COURT FILE NO.: 288/19 (Kingston) DATE: 20220201

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Catherine Anne Ellis Scott Applicant

Eve Theriault, for the Applicant

• and -

Christopher Michael Scott Respondent

K. Gordon Gwynne-Timothy, for the Respondent

HEARD: November 17, 2021

REASONS FOR JUDGMENT

TROUSDALE J.

1On November 6, 2019, the Respondent commenced this Motion to Change the Final Order made by Justice J. Donohue on April 13, 2007 as follows:

(1) That the order for spousal support in that order be terminated effective November 7, 2019;

(2) That the spousal support owed to the Applicant be rescinded and be fixed at $0.00 as of November 7, 2019;

(3) In the alternative, that the order for spousal support be varied on a retroactive basis from 2004 pursuant to the Spousal Support Guidelines; and

(4) Costs on a substantial indemnity basis.

2The Applicant seeks that the Respondent’s Motion to Change be dismissed with costs. Alternatively, if the court decides to vary the duration of the order for spousal support, the Applicant seeks that there be no change in quantum prior to the termination date.

3I heard this Motion to Change by video conference on affidavit evidence and with submissions from counsel. Each party filed a Factum.

BACKGROUND

4The parties were married on June 27, 1998 when the Applicant was 22 years old and the Respondent was 25 years old. The parties resided in the Sarnia area. They separated on April 27, 2004.

5The parties had no children born of their marriage.

6The Respondent did carpentry and drywalling during the marriage and he continues to do carpentry and drywalling on a self-employed basis to the present time.

7The Applicant was a resource teacher for St. Clair Child and Youth Services.

8In 2001, the Applicant had a serious car accident in which she suffered significant injuries. The Applicant had a second car accident in 2003. As a result of these car accidents, the Applicant suffered a spinal cord injury and has been unable to work. Her income since then consists of CPP Disability and Long Term Disability benefits from her last employer.

9The parties entered into a Separation Agreement on May 30, 2005 which provided that the Applicant was entitled to spousal support and the spousal support would be paid as of April 2004. The Respondent did not comply with the terms of the Separation Agreement including spousal support and property issues.

10The Applicant commenced an Application in the Superior Court of Justice in Sarnia (herein “the Sarnia Court”) on August 4, 2005. The Respondent did not file any responding material nor provide any financial disclosure. The Applicant had to bring motions to require the Respondent to comply with his financial obligations which resulted in the Respondent being ordered to pay the Applicant $15,5524.00 for payments she made after separation on behalf of the Respondent including costs. The Respondent was also ordered to pay costs in the total amount of $750.00 on another appearance.

11The Respondent appeared at the Case Conference on November 9, 2005. He stated that he had just hired a lawyer whom he named. The lawyer was not with the Respondent that day.

12The Respondent appeared at the Settlement Conference on September 14, 2006. The Justice’s endorsement from that appearance states that the Respondent advised he had hired a lawyer (a different lawyer than named at the Case Conference), but the lawyer did not appear with the Respondent at that appearance. The Respondent produced his tax returns from 2003 to 2005 and the Respondent was permitted until October 2, 2006 to deliver any responding material, failing which the Applicant could proceed ex parte with her claim.

13On April 13, 2007, Justice Donohue ordered that the Applicant could proceed with her claim on an ex parte basis as the Respondent had not filed any responding material. As part of that Order Justice Donohue confirmed the two prior orders which had been previously made and which provided that the Respondent was ordered to pay the Applicant the sum of $15,524.00 including costs fixed in the amount of $750.00 plus post-judgment interest from December 15, 2005, and a further sum of $750.00 in costs plus post-judgment interest from March 9, 2006.

14The Order of Justice Donohue dated April 13, 2007 (herein “the Final Order”) also orders the Respondent to pay to the Applicant spousal support in the amount of $3,000.00 per month retroactive to April 27, 2004. The Final Order was filed with the Office of Family Responsibility (herein “FRO”).

15The Respondent did not appeal the Final Order.

16Since the Final Order was made, the Respondent made no voluntary payments of spousal support until FRO proceedings started in 2019, nor did he pay the sum of $15,524.00 owing to the wife, or the costs.

17FRO was unable to enforce the financial provisions of the Final Order for more than 11 years as it did not know the Respondent’s location.

18On June 20, 2019, a Notice of Default Hearing was issued by FRO and served on the Respondent who now lives in Kingston, Ontario. The Notice of Default Hearing stated that the arrears owing by the Respondent were $432,824.55, and the total amount enforceable by FRO including an administration fee was $434,424.55. The Respondent appeared at court on the return date on August 21, 2019.

19Since August 21, 2019, there have been a number of court appearances by the Respondent regarding the FRO Default proceeding. The Respondent has been paying some spousal support pursuant to orders made in the FRO Default proceeding. More recently, the Respondent has been ordered to make payments of spousal support in the sum of $300.00 per month. As at May 2021, FRO showed arrears of $493,498.34.

20The Respondent commenced his Motion to Change on November 13, 2019.

ISSUES

(1) Should paragraph 6 of the Final Order regarding spousal support be varied, rescinded, or suspended retroactively and prospectively, or should the Respondent’s Motion to Change be dismissed?

(2) If there should be a variation, rescission or suspension, as of what date should the variation, rescission, or suspension of the spousal support occur?

(3) If a variation of support is found by the court to be appropriate, what should the quantum and duration of spousal support be?

POSITIONS OF THE PARTIES

Position of the Respondent (Moving Party)

21The Respondent’s position is that the spousal support paragraphs of the Final Order should be rescinded pursuant to Section 17(1)(a) of the Divorce Act, R.S.C. 1985, c.3 (2nd Supp.) as there was no possible evidence before the Sarnia Court to justify a monthly spousal support order of $3,000.00 per month. The Respondent also argues that there is no evidence to impute income of $70,000.00 to $80,000.00 per year as claimed by the Applicant in the Sarnia Court. Similarly, the Applicant has in the Motion to Change claimed that the Respondent earned over $100,000.00 per year but there is no evidence to support that. The Respondent argues that his income tax returns as filed do not support imputing any of those incomes. The Respondent requests that the Final Order be terminated and that there be an order rescinding any and all arrears of spousal support.

22In the alternative, the Respondent seeks a re-calculation of spousal support based on his actual filed income tax returns from 2004 with the calculation being done in accordance with the Spousal Support Advisory Guidelines. The Respondent claims that those income tax returns accurately state all his income.

23If the Court is not prepared to rescind the spousal support order the Respondent seeks a variation of the spousal support in the Final Order based on a number of material changes in circumstances since the making of the Final Order. The Respondent claims that the support should be varied to an appropriate level of support based on the parties’ actual incomes and that the duration should not be greater than 6 years as he states that the length of the marriage was 5.83 years.

24Using his income as reported by him to Canada Revenue Agency, using the Applicant’s actual income in her income tax returns, and using the Spousal Support Advisory Guidelines, the Respondent calculates that for the period of 6 years from 2004 to 2010 at the high end of quantum, the total spousal support owing by him for that period would be $8,076.00.

Position of the Applicant (Responding Party)

25The Applicant’s position is that the Respondent’s motion should be dismissed. The Applicant argues that there has been no material change in circumstances that would justify a variation in spousal support. The Respondent should not be permitted to rely on his initial lack of disclosure in the Sarnia Court as a change in circumstances to ground a variation order.

26In the alternative, the Applicant argues that if the court finds that there has been a material change in circumstances, there should be no variation of the quantum up until the termination date. The Applicant argues that the Respondent failed to file responding material or to provide financial disclosure in the proceedings in the Sarnia Court, such that the Sarnia Court was obliged to impute income to the Respondent.

27The income upon which the spousal support was ordered is not indicated in the Final Order. However, the Applicant points out that the Spousal Support Advisory Guidelines were not introduced until July 2008. The Applicant argues that it is presumed that the judge who granted the previous order knew and applied the law. The Respondent did not appeal the order. The Applicant argues that this court should not consider the correctness of the order, nor should the order be departed from lightly.

28The Applicant submits that after the order was made, the Respondent deliberately structured his financial affairs so that he had no income sources that could be garnished or property that could be seized by FRO, which was attempting to enforce the spousal support on her behalf for over a period of 11 years before FRO finally could catch up with the Respondent. The Applicant argues that the Respondent is intentionally under-employed and has the ability to earn a substantial income. The Applicant claims that the Respondent continues to earn more income than reported on his income tax returns.

ANALYSIS

Material change in circumstances

29The Divorce Act (herein “the Act”) applies to these proceedings. Section 17 of the Act states that a court may make an order varying, rescinding or suspending, retroactively or prospectively a support order. The court has the discretion to make such an order, but it is not mandatory.

30Section 17(4.1) of the Act provides that before the court makes a variation of a spousal support order, the court must satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order.

31The Respondent argues that a material change in circumstances is not required to be proven before the court can make an order rescinding or suspending a support order.

32The Respondent submits that there have been the following material changes in circumstances since the Final Order was made:

(1) The Applicant received a settlement from her claim for damages for her injuries arising from her car accident several years after the Applicant and the Respondent separated.

(2) The Respondent married another woman, whom I shall refer to as Ms. C, after the Applicant and the Respondent divorced.

(3) The Respondent and Ms. C had two children to support at the date of the Final Order.

(4) The Respondent and Ms. C separated, which resulted in the Respondent’s obligation to pay child support to Ms. C in the amount of $800.00 per month.

33The Applicant gave affidavit evidence that she did receive a settlement from her personal injury lawsuit several years after separation. She did not state the amount of the settlement she received. The Respondent did not request disclosure of the amount of the settlement. From the Applicant’s income tax returns, the Respondent surmises that the settlement was received in or about 2011. The Applicant’s evidence is that the settlement funds received by her have been used up to cover her ongoing extensive medical expenses. As there is no evidence before me of what was received by the Applicant as a settlement, I am unable to find that it is a material change in circumstances.

34The Respondent was already in a relationship with, and residing with Ms. C at the time of the Final Order. I do not consider the fact that they subsequently married to be a material change in circumstances in this matter.

35The Respondent argues that the Sarnia Court did not know that he and Ms. C had two children when the Final Order was made. However, the evidence is that the Applicant had stated in her Application before the Sarnia Court that the Respondent was in another relationship and did have a son born of that relationship. In fact, both of the children were born prior to the Final Order being made. The Respondent chose to file no responding material in the Sarnia Court. The fact that the Respondent had two children at the date of the Final Order would not be a material change in circumstances as the information was known by the Respondent at that time. Therefore, it cannot be relied upon as the basis for variation. (See L.M.P. v. L.S., 2011 SCC 64, at para. 44).

36The Respondent’s evidence is that he and Ms. C are now separated and have a Separation Agreement. The Respondent states that he pays $800.00 per month child support to Ms. C for their two children who are teenagers. The Respondent did not put into evidence a copy of that Separation Agreement to confirm that child support payment, or whether the Separation Agreement referred to the Respondent’s income on which that child support was based. There is evidence in some of the Respondent’s income tax returns, starting in 2015, that he is paying family support (without benefit of any deduction) of $9,600.00 per year, which would be $800.00 per month.

37According to the Federal Child Support Guidelines, a child support payment of $800.00 per month for two children would be based on an annual gross income of approximately $52,650.00. That amount of income is a higher income than the Respondent has reported to Canada Revenue Agency in any year since 2004, other than 2012 when he had a net income of $95,069.00.

38The obligation of the Respondent to pay child support for the two children of the Respondent’s subsequent marriage could be considered to be a material change in circumstances.

39The Applicant was disabled and unable to work at the date of the Final Order, due to serious injuries to her brain and spinal column from two car accidents during the marriage which persist to the present time. The Applicant continues to be disabled and unable to work at the date of this hearing. The Applicant’s health has declined since the date of the Final Order. She now also has cancer and has very expensive monthly drug treatments for her cancer and Type 1 diabetes.

40The Applicant’s income for 2006 was $14,856.00 and for 2007 was $7,670.00. The Applicant’s income for 2020 was $13,557.00 which is made up of monthly CPP payments and a monthly disability payment from her former employer.

41At the date of the Final Order, the Respondent was a self-employed carpenter and a drywaller. At the current time, the Respondent continues to be a self-employed carpenter.

42The Respondent’s income tax returns show the Respondent’s net business income for 2006 as $15,126.00. For 2007 the Respondent reported a line 150 total income of $21,543.00. The Respondent’s net business income for 2019 was $32,043.53. For 2020, the Respondent’s net business income was $31,060.00.

43In the Respondent’s Financial Statement sworn November 13, 2019 in support of his Motion to Change, the Respondent shows an annual income of $31,590.96 and annual expenses of $47,052.00.

44The Respondent’s Financial Statement sworn November 13, 2019 shows the Respondent has no assets whatsoever other than $500.00 in tools. One would expect that the value of tools for a self-employed carpenter would have a significantly greater value than $500.00. The Respondent has no bank accounts. The Respondent swears that he has no debts. Although this matter involves spousal support, the Respondent did not fill out Schedule B as required regarding other income earners in the home.

45In the Respondent’s Financial Statement sworn November 9, 2020, the Respondent shows annual income of $35,000.00 and annual expenses of $45,065.16.

46In the Respondent’s Financial Statement sworn November 9, 2020, the Respondent again shows no assets other than his tools worth $500.00 and he again shows no debts other than an unknown amount owing to FRO. The Respondent did not fill out Schedule B regarding other income earners in the home.

47Contrary to the information regarding the value of tools given in the Respondent’s Financial Statement sworn November 9, 2020, the Respondent’s 2020 income tax return shows an addition in June 2020 of $9,000.00 of tools, which the Respondent did not report in his Financial Statement sworn November 9, 2020.

48One of the major issues in this matter is the determination of the Respondent’s income. However, the Respondent did not comply with Rule 13(12.2) of the Family Law Rules as he did not file a sworn Financial Statement at least seven days prior to the motion date or an affidavit stating that the information in his last statement (November 9, 2020) has not changed and is still true. The Respondent’s Financial Statement was over a year old by the time of the hearing of this Motion to Change.

49According to the Respondent’s 2018 Notice of Assessment, the Respondent has also failed to pay income tax over many years. The balance of income tax owing as of the Respondent’s 2018 Notice of Assessment is $136,298.61.

50Paragraph 5 of the Final Order stated: “The provisions of equalization and property settlements as set out in the Separation Agreement dated May 30, 2005 are hereby set aside.”

51Neither party filed the Separation Agreement dated May 30, 2005 in the proceeding before me.

52In her Affidavit sworn August 28, 2020, the Applicant states that the Respondent failed to follow through with the terms of the Separation Agreement whereby he was to pay spousal support to the Applicant, and he was to assume title to the home and the vehicle and have the Applicant and her father removed from the title. Therefore, the Applicant commenced an Application in the Sarnia Court seeking enforcement of the Separation Agreement or in the alternative, to set aside the Separation Agreement and to seek alternative relief.

53When the Applicant took over title to the home, she alleges it had been left in a damaged state by the Respondent and that it cost over $27,000.00 to bring the house back into a state where it could be sold. There were also a number of liens against the house from subcontractors and other creditors arising from the Respondent’s business dealings. The Applicant states that she did not make any profit from the sale of the matrimonial home.

54The Applicant produced a statement from FRO dated May 17, 2021 which shows that the Respondent owed the Applicant the sum of $495,548.34 as of that date. On examination of the FRO statement, it is clear that the Respondent made no voluntary payments to FRO after the Final Order was made until 2019 when FRO brought the Respondent before this court on enforcement proceedings.

55However, there were some diversions of funds received by FRO in small amounts on September 3, 2009, September 17, 2009, December 17, 2009, and March 18, 2010. There were a number of other diversion receipts in small amounts in 2011 and 2012. These diversions could have been related to GST/HST. The Respondent would have known that those amounts were being diverted from him. However, the Respondent did nothing to address the issue of outstanding spousal support nor did he commence a Motion to Change the spousal support.

56The Respondent’s evidence is that after separation he lived common law with and subsequently married Ms. C with whom he had two children. In order to get married, the Respondent either knew he was divorced as he had received the Final Order, or he would have had to inquire at the Sarnia Court as to whether he was divorced, as he would need the Certificate of Divorce to be in a position to marry.

57In the case before me, the Respondent submits that there was no indication in the Final Order of a finding of what income the Respondent was making, nor any calculations of how the spousal support was calculated, or what factors were taken into account. It is important to note that the Final Order was made prior to the Spousal Support Advisory Guidelines coming into effect in July 2008. It is unknown if the Justice hearing this case gave oral reasons for his decision at the time.

58I find that the Respondent knew that he was at risk of the court ordering spousal support of $3,000.00 per month, as he was served with the Applicant’s Application commenced in the Sarnia Court on September 29, 2005, in which the Applicant claimed spousal support of $3,000.00 per month. The Respondent, however, chose not to file any responding material which led to the matter being heard at an ex parte trial.

59After the Final Order was made, the Respondent took no steps to appeal the Final Order and took no steps to make any voluntary payments. The Respondent also took no steps to bring a Motion to Change the Final Order until November 13, 2019, which is 12 ½ years after the Final Order was made.

60I find that the Respondent’s financial disclosure in this matter is inadequate and unreliable. The Respondent’s expenses in his two sworn Financial Statements substantially exceed his income, but he shows no debts other than to FRO. He apparently does have a large income tax debt, but he does not show that either. The Respondent has no assets whatsoever, other than his tools, and it appears that those tools are worth more than the $500.00 stated by the Respondent.

61The Respondent is a self-employed carpenter. He has also done drywalling in the past. He has been doing this work for at least 18 years and likely more. In the last three years, he is barely making minimum wage. He states that all his income from his self-employment is reported in his income tax return. The Applicant’s evidence is that the Respondent did cash jobs and did not report all of his income when they were married.

62On the evidence before me, I find that the Respondent is either under-employed or he is under-reporting his income to Canada Revenue Agency. As the Respondent is self-employed, he has control over what income he reports each year. I do not find the Respondent’s evidence regarding his income or his assets to be credible.

63I find on the evidence that the Respondent has done everything possible to arrange his financial affairs so that he would not have to pay spousal support in any amount to the Applicant. Shortly after the Final Order was made, the Respondent disappeared, and FRO was unable to locate his whereabouts or to enforce any spousal support other than a few small diversions. The Respondent is self-employed and has no known assets which can be garnished. The Respondent totally ignored the Final Order and only brought this Motion to Change when FRO found the Respondent’s location and was finally able, after more than 11 years, to bring the Respondent before the court for a default hearing.

64Since the separation of the parties, the Applicant has received very little spousal support from the Respondent, and she has suffered hardship as a result of not receiving the spousal support which had been ordered. I find that the Respondent has engaged in blameworthy conduct concerning his obligation to pay spousal support to the Applicant.

65The case of Colucci v. Colucci, 2021 SCC 24 was a similar situation to this case. That case did involve child support rather than spousal support, but a number of the principles set out in that case would also apply to the issue of spousal support.

66In that case, Justice Martin of the Supreme Court of Canada stated that full and frank income disclosure is the foundation of the child support regime. In my view, this would also apply to the issue of spousal support.

67The Respondent is seeking that the spousal support arrears be totally rescinded, or alternatively that the amount of monthly spousal support be retroactively varied on the basis of his income reported to Canada Revenue Agency.

68At paragraph 63 of Colucci, Justice Martin states the following:

Of course, a payor whose income was originally imputed because of an initial lack of disclosure cannot later claim that a change in circumstances occurs when he or she subsequently produces proper documentation showing the imputation was higher than the table amount for their actual income. The payor cannot rely on their own late disclosure as a change in circumstances to ground a variation order (Gray, at paras. 33-34). This would “defeat the purpose of imputing income in the first place” and act as “a disincentive for payors to participate in the initial court process” (Trang v. Trang, 2013 ONSC 1980, 29 R.F.L. (7th) 364, at para. 53).

69In the case before me, I find that similarly, where the Respondent’s income was originally imputed because of an initial lack of disclosure and a lack of his participation in the process, he cannot now come before the court and rely on his own late disclosure as a change in circumstances to ground a variation order. The Respondent has not provided an understandable reason for his failure to make full disclosure, and for his non-participation in the Sarnia Court proceedings. The Respondent has not provided an understandable reason for his non-payment of any voluntary spousal support until 2019, and for the lengthy delay in bringing his Motion to Change. The Respondent should not be rewarded for his blameworthy conduct in totally ignoring the Final Order for over 11 years.

70I find that in the circumstances of this case, the court should not vary the quantum of spousal support, nor reduce or rescind the arrears, subject to consideration of the issue of duration of spousal support.

Duration and/or termination of spousal support

71I find that it would be reasonable in the circumstances of this case to consider a variation of the duration of spousal support.

72The parties married on June 27, 1998 and they separated on April 27, 2004.

73The Respondent alleges that he and the Applicant were married for 5.83 years and that they did not live together prior to their marriage. The Respondent argues that if support is not rescinded, it should not continue for more than six years.

74The Applicant in her responding material before this court states that she and the Respondent started living together in July 1996.

75In the Applicant’s Application commenced for a divorce and other relief in the Sarnia Court on September 29, 2005, the Applicant did not indicate that the parties had lived together before their marriage. As this document was prepared in the year after the separation, I find that I should use the information that was contained in the Applicant’s Application in the Sarnia Court which was that the parties did not live together prior to their marriage.

76With a marriage of almost six years, I find that it is reasonable to terminate the spousal support order for the Applicant after a period of six years. The parties were both in their twenties when they married, and they had no children. However, because of the Applicant’s severe disability which arose from her two car accidents during the marriage, I find that a termination of the spousal support after six years of spousal support is reasonable in the circumstances of this case, rather than any shorter period of time.

77Accordingly, an order shall go that the spousal support order to be paid by the Respondent to the Applicant pursuant to the Final Order shall terminate after six years (72 months of payments). This would call for a termination date of April 26, 2010.

78I am reluctant, however, to state an actual termination date as the spousal support in the Final Order was stated to be retroactive to April 27, 2004. However, I note that FRO only started its records with an accrued payment of $3,000.00 on May 27, 2005. I wish to make it clear that the total period during which the Respondent shall be required to pay spousal support of $3,000.00 per month to the Applicant is a period of six years (72 months of payments of $3,000.00 per month), at which time the spousal support shall terminate.

Recalculation of arrears

79FRO shall recalculate the arrears owed by the Respondent to the Applicant for spousal support pursuant to the Order of Justice Donohue made April 13, 2007, with the termination date for such spousal support to be six years (72 months of payments of $3,000.00 per month) from the date the support payments were to commence, with credit given to the Respondent for any payments made to the date of the recalculation by FRO.

ORDER

80There shall be a Final Order as follows:

(1) The Final Order of Justice Donohue made April 13, 2007 shall be varied by adding a new sentence at the end of paragraph 6 of that Order that states: “The spousal support order herein shall terminate six years from the date of its commencement, such that the Respondent’s spousal support obligation hereunder is to make 72 monthly payments of $3,000.00 per month.”

(2) The Respondent’s Motion to rescind or suspend or to vary the quantum of spousal support in the Final Order of Justice Donohue made April 13, 2007 is hereby dismissed.

COSTS

81If the parties are unable to resolve the issue of costs between themselves, the Applicant may serve and file written submissions as to costs of no more than three typewritten double spaced pages, together with a Bill of Costs, and a copy of any Offer(s) to Settle, within 10 days of the release of this decision. The Respondent shall have 10 days from the date he is served with the Applicant’s submissions to serve and file responding submissions of no more than three typewritten double spaced pages, together with a Bill of Costs, and a copy of any Offer(s) to Settle. The Applicant shall have 5 days from the date she is served with the Respondent’s submissions to serve any reply submissions of no more than one double spaced typewritten page. If no submissions regarding costs are received within the aforesaid timelines, there shall be deemed to be no costs.