OSHAWA COURT FILE NO.: FC-08-1634-0001
DATE: 20180309
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
JOHN PART
Applicant
– and –
NATASCHA PART
Respondent
Unrepresented
Gail McCrae
HEARD: January 8, 9, 10, 2018
REASONS FOR DECISION
WOODLEY J.:
Relief Sought by Motion to Change
[1] The Applicant John Part (“John”) brings a motion to change the final Order of Justice A. Rowsell dated May 25, 2011, and seeks to immediately terminate child support for the support of his two children ages 11 and 13, and to set child support arrears at $0.
[2] The Respondent Natascha Part (“Natascha”) by her Response seeks that the Applicant pay child support for the children adjusted to reflect the parties’ actual incomes retroactive to May 25, 2011 and that ongoing child support be at an attributed amount based on income imputed by the court.
Facts
Background
[3] John was born on June 28, 1966, and is currently 51 years of age. Natascha was born on June 5, 1983, and is currently 34 years of age.
[4] John and Natascha were married on December 21, 2004, separated in July of 2008, and divorced on August 8, 2011.
[5] John and Natascha share two children born of the relationship, being Damian, born January 22, 2004, and Grace, born March 26, 2006.
[6] John is a self-employed professional sportsman, and more particularly a professional dart player, dart commentator, and spokesman. John’s income varies significantly depending on his skill and success and corresponding sponsorships.
[7] At the date of separation to the date of the final Order, Natascha was unemployed. Natascha is now trained as a medical office assistant and works full time as a support worker for a local nursing home earning minimum wage.
Previous Proceedings Commenced in 2008
[8] The original application and answer between the parties was issued in 2008. Each of the parties were represented by counsel throughout until approximately 2011. Natascha’s current counsel is the same counsel that represented her in the 2008 proceedings.
[9] During the course of the original 2008 proceedings, the parties exchanged financial documents and reached an interim without prejudice consent Order for child and spousal support dated January 7, 2009. By the terms of this interim Order, John’s spousal and child support obligations were based on his 2007 income of $96,919.00, resulting in spousal and child support obligations of $3,099.00 per month.
[10] On April 10, 2010, John brought a motion to change the interim January 7, 2009 Order seeking a reduction in spousal and child support, and Natascha brought a motion for retroactive child and spousal support. Both motions were dismissed by Justice Sosna and the temporary Order of January 7, 2009 continued with an additional temporary Order for joint custody of the children.
[11] On March 16, 2011, the trial date was set for the week of May 16, 2011.
[12] On March 23, 2011, Natascha advised her counsel that she would be representing herself in the proceedings.
[13] Sometime prior to April 13, 2011, John and Natascha entered into final Minutes of Settlement, which resolved all matters between them, including child and spousal support.
[14] On May 11, 2011, Natascha’s counsel was removed as solicitor of record.
[15] On May 25, 2011, John and Natascha obtained a final consent order from Justice Rowsell in accordance with the Minutes of Settlement.
Final Order Dated May 25, 2011
[16] The final consent Order of Justice Rowsell, dated May 25, 2011, provided for spousal and child support as follows:
a. John was to pay Natascha spousal support of $680.00 per month commencing May 25, 2011 to July 1, 2013, at which time spousal support terminated forever;
b. John was to pay child support of $680.00 per month commencing May 25, 2011 to July 1, 2013, based on John’s income set at $45,000.00, and Natascha’s income set at $0.00; and
c. Commencing July 1, 2013, John’s income continued to be set at $45,000.00 and Natascha’s income was set at $20,000.00, resulting in set off child support of $3709.00 per month on an ongoing basis.
[17] The parties obtained a Divorce Order on consent on July 8, 2011.
Events Following Final Order
[18] Natascha re-married in or about 2011 or 2012, and in or about 2012, had a third child named Kaden.
[19] John paid spousal support pursuant to the consent final Order up to and including July 1, 2013.
[20] John paid child support pursuant to the consent final Order to March 2015.
Motion to Change, September 22, 2016
[21] On September 22, 2016, John issued the Motion to Change seeking to terminate child support immediately and set arrears at $0.00 claiming the following change in circumstances had taken place: “Undue hardship due to a drastic change in income (loss of sponsorship equaling $38,730.00 per year) and very large credit card debts (over $100,000) due to professional losses. Also, the respondent is working full time and to date has collected 100% of all child benefits from the government, despite only having 50% custody.”
[22] On November 24, 2016, Natascha filed her Response seeing a retroactive adjustment in child support to May 25, 2011, and ongoing child support at an attributed amount, claiming the following change in circumstances had taken place: “The Applicant father’s income increased significantly once the child support Order was signed. I am asking for a retroactive adjustment in child support. I believe that the Applicant manipulated his income prior to the first court order, and is again attempting to portray an inaccurate financial picture. After that existing order, his income increased, and I believe that if he is able to reduce the current order, his income will once again increase. He never wanted to pay support based on his true income.”
[23] In July of 2017, John refinanced his home and paid Natascha the sum of $6,600.00 on account of child support arrears to July 31, 2017.
[24] No further payment has been made and child support arrears are owed from August 1, 2017 to date at $372.00 per month pursuant to the May 25, 2011 Order.
Disclosure Provided by the Parties
[25] In the course of the current Motion to Change proceedings, John was subject to questioning and provided extensive disclosure and documentation to verify his income and expenses throughout the period of 2011 to date.
[26] More particularly, John provided the following disclosure: (i) income tax returns and notices of assessment (for both Canada and the U.K.) from 2011 to 2016; (ii) banking records for all bank accounts for 2011 to date; (iii) credit card statements for all credit cards for 2011 to date; (iv) Financial Statements, updated as required; and (v) any other documents requested by Natascha’s counsel.
[27] All disclosure provided by John was filed by Natascha’s counsel at trial.
[28] At trial, John testified that his net income from the date of the 2011 Order to date was as follows:
i. 2011: $125,156.00;
ii. 2012: $66,445.36;
iii. 2013: $77,453.91;
iv. 2014: $34,150.36;
v. 2015: $35,638.16;
vi. 2016: $18,962.91; and
vii. 2017: $35,208.00 (including $16,248.00 in Canada Child Tax Benefit)
[29] Natascha’s counsel argued that the net income did not reflect John’s income for child support purposes and cross-examined John extensively on the deductions claimed on his tax returns.
[30] Natascha’s counsel argued that insufficient evidence was filed to allow the court to determine whether John was entitled to rely upon the net income as opposed to the gross income reported. More particularly, counsel argued that John had not filed any of his receipts which evidenced his deductions.
[31] John testified that he satisfied each and every request for disclosure and filed all of his bank statements, credit card statements, and tax returns filed in both Canada and the U.K. for the period of 2011 to date. John testified that there was no request made for receipts during the proceedings, at questioning, or at any time prior to the trial.
[32] John argued that Natascha’s counsel was attempting to “ambush” him at trial.
[33] Natascha provided very limited disclosure and documentation to verify her income and expenses.
[34] Although Natascha provided a copy of her income tax returns and some notices of assessment from 2011 to 2016, the returns failed to list relevant information including spousal support paid by John.
[35] Natascha’s net income as reflected by her ITRs from the date of the 2011 Order to date is as follows:
i. 2011: $9,360.00;
ii. 2012: $300.00;
iii. 2013: $6,265.00;
iv. 2014: $2,207.00;
v. 2015: $9,740.00;
vi. 2016: $25,917.00; and
vii. 2017: $23,687.10.
[36] The difficulty that I have in accepting Natascha’s income as reported is as follows:
i. from 2011 to July 2013 Natascha received spousal support from John which does not appear to be reported on her returns;
ii. in 2017 Natascha received a lump sum payment of approximately $3,000 and monthly payments totaling approximately $3,582.00 which she did not report as received on her latest financial statement;
iii. Natascha separated from her second husband in or about 2015 but did not advise whether she received spousal support following separation; and
iv. Natascha provided no banking records or credit card statements prior to April 1, 2016.
[37] As noted, the parties entered into Minutes of Settlement, which culminated in the May 25, 2011 final order of Justice Rowsell. Although neither party was represented at the date of the execution of the Minutes, both parties had been represented by counsel for several years prior to the execution of Minutes.
[38] John, despite having commenced the application, at the date of trial sought to continue the final Order dated May 25, 2011, without variation.
[39] Natascha, at the date of trial, sought a retroactive adjustment back to the May 25, 2011 Order, and sought that ongoing child support be based on an attributed amount, taking into account business expenses deducted from John’s net income.
Issues
[40] The issues are as follows:
a. Has there been a change in circumstance sufficient to warrant the Motion to Change or the relief sought by the Response?
b. If child support is to be adjusted, from what date is the adjustment to commence?
c. What is the appropriate income to be attributed to each of the parties for set off child support for the retroactive period and ongoing? What are the arrears owed to date and what is the ongoing child support obligation owed by the Applicant?
The Law
Ability to Vary
[41] Jurisdiction to very an existing support order is conferred by s. 5 of the Divorce Act. Section 25.1 authorizes the recalculation of child support Orders under the Federal Child Support Guidelines. Section 14 of the FCSG defines the circumstances that constitute a change of circumstances that give rise to a variation order in respect of a child support order.
[42] Section 15(2) of the FCSG provides that where both spouses agree in writing on the annual income of a spouse the Court may consider that amount to be the spouse’s income for the purposes of the Guidelines if the Court thinks that amount is reasonable having regard to the income information under section 21 of the Guidelines.
Availability of Retroactive Adjustment – “D.B.S.”
[43] Retroactive awards of support can impair the delicate balance between certainty and flexibility. As situations evolve, fairness demands that obligations change to meet them. Yet, when obligations appear to be settled, fairness demands that they not be gratuitously disrupted. However, retroactive awards may be appropriate where the payor parent chose to bring that unpredictability upon himself.
[44] The Supreme Court of Canada determined that the following factors should be considered before awarding retroactive child support (S.(D.B.) v. G. (S.R.); W. (L.J.) v. R. (T.A.); Henry v. Henry; Hiemstra v. Hiemstra, 2006 SCC 37, [2006] S.C.J. No. 37 (S.C.C.) (commonly referred to as “D.B.S.”):
i. Reasonable Excuse for why support was not sought earlier – Delay is not presumptively justifiable. A reasonable excuse may exist where the recipient lacked the means to bring an application or was given inadequate legal advice. However, a recipient parent will generally lack a reasonable excuse where she knew higher child support payments were warranted but decided arbitrarily not to apply. Unreasonable delay by the recipient parent does not eliminate the payor’s obligation but is a factor to consider in deciding whether a court should exercise its discretion in ordering a retroactive award. This factor gives judges the opportunity to examine the balance between the payor’s interest in certainty and to determine the most appropriate course of action on the facts;
ii. Conduct of the Payor Parent – Blameworthy conduct should be taken into account in considering the propriety of a retroactive award. Courts should take an expansive view of what constitutes blameworthy conduct as anything that privileges the payor parent’s own interest over his children’s right to an appropriate amount of support. Whether a parent is engaging in blameworthy conduct is a subjective question. Further, a court should consider whether the conduct of the payor parent has had the effect of fulfilling his or her support obligation – such as where a payor parent contributes to expenses beyond his statutory obligations. Or – in the present case – where the payor parent continues to pay spousal support despite the fact that the former spouse remarried and had a further child with her new spouse during the period that spousal support was agreed to be paid. The court must have regard to all of the circumstances to determine whether the payor parent has contributed to his children’s support in a way that satisfied his obligation. In such a case, no retroactive child support should be ordered.
iii. Circumstances of the Child – Courts should consider the present circumstances of the child as well as past circumstances in determining whether such an award is justified including the child’s needs at the time the support should have been paid.
iv. Hardship Occasioned by Retroactive Award – Retroactive awards disrupt payor parents’ management of their financial affairs in ways that prospective awards do not. Courts should attempt to craft the retroactive award in a way that minimizes hardship.
[45] D.B.S. does not establish a deemed blameworthy conduct threshold where a parent fails to make appropriate and timely adjustments to his child support payments following receipt of an increased income. A failure to increase support automatically does not necessarily amount to blameworthy conduct. Blameworthy conduct is a subjective question of fact and law. (Rosenberg v. Gold, [2016] O.J. No. 3990 (Ont. C.A.)).
Imputation of Income
[46] Natascha seeks an order that I impute income to John well in excess of that claimed to have been earned by him or formerly agreed upon by the parties as reflected by the consent Order.
[47] Section 19 of the Child Support Guidelines explicitly permits a court to impute income based on a failure to provide disclosure while under a legal obligation to disclose.
[48] The self-employed have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See: Meade v. Meade 2002 CanLII 2806 (ON SC), 31 R.F.L. 5th 88 (SCJ).
[49] The onus rests upon the parent seeking to deduct expenses from income to provide meaningful supporting documentation in respect to those deductions, failing which an adverse inference may be drawn. See: Orser v. Grant, [2000] O.J. No. 1429 (S.C.J.).
Review and Analysis
[50] In the present case, John’s evidence was that he had been overpaying support pursuant to a court support order dated January 7, 2009, based on his previous World Championship earnings and this overpayment had caused him to become deeply indebted.
[51] The court record reflects that both John and Natascha were represented at the date of the previous support order (January 7, 2009) which was obtained on consent. Natascha’s current counsel represented her throughout the previous proceeding and was removed as counsel of record on May 11, 2011, just prior to the date of the final Order dated May 25, 2011.
[52] John testified that Natascha was aware of the fluctuating nature of his income and the fact that it was skill and success driven based on his performance as a dart player.
[53] John’s further evidence was that it was agreed that his income would be set at an amount to best represent his income earning ability over an extended period of time without the necessity of re-attending court to readjust his income on a regular basis depending on his relative success in the sport.
[54] John’s evidence with respect to payment of spousal support was that it was intended to allow Natascha to return to school to obtain training and education so that she could improve her employment prospects.
[55] Natascha’s evidence was that she finished school in July of 2011, obtained a placement and worked for a further three months. However, Natascha stated she was not able to obtain further employment as she was pregnant and then went on maternity leave.
[56] John was aware of Natascha’s pregnancy and aware of the fact that Natascha re-married in 2011 or 2012. Notwithstanding this knowledge John continued to pay spousal support as this was the agreement reached between the parties.
[57] I note that John’s disclosure was extensive and filled a banker’s box and were filed by the Respondent at trial in three very large binders. John was unrepresented throughout the proceeding and disclosed all requested documentation producing thousands of pages of documents.
[58] John’s testimony regarding his business, the recording of his expenses, the preparation and filing of his income tax returns by a tax professional in both Canada and the U.K., and the determination of his net income was credible and in my view also reliable.
[59] However, despite the fact that John may not have been aware that some of his business deductions, although acceptable to the tax authorities, may not be deductible for calculating income for child support purposes, this fact does not warrant an exception to the rule.
Ability to Vary
[60] As noted above, section 15(2) of the FCSG provides that where both spouses agree in writing on the annual income of a spouse the Court may consider that amount to be the spouse’s income for the purposes of the Guidelines if the Court thinks that amount is reasonable having regard to the income information under section 21 of the Guidelines.
[61] In the present case, the consent Order dated May 25, 2011, established the annual income of the spouses for the purpose of section 15(2) of the Guidelines. However, as evidenced by the filing of the Motion and Response, any agreement regarding annual income has ended. As such it is appropriate to recalculate support in accordance with sections 14 to 20 of the Guidelines.
Availability of Retroactive Adjustment – “D.B.S.”
[62] A failure to increase support automatically does not necessarily amount to blameworthy conduct. Blameworthy conduct is a subjective question of fact and law.
[63] John and Natascha entered into an agreement to base spousal and child support on certain facts known to each of them namely that John’s income will fluctuate and that Natascha needed a period to become self-sufficient.
[64] John did not seek to reduce or limit spousal support when Natascha re-married or during the period of her subsequent pregnancy and accompanying maternity leave.
[65] Natascha took no steps to vary support and waited over five years to seek an adjustment. At the date the adjustment was sought (2016) Natascha’s circumstances were entirely different from her circumstances in 2011 to 2015 when she was re-married and had a further child.
[66] Taking an expansive review, I find that the Applicant did not engage in blameworthy conduct sufficient to warrant a retroactive variation beyond three years.
[67] Although Natascha may otherwise be entitled to go back three years, it is not apparent that such an adjustment would benefit Natascha on the basis of the information provided. Further, based on my noted concerns with Natascha’s financial disclosure, there is insufficient information filed that would allow a fair determination on the merits.
[68] In any event, based upon all of the circumstances, I find a retroactive order would disrupt the delicate balance and result in undue hardship if an adjustment is granted beyond 2016.
Imputation of Income
[69] Despite John’s argument that he was “ambushed” at trial, not all legitimate business expenses qualify as being deductible for child support purposes.
[70] For 2016, John’s total gross income reported to CRA was $77,320. John claimed $59,090.87 for business expenses deductions and after further adjustments his reported line 150 income was $24,160.77.
[71] Having reviewed the return and the expenses claimed I find that the expenses claimed for travel (which include other items) totaling $38,472 to be reasonable deductions. Upon review of the varying additional expenses I find that $570.00 of the remaining expenses also qualify as reasonable deductions not otherwise captured by the travel expenses.
[72] For the purposes of calculating income for child support for 2016 I have determined that John’s 2016 income is $24,160.77 subject to a gross up of $20,050.00 for expenses unreasonably deducted (for child support purposes).
[73] The net result is that John’s 2016 income for child support purposes is $50,560.
[74] As for Natascha, her 2016 total income is as reported at $25,513.
[75] As the parties are engaged in shared parenting the set-off child support due by John to Natascha for 2016 is $372.00 per month.
[76] Each of the parties’ evidence is that their income for 2017 was similar to that reported for 2016. For the purposes of ongoing child support payable there is a finding that John’s 2017 income is $50,560.00 and Natascha’s 2017 income is $25,513.
Determination of Issues
[77] The final Order of May 25, 2011, is hereby adjusted in accordance with section 14 of the Federal Child Support Guidelines to provide that John Part’s income for 2016 is $50,560.00 and Natascha Part’s income for 2016 is $25,513.00 resulting in set off child support payable by John to Natascha in the amount of $372.00 per month.
[78] John shall pay child support arrears owed to Natascha from August 1, 2017 to date totaling $3,012.00, payable within 45 days of today’ date.
[79] John shall pay ongoing set off child support to Natascha commencing April 1, 2018, for the support of the children Damian Part, born January 22, 2004, and Grace Part, born March 26, 2006, in the amount of $381.00 per month based on John’s income of $50,560.00 and Natascha’s income of $25,513.
Costs
[80] Subject to any offers to settle exchanged between the parties that may affect costs, each party shall bear their own costs.
[81] In the event either party has made an offer affecting costs, such party shall file costs submissions limited to four pages in length, with any offer to settle and a bill of costs attached, within 20 days of today’s date.
[82] The response to any request for costs shall be limited to four pages in length, with any offer to settle and a bill of costs attached, served and filed within 35 days of today’s date.
[83] Any reply shall be limited to 2 pages and served within 40 days of today’s date.
Justice S. J. Woodley