Court File and Parties
COURT FILE NO.: FS-19-13207
DATE: 20210528
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Kevin Liggett, Applicant
AND:
Jenna Doucet, Respondent
BEFORE: S. Shore, J.
COUNSEL: Jaret Moldaver and Stephanie Yuen, for the Applicant
Christina Doris and Carina Chan, for the Respondent
HEARD: May 20, 2021
ENDORSEMENT
[1] The parties each brought a motion before the court with respect to child support. In addition, the Respondent filed a 14B motion seeking a new date for the Trial Management Conference (“TMC”), as counsel is not available on the scheduled date of May 31, 2021.
[2] On consent, the TMC scheduled for May 31, 2021 shall be vacated and rescheduled to take place on June 18, 2021, at 2pm. The parties wish to proceed with the TMC on that date even though they may not have received the report from the reintegration therapist by that time. The case is expected to proceed to trial sometime in the fall.
[3] The issue before the court today is an interesting one. The Respondent brought a motion for the enforcement of child support for the two children of the marriage under the terms of their final Separation Agreement, dated April 27, 2018 (“the Agreement”) and the temporary court order of Justice Nakonechny, dated December 20, 2019 (“the Order”). The Applicant failed to adjust his child support payments using the method prescribed by the Agreement. The Agreement set out a method by which child support is adjusted each year based on income earned in the prior year. Prior to the motion proceeding, the Applicant lost his job. So, the Applicant brought a motion to change his ongoing child support obligation to reflect his current income pending final resolution of the issues.
The Agreement and Order:
[4] The parties began cohabiting in 2006 and separated in 2017. They have two children, namely S. who is 16 years old and K who is 14 years old. The children have been residing with the Respondent since September 2019. Prior to that date, the children were spending equal time with both parents.
[5] The parties entered into a Separation Agreement on April 27, 2018. At paragraph 4.9 of the Agreement, it provides that the parties will exchange income tax returns and Notices of Assessment each year and any other documents necessary to determine their incomes. Any changes of child support will be based on the prior year’s income, paid on a go forward basis from September 1 to August 31 of each year. There would be no retroactive adjustment because child support was always being paid based on the prior year’s income. Further, paragraph 4.13 states that:
Either Jenna or Kevin may seek a change in child support of there is a material change in the condition, means, needs or other circumstances of Jenna, Kevin, S. or K. that would affect child support, subject to paragraph 4.8 above.
[6] A material change was defined in the Agreement as including a material change in either party’s income.
[7] The Agreement was affirmed in the consent order of Justice Nakonechny, dated December 20, 2019. On consent and on a without prejudice basis, the Applicant agreed to pay child support for January 2020 in the sum of $1,556 and in the sum of $2,939 per month commencing February 1, 2020. This was without prejudice to either parties’ claims with respect to “retroactive adjusting support. The parties shall follow their separation agreement with respect to adjusting support.”: see par 7. At paragraph 8, the order also states that:
The parties shall automatically adjust the child support quantum set out in paragraph 7 to the set off table amount in the event that a shared parenting schedule is implemented, (this amount would currently be $1,556/month in accordance with the parties’ 2018 Line 150, and may subject to adjustment as per their Separation Agreement.
The Child Support Guidelines:
[8] Pursuant to s.1 of the Child Support Guidelines (“Guidelines”), the objectives of the Guidelines are:
a) to establish a fair standard of support for the children that ensures that they continue to benefit from the financial means of both spouses after separation;
b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective;
c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders and encouraging settlement; and
d) to ensure consistent treatment of spouse and children who are in similar circumstances.
[9] Pursuant to s.2(3), the most current information on income is to be used to determine Guideline child support.
[10] A change income does not need to be material to affect a change in the quantum of child support. Paragraph 14 of the Guideline states as follows:
14 For the purposes of subsection 17(4) of the Act, any one of the following constitutes a change of circumstances that gives rise to the making of a variation order in respect of a child support order:
(a) in the case where the amount of child support includes a determination made in accordance with the applicable table, any change in circumstances that would result in a different child support order or any provision thereof;
Analysis:
[11] Both parties started their submissions addressing the issue of whether a material change in circumstance was needed or existed to change the Agreement or the Order. However, the Agreement was clear that a material change included a material change in either party’s income. Further the Guidelines permit a change with any change in circumstance that would result in a different child support order. Regardless of whether a party is relying on the agreement or the order, there has been a material change in the Applicant’s income to justify a change at this time.
[12] Until he was terminated from his position, the Applicant was a Senior Product Manager at Veeva Systems. His income for the last several years has been as follows:
2017 - $170,924
2018 - $229,940
2019 - $269,671
2020 - $376,436
[13] From September 2019 until August 2020, the Applicant paid child support on his 2018 income, as per the terms of the Agreement. In June 2020, the Applicant did not provide his disclosure as required under the terms of the Agreement, until several months later, which showed an increase in his 2019 income, by approximately $40,000. Under the terms of the Agreement, his child support obligation should have increased as of September 1, 2020, based on his 2019 income. This should not have been an issue, but for reasons unexplained the Applicant did not adjust his child support payments as of September 1st, 2020.
[14] Likewise, under the terms of the Agreement, as of September 1, 2021, the Applicant’s child support payments should increase to reflect his 2021 increased income. His income in 2020 increased by a further $106,765. However, on March 24, 2021, the Applicant was terminated from his place of employment. The Applicant submits that his current and ongoing child support obligation should be changed to reflect his actual current income of $30,940, from Employment Insurance.
[15] The Respondent submits that the Applicant’s child support obligation as of September 1, 2021, should be based on his 2020 income, otherwise the children would not have received the benefit of the increased 2020 income, with a decrease in the following year to reflect his reduced 2021 income and when his complete 2021 income will be known. Further, the Respondent submits that the child support obligation should not be based on EI only, but on the Applicant’s actual total income for 2021, calculated at $124,500, which would include the employment income received until his job was terminated, plus severance plus current EI, and on the assumption that the Applicant does not find alternate employment before the end of this year.
[16] The Guidelines require the Court to consider the most current information. However, it is not mandatory for parties to abide by that intent in the terms of an agreement: see Granter v. Tricco, 2018 ONSC 6906, at par 43. The parties in the case before me adopted a different method by which to adjust child support on an annual basis, which in most circumstances will still meet the objectives of the Guidelines.
[17] But if I were to accept the Applicant’s position and not have him pay child support in any year based on his actual income for 2020, the Order will not meet the objective of the Guidelines, which requires the Court to ensure that the children continue to benefit from the financial means of both spouses after separation. The Applicant lost his job in March 2021. If child support is varied as requested by the Applicant, the Applicant will not have paid child support on his increased income from 2019 or his significantly increased income from 2020. The children are entitled to benefit from the increase in the Applicant’s income. I am not prepared to simply ignore the Applicant’s significant increase in income in 2020. This would not be a fair or reasonable approach.
[18] On the other hand, I cannot ignore the reality that the Applicant lost his job and with it, his significant income: see for example Moreton v. Inthavixay, 2020 ONSC 4881.
[19] The Applicant is seeking a change to the part of the agreement that states “[a]ny changes of child support will be based on the prior year’s income, paid on a go forward basis from September 1 to August 31 of each year.”, but objects to any retroactive adjustments being made, relying on the next sentence in the Agreement which states “[t]here would be no retroactive adjustment because child support was always being paid based on the prior year’s income.”. If the Agreement is being varied, the rational set out in the Agreement for no retroactive adjustments no longer fits the circumstance.
[20] I find that if the court varies the terms of the Agreement, to adjust child support to be paid on actual and current income, then the Court can and should also vary the provision that there be no retroactive adjustments. On a temporary basis, I am prepared to give the Applicant relief on his support obligation, but adjustments need to be made, back to September 2019, to reflect child support that should have been paid on the Applicant’s actual income in each year to ensure that the children benefit from the Applicant’s increased income in 2019 and 2020. If there are retroactive adjustments that need to be made for the period prior to September 2019, they can be made by the trial judge.
[21] I reject the Respondent’s approach and position for a few reasons. First, the terms of the Agreement allow for a variation in child support if there is a change in income. This provision is in addition to the yearly adjustment. In Casualt v. McNally, the parties had a similar method of determining child support based on prior year’s income: see 2018 ONSC 5945. Justice MacEachern found that if the method of determining income for support purposes changed, it “would add to the confusion and difficulty of making the annual adjustments, both for past amounts and going forward, as well as create a problem for the year in which a new method is adopted.”: par 16. His underlying principal was about being “fair and reasonable”. In that case, although the payor lost his job, he received severance. Justice MacEachern held that there was no material change in circumstance that warranted a change in the scheme. Specifically, the judge considered that the payor had only been unemployed for seven days as of the date of hearing the motion, the father would not suffer a financial hardship if the reduction in support was deferred by a year because the difference was only $235 per month, he has had the benefit of paying lower child support in prior years, and there is benefit to continuity in the manner in which child support is calculated. The facts in that case are distinguishable because of the minimal adjustment to child support. See also Granter v. Tricco. In the case before me, the Applicant’s employment income of over $376,000 has been reduced to zero, and the change in child support is material and significant.
[22] The Respondent referred the Court to other cases that stand for the proposition that where child support is adjusted annually based on a prior year’s income it is incumbent upon a support payor to manage his finances in such a way that he is in a position to meet his child support obligations over time. The concept that the Applicant should have managed his finances in such as way to meet his child support obligation over time, does not work where there is an involuntary loss of employment, causing a material decrease (almost catastrophic) in his ongoing income.
[23] On the other hand, while the Applicant’s income has decreased significantly, many of the expenses of the children are fixed and cannot be adjusted quickly. Had the Respondent received support based on the Applicant’s 2019 and 2020 income, she would have had additional assets of her own or have put some child support away to meet expenses in bad years, on which to meet the needs of the children until adjustments can be made to expenses to reflect the current financial reality of the family.
[24] Further if and when the Applicant secures alternate employment, the child support should likewise be adjustment immediately, to reflect his actual anticipated income for 2021.
[25] In calculating the Applicant’s income for 2021, he will receive EI, he has received some employment income, and he will receive, at some point in the future, severance. I have calculated the Applicant’s income for child support purposes as follows:
Employment income: $98,737
EI income of $30,940, annualized starting in April 2021: $23,205
Total income in 2021: $121,942*
The child support owing under the Guidelines on his 2021 income is $1,739.
[26] *If and when the Applicant settles the issue of his severance with his former employer, the Respondent is entitled to receive increased child support based on this additional income. This is true if the Applicant secures alternate income in 2021.
[27] The retroactive calculations are as follows:
Income
CSG for 2 children
Support paid:
Annual Difference:
Sept 2019-December 31, 2019
$269,671 in 2019
$3,513 x4
$1,556 x4
$7,828
2020
$376,436 in 2020
$4,794
$1,556 Jan
$2,930 x11
$3,238
$20,504
January -May 2021
$121,942
$1,739 (x5)
$2,930 (x2)
$2,835
Total adjustments:
$34,405
[28] The retroactive adjustment of $34,405 shall be paid within 30 days of this order. The Applicant shall continue paying child support in the sum of $1,739 until the parties’ trial, which is anticipated to take place in the fall of 2021. If the trial for any reason does not proceed in 2021, then the Applicant’s child support obligation shall immediately be adjusted retroactively to reflect any changes in his income, including receipt of severance and/or employment. In the meantime, the Respondent has the retroactive support payments from which to meet the needs of the children.
[29] This is a without prejudice, temporary order, meant as a holding pattern until final determination at trial in a few months time. The order meets the objectives of the Guidelines, provides some relief to the Respondent for the Applicant’s underpayment of child support (and for 2020, that would in any event include the Respondent’s failure to adjust his child support payments as of September 1, 2020, as per the terms of the Agreement) but provides the Applicant some relief on his ongoing child support payments until he finds a new source of income.
S.7 Expenses:
[30] The Respondent is seeking an order for arrears owing for s.7 expenses. The Applicant submits the Respondent did not obtain his consent for increasing the frequency of the children’s tutoring and therapy sessions and therefore he should not be responsible for the increased costs. The Applicant also submits that as a result of his losing his job, the family can no longer afford to pay for all of the extracurricular expenses previously incurred for the children.
Therapy:
[31] On consent, a therapist, Ms. Swaigen, was retained to assist Kristine with her anxiety and social issues. The Respondent requests reimbursement for this expense. The consent is contained in Paragraph 4.3 of the Agreement specifically provides that counselling for the children is a s.7 expense (amongst other specified expenses), and, pursuant to paragraph 4.4, no additional s.7 expenses will be incurred without the consent of the other party, aside from those set out above. In the Order, the parties confirmed that Kristine would continue with the therapy.
[32] The Applicant submits he is prepared to reimburse the Respondent in the sum of $840, but not make payments on a prospective basis. It is unclear on the evidence before me, but it appears that the Applicant is also entitled to reimbursement from his insurer for most of this amount. On a without prejudice basis, and subject to adjustment at trial, I find this to be a necessary and reasonable expense on an ongoing and temporary basis. In light of the terms of the Agreement and the position of the Applicant, the Applicant shall pay the Respondent $840 as a without prejudice retroactive adjustment and shall continue to pay his proportionate share on an ongoing basis, as set out in the Order.
Horseback riding:
[33] The children are teenagers. They are old enough to understand that their father has lost his job and that horseback riding lessons are not affordable at the moment. Horseback riding lessons are not necessary or reasonable on a temporary basis given the parties’ current incomes. There is a dispute as to which party owes the other retroactive payments for the horseback riding expenses. The amounts are not significant (either $727.69 owing by the Applicant or $1,350.77 owing to the Applicant) and can be left to be determined by the trial judge.
Tutoring:
[34] I find tutoring to be both necessary and reasonable on a temporary basis. Both children have learning disabilities.
[35] The parties agreed in December 2019 (at par 10 of the Order), that tutoring for Shawn was a necessary and reasonable expense. The Applicant submits he only consented to tutoring for English and is only prepared to reimburse the Respondent in the sum of $967.97, being half the amount, he submits is owing. Shawn currently receives tutoring for Math and English. Shawn started taking Math in school in April 2021. He received an “A” in English in early 2021. It is unclear if he is still taking English or whether the “A” was a final mark. Shawn is 16 years old and entering critical years of high school where his grades will count for entrance into university or college. The retroactive amount claimed by the Respondent is $1,935.94. I do not find this to be unreasonable based on the parties’ incomes last year. The tutoring for Math should continue for so long as Shawn feels it is necessary and while his math class continues. The amount can always be adjusted by the trial judge.
[36] The Applicant is in agreement that English (reading) tutoring is a reasonable and necessary expense for Kristine, for three session per week on a retroactive ($1,232) and prospective basis three times per week. Any dispute with respect to other retroactive amounts or prospective amounts can be determined at trial. The difference in the parties’ positions with respect to the retroactive amount owing is $168.
Other:
[37] As set out in the Order, the parties agreed to retain Ms. Golhar to provide counselling to the children with the view to improving their relationship with the Applicant. The parties acknowledge the Applicant overpaid his share of Ms. Goldhar’s fees by $3,448.50.
[38] At paragraph 12 of the Agreement, the parties agreed that they will contribute $1,894.94 to the children’s RESPs each year. If a party failed to make their contribution in any year, the other party could make the contribution and seek reimbursement in the adjustment of child support in June the following year. Or to clarify, if the Applicant paid the RESP contribution for the Respondent, he could deduct the contribution from his child support payment in September of that year, after the adjustments which are reviewed in June, as set out above. The parties agree that the Applicant he paid $949 of the Respondent’s share of the children’s RESP accounts.
[39] The Applicant is also owed a credit of $769.80 for dental expenses and the educational assessment.
The Order:
[40] Order to go as follows:
[41] Pursuant to the Family Law Rules and on consent,
- The TMC scheduled for May 31, 2021 shall be vacated and rescheduled to take place on June 18, 2021, at 2pm.
[42] Pursuant to the Family Law Act and the Child Support Guidelines,
The Applicant shall pay ongoing child support to the Respondent in the sum of $1,739, per month, commencing June 1, 2021, and on the first day of each month thereafter, pending trial. Child support is based on the Applicant’s estimated income of $121,942 for 2021.
If the trial does not take place before the end of 2021, then the Applicant’s income for child support purposes shall be adjusted retroactively for 2021, to take into account his employment income earned from his former employer in 2021, his severance, EI payments, and any other income earned in 2021.
Subject to the adjustments set out in paragraph 4 below, within 30 days of this order, the Applicant shall pay the Respondent $34,405, on account of retroactive adjustments for child support from September 1, 2019 until May 31, 2021.
Ona without prejudice basis to be determine by the trial judge, the retroactive adjustments owing from the Applicant to the Respondent for s.7 expenses set out in the Agreement are as follows:
a. $840 therapy
b. $1,935.94 tutoring for Shawn
c. $1,232 tutoring for Kristine
d. ($3,448.50) Applicant’s overpayment to Ms. Goldhar
e. ($949) Respondent’s share of RESP contribution paid by the Applicant
f. ($769.80) Applicant’s overpayment of dental/ed assessment fees
for a total over payment of s.7 expenses by the Applicant in the sum of $1,159.36. The Applicant may deduct $1,159.36, from the retroactive child support owing under p.3 above.
- The parties shall continue to pay their proportionate share of the children’s s.7 expenses, as set out in the Agreement or as amended/clarified herein, including but not limited to tutoring, therapy, RESPs, and medical and dental expenses not covered by insurance. On a go forward basis horseback riding and associated expenses are not reasonable or necessary on a temporary basis given the parties’ anticipated income for 2021.
S. Shore, J.
Date: May 28, 2021