Court File and Parties

Newmarket Court File No.: FC-16-50667-01 Date: 2017-02-24 Ontario Superior Court of Justice - Family Court

Between: Olga Alexandrova, Applicant – and – Boris Alexandrov, Respondent

Counsel: Brigitta Tseitlin, Counsel for the Applicant Richard Brown, Counsel for the Respondent

Heard: February 8, 2017

Ruling on Motions

Jarvis J.

Introduction

[1] This ruling deals with child support. The applicant (“the mother”) and the respondent (“the father”) are former spouses. They married on June 4, 2004 and were divorced on March 21, 2010. There is one child of their relationship, a son (“SA”) who was born in 2002.

Background

[2] The parties entered into a Separation Agreement on October 16, 2009. Pursuant to the terms of that Agreement relevant to the motion before the court, the parties agreed that the mother would have sole custody of SA, the father would have liberal and generous access and that he would pay child support. Paragraphs 5.1 to 5.3 and 5.7 to 5.9 of the Agreement provides as follows:

5. Child Support

5.1 In this section,

(a) “Table” and “income” mean “Table” and “income” as those terms are defined in s. 2(1) of the Guidelines,

(b) “special or extraordinary expenses” means “special or extraordinary expenses” as this phrase is defined s. 7(1) of the Guidelines,

(c) “child support” refers to the monthly amount upon which the parties have agreed and may include both Table support and special or extraordinary expenses.

5.2 For purposes of determining child support for [SA], Olga’s annual income is $14,066.16 and BORIS’ averaged income is $91,500.00 in accordance with his 2008 Income Tax Return.

5.3 BORIS will pay to OLGA as child support for [SA]:

a) the Table amount of $810 starting September 1, 2009, and on the first day of each month thereafter, until a terminating event under section 5.4 or a change under section 5.8.

b) Expenses for Montessori Private School;

c) Boris will pay all special extraordinary expenses. OLGA will keep BORIS fully informed of all matter regarding [SA’s] special or extraordinary expenses.

5.7 BORIS must provide OLGA with his Notice of Assessment/Reassessment and his Income Tax Return on or before June 30 of each year, starting June 30, 2009.

5.8 Until the support is adjusted by an amending agreement or court order, BORIS will continue to pay the child support in accordance with the Table amount of the Child Support Guidelines, but not less than $810.00, and his contribution to the children’s special and extraordinary expenses under the parties’ most recent written agreement or court order.

5.9 Either OLGA or BORIS may seek a change in child support if there is a material change in the condition, means, needs or other circumstances of OLGA, BORIS, or [SA] that would affect child support.

[3] In April 2016 the mother filed the Agreement with this court. Sections 35(1) and 35(2) of the Family Law Act, R.S.O. 1990 c. F. 3 (“the Act”) permit the filing of a domestic contract such as a separation agreement with the court, and for the enforcement or variation of a contractual provision for support contained in it as if that provision were an Order of the court. Section 37 of the Act deals with variation of a filed agreement. These are the provisions relevant to this motion,

Application for variation

37. (1) An application to the court for variation of an order made or confirmed under this Part may be made by,

(a) a dependant or respondent named in the order;

(b) a parent of a dependant referred to in clause (a);

Powers of court: child support

(2.1) In the case of an order for support of a child, if the court is satisfied that there has been a change in circumstances within the meaning of the child support guidelines or that evidence not available on the previous hearing has become available, the court may,

(a) discharge, vary or suspend a term of the order, prospectively or retroactively;

(b) relieve the respondent from the payment of part or all of the arrears or any interest due on them; and

(c) make any other order for the support of a child that the court could make on an application under section 33. 1997, c. 20, s. 6.

Application of child support guidelines

(2.2) A court making an order under subsection (2.1) shall do so in accordance with the child support guidelines. 1997, c. 20, s. 6.

[4] The mother started a Motion to Change the child support provisions of the parties’ Agreement in April 2016, around the time that she filed it with the court. She asked that the amount of support for SA be varied starting January 1, 2013 according to the father's income and the Child Support Guidelines (“the Guidelines”). She also alleged that, contrary to paragraph 5.7 of their Agreement, the father had failed to annually provide her copies of his Income Tax Returns and Notices of Assessment.

[5] The father claimed that the mother was earning substantially more than she earned when their Agreement was signed and that the mother should be ordered to contribute at least one-half of their son’s section 7 expenses.

[6] After a case conference was held, the mother brought this motion. It was originally returnable on October 5, 2016 but due to the father's counsel being unavailable, the motion was adjourned on the parties’ consent that pending the outcome of this motion the father would maintain SA's private school tuition costs. The continuing obligation to pay those costs, their affordability by the father and whether the mother should contribute to their payment are disputed.

[7] The mother contends that there should be attributed to the father a Guidelines income of $116,500 and that he should continue to pay all of SA's section 7 expense and activity costs. The father says that he is willing to pay the $810 monthly child support set out in the parties’ Agreement but only if the mother would be prepared to proportionately share SA's private school expenses or enrol him in the public or Catholic school system.

Facts

[8] The facts relevant to this motion are the following:

(a) when the Separation Agreement was signed the mother's annual income was $14,066.16. Her assessed income for 2013 was $73,803 and in 2014 it was $77,947. Her financial statement sworn August 2, 2016 disclosed that she earned $79,986.80 in 2015 and would likely earn $80,028 in 2016. No updated financial statement or affidavit as required by Family Law Rule 13(12) was filed by the mother for this motion;

(b) when the Agreement was signed SA was attending Grade 4 at the Town Centre Private High School. Exhibit “B” to the father’s affidavit sworn January 12, 2017 is a letter from the principal of the school. That letter explained that the high school was one of three divisions of the Town Centre Group Inc., the other two comprising a Montessori pre-school for children aged 2 to 6 years and a private elementary school for Grades 1 to 8. SA was registered in Grade 10 of the high school. That letter also stated that the academic courses provided did not follow the Montessori curriculum or pedagogy and that the teachers were not Montessori trained. All three school divisions occupied the same premises;

(c) the term “Montessori Private School” as found in paragraph 5.3(b) of the Agreement is not defined. The father did not dispute the mother’s evidence that SA had attended the Montessori pre-school since he was about 2½ years old but he asserted that the parties only intended that SA attend the school until the Montessori program ended (when SA was 6-8 years old). The mother disputed that was the parties’ intent. Regardless which parent’s evidence is to be preferred, the evidence is that the father never challenged his obligation to pay SA's private school costs until sometime in 2014 when he was experiencing financial difficulties. In late 2015 the father informed the mother that he would no longer contribute to SA's private school costs after the 2015/2016 school year. This is what prompted the mother to file with the court the parties’ Separation Agreement and start this Motion to Change;

(d) when the Agreement was signed SA's school expenses were between $500-$700 a month. The high school costs are about $1,530 a month now;

(e) when the father signed the Agreement his average annual income from self-employment was $91,500. He has declared bankruptcy in August 2008 shortly after the parties had separated. He had worked since then as an independent contractor providing research and development services in the Russian market, although what that actually involves was never made clear. He incorporated an Ontario numbered company to contract out his services;

(f) the father's Notices of Assessment for 2013 and 2014 disclosed line 150 income of $69,216 and $78,700 respectively. His financial statement sworn January 12, 2017 disclosed that he earned $122,760 in 2015 and $128,760 in 2016 of which $36,000 represented RRSP withdrawals in 2016;

(g) it was unclear from the father's evidence the extent to which the income acknowledged as being earned in 2015 and 2016 reflected pre-tax income in his corporation. No expert or other qualified third party evidence was tendered to help inform the court about the father's qualifying guideline income. Instead, the father delivered, and filed with the court, what could only be described as a two volume “disclosure dump” for which his counsel presented a fragmented summary and invited the court to parse to satisfy itself about the husband's income and overall financial circumstances;

(h) the father sold his residence in November 2016 for net sale proceeds of $620,840.26. He moved to Glasgow, Scotland. His financial statement indicated that he was earning nothing, was unemployed and had a net worth of $46,569.46. Neither that financial statement nor in his accompanying affidavit did the father reveal the whereabouts or disposition of the residential sale proceeds paid to him two months earlier.

Analysis

[9] There has clearly been a material change in the parties’ financial circumstances, although the father's circumstances are more opaque. The mother's income is almost 5 times higher than when the 2009 Separation Agreement was signed: the father's income is more problematic. It was $116,500 in 2015, or $88,282.40 averaged between 2011 to 2015. He says that he earns nothing now. The father claims that he has overpaid basic child support but he is nonetheless prepared to pay the $810 monthly set out in the parties’ Separation Agreement if there is a proportional sharing of SA’s private school costs. The father disputes whether the Separation Agreement requires, or even contemplated, that he pay private school expenses beyond SA’s primary school but his actions suggest otherwise.

[10] There is, quite simply, no reliable evidentiary narrative that assists the court in determining the father's qualifying support income. That was his obligation. Instead he asks the court to wade through voluminous disclosure to choose any one of a number of competing, likely speculative, income scenarios. In Sharma v. Sunak, 2011 ONSC 7670, the McGee J. observed that when dealing with a self-employed party it would be the “uncommon case that will not require some kind of expert assistance to value income…”. There is none for this motion. Since the October 5, 2006 adjournment date of this motion, the father has had plenty of time to assemble a far more robust and coherent evidentiary response.

[11] It is not possible to fairly determine the father's qualifying income for the period 2013 to 2016. That is an issue best left for trial as will be whether the father has underpaid or overpaid child support during those years. This court is not prepared to vary the current monthly child support obligation of $810. Nowhere in his responding evidence has the father told the court why he has chosen to move to Scotland, how he was going to support his new wife and their child or what he has done with over $600,000 received in November 2016 from the sale of his residence.

[12] The parties’ Separation Agreement provided the child support could be varied if there was a material change in circumstances. That was not linked to the parties’ spousal support release. The parties agreed on October 5, 2016 that pending the hearing and determination of this motion the father would continue to pay all of SA’s private school fees on a without prejudice basis. Based on the mother's income of $80,000 and the father's income of $91,500 the parties’ obligations are allocated the 47% (mother)/53% (father) effective October 1, 2016.

[13] The mother also maintains that the parties’ Separation Agreement requires the father to pay all of SA’s extracurricular activities. The Separation Agreement says no such thing. The reference in it is to “special or extraordinary expenses” as defined in section 7(1) of the Guidelines. The father has no obligation to contribute to those expenses not captured by the parties’ Separation Agreement or Guidelines.

Disposition

[14] This court orders:

(1) the father shall pay to the mother child support for SA born January 11, 2002 in the monthly amount of $810 from and after October 1, 2016;

(2) the parties shall share SA’s private school expenses from and after October 1, 2016 as follows:

(i) by the mother of 47%;

(ii) by the father 58%.

(3) for the purposes of this Order the mother's income is $80,000 and the father's income is $91,500;

(4) credit shall be given to the father for payments made on account of table and section 7 expense child support from and after October 1, 2016. No allowance shall be made in paragraph (2) above for any tax deductions that either party may be able to claim for SA’s private school costs;

(5) the provisions of (1) to (4) above are without prejudice to either party's claims at trial;

(6) neither party shall claim from the other a contribution for an expense for SA in addition to those set out the parties’ Separation Agreement without first obtaining the other parent's written consent;

(7) the settlement conference shall proceed on April 27, 2017 at 2:15 p.m. If the father cannot attend in person, he must comply with Family Law Rules 17(16) and (17). I am not seized;

(8) the parties shall comply with all Family Law Rules pertaining to settlement conferences, non-compliance with which may invite cost consequences.

[15] An SDO shall issue.

[16] There has been mixed success with respect to their motions. If the parties are unable to resolve its costs then each shall submit, no later than 15 days following the date of release of this Ruling, their submissions. Those shall be restricted to three double-spaced pages and may be accompanied by Offers to Settle (if any), Bills of Costs and authorities upon which the parties may rely. The submissions shall be filed in the Continuing Record.

Justice D.A. Jarvis Released: February 24, 2017