COURT FILE NO.: 20-274
DATE: 2021/12/17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tania Thauvette Applicant
– and –
Michael McGregor Respondent
Christopher Giggey, for the Applicant
Self-Represented
HEARD: September 23, 2021 and October 1, 2021
LACELLE, J.
Introduction
[1] The parties are the parents of two children. Each brings a motion seeking temporary orders addressing a number of issues.
[2] Mr. McGregor is self-represented and has claimed various types of relief in various documents. I consider only the relief he has properly claimed in his Notice of Motion dated September 15, 2021, in order to ensure procedural fairness in this matter.
[3] In the main, Mr. McGregor requests an order addressing terms for reunification counselling for him and the parties’ children. He seeks an order that he have “specified parenting time” with the children in accordance with the s. 30 assessment recommendations. He also seeks an order for an update to the existing s. 30 assessment, and an order requiring Ms. Thauvette to check in daily to Our Family Wizard “to attend to any family matters if any”.
[4] Ms. Thauvette brings her own motion seeking temporary orders on a number of additional terms. Some of these were addressed on consent following the hearing of the motion (as further described below). The remaining orders sought in her motion are as follows:
a. A temporary order that the father’s parenting time with the children shall be in accordance with the children’s wishes, pending the outcome of the reunification counselling between the Respondent father and the children, ordered by Justice Champagne, on consent;
b. The temporary order of Justice Champagne dated August 4, 2021 shall remain in full force and effect;
c. A temporary order requiring the Respondent father to commence paying the Applicant mother his pro-rata share of all section 7 expenses for the children in the amount of $3, 533 per month, commencing October 1, 2021, and on the first of every month thereafter, based on the Applicant mother’s gross annual income of $153, 022 in 2020 and the Respondent father’s estimated gross annual income of $147, 218 in 2021;
d. A temporary order fixing section 7 arrears owing by the Respondent father to the Applicant mother, as of September 30, 2021, in the amount of $41, 930.36, which shall be paid to the Applicant mother, as follows:
i. $35, 155.27 shall be paid using the entirety of the Respondent father’s 50% share of the net proceeds from the sale of the parties jointly owned cottage, which are currently being held in trust by the law firm of Poirier & Arthur; and
ii. The remainder shall be paid by the Respondent father to the Applicant mother at the rate of $1, 000 per month, commencing October 1, 2021, and on the first of every month thereafter, until paid in full.
[5] Following the completion of the hearing of the motion, on consent, a temporary order was made providing for the following:
a. The children shall be primarily resident with Ms. Thauvette;
b. The parties shall engage Ms. Rekha Chagarlamudi for reunification counselling between Mr. McGregor and the children. The father shall be responsible for paying the reunification counsellor’s account, on a without prejudice basis to him claiming reimbursement of payment of this account when costs of the proceeding are addressed;
c. Mr. McGregor shall pay table child support for the benefit of the children in the amount of $2, 044 monthly commencing October 1, 2021 based on an estimated gross annual income of $147, 218 for 2021 (without prejudice to readjustment of child support based on his actual line 150 income for 2021);
d. The parties shall jointly retain Ms. Barbara Mitchell to complete an update to her section 30 assessment and Mr. McGregor shall be solely responsible for paying Ms. Mitchell’s account in regard to same;
e. Ms. Thauvette shall have exclusive possession of the jointly owned matrimonial home.
Overview of the evidence
General background
[6] The parties met in 2006. Their daughter M. was born in 2007.
[7] In January of 2008, Ms. Thauvette obtained a sole custody order for M., and moved with her from Carleton Place to Cornwall to be closer to family.
[8] The parties reconciled and resumed cohabiting in 2010. Their son H. was born in 2011. They married on July 8, 2017 and separated on August 1, 2020.
[9] At this time, Ms. Thauvette and the children are living in the matrimonial home. Mr. McGregor has agreed that the children shall have their primary residence with Ms. Thauvette, and that she shall have exclusive possession of the matrimonial home.
[10] Ms. Thauvette is currently self-employed as a project manager consultant and works from home to operate her company FogDog Technologies. Mr. McGregor, an engineer by trade, works as a project manager for a company in Ottawa.
[11] The estimated gross annual income for Mr. McGregor for 2021 is $147, 218. This is based on his Financial Statement’s declaration of his gross income from 2020 and a recent pay stub attached to his Financial Statement. His child support obligation based on this figure is $2, 044 monthly. As I have outlined above, a temporary order fixing this amount of monthly child support is now in place.
[12] Ms. Thauvette provided an updated Financial Statement dated September 17, 2021. It indicates she is self employed and carrying on business under the name of FogDog Technologies Inc. She provides no statement of income and expenses/professional activities. She states that her gross income from last year was $153, 021.88.
The evidence of Ms. Thauvette regarding the s. 7 expenses
[13] Ms. Thauvette states that M. suffers from significant anxiety and has been diagnosed with this mental health disorder at CHEO. Long before the parties separated, M. commenced horseback riding as a form of therapy for her anxiety. Ms. Thauvette states that M. rides a minimum of three times per week. In 2020, she attended a week-long horse show (it is not clear if this was before or after the separation).
[14] Ms. Thauvette’s view is that it is of utmost importance to M.’s mental health that she be able to continue with this activity.
[15] Ms. Thauvette purchased a horse for M. to allow her to continue her passion for horseback riding, including participating in competitions. She claims that Mr. McGregor was fully aware of this intended purchase and in favour of it.
[16] Ms. Thauvette has incurred $86, 517.25 in section 7 expenses for the children since the parties separated. She has paid for all these expenses to date. These expenses include the costs of M.’s horse, the costs associated with the horse and riding generally, counselling for both children, braces for M., art lessons for H., and a computer and scooter camp for H. Mr. Thauvette submits that Mr. McGregor’s share of these expenses is $41, 930.36. She seeks an ongoing contribution from him of $3, 533 per month. She proposes that the retro-section 7 expenses might be satisfied in the main by using the proceeds from the sale of the parties’ cottage, with the balance being repaid at the rate of $1, 000 per month.
[17] Ms. Thauvette says that Mr. McGregor “was fully aware, and in favour, of purchasing this horse prior to separation. Even after separation, he continued to support the purchase and made inquiries of me about same. However, when I attempted to obtain his contribution towards this $29, 000 expense, he declined, claiming that he had always advised me that this was my responsibility”. She attaches text messages and a screenshot of a Facebook post in support of these statements.
[18] Ms. Thauvette says in her affidavit that M. advanced in her riding to the point that there were no suitable horses at her riding facility for her to ride. She explains how they came to purchase the horse Albee, and why this made more sense than moving to an “out-of-barn” lease of a horse. She says that prior to their separation, the parties had agreed and made the decision to buy because given M.’s anxiety, she could not handle parting ways with a horse at year end.
[19] In her affidavit, Ms. Thauvette acknowledges that the expenses incurred for the children’s activities are high. She states they are in accordance with what “our pre-separation, agreed upon spending patterns for the future would be”.
[20] Ms. Thauvette indicates that her line 150 income for 2020 was $153, 021.88.
[21] Ms. Thauvette confirms that during the separation, Mr. McGregor has been providing $1, 000 biweekly to her, and this works out to a monthly payment of $2, 166.67. Since the table child support owed by him was $2, 044 per month, he was providing an additional $122.67 in support. She claims that because she made $600 in payments towards a loan for a boat in Mr. McGregor’s name, his credit from his overpayments at this point amounts to $462.64. After this credit is considered, she says Mr. McGregor should pay her $41, 930.36 for the expenses post separation, and he should be required to pay $3, 533 per month going forward.
The evidence of Mr. McGregor regarding the s. 7 expenses
[22] Mr. McGregor states that prior to separation, the parties spent between $10, 000 to $15, 000 per year on extraordinary expenses for both children. He says that a significant portion of that sum was expensed to Ms. Thauvette’s company.
[23] Since separation, Mr. McGregor says Ms. Thauvette has claimed $83, 581.16 in s. 7 expenses through Our Family Wizard (the total of the expenses submitted by Ms. Thauvette is for $86, 517.25 according to Exhibit DD to her affidavit). Mr. McGregor says he was not consulted about whether he agreed with any of the expenses now being claimed as extraordinary.
[24] With respect to the purchase of a horse, Mr. McGregor states that he never agreed to this because he felt the parties could not afford the cost or the risk and the liability of owning a horse.
[25] With respect to the means of Ms. Thauvette, Mr. McGregor states that “Tania earns between $300, 000-$400, 000 per year through invoicing for her project management services however she claims income of around $150, 000”. In his affidavit of September 15th, 2021, he says he seeks “an order for an independent income analysis and chartered business evaluation to determine Tania’s income and value of FogDog Technologies”.
[26] With respect to his financial means, Mr. McGregor has not provided an updated financial statement. The court has only his Form 13.1 dated December 9, 2020. In his evidence on the motion, he states that he purchased another residence in January 2021 and requested the release of funds from the proceeds of the sale of the parties’ cottage, as well as access to his share of the equity in the matrimonial home in order to facilitate the purchase. He says that while Ms. Thauvette initially agreed to the release of some funds, she later refused. He says he is now paying “high interest loans for the money” that Ms. Thauvette refuses to release.
Additional evidence
[27] The author of the s. 30 assessment, Ms. Mitchell, confirms that M. has been diagnosed with Social Anxiety Disorder. She also notes that Ms. Thauvette and Mr. McGregor “have done a good job of finding activities and outlets to benefit their children: M. with her horseback riding and H. with his art”.
The positions of the parties
[28] Mr. McGregor argues that during the relationship, he encouraged Ms. Thauvette to start her business while he earned an income. Now, he says she makes twice what he does and points out that he has claimed spousal support (although this is not an issue in this motion). He says his income is $127, 000 per year and the fact that Ms. Thauvette has spent $86, 000 in s. 7 expenses is unconscionable. He cannot afford this. He says that the purchase of the horse and associated expenses were not necessary, and M.’s riding activity did not require this level of financial support prior to separation.
[29] Mr. McGregor argues that the court needs to know what Ms. Thauvette’s true income is to properly assess each party’s responsibility for s. 7 expenses. In submissions, he renews his request (made at other points in the litigation) for an expert assessment. He argues that the fact that Ms. Thauvette has now been able to purchase a cottage valued at $400, 000 shows that she is earning more than her line 150 income suggests (there is no evidence about this purchase before the court). He emphasizes his expenses following separation, and the fact that Ms. Thauvette will not agree to release funds he is owed (for instance, from the sale of their cottage), and says that as a result, he has had to resort to a high interest loan to support a home purchase near the former matrimonial home so he can be near the children. Mr. McGregor argues that the “financial aspect” requires further disclosure and further investigation before even a temporary order is made regarding s. 7 expenses.
[30] Ms. Thauvette recognizes that horseback riding is expensive, but she says that both parties were aware of this prior to their separation and nevertheless agreed to involve M. in this activity. This activity is necessary for M.’s mental health as it assists her in controlling and managing a diagnosed anxiety condition. Ms. Thauvette submits that if M. is to maintain her involvement in this important activity, she needs to be provided with the opportunity to advance in her skill and achievements, something which Mr. McGregor has encouraged. She says this is why Mr. McGregor agreed, prior to separation, to the purchase of a horse for M. While these expenses are high, in considering what is a necessary s. 7 expense, the court has to consider what was being spent during the relationship. While the purchase of a horse had not occurred during the relationship, M. was very heavily involved in riding. Counsel emphasizes that the test is not whether or not the expense was approved by both parties, but whether it is necessary and within the means of each party.
[31] Counsel submits that should the court determine that the horseback riding expenses are too high, then it would need to assess whether what Mr. McGregor is currently contributing is sufficient. While Ms. Thauvette acknowledges that Mr. McGregor has until recently been overpaying the table amount of child support by $122 monthly, she says this does not come close to covering the necessary extra expenses for the children, including medical expenses and counselling.
[32] In any case, Mr. McGregor has not paid any of his share of the children’s section 7 expenses, including the expenses associated with counselling, braces, art lessons, a computer, and scooter camp. Ms. Thauvette submits that all these expenses clearly fall under section 7 of the Federal Child Support Guidelines.
[33] Ms. Thauvette argues that Mr. McGregor did not plead the issue of an expert income assessment in his motion, which was focused on parenting. She argues that disclosure is not yet complete and an expert is premature and directs the court to Sargalis v. Sargalis, 2019 ONSC 530, which concluded that additional disclosure and questioning should occur first “where the financial affairs of a party are not complicated”. Counsel submits that Ms. Thauvette is more than willing to cooperate with requests for financial disclosure.
[34] As far as a temporary parenting order is concerned, in oral submissions, counsel for Ms. Thauvette submits that there can not be a parenting order where reunification counselling has yet to take place.
The legal principles
The law
[35] Section 7 expenses relate to special or extraordinary expenses related to the support of a child and are paid above and beyond the child support table amount.
[36] Section 7 expenses must fall within the prescribed list of expenses in paragraphs 7(1)(a) to (f) under both the federal and provincial Child Support Guidelines. Not every expense incurred on behalf of a child will qualify.
[37] The list of s. 7 expenses includes “extraordinary expenses for extracurricular activities” (s. 7(1)(f). “Extraordinary expenses” are defined in the Guidelines. Section (1.1)(a) is applicable here. It defines “extraordinary expenses” as expenses that exceed those that the parent requesting the amount can reasonably cover, taking into account that parent’s income and the amount that parent would receive under the applicable table (where table amount has been found appropriate).
[38] In considering whether an expense is a s.7 expense, a court will consider the evidence relating to the details about the expense (including the need for it and its reasonableness) having regard to the child support table amount, the parties’ incomes, the special needs or abilities of the child, and/or other relevant factors.
[39] The onus is on the party who seeks contribution for the expense to show that it falls within s. 7 of the guidelines.
[40] Section 7(2) provides that the guiding principle in determining the amount of an expense listed in subsection (1) is that the expense is shared by the spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.
[41] In accordance with s. 7 (3), the court must also take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.
Income assessment
[42] The law governing the court’s approach on this issue is also set out in the Federal Child Support Guidelines.
[43] Pursuant to s. 15 of the Guidelines, a spouse’s annual income must be determined by the court in accordance with sections 16 to 20. Section 16, which is subject to the circumstances set out in sections 17-20, directs the court to assess “annual income” based on certain income tax information. Income for support purposes is thus presumptively the payor’s income as it appears on line 150 of his or her tax return: Bak v. Dobell, 2007 ONCA 304, 86 O.R. (3d) 196 at para. 30.
[44] The Guidelines provide in s. 18 that where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the payor’s annual income, as determined under section 16 does not fairly reflect all money available to the spouse for the payment of child support, the court may consider the situations described in section 17 (which considers the pattern of income for the last three years) and determine the spouse’s annual income to include all or part of the pre-tax income of the company for the most recent taxation year (s. 18(1)(a)).
[45] Section 18(2) further provides that in determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. Case law holds that the onus is on the corporate shareholder to provide the necessary evidence that the corporation’s pre-tax income is not available for support purposes.
[46] Section 19 of the Guidelines directs that the court may impute such amount of income to a spouse as it considers appropriate in the circumstances. The section references a non-exhaustive list of such circumstances the court may consider.
[47] Case law holds that circumstances apart from those listed in the section may also be relevant. In Bak, after discussing section 19 generally at paras. 30-37, the court held at paras. 41-42 that a payor’s lifestyle often will be relevant to whether a court may impute income under s. 19(1) of the Guidelines, though it is not a “standalone ground for imputing income”. The court stated at para. 41:
For example, it may be apparent from lifestyle that a payor is receiving undeclared income because he or she has historically worked, lives comfortably with the usual trappings, and yet declares minimal income for tax or child support purposes. In such a case, the recipient who calls evidence of the payor’s lifestyle will ask the court to draw the reasonable inference that the payor must have a greater income than he or she has disclosed.
[48] With respect to self-employed individuals, as noted in Sargalis at para. 11, while they do not have an obligation to produce an income analysis if their income is called into question, they do have an obligation “to satisfy the court of their true income … the party may fulfil this obligation by commissioning an income analysis or by providing further disclosure. All measures a party undertakes to prove their true income is at their own costs: see Manchanda v. Thethi (2016), 2016 ONSC 3776, 131 O.R. (3d) 393”.
Analysis
[49] The evidence, or absence of evidence, leads me to the following findings:
a. Aside from general statements and the fundamental agreement that horseback riding was an extracurricular activity enjoyed by M. when the parties were together, there is no evidence about what was spent on that activity by the parties prior to separation;
b. At least one receipt submitted by Ms. Thauvette in relation to the claimed s. 7 expenses was billed to Fogdog Technologies (receipt #50 referenced in Exhibit DD for Equine Recovery Powder billed at $389.95). This provides some support for Mr. McGregor’s claim that during the relationship, s. 7 type expenses were billed to Ms. Thauvette’s corporation;
c. There is no evidence Mr. McGregor was consulted about whether he agreed with any of the expenses now being claimed as extraordinary. The evidence in text messages and Facebook posts about the purchase of the horse consists of saying “ok” to the suggestion that the purchase of a horse be discussed, asking a few questions about proposed horses, and saying he is proud of his daughter’s passion for her hobby. While his consent is not required for an appropriate s. 7 expense to be reimbursed under the law, to the extent it matters, I find that the evidence presented does not establish Mr. McGregor’s consent to share in this expense;
d. The expenses associated with the purchase of the horse and associated with horseback riding for M. are excessive and are not reasonable given the parties’ incomes. The horse boarding and riding lessons alone now cost $1, 327.75 monthly. According to the DivorceMate calculation submitted by Ms. Thauvette, it appears that the vet bills and other costs associated with riding and competition total $51, 172 for one year, while the purchase of the horse adds another $29, 000. The total expenses associated with horseback riding are over $80, 000 for the year. This is not reasonable or sustainable on either of the parties’ declared incomes;
e. I am not satisfied that the income available to Ms. Thauvette for support purposes is fully captured in her line 150 income. She has not filed a complete financial statement since she has not provided a statement of income and expenses as required for self-employed individuals. Further, she has spent over $86, 000 in roughly 12 months on the expenses claimed in this motion, but it is not clear where those funds have come from given the evidence contained in her Financial Statement. She shows no ongoing payments towards these expenses aside from $204 monthly for M’s braces and $37.50 monthly for H’s summer camp expenses. Her monthly income is said to be $11, 770 while her expenses total $12, 737 (including braces and summer camp). Her TFSA shows a value reduced by almost $50, 000 between the date of the statement and the valuation date. Her financial statement also shows she has paid off $11, 582 in debt she had on valuation date (she indicates a debt payment of $1500 monthly in her expenses). Other debt has increased modestly by $1500. Considering all of this information, it is not clear where the $86, 000 to pay for the claimed s. 7 expenses has come from. I find I have insufficient information to determine what her income is for support purposes;
f. The claim for ongoing s. 7 expenses of $3, 533 a month is manifestly unreasonable, particularly since this is based on figures incurred for a year where a $29, 000 horse was purchased. This is clearly not a recurring expense;
g. While I accept that horseback riding is an important activity for M. in allowing her to cope with her anxiety, the evidence falls well short of establishing that it was necessary for the treatment of her anxiety to purchase a horse of this value for her so that she might compete at a certain level.
[50] Given the findings outlined above, I find that the global horseback riding costs for M. are neither reasonable nor necessary. I reach a different conclusion in relation to the costs submitted relating to H.’s laptop, art classes, and scooter camp, as well as M.’s braces and counselling. These expenses all meet the definition of s. 7 expenses and should be shared by the parties.
[51] Based on the evidence presented, however, I am unable to determine how these expenses should be fairly apportioned at this time. I decline to make an order for the apportionment of those expenses for the past year or going forward, since I am not satisfied that I have sufficient evidence about Ms. Thauvette’s income for support purposes to arrive at a fair determination of how those expenses should be shared. The expenses I have found to be s. 7 expenses may be claimed at trial assuming there is sufficient evidence to permit the court to assess Ms. Thauvette’s income, as well as evidence about what portion of these costs are covered by any benefits plan held by either party, and any tax credits that will apply.
[52] Because horseback riding was an activity enjoyed by M. prior to separation and it is important for her mental health, the court will also reconsider what costs associated with horseback riding may properly be considered s. 7 expenses if further evidence about what was spent pre-separation, and how it was paid for, is provided to the court. Since I have no way based on the evidence before me of determining what the cost for horseback riding is without also boarding a horse, or what costs were actually paid by the parties previously, I will not make a finding about what might constitute a reasonable and necessary expense relating to horseback riding for M. for the year post-separation or going forward.
[53] The motion for a temporary order in regard to s. 7 expenses is thus dismissed. I confirm it is dismissed without prejudice to Ms. Thauvette raising the issue of retroactive s. 7 expenses at trial where an order may be made if sufficient evidence is provided to justify it.
[54] The remaining issues in the litigation have, in large measure, been addressed. To be clear, I decline to make any further parenting order while the reunification counselling process is underway. I also decline to order Ms. Thauvette to check in daily to Our Family Wizard.
[55] If the parties cannot agree on costs for the motion, submissions of no longer than 3 pages, plus attachments, may be made to me in writing on the following schedule: the Respondent shall have 30 days from receipt of this endorsement to file his submissions; the Applicant shall have a further 21 days to respond; and the Respondent shall have 7 days to reply.
The Honourable Justice Laurie Lacelle
Released: December 17, 2021
COURT FILE NO.: 20-274
DATE: 2021/12/17
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Tania Thauvette
-AND-
Michael McGregor
AMENDED RULING ON MOTION
The Honourable Justice Laurie Lacelle
Released: December 17, 2021