Court File and Parties
COURT FILE NO.: FS-20-136 DATE: 2021/02/25 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: CRYSTAL LEE JACOBS, Applicant AND: ARNOLD ANDREW JACOBS, Respondent
BEFORE: Mr. Justice D.A. Broad
COUNSEL: Andrew Nicholls, Counsel for the Applicant Eliza J. Montour, Counsel for the Respondent
HEARD: February 23, 2021
Endorsement
Background
1The applicant and the respondent commenced living together in September 1990 and were married on September 9, 1995. They separated on February 16, 2020.
2The parties have two children namely Kendrew, born August 11, 1999 and Keyara, born October 23, 2003. Kendrew attends Western University in London Ontario but resides currently during the COVID shut down with the applicant in the matrimonial home described below. Keyara is 17 years of age and is in Grade 12. She also resides with the applicant.
3The applicant and the respondent are both of First Nations heritage and are each “status Indians” pursuant to the Indian Act. The applicant is a member of the Mississauga of the Credit First Nation and the respondent is a member of the Six Nations of the Grand River.
4The applicant is employed full-time earning $14.28 per hour. The respondent is a constable employed with the Six Nations Police Service and has been so employed since 1995. His earnings from his employment were $113,074.89 in 2020. This earned income is non-taxable in accordance with section 87 of the Indian Act and section 81(1)(a) of the Income Tax Act.
5Following separation, the applicant has continued to reside with Keyara in the matrimonial home located on the Six Nations Indian Reserve. The Certificate of Possession, inclusive of approximately 4 acres, and the mortgage on the home is solely in the respondent’s name. However, he acknowledges and accepts that the applicant has an interest in the matrimonial home and that it will be considered an asset in the equalization of the parties’ net family property.
Motions
6The applicant has brought a motion for the following relief:
(a) an order that Keyara continue to reside primarily with the applicant;
(b) an order that the respondent spend periods of residence with Keyara in accordance with her wishes and preferences as arranged between them;
(c) an order that the respondent pay child support for Keyara commencing March 1, 2020 in accordance with his 2020 income and the Child Support Guidelines;
(d) an order that the respondent’s income be “grossed-up” based on the tax-free treatment of his income earned through employment for support purposes, pursuant to s. 19(1)(b) of the Child Support Guidelines;
(e) an order for payment by the respondent of arrears of child support;
(f) an order requiring the respondent to pay spousal support to the applicant on a monthly basis commencing March 1, 2020, less housing expenses representing 50% of the monthly Six Nations Housing Loan, 50% of the property insurance, and 100% of the monthly utility expenses;
(g) an order that the respondent shall pay the Six Nations Housing Loan, the property insurance and all utilities for the matrimonial home;
(h) an order requiring the respondent to maintain the applicant and Keyara on his dental, medical and extended health coverage through employment for so long as the said coverage is available to him; and
(i) an order requiring the respondent to name the applicant as the irrevocable beneficiary of 100% of his insurance policy through employment to secure his child and spousal support obligations to the applicant.
7During submissions, counsel for the applicant sought calculation of the respondent’s interim child support obligation on the basis of his “grossed-up” income pursuant to s. 19(1)(b) of the Child Support Guidelines but acknowledged that his interim spousal support obligation should be calculated on the basis of his actual reported income, without being subject to grossing-up.
8The respondent has brought a motion for the following relief:
(a) an order reserving the grossing-up of the respondent’s annual income as an issue for a trial judge, pursuant to the Constitution Act, 1984, s. 87 of the Indian Act, and s. 81(1)(a) of the Income Tax Act;
(b) an order that the respondent pay child support for Keyara based upon his actual reported income of $113,074.89 and that his earnings shall not be grossed-up as set out in s. 19(1)(b) of the Child Support Guidelines;
(c) an order for exclusive possession of the matrimonial home;
(d) an order that the applicant return the 2017 Ford F-150 to the respondent and that the vehicle shall be sold and any profit be put into trust for future equalization; and
(e) an order that the respondent pay spousal support to the applicant based on his actual reported income of $113,074.89 and that he be credited monthly for matrimonial home expenses and payment of the applicant’s vehicle loan, insurance and life insurance.
9The balance of the relief sought in the respondent’s Notice of Motion was not pursued by him in submissions.
Deferral of the application of s. 19(1)(b) of the Child Support Guidelines to trial
10Section 19(1)(b) of the Child Support Guidelines provides that:
“(1) the court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following:
(b) the spouse is exempt from paying federal or provincial income tax.”
11As indicated above, the respondent seeks a ruling that the issue of whether his income for support purposes is subject to being grossed-up be determined at trial, and that s. 19(1)(a) of the Child Support Guidelines not be applied to gross-up his earned income for the purpose of determining interim child support. The respondent states that he intends to serve a Notice of Constitutional Question respecting the constitutionality of the application of s. 19(1)(a) of the Child Support Guidelines to him as a First Nations person. No Notice of Constitutional Question has been served by the respondent to date.
12The respondent deposed in his affidavit of February 3, 2021 that it was not clear to him what, if any, consultation occurred between legislators and Six Nations when it came to the determination that non-taxable income should be “grossed-up” for support purposes.
13Ms. Montour submitted that the issue of whether the respondent’s income should be “grossed-up” for support purposes should be deferred to trial on the basis that extensive expert evidence will be led in support of the respondent’s challenge to the constitutionality of s. 19(1)(a) of the Child Support Guidelines.
14I am not satisfied that it is appropriate to decline to apply s. 19(1)(b) of the Child Support Guidelines on an interim basis in the present circumstances. The respondent has served no Notice of Constitutional Question to date and has not sought a determination of the constitutionality of s. 19(1)(b) in his Answer. The respondent has cited no authority calling into question the constitutionality of the provision.
15In the case of Merasty v. Merasty, 2000 SKQB 252 (Sask. Q.B.) Wright J. made the following observation respecting the purpose of 19(1)(b) at para. 4.
This provision has further been used specifically to “gross up” the income of registered Indians exempt from paying income taxes… To do otherwise would be to defeat one of the primary objectives of the Guidelines, that is “to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation.” (s. 1(a))
(case citations omitted)
16This passage from Merasty was followed in the case of Sawatzky v. Campbell, 2001 SKQB 250 (Sask. Q.B.) in which Krueger, J. stated at para. 27:
I agree that a primary objective of s. 19(1)(b) of the Guidelines is to permit children to benefit from any financial advantage either parent has. No breach of [the respondent’s] guaranteed Treaty right results from allowing his son to share the benefits of that right.
17The respondent will suffer no prejudice from the application of s. 19(1)(a) of the Guidelines in the calculation of his income for interim child support purposes with the stipulation that the order is without prejudice to his right to challenge the constitutionality of the provision at trial.
18Any financial prejudice to the respondent resulting from an overpayment of child support in the event that his constitutional challenge succeeds is balanced by the financial prejudice to the applicant resulting from an underpayment of child support by the respondent in the event that his constitutional challenge does not succeed. Given the large differential in the parties’ respective incomes, it would appear that the greater risk of prejudice rests with the applicant.
Child support
19The applicant acknowledged that the interim order for child support should be based upon the respondent’s earned employment income of $113,074.89 grossed-up to $172,942. This would be without prejudice to her right to seek inclusion of additional amounts in the respondent’s 2020 income at trial reflecting transfers into his bank account totaling $16,832. The respondent disputes the inclusion of the additional amount of $16,832 in his income.
20Based upon his grossed-up income of $172,942, the respondent’s child support obligation for Keyara is agreed to be $1,423 per month pursuant to the Child Support Guidelines.
21The applicant seeks an order that child support payments by the respondent commence on March 1, 2020, being the first day of the month following the date of separation. The arrears of child support for the period March 1, 2020 to February 1, 2021 comprise $17,076.
22The respondent submits that payment of arrears should not be ordered but rather the question of the arrears should be left to trial.
23I see no reason in principle that an order for payment of arrears should be deferred until trial. There is nothing that would change the calculation of the arrears of child support for the period commencing March 1, 2020.
Spousal support
24As indicated above, the applicant is satisfied, on a without prejudice basis, that an order for payment by the respondent of interim spousal support should be based upon his 2020 earned income of $113,074.89, without gross-up and the applicant’s 2020 income of $25,494. Pursuant to the Spousal Support Advisory Guidelines this would result in a range of spousal support from a low of $2,416, to a mid range of $2,799 and a high of $3,172. In my view the position that, for spousal support purposes, a gross-up should not be applied is consistent with jurisprudence suggesting that adjustments to the grossing-up of non-taxable income for spousal support purposes may be necessary to accommodate the non-deductibility of the spousal support payments by the payor (see Mancini v. Phelan, [2021] A.J. No. 1385 (Alta Q.B.) and Crow Shoe v. Standing Alone, 2018 ABPC 47).
25The applicant acknowledges that her share of monthly expenses paid by the respondent associated with her occupation of the matrimonial home comprising 50% of the monthly Six Nations Housing Loan ($315.01), 50% of the property insurance ($78.25) and 100% of the utility expenses ($280) totaling $673.26 should be set off against the respondent’s spousal support obligation. This acknowledgement is premised upon the respondent being ordered to continue to pay the Six Nations Housing Loan, the property insurance and all utilities for the property.
26The respondent submits that the expense he incurred for the alarm system in the residence as well as insurance premiums and other expenses associated with the Ford F-150 vehicle which has been in the applicant’s possession since separation should also be deducted from the arrears of spousal support. He also submits that the monthly premium on a policy of insurance on the applicant’ life should be deducted.
27The applicant submits that she does not have access to the alarm system, and it is of no use to her. In these circumstances, I do not find it appropriate that the charges for the alarm system be set off against the respondent’s interim spousal support obligation.
28The applicant says that she does not require the life insurance policy and is content that the respondent no longer pay it.
29The applicant is also content to return the F-150 truck to the respondent.
30On the basis that the applicant has had the use of the Ford F-150 truck since separation and has enjoyed the benefit of insurance coverage on the vehicle during that time, I am of the view that the insurance premiums paid by the respondent in the sum of $185.00 per month for the period March 1, 2020 to February 1, 2021 be set-off against spousal support arrears for that period.
31However, I am not satisfied that it is appropriate to set off the additional sum of $555.85 per month claimed by the respondent. He stated that “I have been paying Crystal’s vehicle” listing this payment. It is not clear what was meant by this. No documentary support was provided. If it was a reference to payments on a vehicle loan, I can infer that the payments likely included components of both principal and interest. The principal component would primarily benefit the respondent and not the applicant. In my view the question of whether the applicant has responsibility for any part of the vehicle payments is better left to be dealt with as a claimed post-separation adjustment on equalization.
32In my view it would be appropriate to set spousal support on a without prejudice interim basis at the mid-range of $2,799.00 per month less deduction of the following monthly expenses paid by, and to continue to be paid by, the respondent:
Mortgage (50%) - $315.01 House insurance (50%) - $78.25 Utilities (100%) - $280.00 Vehicle insurance on Ford F-150 (March 1, 2020 to February 1, 2021 only) - $185.00.
33I see no reason in principle why the respondent should not be ordered to pay spousal support commencing on March 1, 2020, being the first month following separation. The arrears total the following:
$2,799 per month Less $858.26 per month Net: $1,940.74 per month x 12 months = $23,288.88.
34The respondent’s ongoing interim, without prejudice, spousal support obligation commencing March 1, 2021 is the following:
$2,799 per month Less $673.26 per month Net: $2,125.74 per month.
Dental, medical and extended health benefits and life insurance through the respondent’s employer.
35In my view it is appropriate that the respondent be ordered to maintain the applicant and Keyara on his dental, medical and extended health coverage through his employment and also that he name the applicant as the irrevocable beneficiary of 100% of his insurance policy through his employment to secure his child and spousal support obligations to her. Although the respondent advised that the two children are currently the beneficiaries of the insurance policy, they are not irrevocable beneficiaries. It is the applicant who has the primary insurable interest to secure the respondent’s child and spousal support obligations.
Respondent’s claim for exclusive possession of the matrimonial home
36The respondent seeks exclusive possession of the matrimonial home on the basis that, pursuant to the current the Six Nations bylaw, as a non-member of Six Nations she is prohibited from residing, possessing or owning property on the Six Nations reserve. He asserts that if he were granted exclusive possession both children would be permitted to continue to reside in the home with him, with the applicant being required to secure alternate accommodation.
37There is no evidence that the Six Nations Council or by-law enforcement officials have commenced or are contemplating any proceedings to seek the applicant’s removal from the matrimonial home. Moreover, there is no reliable evidence respecting the children’s views and preferences respecting the respondent’s proposal that they reside with him in the matrimonial home. In my view, the respondent has not demonstrated that it is appropriate that he be granted exclusive possession of the matrimonial home. The parties’ children currently reside in the home with the applicant and it would be disruptive to the applicant and potentially to the children, to require the applicant to find alternate accommodation pending resolution of the equalization issues.
Residence of the child
38The applicant has claimed that the child should continue to primarily reside with her and that the respondent spend periods of residence with the child in accordance with her wishes and preferences as arranged between them was not disputed. It is therefore appropriate that this relief be granted.
Disposition
39For the foregoing reasons it is ordered as follows:
(a) on a temporary without prejudice basis, the respondent shall pay to the applicant child support for the child Keyara Jacklyn Eryn Jacobs, born October 23, 2003, (the “child”) in the sum of $1,423 per month based upon the respondent’s 2020 income of $113,074.89 grossed-up to $172,942 pursuant to s. 19(1)(b) of the Federal Child Support Guidelines commencing March 1, 2021;
(b) on a without prejudice basis the respondent shall pay to the applicant arrears of child support for the child for the period March 1, 2020 to February 1, 2021 in the sum of $17,076;
(c) the foregoing orders for payment of child support by the respondent based upon his grossed-up income is without prejudice to the respondent’s right to challenge the constitutionality of s. 19(1)(b) of the Child Support Guidelines at trial;
(d) on a temporary without prejudice basis the respondent shall pay to the applicant spousal support in the sum of $2,125.74 per month based upon the respondent’s 2020 income of $113,074.89 and the applicant’s 2020 income of $25,494;
(e) on a without prejudice basis the respondent shall pay to the applicant arrears of spousal support for the period March 1, 2020 to February 1, 2021 in the sum of $23,288.88 net of the applicant’s share of expenses for the matrimonial home and insurance premiums for the respondent’s Ford F-150 pickup truck used by the applicant;
(f) a Support Deduction Order shall issue;
(g) the respondent shall continue to pay the Six Nations Housing Loan, property insurance and all utilities for the matrimonial home located at 1280 Onondaga Road, Ohsweken, Ontario N0A 1M0;
(h) the respondent shall maintain the applicant and the child on his dental, medical and extended health coverage through his employment and shall name the applicant as the irrevocable beneficiary of 100% of his insurance policy through employment to secure his child and spousal support obligations to the applicant;
(i) the applicant shall return the 2017 Ford F-150 pickup truck owned by the respondent to him;
(j) the child shall continue to primarily reside with the applicant and the respondent shall spend periods of residence with the child in accordance with her wishes and preferences; and
(k) the relief claimed at paragraphs 1, 3, 4(A), 5, and 7 of the respondent’s Notice of Motion dated February 3, 2021 shall be dismissed.
Costs
40The parties are strongly urged to settle the issue of the costs of the motions.
41If the parties are unable to do so, the applicant may make written submissions as to the costs of the motions within 14 days of the release of this Endorsement. The respondent has 10 days after receipt of the applicant’s submissions to respond. The written submissions shall not exceed three (3) double-spaced pages exclusive of Bills of Costs or Costs Outlines, offers to settle and authorities. All such written submissions are to be forwarded to me via email to the Trial Coordinator at Brantford.
42If the parties are able to settle the question of costs, counsel are requested to advise the court accordingly.
D.A. Broad, J.
Date: February 25, 2021