% of his claimed business use of home expense, all to be grossed up by 26% for tax

d. If unable to agree on costs parties may provide written submissions to me through my assistant at Barrie (restricted to 3 pages excluding offers and bills of costs) as follows:

1. Applicant within 21 days

2. Respondent within 28 days

3. Applicant in reply, if desired, within 35 days.

Douglas J.

Released: December 2, 2016