Court File and Parties
Court File No.: FS-20-42923-0000, FS-20-42923-0001 Date: 2023-07-17
Superior Court of Justice – Ontario 491 Steeles Avenue East, Milton ON L9T 1Y6
Re: Calvin Wilfred Lantz, Applicant -and- Sarah Jayanthi Lantz, Respondent
Before: C. Chang J.
Counsel: W. Abbott and V. Merklinger, for the Applicant F. Jamal and F. Broschuk, for the Respondent
Heard: July 10, 2023 (in-person)
Endorsement
[1] Further to my endorsement dated February 1, 2023, the parties bring motions for summary judgment on their respective claims. The applicant seeks a variation of the consent final order of Miller J. dated March 12, 2021 (the “Final Order”) respecting child support, including s. 7 expenses. The respondent seeks enforcement of the Final Order.
[2] In advance of the hearing of these motions, the parties resolved all but one of the outstanding issues and I am prepared to make the requested consent orders.
[3] The sole outstanding issue is the balance of child support payable for the months of November 2020 through to December 2022. The applicant refers to that amount as retroactive child support and argues that it totals $103,196.00 based on his requested variation of the Final Order. The respondent refers to that amount as child support arrears and argues that it totals $227,821.00 based on the Final Order. She seeks no interest on any amount payable.
Facts
[4] The facts relevant to these motions are undisputed and can be summarized as follows:
a. the parties married on June 10, 1995 and separated on December 19, 2019; b. there are two children of the marriage, Malcolm Lantz (DOB: July 10, 2005) and Graham Lantz (DOB: April 22, 2007), who both reside primarily with the respondent; c. the parties resolved all of the issues relating to the end of their marriage by way of a consent arbitral award dated December 22, 2020, the terms of which were incorporated into the Final Order on consent; d. the parties also executed a separation agreement dated November 4, 2021 (the “Separation Agreement”), which, among other things, incorporated the terms of the Final Order respecting child support; e. the Final Order provides for: i. the applicant to pay child support in accordance with the applicable table amount under the Federal Child Support Guidelines, SOR/97-175, based on his actual income, ii. an annual exchange of income information for the purposes of reviewing the amount of child support, iii. an additional process to review the child support amount “if there is a material change in [one or both] of the parties or one or both of the children whether foreseen or unforeseen”, and iv. a mechanism for the adjustment of child support accordingly; f. when the Final Order was made, the applicant was an equity partner at a large law firm based in Toronto and he has continued with that firm in that position; g. because of how the applicant’s income is paid year-to-year, the parties did not know when they consented to the Final Order what his income would be for 2020, so they agreed that, for support purposes, it would be $1,650,000.00 subject to later adjustment based on his actual 2020 income; h. the applicant’s gross income amounts for 2020, 2021 and 2022 are not in dispute, but the parties dispute certain deducted expenses; and i. the applicant has paid child support as follows: i. from November 1, 2020 until June 1, 2021 in the monthly amount of $20,077.00 based on an income of $1,500,000.00, ii. a $14,200.00 “true up” payment in July 2021 pursuant to the applicable mechanism in the Final Order (I was not provided with the manner in which the applicant arrived at this amount), and iii. from July 1, 2021 onward in the monthly amount of $21,852.00 (I was not provided with the manner in which the applicant arrived at this amount).
Issues
[5] The issues to be determined on these motions are:
a. Is this matter appropriate for determination by summary judgment? b. Has there been a material change in circumstances sufficient to justify the requested variation of the Final Order? c. What are the applicant’s incomes for support purposes for the period November 1, 2020 to December 31, 2022 and the resultant balance, if any, of child support payable?
Issue 1: Is Summary Judgment Appropriate?
Parties’ Positions
[6] The parties both agree that summary judgment is appropriate for the determination of their respective claims in this matter.
Law
[7] On a motion for summary judgment, if there is no genuine issue requiring a trial respecting a claim or defence, the court is mandated to make a final order accordingly (see: Family Law Rules, O. Reg. 114/99, r. 16(6)).
[8] For there to be no genuine issue requiring a trial, the motion judge must be able to reach a fair and just determination on the merits; i.e., the motion process: 1) allows the judge to make the necessary findings of fact; 2) allows the judge to apply the law to the facts; and 3) is a proportionate, more expeditious and less expensive means to achieve a just result (see: Hryniak v Mauldin, 2014 SCC 7, at para. 49). These principles are interconnected (see: Hryniak, at para. 50).
Decision
[9] I find that summary judgment is appropriate to determine the parties’ claims in this matter, as there is no genuine issue requiring a trial. I am able, on these motions, to reach a fair and just determination on the merits.
[10] Similar to the matter before Ricchetti R.S.J. in Nutzenberger v Mert, 2021 ONSC 36, at para. 3, in the case-at-bar, the facts necessary to adjudicate the competing claims are undisputed, the relevant evidence is entirely documentary, the determination of the disputed issues involves the application of the law to the facts and, viewing the litigation as a whole, the summary judgment process will serve the interests of timeliness, affordability and proportionality.
[11] There is no genuine issue requiring a trial respecting either the applicant’s motion to change or the respondent’s motion to enforce the Final Order, each of which I address in turn as follows.
Issue 2: Has There Been a Material Change in Circumstances?
Parties’ Positions
[12] The applicant argues that there has been a material change in circumstances since the making of the Final Order; specifically, that his income has increased by almost 50%. Therefore, he submits, payment of the table amount based on his actual income would be inappropriate and the Final Order should be varied so that his income for child support purposes is capped at $2,100,000.00 [^1]. The applicant argues that, without this cap, the amount of child support payable would exceed the children’s actual needs and would constitute improper “wealth transfer” from him to the respondent.
[13] The respondent argues that there has been no material change in circumstances since the making of the Final Order, as changes in the applicant’s income for child support purposes were anticipated and expressly provided for in the Final Order. Therefore, she submits, there is no basis to vary the Final Order, which should be enforced in accordance with its terms.
Law
[14] The federal child support regime “contemplates that the family as a whole – including the children – will share the rising and falling fortunes of the payor parent” and s. 17 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) is one mechanism by which child support orders can periodically be varied to “bring them in line with financial realities” (see: Colucci v Colucci, 2021 SCC 24, at paras. 28-29).
[15] On a motion to change under s. 17, the threshold question is whether there has been a material change in circumstances since the making of the order sought to be varied, without which there is no power to vary (see: Assayag-Shneer v Shneer, 2023 ONCA 14, at para. 6).
[16] Any party seeking such a variation must demonstrate a past change in circumstances as set out in s. 14 of the Federal Child Support Guidelines or one that, “if known at the time, would probably have resulted in different terms” (see: Colucci, at paras. 59-61). To meet the applicable threshold, a change in income must be “significant and have some degree of continuity, and it must be real and not one of choice” (see: Colucci, at para. 61).
Decision
[17] The case-at-bar presents – at least, as far as I am aware – a singularly unique situation where a party seeks retroactive variation of a final child support order to effectively reduce the amount of child support payable based on an increase in his income. I was directed to no authority on point and my own research has disclosed none.
[18] However, in my view, I need not determine whether a material increase in a support payor’s income is a ground to vary a child support order to decrease the amount payable, as I find that there has been no material change in circumstances to justify the requested variation.
[19] The Final Order is clear on its face: the amount of child support payable is the table amount based on the applicant’s actual income and is subject to review by the parties both annually and upon the occurrence of a material change in circumstances. When the annual or other review discloses a difference between the applicant’s income on which child support was calculated for the previous year and his actual income for that year, the amount of child support for that previous year is to be adjusted accordingly.
[20] In other words, the Final Order expressly and specifically contains a mechanism to adjust the amount of child support payable based on possible fluctuations in the applicant’s income. In negotiating and consenting to those terms in the Final Order, the parties clearly contemplated those possible fluctuations (both “material” and otherwise) and expressly agreed on a mechanism to adjust the amount of child support accordingly without having to seek variation of the Final Order under s. 17 of the Divorce Act.
[21] In my view, the change in the applicant’s income is not one that, if known at the time that the Final Order was made, would probably have resulted in a different child support order being contained in it. As outlined above, the parties clearly contemplated possible changes in the applicant’s income and provided for adjustment of the amount of child support payable accordingly. Indeed, on July 1, 2021, the applicant upwardly adjusted his payments of child support in accordance with that mechanism, which increase was based on an income in excess of the $1,650,000.00 cap originally sought on his motion to change.
[22] There has therefore been no applicable material change in circumstances and, as such, I have no authority to vary the Final Order as requested by the applicant. In light of my findings above, I need not determine the appropriateness of the applicant’s requested income cap and I decline to do so.
[23] The applicant’s motion to change should therefore be dismissed.
Issue 3: What is Applicant’s Income for Support Purposes; What is the Balance Payable?
Parties’ Positions
[24] The applicant’s total incomes for 2020, 2021 and 2022 are not disputed; however, the applicant submits that he is entitled to certain expense deductions from those income amounts in determining his income for support purposes. Those expenses total: $42,562.00 for 2020; $76,442.00 for 2021; and $68,876.00 for 2022.
[25] The differences in the parties’ respective positions on the applicant’s income are:
a. for 2020: applicant - $2,029,000.00; respondent - $2,120,588.00; difference - $91,588.00; b. for 2021: applicant - $2,434,831.00; respondent - $2,599,325.00; difference - $164,494.00; and c. for 2022: applicant - $2,518,187.98; respondent - $2,666,402.00; difference - $148,214.02.
[26] Those differences are greater than the amounts of the expenses claimed by the applicant, as the respondent has “grossed up” the total amounts of those expenses before adding them back to the applicant’s income.
[27] The respondent argues that those expenses are not reasonable and should therefore not be deducted from the applicant’s income for the purposes of calculating child support. She submits that the applicant has failed to provide documentary proof of those expenses and, as such, the court should make an adverse inference respecting their reasonableness. After grossing up and adding back those expenses, the respondent argues that the applicant owes arrears of child support in the total amount of $227,821.00 for the months of November 2020 to December 2022.
[28] The applicant argues that his claimed expenses are both proper and reasonable in the circumstances and that he should be permitted to deduct them, as claimed, in determining his income for child support purposes. He submits that he has discharged his burden to produce documentary proof of those expenses, as he has provided to the respondent all requisite particulars and evidence. Without adding back any of his claimed expenses and after applying his income cap of $2,100,000.00, the applicant argues that the total retroactive child support payable for the months of November 2020 to December 2022 is $103,196.00.
Law
[29] Income may be imputed under s. 19 of the Federal Child Support Guidelines “[w]here significant amounts of untaxed business income are used for payment of personal expenses [by] ‘grossing up’ business income to place a spouse’s real income on par with what it would be in a salary income context” (see: Riel v Holland, at para. 36).
[30] The court may also include pre-tax corporate income pursuant to s. 18 of the Federal Child Support Guidelines if it determines that a spouse’s “annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support” (see: Federal Child Support Guidelines, s. 18(1)).
[31] In order to add back claimed expenses, the court need not find that the party claiming the expenses has acted improperly or “outside the norm for claiming expenses in the income tax context”, but need only determine whether the full deduction of the subject expenses “results in a fair representation of the actual disposable income that is available…for personal expenses” (see: Favero v Favero, 2013 ONSC 4216, at para. 105).
[32] A party seeking to have income imputed in such a way bears the burden of proving that the subject expenses are unreasonable and should be added back into the support payor’s income for support purposes (see: Kinsella v Mills, 2020 ONSC 4785, at para. 178). However, the party relying on those expenses “has an obligation to explain the reasons for the expenses and how they were calculated, and must provide documentary proof of the expenses in an organized manner so that the court can make a proper determination as to the reasonableness of the expense from the standpoint of the child support calculation” (see: Favero, at para. 104). Failure to provide such documentation justifies the making of an adverse inference respecting the reasonableness of the claimed expenses (see: Favero, at para. 104).
Decision
[33] I find that the applicant’s claimed expenses are unreasonable and should be added back to his income for support purposes.
[34] The applicant was, at all material times, aware that the reasonableness of his claimed expenses was in issue and, indeed, he undertook to provide the documentary proof of them. Despite those undertakings, the applicant didn’t provide any; electing instead to provide a summary of them, which is neither complete nor organized in a manner that relates to the expense amounts claimed in this litigation. By providing these unacceptable answers to his undertakings (for which he provided no explanation), the applicant failed to discharge his obligation to provide documentary proof of his claimed expenses. In my view, that failure justifies the making of an adverse inference respecting the reasonableness of those expenses and I make that inference.
[35] I therefore find that the claimed expenses are not reasonable and should be added back to the applicant’s income for the purposes of calculating child support. Adding back those expenses for 2020, 2021 and 2022 results in the following incomes for support purposes: $2,071,562.00 for 2020; $2,511,273.00 for 2021; and $2,587,063.98 for 2022.
[36] I do not accept the respondent’s argument that the amounts of those expenses should be grossed up before they are added back to income. She provided neither authority nor calculation for her proposed gross up, but simply inputted the amounts of those expenses into her DivorceMate calculations as separate income amounts in the “Other non-taxable income (auto gross up)” input category. In my view, the grossing up called for in Riel refers only to the adding back of the subject expenses to income; therefore, in the case-at-bar, the subject expense amounts should simply be added to the “Employment Income” input category in the DivorceMate calculations.
[37] Based on the applicable DivorceMate calculations for the income amounts that I have determined above, the child support amounts are: $25,136.00 for 2020; $30,412.00 for 2021; and $31,322.00 for 2022. This results in a balance of child support payable for the relevant period in the total amount of $219,688.00 based on the following calculation:
| Period | Total Payable | Total Paid | Balance |
|---|---|---|---|
| Nov. & Dec. 2020 | $50,272.00 | $40,154.00 | $10,118.00 |
| 2021 | $361,704.00 | $265,774.00 | $95,930.00 |
| 2022 | $375,864.00 | $262,224.00 | $113,640.00 |
| TOTALS: | $787,840.00 | $568,152.00 | $219,688.00 |
[38] Pursuant to the Final Order, the applicant should be required to pay this balance.
Costs
[39] At the conclusion of the oral hearing, the parties advised that there are offers to settle that bear on the issue of costs, so I was unable to receive costs submissions at that time. I did, however, direct the parties to provide the total quantum of their respective costs claims, which I have since received as follows:
a. the applicant (who was apparently unable to decide on one amount) seeks his costs in the all-inclusive amounts of $41,027.52 or $54,523.00 or $68,018.47; and b. the respondent seeks her costs in the all-inclusive amount of $88,823.65.
[40] As outlined below, I will receive the parties’ costs submissions in writing.
Disposition
[41] For the reasons above, I am satisfied that the requested consent orders should be made, that the applicant’s motion to change should be dismissed and that the Final Order should be enforced respecting the amount of child support payable for the months of November 2020 through to December 2022 with the balance of $219,688.00 to be paid by the applicant.
[42] I therefore make the following orders:
a. consent orders to go in accordance with paras. 1 to 10 of the parties’ draft consent order provided; b. the applicant’s motion to change is dismissed; c. the applicant shall pay the balance of child support for the months of November 2020 through to December 2022 in the total amount of $219,688.00, which payment shall be made within 45 days of the date of this endorsement; d. the parties shall each make written submissions on costs (a maximum of two pages plus bill of costs and offer(s) to settle) to be sent to me through the Milton Administration Office as follows: i. the respondent’s submissions by no later than July 24, 2023; ii. the applicant’s submissions by no later than July 31, 2023; and iii. there shall be no reply.
C. Chang J. Date: July 17, 2023
[^1]: Prior to the July 10, 2023 hearing of these motions, the applicant was seeking the applicable income “cap” at $1,650,000.00, but adjusted that amount up to $2,100,000.00 at the commencement of the hearing.