CITATION: H.E. v. T.E. 2017 ONSC 7105
COURT FILE NO.: FS-14-0235
DATE: 2017-11-28
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
H. E.
R. Stead, for the Applicant
Applicant
- and -
T. E.
Self- Represented
Respondent
HEARD: October 23, 24, 25, 26 & 27, 2017 at Thunder Bay, Ontario
Mr. Justice W.D. Newton
Reasons For Judgment
Overview
[1] There are three issues in this action:
Whether the father is liable to pay child support for his son[^1] and, if so, the amount payable;
The amount payable by the father for spousal support; and
Equalization of net family property.
[2] The parties were married on December 7, 1990 and agree that the date of separation, for the purpose of calculating net family property, is January 1, 2012. They have two children: a daughter, aged 32 and living independently, and a son, who turned 18 this spring. The son is not in full time attendance at school.
[3] The father is a skilled trades person currently earning in excess of $100,000 per year. The mother, who has a grade 9 education only, was predominantly a “stay at home” mother who did waitressing and house cleaning. A few years ago she incorporated her cleaning business on the recommendation of her daughter who is a certified public accountant. One of the issues at trial was the value of this business and whether additional income should be imputed to the mother.
[4] In addition to the matrimonial home the parties jointly owned one rental property. In the year prior to separation the father acquired two additional rental properties which were registered in his name alone. Financing for the purchase of these properties was arranged through mortgages and/or lines of credit secured by the matrimonial home and the jointly owned rental property. Many, but not all, of the valuation issues were resolved by trial.
[5] The mother testified. Her brother, who works at times as a contractor in her cleaning business, also testified. The father testified. The daughter testified very briefly about some accounting issues.
[6] I will review the evidence, argument and law by issue.
Entitlement to Child Support
[7] The mother testified that their son did well in school – he was a straight A student – until about grade 7. At that time he developed chronic stomach pain which affected his school attendance. The mother testified that his stomach pain is related to stress and said that the father was the source of much of the stress because he often berated his son. In grade 9 their son missed about 140 days from school because of his stomach pain but was still able to complete all but one of his grade 9 credits. She said that the problems continued and he developed significant anxiety and depression, in part related to a close friend’s suicide attempt. While he has been enrolled each year at school he is not been able to attend most days and works through course booklets at home. When he reconciled with his father briefly this spring his father took him to the adult education centre to assist with obtaining credits. Now he only requires 7 credits to graduate from high school. As of the date of trial, he has not handed in any booklets for coursework. Although medical treatment has been sought, he refuses to take any medication for anxiety or depression. He is in counselling at present.
[8] The mother believes that their son is unable to live on his own and could not be self-supporting at present. She believes that counselling is helping.
[9] Her brother testified that the son is reclusive and despondent. He has not seen the son prepare any meals for himself other than making himself a sandwich.
[10] A medical report from a pediatrician from May 2015 indicated that the son, while denying depression, scored as mildly depressed on a depression questionnaire. The doctor concluded that he did not find any evidence of anxiety or depression. A follow up report in January 2016 noted that he tried attending school for grade 11 but went back to home schooling after 6 weeks. Again, he denied significant symptoms of anxiety or depression. The doctor noted that he was in counselling.
[11] His transcript reveals that he has 11.5 credits of the required 18. His performance ranges from one failure, to passes in the low 50’s to 5 courses at 80% and above.
[12] The father believes that the mother is enabling their son and not pushing him enough. Rather than pay child support to his wife, he would set his son up in an apartment in one of the buildings that he owns so he could live independently. The father attempted to pay child support directly to his son in the past.
Positions of the Parties
[13] The mother argues that their son is incapable of supporting himself at present because of his emotional/mental state and lack of education. She argues that he will improve with time.
[14] The father argues that his son is not actively pursuing education and that therefore his obligation to support should end. He points to the lack of medical information to support a claim based on disability.
The Law
[15] Under the Divorce Act, R.S.C. 1985, s. 2(1), “child of the marriage” includes a child who “is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from their charge or to obtain the necessaries of life” [Emphasis added.]
[16] The key consideration is whether an adult child is unable to withdraw from the parents’ charge or unable to obtain the necessaries of life thus remaining dependent.
[17] This is a fact focused determination. In Fallis v. Garcia, 2008 CanLII 25048 (ON SC) Mossip J. said this in a not too dissimilar case:
[24] I find that Ryan is still a dependent child. Clearly he is struggling, and these parents are fortunate he has not given up and that he keeps trying to finish his school. He should be supported in all those efforts, not challenged further by being considered financially independent. He is doing the best he can given his problems; he cannot support himself, and both parents are obliged to support him. I do not find it is necessary, nor appropriate for Ryan to become any further involved in his parents’ conflict by being required to produce a medical report as to his problems. I am satisfied on the evidence in the mother’s affidavit that Ryan has genuine emotional difficulties which have affected his ability to attend school on a full-time basis. I am further satisfied that his difficulties arise to a large degree from the continued conflict between the parents.
[25] As Justice McCartney in Eyjolfson v. Eyjolfson, 1997 Carswell Ont. 1754, Ontario Court of Justice, General Division, wrote at paragraph 7, in considering support for an 18 year old girl who was in school sporadically and taking correspondence courses;
“Time will tell whether she is successful or not, but at this point in time, she is clearly a person who is unable, due to her age, lack of training and education, and medical disorders from withdrawing from her parents’ charge. She is furthermore unable to obtain the necessaries of life without the assistance of her parents”.
I find this passage applies equally to the circumstances Ryan is in and I find he is still dependent on both of his parents for his needs.
[18] The father was able to point to many decisions in which the lack of full-time school attendance was determinative.
Analysis and Decision
[19] I agree with the father that medical evidence does not support disability. In my opinion, that is not the end of the inquiry. Key to the inquiry is whether I am satisfied, on the evidence, that the son can withdraw from parental charge and support himself.
[20] I take the father’s position that he would provide an apartment for his son as confirmation that he does not believe that his son can be self-supporting. I find that this is a case like Fallis v. Garcia and that both parents are obliged to continue to support him. I agree with the father’s assertion that, to some extent, the mother is enabling the son’s behaviour. I also conclude, however, that the parental strife is not helping anyone. I strongly recommend that counselling for the son continue. At the present time I conclude that child support is still warranted. That is not to say that the situation will not change and the parents are encouraged to take whatever steps they can to assist their son in completing his education.
Father’s Income
[21] The father’s income is a function of his employment income, less union dues paid[^2] and profits or losses from his rental properties.
[22] The following chart summarizes his reported income from 2012 to 2016:
| Taxation year | Employment Income | Union dues | Rental profit (loss) |
|---|---|---|---|
| 2012 | 105,743.17 | 1,021.78 | 2,317.24 |
| 2013 | 105,203.96 | 1,186.20 | (4,767.31) |
| 2014 | 106,496.40 | 1,215.70 | (4,500.92) |
| 2015 | 109,444.96 | 1,244.81 | (9,503.92) |
| 2016 | 109,921.51 | 1,131.83 | (7,803.87) |
[23] The reported income for 2012 is not accurate since the notice of reassessment reports a higher income - $111,366. This was not explained but I assume that the change is on the basis of disallowed rental deductions.
[24] The father’s income fluctuates slightly based on overtime hours worked. He testified that he lost some time from work because of anxiety and a panic attack in 2016 and received disability benefits. The rental income fluctuated as a result of a number of factors. At times, some of the units were not fully occupied. The father has reserved one unit as his office. Early on, he kept a unit vacant in case he needed it for his own use. Other expenses relate to routine maintenance and improvements. Some of the improvements are discretionary and made to increase profits in the future and increase the value of the property.
Positions of the Parties
[25] The father argues that it is reasonable to fix his income at $102,000 annually because his income may fluctuate and because of his losses on the apartment buildings. The mother argues that any of the decisions regarding the apartment buildings are in the father’s control and that total income should include a modest allowance for profit from the apartment buildings.
Analysis and Decision
[26] Retroactive child support is sought to October 3, 2014, the date of the application. The chart above shows steady and slightly increasing employment income for the last five years. I agree with the mother’s argument that some of the apartment renovation expenses are directed to increase profits in the future and increase the value of the property. In these circumstances, I conclude that it is appropriate to impute rental income of $2,500 a year to the father. This was the profit he reported in the year of separation.
[27] Therefore, I find the father’s income for 2014 to be $107,780.70, for 2015 to be $110,700 and for 2016 and going forward $111,289.60. The child support payable for 2014 is $941 monthly, for 2015, $963 monthly and for 2016, $968 monthly. The child support is payable on the first day of each month. The parties are to exchange tax returns and notices of assessment by June 1 of each year and agree, if possible, on child support payable.
Spousal Support
Entitlement
[28] The parties were married on December 7, 1990. They started living together earlier but the date is disputed – it is as early as 1982 or as late as January 1, 1984. The agreed separation date is January 1, 2012 although they lived together for a period of time after that.
[29] For the most part, the mother took on the work of looking after the household and raising the children while the father was the primary income earner. The father acknowledges his obligation to pay spousal support but disputes the duration and quantum arguing that the mother is capable of earning more income.
Mother’s Income
[30] With her limited education, grade 9, the only employment the mother has had has been waitressing or cleaning. She owns her own cleaning business which, on her daughter’s recommendation, she incorporated. Her daughter does the mother’s personal and business taxes and bookkeeping. The business cleans homes primarily but has had commercial clients. The business lost its major commercial client in 2016 because the daughter worked there and was wrongfully dismissed. Shortly after the dismissal, the cleaning contract was tendered and the mother’s company was not successful. At present, the business has one commercial client every two weeks and six residential customers. Depending on need, the company employs the mother and her brother. In the past, there has been another employee. Most payments are by cheque, the rest by cash. Since sometime in 2013 the mother has received spousal support of $2,000 monthly.
[31] The following chart summarizes her employment income, rental income and revenue and profit from the business:
| Taxation year | Employment income | Rental income | Business revenue[^3] | Business profit |
|---|---|---|---|---|
| 2102 | 5,272.00 | 894.00 | 13,719.00 | 428.44 |
| 2013 | 4,988.00 | (520.72)[^4] | 11,605.00 | 639.12 |
| 2014 | 6,819.10 | 19,691.79 | 3,708.08 | |
| 2015 | 11,369.47 | 32,534.00 | 5,749.75 | |
| 2016 | 16,057.00 | 27,190.92 | (3,559.47) |
[32] Her brother testified and was cross-examined about his earnings. The daughter testified about how certain entries were recorded and confirmed that any taxable benefits were properly reported.
Positions of the Parties
[33] The father argues that the mother is underemployed and that income should be imputed to her in the amount of $24,000 annually. The mother argues that her income is highly variable and the best measure is her 2016 reported income of $16,000.
[34] The father also asks that spousal support terminate at 10 ½ years post separation or when he turns 64. The mother argues that, given the duration of the marriage, spousal support should be subject to a material change in circumstances only.
Analysis and Decision
[35] I agree that income should be imputed to the mother. I find that she has been underemployed. No doubt she is concerned about her son but both she and her son must do more to move forward. I conclude that it is reasonable to impute income to her of $20,000 annually.
[36] I agree that it is not appropriate to limit support but that support can be varied based on a material change in circumstances.
[37] The Spousal Support Advisory Guidelines, based on the father’s annual income as determined by me (see paragraph 27) project monthly spousal support from $1,970 at the low-end to $2,700 over the three years from 2014 to 2016. Given the circumstance of the parties I find that the midpoint is appropriate and that the monthly spousal support payable for 2014 is $2,267, for 2015 is $2,362 and for 2016 and going forward is $2,384. The spousal support is payable on the first day of each month.
Net Family Property
[38] Left for determination at date of separation are the value of the following assets: household goods and furniture of each, the amount of cash in the father’s safe and the value of the mother’s cleaning business. Rental expense debt claimed by the father is also disputed.
[39] Two date of marriage valuations are also disputed: the value of the father’s pension and the value of certain company shares.
[40] The difference between values claimed for household goods and furniture is not significant. Based on the evidence I accept the mother’s valuations at $5,000 for her property and $2,000 for the father’s property.
[41] The evidence with respect to cash on deposit in the father’s safe or security box is less than ideal. The mother’s evidence is that she found $12,000 in cash in April 2013. The father’s position is that there was $5,000 in cash on the valuation date. In the absence of any other information I accept the father’s evidence.
[42] The father claims that the mother’s cleaning business has a value of $24,000 based on an income multiplier. No expert evidence was tendered. The mother values the business at $3,000. Frankly, I am surprised that this business would have any value. It consists of some vacuum cleaners and its customers. I cannot believe that there is any realistic value to this business but I accept the mother’s valuation at $3,000.
[43] With respect to debts I am not satisfied that the evidence supports a deduction by the father for rental expense nor the adjustment for any taxes on rental property.
[44] The pension valuation as at the date of marriage is not a significant issue. There is a difference of about $4,000. The father places a value of his pension at $6,792 based on a report. The mother takes the position that the pension, as at the date of marriage has a value equal only to the amounts deposited which equal $2,295.11. The pension evaluator did not testify. In the absence of any other evidence I determine that the pension value as of the date of marriage was $2,295.11.
[45] I accept the value of the shares at $3,519.50.
[46] Based on my findings, the net family property calculations are as follows:
| Mother | Father | |
|---|---|---|
| 1. Value of property on date of separation | 271,021.73 | 942,116.11 |
| 2. Less debts and liabilities on date of separation | 51,774.04 | 467,828.49 |
| 3. Less value of property owned on date of marriage | 2,400.00 | 48,109.61 |
| 4. Less excluded property | 13,000.00 | |
| 5. Totals | 216,847.69 | 413,178.01 |
| 6. Less value of mother’s property | 216,847.69 | |
| 7. Total | 196,330.32 | |
| 8. Equalization | 98,165.16 | 98,165.16 |
[47] Both parties proposed various “swaps” of property to carry out equalization. The mother sought both the matrimonial home and the jointly owned rental property. The father sought partition and sale of the two properties or, alternatively, that each party receive one property.
[48] According to the agreed Comparison of Net Family Property Statements, the matrimonial home has debt of approximately $91,500 relating to acquisition and renovation of the jointly owned rental property. The jointly owned rental property was encumbered by about $87,000 of debt to acquire the two non-jointly owned rental properties.
[49] In a proceeding for equalization the court, under s. 9 of the Family Law Act, R.S.0. 1990, c. F.3, has broad powers to satisfy the obligation for equalization including ordering the transfer or vesting of any property to one spouse and ordering that property be partitioned or sold.
[50] I would be disinclined to order any “swap” of property to carry out equalization but for the fact that I am of the opinion that it would be in the best interests of the son that disruptions be avoided to facilitate the completion of his studies and put the mother and son on a path to self-sufficiency. Accordingly, in the circumstances, I direct that the mother receive title to the matrimonial home. The debt on the matrimonial home for the rental property is to be discharged upon the sale of the jointly owned rental property which I direct to be sold. Upon transfer the mother will owe to the father $26,834.84 which is the difference between her equalization payment and the agreed value of the father’s half interest in the matrimonial home of $125,000. This sum will be payable by her within 60 days of her title in the matrimonial home becoming free of the encumbrances relating to the jointly owned rental property. This time is to allow her to obtain financing. Failing payment to the father within 60, days the property shall be sold.
[51] For clarity, I direct the following to give effect to equalization:
(a) title to the matrimonial home shall vest in the mother;
(b) the jointly owned rental property shall be sold and the debts on the matrimonial home are to be discharged from the proceeds with any surplus belonging to the father; and
(c) within 60 days of the discharge of the debts on the matrimonial home, the mother shall pay to the father the sum of $26,834.84.
Additional Issues
[52] Given my order with respect to spousal support I am not ordering that the father maintain health benefit coverage for the mother but do order that he provide benefits for his son as long as the son qualifies as a dependent.
[53] With respect to life insurance to secure the father’s support obligations I direct that the father maintain a life insurance policy in the amount of $200,000 as long as he is obligated to pay child or spousal support. The mother shall be the revocable beneficiary of that policy.
[54] If the parties cannot agree on support arrears they may contact the trial coordinator to re-attend before me.
[55] Finally, on filing of the marriage certificate and a draft Divorce Order, I will sign the Divorce Order.
Costs
[56] If costs are sought, the party seeking costs shall deliver its costs submissions limited to a maximum of three pages plus a bill of costs plus any offers and authorities within 20 days of the release of this decision. Thereafter, the responding party may file its costs submissions within 10 days. If no costs submissions are received within 20 days then costs shall be deemed settled.
“Original signed by”____
The Hon. Mr. Justice W.D. Newton
Released: November 28, 2017
CITATION: H.E. v. T.E. 2017 ONSC 7105
COURT FILE NO.: FS-14-0235
DATE: 2017-11-28
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
H.E.
Applicant
- and –
T. E.
Respondent
REASONS FOR JUDGMENT
Newton J.
Released: November 28, 2017
/lvp
[^1]: In this decision I will use generic descriptors to the extent possible so that the privacy of the parties, their children and their families are respected.
[^2]: Deductible expense – Schedule III s.1(g) Federal Child Support Guidelines
[^3]: The business has a September 30 year-end.
[^4]: Loss shared with husband. No explanation why additional losses or profits on the jointly owned rental property were not shared after 2013 although from a tax perspective, if permissible, it would be advantageous for the father to claim the losses.