Court File and Parties

COURT FILE NO.: FS-23-35319

DATE: 20231211

ONTARIO

SUPERIOR COURT OF JUSTICE

RE: Azamat Makhmadaliev, Applicant (Responding Party on Motion)

AND:

Guzal Marasulova, Respondent (Moving Party)

BEFORE: Kristjanson, J.

COUNSEL: Claudia Macek, Counsel for Respondent Azamat Makhmadaliev, Self-Represented

HEARD: At Toronto by videoconference December 5, 2023

Endorsement

Kristjanson, J.

[1] This motion was brought by the Respondent mother for retroactive and prospective child support and financial disclosure. The Applicant father, who resides in the United States, contests the jurisdiction of the Ontario courts over child support. The issues are:

1. Does the Ontario Superior Court have jurisdiction over the father, a resident of the United States, for the purposes of making a child support order?
2. If so, what is the father’s income for child support purposes? How much child support is payable from the date of the Answer, the formal and effective notice of a claim for child support? Should a retroactive child support order be made?
3. Are the section 7 extraordinary extracurricular expenses reasonable and necessary? If not, what amount should the father pay?
4. Should financial disclosure be ordered?

Jurisdiction of Ontario Courts

[2] The Application was started by the father as an Application under the Hague Convention on International Child Abduction. The Applicant was represented by counsel in the Hague Application. The mother served an Answer seeking child support and parenting orders in response to the father’s Hague Application.

[3] The parties settled the Hague Application. The parties and their counsel all signed a Consent on June 15, 2023, agreeing to an order dismissing the Hague Application. The Consent provides that:

The issues of parenting time, decision-making responsibility and child support shall be adjudicated in Ontario. To be clear, a court finding shall issue on consent that the Province of Ontario has jurisdiction to adjudicate and determine the issues of parenting time, decision-making responsibility and support with respect to the Child….

[4] On June 19, 2023, Justice Black, who was to hear the Hague Application, released an endorsement finding that the parties settled the Hague Application by the signed Consent of June 15, 2023. Justice Black directed Applicant’s counsel to circulate a proposed form of order to reflect the Consent, and to send the consent order to Justice Black to be issued.

[5] The issued and entered Consent Order is consistent with the Consent signed by the Applicant and his lawyer. It provides that the Hague Application is dismissed. Paragraphs 3 and 4 deal with jurisdiction:

3. The issues of parenting time, decision-making responsibility and child support shall be adjudicated in Ontario.

4. The Province of Ontario has jurisdiction to adjudicate and determine the issues of parenting time, decision-making responsibility and support with respect to the child…

[6] The parents were divorced in Uzbekistan in 2018. The mother seeks corollary relief – child support and parenting orders - under the Family Law Act, R.S.O. 1990, c.F.3, and the Children’s Law Reform Act, R.S.O. 1990, c. C.12. An Ontario court lacks jurisdiction to hear and determine a corollary relief proceeding under the Divorce Act, R.S.C. 1985, c.3 (2d Supp.), if a valid divorce has already been granted in a foreign jurisdiction: Okmyansky v. Okmyansky, 2007 ONCA 427. But an Ontario court has jurisdiction under the Family Law Act to award child support a where a foreign court has issued a valid divorce but did not deal with child support: Cheng v. Liu, 2017 ONCA 104. The Uzbeki Court issued a divorce, but did not deal with child support.

[7] Child support is claimed under the Family Law Act. There are three ways that an Ontario court may gain jurisdiction over child support orders against a non-resident parent. In Jasen v. Karassik, 2009 ONCA 245, the Court of Appeal held at para. 16: that:

Jurisdiction may be asserted against an out-of-province father in three circumstances: the father is physically present in Ontario; the father consents, agrees or attorns to the jurisdiction; or Ontario has a real and substantial connection to the matter being litigated and service ex juris has been properly effected: Muscutt v. Courcelles (2002), 2002 CanLII 44957 (ON CA), 60 O.R. (3d) 20, [2002] O.J. No. 2128 (C.A.), at paras. 19-20.

[8] The Ontario courts have jurisdiction by consent. The father signed a consent to adjudicate issues of parenting time, decision-making responsibility, and child support in Ontario, and so accepted the jurisdiction of the Ontario courts. A consent order issued directing that child support and parenting issues be adjudicated in the Ontario courts.

[9] The father has also attorned to the jurisdiction of the Ontario court on child support and parenting issues. After the Consent Order, he filed a Reply seeking parenting time, decision-making responsibility, and dealing with child support. He appeared at a Case Conference and filed a Case Conference brief and Form 13 Financial Statement. He sought and received an order that the mother make financial disclosure. He appeared on this child support motion to substantively defend issues on the merits. He has attorned to the jurisdiction: C.C. v. J.B., 2021 ONCA 363.

[10] Considering this, I do not accept the father’s arguments that Ontario lacks jurisdiction, or that child support should be decided in the State of Georgia (where he lives), or in Uzbekistan (where the parties divorced). While the father claims he did not understand what he was signing, the father signed the Consent when he was represented by counsel and agreed to an Order. The father has accepted the jurisdiction of Ontario for determination of child support and parenting issues and is bound by the Order.

Child Support From Date of Formal Notice

[11] The mother served the father with the Answer on June 21, 2023. The mother concedes that this is the first time she requested that the father pay child support. This is the date of both formal and effective notice of a claim for child support. I turn first to child support from the date of notice, then address retroactive child support below.

[12] The mother seeks child support based on imputed income to the father of $100,000. The father’s U.S. tax return shows 2022 self-employment income of CAD$50,291 on gross revenue of about $127,000, with deductions of CAD$17,482. The father’s 2023 employment income is CAD$83,717.71.

[13] This was brought as a one-hour motion on the regular list. As Kraft J. states in Moore v. Lemmon, 2023 ONSC 6735 at para. 30:

At the end of the day, interim support motions are meant to be summary in nature; the court is not required to conduct a "detailed inquiry into all aspects and details of the case". As Justice Chappel explained in Damaschin-Zamfirescu v Damaschin-Zamfirescum, 2012 ONSC 6689, 2012 CarswellOnt 14841 (S.C.J.), at para. 24, interim support orders are meant to be "holding orders.": Jarzebinski v. Jarzebinski, 2004 Carswell ON 4600 (ONSC, at para. 36; and Spence v. Sly, 2010 CarswellOnt 8359 (S.C.J.), at para. 11.

[14] The mother sought to impute the father’s income at $100,000, based on grossing up self-employment income from 2022, unspecified and unsupported tax differences between the U.S./Georgia and Canada/Ontario, and a failure of the father to prove deductions. I decline to do so at this stage, given the weak evidentiary basis, and conflicting evidence I cannot resolve on this short motion.

[15] The Child Support Guidelines, O.Reg. 391/97, provide that support is to be paid on the income of the payor as determined under the Guidelines.

[16] In 2023, the father was employed by a U.S. company as a staff accountant. The father filed a Form 13 Financial Statement dated July 5, 2023, estimating that his 2023 income based on monthly income will be USD $62,013.12. This is consistent with his 2022 offer of employment letter. Using the average high/low of Bank of Canada conversion rates as submitted by the Respondent, the equivalent Canadian income is $83,717.71.

[17] Section 16 of the Child Support Guidelines provides that subject to sections 17 to 20, a parent’s or spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III. That is essentially a presumption that the income tax return for the prior year is used as the basis to set child support for the current year. But s. 2(3) provides: “Where, for the purposes of the child support guidelines, any amount is determined on the basis of specified information, the most current information must be used.”

[18] The father earned self-employment income through his corporation in 2021-2022, and perhaps part of 2023. Sections 17-20 of the Guidelines may be relevant to adjust the self-employment income stated on his tax returns:

• s. 17 - pattern of income if income fluctuates
• s. 18 – pre-tax corporate income may be attributed to payor, or services provided by payor, and non-arm’s length payments added back to income
• s. 19 – imputing income for unreasonably deducting expenses, or lower tax regime
• s. 20 – non-resident payor

[19] By contrast, the father’s financial statement, and letter of employment confirm his current income, which I use for child support purposes commencing July 1, 2023. It is the most reliable evidence on this interim motion.

[20] Since the father is self-represented, I advise him that a self-employed person has the onus of clearly demonstrating the basis of his or her net income, including demonstrating that the deductions from gross income should be taken into account in the calculation of income for support purposes. While statutory deductions without support may be acceptable to the IRS as claimed by the father, income must be determined as if the parent were resident in Canada. This requires proof of deductions claimed. Deductions which may be accepted for tax purposes but have a personal component (such as cellphones and cars) are often added back into income for child support purposes. As Chappel, J. explains in Templeton v Nuttall, 2018 ONSC 815 at para. 63:

…In order to impute expenses that have been deducted against income for tax purposes back into a parent’s income pursuant to section 19(1)(g) of the Guidelines, it is not necessary to establish that the party who claimed the deductions acted improperly or outside the norm for claiming expenses in the income tax context. Section 19(2) specifically provides that the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act (Canada). Rather, the issue is whether the full deduction of the expense results in a fair representation of the actual disposable income that should be available to the party for personal expenses and child support (Halliwell v. Halliwell, 2017 ONCA 349 (C.A.)). In determining whether expenses claimed by a party as against income are unreasonable, the court must balance the business necessity of the expense against the alternative of using those monies for the purposes of child support (Osmar v. Osmar, 2000 CanLII 22530 (ON SC), 2000 CarswellOnt 1928 (S.C.J.); Izyuk v. Langley, 2015 ONSC 2409 (S.C.J.)). In carrying out this analysis, the court must keep in mind the principle which the Supreme Court of Canada established in D.B.S. that payor parents should not be permitted to manipulate their financial affairs so as to prefer their own interests over those of their children.

[21] Order to go for monthly child support, commencing July 1, 2023, in the amount of $780.75 based on income of $83,717.71. A support deduction order will issue.

Retroactive Child Support

[22] The mother seeks child support retroactive to November 2021. The mother concedes that the first demand for child support was made in the Answer served in June 2023. Neither the father nor the mother addressed legal or factual issues relevant to retroactive support in their factums or oral argument. The interim claims for retroactive table child support and section 7 expenses are dismissed. Whether the mother may bring another interim motion will have to be case conferenced.

Factors Relevant to Retroactive Child Support and Section 7 Expenses

[23] The factors relevant to retroactive claims for child support and section 7 expenses are generally decided based on factors set out by the Supreme Court of Canada in D.B.S. v. S.R.G., 2006 SCC 37, commonly referred to as the “D.B.S. factors”. The D.B.S. factors are summarized by S.B. Sherr, J. in Ezeibe v. Igbonekwu, 2015 ONCJ 614 at para. 54:

1. Reasonable excuse for why support was not considered earlier.
2. Conduct of the payor parent.
3. Circumstances of the child.
4. Hardship occasioned by the retroactive order.

[24] S.B. Sherr, J. explains at paras. 55-56:

55 None of the above factors are decisive or take priority and all should be considered in a global analysis. In determining whether to make a retroactive award, a court will need to look at all of the relevant circumstances in front of it. The payor's interest in certainty must be balanced with the need for fairness and flexibility.

56 Where ordered, an award should generally be retroactive to the date when the recipient gave the payor effective notice of his or her intention to seek support payments; this date represents a fair balance between certainty and flexibility…

[25] Neither parent addressed the D.B.S. factors, or called relevant evidence, although the father made submissions about his obligations to his second family, without an evidentiary foundation.

[26] There are two aspects to hardship. The father could call evidence and make submissions about “undue hardship” under section 10 of the Child Support Guidelines. Hardship may also be relied on as an element of the D.B.S. factors analysis, which encompasses a broader examination of hardship than the Child Support Guidelines in determining whether a retroactive award is justified: D.B.S. v. S.R.G., 2006 SCC 37, at para. 114.

[27] The reasons why retroactive awards could lead to hardship in circumstances where a prospective award does not are set out in D.B.S. v. S.R.G., 2006 SCC 37, at para. 115, and include:

• Retroactive awards are usually based on past income rather than present income. Unlike prospective awards, the calculation of retroactive awards is not intrinsically linked to what the payor parent can currently afford.
• Payor parents may have new families, along with new family obligations to meet. Hardship considerations in this context are not limited to the payor parent: it is difficult to justify a retroactive award on the basis of a "children first" policy where it would cause hardship for the payor parent's other children.
• Retroactive awards disrupt payor parents' management of their financial affairs in ways that prospective awards do not. Courts should be attentive to this fact.

[28] Neither party addressed the D.B.S. factors in their written or oral arguments. For that reason, I dismiss the interim claim for retroactive child support and section 7 expenses before the effective notice date of June 21, 2023. Whether another interim motion on retroactive child support and section 7 expenses may be brought prior to trial will have to be case conferenced.

[29] I caution the Applicant that full and fair disclosure of his income in the relevant period is essential to any argument about retroactive child support. If he does not make full disclosure, the court may well impute income to him at a level higher than he would like.

Section 7 Expenses

[30] The mother makes a claim for extraordinary section 7 extracurricular expenses in the annual amount of $10,200. Section 7 of the Child Support Guidelines provides that a court is to consider such expenses, in an amount which may be estimated, “taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the parents or spouses and those of the child and to the spending pattern of the parents or spouses in respect of the child during cohabitation.”

[31] Extracurricular expenses may qualify as extraordinary expenses. There is already an allowance for “ordinary” extracurricular activities in the table child support amount: Park v. Thompson (2005), 2005 CanLII 14132 (ON CA), 77 O.R. (3d) 601 (C.A.) at para. 24.

[32] Extraordinary expenses are defined in the Child Support Guidelines to mean:

(a) expenses that exceed those that the parent or spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that parent’s or spouse’s income and the amount that the parent or spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate, or

(b) where clause (a) is not applicable, expenses that the court considers are extraordinary taking into account,

(i) the amount of the expense in relation to the income of the parent or spouse requesting the amount, including the amount that the parent or spouse would receive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate,

(ii) the nature and number of the educational programs and extracurricular activities,

(iii) any special needs and talents of the child,

(iv) the overall cost of the programs and activities, and

(v) any other similar factors that the court considers relevant.

[33] The child is 9 years old. The mother claims annual section 7 extraordinary expenses for extracurricular activities in the amount of $10,320.00 as follows:

(a) Karate: $160.00/month x 12 = $1,920.00/year; (b) Robotics: $400.00/session x 6 = $2,400.00/year; (c) After-school program: $450.00/month x 12 = $5,400.00/year (d) Arabic classes: $50.00/month x 12 = $600.00 Total (approximate): $10,320.00 / year.

[34] There was no evidence filed as to the necessity of any of the programs, the nature of the extracurricular activities, or why they were related to the special needs and talents of the child. In considering reasonableness in the context of the means of the family, the mother’s annual income for support purposes is $29,120. Special expenses would be allocated 74% to the father, and 26% to the mother. The special expenses claimed would be an additional annual cost of $7,636.80 ($636.40 per month) payable by the father, when annual table child support is $9,369 ($780.75 per month).

[35] In determining reasonableness, the court may take into consideration whether the party who incurred the expense consulted the other party prior to doing so: Luftspring v. Luftspring, 2004 CanLII 16869 (Ont. C.A.), at para. 2. While failure to consult does not automatically preclude apportionment of the expense between the parties, it may be given significant weight in the exercise of the court’s discretion, depending on the circumstances: Bandyopadhyay v. Chakraborty, 2021 ONSC 5943 at para. 297.

[36] Here, the mother did not seek consent for the s.7 expenses. The father does not agree that any section 7 extracurricular expenses are necessary or reasonable. He states his children in the U.S. do not take any extracurricular activities, because of tight family finances.

[37] I find that the section 7 expenses claimed are neither necessary in relation to the child’s best interests, nor reasonable in relation to the means of the parents. The overall cost of s. 7 extracurricular expenses is 81.5% of total table support.

[38] Given the collective means of the parents, and the number and cost of the programs, I decline to order a contribution to these extraordinary expenses. I accept that the mother has made good choices in terms of the type of programs. In oral argument, counsel submitted that given the child’s very recent immigration from Uzbekistan, English as a Second Language and math tutoring, both part of the after-school program, are appropriate. Arabic language classes are appropriate because of the child’s religious identity. These are appropriate section 7 expenses given the child’s circumstances, but the mother will have to locate lower-cost providers and reduce the number of extracurriculars considering the means of the parents. For these reasons, I order the father to pay the mother $35 per month for estimated extraordinary extracurricular expenses. A support deduction order will issue.

Disclosure

[39] Timely, accurate, and complete financial disclosure is the bedrock of the Ontario family justice system. Financial disclosure requirements are contained in the Family Law Rules, the Child Support Guidelines, and Form 8.01 Automatic Disclosure Orders.

[40] The Supreme Court of Canada in Colucci v. Colucci, 2021 SCC 24 at para. 48 emphasizes that “disclosure is the linchpin on which fair child support depends”, explaining at paras. 49-50:

• Since support is tied to payor income, it is the payor who knows and controls the information needed to calculate the appropriate amount of support. The recipient does not have access to this information, unless the payor chooses or is made to share it (para. 49)
• A payor’s failure to make timely, proactive and full disclosure undermines the policies underlying the family law regime. Without proper disclosure, the system simply cannot function. Disclosure is required to meet the objective of establishing a fair standard of support for children based on children benefitting from the means of both parents (para. 50)

[41] If a party flouts a court order for financial disclosure, the consequences may be serious. Under Family Law Rule 1(8), the court may make an order striking out any application, answer, notice of motion, financial statement, affidavit, or any other document filed by a party. The court may order costs, rule that a party is entitled to no further court orders, or make a finding of contempt. The court may allow the other party to proceed to an uncontested trial at which the non-disclosing party has no participation rights, and income may be imputed to the non-disclosing parent. Section 24 of the Child Support Guidelines contains similar remedies. The Child Support Guidelines, s. 19(1)(f), allow imputation of income where “the spouse has failed to provide income information when under a legal obligation to do so.” The father should be aware of these severe consequences of failing to make complete financial disclosure.

[42] The mother claims the father has not complied with the July 2023 disclosure Order of Justice Vella. I find that the father has provided substantial and responsive disclosure to the first 13 items, except that the disclosure is improperly redacted. But he has not complied with the 14th item. That disclosure order is set out below.

Order

[43] I make the following Temporary Order, without including the name and date of birth of the child, which shall be contained in the issued and entered Order:

5. The Applicant Azamat Makhmadaliev shall pay to the Respondent Guzal Marasulova monthly table child support commencing July 1, 2023 for the Child (dob), in the amount of $780.75 based on income of $83,717.71.
6. The Applicant Azamat Makhmadaliev shall pay to the Respondent Guzal Marasulova extraordinary extracurricular expenses for the Child (dob), in the monthly amount of $35.
7. For as long as child support is to be paid, the Applicant and the Respondent must provide updated income disclosure to the other party each year, within 30 days of the anniversary of this order, in accordance with section 24.1 of the Child Support Guidelines.
8. Unless the support order is withdrawn from the Family Responsibility Office, it shall be enforced by the Director and amounts owing under the order shall be paid to the Director who shall pay them to the person to whom they are owed.
9. This order bears interest at the rate of seven percent per year on any payment or payments in respect of which there is a default from the date of default.
10. The claims for interim retroactive table child support and section 7 expenses are dismissed.
11. Within 60 days, the Applicant is to provide the Respondent the following unredacted disclosure: (a) The financial statements of UzbServices LLC (UzbServices) for 2020 through 2022, and 2023 when available. (b) A statement showing the breakdown of all salaries, wages, management fees, or other payments or benefits paid to, or on behalf of, persons or corporations with whom the Applicant did not deal at arm’s length, for the tax years 2020, 2021, 2022, and 2023 when available. (c) Tax filings for UzbServices, the tax years 2020, 2021, 2022, and 2023 when available. (d) Bank statements for UzbServices January 2023 to December 2023. (e) Credit card statements for UzbServices January 2023 to December 2023. (f) General ledger of UzbServices with all adjustment entries for tax years 2020-2023. (g) Corporate and business registration documents of UzbServices. (h) Corporate discontinuance or other documents relating to the “closing” of UzbServices in 2023. (i) Unredacted financial disclosure of all redacted financial disclosure previously made.
12. The approval of the Applicant to the form and content of the order is dispensed with.

Costs

[44] The Respondent has been largely successful, and is presumptively entitled to costs under Family Law Rule 24(1). The Respondent is to provide costs submission limited to 8 pages plus Costs Outline plus Offers to Settle, if any, by December 22. The submission must clearly identify a reduction for the retroactive support claims, which were dismissed. If the Respondent seeks enforcement through the Family Responsibility Office of that portion of costs attributable to child support, the amount must be identified. The Applicant is to provide costs submission limited to 8 pages plus Costs Outline plus Offers to Settle, if any, by January 12, with brief reply if necessary, 3 pages, by January 19. Costs submissions are to be sent through the Family Portal, to my attention.

“Justice Kristjanson”

Released: December 11, 2023