Court File and Parties

COURT FILE NO.: FS-13-79343 DATE: 20180927 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Suzettte Thomas-Bakker Applicant – and – Robin Bakker Respondent

Counsel: Self-represented (for the Applicant) Mark Rush, for the Respondent

HEARD: March 26, 27, 28 and 29, 2018

REASONS FOR JUDGMENT

PETERSEN J.

Overview

[1] Ms. Thomas commenced this Application on November 22, 2013. Some of the issues raised by the Application have been resolved. An uncontested order for divorce was issued on November 1, 2014. The parties consented to an order dated November 28, 2016, in which Ms. Thomas was granted sole custody of the three children of their marriage. A parenting schedule was established for Mr. Bakker to have regular access visits with the children on alternating weekends, with shared parenting time during holidays. Support issues and property issues remain outstanding.

[2] Mr. Bakker has paid no child support to Ms. Thomas. He acknowledges that he owes her retroactive child support and that he will have an ongoing obligation to pay child support for their three children. The income to be used to calculate his child support payments (both retrospectively and prospectively) is in dispute because Ms. Thomas argues that Mr. Bakker is not working and earning to his full capacity.

[3] Mr. Bakker is seeking an order for spousal support and argues that his entitlement to spousal support should be offset against his child support obligations. Ms. Thomas takes the position that he has no entitlement to spousal support. The parties disagree on the incomes that should be used to determine his entitlement to spousal support and to calculate Ms. Thomas’s spousal support payments, if any. Mr. Bakker asks the court to impute a greater income to Ms. Thomas than what she reported as her self-employment income in her personal tax returns. He argues that her tax returns are not a true reflection of her earnings. He alleges that she does not report substantial income that she receives in cash and that she uses her business to pay significant personal expenses.

[4] The remaining issues to be determined are Ms. Thomas’s claim for reimbursement of the children’s athletic expenses pursuant to s.7 of the Federal Child Support Guidelines, SOR/97-175, Mr. Bakker’s claim to an unregistered 50% ownership interest in the matrimonial home and the equalization of the parties’ net family properties. There are also issues relating to money advanced by Ms. Thomas’s parents to pay some of the parties’ debts.

[5] The outstanding issues were tried over four days, using a hybrid process. The parties’ affidavits and sworn Financial Statements served as their evidence-in-chief and cross-examinations were conducted at trial.

BACKGROUND

[6] Ms. Thomas and Mr. Bakker were married on July 14, 2001 and began living together a few days later. They are the parents of a daughter who was 14 years old at the time of the trial and two sons who were 13 and 11 years old. Ms. Thomas also has an adult son from a previous relationship and Mr. Bakker has an adult daughter from a previous relationship. The older children are not involved in this proceeding.

[7] The parties separated in April 2012, after almost 11 years of marriage, but they continued to live under the same roof in their matrimonial home with their children and Ms. Thomas’s older son for another 16 months. The home was sold on August 31, 2013. The parties have lived separately since September 1, 2013.

PROPERTY AND EQUALIZATION CLAIMS

[8] The property issues must be decided prior to the support claims: Greenglass v. Greenglass, 2010 ONCA 675, 99 R.F.L. (6th) 271, at paras. 40-44.

[9] The first step in the equalization analysis is to calculate the parties’ respective net family properties. The party whose net family property is the lesser of the two net family properties is entitled to a payment of one-half of the difference: Family Law Act, R.S.O. 1990, c.F.3 (“FLA”), s. 5(1).

[10] “Net family property” refers to the value of the property that each spouse owned on the valuation date (subject to some exceptions) after deducting the spouse’s liabilities on the valuation date and the net value of the property that they each owned on the date of marriage: FLA, s. 4(1).

[11] The valuation date, for the purpose of calculating these parties’ net family properties, is the date on which the parties separated with no reasonable prospect of reconciliation in April 2012: FLA, s. 4(1).

Ownership of the Matrimonial Home

[12] The matrimonial home was purchased in June 2010. Title to the property was registered in the names of Ms. Thomas and her parents. The parties agree that her parents were registered on title only for the purpose of securing mortgage financing for the purchase of the home. They do not have any ownership interest in the property.

[13] Mr. Bakker claims a 50% ownership interest in the matrimonial home based on the doctrine of resulting trust. It is unnecessary for me to review the evidence and make a determination of his claim because Ms. Thomas acknowledged at trial that Mr. Bakker was an unregistered half owner of the property. He is therefore entitled to half of the equity in the home that was realized when it was sold on August 31, 2013.

[14] According to the real estate solicitor’s Trust Ledger Statement, the home was sold for $490,000. At the time of sale, two mortgages on the property were discharged, in the amounts of $308,605.99 and $96,116.62. Property taxes ($875.81), solicitors’ fees and disbursements (totalling $3,101.73) and real estate agent’s fees ($12,600) were paid from the proceeds of sale. The remaining equity in the matrimonial home was therefore $68,699.85. Each party is entitled to half that amount ($34,349.92).

Equity in the Matrimonial Home on the Valuation Date

[15] There is no evidence of the value of the matrimonial home when the parties separated in April 2012. Both parties used the sale price of the home in August 2013 ($490,000) to estimate its value on their date of separation. They also used the amounts paid to discharge the mortgages in August 2013 (i.e., $308,605.99 and $96,116.62) to estimate the balances owing on the mortgages when they separated in April 2012. I agree with this approach because it employs the best evidence available to the Court.

Parties’ Other Assets and Debts on the Valuation Date

Ms. Thomas’s Income Tax Arrears and RBC Visa Credit Card Debt

[16] Despite the $68,699.85 in equity in the matrimonial home, an amount of only $35,224.42 from the proceeds of sale is being held in trust pending the outcome of this trial. Deductions were made by the real estate solicitor -- in addition to the those required to discharge the mortgages and pay transactional costs -- before placing the net proceeds in trust. First, $10,531.18 was paid to the Royal Bank of Canada in connection with a debt owed by Ms. Thomas on a Visa credit card. The RBC Visa debt had become a Court judgement against her, with a writ of execution registered on title to the property. Second, a fee of $82.30 was paid to delete the writ of execution. Third, $23,676.32 was paid to the Receiver General of Canada to discharge a lien placed on title to the property as a result of Ms. Thomas’s unpaid personal income taxes from 2010-2013.

[17] The $23,676.32 payment to the Receiver General in August 2013 corroborates Ms. Thomas’s claim, in her Financial Statement, that she owed the Canada Revenue Agency $23,000 in unpaid taxes on the valuation date in April 2012. That debt (in an amount of $23,000) will therefore be included in the calculation of Ms. Thomas’s liabilities on the valuation date.

[18] In her Financial Statement, Ms. Thomas also claimed to owe $12,000 on her RBC Visa credit card on the valuation date in April 2012. The payment to RBC from the proceeds of sale in August 2013 was in an amount of only $10,531.18. It corroborates the existence of the debt, but not the amount claimed by Ms. Thomas. There is no evidence that she made any payments toward the RBC debt after the valuation date in April 2012, which would have reduced the balance owing. Based on the amount paid in August 2013 and the absence of any payments between April 2012 and August 2013, I estimate that the balance on the valuation date was $10,000. An amount of $10,000 will be included in the calculation of Ms. Thomas’s liabilities on the valuation date.

[19] It is important to note that Ms. Thomas had sole responsibility for these two debts. Mr. Bakker’s share of the equity in the matrimonial home ($34,349.92) will not be reduced on account of the deductions made from the proceeds of sale to pay her debts. He is entitled to $34,349.92 of the $35,224.42 held in trust, subject to the equalization and retroactive child support payments that he owes her, as set out below.

Ms. Thomas’s Desjardins Visa Credit Card Debt

[20] In her sworn Financial Statement, Ms. Thomas claimed to owe $12,000 to Desjardins on the valuation date in connection with a Visa credit card. Mr. Bakker did not dispute this claim but he argued that the debt should not be included in the calculation of her liabilities on the valuation date because it has not been and will not be enforced by Desjardins.

[21] Ms. Thomas testified that she might have paid $1,500 in July 2012 toward the Desjardins debt, but she was uncertain about whether or not that payment was made. She stated that she has made no payments to Desjardins since July 2012. She confirmed that no legal action has been commenced against her in relation to this debt. She said that she was advised it would “fall off soon”. In fact, an Equifax credit report shows that her Visa debt to Desjardins in the amount of $12,415 has been “written off” (without explanation).

[22] Mr. Bakker argues that the debt should not be included in the calculation of Ms. Thomas’s liabilities because there is no reliable evidence that she made any post-separation payments toward satisfaction of the debt and she has no ongoing liability to pay the outstanding balance. While I can appreciate the logic in Mr. Bakker’s argument, the law requires that assets, debts and liabilities be valued as of the date of separation, without regard for subsequent events: Serra v. Serra, 2009 ONCA 105, at para.41. Ms. Thomas’s Desjardins Visa debt in the amount of $12,000 will therefore be included in the list of her liabilities on the valuation date.

Ms. Thomas’s RRSP

[23] According to Ms. Thomas’s sworn Financial Statement, when the parties purchased their first home in November 2004, she withdrew money from her Registered Retirement Savings Plan to contribute to the down-payment. She testified that this was done through a first-time home buyer’s program, which requires her to repay the funds to her RRSP account within a specified time frame, on pain of potential negative tax liabilities. She further testified that, on the valuation date in April 2012, she still “owed” $1,751 to her RRSP account. Mr. Bakker did not dispute her evidence on this issue but he argued that the money to be repaid does not constitute a debt for the purpose of net family property calculations.

[24] Ms. Thomas included the un-repaid amount of $1,751 as a “debt” in her Financial Statement on the valuation date. This repayment obligation is not a liability to a third party – it is money that she effectively borrowed from her own savings and is repaying to her own account. I agree with Mr. Bakker that it is inappropriate to include this amount in the calculation of her liabilities on the valuation date. There is no evidence of any tax consequences associated with the repayment obligation.

[25] Ms. Thomas did not disclose any documentation relating to her RRSP account. She testified that the account was opened after the parties married and that the total balance in the account ($3,290) was withdrawn when the parties purchased their first home in 2004. Her evidence on this point was not challenged or disputed by Mr. Bakker and I accept it as credible. She was still required to repay $1,751 as of the valuation date, so I infer that she had repaid $1,539 by that date. An amount of $1,539 will therefore be included in her list of assets on the valuation date.

The Parties’ Home Depot Credit Card Debt

[26] The Equifax credit report confirms that the parties had a joint Home Depot credit card. Ms. Thomas testified that she negotiated a reduction in the balance owing on the card and then paid it off, with money borrowed from her parents, in August 2012. Ms. Thomas had a clear recollection of making this payment. A bank statement in the record confirms a withdrawal of $569 from her father’s account in August 2012, which she said was used to settle the Home Depot account. Her evidence on this point was not challenged in cross-examination and I accept it as reliable and credible.

[27] There is no evidence of the balance owing on the Home Depot card at the date of separation in April 2012, but the parties were jointly liable for the debt so their respective equal shares of the liability offset each other. There is therefore no need to include the Home Depot debt in their net family property calculations. However, an adjustment will be made to the equalization calculation to account for Mr. Bakker’s responsibility to reimburse Ms. Thomas for his half ($284.50) of the amount she paid to discharge the debt.

Household Items

[28] When the parties sold the matrimonial home on August 31, 2013, they divided their household items between them. Ms. Thomas originally testified that Mr. Bakker “took everything” when they parted, except for two television sets, a Vitamix and a kitchen table, which she kept. In her sworn Financial Statement, she stated that he took, among other furniture and household items, “5 furnished bedrooms”. She estimated the total value of the property he kept to be $21,500 on the valuation date. Mr. Bakker disputed this evidence, claiming that they divided their belongings equally and that he took little of value.

[29] During her cross-examination, it became apparent that Ms. Thomas’s prior testimony was exaggerated. First, she explained that their matrimonial home had been minimally furnished to ensure that they could afford to live in it. The five bedrooms in the home were not fully furnished. Although she originally stated that Mr. Bakker took all the beds from their home, she later acknowledged that he took only the mattresses, not the bed frames, and not her older son’s mattress. She kept the bed frames. She estimated the cost of the mattresses to be $1,500 for the king bed, $1,000 for the queen bed and $700 for the twin beds, when they were purchased new. She could not recall the cost of the dining room set and designer dish set that Mr. Bakker took. She stated that the computer he took had been purchased used in 2009 for about $400.

[30] During her cross-examination, she acknowledged that, in addition to the Vitamix, TVs, kitchen table, and all the bed frames, she also kept a 3 piece living room sofa set, IKEA cupboards and dressers from the children’s bedrooms, mirrors and artwork, a television stand, and “miscellaneous other things” from the house. She estimated the total value of the property she kept to be approximately $2,000 as of the valuation date, which I believe to be an underestimation. It is an implausibly low amount, considering the number of items that she retained.

[31] I accept Mr. Bakker’s evidence that the parties divided the household items in a manner that was of roughly equivalent value, so the precise value of Ms. Thomas’s share of the household contents need not be determined. Whatever the value, it will not be included in the net family property calculations because the parties’ equal shares of the household contents offset each other.

Vehicles

[32] Ms. Thomas deposed that she owned a 2007 Honda Odyssey van on the valuation date, the value of which she estimated to be $10,000. She stated that she owed $15,800 for the van on the valuation date. She did not produce any documentation confirming the amount owing on her car loan in April 2012, but she submitted an Equifax credit report dated August 31, 2015, which confirms that, as of that date, she owed $8,306 to Honda Finance Inc. and had been making bi-weekly payments in the amount of $206 to repay the loan. Based on this evidence, I accept her sworn statement that she owed $15,800 for the van on the valuation date.

[33] Her sworn statement that the van was worth only $10,000 on the valuation date is unsupported by documentary evidence, but I accept it as a plausible estimate based on the year of the vehicle and the balance outstanding on her car loan.

Ms. Thomas’s 407 ETR Debt

[34] Ms. Thomas swore in her Financial Statement that she owed $275 in Express Toll Route charges on the valuation date. This evidence was not challenged by Mr. Bakker and I accept it as credible.

The Parties’ Bank Accounts

[35] Both parties had only nominal savings in their personal bank accounts at the valuation date.

Mr. Bakker’s Pension

[36] Mr. Bakker deposed that he had recently commenced making contributions to a workplace pension plan just prior to the parties’ separation. In his Financial Statement, he valued the pension at $1,200 on the valuation date. He submitted no documentary evidence relating to the pension but Ms. Thomas did not contest the value he assigned to the pension, so I will accept it for the purpose of calculating his net family property.

Ms. Thomas’s Business Assets

[37] Ms. Thomas owns a hairstyling business, which Mr. Bakker submitted should be valued at $1,000 on the valuation date, based on equipment and leasehold improvements. Ms. Thomas did not dispute this assigned value, so I am prepared to accept it for the purpose of calculating her net family property, despite the absence of documentary evidence to support it.

Mr. Bakker’s Child Support Arrears and Other Debts

[38] The undisputed evidence in the record establishes that Mr. Bakker had three personal debts on the valuation date. First, he owed $2,376 in unpaid traffic fines. Second, he owed $11,350.06 in connection with an unsatisfied Court judgement against him arising out of a motor vehicle accident. Third, he owed child support arrears to the mother of his eldest child from a previous relationship.

[39] His evidence with respect to the amount of his child support arrears on the valuation date was contradictory and confusing. In his sworn Financial Statement, he indicated that he owed $13,000 in child support arrears on the date of marriage. Ms. Thomas agreed with that amount during her testimony. She deposed that, by the time the parties purchased their first home in November 2004, Mr. Bakker’s child support arrears had grown to $16,000. Mr. Bakker testified that, as a result of a court order against him, he started paying the arrears in 2004, in a monthly amount of $330, deducted from his wages at source by the Family Responsibility Office. In his sworn Financial Statement, he stated that he still owed $5,000 in child support arrears on the valuation date. He testified that he continued making monthly payments toward the arrears for three years after the parties separated and eventually fully satisfied the debt.

[40] However, during his cross-examination and re-examination at trial, Mr. Bakker testified that he owed $16,000 in child support arrears on the valuation date. I reject this testimony as implausible. His arrears could not have increased from $13,000 to $16,000 over the course of the marriage because he was making regular monthly payments through FRO for the last eight years. Moreover, his income was not sufficient to enable him to pay $16,000 in child support in the three years after the parties separated. I will therefore use the figure from his sworn Financial Statement ($5,000), rather than his testimony at trial, to account for his child support arrears on the valuation date.

[41] Mr. Bakker was able to negotiate a reduced payment to satisfy the outstanding Court judgement against him. He used a lump sum severance payment from his former employer to pay $6,650 in 2018 to discharge the debt in full. However, the law requires that his liabilities be valued as of the date of separation, without regard for subsequent events: Serra, at para.41. The amount that was owing on the judgement as of the date of separation ($11,350.06) will therefore be used in the calculation of his net family property.

Total Assets and Debts on the Valuation Date

[42] In summary, Ms. Thomas’s assets and liabilities on the valuation date were as follows:

Assets Matrimonial home $245,000.00 RRSP $ 1,539.00 Honda Odyssey van $ 10,000.00 Business Assets $ 1,000.00 Total assets: $257,539.00

Liabilities 1st mortgage $154,302.99 2nd mortgage $ 48,058.31 CRA back taxes $ 23,000.00 RBC Visa $ 10,000.00 Desjardins Visa $ 12,000.00 Car Loan $ 15,800.00 ETR $ 275.00 Total debts: $263,436.30

[43] Mr. Bakker’s assets and liabilities on the valuation date were as follows:

Assets Equity in the matrimonial home $245,000.00 Pension $ 1,200.00 Total assets: $246,200.00

Liabilities 1st mortgage $154,302.99 2nd mortgage $ 48,058.31 Child Support Arrears $ 5,000.00 Traffic fines $ 2,376.00 MVA court judgement $ 11,350.06 Total debts: $221,087.36

The Parties’ Assets and Debts on the Date of Marriage

Mr. Bakker’s Assets and Debts

[44] Ms. Thomas testified that Mr. Bakker brought virtually no personal belongings into their relationship when they got married. She said that he had only a “bow and arrow and a cast iron pot” when he moved into her apartment after their wedding in July 2001. Mr. Bakker disagrees. He testified that he owned a car worth $10,000 at the date of marriage. He gave no information about the year, make or model of the car. He submitted no evidence to confirm his ownership of the vehicle or its value on the date of marriage.

[45] I am not required to resolve this conflict in the parties’ evidence because Mr. Bakker testified that he owed $10,000 in connection with the purchase of the vehicle on the date of marriage. Even if I were to accept his evidence regarding this claimed asset, it would have a nil effect on the calculation of his net family property. The vehicle claim will therefore be disregarded.

[46] Mr. Bakker did not assert that he owned any other items of value on the date of marriage.

[47] The parties agree that Mr. Bakker owed $13,000 in arrears in child support (for his daughter from a previous relationship) on the date of marriage. There is no evidence that he had other debts at that time.

Ms. Thomas’s Assets and Debts

[48] In her Financial Statement, Ms. Thomas declared that she owned household goods and furniture valued at $10,600 and a Honda Civic valued at $300 on the date of marriage. The undisputed evidence in the record is that Mr. Bakker moved into her apartment after they got married. It is plausible that the apartment was already furnished with her belongings because she had been living there prior to the wedding. Ms. Thomas was not challenged during her cross-examination about the stated value of her personal belongings on the date of marriage. Mr. Bakker did not give any testimony to contradict her claim. I therefore accept her sworn evidence that the total value of her assets on the date of marriage was $10,900.

[49] Ms. Thomas deposed that she owed $1,000 on her RBC Visa credit card on the date of marriage. The Equifax credit report confirms that her RBC Visa account was opened in April 1995, so she possessed the card on the date of marriage. There is no documentary evidence confirming the balance due on the card in July 2001, but her claim that she owed $1,000 was not challenged during her cross-examination and was not contradicted by Mr. Bakker. I accept her evidence regarding the outstanding $1,000 balance as credible. There is no evidence that she had any other debts on the date of marriage.

[50] Consequently, the net value of Ms. Thomas’s property on the date of marriage was $9,900 ($10,600 + $300 - $1,000).

Net Family Property Calculations

[51] The value of Ms. Thomas’s property at the date of valuation ($257,539.00), after deducting her liabilities at the valuation date ($263,436.30) and the net value of her property at the date of marriage ($9,900.00) is a negative amount. According to s. 4(5) of the Family Law Act, when a spouse’s net family property is less than zero, it is deemed to be equal to zero. Ms. Thomas’s net family property is therefore zero.

[52] The value of Mr. Bakker’s property at the date of valuation ($246,200.00), after deducting his liabilities at the date of valuation ($221,087.36) and the net value of his property at the date of marriage (-$13,000) is $38,112.64. His net family property is therefore $38,112.64.

[53] The difference between Mr. Bakker’s net family property and Ms. Thomas’s net family property is $38,112.64. Mr. Bakker owes Ms. Thomas half of this difference ($19,056.32) as an equalization payment.

[54] In his pleadings, Mr. Bakker sought an order for unequal division of net family property under s.5(6) of the Family Law Act. He pleaded that, during the marriage, Ms. Thomas unreasonably incurred debts to her parents and to the Canada Revenue Agency. He did not pursue the request for an unequal division at trial. In any event, such an order would not be justified because the evidence establishes that debts incurred by Ms. Thomas to her parents during the marriage were repaid and there is no evidence that her CRA debt was incurred recklessly or in bad faith: FLA, s. 5(6)(b).

Monies Advanced by Ms. Thomas’s Parents

[55] In an affidavit sworn June 30, 2017, Ms. Thomas deposed that her parents loaned the parties $30,000 in “early spring 2012”, before the marriage broke down. She stated that the purpose of the loan was to pay off their debts, including Mr. Bakker’s traffic violation fines and his arrears in child support for his daughter from a previous relationship, as well as her unpaid income taxes and credit card debts. She argues that the amount of Mr. Bakker’s equalization payment to her should be increased by an amount equal to half of the money borrowed, so that she can repay her parents.

[56] Mr. Bakker acknowledged during his cross-examination that there had been a plan for the parties to borrow money from Ms. Thomas’s parents to pay off their debts, but he testified that the parties separated before any loan was made, that the money subsequently advanced by his parents-in-law was loaned to Ms. Thomas alone, and that he paid off his outstanding child support arrears on his own after their separation. He disputes that he owes any money to his parents-in-law and submits that any money borrowed by Ms. Bakker from her parents should not factor into her net family property calculation or his equalization payment because the loan was made after the parties separated.

[57] I accept Mr. Bakker’s evidence and agree with his position on this issue. The evidence establishes that the money from Ms. Thomas’s parents was advanced to her and not to Mr. Bakker. Moreover, Ms. Thomas conceded that it was advanced in increments starting in July 2012, two months after the parties separated. For that reason, I have not included the loan in the net family property calculations above.

[58] The record establishes that Ms. Thomas’s parents refinanced their home on June 19, 2012. They did not testify at the trial, but the documentary evidence and Ms. Thomas’s testimony establish that they deposited a sum of $32,678.17 from their home equity into her father’s personal bank account. Ms. Thomas testified that cash withdrawals were made thereafter from her father’s account, that the money was given to her and that it was used to pay debts incurred by the parties during their marriage. She submitted copies of her father’s bank account statements, but the statements provide no details regarding the use that she claims to have made of the funds. Her evidence about payments made with her parents’ money was generally vague and unsupported by any documentation.

[59] Ms. Thomas conceded during her cross-examination that the money advanced by her parents was not used for its original planned purposes. Her tax arrears, Desjardins Visa and RBC Visa debts were not paid with those funds, nor were Mr. Bakker’s child support arrears. Ms. Thomas maintained, however, that the money advanced by her parents was used to pay off both of their debts. Although she admitted that no specific terms of repayment were negotiated, she asserted that Mr. Bakker understood he was expected to repay half of the monies advanced by her parents. Mr. Bakker denies that assertion, but acknowledges that some of the money loaned to Ms. Thomas from her parents was used to pay off some of his debts shortly after the parties separated. He agrees that Ms. Thomas should be reimbursed for those specific amounts.

[60] It is clear from the totality of the evidence – and Mr. Bakker concedes – that Ms. Thomas’s parents’ money was used in August 2012 to pay Mr. Bakker’s traffic fines in an amount of $2,376 and to pay penalty fees totalling $6,000 on their two mortgages after a monthly payment was missed in June 2012 (half of which was Mr. Bakker’s responsibility to pay). As discussed above, her parents’ funds were also used to settle the outstanding balance on the parties’ joint Home Depot credit card in the amount of $569 (half of which was Mr. Bakker’s responsibility to pay). Ms. Thomas borrowed this money from her parents. She is entitled to reimbursement for the payments that she made toward Mr. Bakker’s portion of these debts. Mr. Bakker’s equalization payment to Ms. Thomas will therefore be increased by $5,660.50 ($2,376 + $3,000 + $284.50).

[61] There is no reliable evidence in the record that Mr. Bakker owes Ms. Thomas (or her parents) any additional money in connection with funds that her parents loaned her in or after July 2012. Whatever additional funds may have been advanced to her and used to reduce her debt load is a matter between her and her parents; it has no bearing on the property issues between the parties in this matter.

Equalization Payment

[62] For the reasons set out above, Mr. Bakker owes Ms. Thomas an equalization payment of $19,056.32 plus $5,660.50, for a total of $24,716.82. This payment resolves all of their property issues.

CHILD SUPPORT

[63] The three children of the marriage have had their principal residence with their mother since the parties separated, with alternate weekends spent at their father’s apartment. Mr. Bakker is therefore obligated to pay child support to Ms. Thomas. He has not made any child support payments to date.

[64] Ms. Thomas is seeking an order for the payment of child support retroactive to the date of separation in April 2012. The parties continued living with the children under the same roof until August 31, 2013. They shared the mortgage and property tax expenses equally. In these circumstances, Ms. Thomas is not entitled to child support during the months that they lived together. One of the primary purposes of child support is to ensure that the children benefit from an equivalent standards of living in each parent’s household. This purpose has no application when the separated parents occupy the same household. Mr. Bakker’s child support arrears will therefore be calculated from September 1, 2013.

Mr. Bakker’s Income

[65] Mr. Bakker’s income for each of the years since 2013 must be determined in order to calculate the retroactive child support owed. A parent’s annual income, for the purposes of calculating child support under the Divorce Act, R.S.C. 1985, c.3 (2nd Supp.), is generally 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 on the person’s personal income tax return): s.15 of the Federal Child Support Guidelines. Mr. Bakker’s annual tax returns reflect the following total incomes: $37,826 in 2013, $40,398 in 2014, $47,002 in 2015 and $43,155 in 2016.

[66] In each of the above years, Mr. Bakker paid $481 in union dues. These dues must be deducted from his reported income pursuant to s. 1(g) of Schedule III of the Federal Child Support Guidelines. Thus Mr. Bakker’s annual income amounts, for the purpose of calculating his child support obligations, are as follows:

2013: $37,345 2014: $39,917 2015: $46,521 2016: $42,674

[67] Mr. Bakker’s income tax return and Notice of Assessment for 2017 were not available at the time of trial. I must therefore calculate his 2017 income based on the available evidence in the record.

[68] Mr. Bakker’s employment was terminated in mid-July 2017. He received severance pay in the amount of $9,500 from his former employer, as well as Employment Insurance benefits, then he commenced employment with a new employer in mid-December 2017. His T4s confirm that he earned $24,703.35 from his former employer (in addition to the severance pay) and $1,399 from his current employer. He paid $259 in union dues while working for his former employer during the first half of 2017.

[69] Mr. Bakker did not produce any documentation or disclose information relating to his E.I. benefits. The benefits must therefore be calculated based on the available evidence and the legislated employment insurance scheme, specifically ss.13 and 14(1) of the Employment Insurance Act, S.C. 1996, c.23.

[70] Employment insurance benefits are calculated based on 55% of a person’s regular weekly wage. Mr. Bakker was unemployed for approximately 22 weeks from mid-July 2017 until mid-December 2017. He earned $24,703 in the first 30 weeks of 2017. Pro-rating this amount, I conclude that he was earning a gross annual income of $42,818 before he lost his job. There is no evidence that his earnings included any overtime wages, so I will deem his regular weekly wage to be $823, based on an annual gross income of $42,818.

[71] Using regular weekly earnings of $823, Mr. Bakker’s severance pay of $9,500 represented approximately 11.5 weeks of pay. Taking into consideration the one week waiting period that he would have been required to serve before receiving E.I. benefits, I conclude that Mr. Bakker would have been eligible for 10.5 weeks of E.I. benefits prior to commencing his new job. At 55% of his regular weekly wage ($453), I deem his total E.I. benefits for 2017 to be $4,756.

[72] I therefore conclude that Mr. Bakker’s 2017 income was $40,099 (i.e., $24,703 - $259 + $9,500 + $4,756 + $1,399).

[73] Mr. Bakker testified that he expects to earn $37,100 at his new job in 2018. That estimate is consistent with the 2017 T4 from his current employer, showing that he was paid $1,399 for two weeks of work in late December 2017. I therefore accept that Mr. Bakker’s projected 2018 income is $37,100.

[74] Ms. Thomas does not dispute the income figures reported on Mr. Bakker’s tax forms and payroll slips. She does not claim that he is concealing any income. However, she argues that he is not working and earning to his full capacity. She did not employ the language of “imputation of income” in her pleadings and submissions, but she is a self-represented litigant who likely was not aware of the law on this issue. She gave evidence, cross-examined Mr. Bakker and made submissions alleging that he is intentionally underemployed.

[75] There is a duty on the part of a payor-parent to seek out reasonable employment opportunities that will maximize their earning potential so as to meet the needs of their children: Szitas v. Szitas, 2012 ONSC 1548, [2012] W.D.F.L. 5582, at para 57 and Drygala v. Pauli, , 61 O.R. (3d) 711 (C.A.), at para. 38. In light of this duty and the Court’s obligation to protect the rights of the children, I am compelled to consider whether a higher income should be imputed to Mr. Bakker based on Ms. Thomas’s evidence and arguments about his underemployment, even though she did not ask for a specific amount to be imputed to him.

[76] Section 19(1)(a) of the Federal Child Support Guidelines permits the Court to impute income to a parent who is intentionally underemployed (except in certain limited circumstances, which have no application in this case). There is no requirement of proof of bad faith or deliberate evasion of child support obligations in order to make a finding of intentional underemployment: Lavie v. Lavie, 2018 ONCA 10, 8 R.F.L. (8th) 14, at para. 26 and Drygala, at paras. 25-30. If a parent is earning less than they are capable of earning, having regard to all the circumstances, then they are intentionally underemployed. The relevant circumstances include the person’s age, education, training, experience, skills, health and past earnings history: Drygala, at para. 45; Lawson v. Lawson, , 81 O.R. (3d) 321 (C.A.), at para. 36; Thompson v. Thompson, 2013 ONSC 5500, [2013] W.D.F.L. 4400, at para. 98; Szitas at para. 57; and Cameron v. Cameron, 2018 ONSC 2456, at paras. 140-141.

[77] If a payor-parent experiences a loss of employment, they may be given a grace period to seek out employment in their field at a comparable remuneration before income will be imputed to them. However, if they have been unable to secure comparable employment within a reasonable time frame, they will be required to accept other less remunerative employment opportunities in order to satisfy their obligation to support their children: Szitas, at para. 57 and Cameron, at para. 141.

[78] Section 19 of the Federal Child Support Guidelines is not an invitation to the Court to arbitrarily select an amount as imputed income. There must be a rational basis underlying the selection of any such figure. Any amount selected as an exercise of the Court’s discretion must be grounded in the evidence: Drygala, at para. 44.

[79] In this case, Mr. Bakker has a college education as well as on-the-job training in tool and die making. He was working as a tool and die apprentice when the parties first met. He testified that he got laid off from that job before they were married. He said he then started working at a part-time job while seeking out employment in his field. He recalled that he had an interview for a tool and die making position just prior to the parties’ wedding, but he did not succeed in obtaining that job. He testified that, after their wedding, he continued to pursue employment in his field for some time while working minimum-wage jobs. Eventually, with the assistance of Ms. Thomas’s brother, he obtained a position as a warehouse worker at Winners. He worked full-time at Winners for over 12 years, until his employment was terminated in July 2017. The reason for his termination is unclear, but there is no evidence that it was for cause based on misconduct. After several months of unemployment, he accepted a position with his current employer at a lower rate of pay than what he was earning at Winners because he could not find comparable employment.

[80] I accept Mr. Bakker’s testimony regarding his employment history. During his cross-examination, Ms. Thomas suggested that he had quit a series of jobs and had failed to diligently pursue employment opportunities in tool and die making, but his testimony was unshaken.

[81] In the three years leading up to the parties’ separation, Mr. Bakker’s tax returns show that he earned the following annual employment incomes:

2010: $37,742 2011: $43,813 2012: $39,484

[82] Ms. Thomas testified that Mr. Bakker was not working to full capacity throughout their marriage. She stated that he lacked initiative and did not work as hard as he could have to contribute to their household income. She said she worked long hours (up to 60 hours/week), whereas he arrived home early from work and refused to obtain a second job to supplement his income.

[83] Mr. Bakker’s uncontested evidence is that, when he was working at Winners, he would leave home at 5:30 AM to take public transit to his job and would return home at the end of his shift around 4:35 PM. He did this for many years during the marriage. He was working full-time hours both before and after the parties’ separation, up until his employment was terminated in July 2017. In 2015, he worked overtime hours, which resulted in an increase in his income that year. He stated that overtime work was not available after 2015.

[84] There is no evidence that Mr. Bakker voluntarily left his position at Winners or deliberately transitioned to less remunerative work. There is no basis upon which to conclude that he sabotaged his earning potential or engaged in misconduct resulting in loss of his employment. He attempted to find comparable re-employment and when he could not do so, he accepted a lower-waged position but is still working full-time hours.

[85] The evidence does not support Ms. Thomas’s submission that Mr. Bakker is now or was during the marriage intentionally underemployed. Her perspective on this issue is grounded in her stereotypical views of the role of men in heterosexual relationships. During her cross-examination, she testified that “as a man” it was Mr. Bakker’s job to be the primary earner in their marriage. She stated, “my job was to be his help mate”. She said she was “forced to be the breadwinner” in their family and equated that to being “forced to carry his balls for him.” She also stated that, “as a man”, he should recognize the need to support his family. These gender stereotypes have no place in the law.

[86] Mr. Bakker’s duty to work to full capacity in order to support his children does not require him to earn as much or more than their mother. In the circumstances of this case, it does not require him to take a second job to supplement his full-time income. He worked full-time hours during the parties’ marriage and has continued to work full-time hours since the parties separated. He has not reduced his hours of work since separation except in 2017 when he was temporarily and involuntarily unemployed.

[87] Mr. Bakker’s annual income for 2018 is projected to be less than he was earning for the past four years. However, I am not convinced that his education, experience and skills could generate a higher income in today’s labour market. His earnings history consists largely of minimum wage work, apart from the one position he held at Winners for an extended period of time. He does not have a successful record of employment in tool and die making. His education and training in that field from 15 years ago have limited, if any, marketability today.

[88] For the above reasons, I conclude that Mr. Bakker is not intentionally underemployed. I therefore will not impute any additional income to him for the purpose of calculating his child support obligations.

Retroactive Child Support Owed by Mr. Bakker

[89] Based on his income, the Table amounts [^1] of monthly child support that Mr. Bakker was required to pay Ms. Thomas for their three children, pursuant to the Federal Child Support Guidelines, are as follows:

Sept. 1, 2013 to Dec. 31, 2013 (based on $37,345): $724 x 4 months = $ 2,896 Jan. 1, 2014 to Dec. 31, 2014 (based on $39,917): $763 x 12 months = $ 9,156 Jan. 1, 2015 to Dec. 31, 2015 (based on $46,521): $889 x 12 months = $10,668 Jan. 1, 2016 to Dec. 31, 2016 (based on $42,674): $811 x 12 months = $ 9,732 Jan. 1, 2017 to Dec. 31, 2017 (based on $40,099): $766 x 12 months = $ 9,192 Jan. 1, 2018 to Sept. 30, 2018 (based on $37,100): $720 x 9 months = $ 6,480

[90] The total retroactive child support owed by Mr. Bakker to Ms. Thomas equals $48,124.

Child Support Payments Going Forward

[91] Effective October 1, 2018, Mr. Bakker is required to pay $720/month in child support for the three children of the marriage based on his current income of $37,100.

[92] The amount of Mr. Bakker’s child support monthly payment may be reviewed annually on the anniversary of this judgement. For that purpose, he must provide a copy of his completed income tax return (with all schedules) and a copy of his Notice of Assessment (and any Notices of Reassessment) to Ms. Thomas on September 1st of each year, for as long as he is obligated to pay child support to Ms. Thomas.

SECTION 7 EXPENSES

[93] Ms. Thomas seeks reimbursement from Mr. Bakker of athletic expenses that she paid for the children since the parties separated.

[94] She submitted receipts showing that she paid $491 each for two of their children to play recreational soccer in the summer of 2015.

[95] She testified that she has paid fees for their daughter to play rep basketball, in an amount of approximately $850 annually since 2015. She submitted a receipt in the amount of $848.63 for the 2016-2017 basketball season. The team has numerous out-of-town tournaments, which necessitates travel, with associated expenses for gas, hotel accommodations and meals. Ms. Thomas estimated the travel costs are approximately $1,500 annually. She stated that their daughter also attends a summer basketball camp that costs $200-$300/year.

[96] Ms. Thomas testified that one of the parties’ two sons played rep soccer and the other played rep basketball in 2015-2016. She submitted a receipt confirming that the soccer fees were $1,412.75. She testified that the basketball fees were approximately $1,500. She stated that there were also travel costs relating to out-of-town tournaments for both of the boys’ rep sports. She explained that the boys did not continue playing rep sports after 2015 because she could not afford to register them. The boys play school sports instead.

[97] Ms. Thomas asks the court to order Mr. Bakker to reimburse her for 50% of these expenses and to contribute 50% of the children’s athletic expenses on an ongoing basis.

[98] Pursuant to s. 7(1)(f) of the Federal Child Support Guidelines, the Court can make an order for payment of “extraordinary expenses” for children’s extracurricular activities. The factors for consideration are the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family’s spending pattern prior to the separation.

[99] I find that the costs associated with the children’s recreational soccer and with their daughter’s summer basketball camp are not “extraordinary” expenses within the meaning of s.7(1.1)(a) of the Federal Child Support Guidelines. Ms. Thomas can reasonably cover those expenses with Mr. Bakker’s monthly child support payments.

[100] The rep sports are considerably more expensive. The evidence establishes that the costs exceeded $8,000 in 2015 and that Ms. Thomas has been paying approximately $2,350 per year for their daughter to play rep basketball since then. These expenses are not necessary to ensure that the children’s best interests are not compromised; the children could play (less costly) recreational sports instead. Indeed, the two boys are playing school team sports now. The parties have limited means. They did not register the children in rep sports prior to their separation, presumably because they could not afford to do so. There is no evidence that Mr. Bakker was consulted about the children’s enrolment in rep sports after separation. In these circumstances, I am not prepared to order Mr. Bakker to contribute to the children’s rep sports expenses.

[101] For the above reasons, Ms. Thomas’s request for a s.7 order for contribution to athletic expenses is denied.

SPOUSAL SUPPORT

[102] Mr. Bakker seeks an order for Ms. Thomas to pay him spousal support from September 1, 2013, for a period of 11 years, in a monthly amount of $397 based on an imputed annual self-employment income of $65,250. He submits that the retroactive spousal support should be calculated as a lump sum payment of $16,915 and offset against his retroactive child support obligation.

[103] The parties’ respective incomes must be considered in determining Mr. Bakker’s entitlement to spousal support and in calculating what amount, if any, of spousal support must be paid by Ms. Thomas.

Entitlement to Spousal Support

[104] There are three conceptual bases for entitlement to spousal support: compensatory, contractual and non-compensatory. Entitlement can be based on both compensatory and non-compensatory factors. My task is not to select from one of these conceptual models but rather to decide the issue of Mr. Bakker’s entitlement to spousal support based on the governing legislation, with all models in mind: Bracklow v. Bracklow, [1999] 1 S.C.R. 420, at para. 37. There is no contractual basis for spousal support in this case; the parties had no written agreement to pay spousal support.

[105] I am mindful of the four objectives of spousal support set out in s. 15.2(6) of the Divorce Act. Mr. Bakker relies primarily on the non-compensatory objectives of recognizing economic disadvantages and relieving economic hardship arising from the breakdown of the marriage. These objectives focus on the claimant spouse’s post-marital need and aim to relieve against need that is induced by the parties’ separation: Moge v. Moge, [1992] 3 S.C.R. 813, at p. 878-879.

[106] Mr. Bakker argues that the parties’ financial circumstances and incomes have been vastly different since they separated. He claims to be in a difficult financial position as a result of the marriage breakdown. He argues that, if he is not awarded spousal support, his financial situation will become dire. He submits that he will suffer crushing economic hardship if he is not awarded spousal support, particularly since he will be required to pay child support to Ms. Thomas.

[107] In order to determine Mr. Bakker’s entitlement to spousal support, I must first calculate Ms. Thomas’s annual income, which is in dispute.

Ms. Thomas’s Income

[108] Ms. Thomas is self-employed. She started her own hair-styling business in 2003 after working for a salon from 1996 to 2002. Initially, she worked from home; the children were young and were at home in her care. She did this until 2009, when she started to sublet space from a nearby barbershop. She has operated her business from this rental property since 2009. She incorporated the business in 2012.

[109] Ms. Thomas claims that she currently (in 2017 and 2018) earns an average of $1,917 monthly, or $23,004 annually. Her personal income tax returns show that she declared self-employment income of $12,485 in 2012, $18,804 in 2013, $19,200 in 2014, $21,840 in 2015 and $18,220 in 2016. The record does not include any of her income tax documents for 2017 or any income documents for 2018.

[110] Ms. Thomas’s annual income is derived from her business and from government benefits that she receives, namely the Ontario Trillium Benefit, Canada Child Benefit and Ontario Child Benefit. There is no dispute that these are her only sources of income. There is, however, a dispute about the amount of revenue that her business generates and the amount of income she receives from her business annually. Mr. Bakker alleges that she has undisclosed cash income. He also alleges that she has unreasonably deducted personal expenses from her business income.

[111] Imputation of income is permitted under Spousal Support Advisory Guidelines (“SSAG”) in situations where the court is of the view that the income reported in a party’s tax returns is not an accurate reflection of what the party is or could be earning. As with imputation of income for the purposes of child support calculations, any amount of imputed income must be grounded in the evidence in the record.

[112] In his pleadings and supporting affidavit, Mr. Bakker claimed that Ms. Thomas’s business generates in excess of $100,000 annually and that her take-home income is approximately $80,000. He deposed that he had knowledge of these earnings because she told him on a number of occasions during their marriage that she earned between $80,000 and $100,000. He provided no details of when or in what context these conversations allegedly occurred.

[113] Ms. Thomas denied ever telling him that she earned that much money. Indeed, she insisted that she did not discuss her income with Mr. Bakker except at the very outset of their marriage.

[114] It is clear from the evidence of both parties that money was a source of friction in their relationship. Ms. Thomas thought that Mr. Bakker was financially irresponsible and was not interested in saving money for their betterment. She testified that she did not discuss her earnings with him because she was trying to motivate him to work harder, earn more and help to “elevate” the family.

[115] Ms. Thomas also testified that she did not trust Mr. Bakker when it came to money. She said Mr. Bakker had tried to empty a joint bank account that they opened when they were first married, so she kept her finances separate from his after that incident. This evidence was not contradicted by Mr. Bakker, who recalled an occasion when he attempted to withdraw money from their bank account at an ATM and lost the bank card in the process. He also acknowledged that, on at least one occasion, he literally took money from her pocket (cash from clients that she kept in the pocket of her hairstyling cloak) without her consent.

[116] I accept Ms. Thomas’s testimony on this point. I find it implausible that she would have discussed her business revenue or personal income with Mr. Bakker in circumstances where she clearly did not trust him with money and wanted to keep their finances separate.

[117] Moreover, Mr. Bakker’s evidence on this point is internally inconsistent and not credible. During his cross-examination, he could not provide details of any purported conversations with Ms. Thomas about her income. Instead, he changed his evidence and testified that it was not what Ms. Thomas had told him but rather something that he saw on her tax returns in June 2010 which led him to believe that she was earning over $100,000 annually. He said that he saw income figures in excess of $100,000 on 2009 and 2010 tax documents that Ms. Thomas asked him to take to her accountant. His testimony on this point was disputed by Ms. Thomas, was inconsistent with his earlier affidavit evidence, was not supported by any documentary evidence, and was in any event too vague to be credible.

[118] I am not prepared to impute an $80,000 or $100,000 income to Ms. Thomas based on Mr. Bakker’s evidence. However, there is other reliable and credible evidence in the record that supports the imputation of some income to her. At the close of trial, Mr. Bakker’s counsel submitted that a self-employment income of $54,000 (grossed up to $65,250) should be imputed to Ms. Thomas.

[119] It is clear from the evidence that Ms. Thomas does not declare all of her business revenue or personal income, so her tax returns do not constitute an accurate record of her self-employment earnings. Although she deposed that her business was “mostly cash” when it started, she testified that clients are increasingly paying for her services using Interact debit transactions. Her business bank account statements corroborate this fact. However, she admitted during cross-examination that she is still sometimes paid by clients in cash, that she sometimes does not charge HST on cash payments, that she sometimes does not report cash payments in her corporate and personal income tax returns, that she does not always deposit cash payments into her business bank account and that she does not always keep track of the total amount of money she receives from clients in a day. She also confirmed that she receives small cash gratuities from clients and does not always deposit them to her business bank account or keep a record of them.

[120] The most complete post-separation year for which business bank account statements were produced by Ms. Thomas is 2014. She produced statements for only 10 months of that year and provided no explanation for the two missing months. The statements show that deposits made to the business account over 10 months totalled $71,366. There is no evidence of the amount of deposits made in the two missing months (and no evidence that the business was not operational). It is not known how many cash payments and/or gratuities Ms. Thomas received in 2014 that were not deposited to the account. What is known is that she declared only $62,368 in gross revenue in her Business Income Statement for 2014, which is approximately $9,000 less than the minimum amount known to have been deposited to the business account that year (without taking into consideration the missing two months). Based on this evidence, Mr. Bakker asks the Court to find that Ms. Thomas’s business is actually generating thousands of dollars more than she declares on her Business Income Statements (i.e., at least an average of $7,136 in income for each of the two missing months in 2014).

[121] Ms. Thomas testified that the discrepancy between the total amount of the deposits made to her business account in 2014 and the amount of business revenue she declared was not due to concealed income but rather to lump sum child benefit payments she deposited to her business bank account. She explained that she did this because the benefit cheques were made out to her married surname (Bakker) and her personal account was in her maiden surname (Thomas), whereas the business account was in the name Sue Bakker Salon Inc. When the cheques were deposited to her personal account, the funds were temporarily held by the bank, whereas she could immediately access the funds when the cheques were deposited to her business account. For that reason, she often deposited the cheques to her business account.

[122] Ms. Thomas was asked during her cross-examination about several deposits in excess of $1,000 made to her business bank account in the first few months of 2014. She testified that they were government benefit cheques. She explained that she did not file her taxes on time in 2014, so the benefit cheques for that year ceased, which is why there are no similar deposits in the bank statements for the latter part of 2014. She further testified that a deposit to her business account in the amount of $10,744 in December 2014 was a lump sum child benefit cheque that she received after filing a late tax return for an earlier tax year.

[123] I accept Ms. Thomas’s explanation of the discrepancy between her reported business income and the total deposits made to her business bank account. It is both plausible and consistent with documentary evidence in the record. I am therefore not prepared to impute income to her on that basis. However, I agree with Mr. Bakker’s submission that Ms. Thomas’s business revenue in 2014 must have been greater than the $62,368 reported on her Business Income Statement because of undisclosed cash payments and gratuities that she received. Similarly, her business revenue in 2015 must have been greater than the $66,156.11 she reported.

[124] Ms. Thomas did not track all of the cash payments she received so I must estimate the amount of her undisclosed income based on the totality of the evidence in the record. She testified that she works six days/week, up to 60 hours/week. She said her business revenue fluctuates depending on the time of year. She stated that she sees as few as 3 and as many as 10 clients in a single 10 hour work day. She estimated that, in an average week, Monday and Tuesday would be “slow days” at her salon, she might see 4 clients on Thursday and Friday, and 5 or 6 clients on Saturday. The holiday season would be busier. She said she typically bills a modest amount between $20 and $50 per client and often receives gratuities of between $2 to $5 dollars from clients.

[125] Based on this evidence and on the budget she included in her sworn Financial Statement, I find that she receives on average $100/week in cash payments that are not deposited to her account, recorded or disclosed to her accountant. She testified that any unreported cash revenue was spent on food and items for her children, so it constitutes undeclared personal income. Based on a 50 week work year (allowing for 2 weeks of vacation), an additional amount of $5,000 of non-taxed income will therefore be imputed to her annually.

[126] Additional income will also be imputed to Ms. Thomas because of substantial personal expenses that she deducts from her business income. For example, in 2014, she deducted $10,007 as a motor vehicle expense for her personal vehicle. She testified that her accountant made this deduction because she sometimes carries hair products in her car and occasionally drives to a client’s home or a nursing home to provide hair styling services. However, she conceded that the bulk of her business is conducted in her salon and admitted that her car is primarily used for personal reasons. The $10,007 motor vehicle expense is therefore not a reasonable deduction when calculating her income for spousal support purposes.

[127] Similarly, in 2014, she expensed $1,878 for business travel and entertainment. She testified that, “Like everyone else, we go out and talk about business for 10 minutes and I expense it.” Asked about vacation trips that she has taken, she stated that she usually “writes them off” as a business expense, but she conceded that they are “mostly for pleasure”. In light of these admissions, the travel and entertainment expenses are not reasonable deductions when calculating her personal income for spousal support purposes.

[128] No issue was taken with other deductions on her 2014 Business Income Statement and there is no basis for me to conclude that any other deductions were unreasonable.

[129] Consequently, I calculate Ms. Thomas’s self-employment income in 2014 as follows:

Reported earnings $19,200 Unreported cash earnings $ 5,000 Unreasonably deducted personal expenses $11,885 Total 2014 self-employment income: $36,085

[130] The personal expenses paid by her business were not as large in 2015. Her 2015 Business Income Statement shows that she deducted $1,292.77 for her vehicle and $998.39 for travel and entertainment that year. For the reasons outlined above, these deductions are not reasonable in the context of calculating her income for spousal support purposes. No issue was taken with any of the other deductions on her 2015 Business Income Statement.

[131] I therefore calculate her self-employment income in 2015 as follows:

Reported earnings $21,840 Unreported cash earnings $ 5,000 Unreasonably deducted personal expenses $ 2,291 Total 2015 self-employment income: $29,131

[132] Ms. Thomas provided no evidence of her business revenue in 2016, 2017 or 2018. I accept her testimony that her salon is more profitable in some years than in others, but I will infer that the business in 2016-2018 was at least as profitable as it was in 2015. There is no evidence relating to her business expense deductions in the past three years, so I will infer that she continues to make unreasonable deductions in an average amount of $7,000 annually. I am entitled to make these adverse inferences because it was incumbent on her to make full disclosure of her annual Business Income Statements. An imputed amount of $12,000 will be added to her declared self-employment income in 2016, 2017 and 2018 to account for unreasonably deducted personal expenses ($7,000) and undisclosed cash income ($5,000).

[133] Ms. Thomas’s declared self-employment income ($18,220) in 2016 will therefore be increased to $30,220. Her 2017 and 2018 declared self-employment income ($23,004) will similarly be increased to $35,004.

[134] In addition to her self-employment income, I must take into consideration non-taxable benefits that she is entitled to receive. Child benefits are not treated as income for the purpose of calculating a payor’s child support obligations, but they are treated as income for the purpose of calculating spousal support: SSAG, ss. 6.3 and 6.4.

[135] In her sworn Financial Statement, Ms. Thomas disclosed income from child benefits in the amount of only $180/month. Documentary evidence in the record demonstrates that she is receiving significantly greater benefits than what she disclosed. For the 2016 tax year, she received $16,200 in Canada Child Benefits and $4,134 in Ontario Child Benefits. During her cross-examination, she confirmed that she has been entitled to child benefits since the date of separation. She stated that she files her income tax returns late, so she does not receive the benefit cheques on a regular periodic basis but rather receives retroactive lump sum payments only after her taxes are filed. The documentary evidence shows that she did not receive the combined $20,334 in child benefits for 2016 until 2018.

[136] The child benefits must be included in the calculation of her total income in the years for which they are payable. It is incumbent on her to file her taxes in a timely fashion in order to receive the benefits without delay.

[137] An annual amount of $20,334 will be included in the calculation of Ms. Thomas’s total income for spousal support purposes. I recognize that the amount of her child benefits may have been less in years prior to 2018, but she submitted no evidence to prove the amount of benefits received. It is her obligation to make full disclosure. Based on her non-disclosure, I am entitled to draw the adverse inference that she received at least as much in tax benefits in prior (and subsequent) years.

[138] The documentary evidence in the record and Ms. Thomas’s testimony confirm that she also receives an Ontario Trillium Benefit in the amount of $690 annually. That amount will therefore also be added to her total income for spousal support purposes.

[139] Ms. Thomas declared so little personal income in 2014, 2015 and 2016 that she was not required to pay any taxes. At the time of trial, she had not yet filed her 2017 income tax return. I infer that she continues to arrange her affairs in such a way as to avoid paying any taxes.

[140] In assessing Mr. Bakker’s claim for spousal support, the parties’ incomes must be compared on an equal footing. He is an employee who pays federal and provincial income taxes on his employment earnings. The calculation of her non-taxed income must therefore be grossed up to account for taxation.

[141] Based on all of the above factors and using DivorceMate software to gross up her income, I impute to Ms. Thomas the following annual incomes:

2014: $68,745 2015: $60,498 2016: $60,766 2017: $67,278 2018: $67,082 (projected)

[142] I am confident in the reasonableness of these imputed income calculations because Ms. Thomas’s sworn Financial Statement lists expenses totaling $5,304/month ($63,648 annually). She testified that she sometimes spends more on clothing and rent than she listed in her budget. She said she acquired a new credit card post-separation and “maxed” it. She stated that she currently owes $2,500 on that card. Since the parties separated, she has borrowed some money from her parents to service other debts, but her parents are not supporting her financially, except to provide her and her children with accommodation in their home at low rent. She could not possibly afford her reported living expenses if she were earning only the modest income that she declared (of $23,004 annually or less). The imputed annual incomes set out above are consistent with her reported expenses and with the modest debt that she has incurred since the parties separated.

Disparity in Parties’ Incomes after Separation

[143] As the above calculations demonstrate, there is a significant disparity of almost $30,000 between the parties’ current incomes. This disparity is partly attributable to the termination of Mr. Bakker’s employment in July 2017 and his inability to find re-employment at a comparable wage. That change in his employment circumstances occurred five years post-separation and was not connected to the breakdown of the marriage. It is therefore not a basis upon which to find entitlement to spousal support: Rezel v. Rezel (2007), , 37 R.F.L. (6th) 445 (ON Sup. Ct. J.), at para. 20 and Lawder v. Windsor, 2013 ONSC 5948, 37 R.F.L. (7th) 417, at paras. 21, 26.

[144] There was, however, a marked disparity in the parties’ incomes in the immediate aftermath of their separation and in the years following their separation, before Mr. Bakker lost his job. In the first year after the parties sold the matrimonial home and Ms. Thomas commenced this Application (2014), Mr. Bakker’s income was $39,917, whereas Ms. Thomas’s (imputed) income was $68,745. In 2015, Mr. Bakker had the opportunity to work overtime and increased his income to $46,521. Ms. Thomas’s (imputed) income that year was $60,498. In 2016, Mr. Bakker’s overtime opportunities ceased and he earned $42,674, whereas Ms. Thomas’s (imputed) income that year was $60,766. Before his employment was terminated in July 2017, Mr. Bakker was earning an annual income of $42,818; Ms. Thomas’s 2017 (imputed) income was $67,278.

[145] The disparity in the parties’ incomes is an important factor that supports Mr. Bakker’s claim for spousal support, but it is not a sufficient basis upon which to make a support order. I must also evaluate Mr. Bakker’s claim that he has an economic need induced by the breakdown of the marriage and that he requires spousal support to relieve against economic hardship.

Economic Disadvantage Arising from the Marriage Breakdown

[146] Non-compensatory support claims are based on a loss of the marital standard of living that results when a marriage ends: Papasodaro v. Papasodaro, 2014 ONSC 30, [2014] W.D.F.L. 1646, at para. 59. Mr. Bakker argues that he has suffered such a loss and that he has a need for spousal support as a result.

[147] Mr. Bakker testified that he has been struggling financially since the parties separated. He stated that Ms. Thomas was the primary income earner in their relationship and that he came to depend on her income during the marriage. He does not have the family support network that Ms. Thomas enjoys and his standard of living has therefore declined since they separated. He moved into a small two-room basement apartment and had no access to a car until recently, when a friend gave him one. None of this evidence is disputed.

[148] Both parties testified that Ms. Thomas controlled the family finances during the marriage. She unilaterally made decisions about large purchases. Mr. Bakker made meaningful financial contributions to the household, but Ms. Thomas funded the majority of their family expenses. From the date of purchase of their first home, Mr. Bakker paid the monthly mortgage and property taxes, in an initial amount of approximately $1,700 and later $1,900. Ms. Thomas paid for all of the other household expenses, including all utilities, car payments, home and auto insurance premiums, gas, groceries, clothing, and tuition for the children to attend private school. She testified that her share of the monthly expenses was much greater than Mr. Bakker’s share. I accept her uncontradicted evidence on this issue, particularly in light of the fact that she was paying $10,000 annually in private school tuition fees. (The children are now enrolled in the public school system.)

[149] It should be noted that the parties’ marital standard of living was not one of luxury. Although they owned a spacious five bedroom home, they could not afford to furnish it other than sparsely. Ms. Thomas testified that utility bills were not always paid and that the hydro service to the house was shut off for a couple of days as a result. She said she occasionally frequented a food bank because she could not afford to purchase groceries for the family. Mr. Bakker did not dispute or contradict her evidence on these points.

[150] Thus while the parties may have appeared to be living in relative comfort and were sending their children to a private school, they were actually living beyond their means. This is reflected in Ms. Thomas’s accumulated debt over the course of the marriage. When Mr. Bakker’s post-separation circumstances are compared to the marital standard of living, it must be done with a view to this reality.

[151] Still, I accept Mr. Bakker’s evidence that his standard of living has declined relative to the parties’ marital standard of living. Both parties have been negatively impacted by the breakdown of the marriage because of the lost advantage of economic interdependency. Ms. Thomas has the benefit of residing in her parents’ home, but it is occupied by at least four other adults (her parents, her adult son and her adult nephew) and she shares one bedroom with the parties’ three children. I accept as credible her testimony that she is struggling to pay her bills. However, her financial difficulties are largely attributable to the fact that she has solely supported the children since the parties separated, with no financial assistance from Mr. Bakker – a circumstance that is about to change.

[152] Although the evidence establishes that both parties have experienced some economic disadvantage arising from the breakdown of their marriage, I find that Mr. Bakker’s need is greater. After payment of his $720 monthly child support, his ability to fund groceries, daily living expenses and incidentals (such as car repairs) will fall below a reasonable standard: Papasodaro, at para. 55. His economic circumstances, induced by the parties’ separation, will amount to hardship that must be relieved by an award of spousal support.

[153] For the above reasons, I conclude that Mr. Bakker is entitled to spousal support on a non-compensatory basis. No case has been made for compensatory spousal support.

Amount and Duration of Spousal Support Owed by Ms. Thomas

[154] In determining the amount and duration of spousal support to be paid by Ms. Thomas, I must take into consideration the condition, means, needs and other circumstances of each party, including the length of their cohabitation (12 years) and the functions that they each performed during their cohabitation: Divorce Act, s15.2(4). I must also consider the ranges produced by the Spousal Support Advisory Guidelines.

[155] The SSAG generate suggested ranges of both amount and duration of spousal support that reflect the current law. The ranges are calculated based on different formulas, depending on the circumstances of each case. In this case, the Custodial Payor formula applies because the parties’ children reside with Ms. Thomas. This formula takes into account Ms. Thomas's reduced ability to meet the expense of spousal support given the costs of three dependent children. It also takes into account Mr. Bakker’s child support obligations.

[156] In order to calculate an equitable amount of spousal support, I have averaged the parties' post-separation incomes for 2014, 2015 and 2016, the three years following the sale of their matrimonial home and the commencement of this Application. This ensures that Ms. Thomas will not be required to pay an amount of spousal support that takes into consideration Mr. Bakker’s recent decline in income, which had no connection to the marriage breakdown.

[157] The average of Ms. Thomas’s (imputed) earnings for those three years is $63,336. The average of Mr. Bakker’s earnings is $43,037. Applying the Custodial Payor formula to these averages, with three children, the SSAG produce a range of spousal support in the amount of $190 (low) to $221 (mid) to $253 (high) per month for a duration of 6 to 12 years. This assumes that Mr. Bakker has been paying $857/month in child support (based on average earnings of $43,037 annually). When Mr. Bakker’s actual child support payments of $720/month are inserted into the formula, the SSAG produce a range of $155 (low) to $180 (mid) to $206 (high) for 6 to 12 years (using the parties’ average earnings).

[158] In reviewing these amounts in the context of the parties’ financial statements and budgets, and taking into consideration the length of their cohabitation, I find that $250 per month (at the highest end of the ranges) represents a reasonable amount of spousal support and that 9 years is an appropriate duration: Divorce Act, s.15.2(1).

[159] Time limited spousal support orders are generated by the SSAG in most cases where support is calculated based on the Custodial Payor formula, but the Court must consider, in every case, whether a support order should have a temporal limitation: Fisher v. Fisher, 2008 ONCA 11, at paras.83-84. In this case, Mr. Bakker is seeking spousal support for 11 years.

[160] The parties’ marriage was not brief but neither was it long-term, which would warrant an indefinite order. It was of a medium duration; the parties lived together for 12 years. When they parted in August 2013, Mr. Bakker was 45 years old. He is relatively youthful and is currently debt-free (apart from the equalization payment and retroactive child support that he owes Ms. Thomas pursuant to this judgement). He no longer owes any child support for his eldest child. He has post-secondary education and work experience. He has no disability that impairs his capacity to work full-time. With these factors in mind, I find that he should be able to achieve financial self-sufficiency within a relatively short period of time.

[161] I have granted him an order of spousal support to satisfy the objectives of s.15.2(6)(a) and 15.2(6)(c) of the Divorce Act, namely to recognize and relieve against the greater economic disadvantage to him arising out of the marriage breakdown. However, the objective of promoting the economic self-sufficiency of the parties is equally important: Divorce Act, s.15.2(6)(d) and Moge, at para. 35. In this case, it is reasonable to expect that Mr. Bakker will be able to achieve self-sufficiency within 9 years of August 31, 2013 when the parties parted.

Retroactive Spousal Support

[162] No spousal support has been paid by Ms. Thomas since the parties separated. She ought to have been paying $250/month since September 1, 2013. Over the past 61 months, she owed Mr. Bakker a total of $15,250 in spousal support.

[163] If the spousal support payments had been made periodically over time, Ms. Thomas would have been able to deduct them from her income for tax purposes, though she would not have gained any tax advantage because she paid no taxes in any event. Mr. Bakker would have been required to declare the support payments as income and would have incurred tax liability as a result. He would have netted an average of approximately $190/month after taxes. Over 61 months, he would have netted a total of $11,590 in spousal support after taxes.

[164] Paid in a lump sum, the retroactive spousal support is neither tax deductible for Ms. Thomas nor taxable in Mr. Bakker’s hands. If Mr. Bakker received a lump sum payment of $15,250, he would obtain a windfall. On the other hand, if I reduced the amount owing from $15,250 to $11,590 to account for his tax liability, then Ms. Thomas would obtain a windfall. She would effectively save the amount that he would have been required to pay in taxes on periodic support payments. In these circumstances, the most equitable approach is to split the difference. I therefore order Ms. Thomas to pay retroactive spousal support in an amount of $13,420.

[165] This retroactive spousal support order will be offset against the amount of retroactive child support owed by Mr. Bakker. Inter-spousal debts cannot be offset against prospective child support orders but an offset is permissible with respect to retroactive orders: Pascual v. Pascual, 2018 ONSC 5412 at paras. 63-66. I find that this is an appropriate case in which to make such an order. Both parties have neglected their mutual support obligations for the past five years. An offset will permit them to get current on their respective support payments and most importantly, it will not negatively impact the children.

Payment of Spousal Support Going Forward

[166] Commencing October 1, 2018, Ms. Thomas must pay Mr. Bakker $250 per month in spousal support on the 1st of each month, up to and including August 1, 2022. These payments cannot be offset against Mr. Bakker’s child support payments of $720 because of the different tax treatment of spousal support and child support.

CONCLUSION

[167] Ms. Thomas is entitled to retroactive child support in an amount of $48,124. Mr. Bakker is entitled to retroactive spousal support in an amount of $13,420. These amounts are offset, such that the amount of Mr. Bakker’s retroactive child support owing is reduced to $34,704 and Ms. Thomas owes no retroactive spousal support.

[168] Mr. Bakker is entitled to $34,349.92 from the equity of the matrimonial home. That money will be put toward his retroactive child support.

[169] I therefore order that the full amount of the funds held in trust from the sale of the matrimonial home ($35,224.42) be released to Ms. Thomas.

[170] Mr. Bakker still owes Ms. Thomas $354.08 in retroactive child support, as well as an equalization payment of $24,716.82. He shall make these payments within 30 days of the date of this judgement. Post-judgement interest will accrue on any unpaid amounts, in accordance with the Courts of Justice Act, R.S.O. 1990, c.43.

[171] Commencing October 1, 2018, Mr. Bakker is ordered to pay Ms. Thomas $720/month in child support for the three children of the marriage and Ms. Thomas is ordered to pay Mr. Bakker $250/month in spousal support until August 1, 2022.

[172] The support orders contained in this judgement may be enforced through the Family Responsibility Office.

COSTS

[173] The parties may make brief writing submissions of no more than two pages with respect to costs. Submissions must be accompanied by an Outline of Costs and by any settlement offers that have costs implications. Mr. Bakker shall serve and file his submissions by October 19, 2018. Ms. Thomas shall serve and file her submissions by November 5, 2018. There will be no reply submissions unless requested by me.

NOTE TO THE PARTIES: If I have made any arithmetical errors in my calculations, the parties may bring them to my attention within 14 days of the date of this judgement so that they may be corrected. In the event that an error is detected, either party should write to the Court, with a copy to the opposing party. If necessary, a teleconference call may be scheduled to speak to the issue.

Petersen J. Released: September 27, 2018

[^1]: The 2011 Table was used for the years 2013-2017 and the 2017 Table was used for 2018.