Court File and Parties

Court File No.: FC-17-2424 Date: 2018/09/17 Superior Court of Justice – Ontario

Re: Carolyn Heidi Brown, Applicant -and- Jeffrey Stokes Brown, Respondent

Before: Justice P. MacEachern

Counsel: Thomas E. Peters, for the Applicant No one appearing for Respondent

Heard: August 30, 2018

Endorsement

[1] This is an uncontested trial. For the reasons set out below, I adjourn this trial, grant leave to the Applicant to amend her pleadings, and make a number of interim Orders.

Background

[2] The parties were married on August 17, 1991. They separated on December 28, 2015 but lived together from March 2016 to September 2016 in an unsuccessful attempt to reconcile.

[3] There are four children of the marriage, two 15 year old twins and two older children, ages 22 and 23. The Applicant’s evidence is that the older children, who reside with the Respondent, have now completed school and are financially independent. The twins currently reside with both parties on an approximately equal basis, which is in accordance with their wishes.

[4] The Application was commenced on November 9, 2017. In the Application, the Applicant seeks:

a. A divorce; b. Joint custody of the twins or, in the alternative, sole custody; c. Child support for the twins, including section 7 expenses, and for this support to be retroactive, although no date is specified for the commencement of the retroactive support; d. Spousal support, including retroactive support, although again no date is specified for the commencement of the retroactive support; e. An order for equalization of net family property and “if it can be shown, an unequal division”; f. A restraining order; g. Life insurance to secure the child and spousal support; and h. An order directing any net sale proceeds from the sale of the matrimonial home to be held in trust by the real estate lawyer.

[5] The Respondent was served on November 27, 2017 with the Application, the Applicant’s Form 35.1 and Applicant’s financial statement, sworn November 9, 2017. The Respondent has not filed an Answer. The Respondent has not provided a sworn financial statement nor evidence of his income. He has not been served with any further material filed with the court, nor was he given notice of this uncontested trial.

Divorce

[6] The Applicant seeks a divorce. I am unable to grant a divorce at this time. Although a clearance certificate is in the court file, the Applicant has not filed the marriage certificate, nor Affidavit in Support of the Divorce (Form 36). Both of these documents are required before a divorce can be granted, as set out under Rule 36 of the Family Law Rules.

Custody and Timesharing Schedule

[7] In the Applicant’s Affidavit for Uncontested Trial sworn on April 11, 2018, she states that she was willing to remain joint custodian of the twins with the Respondent, and the evidence before me supports such an order being made. I would make a final order for the parties to have joint custody of the twins except that the Applicant’s counsel did not request such an order at the hearing.

[8] The Applicant, instead, requested an order providing for the primary residence of the twins to be with her, with liberal access to the Respondent as determined between the parties from time to time on an approximately equal basis. Neither the Application nor other material served on the Respondent contained notice to the Respondent that the Applicant was requesting this relief.

[9] The evidence before me, from the Applicant’s Affidavit for Uncontested Trial, is that the twins currently reside for approximately equal time with both parties, and that this is in accordance with their wishes.

[10] Taking into consideration the orders that I make below with respect to the financial issues, and given the lack of notice to the Respondent, I decline to make a final order at this time with respect to primary residence of the children and the Respondent’s access. Instead, there shall be an interim order that the existing equal parenting and timesharing arrangement for the children continue pending a further order.

Child Support

[11] At the hearing, the Applicant requested an order for child support for the twins based on a set-off calculation in the amount of $1,440 per month, which was based on an income being imputed to the Respondent at $130,000 per year, and the Applicant’s income being $26,000 per year.

[12] In the Application, the Applicant set out her position that the Respondent was a financial advisor for Primerica and that she believes his income is over $100,000 per year. This is the position of which the Respondent is on notice. He has not been served with any other material that puts him on notice that the Applicant will be seeking a higher income be imputed to him. The Respondent has failed to respond to these proceedings, and is therefore at risk of the court imputing an income to him based on the limited information before it. But it remains that he has only had notice that the Applicant seeks to impute income to him of $100,000 per year, not $130,000 per year.

[13] The second issue is that the only sworn evidence before me with respect to the Respondent’s income is the Applicant’s affidavit which states that she believes his current income is $130,000 per year. This belief is based on having contacted a Primerica representative who oversees the Respondent at his office, who is not identified, and who told her “off the record” that the Respondent has made approximately $130,000 gross income per annum. This is not admissible evidence under the Rule 14(19) of the Family Law Rules - the Applicant has not identified the source of the information nor sworn that she believes the information to be true.

[14] Although this is an uncontested trial, the Applicant still needs to provide evidence upon which this Court can be satisfied to make the orders she seeks. This may mean that the Applicant needs to take additional procedural steps to obtain orders requiring the Respondent, or third parties (such as, for example, the Respondent’s employer), to provide information that is needed for the court to determine the issues before it. The Family Law Rules are designed to permit such orders, as well as cost awards to reimburse a party for costs that could have been avoided if the other side had acted reasonably.

[15] Given the above, I am not prepared to make a final order, at this time, requiring the Respondent to pay child support based on an imputed annual income of $130,000. I am prepared to make an interim order, as set out below, that provides for interim child support based on the Respondent’s income being $100,000 per year, based on the Applicant’s evidence that the Respondent has been working for the same employer since 1991, the family enjoyed a comfortable standard of living prior to separation, and based on the Respondent being on notice, from the Application, that this was the position the Applicant would put before the court if he failed to respond.

[16] The interim child support of $1,080 per month is based on the set-off calculation for two children, as requested by the Applicant. I am satisfied that this is an appropriate amount of interim child support taking into account the factors under s.9 of the Child Support Guidelines.

[17] In addition, I also make interim orders, as detailed below, that require the Respondent to provide income information, and provide for service of further material on the Respondent that place him on notice that the Applicant is seeking to impute income to him in the amount of $130,000 per year.

Spousal Support

[18] The Applicant seeks a final order requiring the Respondent to pay her spousal support in the amount of $1,950 per month, indexed in accordance with the indexing factor set out in subsection 34 (5) of the Family Law Act.

[19] The Applicant claims spousal support on a compensatory and non-compensatory basis. The parties were married for 24 years before separating. The Applicant’s evidence is that she was out of the paid workforce for the majority of the marriage, being responsible for the primary care of the parties’ four children, whom she homeschooled, and the home. During this period, the Respondent developed his career with his employer, with whom he has worked since 1991. The Applicant only began working outside of the home, on a part-time basis, four years before the separation.

[20] At the hearing, the Applicant requested spousal support in the amount of $1,950 per month. The Applicant’s counsel provided me with calculations that, assuming the Respondent’s income is $130,000 per year, the Applicant’s income is $26,000 per year, and the Respondent is paying child support of $1,440 per month, this is the mid-range of spousal support payable calculated under the Spousal Support Advisory Guidelines (“SSAG’s”). If these calculations are adjusted to assume the Respondent’s income is $100,000 per year, he pays child support of $1,080 per month, each party claims one child for income tax purposes [^5], and there are no s.7 expenses or these are shared equally, the mid-range under the SSAG’s is $1,326 per month.

[21] For the same reasons set out above with respect to child support, I am not prepared to make a final Order, at this time, requiring the Respondent to pay spousal support based on an imputed income of $130,000 per year. Pending the return of this matter, given the Applicant’s prima facie entitlement to spousal support on a compensatory and non-compensatory basis, I order the Respondent to pay interim spousal support to the Applicant, commencing December 1, 2017, in the amount of $1,326 per month.

Retroactive Child and Spousal Support

[22] At the uncontested trial, the Applicant’s counsel requested an Order requiring the Respondent to pay a lump sum amount for retroactive child and spousal support in the amount of $57,202. The Applicant provided, at Exhibit “E” to her Affidavit for Uncontested Trial, calculations for this lump sum up to May 1, 2018 (which were then adjusted by the Applicant’s counsel to include support payable for June, July and August, 2018), but this chart states that it calculates the support from September 1, 2015, whereas the parties only separated on December 28, 2015. The Applicant states in her sworn affidavit that she did not leave the matrimonial home until September 1, 2016.

[23] Presumably, the Applicant seeks retroactive child and spousal support back to September 1, 2016. This should be clarified for the Court on the return of this matter but it should also be clarified for the Respondent. Again, the Application, although stating that the Applicant sought retroactive child and spousal support, did not state the period for which retroactive support was sought. The Respondent has not received notice that the Applicant is seeking child or spousal support retroactive to September 1, 2016.

[24] The issue of the retroactive child and spousal support is adjourned to the return of this matter at which time the Applicant should provide further evidence to support her claim for retroactive child and spousal support, including:

a. evidence in support of her claim for retroactive child support and spousal support, given that her Application was filed on November 9, 2017, and taking into consideration the case law that sets out the test for awarding child support and spousal support commencing on a date earlier than when the Application was commenced; b. evidence that addresses the calculation of retroactive child and spousal support given the situation of the older two children, who resided with the Respondent during this period; c. evidence and/or authority that supports the Applicant’s counsel’s submission that if this Court makes an order for periodic or lump sum spousal support to be payable for a retroactive period, such spousal support would not be tax-deductible from income to the payor nor taxable as income to the recipient under Canada Revenue’s requirements, with reference to Income Tax Folio S1-F3-C3; and d. in the event that the Applicant seeks an order for retroactive spousal support on an after-tax basis, evidence in support of the tax rate(s) upon which she relies to calculate the after-tax amount.

Equalization Payment

[25] The Applicant seeks an Order with respect to equalization that provides that:

“the Applicant’s claim for equalization remains preserved and may be revitalized by a Motion to Change a Final Order upon the Applicant having obtained new and relevant information of the Respondent’s assets at separation. The Respondent’s claim for equalization is dismissed.”

[26] The Applicant is effectively asking the Court to allow her to bring a claim for equalization at any point in the future, while at the same time prohibiting the Respondent from doing so. Counsel did not provide me with any authority in support of this position. This Court has the jurisdiction to determine the equalization payment under sections 5 and 7 of the Family Law Act. In the absence of doing so, however, there is no basis before me upon which I would dismiss the Respondent’s possible claim for an equalization payment.

[27] There is also no basis before me upon which I would grant the Applicant the right, effectively in perpetuity, to renew her clam for an equalization payment at any point in the future [^6].

[28] I am prepared to determine the issue of the equalization of the parties’ net family properties. In her Application, the Applicant has sought an equalization of net family properties or, in the alternative, an unequal division. The Respondent has had notice of this claim. However, I am unable to determine this issue at this time, as there is insufficient evidence before me to calculate the parties’ respective net family properties.

[29] The only evidence before me with respect to the parties’ respective assets and debts at the date of marriage and the date of separation, and any exclusions, is the Applicant’s financial statement sworn November 9, 2017. That statement appears to be incomplete as it does not include the value of the mortgage on the matrimonial home as a debt on valuation date. The Applicant has also not provided me with any evidence regarding the Respondent’s assets and debts, with the exception that the Respondent owed significant amounts to the Canada Revenue Agency. The Applicant has provided evidence that the Canada Revenue Agency filed two liens against the matrimonial home – one in the amount of $425,715 registered on August 24, 2015 (before separation), and a second in the amount of $73,095 registered on June 16, 2017. The matrimonial home was sold under power of sale proceedings commenced in August 2017. There is no evidence before me as to the net proceeds, if any, from the sale of the home.

[30] Other than the existence of this debt, which the Applicant states she did not know about prior to the power of sale proceedings, the Applicant has also not provided any evidence upon which to support an unequal division of net family properties.

[31] Given this evidence, I raised the issue of whether the Respondent has filed a proceeding under the Bankruptcy and Insolvency Act (“BIA”). If the Respondent has filed a proceeding under the BIA, this raises the issue of whether the equalization proceeding is stayed subject various conditions that may apply [^8]. The Applicant’s counsel advised that he has not conducted a search to confirm if the Respondent has filed a proceeding under the BIA, even though the Office of the Superintendent of Bankruptcy Canada has an online portal of such records that can be searched at a minimal cost.

[32] Based on the evidence before me, I am not able to determine the equalization payment, if any, owed between the parties. I adjourn the determination of the equalization payment for the Applicant to file further evidence in support of the equalization calculation or to amend her claim with respect to this issue. If the Applicant wishes to pursue the issue of equalization on the return of this matter, the Applicant should provide evidence as to her efforts to attempt to identify whether the Respondent has filed a proceeding under the BIA and whether, if he has, the equalization issue is therefore stayed and/or whether notice of the equalization issue needs to be provided to the Trustee.

Other Orders

[33] At the hearing, the Applicant’s counsel did not request orders with respect to restraining the Respondent, life insurance, or the disposition of proceeds from the sale of the matrimonial home.

Costs

[34] The Applicant sought her costs of this proceeding. Given the other Orders made, I am adjourning the issue of costs to be returned with the other issues. At that time, I request that the Applicant provide evidence in support of any cost order that she wishes the Court to make, including evidence of legal fees that she has incurred.

Disposition

[35] Given the above, I make the following interim Orders:

1. The uncontested trial in this matter, heard on August 30, 2018, is adjourned for the purpose of allowing the Applicant to file further evidence in support of the relief that she seeks, and for compliance with the below Orders.
2. A copy of this Endorsement, the Applicant’s Affidavit for Uncontested Trial, sworn April 11, 2018, and her affidavit sworn August 30, 2018, shall be served on the Respondent forthwith by special service in accordance with the Family Law Rules.
3. The existing parenting and timesharing arrangement for Nathan Peter Brown, born October 30, 2002, and Joel Arthur Brown, born October 30, 2002, shall continue pending a further Order.
4. The Applicant is granted leave to amend her Application to specify the precise relief she is seeking from this Court including with respect to primary residence of the children, the Respondent’s access to the children, the amount of income which she seeks to impute to the Respondent for the purposes of child and spousal support, the period during which she seeks retroactive child and spousal support, the amount of child and spousal support she is seeking, that she seeks indexation of the spousal support, and whether she seeks to amend her claim for an equalization payment. This Amended Application shall be served on the Respondent within 30 days of this Order and the Respondent shall then have 30 days from such service to file an Answer along with any other documents, such as a sworn Financial Statement and Form 35.1, as may be required under the Family Law Rules, failing which the Respondent shall be noted in default.
5. In the event of the Respondent’s default: i. the Applicant is granted leave to bring a procedural motion seeking an Order requiring the Respondent’s employer to provide confirmation of the Respondent’s current income and income since the date of separation, such motion to be brought on notice to the employer in accordance with the Family Law Rules; and ii. this matter shall be returned before me, for a half day hearing, on a date to be set by the Applicant through the Trial Coordinator, for the purpose of determining the outstanding issues on a final basis.
6. Regardless of whether the Respondent does or does not file an Answer in response to the Amended Application, he shall provide the following disclosure to the Applicant within 30 days of being served with this Order: i. copies of his complete income tax returns, including all schedules and T-slips, for the years 2017, 2016, 2015; ii. copies of all of his Notices of Assessment and Reassessment for 2017, 2016 and 2015; iii. confirmation of his income for the year-to-date in 2018, by way of providing copies of his three most recent pay stubs from all income sources, and/or other business records; iv. any additional information required to determine his income pursuant to section 21 of the Child Support Guidelines; and v. in the event that the Respondent takes the position that he is not currently working on a full-time basis, he shall provide all supporting documents indicating why he is not doing so.
7. Pending the return of this matter, the Respondent shall pay, commencing December 1, 2017: i. interim child support to the Applicant, for the support of Nathan Peter Brown, born October 30, 2002, and Joel Arthur Brown, born October 30, 2002, in the amount of $1,080 per month, payable on the first day of each month, based on the current equal timesharing schedule, the Respondent’s income being imputed to be $100,000 per year, and the Applicant’s income being $26,000 per year. ii. interim spousal support to the Applicant, in the amount of $1,326 per month, payable on the first day of each month.
8. Pending the return of this matter, the parties shall share, in proportion to their net disposable incomes (after taking into account the child and spousal support payments given this is a shared timesharing arrangement), any expenses incurred for the benefit of Nathan Peter Brown, born October 30, 2002, and Joel Arthur Brown, born October 30, 2002, pursuant to section 7 of the Child Support Guidelines, taking into consideration any subsidies, benefits or income tax deductions or credits relating to the expense. Prior to incurring an expense for which a party seeks reimbursement from the other, that party shall give the other notice of the expense in writing or by electronic means (including text or email) and seek the other parties’ agreement, such agreement not to be unreasonably withheld. For the purpose of this interim Order, the Respondent’s proportionate share of section 7 expenses is 50% and the Applicant’s proportionate share is 50%.
9. The interim child and spousal support Orders, including the sharing of section 7 expenses, are without prejudice to a determination of the Respondent’s income on a final basis once he has provided evidence of his income and/or the Applicant has provided further evidence with respect to the Respondent’s income.
10. At the return of this matter, in the event that the Respondent has not provided the required disclosure, the Court may make an adverse inference against him and impute income to him for the purposes of determining his child and spousal support obligations.
11. Costs of the appearance on August 30, 2018 are reserved to the Judge hearing the return of this matter.

Justice P. MacEachern Date: September 17, 2018

Footnotes

[^1]: Family Law Rules, O.Reg. 114/99, as am. [^2]: Federal Child Support Guidelines, SOR/97-175, as am. [^3]: Family Law Act, R.S.O. 1990, c.F.3, as am. [^4]: Spousal Support Advisory Guidelines, prepared for the Department of Justice Canada, July 2008. [^5]: The sharing of tax credits related to the children has not been determined. On an interim basis, for the purpose of calculating spousal support, I have assumed each party would claim the eligible dependent credit for one child. This may need to be adjusted if the Respondent is not able to claim a child for tax purposes. This issue will determined at the return of this matter. [^6]: Subsection 7(3) of the Family Law Act requires that an application for an equalization payment be brought within certain time limits, subject to the authority under subsection 2(8) to extend these time limits. [^7]: Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, as am. [^8]: Bankruptcy and Insolvency Act, section 69. [^9]: Office of the Superintendent of Bankruptcy Canada.