Court File and Parties

COURT FILE NO.: FC-16-916-1 DATE: 2022/03/03 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: DOUGLAS LAWRENCE SAVAGE Applicant – and – DOMINIKA KLARA KACZMAREK Respondent

Counsel: Self-represented for the Applicant Self-represented for the Respondent

HEARD: In writing

Reasons for Decision

Audet J.

[1] This is a support variation application brought by the Applicant father pursuant to the Inter-jurisdictional Support Orders Act, 2002, S.O. 2002, c. 13 (“ISOA”). He lives in New Brunswick and the Respondent mother and the children live in Ontario.

[2] Pursuant to the Partial Final Order of Engelking J. dated January 6, 2017, the father is required to pay child support for the two children of the marriage, T.M.S. (now 16) and A.L.S. (now 13), in the amount of $890.20 per month, based on an income of $67,000 (2016 income) less $4,500 representing travel costs to be incurred for the purpose of exercising his parenting time with the children. In a subsequent Final Order made by Engelking J. on July 18, 2017, the father was ordered to pay $19,596 in arrears for the years 2015 and 2016, in addition to costs in the amount of $6,000 (referred to jointly as “the 2017 Order”). The father was also required to share the cost of tutoring and any other agreed upon expenses for the children.

[3] By this application, the father seeks to rescind all outstanding arrears owing as of July 1, 2021 ($10,741.12 according to the reciprocating jurisdiction’s statement of arrears), and vary his child support payments to $175 per month, an amount which is lower than the Table amount based on his current income ($49,995 in 2020 and 2021). The father takes the position that paying the full amount provided by the Guidelines would result in undue hardship for him given the large disparity in the parties’ income, his relatively modest employment income, and the fact that the expenses he incurs to exercise his parenting time with the children is very high. He points to the mother’s much higher standard of living, which includes an annual income twice his income, proper housing (which he says he does not have currently), and the financial support of a new spouse who earns a similar income as the mother.

[4] The mother opposes the father’s application for the following reasons:

• Whereas the 2017 Order was based on the father earning $67,000 per annum (2016 income), he actually earned $72,989 in 2018 and $75,403 in 2019;
• The father acknowledges in his evidence that he left his $75,000 per annum employment to work elsewhere at $49,995 “for better quality of life”, without explaining why such a change was reasonable given his obligation to support two children;
• Despite having benefitted from a reduction of his child support obligation due to high travel costs to exercise his parenting time, the father since 2017 has not incurred those expenses because the mother has facilitated all the children’s travel to New Brunswick.

[5] The mother further states that while she shares housing expenses with a new spouse, he has both child support and spousal support obligations, and is currently assuming very high debts, just like her. Based on the above, the mother seeks to impute an income to the father commensurate to what he was earning before he chose to leave his more gainful employment, and she seeks an increase in child support to reflect the fact that he has been earning more, and spending less, than what was originally contemplated at the time of the 2017 Order.

[6] I am unable to make a decision in this case because I am missing important information in relation to the three claims being advanced by the parties, being:

• The mother’s request for the imputation of a higher income to the father based on her assertion that he is intentionally under-employed;
• The father’s undue hardship claim;
• The father’s claim for the rescission of all arrears accrued to July 1, 2021.

Imputation of income on the basis of under-employment

[7] The relevant part of Section 19 of the Federal Child Support Guidelines, S.O.R./97-175, as am. ["Guidelines"] applicable to this case is as follows:

19. Imputing income. — (1) The court may impute such amount of income to a parent or spouse as it considers appropriate in the circumstances, which circumstances include, (a) the parent or spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of any child or by the reasonable educational or health needs of the parent or spouse;

[8] The Court of Appeal in Drygala v. Pauli (2002), 61 O.R. (3d) 711 (Ont. C.A.), at para. 23, set out a three-part test for determining whether income should be imputed on the basis of intentional under-employment or unemployment as follows:

1. Is the spouse intentionally under-employed or unemployed?
2. If so, is the intentional under-employment or unemployment required by virtue of the reasonable educational or health needs of the parent or spouse needs?
3. If the answer to question #2 is negative, what income is appropriately imputed in the circumstances?

[9] The Court of Appeal added:

32 A spouse is intentionally under-employed if he or she chooses to earn less than he or she is capable of earning having regard to all of the circumstances (Drygala, at para. 28). There is no requirement that the under-employment or unemployment be undertaken in bad faith or with the intention of avoiding support payments (Drygala, at paras. 29-36).

33 The onus is on the party seeking to impute income to establish an evidentiary basis that the other party is intentionally under-employed or unemployed (Homsi v. Zaya (2009), 2009 ONCA 322, 65 R.F.L. (6th) 17 (Ont. C.A.), at para. 28).

Step one

34 When considering the spouse's capacity to earn income, the court should consider, among others, the following principles: (a) There is a duty on the spouse to "actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their children" (Thompson v. Thompson, 2014 ONSC 7503 (Ont. S.C.J.), at para. 99); (b) A spouse's capacity to earn income can be influenced by his or her age, education, health, work history, and the availability of work that is within the scope of his or her capabilities (Marquez v. Zapiola, 2013 BCCA 433, 344 B.C.A.C. 133 (B.C. C.A.), at para. 37);

Step two

35 The second step of the Drygala test is generally treated as an overall test of reasonableness. In Jackson v. Mayerle, 2016 ONSC 72 (Ont. S.C.J.), at para. 702, the court held that:

Once intentional underemployment is established, the onus shifts to one of the exceptions of reasonableness.

36 Justice Pazaratz notes in Jackson v. Mayerle, at para. 715:

Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of their children.

Step three

37 Where the spouse is intentionally and unreasonably under-employed or unemployed, the court has a large range of discretion to impute as income an amount founded on a rational basis, as detailed in the Court of Appeal case of D. (D.) v. D. (H.), 2015 ONCA 409, 335 O.A.C. 376 (Ont. C.A.).

38 The main factors a court should consider are the age, education, skills, and health of the spouse, along with the number of hours that can be worked in light of competing obligations and the hourly rate the spouse could reasonably obtain (Drygala, at para. 45).

[10] In the context of the matter at hand, the father must provide detailed and compelling evidence which explains the circumstances surrounding his change of employment so that this court is in a position to assess the reasonableness of his decision.

Undue hardship

[11] The applicable section in the Guidelines is section 10:

Undue hardship

10 (1) On either spouse's application, a court may award an amount of child support that is different from the amount determined under any of sections 3 to 5, 8 or 9 if the court finds that the spouse making the request, or a child in respect of whom the request is made, would otherwise suffer undue hardship.

Circumstances that may cause undue hardship

(2) Circumstances that may cause a spouse or child to suffer undue hardship include the following: (a) the spouse has responsibility for an unusually high level of debts reasonably incurred to support the spouses and their children prior to the separation or to earn a living; (b) the spouse has unusually high expenses in relation to exercising access to a child; (c) the spouse has a legal duty under a judgment, order or written separation agreement to support any person; (d) the spouse has a legal duty to support a child, other than a child of the marriage, who is (i) under the age of majority, or (ii) the age of majority or over but is unable, by reason of illness, disability or other cause, to obtain the necessaries of life; and (e) the spouse has a legal duty to support any person who is unable to obtain the necessaries of life due to an illness or disability.

(3) Standards of living must be considered (4) Despite a determination of undue hardship under subsection (1), an application under that subsection must be denied by the court if it is of the opinion that the household of the spouse who claims undue hardship would, after determining the amount of child support under any of sections 3 to 5, 8 or 9, have a higher standard of living than the household of the other spouse.

Standards of living test

(4) In comparing standards of living for the purpose of subsection (3), the court may use the comparison of household standards of living test set out in Schedule II.

[12] In light of the mother’s evidence that she is the one who facilitated the father’s parenting time by traveling to New Brunswick for his parenting time with them, I am not sure that the father is even meeting the threshold of establishing that his circumstances fit into one of the categories listed in subparagraph 10(2) above. More evidence is required on this issue, including precise evidence of the father’s expenses in the past four years in relation to exercising his parenting time (including the amount of time he had the children in his care each year).

[13] Should he be able to convince this court that he meets the first requirement, then I need more information from both parties to allow me to perform a “standard of living” comparison test. Among other things:

• I need confirmation of the number of people living in each homes (adults, children) and confirmation of their income (the mother has provided her spouse’s income), their contribution towards the household expenses and, in the case of the mother’s spouse, it would be important for the court to know how much child and spousal support he is currently required to pay (this is relevant to the standard of living comparison test);
• I need to have better evidence of the father’s current living arrangements. It is not enough for him to state that he sold his house and cannot afford housing. Surely, he lives somewhere.

Rescission of arrears

[14] When considering whether to retroactively vary the father’s child support obligations and rescind his arrears, I have to balance three interests to achieve a fair result:

1. The children's interest in receiving the appropriate amount of support to which they are entitled;
2. The interest of the parties and the children in certainty and predictability; and
3. The need for flexibility to ensure a just result in light of fluctuations in the father’s income.

[15] The legal principles applicable to this analysis have been very recently reviewed and set out by the Supreme Court of Canada in Colucci v. Colucci, 2021 SCC 24. Even though that particular case was decided pursuant s. 17 of the Divorce Act, it is equally applicable to similar requests, such as this one, being made under our provincial legislation. The Court summarized those principles as follows:

[113] To summarize, where the payor applies under s. 17 of the Divorce Act to retroactively decrease child support, the following analysis applies: (1) The payor must meet the threshold of establishing a past material change in circumstances. The onus is on the payor to show a material decrease in income that has some degree of continuity, and that is real and not one of choice. (2) Once a material change in circumstances is established, a presumption arises in favour of retroactively decreasing child support to the date the payor gave the recipient effective notice, up to three years before formal notice of the application to vary. In the decrease context, effective notice requires clear communication of the change in circumstances accompanied by the disclosure of any available documentation necessary to substantiate the change and allow the recipient parent to meaningfully assess the situation. (3) Where no effective notice is given by the payor parent, child support should generally be varied back to the date of formal notice, or a later date where the payor has delayed making complete disclosure in the course of the proceedings. (4) The court retains discretion to depart from the presumptive date of retroactivity where the result would otherwise be unfair. The D.B.S. factors (adapted to the decrease context) guide this exercise of discretion. Those factors are: (i) whether the payor had an understandable reason for the delay in seeking a decrease; (ii) the payor's conduct; (iii) the child's circumstances; and (iv) hardship to the payor if support is not decreased (viewed in context of hardship to the child and recipient if support is decreased). The payor's efforts to pay what they can and to communicate and disclose income information on an ongoing basis will often be a key consideration under the factor of payor conduct. (5) Finally, once the court has determined that support should be retroactively decreased to a particular date, the decrease must be quantified. The proper amount of support for each year since the date of retroactivity must be calculated in accordance with the Guidelines.

[138] Accordingly, in this third category of cases [where the prior order corresponds with the payor's income], the payor must overcome a presumption against rescinding any part of the arrears. The presumption will only be rebutted where the payor parent establishes on a balance of probabilities that — even with a flexible payment plan — they cannot and will not ever be able to pay the arrears (Earle, at para. 26; Corcios, at para. 55; Gray, at para. 58). Present inability to pay does not, in itself, foreclose the prospect of future ability to pay, although it may justify a temporary suspension of arrears (Haisman, at para. 26). This presumption ensures rescission is a last resort available only where suspension or other creative payment options are inadequate to address the prejudice to the payor. It also encourages payors to keep up with their support obligations rather than allowing arrears to accumulate in the hopes that the courts will grant relief if the amount becomes sufficiently large. Arrears are a "valid debt that must be paid, similar to any other financial obligation", regardless of whether the quantum is significant (Bakht et al., at p. 550).

[141] While the presumption in favour of enforcing arrears may be rebutted in "unusual circumstances" (Gray, at para. 53), the standard should remain a stringent one. Rescission of arrears based solely on current financial incapacity should not be ordered lightly. It is a last resort in exceptional cases, such as where the payor suffers a "catastrophic injury" (Gray, at para. 53, citing Tremblay v. Daley, 2012 ONCA 780, 23 R.F.L. (7th) 91). I agree with Ms. Colucci that the availability of rescission would otherwise become an "open invitation to intentionally avoid one's legal obligations" (Haisman (Q.B.), at para. 18, citing Schmidt v. Schmidt (1985), 46 R.F.L. (2d) 71 (Man. Q.B.), at p. 73; R.F., at para. 57). Simply stated, how many payors would pay in full when the amounts come due if they can expect to pay less later? The rule should not allow or encourage debtors to wait out their obligations or subvert statutory enforcement regimes that recognize child support arrears as debts to be taken seriously. [emphasis added]

[16] In the case at bar, the father has not provided me with all relevant evidence with regards to his request to rescind arrears, particularly since his income, for at least the first three years following the 2017 Order (which was based on the father’s 2016 income) was higher than the one that order was based on.

Other information missing

[17] In addition to all the above, I am also seeking the following additional evidence and clarification:

1. I need the parties’ income information for the year 2017, which neither has provided;
2. I need clarification in relation to the arrears actually owing by the father as of July 1, 2021.

[18] In his materials, the father has provided a Statement of Account from the New Brunswick Office of Support Enforcement, which shows an opening balance of $16,754.61 on January 1, 2020. The Statement of Arrears provided by the mother from the Ontario Family Responsibility Office (“FRO”) shows a balance owing of $26,600.58 on that same date. This discrepancy must be explained.

[19] Finally, I need confirmation of the amounts owing according to the FRO as of July 1, 2021 (the Statement of Arrears provided by the mother ends in January 2021).

Order

[20] Based on the above, I make the following order:

1. The Applicant father shall have 30 days from the date of service of this Order to provide additional evidence set out above in this decision;
2. The Respondent mother shall have 30 days after receipt of the father’s additional evidence to provide a response and the additional evidence set out above in this decision.

[21] I will then make my final decision.

Madam Justice Julie Audet Released: March 3, 2022