COURT FILE NO.: FC-07-1429-7 DATE: 2018/07/12 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: GRETTA SAWMA, Applicant AND ELIE ABOU ZEIDAN, Respondent
BEFORE: Madam Justice H. J. Williams
COUNSEL: Eric Letts, Counsel for the Applicant Ron Loder, Counsel for the Respondent
HEARD : January 9 and 15, 2018 and June 21, 2018
ENDORSEMENT
H.J. WILLIAMS, J.
Background:
[ 1 ] The applicant Gretta Sawma and the respondent Elie Abou Zeidan married when the applicant was 15 and the respondent was 21.
[ 2 ] The parties had two children, a son born in June, 1994 and a daughter born in May, 2000.
[ 3 ] The parties separated in 2003 after living together for 10 years.
[ 4 ] The children both lived with the mother after the separation.
[ 5 ] The older child ceased to be a child of the marriage for child support purposes at the end of September, 2013.
[ 6 ] The applicant has now brought a motion to change child support, retroactive to 2011.
[ 7 ] The parties had a child support agreement in place in 2013 when the respondent informed the applicant that his employment with “Dynacare” had been terminated. As a result of this apparent change in circumstances, on September 15, 2015, the parties agreed to change their child support arrangements.
[ 8 ] During the course of their negotiations, the respondent produced a letter he said had been written by the employer. The employer denied having prepared the letter. The respondent initially denied but eventually admitted that he had prepared the letter himself.
[ 9 ] The applicant then initiated this motion to change, in part to have court oversight over her efforts to obtain accurate financial disclosure from the respondent.
[ 10 ] The parties attended numerous case conferences in the context of the applicant’s motion to change.
[ 11 ] Further to case management orders of Master Champagne on September 28, 2016 and December 5, 2016, the respondent produced bank records. The applicant concluded that the records were incomplete and that some of them had been altered.
[ 12 ] As a result of a further case management order of Master Champagne on February 28, 2017, the applicant obtained the respondent’s bank records directly from his banks.
[ 13 ] The parties appeared before me on January 9, 2018. Both argued that if the other had been more cooperative, they would have been able to resolve their issues without the intervention of the court. The respondent’s lawyer said that all that was involved was “Grade 8 math.”
[ 14 ] I urged the parties to attempt to resolve the issues themselves and told them that I would do so if they could not.
[ 15 ] The parties spent the day and much of the evening of January 9, 2018 negotiating and, to their credit, agreed on the respondent’s gross income from 2011 to 2016. The parties also agreed that, before a further court appearance on January 15, 2018, they would consider whether the respondent had incurred business expenses that should be deducted from his gross income to determine his net income for purposes of calculating child support.
[ 16 ] The parties appeared before me again on January 15, 2018. The applicant asked me to award child support based on the gross income figures in the January 9, 2018 agreement. The respondent requested additional time to compile evidence in respect of his expenses.
[ 17 ] The respondent had been ordered by Master Champagne to produce information about his expenses on or before February 28, 2017, almost one year earlier, but had failed to do so. Despite this, in recognition of the progress the parties had made in their negotiations on January 9, 2018 and because I did not have sufficient evidence to permit me to determine the business expenses issue, I provided the respondent with an additional two weeks within which to deliver all evidence he intended to rely upon in support of his position that his gross income from 2011 to 2016 should be reduced by business expenses.
[ 18 ] I invited the applicant to deliver reply evidence if she wished to do so.
[ 19 ] The parties filed additional evidence.
[ 20 ] They were unable to agree on the net income that should be used to calculate child support.
[ 21 ] They then appeared before me on June 21, 2018 to make submissions.
The issues:
[ 22 ] The applicant seeks child support and special expenses, both retroactive and on-going.
[ 23 ] In order to calculate the amounts owing and to be paid on an on-going basis, the income to be attributed to the respondent for the years 2011 to 2016 must be determined.
[ 24 ] The parties will then be able to look to the Child Support Guidelines, O. Reg. 391/97, the applicant’s income and the amount of child support and expenses paid to date and carry out the necessary calculations.
[ 25 ] The issue is: What was the respondent’s income for the years 2011 to 2016 for purposes of calculating child support?
What was the respondent’s income for the years 2011 to 2016 for purposes of calculating child support?
The parties’ positions:
The applicant’s position:
[ 26 ] The applicant’s position is that the respondent’s income for child support purposes should be the gross income the parties agreed to on January 9, 2018. The applicant argues that the respondent’s evidence in respect of his income and expenses is either insufficient or incredible; she argues that the respondent has demonstrated a pattern of hiding income and that his evidence in support of expenses lacks specificity and does not prove that the expenses he is claiming were business-related.
The respondent’s position:
[ 27 ] The respondent’s position is that his income for child support purposes should be the gross income that was agreed to by the parties on January 9, 2018, minus the amounts the respondent’s employers paid him for mileage allowances and minus certain “business expenses” he claims which include cell phone, internet, gas heating and bookkeeping expenses.
[ 28 ] The following table sets out: (a) the parties’ January 9, 2018 agreement in respect of the respondent’s gross income, which is the income the applicant argues should be used for child support purposes; (b) the mileage allowance payments the respondent argues should be deducted from the gross income amount; (c) the business expenses the respondent argues should be deducted from the gross income amount; and (d) the net income the respondent argues should be used for purposes of calculating child support.
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
|---|---|---|---|---|---|---|
| (a) Respondent’s gross income per Jan. 9/18 agreement | $45,825.51 | $71,985.40 | $80,704.14 | $40,000.00 | $71,320.76 | $63,323.59 |
| (b) Respondent’s claimed mileage expenses | $14,142.50 | $27,227.00 | $33,958.85 | $29,082.35 | $26,476.85 | $18,550.45 |
| (c) Respondent’s claimed business expenses | $3,602.82 | $3,394.11 | $4,178.14 | $4,505.73 | $3,665.82 | $4,282.23 |
| (d) Respondent’s net income, according to the respondent | $28,080.19 | $41,364.29 | $42,567.15 | $6,411.92 | $41,178.09 | $40,490.91 |
The Law:
[ 29 ] In Cunningham v. Seveny, 2017 ABCA 3, the Alberta Court of Appeal confirmed that:
- When a self-employed parent argues that his or her gross income should be reduced by business expenses for purposes of calculating income for child support, the onus of proving that the expenses are reasonable is clearly on that parent.
- A parent claiming a deduction for business-related expenses must present evidence to justify the expenses.
- If the claimed expenses also resulted in a personal benefit to the parent claiming the deduction, “an explanation is required for why those expense deductions (or a part of them) should not be attributed to the parent’s income for child support purposes.”
- Even if expenses have been approved for income tax purposes by the Canada Revenue Agency, this does not mean that the test for deducting expenses from income for child support purposes has been met.
- “Child support is the right of the child. A parent's legal obligation to pay child support that fairly reflects the parent's income in accordance with child support guidelines is not to be constrained or limited by income tax statutes that may confer entitlements in relation to deductibility of business expenses.”
[ 30 ] The principles in this Alberta case apply equally in Ontario.
[ 31 ] Section 19(1)(g) of the Child Support Guidelines, O. Reg. 391/97 provides that a court may impute income to a parent, as it considers appropriate in the circumstances, when the parent has failed to provide income information when legally required to do so and when the parent unreasonably deducts expenses from income.
Analysis:
[ 32 ] The parties relied on the respondent’s bank records rather than his income tax returns to reach their January 9, 2018 agreement in respect of his gross income for the years 2011 to 2016.
[ 33 ] I cannot accept the respondent’s argument that the agreed-to gross income figures should be reduced by the mileage allowances he received from his employers. Regardless of how these allowances may have been or may be treated by the CRA, they represent money that went into the respondent’s pocket and which must be taken into account in determining his income for child support purposes.
[ 34 ] I do accept, however, based on the evidence that three of the companies the respondent worked for from 2011 to 2016 paid him mileage allowances, that the respondent incurred some car-related business expenses in these years that should be deducted from the agreed-to gross income figures.
[ 35 ] However, other than in respect of certain car-related expenses, to which I will make reference in greater detail below, I find that the respondent has failed to prove that any of the business expenses he argues should be deducted from the agreed-to gross income figures are reasonable business expenses for purposes of calculating his income for child support.
[ 36 ] Following the parties’ court appearance on January 15, 2018, the respondent filed six thick volumes of receipts along with calculations showing what car and other business expenses for the years 2011 to 2016.
[ 37 ] Despite the amount of paper that was filed and the work I accept must have been devoted to compiling the hundreds of receipts and adding up the totals, the respondent has not provided the evidence I would require to find that the receipts and totals represent expenses that were all actually incurred by the respondent or that they represent business expenses exclusively and not personal expenses.
[ 38 ] As an example, while there was evidence that the respondent used a car for business purposes, there was no evidence to demonstrate the extent to which the respondent used a car for business purposes rather than personal purposes.
[ 39 ] As a further example, the respondent included in his claimed car-related expenses car payments of more than $3,000.00 per year for the years 2011 to 2014 and $6,500.00 for a new car in 2016. There was no evidence to explain why, given that the respondent was purchasing an asset, all or any portion of these amounts should be deducted from his income or to indicate whether the car that was being paid for from 2011 to 2014 had been sold and if so for what amount.
[ 40 ] There was also no evidence to satisfy me that of the business expenses other than car-related expenses, which included cell phone and internet charges and gas heating, related to business rather than personal use and if so, to what extent.
[ 41 ] Although the respondent filed photographs of an office, there was no evidence of where the office was located, how or how often it was used, why it was required or whether it was used for any other purpose other than business purposes.
[ 42 ] The respondent was given sufficient time to compile this evidence. Master Champagne had ordered him to produce evidence of his business expenses in February, 2017. The respondent failed to comply with Master Champagne’s deadline and had not produced the evidence before the parties’ January 9, 2018 appearance before me. Although the parties’ January 9, 2018 agreement contemplated that the respondent would produce this evidence before January 15, 2018, when the parties appeared before me that day, he requested an additional two weeks. I allowed him the additional two weeks he had requested. When the parties were unable to reach an agreement with respect to the deductible expenses based on the evidence the respondent had produced, the motion was not heard until June 21, 2018.
[ 43 ] In addition to finding that the respondent’s evidence in support of his claimed expenses is insufficient, I find that, overall, the respondent’s evidence lacks credibility. I find that he is not a party who can be given the benefit of any doubt. My conclusion in this regard is based on the steps the applicant took to conceal income from the applicant, which included preparing a letter the respondent informed the applicant his employer had prepared and falsifying bank records. In both cases, the respondent initially denied but eventually admitted what he had done.
[ 44 ] As I stated above, however, I accept that the respondent incurred some car-related business expenses that should be deducted from the agreed-to gross income figures for 2011 to 2016.
[ 45 ] The respondent produced evidence of car-related expenses which included gas, repairs and maintenance, insurance and car payments. These expenses do not appear in the chart reproduced above which illustrates how the respondent argues his income for child support purposes should be calculated. This is because the respondent’s position is that the mileage allowances he was paid, and not his expenses, should be deducted from his gross income. The car-related expenses claimed by the respondent were the following:
| Year | Total car-related expenses | Gas | Repairs | Insurance | Car payments | Other |
|---|---|---|---|---|---|---|
| 2011 | $7,342.22 | $1,999.00 | $483.22 | $1,776.00 | $3,084.00 | |
| 2012 | $13,136.74 | $6,782.00 | $870.74 | $2,112.00 | $3,372.00 | |
| 2013 | $8,587.00 | $3,045.00 | $466.00 | $1,704.00 | $3,372.00 | |
| 2014 | $7,321.00 | $2,096.00 | $299.00 | $1,884.00 | $3,042.00 | |
| 2015 | $4,368.40 | $2,713.00 | $491.40 | $948.00 | $216.00 (CAA) | |
| 2016 | $15,112.10 | $5,330.00 | $2,118.10 | $948.00 | $6,500.00 | $216.00 (CAA) |
[ 46 ] As I noted above, the respondent’s evidence in respect of these car-related expenses did not provide any indication of the extent to which the expenses were business-related rather than being personal expenses.
[ 47 ] As I also noted above, there was no justification in the respondent’s evidence for a deduction from gross income for the expenses related to car payments or the purchase of a new car.
[ 48 ] I find that the respondent would have incurred the expenses related to insurance whether he had used a car for business purposes or exclusively for personal purposes.
[ 49 ] I am unable to make any finding with respect to whether the CAA, which I assume to be Canadian Automobile Association, expense was a business as opposed to a personal expense, because there was no evidence that would enable me to do so.
[ 50 ] As noted above, I accept that the respondent incurred some car-related expenses for business purposes, because three companies he worked for provided him with mileage allowances. The evidence of these allowances was the only evidence that satisfied me that the respondent’s car-related expenses did not relate exclusively to personal use. Although the respondent’s evidence was insufficient to enable me to assess the extent to which he incurred car-related expenses for business purposes, I find that it would be unfair to the respondent to deny him any deduction from his gross income for car-related expenses.
[ 51 ] I have concluded that it would be fair and appropriate to reduce the respondent’s agreed-to gross income figures by one third of the amounts the respondent has claimed for gas and repairs.
[ 52 ] The respondent’s evidence does not persuade me that it would be fair or appropriate to provide him with any deduction for expenses related to insurance or the CAA, because it is not clear that these are not expenses he would have incurred personally in any event. The respondent’s evidence also does not persuade me that the car payments should be deducted, because, as noted above, the respondent was purchasing an asset with these payments.
[ 53 ] I will not reduce the respondent’s agreed-to gross income figures by any amounts related to the business expenses claimed by the respondent which are not car-related, specifically, cell, internet, gas and bookkeeping expenses. There is no explanation of these expenses and no evidence to satisfy that these are legitimate business as opposed to personal expenses.
[ 54 ] With respect to the gross income figures from which any expenses I have found are deductible should be deducted, the evidence before me on June 21, 2018 showed that, after the parties reached their January 9, 2018 agreement, the respondent produced a letter from his employer Dynacare which set out the amounts Dynacare paid the respondent for services and mileage from 2013 to 2016. The applicant argued this letter showed that the parties’ January 9, 2018 agreement had understated the respondent’s income for 2014 by approximately $9,000.00. I accept the applicant’s position in respect of the respondent’s 2014 income. I find that for purposes of assessing the respondent’s income for child support purposes, his gross income for 2014 should be set at $49,000.00 instead of the $40,000.00 the parties had agreed to on January 9, 2018.
[ 55 ] The chart below shows the parties’ agreed-to gross income figures for 2011 to 2016, minus one third of the gas and repair expenses claimed by the respondent for each year:
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
|---|---|---|---|---|---|---|
| (a) Respondent’s gross income per Jan. 9/18 agreement | $45,825.51 | $71,985.40 | $80,704.14 | $49,000.00 | $71,320.76 | $63,323.59 |
| (b) 1/3 of claimed car expenses for gas and repairs | $827.40 | $2,550.91 | $1,170.33 | $798.33 | $1,068.13 | $2,482.70 |
| (c) Respondent’s net income for calculation of child support | $44,998.11 | $69,434.49 | $79,533.81 | $48,201.67 | $70,252.63 | $60,840.89 |
Conclusion:
[ 56 ] I make the following orders:
- The respondent’s income for purposes of calculating child support shall be the amounts in row (c) in the chart immediately above.
- The respondent shall pay the applicant special expenses that she has incurred for the children from 2011 in amounts commensurate with the parties’ incomes.
- The parties shall calculate the amounts owed by the respondent for child support arrears and special expenses and for on-going child support and shall prepare a draft order reflecting their agreement. In the event of a disagreement, the parties may request a ruling from me and make brief written submissions outlining the basis for their disagreement and their respective positions.
Costs:
[ 57 ] The applicant shall deliver written costs submissions within 14 days of the date of this order, the respondent shall deliver written responding submissions within 14 days of receipt of the applicant’s submissions and any reply submissions by the applicant shall be delivered within seven days of receipt of the respondent’s submissions.
[ 58 ] All submissions shall be sent to me through the trial coordinator.
Madam Justice H. J. Williams
Date: 2018/07/12