COURT FILE NO.: FS-15-82841-00
DATE: 2019 09 27
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Vanessa Lall-Persaud v. Devendra Persaud
BEFORE: Dennison J.
COUNSEL: Chad D. Rawn, for the Applicant
Krystal Myge, for the Respondent
HEARD: In writing
E N D O R S E M E N T
[1] The parties have a young son together. There was a four-day trial that dealt with custody, access and child support. Ms. Lall-Persaud submitted that Mr. Persaud earned undeclared income from DJing that should be included when considering the amount of child support that should be paid. Ultimately, I found that $11,000.00 should be imputed to Mr. Persaud’s income commencing in 2015 from DJing.
[2] I asked the parties for further submissions with respect to how the child support arrears should be calculated based on the imputed income to Mr. Persaud and how child support should be calculated including the imputed income moving forward.
[3] I have received and considered the parties’ submissions. Below are my reasons with respect to the child support arrears and how child support should be calculated going forward based on the imputed income to Mr. Persaud.
Background Facts
[4] Mr. Persaud worked full-time as a project manager. This income was reflected in his tax returns. In addition, Mr. Persaud DJed. Mr. Persaud contracts his DJing services exclusively for Paradise2demax, which is owned by Mr. Ramcharan.
[5] Mr. Persaud declared a gross income from DJing of $2,500 in 2015, a gross income of $2,125 in 2016, and a gross income of $2,850 in 2017. His net income from DJing in 2015 was $432.64; $470 for 2016 and $550 for 2017. The expenses he claimed were for items such as advertising, gas, telephone, and rental equipment.
[6] After reviewing the evidence filed at trial, I determined that Mr. Persaud DJed at more events between 2015 and 2017 than he claimed. I also held that Mr. Persaud earned more money DJing than he claimed on his income tax returns. There were large amounts of unexplained deposits in his bank account during this period. Based on the evidence, I determined that $11,000 should be imputed as income from DJing, commencing in 2015. Detailed reasons for my decision are found at 2019 ONSC 3587.
[7] I determined that it was appropriate to allow the parties to make submissions as to how the imputed income should be considered in relation to the child support arears and how it should be considered moving forward.
[8] Mr. Persaud was laid off from his employment in May 2019. He does not seek to reduce his income for the purpose of calculating child support at this time. He seeks to have his child support obligations adjusted once he has new employment.
Issue #1: What is Mr. Persaud’s Income from 2015 to 2018 Including the Imputed Income?
[9] Ms. Lall-Persaud submits that I should not consider any business deductions that Mr. Persaud claimed in his tax returns related to his DJ income when determining his total income. She submits that his total income after the imputed income should be determined as follows:
Year
Respondent Income (para. 147 of Trial Dec.)
Less Declared Net DJ Income Claimed to CRA by Resp.
Cash Income of $11,000 Grossed up at 29.65%
Total Income after Imputed Income Grossed Up
2015
$58,897.00
$432.64
$15,636.11
$74,100.47
2016
$61,274.00
$470.00
$15,636.11
$76,440.11
2017
$60,370.00
$550.00
$15,636.11
$75,456.11
2018
$62,407.80
$0.00
$15,636.11
$78,043.91
[10] Ms. Lall-Persaud submits that Mr. Persaud did not provide sufficient evidence to prove the deductions he claimed as DJing expenses. She submits that the court should draw an adverse inference and disallow all deductions that Mr. Persaud made on his tax returns related to his DJ expenses.
[11] Mr. Persaud has proven on a balance of probabilities that the expenses for his DJ business are legitimate for the purpose of calculating child support. In coming to this conclusion, I recognize that an expense is not reasonable simply because the Canada Revenue Agency has accepted it as an expense: see Rule 19(2) of the Federal Child Support Guidelines.
[12] In Mr. Persaud’s affidavit, he stated that he had monthly expenses for DJing, including: $50 per month for DJ music pool; rental expenses; phone bill of $22 per month; gas of approximately $50 per month; and equipment costs that varied year to year. He also testified that he buys and sells DJ equipment on Kijiji.
[13] Mr. Persaud’s tax returns supported his evidence. In his 2017 tax return, he claimed the following expenses: $125 for advertising; $780 for travel expenses; $260 for telephone; $810 for supplies and rental equipment; and $325 for DJ help.
[14] In 2016, Mr. Persaud claimed $1,655 in expenses. Those expenses included $740 for office expenses, $710 for travel and $205 for telephone and utilities. Finally, in 2015, Mr. Persaud claimed office expenses of $982, travel of $810 and telephone and utilities of $275.26.
[15] I am not satisfied that these expenses are unreasonable pursuant to s. 19(g) of the Federal Child Support Guidelines. Mr. Persaud testified that, while he owns most of his DJing equipment, he often buys and sells it on Kijiji. Mr. Ramcharan, who owns Paradise2demax, confirmed that the DJs bring their own equipment to events. Mr. Persaud also filed rental receipts from Long and McQuade that specified the equipment rented. It appears that the $125 for advertising was in relation to the promotional CD that Mr. Persaud testified he created to increase business. With respect to his telephone expenses, he claimed approximately $20 per month, which does not seem unreasonable. With respect to travel, Mr. Persaud has claimed travel expenses of approximately $20 per DJing event, which also does not seem unreasonable.
[16] This case is not like Janik v. Drotlef, 2018 ONCJ 287, which Ms. Lall-Persaud referred to in her submissions. In that case, the father manufactured many of the receipts for the trial. He also deducted expenses that were clearly not business expenses, including children’s toys, clothing and furniture. In this case, the tax returns were filed, along with phone bills, and Mr. Persaud’s rental receipts. Even in Janik, where the trial judge found the father to be completely discreditable, the trial judge allowed some expenses as “obviously some deduction for expenses is inherent in running a business”, which included transportation: see paras. 36, 168-169. The expenses claimed by Mr. Persaud appear inherent to operating a DJ business.
[17] Mr. Persaud stated that his income should be calculated as follows:
Year
Respondent Income (Para 147 of Reasons for Judgment dated June 11, 2019)
Imputed Income Less Gross declared DJ (self-employed) grossed up at 29.65%
Total Income for Child Support Purposes including Imputed Income Grossed Up
2015
$58,897.00
$11,000 - $2,500 (declared) = $8500
- 29.65 % =
$11020.25
$ 69,9167.25
2016
$61,247.00
$11,000 - $2125
(declared) = $8875
- 29.65 % =11506.44
$72,780.44
2017
$60,370.00
$11,000 - $2850 (declared) = $8150
- 29.65%= 10566.48
$70,936.48
2018
$62,407.80
$11,000 - $2500 (declared) = $8,500. + 29.65 % = $11,020.25
$73,428.05
[18] I prefer to use the calculations provided by Divorcemate with respect to calculating income that includes grossed-up income because the calculation is not best calculated by multiplying the imputed income by 29.65%. I have attached the Divorcemate calculations for 2015 to 2018 as Appendix A to this decision. Mr. Persaud’s total income calculated for the purpose of child support is as follows:
2015: $71,242.00
2016: $74,102.00
2017: $71,953.00
2018: $74,702.00
Issue #2: What Amount of Child Support Arrears are Owed?
[19] Ms. Lall-Persaud submits that I should revisit my decision with respect to reducing child support by $200 per month for Mr. Persaud, pursuant to s. 10 of the Guidelines, when calculating the amount of child support arrears that are owed.
[20] Ms. Lall-Persaud submits that I erred in fact and in law in deducting the $200 per month travel expenses that Mr. Persaud incurred for travelling to visit his son. Mr. Persaud lives in Whitby. Their son lives in Mississauga. Mr. Persaud has dropped off and picked up their son in Mississauga for the past four years. Ms. Lall-Persaud has not left her neighbourhood to do any of the drop-offs or pick-ups, and she took the position that she should continue to do none.
[21] Submissions from counsel on this issue was neither requested nor appropriate. A final decision was made, and it is not appropriate that I revisit it. This matter may be appealed, if Ms. Lall-Persaud wishes.
[22] Based on the Child Support Guidelines, the following child support arrears are owed:
Year
Total Income for Child Support
Child Support Owing in the Year
Less Child Support Paid in the Year
Less Deduction for Travel
Total Arrears Owing
2015
$71,242.00
$649.00 x 12 = $7,788.00
$505.00 x 8 = $4,040.00
$200.00 x 12 = $2,400.00
$1,348.00
2016
$74,102.00
$674.00 x 12 = $8,088.00
$505.00 x 12 = $6,060.00
$200.00 x 12 = $2,400.00
- $372.00
2017
$71,953.00
$672.00 x 12 = $8,064.00
$505.00 x 12 = $6,060.00
$200.00 x 12 = $2,400.00
- $396.00
2018
$74,702.00
$698.00 x 12 = $8,376.00
$505 x 12 = $6,060.00
$200.00 x 12 = $2,400.00
- $84.00
Total
$496.00
[23] Mr. Persaud owes $496.00 in child support arears from 2015 to 2018.
Issue #3: How Should the Income be Imputed from January 1, 2019?
[24] Ms. Law-Persaud submits that for each year Mr. Persaud continues to DJ, the imputed DJ income should be increased by $1,500, starting in 2019, until the imputed income reaches $20,000 (in the year 2024). In 2024, the imputed income shall plateau pending a further court order. She submits that this is appropriate to avoid requiring the parties to attend court and meet a very difficult evidentiary onus on any future application.
[25] There is no evidence to suggest that Mr. Persaud will receive an increase in DJing income in the amount of $1,500 per year. Based on the evidence at trial, there was little increase in the amount being paid to Mr. Persaud from DJing over the course of four years. While I am sympathetic to the parties having to return to court, there is no evidence before me to support such an increase. I agree that there will likely be an increase in income earned from DJing based on the cost of living. In the circumstances, it is appropriate to require that the cost of living be added to the $11,000 on a yearly basis commencing in 2020.
[26] To be fair to the parties, should Mr. Persaud declare more than $11,000 from DJing on his next tax return, it will be unnecessary to impute $11,000 as income. The higher amount shall apply. Expenses for the purpose of calculating Mr. Persaud’s income are limited to $2,500 per year.
[27] Mr. Persaud’s income for 2019 is to be based on his 2018 income which was $74,702. He therefore owes $6,282 (9 x 698) in child support as of September 2019. Assuming he has continued to pay $505 per month which would total $4,545 (505 x 9) and keeping in mind the $200 deduction per month totalling $1,800, Mr. Persaud is owed $63 for 2019 This amount may be deducted from the child support arrears due from 2015 to 2018. Mr. Persaud is required to pay $433.00 in child support arrears on October 1, 2019.
[28] As of October 1, 2019, Mr. Persaud is to pay child support in the amount of $498 per month.
[29] Commencing in 2020, the parties shall exchange their notices of assessment every year prior to June 30th. Upon the notices being exchanged, the parties shall factor any imputed cash income from DJing and adjust the child support and s. 7 expense ratios for the year retroactive to January 1st pursuant to the Child Support Guidelines. The parties shall also make any payments required by the adjustments payable within 60 days, to comply with the Child Support Guidelines.
Issue #4: Should I order Prejudgment Interest and Payment of Arrears?
[30] I am not prepared to grant prejudgment interest on the child support arrears given that Mr. Persaud offered to pay a great amount of child support that was declined by Ms. Lall-Persaud and given the minimal amount owing.
Issue #5: Should There be Arrears for s. 7 Expenses?
[31] At trial, Ms. Lall-Persaud only claimed s. 7 arrears for daycare costs. I previously found that there should be no arrears for daycare costs from Angelic Treasures from October 2015 to August 2018 because it was Ms. Lall-Persaud’s choice to send their son to a more expensive childcare when other options were available.
[32] I held that there should be arrears for the PLASP daycare costs, as those were a legitimate s. 7 expense. Their son started at that daycare in September 2018, when he began school. The parties should calculate any arrears owing for the daycare based on the proportional amount (60%) owed by Mr. Persaud within 30 days of this decision.
[33] In my decision dated June 11, 2019, the parties were also ordered to pay for their son’s s. 7 expenses, including medical expenses not covered by the parties’ health insurance plans. Each party is responsible for their own costs of enrolling their son in extracurricular activities, unless otherwise agreed to by the parties.
[34] Any arrears in relation to s. 7 expenses that have arisen since my order dated June 11, 2019, are owed by Mr. Persaud based on his proportional share of his income (60%). The payment is to be paid within 30 days of Ms. Lall-Persaud providing particulars and proof of payment for those expenses.
Issue #6: Should There be a Fresh 30-Day Appeal Period?
[35] Ms. Lall-Persaud requests that a fresh 30-day appeal period should be applied to my earlier judgment. The entire judgment in this case is final as of the date of this decision.
Issue #7: Should I Grant an Order Adjusting Mr. Persaud’s Child Support Obligations?
[36] Mr. Persaud was recently laid off from work and seeks an order that his child support obligations be adjusted, on an ongoing basis, in light of his rate of pay with a new employer.
[37] I have already included a clause that requires the filing of tax returns for the previous year by June 1st the following year and that adjustments be made to child support and the proportionality of s. 7 expenses based on the parties’ incomes. I am not prepared to order anything further at this time.
Making Lettered Exhibits
[38] Counsel provided a number of documents to the court during the trial that should have been made lettered exhibits, including the further submissions of counsel. The lettered exhibits are as follows:
A. Draft order from Ms. Lall-Persaud.
B. Primary draft order from Mr. Persaud.
C. Alternative draft order from Mr. Persaud.
D. Issues sheet prepared by counsel for Ms. Lall-Persaud and Mr. Persaud.
E. Further written submissions and authorities provided by Ms. Lall-Persaud.
F. Further written submissions provided by Mr. Persaud.
Conclusion:
[39] I make the following orders:
- Mr. Persaud’s total income from 2015 to 2018 is as follows:
2015: $71,242.00
2016: $74,102.00
2017: $71,953.00
2018: $74,702.00
Mr. Persaud must pay $433 for child support arears by October 1, 2019.
For the purpose of calculating child support for 2019, Mr. Persaud’s income is based on his 2018 total income which was $74,702.00.
Commencing October 1, 2019, Mr. Persaud is to pay $498 per month in child support.
Commencing on January 1, 2020, the imputed income of $11,000 shall be indexed annually in accordance with the inflation rate.
If Mr. Persaud declares more than $11,000 DJing on any annual tax return, the $11,000 will not need to be imputed as income. The higher amount shall apply.
DJ Expenses for the purpose of calculating Mr. Persaud’s income as set out in his income tax return but are limited to $2,500 per year.
Mr. Persaud shall pay his proportionate share of any arrears (60%) owing for the PLASP daycare within 30 days.
Any arrears in relation to s. 7 expenses that have arisen since my order dated June 11, 2019, shall be calculated using Mr. Persaud’s proportional share of his total income (60%). His proportionate share is owing within 30 days of Ms. Lall-Persaud providing particulars and providing receipts of the s. 7 expenses that have been agreed to.
The parties shall exchange their notices of assessment every year prior to June 30th of that year. Upon the notices being exchanged, the parties shall factor any cash imputed from DJ income and adjust the child support and s. 7 expense ratios for the year, retroactive to January 1st of that year. The parties shall also make any required payments created by the adjustments payable within 60 days.
The appeal period for this decision and my decision dated June 19, 2019, commences upon delivery of this endorsement.
Costs
[40] The parties are encouraged to work out the issue of costs. If they are not able to do so, counsel for Ms. Lall-Persaud may provide written submissions of no more than 2 pages, double-spaced, as well as a bill of costs, offers to settle and any authorities within 15 days of receipt of this endorsement. Within ten days of receipt of Ms. Lall-Persaud’s submissions on costs, counsel for Mr. Persaud may provide written submissions of no more than two pages, double-spaced, any bill of costs, offers to settle and book of authorities. Ms. Lall-Persaud may file a one-page reply, double-spaced, within five days of receipt of Mr. Persaud’s submissions.
Dennison J.
DATE: September 27, 2019
COURT FILE NO.: FS-15-82841-00
DATE: 2019 09 27
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Vanessa Lall-Persaud v. Devendra Persaud
COUNSEL: Chad D. Rawn, for the Applicant
Krystal Myge, for the Respondent
ENDORSEMENT
Dennison J.
DATE: September 27, 2019