COURT FILE NO.: FS-17-176-00
DATE: 2018 05 08
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Ziaullah Khan Applicant / Appellant
AND:
Amal Talaoui Respondent / Respondent
BEFORE: Bloom, J.
COUNSEL: O. Chaudhry, for the Appellant
P. Steckley, for the Respondent
HEARD: April 23, 2018
E N D O R S E M E N T
I. INTRODUCTION
[1] The Appellant appeals from the judgement of Justice J.W. Bovard released March 22, 2017 as it relates to spousal support, child support, and s. 7 expenses. No formal order was taken out relating to the reasons of Justice Bovard. The Appellant also appeals from the costs ruling made by the trial judge on June 15, 2017; again no formal order was taken out.
[2] The trial took 14 days. A number of issues were addressed.
[3] The Appellant alleges three errors were made by the trial judge: (a) he erred in principle or in significantly misapprehending the Appellant’s evidence in failing to address the expenses related to the earning of rental income when imputing income to the Appellant; (b) he erred in principle in failing to apply s. 9 (b) and (c) of the Child Support Guidelines (Ontario); and (c) he erred in principle in applying a with child support formula for spousal support that did not take into account the custody and access arrangements he ordered.
[4] As noted, the Appellant also appeals the costs order made by the trial judge; he seeks leave to do so, if necessary.
[5] The parties went through two Islamic wedding ceremonies, but were never married under Canadian law.
II. GOVERNING PRINCIPLES
A. Standard of Review
[6] In Mason v. Mason, 2016 ONCA 725, 132 O.R. (3d) 641 (Ont.C.A.) at paras. 110 and 111 Justice Simmons for the Court stated:
[110] Because of the fact-based and discretionary nature of support awards, a trial judge's order for spousal support is entitled to significant deference on appeal. This deferential approach to support awards promotes finality in family law litigation and also recognizes the importance of the trial judge's role in seeing and hearing the parties and other witnesses testify. An appeal court is not entitled to overturn a spousal support order simply because it would have balanced the relevant factors differently or arrived at a different decision: Hickey v. Hickey, 1999 CanLII 691 (SCC), [1999] 2 S.C.R. 518, [1999] S.C.J. No. 9, at paras. 10-12.
[111] Nonetheless, an appeal court must intervene where the trial judge's reasons disclose an error in principle, a significant misapprehension of the evidence or if the award is clearly wrong: Hickey, at para. 11. [page665]
[7] These principles will guide me in my analysis of the issues before me other than costs.
B. Imputation of Income
[8] Also in Mason v. Mason, 2016 ONCA 725, 132 O.R. (3d) 641 (Ont.C.A.) at para. 119 Justice Simmons for the Court held that where, as in the case at bar, the trial judge employs the Spousal Support Advisory Guidelines (SSAGs) to determine the amount of spousal support, he or she must rely on the Guideline provisions to determine income or explain why they ought not to apply.
[9] Justice Simmons in Mason v. Mason, supra at paras. 48 to 60 also provided a comprehensive explanation of the relationship among the SSAGs and the income determination provisions of the federal and Ontario child support guidelines. She stated, in substance, that all three sets of provisions were materially the same as they relate to the issues before me:
C. Relevant provisions of the SSAGs
[48] The final version of the SSAGs was published in July 2008. As described in their executive summary, they were developed to bring more certainty and predictability to the determination of spousal support under the federal Divorce Act. However, ss. 3.2.3 and 5.1 note that, in practice, there is much overlap between federal and provincial/ territorial support laws. Section 5.1 states that, since the release of the draft proposal, the advisory guidelines have frequently been used in spousal support determinations under provincial legislation. The SSAGs have not been formally enacted by any level of government.
[49] Section 3.2.2 of the SSAGs makes it clear that whether there is entitlement to any support remains a threshold issue to be determined before the SSAGs guidelines concerning the amount of support apply. [page653]
[50] Chapter 6 of the SSAGs addresses income. Section 6.1 states: "[t]he starting point for the determination of income under the Spousal Support Advisory Guidelines is the definition of income under the Federal Child Support Guidelines".
[51] The commentary to s. 6.1 of the SSAGs notes that the Federal Child Support Guidelines, SOR/97-175 provide an expansive definition of income for child support purposes -- and one "that reflects and clarifies much of the pre- Guidelines law on income determination". The commentary also notes that "[p]rior to the release of the [SSAGs], most courts used the same definition of income for both child support and spousal support purposes and that practise has continued since January 2005".
[52] Section 9 of the SSAGs addresses using the ranges. Section 9.6 deals with property division and debts and states that:
Underpinning the Advisory Guidelines is a basic assumption that the parties have accumulated the typical family or matrimonial property for couples their age, incomes and obligations, and that their property is divided equally under matrimonial property laws. Significant departures from these assumptions may affect where support is fixed within the ranges for amount and duration.
Further, "[i]f the recipient receives a large amount of property, the low end of the range might be more appropriate".
D. Relevant provisions of the CSGs
[53] I begin by noting that, while the SSAGs refer to the Federal Child Support Guidelines, those guidelines and the CSGs are virtually identical. A comparison of the sections relevant to the issues on appeal in the two sets of guidelines reveals no material differences.7 Accordingly, for the purposes of this [page654] appeal, I will treat the two sets of guidelines as identical and, unless the context requires a specific reference, I will simply refer collectively to the Guidelines.
[54] Like the Federal Child Support Guidelines, the CSGs include provisions for determining the annual income of a spouse for child support purposes. The issues on appeal involve the interpretation and application of the income determination provisions of the CSGs, ss. 15 to 20. Section 20 addresses non-resident spouses and is not relevant to the issues on appeal. I will set out ss. 15 to 19 in full.
[55] Section 15 of the CSGs provides that, except where a court accepts the parties' written agreement concerning a spouse's annual income, a spouse's annual income is determined in accordance with ss. 16 to 20:
15(1) Subject to subsection (2), a parent's or spouse's annual income is determined by the court in accordance with sections 16 to 20.
(2) Where both parents or spouses agree in writing on the annual income of a parent or spouse, the court may consider that amount to be the parent's or spouse's income for the purposes of these guidelines if the court thinks that the amount is reasonable having regard to the income information provided under section 21.
[56] Section 16 sets out the general rule that income is determined using the sources of income set out under the heading "Total income" in the T1 General form issued by the Canada Revenue Agency ("line 150 income"):
- Subject to sections 17 to 20, a parent's or spouse's annual income is determined using the sources of income set out under the heading "Total income" in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.
[57] Sections 17 and 18 permit a court to depart from line 150 income where the court is of the opinion that the determination of the spouse's line 150 income would not be the fairest determination of income.
[58] Section 17(1) allows a court to consider patterns or fluctuations in a spouse's income over the last three years while s. 17(2) permits a court to adjust non-recurring capital or business investment losses:
17(1) If the court is of the opinion that the determination of a . . . spouse's annual income under section 16 would not be the fairest determination of that income, the court may have regard to the . . . spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.
(2) Where a . . . spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination [page655] of the . . . spouse's annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate.
[59] Section 18 allows a court to add all or part of pre-tax corporate income for the most recent taxation year to a spouse's income:
18(1) Where a . . . spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the . . . spouse's annual income as determined under section 16 does not fairly reflect all the money available to the . . . spouse for the payment of child support, the court may consider the situations described in section 17 and determine the . . . spouse's annual income to include,
(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or
(b) an amount commensurate with the services that the . . . spouse provides to the corporation, provided that the amount does not exceed the corporation's pre-tax income.
(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm's length must be added to the pre-tax income, unless the parent or spouse establishes that the payments were reasonable in the circumstances.
[60] Section 19 addresses imputing income to a spouse and sets out a non-exhaustive list of circumstances in which income may be imputed:
19(1) The court may impute such amount of income to a . . . spouse as it considers appropriate in the circumstances, which circumstances include,
(a) the . . . spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;
(b) the . . . spouse is exempt from paying federal or provincial income tax;
(c) the . . . spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada;
(d) it appears that income has been diverted which would affect the level of child support to be determined under these guidelines;
(e) the . . . spouse's property is not reasonably utilized to generate income;
(f) the . . . spouse has failed to provide income information when under a legal obligation to do so; [page656]
(g) the . . . spouse unreasonably deducts expenses from income;
(h) the . . . spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and
(i) the . . . spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust.
[10] S. 19(2) of both the federal and Ontario child support guidelines provide:
Reasonableness of expenses
(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under… [the federal Income Tax Act.]
[11] In the case at bar the trial judge imputed income to the Appellant. Since the Appellant’s income was in substance his rental income, the imputation of income of necessity required the taking into account of “hard costs” such as mortgage interest, property taxes, and insurance, if those costs were properly before the trial judge. Eager v. Graves, 2002 CanLII 45104 (ON CA), [2002] O.J. No. 3878 (Ont. C.A.) at paras. 9 and 10 is authority for the taking into account of the “hard costs.”
C. S. 9 of the Federal and Ontario Child Support Guidelines and the SSAGs
[12] The material portion of s. 9 of the federal and Ontario child support guidelines provides:
Shared custody
9 Where a…[parent or spouse] exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of …child support … must be determined by taking into account
(a) the amounts set out in the applicable tables for each of the spouses;
(b) the increased costs of shared custody arrangements; and
(c) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought.
[13] The SSAGs in s. 8.6 address spousal support in cases to which the above provision applies.
D. The Raising of a New Issue on Appeal
[14] In R. v. Roach, 2009 ONCA 156 at paras. 6 to 8 Justice Doherty for the Court stated:
6 Generally speaking, appeal courts will not entertain arguments not made at trial: Kaiman v. Graham, 2009 ONCA 77, [2009] O.J. No. 324 at paras. 18-19 (C.A.). That general rule applies to constitutional arguments raised for the first time on appeal regardless of whether the arguments invoke the remedial powers of s. 24 of the Charter or the nullifying power in s. 52(1) of the Constitution Act, 1982: e.g. see R. v. L.G. (2007), 2007 ONCA 654, 228 C.C.C. (3d) 194 at para. 43 (Ont. C.A.); R. v. Seo (1986), 1986 CanLII 109 (ON CA), 25 C.C.C. (3d) 385 at 394 (Ont. C.A.).
7 An appellate court does, however, have the discretion to permit new arguments, including Charter arguments. In exercising that discretion, the appellate court must be satisfied that the new issue raised on appeal can be fully, effectively and fairly addressed on appeal even though it was not raised at trial. An appellate court will be most inclined to exercise its discretion in favour of hearing a new argument where that new argument can be fully addressed and determined based on the trial record: e.g. see R. v. Sweeney (2000), 2000 CanLII 16878 (ON CA), 148 C.C.C. (3d) 247 at paras. 34-40 (Ont. C.A.). More rarely, an appellate court will hear a new argument based on an evidentiary record laid out for the first time in the court of appeal: e.g. R. v. Seo, supra.
8 In my view, the more numerous and contentious the evidentiary disputes generated by the material filed on appeal in respect of the issue raised for the first time on appeal, the less likely it is that the appellate court will exercise its discretion in favour of considering the merits of the new argument. While appeal courts do resolve evidentiary disputes from time to time in the course of deciding appeals, appellate procedures are not designed for that purpose. The appellate forum and its procedures are not adapted to the weighing of evidence and the finding of facts. Appeal courts review decisions made at trial. The appeal process is premised on the issues under appeal having been vetted in the trial court and subjected to the reasoned analysis of the trial court. If a new argument put forward on appeal can only be effectively and fairly resolved by conducting what amounts to the trial of an issue or several issues in the appellate court, the appellate court should, absent exceptional circumstances where the interests of justice require otherwise, decline to resolve the new issue raised on appeal.
E. The Appeal of a Costs Order
[15] In St. Jean (Litigation Guardian of) v. Cheung, 2009 ONCA 9 at para. 4 the Court set out the following principles:
4 In general, costs follow the event. The appellants were successful on the appeal, and, as a result, also on the lower court motion. The general principle when an appeal is allowed is that the order for costs below is set aside and the costs below and of the appeal are awarded to the successful appellant: see Hunt v. TD Securities Inc. (2003), 2003 CanLII 48369 (ON CA), 43 C.P.C. (5th) 211(C.A.), at para. 2. Further, where the substantive disposition is different from that of the decision under appeal, leave to appeal costs is not necessary: see Dines v. Harvey A. Helliwell Investments Ltd., [1992] O.J. No. 2107 (C.A.).
III. ANALYSIS
[16] I intend to address each of the grounds of appeal raised seriatim, and then address costs.
A. The Imputation of Income to the Appellant
[17] In oral argument the Appellant argued that the trial judge imputed income to him for the years 2013 and 2014 without regard to his obligation under s. 19 (1) and (2) of the child support guidelines (both sets are materially the same in this regard) to consider the evidence before him of appropriate expenses. The Appellant frames this alleged error as both one of principle and also one of significant misapprehension of evidence.
[18] Specifically the Appellant argued that the trial judge erred in imputing income for those years based on his rental income without regard to the expenses the Appellant incurred to earn the rental income.
[19] The Respondent argued at para. 9 of her factum that at trial the Appellant did not present independent evidence of alleged expenses related to the earning of the rental income; and that “[t]he only evidence presented was through his oral testimony and his income tax returns.” In oral argument she contended that the trial judge found that the Appellant was of “low” credibility; and found that he was evasive in his evidence about his income, giving only a range, and thus forcing the trial judge to impute income.
[20] The Appellant was self-represented at trial, although he was represented by several different lawyers prior to trial.
[21] The trial judge’s assessment of his testimony on the income issue is found in his reasons for judgement materially at paras. 232 to 237 and 354 to 356. At paras. 233, 236, and 237 he states:
[233] Mr. Khan testified that his income in 2013 was $ 106,000; in 2014 it was between $ 108,000 and $ 109,000. In 2015 it was less because he has two stores that are not rented. He estimated that it was between $100,000 and $110,000. But then he said that he did not know “til we get the rental---“ He does not have any other source of income other than from the rental of his properties.
[236] Based on the evidence before the court, determining Mr. Khan’s income with exactitude is impossible. However, as stated above, his testimony at trial, which is the latest word on this, gives a strong indication of his income for the last three years. I note that the amounts are all within striking range of the amount that Justice Clay imputed ($91,000). Accordingly, based on his testimony, I find as a fact that his income for the years 2013; 2014 and 2015 was [sic] follows:
2013 - $106,000
2014 - $108,000 -$109,000
2015 -$100,000 - $110,000
[237] Mr. Steckley [for the Respondent] argued that the court should make an order for child support based on an imputed income of $106,088. Based on Mr. Khan’s evidence that his annual income for 2015 was between $100,000 and $110,000, I will impute an annual income to him of $105,000 for 2016.
[22] While the trial judge’s findings of fact are entitled to deference, an error of principle or significant misapprehension of evidence is subject to correction on appeal. Further, while I accept the trial judge’s finding that the Appellant’s testimony was not forthright or clear on the issue of his income, the trial judge did not refer at all to the expenses for the rental properties as contained in the Statement of Real Estate Rentals in both the Appellant’s 2013 and 2014 income tax returns. These documents were, as noted above, admitted by the Respondent to have been before the trial judge.
[23] This tax return evidence was simply not addressed. In my view this omission constitutes a significant misapprehension of evidence in relation to the findings of the Appellant’s income for 2013 and 2014; it also affected materially the finding of the Appellant’s income for 2015 by causing the trial judge to ignore the expenses issue. Moreover, the imputation of income for 2016 was subject to the same error. It was also subject to an error in principle; that error was ignoring the expenses question which must be addressed in the imputation of income, having regard to s. 19(1) and (2) of both sets of child support guidelines, and Eager v. Graves, supra.
[24] Before considering the remedy for these errors, it is necessary to address briefly the other alleged errors.
B. The Alleged Errors in Failing to Apply S. 9(b) and (c) of the Guidelines and S. 8.6 of the SSAGs
[25] It is common ground between the parties that the trial judge did not apply s. 9(b) and (c) of both sets of the child support guidelines and did not apply s. 8.6 of the SSAGs, although those provisions were applicable.
[26] Nevertheless, the Respondent argued that the Appellant was prevented from raising these errors on appeal because they were not raised at trial. The Respondent relied on the principles set out in R. v. Roach, supra.
[27] Despite the Appellant’s contention that the appropriate evidentiary record exists to allow my application of s. 9 (b) and (c) and the applicable SSAG provisions in accordance with R. v. Roach, I need not decide this issue based on my analysis of the remedy which is necessary to correct the first set of errors I have found.
C. Remedy
[28] The material portions of s. 134 of the Courts of Justice Act, R.S.O. 1990, c. C-43 relating to remedy provide:
Powers on appeal
134 (1) Unless otherwise provided, a court to which an appeal is taken may,
(a) make any order or decision that ought to or could have been made by the court or tribunal appealed from;
(b) order a new trial;
(c) make any other order or decision that is considered just. R.S.O. 1990, c. C.43, s. 134 (1).
Determination of fact
(4) Unless otherwise provided, a court to which an appeal is taken may, in a proper case,
(a) draw inferences of fact from the evidence, except that no inference shall be drawn that is inconsistent with a finding that has not been set aside;
(b) receive further evidence by affidavit, transcript of oral examination, oral examination before the court or in such other manner as the court directs; and
(c) direct a reference or the trial of an issue,
to enable the court to determine the appeal.
Scope of decisions
(5) The powers conferred by this section may be exercised even if the appeal is as to part only of an order or decision, and may be exercised in favour of a party even though the party did not appeal. R.S.O. 1990, c. C.43, s. 134 (3-5).
New trial
(6) A court to which an appeal is taken shall not direct a new trial unless some substantial wrong or miscarriage of justice has occurred. R.S.O. 1990, c. C.43, s. 134 (6); 1994, c. 12, s. 46 (1).
Same
(7) Where some substantial wrong or miscarriage of justice has occurred but it affects only part of an order or decision or some of the parties, a new trial may be ordered in respect of only that part or those parties. R.S.O. 1990, c. C.43, s. 134 (7); 1994, c. 12, s. 46 (2).
[29] Having regard to those provisions, in my view it is necessary that a new trial take place to determine the income of the Appellant as a result of the set of errors which I have found. That retrial will be required to do the calculations of the Appellant’s income, spousal support, child support, and s. 7 expenses. These calculations are an integrated whole; the application of s. 9(b) and (c) and the related SSAGs provisions will of necessity have to be subject of this retrial in order that justice be done.
[30] I, therefore, order a retrial on the issues of the income of the Appellant, spousal support, child support, and s. 7 expenses.
IV. COSTS
[31] In accordance with the principles in St. Jean (Litigation Guardian of) v. Cheung, supra I am prepared to accept costs submissions in respect of the costs of trial, and of this appeal. I will receive those submissions in writing.
[32] Each set of submissions shall be nor more than four pages, excluding a bill of costs.
[33] The Appellant is to serve and file his submissions within 14 days of the release of these reasons. The Respondent is to serve and file her submissions within 14 days from service of the Appellant’s submissions. There shall be no right of reply.
Bloom, J.
DATE: May 8, 2018
COURT FILE NO.: FS-17-176-00
DATE: 2018 05 08
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Ziaullah Khan v. Amal Talaoui
BEFORE: Bloom, J.
COUNSEL: O. Chaudhry, for the Appellant
P. Steckley, for the Respondent
ENDORSEMENT
Bloom, J.
DATE: May 8, 2018