Court File and Parties

COURT FILE NO.: FC-15-FS849

DATE: 2020/08/21

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Kirk Christopher Anderson, Applicant AND: Anick Quenneville, Respondent

BEFORE: Madam Justice M. Fraser

COUNSEL: Duncan Crosby, Counsel for the Applicant Diana Tomazin, Counsel for the Respondent

HEARD: July 16, 2020

Endorsement

[1] This motion was heard on July 16, 2020 in order to determine, on a final basis, the last outstanding issue in this proceeding.

[2] As a preliminary matter, the parties advised that they are consenting to a final order incorporating the terms of the temporary order of Justice James dated March 3, 2020 and making those terms final. As such, on consent, a final order shall issue making paragraphs 1, 2 and 3 of that Order final in its terms.

[3] The remaining issue in dispute concerns the ongoing and retroactive child support for the children, Kameron Christopher Anderson, born July 11, 2008 and Aydin Kirk Anderson, born August 15, 2011.

[4] The parties agreed at the outset of this hearing that with respect to the ongoing child support (from 2019 moving forward) a final order should issue on consent providing that no support should be payable by either to the other given the ongoing shared custody of the children and the parties’ relatively equal income for the 2019 year. A final order shall issue accordingly.

[5] The sole issue then which was subject to argument and which needs to be decided, is the retroactive child support, if any, payable for the 2018 year.

[6] It is undisputed that the Applicant’s income for 2018 based upon line 150 of his income tax return was $158,980.52 and that the Respondent’s income for 2018 based upon line 150 of her income tax return was $45,424.00.

[7] The Respondent wishes to employ these income figures when calculating any child support obligation for 2018. She proposes that there be a set off of the table amounts each would otherwise pay to the other based on these incomes given the shared parenting arrangement.

[8] The Applicant disputes that the figure of $158,980.52 should be used as his “income” for the 2018. His gross employment income that year was $91,161.87. His evidence is that he additionally received a mandatory pension payout that year in the amount of $67,818.65. He reinvested $20,000.00 from this payout into an RRSP. He asks that this be excluded from his “income” for the purposes of determining his obligation to pay child support.

[9] The Applicant additionally points out that the remaining paid to him as part of his pension payout was applied toward debt. No evidence of the nature of this debt was produced. The Applicant argues that, as a one-time non-recurring payment, it would be unfair to include the remaining amount as “income” when determining his child support obligation for that year. The Applicant suggests that it would be fair and reasonable to instead employ the average of his three years of income (2016, 2017 and 2018). He states that a three-year average income for these years (using $138,980, however, for 2018) produces an average income of $95,350.67.

[10] Finally, the Applicant argues that the Respondent’s income for 2018 was lower than usual. This is because the Respondent was unable to work for a part of that year due to a health issue. The Applicant wishes to average her income as well for the past years and suggests her income for 2018 should be set at $68,199.33.

[11] The Applicant additionally suggests that the Respondent was receiving non taxable short term disability during part of the 2018 year and that income should be imputed to her over and above her line 150 income. This is inconsistent with her evidence, which I accept.

[12] The Respondent’s evidence on this issue is that she was on sick leave from her employment from March 1, 2018 to July 27, 2018. She received short term disability from EI for twelve weeks and then she lived off her savings for the rest of the time. She gradually returned to work, part time starting July 28, 2018 to November 14, 2018. She worked one day a week for several weeks, then 2 days a week for several weeks, then three days, etc. until she was back working full time hours. She was working full time employment again by November 14, 2018.

Analysis

Applicant’s 2018 income:

[13] Firstly, it should be noted that if the Applicant’s pension was “in pay” in the normal way, that income would be included as “income” when calculating the Applicant’s ability to pay child support.

[14] The question in this instance is whether, due to the one-time lump sum payout of that pension, a different treatment should be accorded it.

[15] Section 3 of the Federal Child Support Guidelines, S.O.R./97-175 (the “Guidelines”) creates a presumptive rule that, unless otherwise provided, the amount of support payable for a child is to be determined based on the income of the spouse against whom the order is sought.

[16] "Income" is defined in s. 2 of the Guidelines as meaning "the annual income determined under sections 15 to 20."

[17] Section 15 of the Guidelines provides that, subject to any written agreement between the parties, a spouse's annual income is determined in accordance with sections 16 to 20 of the Guidelines.

[18] Section 16 establishes the basic rule that a spouse's income should be determined based on the spouse's "Total Income" on line 150 of the T1 General tax return:

16. Calculation of annual income — Subject to sections 17 to 20, a spouse's annual income is determined using the sources of income set out under the heading "Total income" in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.

[19] However, section 17 provides:

17(1) If the court is of the opinion that the determination of a spouse's annual income under s. 16 would not be the fairest determination of that income, the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.

[20] Pension income is a source of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and it is therefore is presumptively part of a spouse's income for child support purposes. No special exception is made for a pension lump sum “payout” in Schedule III.

[21] The issue becomes whether I exercise my discretion under section 17 on the basis that the income under s. 16 would not be the fairest determination of the Applicant’s income for that year.

[22] I note that the onus is on the payor-spouse to justify a deviation from the s. 16 method of determining income (See Fung v. Lin (2001), 2001 CanLII 28193 (ON SC), 16 R.F.L. (5th) 83 (Ont. S.C.J.)).

[23] The case law confirms that this issue is factually driven and determined by what is appropriate in the particular circumstances of the case.

[24] In Fraser v. Fraser 2013 ONCA 715, 2013 CarswellOnt 1582, the Court of Appeal for Ontario, for instance, held that R.R.S.P. income is presumptively part of a spouse's income for child support purposes, since R.R.S.P. income is included in "total income" on the T1 General form.

[25] At paragraph 103, J. Simmons J.A. notes as follows:

The clear wording of the Guidelines includes RRSP withdrawals as income and no special exception for RRSP withdrawals has been provided in Schedule III. Although I would acknowledge the possibility that the facts of a particular equalization could in theory reach the threshold of unfairness, I have no evidence about the specifics of the equalization calculation that occurred in this case and cannot so conclude.

Similarly, I do not consider the fact that the father may have used some or all of the RRSP on account of his house purchase as a factor creating unfairness in terms of characterizing the RRSP. Particularly in circumstances where he was not working, the father's first obligation was to ensure that his children were properly supported. The fact that the father chose instead to buy a four-bedroom house should not deprive his children of an available source of child support.

[26] In Ludmer v. Ludmer 2014 ONCA 827, CarswellOnt 16441, the Court of Appeal upheld the exclusion of R.R.S.P. withdrawals where, in the Court’s discretion, it was considered appropriate in the circumstances not to include them. In that case, the withdrawals were found to be “non-repeating encroachments on capital” that were used by the payor to fund the costly litigation and not to enhance the payor’s lifestyle.

[27] In Kotyck v. Kotyck 2017 ONSC 7281 the court considered whether $57,261 which the payor received from the collapse of his United States 401(K), the equivalent to a Canadian RRSP, should be included in his income. The court noted that RRSP income is presumptively part of a parent’s income for child support purposes and no exception for withdrawals has been provided in Schedule III of the Guidelines. Justice Hood found that the payor had not demonstrated any unfairness in including the equivalent of the RRSP withdrawal in his income.

[28] In Knight v. Frobel, 2018 CarswellOnt 11351, 2018 ONSC 3651 (Ont. Div. Ct.), the Divisional Court upheld the trial judge’s decision to include a severance payment in the calculation of the payor’s income for a given year.

[29] When I consider all of the evidence, I am prepared to exclude from the Applicant’s income the $20,000.00 from the pension payout that was then reinvested into an RRSP. The pension payout was mandatory and the Applicant immediately put the funds directly into an alternative form of retirement savings. He did not have access to these funds to enhance his lifestyle.

[30] I am not satisfied, however, that the Applicant has met the burden on him to establish unfairness should the remaining payout of pension be included as income. These amounts are presumptively to be included. The burden is on him to justify a deviation from the section 16 method of determining income on the basis that it would create an unfairness.

[31] The Applicant’s blanket statement that the funds were used to pay debt, without any further specificity, does not satisfy the onus on him to establish an “unfairness”. For all we know, he may have unwisely incurred debt on self indulgences or enhancing his personal lifestyle. If such is the case, I would not conclude that the inclusion of the payout as income created unfairness due to his need to pay such debt.

[32] I note in this regard that the “fairness” of income determination in s. 17 of the Guidelines refers to fairness as interpreted with the objectives of the Guidelines in mind, especially the objectives of children benefiting from the financial means of their parents, and consistent treatment.

[33] Furthermore, accepting the Applicant’s evidence that the funds were used to extinguish existing debt, I presume this payment of debt decreased the Applicant’s ongoing financial obligations and enhanced, as a result, his ability to contribute toward the support of the children.

[34] I therefore find the Applicant’s income for the 2018 year to be $138,980.52.

Respondent’s income:

[35] I accept the Respondent’s evidence with respect to her 2018 income. She maintains that all income received by her was taxed and that her total income for the 2018 years was $45,424.00. Her tax assessment for 2018 confirms that the amounts she indicated were received by her for that year. Given her reality I do not see any unfairness which would justify a departure from a s. 16 determination of her income.

[36] Accordingly, I find that Respondent’s income for the 2018 year was $45,424.00.

Conclusion

[37] Based upon the foregoing, I make a final order as follows:

1. The Applicant shall forthwith pay retroactive child support to the Respondent for the 2018 year in the amount of $1,267.00 per month ($15,204.00 for the year). This is based upon a set off of the applicable table amount payable by each of them to the other (Applicant would pay $1948.00 and the Respondent would pay $681.00) using the incomes set out above and based upon a shared custody arrangement.

2. There shall be no child support ordered for 2019 moving forward given the parties’ relatively equal incomes.

3. Paragraphs 1, 2, and 3 of the Order of Justice James dated March 3,2020 shall be made final.

4. The parties shall attempt to reach an agreement on costs. If unable to do so, the Respondent may file brief submissions, not to exceed two typed double-spaced pages, together with a Bill of Costs, and any necessary documents, such as offers to settle, on or before September 10, 2020. Any responding submissions from the Applicant, subject to the same directions, are to be filed on or before September 21, 2020.

M. Fraser J. Date: August 21, 2020