Court File and Parties

COURT FILE NO.: 18-0082 DATE: 20230216

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Courtney Rose Bolton, Applicant – and – Daniel Trevor Wilson, Respondent

Counsel: Jill K. Addison, for the Applicant James Eastwood, for the Respondent

HEARD: October 25, 26, 2022

REASONS FOR JUDGMENT

Justice Helene C. Desormeau

[1] This two-day focused trial was required for determination of financial issues.

[2] The evidence revolved around the two principal themes, the jointly owned property and each parties’ income. Several sub-issues arise from these themes, as delineated by each parties’ prayer for relief.

[3] The Applicant mother requested for a decision on the following:

a. The value of the jointly owned family home and the amount owing to the mother for her interest plus pre-judgment interest;

b. A determination of the amount repayable by the mother to the father for any increase in mortgage interest paid after the date of the mortgage renewal; and

c. A determination of income for both parties, then deciding child and spousal support (both ongoing and retroactive), including s.7 expenses.

[4] The Respondent father sought determination on these issues:

a. Whether the partial (final) Order granted on consent by Justice Swartz on September 4th, 2018, remains valid (as argued by the father) or whether part of the Order should be set aside (as argued by the mother);

b. If the 2018 Order is set aside, the value of the family residence needs to be determined, considering the father's argument that the non-contiguous acreage is excluded pursuant to the principle of resulting trust. In addition, the father is sought a reduction in the mother's equity value to compensate for the excess mortgage interest he had to pay due to her refusal to sign mortgage documents;

c. The amount of income earned by the Applicant from her dog-breeding business; and

d. Retroactive arrears/overpayment of support, and ongoing support quantum.

Overview

[5] The parties were in a common law relationship from 2011 until approximately April 2017. Together, they have three children, now aged 11 to 7. Since separation, the children have effectively spent equal time with both parents and continue to do so at this time.

[6] The parents were able to resolve the very important decision-making responsibility and most parenting time issues, and they are commended for same. Outstanding was the right of first refusal.

[7] The mother is employed by Canada Bank Note and the father is a diesel mechanic, working for Hydro One.

[8] It was argued that one or both parties have additional income by way personal business ventures or alternatively by way of assistance they provide to their parents. That issue will be determined herein, and what income derived from same shall be decided.

[9] During their relationship, the parties jointly built the family home, located in Merrickville, Ontario. That home is immediately adjacent to the father’s family’s farm.

[10] Recognizing this trial file was significantly delayed due to the pandemic and that the parties wish a decision rather than a lengthy overview of the evidence filed, I shall direct my attention to determination of issues with brief reasons for the findings. Prior to analyzing each issue, I have turned my mind to the affidavit and documentary evidence filed (over 3000 pages), the transcripts from the two-day focused hearing, the case law and submissions of counsel.

[11] I have assessed each witnesses’ credibility and reliability. I note that the court can believe none, part or all of a witness’s evidence, and may attach different weight to different parts of a witness’s evidence. (See R. v. D.R. [1966] 2 S.C.R. 291 at [para.] 93 and R. v. J.H. supra).

[12] In assessing credibility, the court is concerned with the witnesses’ truthfulness: R. v. C.(H.), 2009 ONCA 56 at para. 41. Reliability involves consideration of the accuracy of the witnesses’ testimony, considering their ability to accurately observe, recall and recount events in issue: R. v. C.(H.), ibid. A credible witness may provide unreliable evidence, as it is possible that the witness has misperceived events, has a poor memory or could simply be wrong. Ultimately, the Court must assess not merely the witnesses’ truthfulness, but also the accuracy of their evidence. See: Saroli v. Grette, 2022 ONSC 148.

Issue 1: Partial (Final) order of Justice Swartz dated September 4th, 2018

[13] On September 4, 2018, at a motion initially regarding the children’s school, the parties consented to an interim order, as signed by Justice Swartz. That order provided:

1. The [father] shall have exclusive possession of the jointly held home located [in Merrickville] and shall purchase the [mother’s] equity in same with an agreed upon home valued of $285,000.00, with payment to be made within 30 days. Specifically, equity will be calculated as follows:

Value of $285,000.00 minus the property taxes owed as of March 31, 2017, minus the mortgage balance on March 31, 2017 and divided by two.

2. The [father] shall be responsible for 100% of the accumulated tax arrears from April 1, 2017. Arrears of taxes accumulated before April 1, 2017 shall be paid by the parties in proportion to their respective incomes.

3. …

4. The attached list of items shall be returned to the [mother] from the [father].

Mom’s iPad Van keys/fob, video camera, crib + mattress, mail 2017 / 2018 (returned and she will return his), 2 cameras.

[14] Crossed off the “return” list were “camera” and “horse returned to [the father]”.

[15] The mother wished to have the order set aside. The father wished to maintain the order.

[16] Pursuant to the Family Law Rule 25(19), the court has to the authority to set aside or change an order. Rule 2(2) FLR provides that the primary objective of the Rules is to enable the court to deal with cases justly, and Rule 2(3) FLR clarifies this includes ensuring the procedure is fair to all parties and saving time and expenses for the parties. Rule 1(7) FLR allows the court to look to the Rules of Civil Procedure if the Family Law Rules do not cover a matter adequately.

[17] Rule 59.06(1) RCP states that if an order that contains an error arising from an accidental slip or omission or requires amendment in any particular on which the court did not adjudicate may be amended on a motion in the proceeding. Rule 59.06(2) RCP states: a party who seeks to, (a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made; (b) suspend the operation of an order; (c) carry an order into operation; or (d) obtain other relief than that originally awarded, may make a motion in the proceeding for the relief claimed.

[18] In Gray v. Gray, the Ontario Court of Appeal found that Rule 25(19) permits the court to change an order, which includes the power to set aside an order (Gray v. Gray, 2017 ONCA 100 at para. 26). The court has the authority to determine if the most efficient remedy is to vary the order at issue without setting it aside or set the order aside in its entirety if a variation would not produce a just result (ibid, at para. 31).

[19] In Mohammed v. York Fire and Casualty, the parties agreed to a final settlement on a civil action. Thereafter, the plaintiff sought to set aside the settlement, which, for a number of reasons including the lack of fresh evidence, the court dismissed the case. The court set out that the onus is on the moving party to justify making an exception to the fundamental rules that final judgments are final. The court also found that the delay of 18 months to set aside the order was not adequately explained, and the delay inherently prejudiced the defendant. Finally, the court found there was no evidence that the settlement was unconscionable.

[20] The court in Joshi v. Joshi, 2014 ONSC 4677 noted that it had the authority to set aside a consent order, indicating “there must be proven grounds of common mistake, misrepresentation, fraud, or any other ground which would invalidate contract or, alternatively, a material change in circumstance occurring after the consent order: at para. 6. In that case, the court found there was no basis to set aside the order, which was clear, unambiguous and detailed. The court was not persuaded as to the argument of frustration of contact, and went on to indicate “a consent judgment is final and binding and should not be varied in the absence of extraordinary factors.” (at para. 9).

[21] The mother also relied on Capital Quality Homes Ltd. v. Colwyn, 1975 ONCA 726, which addressed the issue of frustration of contract. In that case, the plaintiff purchaser agreed to purchase from the defendant 26 building lots each comprising of part logs within a registered plan of a subdivision. Both parties were aware the purchaser planned on erecting a home on each building lot with the intention of selling the several homes by way of separate conveyances. Between the time of sale and closing, amendments were made to the Planning Act, R.S.O. 1960, c. 296, which prohibited and restricted conveyancing the land in question. The purchaser demanded its 26 individual conveyances with consents attached, and the vendor could not provide such conveyances without first securing the consent required under the Planning Act. The Court of Appeal examined the doctrine of frustration and found it applied to contracts involving the sale and purchase of land. The court found “[i]f the factual situation is such that there is a clear ‘frustration of the common venture’ then the contract, whether it is a contract for the sale of land or otherwise, is at an end and the parties are discharged from further performance and the adjustment of the rights and liabilities of the parties are left to be determined under the Frustrated Contracts Act.” The court determined that both parties were discharged from performance of the contract.

[22] Finally, the mother referred to Georgina Island Development Inc. v. Neale, 2008 ONSC 30302, wherein there was a failure to comply with an agreement due to a discretionary authority of a regulatory body over which the plaintiff had no control. The court went on to speak of contractual frustration, which occurs when, without default of either party a contractual obligation has become incapable of being performed because circumstances have taken away the very foundation of the agreement: ibid, at para. 19.

[23] In Stephens v. Stephens, 2016 ONSC 367, the parties had agreed to a final order, following which the pension administrator advised of an error in the Family Law Pension Valuation, which was an underestimation of over $164,000.00. Both parties had relied on the mistaken pension valuation when entering into minutes of settlement, which were turned into an order. The wife in that case sought to “fix” the mistake by relying on Rules 15, 1(7) FLR and 59.06(2) RCP. The court noted that both parties were ignorant of the error by the plan administrator. The court noted that Rule 25(19)(b) allows the court to change an order which contains a mistake, which includes rectifying a court order, “where, through a mistake, that order does not reflect the common intentions of the parties, and there are similar ground to rectify the order as there would be for rectification of contract. This is, however, only where it is in the interests of justice to do so.” (at para. 28). Rule 59.06 goes further and permits the court to set aside or vary an order on the ground of facts arising or discovered after the order was made. The court found it had the authority to change a final order based on the Rule 25(19)(b), Rule 1(7) of the Family Law Rules and Rule 59.06(2) of the Rules of Civil Procedure, and/other common law jurisdiction inherent in the court to correct mistakes. (See para. 36)

[24] The father relied on Trial Lawyers Association of British Columbia v. Royal & Sun Alliance Insurance Company of Canada, 2021 SCC 47, where Supreme Court of Canada discussed the issue of promissory estoppel, which requires (1) the parties be in a legal relationship at the time of the promise or assurance; (2) the promise or assurance be intended to affect the relationship and to be acted on; and (3) the other party in fact relied on the promise or assurance. The intent of the promisor in promissory estoppel must be interpreted objectively, based upon their words or conduct. The court stated that “[p]romissory estoppel seeks to protect against the ‘inequity of allowing the other party to resile from his statement where it has been relied upon to the detriment of the person to whom it was directed’’ (ibid, at para 16).

Analysis

[25] The parties agreed to a resolution of the jointly owned home in 2018 and agreed to how to reach a fair value for the equity for the home. The father wished to have the order continue, whereas the mother wished to set it aside. It is the mother’s onus to establish why the order should be set aside.

[26] The evidence established that since the 2018 order was made, until trial in October 2022 or shortly before same:

• The matter was listed for trial to be heard in March 2020. It did not proceed due to the pandemic. At the time the original trial was to proceed, the value of the home was not contentious, nor was there a request to set aside the 2018 order.
• Due to the pandemic and scarcity of judicial resources, the trial could only proceed in October 2022, at which point the housing market had significantly changed, thus affecting the value of the jointly owned home, as discussed below.
• The mother never received her net equity from the home. Both parties blame the other for the failure to comply with the 2018 order, which included the refusal to return the horse to the father (which was not part of the agreement) and items returned by the father in a deficient manner (iPad broken, charger missing for camcorder, etc.).
• The evidence established the father failed to make timely property tax payments, tough that deficiency has since been rectified.
• The bank wanted a fully executed separation agreement, which was not forthcoming due to the other triable issues set out below, such as each parties’ income.

[27] It is clear the intention of the parties was to resolve the issue about the ownership of the property and the net equity on a final basis. They initially engaged in good faith efforts to do so. The evidence shows that the appraised value of the home at the time the settlement was reached was $240,000.00, but the parties agreed to a higher value of $285,000.00, with a 30-day turnaround payout, thus increasing the net equity owed to the mother. There was no evidence that the settlement was unconscionable at the time it was brokered.

[28] For multiple reasons, the order was never satisfied. I note that the order was marked “temporary”, thought it was dispositive with regard to the jointly owned home. I also note that the order ought to have contained a “post-judgment interest” clause.

[29] The mother argued that the father could not fulfill the terms of the contract (being the consent order) because of an intervening event – that the bank was not willing to provide him the money to satisfy the agreement. By failing to comply with the contract for four years, the father has significantly benefited from the increase in property values from 2018. Moreover, that same increase in property values disadvantaged the mother, who in 2018 could have purchased a larger home than she can no longer obtain.

[30] I find that the father exhibited bad faith behaviour, such as demanding the return of the horse when it was not part of the agreement, using the children’s schooling as a negotiation tactic, and telling the mother that the “longer it goes the less I pay and the more u pay”. However, this does not lead to a termination of the 2018 order.

[31] While I am sympathetic to the mother who continues to await her net equity from the jointly owned home, I am not persuaded the mother has met her onus of establishing that there are extraordinary factors present to justify making an exception to the fundamental rules that final judgments are final. Both parties were, and are, represented by experienced and knowledgeable legal counsel.

[32] Further, I am not persuaded based on these facts that there has been frustration of contract which leads to the repudiation of same. The order did not contain a clause necessitating refinancing; thus I am of the view that the banks requirement of a signed separation agreement does not establish frustration of contact.

[33] Finally, while I find there was a breach by the father in fulfilling the terms of the order, there was no evidence proffered to explain why the mother did not seek any enforcement mechanisms from the time the order was made in September 2018 until March 2020 or following the resumption of regular court operations.

[34] Turning to the issue of the property taxes. The evidence showed that no property taxes were paid from April 23, 2015, putting the asset in jeopardy as it was flagged for a tax sale in December 2020. As of December, 2020, the taxes owed were $49,392.06. Given the serious nature of this issue, several letters between counsel were exchanged. The deficiency has now been resolved.

[35] Given the above, I am of the view that the amount payable is as follows:

a. Value of the land: $285,000.00

b. Less mortgage of March 31, 2017: $62,845.00

c. Less property taxes of March 31, 2017: $19,800.00

d. Total $202,355.00

e. Divided by two - balance owing to the mother: $101,177.50

Pre- and post-judgment interest

[36] The mother sought pre-judgment interest from the date of the application, or at the least, from the September 4, 2018, order regarding the jointly owned family home. The father disputed pre-judgment interest as being payable as the reason he was unable to satisfy the order was due to not having financing.

[37] The mother submitted in her September 8, 2022 affidavit (Exhibit 6) that pre-judgment interest on the amount owed was be an additional $16,676.33 to the hearing date. She referenced Tab W of her book of documents, but the calculations were not contained therein. In her prayer for relief in that same affidavit, she suggested that the sum of $261,312.83 be paid to her for her interest in the jointly owed home. The rest of her figures were based on “TBD” numbers. As such, subject to submissions upon our return date to the contrary, I can only surmise this argument was in relation to the value of the jointly owned property.

[38] The father suggested post-judgment interest at 3% from the date of the order would be $12,582.98.

[39] Section 128 (1) Courts of Justice Act sets out that a person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate calculated from the date the cause of action arose to the date of the order.

[40] Section 129 (1) CJA states that money owing under an order, including costs to be assessed or costs fixed by the court, bears interest at the post-judgment interest rate, calculated from the date of the order.

[41] Section 130 (1) CJA indicates that the court may, where it considers it just to do so, in respect of the whole or any part of the amount on which interest is payable under section 128 or 129, (a) disallow interest under either section; (b) allow interest at a rate higher or lower than that provided in either section; (c) allow interest for a period other than that provided in either section.

[42] Section 130 (2) CJA states that for the purpose of subsection (1), the court shall take into account, (a) changes in market interest rates; (b) the circumstances of the case; (c) the fact that an advance payment was made; (d) the circumstances of medical disclosure by the plaintiff; (e) the amount claimed and the amount recovered in the proceeding; (f) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; and (g) any other relevant consideration.

[43] The mother sought pre-judgment interest on the 2018 order. The father submitted that post-judgment interest is more appropriate given the order was essentially a final order. He relied on Burgess v. Burgess, 1995 ONCA 8950, [1995] O.J. no. 2242 (ON CA) regarding pre-judgment interest.

[44] In M.P.A.N. v. J.N., 2019 ONCJ 96, the court exercised its discretion to award post-judgment interest at a rate of 5 percent and corrected an oversight within the order as it did not contain a post-judgment interest clause.

[45] As set out in MacLeod v. Marshall, 2019 ONCA 842, “[t]rial judges enjoy a wide discretion under s. 130 of the CJA to allow pre- or post- judgment interest at a rate higher or lower than the rate of interest prescribed by the CJA, where they consider it just to do so. An appellate court may interfere with the discretionary decision of a trial judge only where it reaches the clear conclusion that there has been a wrongful exercise of discretion by the trial judge in that no weight, or insufficient weight, has been given to relevant considerations: Stellarbridge Management v. Magna International (2004), 2004 ONCA 9852, 71 O.R. (3d) 263 (C.A.), at para. 85, leave to appeal refused, [2004] S.C.C.A. No. 371; MacLeod, at para 48.

[46] I note that the Swartz order does not contain pre- or post-judgment interest clauses. However, I am of the view that this was an oversight, and it ought to have contained a post-judgment interest clause which is generally included in orders requiring payment of money. I adopt the reasoning from M.P.A.N. v. J.N. in determining it is appropriate to correct the error of the order and granting the nunc pro tunc order to include both pre- and post-judgment interest clauses.

[47] Ultimately, I am of the view that both pre-judgment and post-judgment interest should be awarded on this issue.

[48] The CJA sets out that post-judgement interest accrues from the date of the order, being September 4, 2018.

[49] As noted above, I have the authority under section 130(1)(b) CJA, in conjunction with the facts set out in s. 130(2) CJA, to award a higher interest rate for both pre- and post-judgment interest. I have considered all the factors set out in s. 130(2) CJA, including the changes in market interest rates, which have fluctuated from 1.3% in 2018 to 4% today for pre-judgment interest, and between 3% to 5% for post-judgement interest for the same time period, as well as current and recent inflation. As to the circumstances of the case and conduct of the parties, I note there was an agreement to a payout in 2018, which has not yet been satisfied, over four years later.

[50] I am of the view that due to the failure by the father to pay out the mother from her net equity in the jointly owned property, and because he solely benefitted from the increase of value of same, I find it is appropriate to award a higher interest rate.

[51] Taking into account of all the above factors, I hereby exercise my discretion and find it is appropriate to compensate the mother by awarding the pre-judgment interest at a rate of 4% and awarding post-judgment interest rate at 6.5%.

Repayment of mortgage interest

[52] The father sought an order for the repayment of mortgage interest due to mother refusing to renew the mortgage, causing him to pay a much higher interest rate since separation. He argued the mother’s equity should be reduced to compensate for the excess mortgage interest he had to pay due to her actions.

[53] The father’s evidence was there was a verbal agreement to re-negotiate the joint mortgage. When the mother refused to sign the paperwork, the bank continuously rolled the mortgage into 6-month terms at a higher interest rate of approximately 8% rather than the 2% rate which might have been negotiated. That resulted in, based on his March 2020 affidavit, excess interest payments of $5,410.00.

[54] Since the mother left the home, the father has made all the mortgage payments. He had de facto exclusive possession since separation, which was formalized in the September 4, 2018 order.

[55] The mother’s evidence was that the jointly held mortgage on the home was up for renewal in 2016, prior to separation. The mortgage was not renewed as the end of the relationship was eminent. The father assumed responsibility for the mortgage payments.

[56] In September 2018, the mother attended the bank to sign the necessary paperwork to renew the mortgage, at the father’s request. The bank did not have the requisite paperwork. As stated by the mother in her affidavit, she did not reattend given the father’s refusal to cooperate or comply with the September 2018 order. However, in July 2019 she had a change of heart and asked for the requisite documentation, with no response. On January 23, 2020, another request was made, through counsel, and the documents were signed by the mother on February 5, 2020.

[57] I find that the mother took all reasonable steps to permit the father to re-finance the home, including attending the financial institution in September 2018, when the bank did not have the paperwork ready. Further, I find that the mother asked the father for the paperwork in July 2019, and through correspondence between counsel in January 2020. Those documents were signed in February 2020. As such, this claim is dismissed.

Issue 2: Value of the jointly owned home/ property

[58] The issue of the value of the property was discussed at length at trial. As set out below, I accept neither value reached in either appraisal for the land plus one acre.

[59] I note that resulting trust was conceded for the land minus one acre.

[60] Based on the mother’s real estate appraisal dated February 1, 2022 by Ms. Donna Bain, the current value of the jointly owned home plus one acre is $600,000.00. In keeping with the formula provided for in Justice Swartz’s order from 2018, the mother advanced she was owed $261,312.82, plus pre-judgment interest.

[61] Based on the father’s real estate appraisals by Ms. McMillan, the value of the jointly owned home in 2017 was $240,000.00, and as of September 2021, it was $310,000, representing the value of the entire property appraised at $570,000.00, minus $260,000.00, which was the appraised value of the extra 27.5 acres of land which the parties agree do not form part of the jointly owned property.

[62] The mother did not accept the father’s real estate appraisal, arguing there was an inflated price for the vacant land, valued as it if were a severed parcel, which was not the case. She also argued her appraisal was more recent and was the most accurate evidence of the value of the jointly owned home.

[63] The father did not accept the mother’s real estate appraisal as it did not properly consider the “as is” or “unfinished” nature of the home.

[64] In this fact scenario, both experts agreed, and I find, that the superior way to establish the value of the home was to obtain a valuation for the home plus one acre, rather than value the entire property and then separately value the acreage around the home, subtracting one from the other.

[65] I am of the view that both experts’ appraisal had weaknesses which were revealed in cross-examination.

[66] For instance, Ms. McMillan’s evidence was that she was not aware that the abutting landfill site to the property required a 1,640-foot set-back for building purposes and admitted that might affect the value that would be attributed to that land. Ms. Bain had noted those setback requirements, and her evidence was those setbacks would likely prevent a severance from being granted, which would likely render the acreage unsuitable for residential use, thus affecting the value attributable to that land. Ms. Bain’s evidence was the value for the land would generally set between $700 and $4,000.00 an acre, contrary to Ms. McMillan’s suggested $9,400 per acre.

[67] Ms. Bain meanwhile noted the subject property as being of average condition, where Ms. MacMillan classified it as being in poor condition. Ms. Bain noted the proximity of the land fill site as an adverse impact on the property. As for the house itself, Ms. Bain observed there was evidence of water damage. Her appraisal listed a four-piece ensuite, but she admitted that with the vanity being detached, it did not qualify as same. There was also some repair and joint work needed along the ceiling in the hallway where the ceiling was detached from the walls at parts.

[68] The property was noted to have a crack in the concrete flooring, incomplete porch decking, lack of compliance with the building codes in some regards such as for the deck and railings, construction grade stairs, unfinished areas for the home, outstanding parging of the foundation, cracking and movement in some drywall on the second floor, poor and overgrown landscaping, etc. Interestingly, Ms. McMillan’s appraisal for 2017 noted similar concerns, such as the cracking and movement in drywall, water damage, etc.

[69] However, their house had good market appeal with a lot of acreage, which placed it at the upper end of the selling range.

[70] Both experts took issue with the comparables listed in the other’s appraisals, such as when Ms. MacMillan listed some comparable property as “superior” condition when from Ms. Bain’s perspective it was an inferior property, or Ms. MacMillan not properly noting the square footage of a property, or failing to account for wetlands.

[71] I am of the view that both appraisers’ evidence was credible, and they were trying to be helpful. While I place more reliance on the fulsome nature of Ms. Bain’s appraisal, based on the deficiencies noted, I am persuaded on a balance of probabilities that the property in question was not of “average” condition but “poor” condition, and thus find Ms. McMillan’s conclusion in this regard more reliable.

[72] Given my determination on the issue as to the binding nature of Justice Swartz’s 2018 order, I need not address the actual value of the home/ property. However, I find the property has increased in value since the order was made.

Issue 3: Determination of income

[73] Based on the submissions of the parties, a determination of what each parties’ income was required, following which counsel agreed to provide calculations to address retroactive child and spousal support.

[74] Both parties suggested the other is earning income from a business or side-business.

The law

[75] Section 19 provides that the court may impute to a spouse “such amount of income … as it considers appropriate” and provides a non-exhaustive list of such circumstances. The relevant portions of s. 19 read as follows:

19.(1) Imputing Income – The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include,

(a) the 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 spouse;

(e) the spouse’s property is not reasonably utilized to generate income;

(f) the spouse has failed to provide income information when under a legal obligation to do so;

(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax.

[76] From Colucci v. Colucci, 2021 SCC 24:

Full and frank disclosure is also a precondition to good faith negotiation. Without it, the parties cannot stand on the equal footing required to make informed decisions and resolve child support disputes outside of court. Promoting proactive payor disclosure thus advances the objectives — found in s. 1 of the Guidelines — of reducing conflict between the parties and encouraging settlement (par. 51).

The exercise of judicial discretion must encourage financial disclosure and in no way reward those who improperly withhold, hide or misrepresent information they ought to have shared. Proactive disclosure of changes in income is the first step to ensuring that child support obligations are tied to payor income as it fluctuates. Inadequate disclosure breeds “a backlog of [retroactive] support applications.” Indeed, with full, frank and regular disclosure, long-term arrears should be rare. (par. 54)

[77] As stated in Leitch v. Novac, 2020 ONCA 257, par. 44, nondisclosure is the cancer of family law. This is an apt metaphor. Nondisclosure metastasizes and impacts all participants in the family law process. Lawyers for recipients cannot adequately advise their clients, while lawyers for payors become unwitting participants in a fraud on the court. Judges cannot correctly guide the parties to a fair resolution at family law conferences and cannot make a proper decision at trial. Payees are forced to accept an arbitrary amount of support unilaterally determined by the payor. Children must make do with less. All this to avoid legal obligations, which have been calculated to be a fair quantification of the payor's required financial contribution. In sum, nondisclosure is antithetical to the policy animating the family law regime and to the processes that have been carefully designed to achieve those policy goals.

[78] Simply stated, disclosure is the linchpin on which fair child support depends and the relevant legal tests must encourage the timely provision of necessary information. See: Colucci v. Colucci.

[79] The test for imputing income for child support purposes applies equally for spousal support purposes: See Rilli v. Rilli, 2006 ONSC 34451, [2006] O.J. No. 4142, (Ont. Fam. Ct.); Perino v. Perino, O.J. No. 4298 (Ont. S.C.).

[80] The self-employed have an inherent obligation to put forward not only adequate, but comprehensive records of income and expenses, from which the recipient can draw conclusions and the amount of child support can be established. See: Meade v. Meade (2002) 2002 ONSC 2806, 31 R.F.L. 5th 88 (SCJ). This includes the obligation to present information in a user-friendly fashion. A recipient should not have to incur the expense to understand it. See: Reyes v. Rollo.

[81] There must be an evidentiary basis to make an income determination. See: Quintal v. Quintal, 1997 ONSC 9576, [1997] O.J. No. 3444 (Ont. Ct. General Div.).

[82] Onus is on person requesting it to show a reasonable inference upon which the order can be made. See: West v. West (2001) 18 RFL 5th (Ont. SCJ).

[83] When considering the onus issue in imputation of income claims, the court must be mindful of the fundamental principle that every party in a support case must disclose and adduce the evidence required to allow the other party and the court to undertake a proper assessment of their income for support purposes. Further to this principle, if a party identifies issues respecting the other party's income that could support an imputation of income argument during the course of the proceeding, the party whose income is in question cannot simply make bald assertions regarding their financial circumstances and hope that the other party will not uncover evidence to support an imputation of income claim. Rather, that party has a positive obligation to proactively disclose information and evidence in support of their position respecting their income, including why income should not be imputed to them. See: M.A.B. v. M.G.C., 2022 ONSC 7207.

Analysis

[84] After having heard the evidence, including a review of the affidavits, the following is a summary of the evidence and my analysis regarding both parties’ income.

The mother’s business income

[85] For reasons that follow, I am not persuaded that the mother earned any supplemental income as a result of her puppy breeding business after 2018.

[86] For 2017 however, I would include the net business proceeds, which I accept to be $2,664.69.

[87] Prior to separation, in about 2016, the mother began breeding Wirehaired Pointing Griffons (“griffons”). She called her business “Deer Creek Kennel”. She had three dogs which were used for breading: Citori (“Tori”), Kiki and Rocky.

[88] Historically speaking, the mother had been around dog breeding most of her life as her parent’s bred dogs. Growing up, she was involved in or exposed to the business. Her parents continue to operate a hobby farm where they have dogs, cats, horses, and other pet animals on the farm. Her parents raised German short haired pointers.

[89] Following separation, as of April 15, 2017, the mother moved to her parents’ residence, where the hobby farm was located.

[90] The father’s position was the mother typically bred two litters of puppies per year, approximately 12 puppies per litter. He contended that profits from the puppy sales were used for RESP’s in the mother’s name alone. He provided evidence of eleven puppies being registered in the mother’s name in 2017, and four in early 2018.

[91] He alleged the mother was not forthcoming with disclosure, and once he himself found proof of puppy sales, the mother stopped registering the puppies in her name. He believed the mother would have earned revenues exceeding $250,000.00 from 2020 to date.

[92] I find as a fact that the mother provided very little disclosure to establish the expenses for the business. The father had to make his own inquires and produced evidence as to the dogs bred by the mother, including statements from the North American Versatile Hunting Dog Association (“NAVHDA”), for which the mother was a member.

[93] The father’s evidence showed that the mother registered her Griffon litters in 2016 and 2017, listing herself as the breeder. In 2018, Laura Bolton (the children’s maternal grandmother) was listed as the breeder.

[94] The father provided evidence of the mother posting on social media, purportedly as the owner of the breeding business after 2019. This evidence was contested by the mother.

[95] The evidence showed that in 2016, the mother’s net income from puppy sales was $1,534.35 (Exhibit 9). The mother did not record the puppies or puppy sales prior to separation.

[96] In 2017, the mother registered a litter of 11 puppies. Of the 11, she sold 7 puppies at $1,500 per dog, totalling $10,500.00. Some were not sold due to birth defects – those were given away. Pursuant to her March 8, 2018 financial statement and Exhibit 12, she earned $2,664.69, which was not declared on her income tax returns.

[97] The mother’s evidence was she would enroll the litter, but it was up to the owners to register their own dogs following the sale.

[98] According to the mother, in 2018, she had two litters of puppies, totalling five born and six stillborn. One puppy was given the Laura Bolton as a pet as it had significant health issues. Another puppy with health issues was sold for less than usual. Two were sold for $1,500.00 each. One puppy was returned due to behavioural problems. There were no litters enrolled in NAVHDA under the mother’s name. The mother’s felt that either it was a misprint, or originally Laura was to take over the business in 2018, but she was unable to due to her own father’s death. Laura helped with the veterinarian bills. Ultimately, based on her summary of dog expenses, the mother suffered a loss of $791.44 for 2018 (Exhibit 15).

[99] In 2019, the mother bred one litter, resulting in 11 puppies. The entire litter contracted the parvo virus. All the puppies ended up dying, and those which had been sold, the monies were reimbursed to the owners. The result was a loss of $4,425.73.

[100] It was the mother’s position that due to bad luck, including several puppy deaths due to the puppies contracting a disease in 2018 and/ or 2019, she could no longer afford to run the business. This business, which included the mother’s dogs, was folded in her parent’s well-established kennel known as “Sure Fire kennels” (“SFK”). Her parents continued their dog breading program.

[101] The father believed the mother had approximately 20 puppies in 2019, and perhaps up to 36 puppies in 2021. The mother did not dispute the amount of puppy’s bred, nor did she dispute they might have been sold for between $1,500 up to $2,500 per puppy, which would have generated between $54,000 to $90,000.00 in revenue in 2021.

[102] The father meanwhile alleged that there is no evidence verifying the sale of the business to the mother’s parents, and thus the transfer never occurred. He believed the mother remained actively involved in the business, including dealing directly with purchasers and maintaining her phone number as a point of contact with same.

[103] The mother’s view was, following the transfer to Laura, the business was no longer hers, though she helped when needed. As it was not her business, she did not enjoy any profits. She did not deny interacting with clients on her parent’s behalf, or that her phone number was a point of contact, also on her parent’s behalf. She and the children live in the same house as her parents, so naturally there would be pictures of the children with some of the puppies.

[104] The father alleged that the mother’s financial growth, as set out in her financial statement, showed she had $165,000.00 worth of assets, whereas at date of separation she had $80,000.00. He contended this was evidence of dog sales. Based on his math, gross revenues were $16,500 through to 2018, less expenses, resulting in net revenues of approximately $14,000 to $15,000.

[105] The mother meanwhile testified she received a financial loan from her father of $73,500, withdrew all her money from her Tax-Free Savings Account, and took a personal line of credit of $15,000, all evidenced in her financial statement.

[106] I accept that the mother did not provide all of requisite supporting documentation to establish the expenses noted in her summaries. Some expenses such as dog food were in her father’s name. It was uncontested he too was breading dogs at the same time.

[107] I find that the proceeds of one puppy, which was approximately $1,500, would cover the cost of stud fee, not the entire costs of the litter.

[108] I note that the mother was less than forthcoming as to her financial information regarding the puppies, their registration, and any income earned from same. While I accept that the mother felt the dog breeding was a “hobby”, I am of the view that it was more of a business, though not as lucrative as asserted by the father. I accept that based on the mother’s view this was a “hobby”, she did not take careful note of the expenses, and had to go back in time to reconstruct them, which led to less that fulsome evidence.

[109] However, on a balance, with the onus being on the father to argue imputation of income, I find the only year I am persuaded to impute income was 2017, in the amount the mother disclosed as net profits. I am not persuaded that she earned any net profits in 2018 onward.

[110] On a balance of probabilities, I find that the mother ceased running her own dog breading business as of August 2019. I accept that she gave the business to her parents, who had bred dogs in the past. The evidence established both Kiki and Tori were in Laura Bolton’s names, such as Kiki being registered in Laura’s name as of September 17, 2019. There was evidence that the intention to stop running the business was formed as of about July 26, 2019.

[111] On or about August 10, 2019, Tori and Rocky had another litter. According to both the mother and Laura, this litter was Laura’s litter, and as such, Laura kept the money from the puppy sales. It was suggested that the mother would have earned about $12,000 from the puppy sales, but she denied receiving any financial compensation. Laura’s evidence was the same as the mothers. While the father suggested it was implausible that Laura would keep the money despite knowing her daughter was going through financial hardship, on a balance of probabilities, I accept Laura’s evidence.

[112] I find the mother was frequently involved with Laura’s business, which including dealing with clients. However, on a balance of probabilities, I accept Laura’s evidence, and that of the mother, that the mother received no income or funds from Sure Fire Kennels despite her assistance.

The father’s business income

[113] For reasons that follow, with the onus being on the mother, I am not persuaded that I should impute any income to the father for his work on his family’s farm.

[114] It was the mother’s belief that the father commenced a second job working on his family’s farm on or about September or October 2019. Her evidence was the father previously worked on the farm for compensation, and the work he started doing in 2019 was previously done by his brother, who had been renumerated for same.

[115] The mother was of the view, based on the children’s comments to her and where exchanges were taking place, that the father worked approximately twenty hours per week. She argued income should be imputed to him based on this work, even if he was not being compensated. General farm labourers earn an average wage of $15.67 per hour. She suggested an additional $1,357 per month should be added to his income from September/ October 2019 onward.

[116] The father denied being remunerated for the work on the family farm. His evidence was that on October 19, 2019, his brother, who actively worked on his parent’s dairy farm, fell into a silo, and broke his heal and suffered other injuries. For about a week after the injury, the father took over, without pay. Since then, his parents have primarily replaced his brother’s work with two hired hands. He continues to help when possible, which is expected in a family farm business.

[117] The father grew up working on the farm, and occasionally lent a hand when needed as an adult. The father’s family also have Percheron horses, which are bred and raised on the farm. There are numerous other animals. The evidence supports a finding that the father attends with his father at horse shows.

[118] I accept the father’s evidence that he has not been paid for assisting his family on the farm, or attending horse shows with his father. As such, no income is imputed to him.

Calculations

[119] I accept that the mother works at Canada Bank Note Ltd, and based on her financial statement dated September 8, 2022, she earns approximately $53,307 per annum.

[120] Based on her notices of assessment and my determinations above, the mother’s income is found to be the following:

a. 2021: $62,955 minus union dues of $783.21 - totalling: $62,171.79

b. 2020: $64,903 minus union dues of $767.45- totalling: $64,135.55;

c. 2019: $59,979 minus union dues of $751.80 - totalling: $59.227.20;

d. 2018: $50,645 minus union dues of $727.20 - totalling: $49,917.80;

e. 2017: $47,886 minus union dues of $697.32, plus imputed net income $2,664.69 (to be grossed up)- totalling $49,854;

f. 2016: $35,691, minus union dues of $227.84- totalling: $35,463.16.

[121] Based on the father’s financial disclosure and my determinations above, his income was:

a. 2021: $103,808 minus union dues of $1,230.54- totalling: $102,577.46;

b. 2020: $99,246 minus union dues of $1,194.44 - totalling: $98,051.56;

c. 2019: $98,753 minus union dues of $1,183.08 - totalling: $97,569.92;

d. 2018: $97,312 minus union dues of $1,155.00 - totalling: $96,157;

e. 2017: $102,998 minus union dues of $1,148.20 -totalling: $101,849.80; and

f. 2016: $103,397, minus union dues of $1,132.14 - totalling: $102,264.86.

Issue 4: child support, s.7, and spousal support

[122] The court was asked to determine income, as determined above, and then decide what, if any, support is payable.

Analysis

[123] The mother is seeking retroactive child support, spousal support, and section 7 expenses from May 1, 2017, following their separation of April 15, 2017. The father agrees to this proposition.

[124] Both parties agree to the application of s.9 of the Child Support Guidelines, which states the following:

9. Where each parent or spouse exercises parenting time with respect to a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,

(a) the amounts set out in the applicable tables for each of the parents or spouses;

(b) the increased costs of shared parenting time arrangements; and

(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.

[125] Both the mother and father accepted that the calculation be based s.9(a) CSG.

[126] After reviewing the relevant legislation, the conditions, means and circumstances of each parent and case law, I am of the view that it would be appropriate in this case to apply a straight set-off approach.

Child support

[127] The father started to voluntarily pay child support of $776.00 per month to the mother, without the necessity of a court order, from July 2017 to April 1, 2019. Thereafter, he reduced the payments to $689 per month to reflect his lower income. By summer of 2021, based on his belief that the mother was receiving substantial income from the dog breeding business, he reduced the support to $473 per month. It was uncontested that the father stopped all child support payments as of September 2021.

[128] The father indicated that though the mother alleged he missed some payments, he had provided cheques for the months in question. He did not deny it was possible the mother never cashed the cheques. I accept the father provided cheques, but if they were not cashed, it is hereby considered as not paid.

Section 7 expenses

[129] The mother incurred several s.7 expenses from date of separation, such as daycare, medical, dental and extracurricular activities. Based on her calculations, which use proportionate sharing of expenses, she alleged that total s.7 arrears from 2017 to 2019 were $4,299.75. These numbers however reflect imputation of income to the father for farm income, which I do not accept. They do however add the mother’s 2017 net business income.

Daycare and extracurricular activities

[130] One claim for s.7 expenses was paying the children’s maternal grandmother (Laura Bolton) for daycare. Contrary to the father’s belief, the mother maintained that prior to separation, Laura was paid to care for the children. The mother provided receipts of $3,575 for 2019 and $2,500 ($400 for 2017; $2,100 for 2018) from Laura Bolton. For some reason, these childcare expenses were not listed in her income tax returns. Laura’s evidence also confirmed she did not claim the childcare payment on her taxes.

[131] The mother argued the father was using daycare for non-work-related activities such as hunting and horse shows. If the use of daycare was for employment purposes, such receipts were acceptable. She asserted that in 2018, 2019, and 2021 the father at a horse show in February and hunted in October and November. Additionally, from May to September 2021, the mother was home and had offered to switch days to save on daycare costs, which was refused.

[132] The mother paid for the children’s swimming lessons, at a cost of $340 for 2017 and $200 for 2018.

[133] The father did not believe Laura was ever paid for watching the child prior to separation, therefore it was unlikely she was paid following separation. Additionally, he did not believe money changed hands between the mother and Laura, particularly as the mother resides with her parents. The father’s view was that his mother (the children’s paternal grandmother) does not charge him for watching the children, therefore neither should Laura. However, if one were to be paid, they should both be paid.

[134] The father used Ms. McGregor as support for childcare purposes, which he claimed on his taxes. The father’s evidence was he solely paid day care expenses for the children as required and provided receipts of $8,750 for 2017 and $8,370 for 2018. He added that his mother cared for the children after-school at minimum five days every two-week rotation – though no invoices or receipts were provided to substantiate same.

[135] The father’s tax returns showed he claimed $5,915 for childcare expenses in 2017, $7,270 for 2019, $7,420 for 2020, and $7,640 for 2021. It was unclear how much child care expenses were claimed on his 2018 taxes, but it was reasonable to conclude some were claimed given the difference between the total income and net income on his tax account summary. As to the amount claimed for 2017, this included pre-separation use of child care, which will need to be adjusted for the purpose of the final calculations.

[136] The father solely paid for the children’s soccer expenses since separation. In 2019, he paid for registration costs totalling $220, plus shoes and shin pads. He acknowledged the mother paid for their swimming lessons. He suggested these two activities be set off against each other.

[137] I am of the view that both parents should be proportionately responsible for the children’s s.7 expenses, including the swimming lessons and soccer. The father shall receive credit for the $220 paid by him, and the mother for the $540 paid by her. Counsel are to provide calculations to establish the net after-tax cost for same, which shall be divided proportionately between the parties.

[138] The father agreed in cross-examination that he used Ms. McGregor’s services to care for the children a few days per year which were not employment related. His evidence was in 2020, he was away three days for moose hunting, which would have totaled $225 worth of daycare costs for that year. He believed he also had childcare while he attended a horse show in 2018 and agreed to reduce his claim by $75 to account for same. While the mother alleged there were other times which were not employment related, I accept the father’s direct evidence over hearsay evidence.

[139] I am of the view it was reasonable to incur childcare expenses for employment purposes. The father is to reduce his claims as noted in preceding paragraph.

[140] I accept that both grandmothers assisted the parents in providing daycare. The question was whether there was an exchanging of monies between the mother and Laura.

[141] I have considered that the father claimed the child-care related expenses on his taxes, though the same is not true of the mother.

[142] Having weighed all the evidence, I found the mother and Laura credible. As such, I accept the mother had paid Laura for child care.

[143] Counsel are directed to provide this court with the after-tax cost of daycare, as opposed to the out-of-pocket cost. While the mother has not claimed such a deduction on her taxes, counsel are directed to input the numbers in Divorcemate as though she had claimed same. These calculations are to be provided upon at the return date.

Medical/ dental expenses

[144] The mother argued the father also owed $4,271.70 for medical/ dental expenses from in 2016/ 2017, including the mother’s Lasik surgery from 2016 of $3,850.00. Her view was that while they were still together, the father refused to sign the necessary insurance forms for the Lasik to be covered.

[145] The mother argued that receipts had been provided in 2017 and had been advised through the father’s former counsel the dental receipts were submitted through insurance. Since then, the father denied having submitted the receipts and refused to pay for same.

[146] In the father’s March 2, 2020, affidavit, he stated the mother took the children to a dental appointment on March 13, 2018. No payment was required as it was covered by insurance. Her plan was billed first. For some reason, the benefits payment was sent to the mother rather than the dental office. She kept that money and refused to pay the dentist. Attached to his affidavit was a letter from the dentist, who confirmed the mother refused to pay the outstanding $250.00 bill as the father owed her money.

[147] The father meanwhile argued the mother used to submit her own claims to the insurance and did not understand why she did not do so for the Lasik surgery, which occurred a year prior to separation. She too had her own insurance available. Moreover, by the time the father was asked to submit the claim through his insurance, it was too late. I accept the father’s evidence on this issue. I am not prepared to order the father to reimburse the mother for a claim which he did not submit and is prevented from doing so as the claim was not given to him within the required time to submit it to the benefits carrier.

[148] I accept that the mother provided the dental receipts to the father, which shall be reimbursed proportionately. However, the mother shall reimburse the father the $250.00 for the monies received by her which should have gone to the dentist. Calculations for these allowable expenses are to be provided at the return date.

Spousal support

[149] The parties were in a common law relationship for six years. The mother was seeking mid-range spousal support, with a determination as to duration.

[150] The mother’s evidence was the father was always the primary income earner for the family, earning over $90,000 as a diesel mechanic throughout the relationship. As of date of separation, the youngest child was just over 1.5 years old, and the oldest was 6 years old.

[151] The mother worked at the same place of employment during their relationship, earning between $45,000.00 up to $64,900 in 2020. Her evidence was after all their three children were born, she took off a full year of maternity leave for each, and an additional two months of sick leave prior to their births, resulting in missed opportunities for possibility of promotion, raises and extra overtime work. The father however, who was unionised, benefited from raises and overtime hours.

[152] The father’s Answer acknowledged his obligation to pay spousal support as of May 1, 2017. The issue was quantum. He testified that when he was paying child support at a rate of $776 per month, $72 of the support was for spousal support. This contribution ended when he reduced the support to $698.

[153] The father submitted that spousal support should be non-compensatory, needs based support. He submitted that the question would be whether there continued to be entitlement depending in my determination of the mother’s dog breeding business income. The father proposed that mid-range or below mid-range support would be the appropriate range to apply, with a mid-range default being a reasonable range supported by the facts of this case.

[154] I am of the view that entitlement for spousal support is made out, and having considered the Spousal Support Guidelines, the claim should be based on compensatory support.

[155] I am of the view that mid range is appropriate in the circumstances given the missed financial opportunities resulting from being a stay-at-home parent during maternity leave for all three children. Having considered the ranges in Divorcemate, I am of the view that spousal support should be payable, in these circumstances, for a range of three to sixteen years, from May 1, 2017. I am of the view that a review is warranted in five years. Calculations as to quantum for ongoing and arrears to be provided at the return date.

Corollary issues

[156] One final issue raised by the father was the right of first refusal.

[157] The court heard evidence that the children have equal parenting time with each parent. Both parents have very helpful support networks, including their families.

[158] There have been communication difficulties in the past regarding parenting time, which have led to conflict, for instance, Christmas parenting time in 2017 and 2019.

[159] I am of the view that the right of first refusal will only lead to increased conflict and decline to award same.

Disposition

[160] The father shall pay to the mother $101,177.50, for her interest in the jointly owned home, plus pre-judgment interest at a rate of 4% from March 8, 2018, to September 4, 2018, and post-judgment interest rate at 6.5% from September 4, 2018, onward.

[161] The claim by the father for repayment of mortgage interest is dismissed.

[162] The parties shall pay set-off child support to each other, based on s.9(a) CSG, from May 1, 2017, onward. The father shall be credited for payments made. Calculations are to be provided, taking into consideration the findings as to include at paragraphs 120 and 121 of this judgment.

[163] Counsel are directed to provide this court calculations to address the after-tax cost of daycare, to be provided upon at the return date.

[164] The mother shall reimburse the father the $250.00 for the dental claim for which he paid yet she was reimbursed. The remainder of the children’s outstanding medical and dental expenses shall be reimbursed proportionately by the father, taking into consideration what was paid by all eligible insurance providers. Calculations for these allowable expenses are to be provided at the return date.

[165] Any new s.7 expenses shall be shared proportionately between the parties. Both parties shall consult the other prior to incurring such an expense, apart from emergency medical or dental expenses. Consent to same shall not be unreasonably withheld. Invoices and/or receipts shall be provided within 15 days of incurring an expense and reimbursed within 30 days. Consent is not required for employment related childcare.

[166] The mother’s claim for reimbursement of the Lasik surgery is dismissed.

[167] The father shall pay the mother mid-range compensatory spousal support for a range of three to sixteen years, from May 1, 2017, with a review in five years. Calculations as to quantum for ongoing and arrears to be provided at the return date.

[168] The claim for right of first refusal is dismissed.

[169] A date shall be set, through trial coordination in Brockville and Cornwall (CornwallSCJTrialCoordination@ontario.ca), for submissions on the outstanding arrears, mathematical issues and costs submissions. Two hours required. Draft orders, Divorcemate calculations and costs submissions to be exchanged between the parties ten days prior to the return date, then filed with the court and uploaded to Caselines.

Justice Helene C. Desormeau

Released: February 16, 2023