Court File and Parties
COURT FILE NO.: FC-05-450-02 DATE: 20170313 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: TRAVIS RAYMOND MANKLOW Applicant – and – CARLY LYNN SMITH Respondent
Counsel: B. Degoldie, Counsel for the Applicant G. Hayes, Counsel for the Respondent
HEARD: February 23, 2017
REASONS FOR JUDGMENT
Overview
1The applicant father has brought a motion to change the Final Order of McMillan J. dated January 21, 2014 to reduce the quantum of child support payable for his child, Tayton Raymond Smith-Manklow, born December 14, 2004. The respondent mother agrees that there has been a material change in circumstances since the making of the Final Order but asks that child support be increased.
Background
2The applicant and respondent had a four year common-law relationship and are the parents of Tayton, age 12. In 2005, Eberhard J. granted a Final Order that provided for joint decision-making regarding Tayton, allowed the respondent to move the child’s residence to Sault Ste. Marie, set the applicant’s access, and ordered table child support of $281 per month and a proportionate sharing of s. 7 expenses. Pursuant to the 2005 Final Order, the applicant was to provide the respondent with a copy of his income tax returns by no later than July 1 of each year. The applicant did not do so.
3As a result of the applicant’s failure to respond to the respondent’s requests for updated financial information, the respondent commenced a Motion to Change in April 2011. In the course of that proceeding, the applicant represented that he was earning $63,000 per year and interim child support was awarded based on that amount. Although the applicant consented to an order that he provide financial disclosure to the respondent, he failed to do so. Ultimately, the matter was dealt with on January 21, 2014 by way of an uncontested trial.
4At the uncontested trial, McMillan J. granted a Final Order, imputing income to the applicant in the amount of $85,000. The income was based on the respondent’s research into the amount an individual with the applicant’s education, skills, training and work experience could earn. McMillan J. ordered monthly child support in accordance with the Child Support Guidelines in the amount of $762 per month, sole custody of Tayton to the respondent, and a proportionate sharing of s. 7 expenses. He set the arrears of child support and s. 7 expenses and ordered costs payable by the applicant.
5The applicant commenced this Motion to Change on June 19, 2014. He subsequently paid the arrears of child support and s. 7 expenses and the costs that were awarded in the 2014 Final Order. He is currently up-to-date on his child support payments, although there are some arrears of s. 7 expenses.
6This Motion to Change proceeded through the various conferences. It was before me for hearing by way of a long motion. Both parties have asked the court to make a final order based on the affidavit evidence.
Issue to be Decided
7The parties agreed that the applicant has demonstrated a material change in circumstances since the making of the 2014 Final Order and that any revised award should be effective March 1, 2017. Therefore, the only issue for me to determine is on what income child support should be based on a go forward basis.
Positions of the Parties
8In the course of oral submissions, both parties took different positions from those set out in their written materials.
The Applicant’s Position
9The applicant accepts the correctness of the 2014 Final Order, but argued that his circumstances have since changed, warranting a decrease in the quantum of child support he should pay. He asserted that over the last twelve years, his average income has been approximately $46,000.
10Until recently, the applicant was self-employed with his father as a fifty percent partner in Kodiak Steel Building Inc. (Kodiak). In December 2016, the applicant’s father incorporated another steel-building company in the United States. In January 2017, Kodiak declared corporate bankruptcy. The applicant expects to secure employment with his father’s new company. He argued that he will be able to continue to earn the same income he earned in 2016 whether he is employed by his father or at another job. The applicant’s 2016 T4 and T5 slips from Kodiak show income totaling $57,973.
11The applicant’s position is that $57,973 is an appropriate income to impute to him commencing March 1, 2017. He seeks to have future proportionate payment of s. 7 expenses based on his imputed income of $57,973 and the respondent’s income of $35,000.
The Respondent’s Position
12The respondent’s position is that the applicant’s income is significantly higher than $85,000 and the applicant’s support obligation should increase. In the alternative, the respondent asks that the applicant’s support obligation remain the same. The respondent argued that Kodiak’s bankruptcy proceeding was commenced in an attempt to either reduce the applicant’s income or the appearance of his available income for support purposes. She asserted that the applicant continues to operate his business in both Canada and the US. The respondent argued that the applicant’s lifestyle, skill sets and experience are consistent with an income of well over $85,000.
Analysis
13In view of Kodiak’s bankruptcy and the uncertainty surrounding the applicant’s employment and income, income will have to be imputed to the applicant. To determine the amount of income to impute, I have considered the income available to the applicant to-date and what the applicant can expect to earn going forward.
14For the following reasons, I find that the evidence supports that in 2016 the applicant earned more than $57,973, the amount that he seeks to have imputed to him on a go forward basis:
(i) Although the applicant acknowledged doing roofing work to supplement his income while employed with his uncle's company after 2010, he did not address the respondent’s claim that the roofing jobs were done for cash. The respondent filed an affidavit from the applicant’s former brother-in-law, Mr. Gullett. Mr. Gullett deposed that over the years that he has known the applicant, the applicant told him that he had been doing roofing jobs for cash. The applicant replied to this and other allegations made by the respondent by deposing that they were "all false and irrelevant". The respondent’s assertion that the applicant has historically done roofing jobs for cash was an important assertion that should have been directly addressed by the applicant in his reply. The applicant’s failure to directly respond to this allegation leads me to accept this evidence, despite the fractured relationship between the applicant and Mr. Gullet. As a result, I accept that the applicant has historically received cash for roofing jobs. Although there is no evidence before me as to the amount of income that the applicant receives from cash jobs, I am satisfied that some monies should be imputed to him for these cash jobs.
(ii) The applicant argued that his income in 2016 was $57,973. He pointed to his T4 and T5 slips to support this number. However, in his affidavit sworn January 25, 2017 the applicant deposed that in 2016 he earned $62,840. I note that the figure of $57,973 fails to take into account any income that the applicant received from firefighting.
(iii) The applicant deposed in his February 17, 2017 affidavit that until 2014 he was working in employed positions. This assertion was to support his position that the court should rely on the income he reported to CRA. However, it was clear from the applicant’s earlier affidavit and exhibits filed that from 2008 until either 2010 or 2011 the applicant was a co-owner of Simcoe County Custom Roofing Inc. As the co-owner of companies at various times, the applicant has had control over the money he receives. For example, in mid-2011 the applicant received additional funds by way of dividend income that increased his Line 150 income from approximately $70,000 to $107,000. Although the applicant argued that some of that dividend income should have been attributed to earlier years, the exhibits filed do not support his position. In addition, as noted in Bohm v. Bohm, 2016 ABCA 406:
[23] For the purposes of establishing a payor’s income for Guideline purposes, courts routinely add to Line 150 income the value of personal benefits the payor spouse derived from deductions from income for tax purposes or expenses deducted from income of a related corporation. See generally Guidelines, section 16 and Schedule III and sections 17-20. Examples include personal use of a corporate vehicle; personal benefits associated with travel, entertainment and promotional expenses; and other non-arm’s length expenditures.
In 2015, the applicant claimed deductions of $23,464.15 from profit of $20,841.88. No submissions were made as to the amount of personal benefits that should have been added to the applicant’s 2015 Line 150 income. Nor is there information as to the quantum of deductions the applicant will claim for 2016.
As stated in Bohm at para. 25:
[25] The obligation to provide the detailed supporting information was on the appellant… The parent claiming business expense deductions bears the onus of demonstrating they are reasonable for the purposes of calculating Guideline income. If that parent does not provide adequate supporting documentation, the court is entitled to draw an adverse inference…
As a result, this is another basis on which it is clear that the applicant’s 2016 T4 and T5 slips fail to accurately set out the applicant’s income for child support purposes. Any personal benefits would increase the applicant’s income for support purposes.
(iv) Kodiak operated for the entire 2016 calendar year. Between September and December 2016, Kodiak earned a profit of at least $136,000 from one job. The applicant was a 50% shareholder at the time. This supports that his 2016 income for child support purposes was significantly higher than his claimed amount of $57,973 and likely well over $100,000.
(v) The applicant’s income tax returns shows that he and his wife have a combined income of just over $120,000. I accept the respondent’s submission that the applicant’s lifestyle is inconsistent with that income. On September 1, 2016 the applicant and his wife purchased a home that had been listed for $575,000. The home sits on almost 100 acres. The parcel register shows a transfer to the applicant and his wife in the amount of $440,000 and a mortgage in that same amount. The Facebook posts filed by the respondent do not support the applicant’s assertion in his affidavit that the property is a "modest farmhouse". The applicant’s wife seeks through Facebook postings to purchase farm equipment. The applicant did not directly dispute the respondent’s assertion that he and his wife had recently purchased two ponies and a snow machine.
(vi) I do not accept the applicant’s argument that CRA’s failure to challenge his income supports that the applicant’s tax filings accurately reflect his income.
(vii) The applicant has a history of minimizing his income and/or his ability to earn income in materials filed with the court. In particular:
(a) The applicant filed an affidavit in September 2014 in which he deposed that he was "unemployed". However, he was still employed part-time as a firefighter and his Linked In profile showed that Kodiak had been in operation for at least a month. I do not accept that the applicant’s reference in his affidavit to teaching firefighting was sufficient to alert the court to the fact that he was in fact in receipt of income. Rather, I find that the applicant was not forthcoming with the court.
(b) In 2011, the applicant represented to the court that his income was $63,000. However his line 150 income for 2011, which included employment income of $70,429, also included dividend income of $36,250, for a total line 150 income of $107,000.
15For the reasons set out above, I do not accept the applicant’s position that $57,973 should be imputed to him commencing March 1, 2017. I am satisfied that the applicant’s Line 150 income does not accurately reflect the funds available for child support. I also find that the applicant has earned and is capable of earning more than the $85,000 per year imputed to him in 2014.
16I have not considered Mr. Gullett’s income as determined for child support purposes in determining the amount to be imputed to the applicant. I have no evidence as to whether Mr. Gullett is the sole owner of his company and the retained earnings of Mr. Gullett’s company may bear no relationship to the retained earnings of the now bankrupt Kodiak.
17On a go forward basis, I consider that Kodiak is now bankrupt. The applicant will have to start afresh. He plans to continue working as a commissioned consultant in the steel building industry. His 2014 LinkedIn profile and “draft resume” support that he has significant experience in this field.
18I am satisfied that it is appropriate to consider the job postings filed by the respondent for a sales representative in the applicant’s industry to determine what an individual with the education, skills, training and work experience of the applicant could earn. The respondent's postings demonstrate that, at a minimum, the applicant could earn $80,000 in his first year, but is much more likely to earn $100,000, with the expectation that by his second year he could earn up to $125,000. These amounts have not been directly disputed by the applicant.
19I have considered all of the evidence, including the evidence that the applicant receives some income from cash roofing jobs and firefighting. I have considered the applicant’s lifestyle, his ability to earn income, extensive experience in his field and the job postings. I am satisfied that an appropriate income to impute to the applicant on a go forward basis is $100,000.
Conclusion
20This court orders that the Final Order of McMillan J. dated January 21, 2014 is varied as follows:
Commencing March 1, 2017 and thereafter on the first day of each month the applicant father shall pay child support to the respondent mother, for the benefit of the child, Tayton Raymond Smith-Manklow, born December 14, 2004, in the amount of $880 per month. This amount is based on an imputed income of $100,000 and the Child Support Guidelines.
Both parties shall exchange their tax returns and Notices of Assessment annually for the previous year on or before June 1st. If the applicant’s Line 150 income is shown to be more than $100,000, Child Table Support and Section 7 expenses shall then be adjusted according to the Guidelines, commencing on the next July 1st. Either party may send the other a consent to change the court order to effect this change and file it with the court. If the court order is not changed immediately, the change will be effective retroactively to the July 1 date when it should have been made. If there is a support recalculation service in effect at the time, the parties may use that process to adjust support.
Future payment of Section 7 expenses shall be based on an income of $35,000 for the respondent mother and an income of $100,000 for the applicant father. The parties shall share Section 7 special and extraordinary expenses on a proportionate basis.
The applicant father’s contribution to Tayton’s extracurricular activities shall continue to be capped at $1,500 per year, as per McMillan J.’s Order dated January 21, 2014.
For all future Section 7 special and extraordinary expenses, the respondent mother shall provide receipts to the applicant father via e-mail, and the applicant father shall pay his portion within seven days of receipt.
Tayton shall be placed on the health care benefits of the applicant father’s wife, Michelle Manklow, so long as it is available to Michelle Manklow, the applicant father and Tayton. Both parties shall complete whatever documentation is needed for Tayton to be registered on Michelle Manklow’s work health care benefits forthwith.
A Support Deduction Order shall issue.
Costs
21If the parties are unable to agree on costs, I will receive written submissions from the respondent mother by March 30, 2017, followed by responding submissions from the applicant father by April 14, 2017. Reply by the respondent mother, if any, shall be filed by April 21, 2017. Costs Submissions shall be no more than three pages in length, exclusive of any Costs Outline or Offers to Settle. If no submissions are received by April 14, 2017, the issue of costs will be deemed to have been settled as between the parties.
QUINLAN J.
Released: March 13, 2017