Savage v. Kaczmarek, 2022 ONSC 4445

COURT FILE NO.: FC-16-916-1

DATE: 2022/07/29

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DOUGLAS LAWRENCE SAVAGE

Applicant

– and –

DOMINIKA KLARA KACZMAREK

Respondent

Self-represented for the Applicant

Self-represented for the Respondent

HEARD: In writing

REASONS FOR decision

Audet J.

1This 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.

2In accordance with my prior decision in this matter, released on March 2022 and reported at 2022 ONSC 1313, both parties provided me with additional evidence allowing me to decide the issues raised in this application. The background facts and legal framework relevant to the issues raised in this case are set out in my earlier decision and will not be repeated here.

Imputation of income on the basis of under-employment

3I find that the father’s decision to change employment in April 2019 was reasonable in the circumstances, and I am not prepared to impute to him a higher income than what he has actually earned during the relevant years, as reported in his income tax returns and notices of assessment.

4In April 2019, the father left his employment with Irving at Grand Lake Timber in Chipman, NB, which provided him with a yearly income in the range of $66,000 to $75,000, to take on full-time employment with Horizon Health Network at Dr. Everett Chalmers Hospital in Fredericton. His yearly income at Horizon Health Network is $49,995. This change in the father’s employment was based on the following considerations:

a. The father resides in Fredericton and his prior place of employment was located approximately 110 kilometers away from his home, requiring him to travel two hours per day (sometimes in difficult winter conditions) to get to and from work. His current employment at the hospital is located within a very short distance of the various places of residence in Fredericton;

b. The father’s travel costs to and from his previous place of employment was significantly higher, given the long commute he was required to travel in his previous employment. Although he has suffered an important reduction in his yearly income due to his change of employment, his travel and vehicle expenses are now much less as a result. Therefore, from a net disposable income perspective, his decision to change employment was not unreasonable;

c. In his previous employment, the father was required to work 12-hour night or day shifts, as well as every other weekend. This work schedule was not only more difficult, it made it challenging when the children were in their father’s care and he often had to rely on family members to care for the children while he was at work. His current work schedule is from 8:00 AM to 4:00 PM, Monday to Friday, and he does not work on weekends. Given that his current workplace is within minutes from his residence, and given the age of the children, he no longer needs to rely on family members to care for them when they are in his care. Further, he is minutes away if needed while he is at work;

d. The father is now employed by the provincial government, with all the benefits and employment security that this brings, including a pension plan, health insurance coverage (from which the children benefit as well) and annual vacation time;

e. The working conditions at the father’s previous place of employment were dangerous at times and involved heavy, dirty work (he worked as an industrial mechanic and was responsible to repair the large equipment that turns the logs into lumber). His current employment offers significantly less stressful working conditions in a clean and slow-paced environment. The father testified that this change had a beneficial impact on his overall mental and physical health.

5It is to be noted that in 2019-2020, the father attempted to re-enlist in the Royal Canadian Navy to be able to better support his children financially. However, his application was denied due to not meeting minimum requirements because of medical issues.

6For all these reasons, I find that the father’s change of employment in 2019 was reasonable and that he is not intentionally underemployed.

The father’s income

7The father's change of employment in 2019, with the associated reduction in his income, is a material change in circumstances allowing for this court to review his child support obligations from that date forward.

8I find as a fact that the father's income for the years 2017 to present was as follows:

a. 2017: $107,857 (comprised of employment and other income of $67,805, and RRSP withdrawals of $39,052 used by the father to purchase a home, which he has since been forced to sell);

b. 2018: $72,989;

c. 2019: $75,403 ;

d. 2020: $49,995;

e. 2021: $49,995.

9While the material change in the father’s circumstances occurred in April 2019, during that year the father still earned slightly more than the income upon which his child support obligations (pursuant to the 2017 Final Order) were based ($67,000). For that reason, I am not prepared to retroactively vary his ongoing child support obligations prior to 2020. I am, however, prepared to retroactively vary his child support obligations from January 1, 2020 onward.

Undue hardship

Step One

10Contrary to the mother’s assertion in her previously filed materials, it is clear that the father has indeed travelled frequently between Ottawa and Fredericton for the purpose of exercising his parenting time with the children. He has provided detailed evidence, supported by invoices and bank statements (whether he paid those expenses himself or someone else did for him, as alleged by the mother, is irrelevant), which clearly confirms his travel expenses over the past four years.

11In 2018, he travelled five times to Ottawa; in 2019 he travelled three times; in 2020 he travelled three times and in 2021 he travelled twice. On many of those times, he travelled a whole day to Ottawa to pick up the children, returned to Fredericton the next day only to come back to Ottawa to bring the children back to their mother once his parenting time was over.

12It is clear that in 2020 and 2021, the father exercised his parenting time less frequently than in previous years as a result (in part) of the COVID-19 pandemic and the stringent travel restrictions in place in New-Brunswick during that time. In 2020, the parties agreed to meet in Edmunston, NB, to exchange the children to avoid the father having to self-isolate for two weeks upon his re-entry into the province. I recognize that on occasions, the mother travelled to Fredericton or to meet the father halfway to facilitate the father’s parenting time. However, this does not take away the fact that the father is required to spend significant amounts of money, in light of his modest income and obligation to pay child support, in order to spend time with his children.

13The evidence presented by the father confirms that he has incurred the following expenses since 2018 to exercise his parenting time with the children: $3,084 in 2018; $2,896 in 2019; $1,525 in 2020 and $1,247 in 2021. The evidence before me supports a finding that while the pandemic created additional barriers in the father’s ability to exercise his parenting time in 2020 and 2021, his limited financial means also played an important role.

14In Somerset v. Somerset [2004 CarswellOnt 2100 (Ont. S.C.J.)], 2004 CanLii 16881, Pierce J. considered an undue hardship claim based on unusually high access costs. She took into account the difference in access costs depending on where access was exercised, the proportion the expenses represented of the access parent's net income, and the proportion that access costs plus table support would represent of his net income. She also considered whether it was the payor parent who moved away thereby giving rise to the higher costs of access. At para [98] she stated:

98An order for the table amount of support at the prescribed level would mean the access order would be frustrated for financial reasons, on the present facts, and the children would be deprived of meaningful contact with their father, and he with them. This would constitute an undue hardship for both father and children.

15A consideration of these factors in this case leads me to conclude that the father has established step one of the test for undue hardship. While his travel costs did not quite reach the level expected by the parties and the court when the 2017 Final Order was made ($4,500), I find that the father’s reasonable travel costs incurred for the exercise of his parenting time were unusually high in relation to his income, particularly when his income dropped down to $49,995 per annum (which indeed resulted in his inability to visit the children as frequently as he did in the previous years).

16The combined total of travel expenses to be incurred by the father to exercise his parenting time (as frequently as he did back in 2018 and 2019 when he was able to afford it), plus his annualized Guidelines child support based on his current income of $49,995 is approximately $12,000 ($720 per month times 12 months plus an estimated $3,500 in travel expenses), representing approximately 30% of his net income.

17It is also important to note that pursuant to the 2017 Final Order, the father did not get a credit of $4,500 (estimated amount of his travel expenses) against his ongoing child support obligations; his annual income was reduced by this amount, thus resulting in a reduction of $63 per month of his basic child support payment, or $756 per year (based on his income of $67,000, he should have paid $953 per month, but based on a reduced income of $62,500, he was required to pay $890 per month). This means that in each of the years that followed, the father incurred significantly more travel expenses than the yearly credit he was granted on his child support obligations.

18Based on the above, I find that the father has met the first step of the undue hardship test in the circumstances of this case. I further find that an order for the table amount of support at the prescribed level would mean the children’s parenting time with their father would likely be frustrated for financial reasons.

Step Two

19The parties have both provided me with additional evidence allowing me to perform the “standard of living” comparison test set out in s. 10(3) of the Guidelines. I come to the conclusion that the father also meets step two of the test, the standard of living test. His household standard of living calculated according to Schedule II of the Guidelines is lower than that of the mother's household’s standard of living during the years 2020 and 2021 (which are the only years for which I am prepared to reconsider the father’s child support obligations). This is based on the following findings of facts:

a. Throughout the relevant years the mother resided (and continues to reside) with her common law partner, his eight-year-old son and the parties’ two children;

b. The mother’s yearly income for the years 2020 and 2021 was in the range of $100,000 to $105,000 and her partner’s income for those years was in the range of $115,000;

c. The mother’s common law partner was required to pay combined child and spousal support to his former spouse in the amount of $2,391 only until July 2021; after that date the amount was reduced to approximately $700 per month, and as of January 2022 it is further reduced to $336 per month;

d. For the years 2020 and 2021, the evidence establishes that the father earned $49,995 per annum. He sold his home at the beginning of 2020 (he might have made a modest profit), and thereafter resided with his family members or his friends, with the exception of July to October 2021 when he rented an apartment. The father’s evidence, which I accept, is that during those two years he was simply unable to afford housing on his own. His belongings were secured in a storage facility.

20Although there is evidence suggesting that the father might now be sharing accommodations with his new partner, this change in his circumstances would be very recent. If this is indeed the case, the father’s new living arrangements in so far as it impacts his ability to pay, can be addressed when the time comes to review the parties’ 2022 child support obligations.

21Similarly, while the mother did provide evidence suggesting that the father and his new partner have started a business venture together in March of this year (Epicure by Doug & Jen), any increase in the father’s income as a result of this new business venture can only be explored in the context of next year’s review of child support.

22Based on the above I find that the father meets step two of the undue hardship test.

Step Three

23I will now consider the parties’ financial circumstances.

24The mother has submitted a sworn financial statement which shows annual expenses in the amount of $150,000 per year, to which her spouse contributes, according to her, at the rate of $500 per month. According to those figures, the mother would have a yearly deficit of roughly $40,000, subject to the child support she receives from the father. This seems excessive to me, particularly in light of her current debts.

25There are other important discrepancies in the mother’s financial statement. For instance, while she indicates having a mortgage exceeding $500,000, her financial statement does not mention her ownership in the home. This is likely an inadvertent oversight, but including the current fair market value of her home in her financial statement would have a significant impact on her stated net worth. Further, in light of her monthly housing costs (monthly mortgage payments alone are $3,000), her partner’s monthly contribution of $500 towards the family’s household expenses, while earning a yearly income of $115,000, is simply not credible.

26The mother has, aside from her pension plan (worth over $600,000), almost $70,000 of savings in the form of RESPs and RRSPs, as well as line of credits totalling $65,000. She lives in her own home, spends roughly $2,500 yearly on vacation, and has access to the financial support of her partner who earns a very good income (although I acknowledge that he is financially responsible for his own child). The children’s standard of living in the mother’s home is clearly superior than the one they benefit from when they are in their father’s care.

27The father does not currently own a home and for the past two years he has resided alternatively with family members and friends because he was unable to afford his own housing. At a yearly income of $49,995 and child support obligations for two children, it is not surprising that the father was unable to afford housing on his own. He visited the children less frequently over the past two years, due in part to his lack of financial resources, and he has over the past couple of years completely depleted his RRSPs to supplement his income and cover expenses. However, he recently managed to a 2019 truck, the value of which is unknown to me. He has also likely made a small profit from the sale of his home in 2020.

28As of July 2021 (when he swore his financial statement), the father had $33,000 of consumer debts, which included a car loan of $15,000, credit card debts of $5,000, outstanding income taxes of $6,500 and a $6,000 debt owing to a lawyer (in addition to outstanding child support arrears).

29The law expects the father to take reasonable steps to organize his financial affairs so that he can meet his obligations to his children. One’s child support obligations come before one’s debts. The father has done that. Since the 2017 Final Order was made, he paid more than his basic child support each month. Since January 2020, he has paid $500 by-weekly without missing a payment. Based on the Ontario Family Responsibility Office’s Statement of Arrears, it appears that the father has been mostly compliant with the ongoing child support obligations imposed by Engelking J. in her Final Order of July 2017. Most of the arrears owing by him as of December 31, 2019, if not all, are those imposed upon him by Engelking J. for the years 2015 and 2016, as well as costs in the amount of $6,000.

30Based on his yearly income of $49,995, the father would be required to pay $720 per month in child support, retroactive to January 1, 2020 (New-Brunswick Tables). When he had more financial means, the father demonstrated that he was visiting the children more frequently and enjoying more parenting time with them.

31During the years 2020 and 2021, the father has actually spent $1,525 and $1,247, respectively, on travel expenses to exercise parenting time with the children. I am prepared to reduce his yearly child support obligations by an amount equivalent to what he has actually spent on travel expenses during those two years.

32For the year 2022 forward, I fix the father’s monthly child support obligations to $500 per month. This provides the father with a $2,640 yearly reduction in his basic child support obligations which I expect him to use to visit the children four to five times per year. In the event that the father’s visits with the children are less than four times per year, this shall be taken into consideration in the context of the parties’ yearly review of the father’s child support obligations.

Rescission of arrears

33I am not prepared to reduce or otherwise adjust the father’s child support obligations for any years prior to 2020, for the reasons already mentioned earlier. For the same reasons, I am not prepared to rescind arrears accrued up to December 31, 2019. The father had the ability to pay the support he was required to pay, as he was earning slightly more than the income upon which his child support obligations were based back in 2017. As stated earlier, most of the arrears owing by the father as of December 2019 are those imposed upon him by Engelking J. in 2017 for the years 2015 and 2016. That Final Order was not appealed by the father and rescinding those arrears now would be akin to allowing an appeal of the 2017 Final Order. In my view, the father’s reasonable reduction of income in 2020 does not justify rescinding arrears imposed on him in 2017, for the years 2015 and 2016.

34While paying those arrears at this time, in light of the father’s reduced income and ongoing child support obligations, will be a challenge – something that can be addressed with a reasonable payment plan – the father has not established that he cannot and will not ever be able to pay the arrears. As stated by the courts on many occasions, including by the Supreme Court of Canada in Colucci v. Colucci, 2021 SCC 24, 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.

35Thomas is almost 17, and Alexander is almost 14. Depending on whether they decide to pursue post-secondary education, and where, the father’s ongoing child support obligations may come at an end in the next few years. His employment status may still change and if he starts earning a higher income his monthly arrears repayment, if any remain, can be increased. For the time being, given his current income and ongoing child support obligations, I order him to repay outstanding arrears, if any, at the rate of $100 per month.

Clarification in relation to arrears owing by the father

36In my earlier decision, I brought to the parties’ attention the fact that there was a discrepancy in the amount of arrears owing by the father based on the New Brunswick Office of Support Enforcement’s statement of account, which shows an opening balance of $16,754.61 on January 1, 2020, and the Statement of Arrears provided by the Ontario Family Responsibility Office (“FRO”), which shows a balance owing of $26,600.58 on that same date.

37The New Brunswick enforcement has provided confirmation that under the applicable legislation in New Brunswick, the Director may temporarily enforce a lesser amount of support if a circumstance prescribed by regulation exists. In this particular case, the Director used its discretion to do so, which is why there is a discrepancy in the amount of arrears outstanding as of January 1, 2020. I am advised that upon receipt of this decision, the New Brunswick enforcement authorities will adjust arrears accordingly.

ORDER

38Based on the above, I make the following order:

1. As of December 31, 2019, the father’s arrears of child support (which include a cost award of $6,000) are set at $25,710.38 (as confirmed on the Ontario Family Responsibility Office’s Statement of Arrears dated November 19, 2021, filed).

2. Those arrears shall be repaid at the rate of $100 per month, until a material change in circumstances occurs.

3. For the year 2020, the father’s child support obligation is $720 per month (or $8,640 for the year), based on his yearly income of $49,995, and minus $1,525 representing travel expenses he incurred to exercise his parenting time with the children (for a total of $7,115 payable by the father in 2020 as basic child support).

4. For the year 2021, the father’s child support obligation is $720 per month (or $8,640 for the year), based on his yearly income of $49,995, and minus $1,247 representing travel expenses he incurred to exercise his parenting time with the children (for a total of $7,393 payable by the father in 2021 as basic child support).

5. Beginning on January 1, 2022, and every month thereafter, the father shall pay basic child support of $500 for the two children, based on his income of $49,995 per year (with the yearly amount of child support being reduced by $2,640, or $220 per month, representing estimated travel expenses to be incurred by him to exercise his parenting time).

6. All payments made by the father from January 1, 2020 to present shall be credited, first, against ongoing child support obligations as set out in paras. 3, 4 and 5, and then towards arrears owing as of December 31, 2019.