NEWMARKET COURT FILE NO.: FC-11-39491-02
DATE: 20180608
ONTARIO
SUPERIOR COURT OF JUSTICE
FAMILY COURT
BETWEEN:
COLLEEN HEATHER BARTHAU
Applicant
– and –
KENNETH J. JOHANSEN
Respondent
D. Barbieri/C. Still, for the Applicant
Self-Represented
HEARD: December 7 & 8, 2017
DECISION
FRYER, J
I. Introduction
[1] This trial involved the Applicant (Mother)’s claim to adjust child support for the two children of marriage: Ethan Corey Johansen (born January 31, 2003) and Mikalah Alicia Johansen (born February 26, 2005) retroactive to 2011.
[2] Through much of the period in question Mr. Johansen was a self-employed recreational vehicle salesperson.
[3] Following the parties’ separation, Ms. Barthau and Mr. Johansen entered into a comprehensive separation agreement dated July 10, 2008 (the “Separation Agreement”). They negotiated the settlement through mediation without the help of lawyers. At that time, Mr. Johansen represented his income as $30,000 for the purpose of child support for the two children living with Ms. Barthau.
[4] Later, the parties entered into an amending agreement dated November 16, 2011 (the “Amending Agreement”), again through a process of mediation without the assistance of lawyers. Mr. Johansen represented that his income was $24,000.
[5] Although Mr. Johansen paid child support regularly, he failed to both provide financial disclosure in a timely fashion, and abide by disclosure orders in this proceeding.
[6] Ms. Barthau later learned that Mr. Johansen, who had always been a sole proprietor, had entered into a partnership in August 2012. She also found out that he had expanded into a new business enterprise called “All in Hot Tubs”. Some time in 2015 Ms. Barthau learned that Mr. Johansen had started working for Camping in Style and was earning a significantly higher income. These various discoveries caused her to question the foundation of the earlier child support agreements and to seek a retroactive variation back to 2011.
[7] A further change in circumstances relates to the child, Ethan who has a number of challenges including Attention Deficit Hyperactivity Disorder, Oppositional Defiant Disorder, disruptive mood dysregulation disorder, and a learning disability. Ethan lived primarily with Ms. Barthau, except from January 2 to April 11, 2016, when he lived with Mr. Johansen. Since April 11, 2016, however, Ethan has lived at Enterphase—a residential treatment centre; he has short visits on weekends with each of his parents.
II. Analysis
[8] Ms. Barthau commenced her Motion to Change on or about August 17, 2016 seeking a retroactive variation of both the Separation Agreement and the Amending Agreement. In her Motion to Change, she does not stipulate the commencement date for the retroactive variation, although in her sworn Change Information Form she includes a chart with calculations going back to the date of the Amending Agreement. Further, her evidence made it clear that she sought to go back to the date of that agreement.
[9] Mr. Johansen brought a cross Motion to Change seeking to vary the custodial arrangements for the children. This was not noted as one of the issues proceeding to trial in Justice Douglas’s trial scheduling court endorsement dated March 21, 2017 as one of the issues proceeding to trial. Mr. Johansen led no evidence and made no submissions about this claim. I therefore have not considered it.
[10] Ms. Barthau’s position is that Mr. Johansen misrepresented his income every year, starting with the year that the Amending Agreement was signed. In 2016, he earned over $65,000 in commissions. Ms. Barthau suggests that this is more representative of his true income for the purposes of calculating table child support under the Federal Child Support Guidelines, SOR/97-175 (“FCSG”) each year retroactive to 2011.
[11] Mr. Johansen’s position is that each year he provided disclosure regarding his income to Ms. Barthau’s husband, who in turn told him what he had to pay for child support; Mr. Johansen then simply paid the requested amount.
[12] I set out my findings below with respect to Mr. Johansen’s income for each year. This exercise was challenging for a number of reasons. Firstly, Mr. Johansen failed to make full disclosure with respect to his annual income for each year and he was in default of a number of disclosure orders. Secondly, Mr. Johansen was flip and casual in his testimony; his evidence was confused and often utterly lacking in credibility.
[13] I found Ms. Barthau for the most part to be direct and careful with her evidence. Where the evidence of the two parties conflicted, I had no hesitation in accepting Ms. Barthau’s version.
[14] When the parties negotiated the Amending Agreement with the assistance of a mediator, they agreed to use a formula to calculate Mr. Johansen’s self-employment income in the future. Paragraph 4(f) of the Amending Agreement describes that formula as follows:
In principle, if the father’s annual gross income (before business expenses) is not less than $30,000, then child support will continue to be based upon $24,000. If the gross is above $30,000 (hereinafter the “excess”), then support will be based upon $24,000 plus the excess (e.g. where the gross is $35,000, support will be based upon $24,000 + $5,000 of excess that is $29,000). If the gross is less than $30,000 (hereinafter the “deficit”), then support will be based upon $24,000 minus 0.7 times the deficit (e.g. where the gross is $20,000, support will be based upon $24,000 – (0.7 x $10,000) of excess, that is $17,000).
[15] Paragraph 4(e) of the Amending Agreement states as follows:
The parties will provide copies of their Income Tax returns (and assessments if available then) by no later than June 30 of each year (beginning June 2012), or within 60 days of filing their returns, whichever comes sooner. If requested by a party, support amounts for the ensuing year are to be recalculated at that time, in order to avoid retroactive claims. Unless a new amount is determined at that time, the said $362 will continue for another year, and so on. Any different amount of child support determined from that new information, will come into effect as of the month immediately following the determination.
[16] Ms. Barthau stated that Mr. Johansen provided the required disclosure, but that it was typically late.
[17] Mr. Johansen has been employed in recreational vehicle sales and service for many years. When the parties signed the Separation Agreement, he was working for McKenzie Trailers and received commissions on sales. Although he had one “employer”, he treated himself as self-employed so that he could benefit from various tax write-offs.
[18] Mr. Johansen stated that he left sales or did not work between 2010 and 2012, but despite his lack of income he continued to pay child support based on an income of $30,000. When he signed the Amending Agreement in November 2011, he represented to Ms. Barthau that he was working in sales through his sole proprietorship, “Open Road”, and he was earning net business income of $24,000.
[19] In his evidence, Mr. Johansen later asserted that he did not work at all between 2011 and 2015. As will be seen, this was clearly not thne case.
1. The Retroactive Support Claim
(a) 2011
[20] According to his 2011 income tax return, Mr. Johansen had gross sales of $34,561 and net business income of $12,282. It appeared that Mr. Johansen continued to work for McKenzie Trailers this year, although he denied this.
[21] In the two months of 2011 that followed the execution of the Amending Agreement, he paid child support based on an income of $24,000, or $362 per month.[^1]
[22] Applying the formula in the Amending Agreement, Mr. Johansen’s income for 2011 is calculated as follows: $24,000 plus $4,561 (excess gross sales over $30,000) = $28,561.
[23] The Table amount that should have paid for the two children commencing November 1, 2012 based on the formula was $417 per month. Mr. Johansen adjusted his child support to $424 on November 1, 2012.
[24] The evidence did not suggest that Mr. Johansen’s 2011 income exceeded the income calculated using the Amending Agreement formula.
(b) 2012
[25] Mr. Johansen denied that he worked at all in 2012.
[26] However, that same year, he renewed his registration for Open Road as a partnership business registration. He added Gabrielle Eisenmann as a partner. When asked by Mr. Still in cross-examination why he would need to do this if he was not working, Mr. Johansen’s response was that it was “none of [Mr. Still’s] business”. Mr. Johansen is shown as a member of McKenzie Trailers’ sales team on a historical search of the company’s web page.
[27] Per his 2012 income tax return, Mr. Johansen had gross sales of $28,215 and net business income of $11,008. Under the formula in the Amending Agreement, Mr. Johansen would have been entitled to a slight income reduction from the $24,000 base, as his gross sales were less than $30,000.
[28] In September 2013, he reduced his child support to $346 per month and he paid this Table amount through to November 2014.
[29] The evidence did not suggest that Mr. Johansen’s 2014 income should be other than what was represented on his income tax return and calculated according to the Amending Agreement formula.
(c) 2013
[30] In 2013, Mr. Johansen’s gross business income was $10,827, and his net business income was ($12,166). Using the formula in the Amending Agreement his business income would be $10,579 ($24,000 less ($19,173 (the deficit) x 0.7 = 13,421)). Mr. Johansen cashed in RRSP’s totalling $24,284. His Line 150 income was $13,328.
[31] On July 28, 2013, Mr. Johansen registered a domain name: allinhottubs.com. He was listed as the administrative and technical contact for the domain registration. Mr. Johansen is also named as the contact person for All in Hot Tubs for the Better Business Bureau Review file opened July 16, 2013, and he was listed as a team member on the company’s website. Despite all this evidence to the contrary, Mr. Johansen steadfastly maintained that he was not the owner of All in Hot Tubs. According to him, Gabrielle Eisenmann was the owner; he was simply named on all of the documents because he had a credit card to pay registration fees and she did not.
[32] I found Mr. Johansen’s position very difficult to accept but again, much as with the prior years, there was little evidence to suggest that Mr. Johansen’s income was significantly different than as represented on his income tax returns. The fact that he drew on his RRSPs this year would suggest that he was struggling to make ends meet.
[33] It is not clear how Mr. Johansen or Ms. Barthau calculated child support for the following year but in November 2014 Mr. Johansen adjusted his child support to $250 per month, which would be Table child support for two children based on an income of $16,800.
(d) 2014
[34] Mr. Johansen’s Line 150 income for 2014 was ($30,881). He had gross sales of $25,798 and a net income of ($30,881). Using the Amending Agreement formula, his business income would be $21,059 ($24,000 – ($4,202 (the deficit) x 0.7) = $2,941)).
[35] In November 2015, Mr. Johansen adjusted his child support payment to $385 per month, which would be the table child support for two children based on an income of $25,900.
[36] The evidence does not suggest that Mr. Johansen’s income was significantly higher this tax year than as calculated above. Furthermore, he adjusted his child support based on a higher income than that calculated pursuant to the Amending Agreement formula.
(e) 2015
[37] In August 2015 Mr. Johansen started working for Camping in Style as an employee and his income increase significantly.
[38] On his 2015 income tax return, Mr. Johansen had Line 150 income of $13,415. He had gross business income of $35,726 and net business income of ($3,531). In addition he had T-4 income of $15,529 from Camping in Style. He received a tax refund of $5,857.
[39] Under the formula in the Amending Agreement Mr. Johansen’s income for 2015 should be calculated as $24,000 plus $5,726 being the business income in excess of $30,000 plus the T-4 income of $15,529 for a total of $45,255.
[40] The Table amount of child support was not adjusted in November 2016 to reflect this higher income; Mr. Johansen continued to pay $385 per month until March 21, 2017, when Justice Douglas made a temporary child support order.
(f) 2016
[41] In his Financial Statement sworn on November 25, 2016, Mr. Johansen stated that his current income was the same as his 2015 income: $15,530. He stated this despite the following:
• he received regular pay confirmations from Camping in Style;
• the majority of his sales would already have occurred when he swore the financial statement; and
• his paystub from Camping in Style showed his year-to-date income as $65,484.
[42] Mr. Johansen did not file an up to date Financial Statement for this trial contrary to the Family Law Rules and contrary to the Trial Scheduling Court Endorsement. Similarly Mr. Johansen failed to file his 2016 income tax return or Notice of Assessment with the court. He did provide his T-4 from Camping in Style for 2016 that showed he earned an income of $67,474.
[43] I find that Mr. Johansen’s 2016 income is $67,474.
(g) 2017
[44] The trial was held on December 7 and 8, 2017, at which time Mr. Johansen would have earned the majority of his income. Mr. Johansen declined to update his financial information with the court at the time of the trial.
[45] At paragraph 4 of his order, Douglas J. ordered Mr. Johansen to provide his 2016 income tax return with all schedules and attachments and his 2016 Notice of Assessment when available. Mr. Johansen did not comply with this order.
[46] Pursuant to s. 19(f) of the FCSG, it is reasonable to impute an income to Mr. Johansen of $67,474 for the future payment of child support.
(h) Summary
[47] Ms. Barthau first gave notice of her intention to seek a retroactive variation in her Motion to Change. For the court to consider a retroactive variation going back more than three years prior to the date of the application, there should be some evidence of blameworthy conduct: S. (D.B.) v. G. (S.R.), 2006 SCC 37, [2006] 2 S.C.R. 231 at para. 123.
[48] Mr. Johansen has made consistent child support payments. The evidence does not suggest that he earned significantly more than the $24,000—upon which support was calculated in the Amending Agreement—in net business income before he started working for Camping in Style in August 2015. In 2013, Mr. Johansen cashed in RRSPs. He also supplemented his income by relying on his line of credit that steadily increased to $100,000 by 2015. He ultimately made an assignment in bankruptcy on November 15, 2016.
[49] The parties made annual adjustments to Table child support each year. Ms. Barthau acknowledges that Mr. Johansen provided some disclosure, just not in a very timely fashion. Ms. Barthau’s husband would make the necessary calculations and advise Mr. Johansen how much he had to pay in child support.
[50] Mr. Johansen’s approach to both his disclosure obligations and his evidence in this trial left much to be desired. The evidence before me, however, did not suggest that he engaged in blameworthy conduct that would merit an inquiry into the support paid prior to August 2013.
[51] While Mr. Johansen is deemed to have admitted the propositions put to him in Ms. Barthau’s Request to Admit, this court still has discretion as to how to calculate the retroactive child support claim.
[52] I find that Mr. Johansen paid Table child support roughly in accordance with his obligations until November 1, 2016[^2] when he did not appropriately adjust to reflect his higher income earned in 2015. For these reasons, I decline to adjust the Table child support obligation prior to November 1, 2016. It is appropriate however to adjust Table child support after that date.
[53] Mr. Johansen’s child support obligation also needs to be adjusted from an obligation for two children to an obligation for one child, as Ethan has not been primarily resident with Ms. Barthau since January 2017.
[54] Pursuant to s. 15.1 (1) of the Divorce Act, 1985 R.S.C. c. 3 (2nd Supp.), “[a] court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage” and such an order shall be made “in accordance with the applicable guidelines” (s. 15.1(3)).
[55] Section 3 (1) of the FCSG stipulates:
Unless otherwise provided under these Guidelines, the amount of a child support order for children under the age of majority is
(a) the amount set out in the applicable table, according to the number of children under the age of majority to whom the order relates and the income of the spouse against whom the order is sought; and
(b) the amount, if any, determined under section 7.
[56] The Table child support amount referred to in s. 3(1)(a) of the FCSG assumes that the child is in the care of or charge of the recipient parent in whole in part of the time.
[57] Ethan resided with Mr. Johansen from January 1 until April 1, 2016, when he went to Enterphase.
[58] Ms. Barthau proposes that Mr. Johansen pay the average between child support for one child and child support for two children. Based on Mr. Johansen’s current Table child support obligation, the difference between Table child support for one child and for two children is $386 per month; Ms. Barthau is seeking 50% of that amount or $193 per month. However, Ethan is not in the physical care of either parent more than 40% of the time. Ethan spends a few hours with each parent on alternate weekends; the remainder of the time, he lives at Enterphase. Neither party is required to pay for the cost of Enterphase and most of Ethan’s medical expenses are covered. However, because of Ethan’s unique challenges, he is very hard on clothing and Ms. Barthau, who is also Ethan’s case manager, is required to purchase replacement clothing for him on a regular basis.
[59] Ms. Barthau estimated that she pays approximately $3,700 per year for Ethan’s shoes and clothes, or roughly $300 per month. The receipts that she provided, however, for expenses incurred in 2016 and 2017, were significantly less than that.
[60] It is more appropriate and consistent with the FCSG to treat the clothing expenses incurred by Ms. Barthau as a special and extraordinary expense to be shared proportionate to income.
[61] For the period from November 1, 2016 to March 21, 2017 when Justice Douglas made the temporary child support order, Mr. Johansen paid child support of $385 per month. He was obliged to pay child support for one child in the amount of $408 per month based on his 2015 income of $45,255 therefore he owes retroactive Table child support of $69 (3 x $23) .
[62] On March 21, 2017 Douglas J. ordered Mr. Johansen to pay temporary child support of $810 per month being the mid-point between the Table amount for one child and the Table amount for two children based on Mr. Johansen’s income of $67,474. I decline to adjust child support for the period from March 1, 2017 to June 1, 2018. Any additional child support paid by Mr. Johansen during this period is paid in satisfaction of his proportionate share of the special and extraordinary expenses for this same period as discussed further below.
2. Special and Extraordinary Expenses
[63] Ms. Barthau is also seeking a retroactive contribution to certain special and extraordinary expenses for the children.
[64] The Amending Agreement provides as follows:
The parties will consult and are to agree on special courses, counselling, etc. (and s. 7 expenses generally) the cost of which is $100 or more, and will not make unilateral decisions in these areas. The parties further agree that the expenses for such items should be reasonable and consistent with their incomes. On such agreed expenses, the cost shall be borne equally by the parties. If one has paid the entire sum, they shall be reimbursed within 10 days.
[65] At the time the Amending Agreement was signed, Mr. Johansen was self-employed and working for McKenzie Trailers. I did not receive evidence with respect to Ms. Barthau’s 2011 income to determine if this represented each party’s proportionate share. Mr. Johansen’s income increased significantly when he started working as an employee for Camping in Style and constitutes a material change in circumstances that warrants a variation to the Amending Agreement.
[66] Commencing in August 2015, the special and extraordinary expenses for the children shall be shared proportionate to income in accordance with s. 7 of the FCSG rather than equally as set out in the Amending Agreement.
[67] I am also prepared to consider Ms. Barthau’s claim for contribution to various special and extraordinary expenses for the period claimed; this is an enforcement of an existing obligation rather than a retroactive adjustment.
[68] Although the parties used their prior years’ income to determine Table child support, in my calculation of the special and extraordinary expenses, I have used the parties’ income for the applicable year. The income of the parties and their respective contribution to special and extraordinary expenses for the relevant years is as follows:
| Year | Applicant’s Income | Respondent’s Income | Applicant’s % Share | Respondent’s % Share |
|---|---|---|---|---|
| 2013 to August 1, 2015 | N/A | N/A | 50% | 50% |
| 2015 (as of August 1) | $3,360 | $45,255 | 7% | 93% |
| 2016 | $8,420 | $67,474 | 11% | 89% |
| 2017 | $22,262 | $67,474 | 24% | 76% |
[69] Ms. Barthau explained that her income has been very low for a number of reasons: she gave birth to another child, Jewell Barthau, and she stopped working in 2014 as she needed to stay home to care for Ethan. She has since resumed working at Canadian Tire. Mr. Johansen did not seek to impute an income to her and I have not done so.
[70] Ms. Barthau did not adduce any evidence with respect to her requests for contribution for these expenses from Mr. Johansen. However, the vast majority of her claims are for medical/dental expenses for the children and if Mr. Johansen did not consent, he reasonably should have. There was insufficient evidence to determine if the other expenses (martial arts and camps) would qualify as an extraordinary expense under s. 7(f) of the FCSG and I have declined to include them.
[71] The following chart sets out the calculation of the applicable retroactive special and extraordinary expenses. I included Ethan’s clothing expense as a special and extraordinary expense.
| Year | Total Expenses[^3] | Respondent’s % | Respondent’s Share |
|---|---|---|---|
| 2013 to August 2015 | $2,307.82 | 50% | $1,153.91 |
| August 2015 to December 2015 | $51.40 | 93% | $47.80 |
| 2016 | $677.76 + $232.88 (for Ethan’s clothing) = $910.64 | 89% | $810.47 |
| January 1 to March 21, 2017 | $120 (for Ethan’s Clothing) | 76% | $91.20 |
[72] The total due to Ms. Barthau for Mr. Johansen’s contribution to the special and extraordinary expenses is $2,103.
[73] I have not included Ethan’s clothing expense as a special and extraordinary expense from March 2017 to date, as Mr. Johansen has been paying sufficient child support to cover his proportionate share of that and other special and extraordinary expenses.
[74] In 2017, Ms. Barthau incurred clothing expenses for Ethan totalling approximately $750 for nine months of the year. She estimates that she will incur approximately $3,700 per year for clothes for Ethan. I found this estimate on the high side. Having regard to Ethan’s special needs, a reasonable annual amount for clothing is $1,200. Therefore, commencing June 1, 2018, Mr. Johansen shall pay $76 per month being his proportionate share (76%) of Ethan’s clothing expense, which is deemed a special and extraordinary expense.
III. ORDER
[75] The Respondent owes the Applicant $69, on account of retroactive Table child support up to June 1, 2018. The Respondent also owes the Applicant $2,103, being his retroactive contribution to the children’s special and extraordinary expenses. The total retroactive child support is $2,172. Commencing June 1, 2018, the Respondent shall pay $250 per month toward the retroactive amount until it is satisfied in full.
[76] Any child support arrears that may have accrued under Justice Douglas’s Endorsement, from March 21, 2017, to June 1, 2018, remain due and owing and are fully enforceable.
[77] Commencing June 1, 2018, the Respondent shall pay to the Applicant Table child support of $629 per month for the child Mikalah Alicia Johansen, based on an imputed income of $67,474.
[78] Commencing June 1, 2018, the Respondent shall pay to the Applicant $76 per month, being his 76% share of the estimated total clothing expenses ($100 per month) for the child Ethan Corey Johansen, while Ethan is residing in a residential facility.
[79] Commencing June 1, 2018 the parties shall share proportionate to income all other reasonable special and extraordinary expenses for both children including but not limited to uninsured medical, dental and therapy expenses. The Applicant’s current proportionate share is 24% and the Respondent’s is 76%.
[80] The parties shall exchange their Notices of Assessment and Income Tax returns by no later than September 1 each year commencing September 1, 2018. They shall then adjust the Table amount of child support payable and their proportionate share of the special and extraordinary expenses effective November 1 that same year.
[81] The foregoing order replaces paragraph 4 of the Amending Agreement; all other provisions of that agreement remain in full force and effect.
[82] All other claims, but for costs, are hereby dismissed.
[83] The Applicant shall deliver written submissions with respect to costs not exceeding four pages, excluding bill of costs and offer(s) to settle, on or before July 6, 2018. The Respondent shall deliver written submissions with respect to costs not exceeding four pages, excluding bill of costs and offer(s) to settle, on or before July 20, 2018. The Applicant shall deliver a reply of not more than two pages on or before July 27, 2018. Any case law submitted by either party shall be delivered in electronic format only. All costs submissions shall be filed with court in Newmarket along with a duplicate electronic copy on a USB key. The court’s administration is directed to deliver the submissions to my judicial assistant forthwith upon receipt.
JUSTICE L.E. FRYER
Released: June 8, 2018
[^1]: The parties used the prior year’s income to calculate child support through to November each year, at which time they adjusted for the ensuing twelve months; I have used this same methodology in calculating retroactive support, except where noted.
[^2]: Although Ethan resided with Mr. Johansen from January to March, 2016, I decline to adjust for that period as the overall amount paid by Mr. Johansen for that year up to November 1, 2016 including any possible overpayment for those three months when Ethan resided with him, is appropriate.
[^3]: Taken from a chart prepared by Ms. Barthau, except for the clothing expense, which was calculated from receipts she provided.