COURT FILE NO.: FS-18-92192 (Brampton)
DATE: 20211115
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Michael Fearon
Applicant
-and-
Margaret Tzeng Fearon
Respondent
William H. Abbott, for the applicant
Mervyn F. White, for the respondent
Heard: August 24, 2021 by video conference
Before: Justice R. Chown
Endorsement
[1] The parties disagree over how their children’s post-secondary education should be funded. The disagreement arises because there are “trust funds” for the children which were given to them by their maternal grandfather. The children therefore have access to significant amounts of money. The applicant father says the children have the “means” to pay for their education and there is no “need” for support from either parent to pay post-secondary education expenses. The respondent mother argues that the applicant is trying to shift his support obligations onto her father.
[2] Both parties want the issue resolved on this motion.
[3] Both parties relied heavily on Lewi v. Lewi (2006), 2006 15446 (ON CA), 80 O.R. (3d) 321 (C.A.) and cited passages of that case to me.
Facts
[4] The parties were married on January 5, 2002 after having lived together for approximately three years. They had two daughters together: Mckenzie, now age 18, and Addison, now age 15. The parties separated on September 26, 2017.
[5] When this motion was argued on August 24, 2021, Mckenzie was about to head to York University in September, to commence a six-year program towards a combined BA Mathematics and Concurrent Education. Mckenzie has earned scholarships totalling $7,400 to assist with this program.
[6] Addison is also expected to attend university.
[7] The parties agree that the cost of post-secondary education is approximately $23,000 to $25,000 per year including residence and meal plan plus incidentals.
[8] The applicant earns roughly $311,000. The mother earns roughly $102,000.
[9] During the marriage, the parties opened RESP accounts for each child. The balance of the RESP account for Mckenzie is roughly $64,000 and for Addison, roughly $52,000.
[10] In 2012, the respondent’s father gifted $62,000 to each child. Then in November 2017 he gifted $170,000 to each child. No formal trust was set up. The funds are held in bank accounts in the respondent’s name on the understanding that the respondent is a bare trustee of the funds and the children the sole beneficiaries.
[11] The respondent’s answer in this proceeding states:
Both children are excellent students and the parties anticipate that both children will pursue post secondary education. The Respondent Wife contributed to RESP plans for both of the children out of the joint account. As of March 2018, Mckenzie’s RESP had a balance of approximately $58,000 and Addison’s RESP had a balance of approximately $41,000.
In November 2017, the maternal grandfather also gave each child an advance on their inheritance of $170,000. The funds are held in accounts in the children’s names.
Between the RESP funds and their inheritance, the children should have sufficient funds to pay for their post-secondary education expenses.
[12] The applicant relies on these passages from the answer as evidence that the gifts were intended by all parties to fund the children’s education. The respondent submits that the answer was prepared by her prior lawyer and is not evidence. She submits that it is not the case that the funds were earmarked for education. The applicant submits that the answer is evidence and notes that neither the respondent nor her father, who is still alive, have resiled from the content of the answer. He says the court should accept that the funds were intended for the children’s education in priority of any other purpose.
[13] My view is that the answer is not evidence but a statement of the respondent’s position. With that said, this was not a boilerplate comment in the answer that may have been written by the respondent’s prior counsel without the input of the respondent. Rather, it is a detailed and particularized statement of facts that could only have been crafted with her input. It should be inferred that the respondent would not have taken the position she took in her answer if she did not think it was true. Effectively, her stated position in the answer is that the “needs” of the children do not include assistance with post-secondary education expenses. However, that does not end the analysis. As will be seen, the means of the parties remains an important consideration in the analysis, as does the family’s spending pattern.
Issue
[14] The difference between the parties’ positions represents a relatively small amount of money because the RESPs will fund a significant component of the children’s education.
[15] The applicant says he should not be obliged to pay any s. 7 expense for the children’s post-secondary education.
[16] The respondent says the parties are obliged to contribute to their post-secondary education. She suggests the children should be asked to contribute $5,000 annually towards their expenses, whether from scholarships, summer employment, or the “trust funds.” The RESP should then be divided into appropriate annual amounts and then applied towards their expenses. Next, the parties should contribute the balance of the required funding as a s. 7 expense divided in proportion to their incomes.
Analysis
[17] Neither parties’ position can be sustained.
[18] The facts of Lewi are quite similar to the facts here, except the “means” of the children are substantially greater here in that between the RESPs and the “trust funds” they have available funds which would fully fund their education without any further assistance from the parties, and still leave significant money left over. In Lewi the trust funds were not enough to completely fund the children’s education.
[19] In Lewi, Juriansz J.A., for the majority, held at paras. 141 to 143 that:
[141] Both s. 7 and s. 3(2)(b) require the court to consider whether a child of majority age is able to make a contribution to his or her post-secondary education expenses.
[142] Section 3(2)(b) requires the court to have regard to the “means” of the child. Both capital and income are encompassed by the term “means”. (Whether credit is within the ambit of “means” does not arise on this appeal.) The section requires the court to consider the child’s means in the context of the financial ability of each of the parents to contribute to the support of the child.
[143] There are several indicators in s. 7 that the court is required to consider the child’s ability to make a contribution toward post-secondary education expenses. First, s. 7 requires the court to take into account the necessity and reasonableness of the expense in relation to the “means of the spouses and those of the child” (emphasis added). The phrase “all or any portion” in s. 7(1) allows the court to provide an amount to cover only a portion of the expense at issue. Most apparent is s. 7(2), which provides that [the] amount of the expense to be shared by the parents is arrived at “after deducting . . . the contribution, if any, from the child”.
[20] Juriansz J.A. went on to state, at para. 150, that it is an error to fail to consider whether the children should make a contribution to their post-secondary education expenses out of their capital assets. The father’s income was in the $180,000 range and the mother had no income. The father’s total child support and spousal support on this income would be in the $70,000 range under the motions judge’s order. Juriansz J.A. said, “In the context of this level of sacrifice” the children’s capital in their trust funds would be largely untouched, and they would graduate with about $45,000 (plus a four year old car in the case of the older child).
[21] Juriansz J.A. then said:
[154] Neither s. 3(2)(b) nor s. 7 contain any indication whatsoever of the level of contribution a child of majority age with funds should be expected to make to his or her own post- secondary education expenses. Under both provisions, the question is largely a matter of discretion for the trial judge.
[155] Section 3(2)(b) simply specifies general criteria to which the court must have regard. As Carthy J.A. observed at para. 22 in Arnold v. Washburn, supra, the focus of s. 3(2)(b) is, “[n]ot on the payer’s income but rather on the amount of support and its appropriateness having regard to the needs and condition of the children and the financial ability of the spouses to contribute to the children’s support”.
[156] Section 7 also specifies some general criteria and leaves it to the court’s discretion to decide:
(1) whether the court should provide an amount to cover all or a part of an expense;
(2) the reasonableness of the expense;
(3) the means of the spouses;
(4) the means of the child;
(5) the family’s spending pattern prior to separation;
(6) the amount of the contribution of the child, if any; and
(7) whether the court should depart from the guiding principle that the spouses should share the expense in proportion to their incomes.
[157] It seems to me that the court, in order to exercise its discretion properly under either s. 3(2)(b) or s. 7, when parties dispute the amount of contribution expected of a child, requires the same kind of information regarding the needs of the child and the means of the child and parents. Nor would the contribution the child is expected to make and the support the parent is obliged to provide necessarily be different under the two provisions. In my view, in fashioning an order applying the broad criteria in s. 3(2)(b), the court may well draw upon the principles of the Guidelines and its experience in applying them. For example, it would be entirely appropriate for the court, under s. 3(2)(b), to consider that the parents should share post-secondary expenses in proportion to their incomes after deducting the contribution, if any, of the child. The evidence upon which the court might conclude it was just and appropriate that the parents should share the expenses in some other proportion would, I think, be the same under both provisions.
[158] I agree with Gillese J.A. that the all or nothing positions advanced by each of the parents in this case must be rejected. There is nothing in the Guidelines that implies that children of majority age with capital assets should be required to contribute all of their assets towards their post-secondary education before their parents are called upon to provide support, or that such children should not have to make any contribution out of their capital. [Emphasis added.]
[22] In Roth v. Roth, 2010 ONSC 2532, at para. 16, Ricchetti J. (as he then was), held:
Children have an obligation to make a reasonable contribution to their own post-secondary education or training. This does not mean that all of a child’s income should necessarily be applied to the costs of the child’s further education. [Emphasis in original.]
[23] In my view, the same can be said of the children’s capital, i.e., the obligation to make a reasonable contribution does not mean that all of a child’s capital should necessarily be applied to the costs of the child’s further education.
[24] Another factor is the parties’ spending pattern prior to separation. If an expansive and purposeful interpretation of the Guidelines is used, as it should be, the money the parties devoted to RESPs can be considered a form of spending. By setting up the RESPs, the parties mutually acknowledged that their daughters’ education was an important priority for them. The expense here is unquestionably reasonable as post-secondary education brings immense benefits, and both parties agree on the expected amount. The expenses qualify as a reasonable “need.” In this case, the children have exceptional means to contribute. However, both parents also have considerable means to contribute and they should contribute a reasonable amount in addition to the RESPs they have already funded.
Disposition
[25] Funding sources for the children’s post-secondary education, including tuition, residence or rent, books, meal plan and food, tutors, laptop computer, school supplies, orientation expenses, student fees, school gym fees or athletic fees, and transportation, for up to six years, shall be applied in the following priority:
a. Scholarships, bursaries, and awards.
b. RESP funds, but these shall be divided up and used annually in such a way as to minimize tax to the children and maximize the benefit to the children.
c. $7,500 per year for each child from the parties, divided in proportion to their incomes.
d. The children shall fund the balance of their education from their own means (including the “trust funds”).
[26] If the parties cannot agree on costs, they may make written submissions consisting of not more than three single spaced pages, plus attachments. Both parties’ submissions are due November 29, 2022. Both parties’ reply submissions are due December 2, 2021.
“Chown J.”
Released: November 15, 2021