COURT FILE NO.: FS-18-00093726-0001
DATE: 2022/12/16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: N.C. v. C.H.
COUNSEL: SH Jana Tsang, for the Applicant
Michael Neilly, for the Respondent
BEFORE: Mandhane J.
HEARD: December 14, 2022
E N D O R S E M E N T
INTRODUCTION AND OVERVIEW
[1] The parties were married on May 30, 1998, separated on November 8, 2016, and divorced on February 4, 2019. They have four children: W.A.H., born March 30, 2000; E.J.H, born September 6, 2001; E.M.H, born February 15, 2004; and J.R.H., born August 5, 2006 (collectively, “the Children”).
[2] After obtaining independent legal advice, the parties signed a comprehensive Separation Agreement dated March 30, 2017 (“Agreement”). They agreed to split s. 7 expenses equally, and that there would be no child support payable to the Applicant/”Mother,” and no spousal support payable to the Respondent/“Father.” They were not required to exchange financial information annually as they intended to be financially independent of one another.
[3] The terms in the Separation Agreement relating to s. 7 expenses stated:
5.6 The parties shall share the payment of the children special or extraordinary expenses equally. This means that [the Mother] will pay 50% of those expenses and [the Father] will pay 50% of those expenses.
5.7 The children special or extraordinary expenses include:
(a) class for sports, lessons, and other extracurricular activities;
(b) school expenses;
(c) summer or other camps;
(d) medical and dental expenses not covered by insurance; and
(e) The costs of post-secondary education.
5.8 The parties will only be obligated to contribute to the costs of sports, lessons, summer camps and other extracurricular activities if he or she consents to the expense in advance, in writing. Neither party will unreasonably withhold consent bearing in mind the necessity for the expense, the family history of the expense and the reasonableness of the expense.
Trimble J. incorporated 5.6 through 5.8 into his Divorce Order dated February 4, 2019, and also ordered that FRO enforce them.
[4] The Mother says that the Father has never contributed his share towards the s. 7 expenses such that $43,989.06 in arrears have accrued. She says that she has covered nearly the entire cost of orthodontics, chiropractic and naturopathic services, cord blood bank storage fees, school-related expenses, university expenses, and so on. The Mother asks me to make an order requiring the Father to pay his share.
[5] The Mother says that the Father has steadfastly refused to engage in conversations about the s. 7 expenses, unreasonably withheld his consent to them, ignored her requests for payment, and forced her to bring this motion. She says that FRO refuses to enforce the Order because it does not name her as the recipient even though, de facto, she has incurred almost all of expenses up front prior to seeking contribution from the Father.
[6] The Father does not dispute disengaging from the Mother on the issue of s. 7 expenses post-separation. He says that the Mother was “aggressive” in her communication style and that he did not want to argue with her. He also admits that the Mother paid the vast majority of the children’s significant s. 7 expenses up front and without any meaningful contribution from him. Finally, he admits that when FRO attempted to enforce the Order, he took the position with FRO that the Order was unenforceable because it did not specify that the Mother was the recipient parent.
[7] On the expenses themselves, the Father accepts that some of the expenses are properly claimed by the Mother, but objects to contributing anything towards paramedical, car, and cellular phone expenses. He says these expenses were not contemplated in the Agreement.
[8] In relation to post-secondary expenses, he says that the equal contribution requirement should be limited to tuition, books, and accommodation. He also says that the Agreement required the Children to use monies held in trust for them by the Mother for their post-secondary education prior to seeking any contribution from the parents. The Mother says that the money was a gift from the Children’s maternal grandfather and that he should have some say in how it is used.
[9] Finally, going forward, the Father asks that I vary the terms of the Agreement so that his contributions are proportional to his income rather than equal to the Mother’s. He says that there has been a material change in circumstances justifying such a change because he is now impecunious. The Mother rejects this claim and says that the Agreement should remain in full force and effect and either be satisfied immediately through a lump sum payment or enforceable by FRO.
ISSUES
[10] The issues I must decide are as follows:
- What expenses was the Father required to contribute towards?
- Should the terms of the Separation Agreement be varied because of a material change in the Father’s financial position?
- How should the Agreement be enforced going forward?
SHORT CONCLUSION
[11] The Father was required to contribute equally towards all the s. 7 expenses claimed by the Mother except those related to chiropractic and naturopathic care, use of the Mother’s car, and the Children’s cellular phone plans.
[12] Each Child is required to use the $5,000 held in trust for them by the Mother for their post-secondary education prior to seeking a contribution from the parents. The parent’s equal contributions are limited to the cost of tuition, books, and accommodation.
[13] The parties’ Agreement remains in full force and effect. There is no material change in circumstance that would justify varying its terms. It shall be enforced by FRO in favour of the Mother.
ANALYSIS
What expenses is the Father required to contribute towards?
[14] The Father accepts that the expenses related to medical treatment, medication, orthodontics, school, summer camps, and sports were properly claimed by the Mother. He agrees to pay 50% of the total cost of these expenses on a retroactive basis. The Father is entitled to a set-off for the amounts that he paid towards similar s. 7 expenses, and for any “without prejudice” payments he made towards post-secondary expenses.
Paramedical expenses
[15] The Father objects to contributing anything towards chiropractic and naturopathic services because these types of expenses were not contemplated in the Agreement. The Mother says that the Agreement specifically contemplates that the Father cannot unreasonably withhold his consent to these expenses because they are consistent with the “family history of the expense.” The parties agree that the entire family attended the same chiropractor prior to separation.
[16] I agree with the Father that the terms of the Agreement do not automatically capture paramedical services such as chiropractic and naturopathic treatments. The Separation Agreement states that the parties shall share the “medical and dental expenses not covered by insurance.” In my view, the chiropractic and naturopathic treatments are not properly considered “medical expenses” unless and until they are prescribed or recommended by each Child’s treating physician. Here, the Mother did not adduce any evidence from a doctor as to why these treatments were necessary for all the Children. The Father is not required to contribute to the Children’s chiropractic and naturopathic treatment on a retroactive basis. On an ongoing basis, he shall only contribute where the Mother provides written proof that the Child’s treating physician prescribes or recommends such treatments.
Cord blood storage
[17] On the issue of cord blood storage, I find that the Father is required to contribute equally to this expense. The parties made a joint decision at the time of each Child’s birth to store their cord blood which is rich in stem cells. This is a medical expense that was properly claimed by the Mother as a s. 7 expense. That said, the Father’s obligation to contribute towards cord blood storage ends when each Child turns 18 years old.
Car-related costs
[18] The Father objects to contributing towards the Children’s car-related expenses (insurance, licensing, fuel, etc.), while the Mother says that these are properly considered “school expenses” within the meaning of the Agreement. The parties generally agree that the Mother and Children live a long distance from the local high school. The Father drove the Children in 2015. However, once the eldest Child got their driver’s licence, sometime in 2016, they would drive themselves and their younger siblings to and from school. This was the situation immediately prior to separation.
[19] While the car expenses are school-related, that does not necessarily mean that they are “school expenses” within the meaning of the Separation Agreement. These were not expenses paid directly to the school or any other third party. Indeed, the Father does not object to paying his share towards school trips, for example. Instead, the car-related expenses are calculated by the Mother based on the cost to her of allowing the Children to use her car for transportation to and from school. In short, the car-related expenses were incurred by the Mother on account of her role as the primary parent and were neither special nor extraordinary. While the primary parent is usually compensated for this type of expense through receipt of child support, here, the Agreement did not require the Father to pay it. This is because the Mother earned significantly more than the Father and the Agreement also released her from any spousal support obligations. In this context, it would be unfair to allow the Mother to claim costs for school transport under the guise of “school expenses.”
Cellular plans
[20] I adopt the same reasoning regarding cellular plans as I do in relation to the car-related expenses. Within the broader context of their roles prior to the marriage and their relative incomes, I find that the Children’s cellular plans are properly considered normal childcare expenses and are not captured by the term “special and extraordinary” in the Agreement. Moreover, they were expenses that were already being incurred and could have easily been written into the Agreement had that been the intention of the parties.
Post-secondary education
[21] In relation to post-secondary expenses, the parties agree that the equal sharing contribution requirement should be be limited to tuition, books, and accommodation, and shall not include living costs (i.e., food, clothing, etc.)
[22] The parties also agree on how to allocate the funds in each Child’s Canadian Scholarship Trust Fund (“Education Fund”) vis-à-vis their obligations under the Agreement. The balance available in each Child’s Education Fund on the date of separation should be used towards that Child’s post-secondary education expenses, prior to seeking any contribution from the parties. They also agree that any amount that accrued in the Education Fund post-separation shall be credited against the Mother’s share of post-secondary expenses only, since she was the one making contributions post-separation.
[23] Beyond the Education Funds, the Father also claims that the Agreement required the Children to use monies held in trust by the Mother for their post-secondary education (the “Trust Funds”) prior to seeking any contribution from the parents. The Mother says that the Trust Funds were a gift from the Children’s maternal grandfather and that the Agreement did not require them to use it for post-secondary expenses as defined in the Agreement (i.e., tuition, books, and accommodation). For example, she says that the Children could use the Trust Funds to cover their living expenses.
[24] The Agreement contemplates that the Trust Funds would be credited equally against their respective obligations in relation to post-secondary expenses. Under the heading “Children’s Trust Fund,” the Agreement states:
13.1 [The Mother] is the owner of an account having an approximate value of $20,000 which has been characterized as by the parties as a trust fund for the children's education. She may need to use this in order to complete the payment to [the Father] in the amount of $300,000. [The Father] permits this use. If [the Mother] does indeed use this money, for this purpose, that she shall repay the money to the trust in equal annual installments over a period not exceeding 10 years, and the use of trust funds for the children's education cost shall be a credit against their respective equal obligations.
Based on the language in the Agreement, I find that each parent is entitled to a $2,500 credit per Child on account of the monies held in trust by the Mother for the children’s post-secondary education.
[25] Finally, I find that the Children are already reasonably contributing to their own education as contemplated by the Separation Agreement, which states that:
5.10 Prior to determining each party's obligation to the child's postsecondary educational costs, [the Father and Mother] shall first discuss a reasonable contribution to these expenses expected from the child.
The Children are covering their own living expenses which shows substantial compliance with this requirement even if there was no prior discussion between the parents about it.
Should the Agreement be varied because of a material change in circumstance?
[26] The Father says that the terms of the Agreement should be varied to require him to contribute proportionally (rather than equally) towards the Children’s s. 7 expenses. In substance, this would significantly reduce the Father’s contributions since he claims to earn a negligible salary compared to the Mother.
[27] The Agreement states that either party can seek to vary the child support terms where there is a “material change” in their “condition, means, needs, or other circumstances,” including a “material change in either party’s financial position.” The parties agree that this term applies to the Father’s request to vary the terms related to s. 7 expenses.
[28] On this threshold matter, the Father says that there has been a material change in his financial position post-separation such that he is now impecunious and cannot afford to make the s. 7 contributions that he agreed to over five years ago.
[29] Immediately prior to separation, Mother was working full-time, while the Father was not working and was responsible for transporting the Children to and from school and to their various activities. The Father explains that he was terminated from Bell Canada after 37 years in 2014 and that, at that time, he received a salary continuance of one year and a large lump sum financial payout. He did not work in 2015 because he was being paid an amount equivalent to his salary. In 2016, the year of separation, the Father was 56 years old and says that he was living off the income generated from his investments and effectively “retired.”
[30] The Father says that his situation has now changed because his investment income has steadily declined such that he has been forced to dip into his capital to fund his living expenses. He says that he had to come out of retirement to obtain part-time work as a painter to support his living expenses. According to his Financial Statement sworn August 11, 2022, the Father says that his annual income is $37,307.40 and expenses total $65,095.44.
[31] Overall, I find that there has been no material change in circumstances that would justify varying the Agreement. Foremost, I find that the Father is not impecunious. He has significant assets that could be sold to meet his obligations under the Agreement. His own Financial Statement sworn August 11, 2022 shows that he has a net worth of $1,426,449. Moreover, there has been no loss of employment because the Father was not employed at the time of signing the Agreement. There has been no loss of livelihood either. The fact that the Father’s investments have not performed as well as he expected does not constitute a material change in circumstance. Rather, it speaks to the unpredictability of financial markets, the Father’s poor investment decisions, and/or his own miscalculations about the likely rate of return. In short, the Father’s own expectations that he would be able to take an early retirement and live off his investments does not absolve him of his child support obligations. This is especially the case where the Father admits that he had not yet searched for employment commensurate with his 35+ years of experience in project management with Bell Canada.
FINAL ORDER AND COSTS
[32] The retroactive s. 7 expenses payable by the Father shall be paid as a lump sum amount, plus applicable interest.
[33] On an ongoing basis, the s. 7 expenses shall be enforceable by FRO, with the Mother being designated as the recipient and the Father being designated as the payor.
[34] Based on my findings herein, the parties shall endeavour to come to an agreement of the terms of a final order. If they are unable to do so, on or before, December 23, 2022, counsel shall email my assistant, Corry Allard (corry.allard@ontario.ca) with a copy of their draft final order, and an appendix outlining their supporting calculations.
[35] The parties shall endeavour to agree on the matter of costs. If they are unable to do so, on or before December 23, 2022, counsel shall send their costs submissions (maximum 3 pages, double-spaced, 12-point font), Bill of Costs, and relevant offers to settle to my assistant Corry Allard.
[36] I am seized of this matter pending issuance of a Final Order.
Mandhane J.
DATE: December 16, 2022
COURT FILE NO.: FS-18-00093726-0001
DATE: 2022/12/16
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: N.C. v. C.H.
COUNSEL: SH Jana Tsang, for the Applicant
Michael Neilly, for the Respondent
ENDORSEMENT
Mandhane J.
DATE: December 16, 2022