Court File and Parties

Court File No.: FS-24-0069-00 Date: 2024-09-06 Ontario Superior Court of Justice

Between: Cale Swearengen Applicant – and – Chelsea DeGagne Respondent

Counsel: Not appearing Christopher Arnone, for the Respondent

Heard: August 1, 2024, Thunder Bay, Ontario

The Honourable Mr. Justice S. J. Wojciechowski

Reasons on Motion

Introduction

[1] The respondent, Chelsea DeGagne (“Chelsea”), has brought this Motion to Change seeking to change the final order of Justice K.E. Cullin dated August 17, 2020 (“the Final Order”).

[2] The Final Order provides a framework for the payment of child support by the applicant, Cale Swearengen (“Cale”), for the child, Jack Lyle Swearengen, who was born on December 2, 2018 (“the Child Jack”) and resides in the primary care of Chelsea.

[3] Based upon a material change in circumstances, Chelsea is seeking to adjust the amount of child support payable by Cale, retroactive to January 1, 2021. In the process of bringing this Motion to Change all materials were properly served upon Cale, however he did not file any responding materials, nor did he appear at the Motion to Change hearing.

[4] Chelsea also seeks an order requiring Cale to provide her with his annual income tax returns, along with verification that a life insurance policy was established and continues to be maintained, as required by the Final Order.

[5] Finally, Chelsea seeks her costs of bringing this Motion to Change.

Background

[6] Chelsea and Cale were married on July 6, 2013. They separated in February 2020, and eventually divorced.

[7] The Final Order was made on the consent of the parties and provides for child support payable in the amount of $500 monthly, commencing September 1, 2020. The Final Order also provides that the amount of child support payable by Cale to Chelsea will not change unless there is a “significant material change in circumstances”.

[8] A “significant material change in circumstances” is defined in the Final Order as a 20% change in Cale’s income earned in 2018, which was $68,335.

[9] In order to assess Cale’s income since the Final Order was made, Chelsea has requested copies of Cale’s income tax returns. Cale has not responded to these requests, except to produce his 2019 Notice of Assessment to Chelsea in 2021.

[10] Without having received any information from Cale with respect to his annual income since the Final Order, Chelsea is asking this court to impute income to Cale based upon the evidence contained in her affidavit, sworn July 23, 2024.

Affidavit Evidence of Chelsea

[11] The evidence filed in support of the Motion to Change includes the following:

1. Cale has two main sources of income, firstly as an Aircraft Maintenance Engineer for MAG Aerospace Canada, and secondly through a company called “Cale’s Contracting and Repairs” which offers general contracting, lawn maintenance, snow removal, small engine repair and construction work in Chapleau, Ontario.
2. Cale has obtained government contracts through Cale’s Contracting and Repairs to provide snow removal and lawn maintenance services.
3. The threshold for a variation of the child support payable by Cale to Chelsea in the Final Order requires an increase of Cale’s 2018 income by 20% or more, which based upon Cale’s income in 2018 means a variation can be sought if Cale’s income totals $83,303 or more.
4. The Notice of Assessment for Cale’s 2019 tax year shows an income of $106,116. This includes T4 income from MAG Aerospace in the amount of $58,529.46, and a net income of $46,015.93 from Cale’s Contracting and Repairs.
5. Cale’s Contracting and Repairs has expanded since February 2020 by purchasing more heavy equipment including three trucks with plows, a dump truck, two Kubota tractors with snow removal implements, street sweepers, and a grader. Cale’s Contracting and Repairs now also has multiple employees in addition to Cale.
6. Cale told Chelsea that he “won” a three year contract to haul upwards of fifty loads per year of gravel on a highway culvert replacement program in the Chapleau area.
7. Chelsea, in her previous capacity as a bookkeeper for Cale’s Contracting and Repairs, was aware of cash transactions for jobs that were not reported as income in amounts just under $13,000 in 2018 and 2019.
8. Chelsea estimates that Cale would receive a 2% increase in his income from MAG Aerospace Canada on an annual basis. This would mean estimates of incomes in the following amounts for the following years: a. 2020: $59,599.58; b. 2021: $60,893.57; c. 2022: $62,111.44; and d. 2023: $63,535.67.
9. The income from Cale’s Contracting and Repairs in 2020 is calculated by Chelsea to be $74,422 in 2020.
10. Based upon Chelsea’s evidence that in 2018 Cale’s net business income from Cale’s Contracting and Repairs increased by 60%, and in 2019 it increased again from the previous year in an amount of roughly 35%, a 40% growth in Cale’s net income from Cale’s Contracting and Repairs is projected, resulting in the following calculations: a. 2020: $64,422.40; b. 2021: $90,191.36; c. 2022: $126,267.90; and d. 2023: $176,775.07.
11. Based upon the combined income from MAG Aerospace Canada and Cale’s Contracting and Repairs, the total income which Chelsea calculates Cale earned over the following years totals the following amounts: a. 2020: $134,121.98; b. 2021: $161,084.93; c. 2022: $198,379.35; and d. 2023: $250,128.74.

Decision

[12] Based upon the affidavit evidence filed by Chelsea, it is evident that there has been a “significant material change in circumstances” as defined by the Final Order.

[13] Accordingly, the relief of an increase in child support payable by Cale to Chelsea, which is sought in this Motion to Change, shall be granted.

[14] The question, of course, is the amount of the increase and whether it is retroactive.

[15] Section 19 of the Federal Child Support Guidelines, SOR/97-175, as amended (“the Guidelines”) allows the court to impute such amount of income to a spouse as is appropriate in the circumstances. Subsection 19(f) of the Guidelines applies to the situation in this matter, where Cale has been properly served with the Motion to Change materials but has failed to respond within 30 days of receiving the materials.

[16] In this case, a hard copy of the Motion to Change was served upon Cale on April 21, 2024. No responding materials were filed by Cale, as is required by subrule 15(10), and as such, by virtue of subrule 15(14), Cale was not entitled to any further notice of the steps in this case. Furthermore, the court can deal with the issues raised by Chelsea in Cale’s absence.

[17] Imputing income must be tied rationally to the evidence, and this court cannot arbitrarily select an amount to impute as Cale’s income. A reasonable approach would lie in considering the previous earning history and imputing an appropriate percentage thereof, in order to assess what child support payments would be appropriate: see Drygala v. Pauli, 61 O.R. (3d) 711, at paras. 44 and 46.

[18] In terms of the income this court may impute to Cale, while a 40% increase for the past several years may appear excessive, the evidence that Chelsea was a bookkeeper for Cale’s Contracting and Repairs provided some insight into the operation of Cale’s business. This insight provided support for a 60% increase in income one year and a 35% increase in another year.

[19] Without Cale’s participation in this matter, the court must give serious consideration to the evidence provided by Chelsea. Cale cannot benefit from his refusal to respond to the Motion to Change with meaningful information and evidence supporting his current income levels. Cale’s failure to provide evidence in this matter leaves the court with no choice but to examine the position put forth by Chelsea and determine whether it is reasonable.

[20] While it is possible that the limited amount of information available may not accurately describe Cale’s current economic circumstances, I do not find that imputing an annual increase of 40% to his income, over the years 2021, 2022, and 2023, is unreasonable or without any support.

[21] Accordingly, I accept the evidence of Chelsea in this regard, and impute income to Cale in the amounts calculated, noting that these may be on the lower side since the exact level of cash transactions – representing unreported income – is unknown.

[22] Chelsea’s evidence also supports her efforts in attempting to obtain Cale’s full financial disclosure over the years, including written requests in October 2021, early 2022, and again in 2024. There is no obvious reason before me why this disclosure would not have been provided, other than to prevent an accurate assessment of Cale’s support obligations for the Child Jack. Child support based upon Chelsea’s calculations shall be applied retroactively to Cale’s support obligations.

[23] I also agree that, in light of Cale’s lack of response to this legal proceeding, it is reasonable to require him to regularly provide Chelsea with annual income tax returns, along with confirmation that the life insurance policy required by the Final Order is in full force and effect, to secure Cale’s child support obligations.

[24] Finally, the Motion to Change and the legal costs incurred by Chelsea may not have been necessary had Cale simply responded to her requests for financial information. Chelsea will therefore have her legal costs, including fees, disbursements and HST, assessed at $3,500, which are to be payable forthwith by Cale.

[25] Accordingly, based upon these reasons, order to go in accordance with the draft Order filed and uploaded at pages B-1-246 to B-1-247 of Case Center.

[26] This order is without prejudice to the right of the applicant, Cale Swearengen, to commence his own application seeking a change in the child support payable to the respondent, Chelsea Jacqueline DeGagne, for the for the child of the marriage, Jack Lyle Swearengen, born December 2, 2018, without the need to establish a material change in circumstances. This would provide Cale with the opportunity to file evidence accurately reflecting his income since 2018 should he desire to do so. However, such application should not proceed without Cale first satisfying the costs’ order in the amount of $3,500 provided by these reasons.

Released: September 6, 2024 The Hon. Justice S.J. Wojciechowski