COURT FILE NO.: FS-17-00040411-0001
DATE: 2024-11-25
SUPERIOR COURT OF JUSTICE – ONTARIO
491 Steeles Avenue East, Milton ON L9T 1Y6
RE:
Samantha Anne Dowdall, Applicant
AND:
Paul David Dowdall, Respondent
BEFORE:
Justice C. Yamashita
COUNSEL:
Kaitlyn Armstrong and S. Kabbar, Articling Student, for the Applicant
Gabrielle Pop-Lazic, for the Respondent
Clare Shrybman, counsel for Family Responsibility Office
HEARD:
November 19, 2024
ENDORSEMENT
[1] This motion is brought by the respondent father for an order staying the enforcement of his support obligations of any arrears or ongoing payments of child support and/or spousal support pursuant to the Final Order, dated September 27, 2022 (the “2022 Order”), as well as an order varying the Final Order to reduce his child support and spousal support pending a final determination of his Motion to Change.
[2] Pursuant to the 2022 Order, the respondent is required to pay child support in the amount of $3,277 monthly based on an income of $250,000. Pursuant to paragraph 15, the respondent is required to pay spousal support in the amount of $4,023 per month based on an income of $250,000.
[3] The respondent commenced a Motion to Change on November 29, 2023 on the basis that there has been a material change to his income since the 2022 Order. On or about July 17, 2023, the respondent was terminated from his position as Chief Financial Officer of the company XTM Inc. and was given statutory entitled pay of three weeks’ severance. In February 2024, the respondent commenced his new position at VoPay International Inc. (“VoPay”) with an annual gross salary of $160,000.
[4] At the beginning of the hearing, counsel for the Family Responsibility Office (“FRO”) provided the court with an updated statement setting out the arrears owing by the respondent on account of the 2022 Order. As of November 12, 2024, the total amount of periodic payments in arrears is $74,207.10.
Background Facts
[5] The parties have two children, S.D., and A.D., (the “children”).
[6] The parties resolved their issues by way of Minutes of Settlement, which were then incorporated into the 2022 Order.
[7] With respect to the calculation of child support, paragraph 9 of the 2022 Order provides as follows:
- The parties shall adjust the Table amount of child support paid each calendar year based on the parties’ actual incomes for that calendar year. By no later than June 1st of each year, commencing on June 1, 2023, the Respondent, Paul David Dowdall and the Applicant, Samantha Anne Dowdall, shall exchange copies of his and her income tax returns as filed for the prior calendar year (the “applicable calendar year”). The parties shall then determine the appropriate Table amount of the Respondent, Paul David Dowdall’s child support obligation for the applicable calendar year, in accordance with the Child Support Guidelines.
[8] Paragraph 18 of the 2022 Order provides that “[a] change in either party’s income shall only be considered a material change for purposes of variation of support if the change is equal to or greater than a 30% increase or decrease from the incomes used for the purposes of the Order.”
[9] The parties agree that, as the respondent’s income in the Final Order is based on an income of $250,000, the respondent’s annual income must be reduced to at least $175,000 or less, to qualify as a material change for the purposes of triggering a review of the quantum of spousal support.
[10] The respondent is a Chartered Professional Accountant. His line 15000 income for the last nine years (except for 2019) was as follows:
2014 $ 355,651.00
2015 $ 204,119.00
2016 $ 219,729.00
2017 $ 257,738.00
2018 $ 203,410.00
2019 Unknown
2020 $ 266,757.00
2021 $ 308,572.00
2022 $ 251,592.00
[11] In 2023, the respondent’s income significantly dropped to $126,422 as a result of his termination from XTM Inc.
[12] The applicant is employed as a full-time educational assistant with Halton Catholic District School Board and earns a salary of $40,893 and EI benefits in the summer months of $7,453. The applicant’s income in 2023 was $50,256.
[13] The respondent contacted the applicant in late June 2023 to advise that he anticipated being terminated from his employment with XTM Inc. because he had uncovered discrepancies in his employer's financial statements in his capacity as CFO and feared he would be scapegoated. The respondent asked the applicant to consider a reduction and/or a temporary stop to his support payments so he could resign, but the applicant refused.
[14] On July 17, 2023, the respondent was terminated and received three weeks’ severance pay.
[15] On August 9, 2023, the respondent emailed the applicant to advise her that there would be a break in support and suggested that they withdraw enforcement of the 2022 Order by FRO. The applicant did not agree.
[16] The respondent paid some child support through FRO at the beginning of September 2023, but ceased payments thereafter until he found a new job in February 2024.
[17] The respondent served his Motion to Change in January 2024.
[18] The respondent found a new position commencing with VoPay on or about February 1, 2024, earning $160,000 per annum as a base salary. His current employment contract provides for a discretionary bonus of up to 20% of his base salary, based on company and individual achievements.
[19] On March 5, 2024, the respondent began making child and spousal support payments through FRO based on his revised income and pursuant to his own calculations under the Guidelines. The respondent did not confer with the applicant or seek the applicant’s consent or input regarding his calculation of the support he commenced paying.
[20] The respondent has not filed his 2023 income taxes due to the FRO enforcement proceedings which are garnishing 100% of any government payments the respondent receives. He anticipates receiving a large refund for 2023.
[21] In respect of the respondent’s Motion to Change, the parties attended at DRO in February and believed that a settlement conference was scheduled for July 2023. The conference ended up not being scheduled and did not proceed. The respondent did not take steps to reschedule the settlement conference.
Position of the parties and FRO
Position of the Applicant:
[22] The applicant submits that when the respondent ceased paying all support payments at the end of September 2023, it caused her significant financial strain that caused her to dip into her savings to pay household expenses and expenses for the children.
[23] The applicant further submits that the respondent has a history of failing to provide material disclosure. In the initial litigation, the respondent attempted to accept an Offer to Settle without providing critical income disclosure related to his new employment. He brought a motion seeking to enforce the settlement and lost. The motions judge, Kurz J., found that there was material and deliberate non-disclosure on the part of the respondent (see 2020 ONSC 4944 at para. 92). The respondent appealed, but the Court of Appeal upheld the decision of Kurz J. (see 2021 ONCA 260).
[24] Here, the applicant highlights that the respondent has failed to provide full financial disclosure with respect to his total income for 2023. He admittedly has not filed his 2023 tax return. The applicant therefore submits that the child support obligations for 2023 ought not to be adjusted due to the non-disclosure of the respondent in respect of his 2023 tax return and notice of assessment.
[25] In terms of spousal support and the respondent’s 2024 income, the applicant contends that, while the respondent’s base salary at VoPay is $160,000, if the respondent earns a bonus of $15,001 or more, his income will exceed $175,000 and will therefore not meet the threshold 30% reduction that may constitute a material change.
[26] The applicant further highlights that the respondent has not provided an updated financial statement since July 22, 2024.
[27] According to his financial statements sworn on November 7, 2023, and July 22, 2024, the respondent’s SDRRSP increased from $579,047 to $631,523 and his RRSP increased from $60,381 to $77,618. In sum, his two RRSP investment accounts increased by $69,713 since October 2023.
[28] Additionally, the applicant submits that the respondent is underemployed and capable of earning at least $250,000 as he has historically earned. She argues that income should be imputed to the respondent. The applicant also points to the respondent’s paystub that shows "reimbursement" payments made to the respondent from his employer in the amount of $21,201.59 for the time period from February 2024 to June 28, 2024. The respondent has not provided any particulars or supporting documentation for the expenses that were reimbursed. To the extent that these expenses may relate to personal expenses, the applicant argues that the corresponding reimbursement should be added to the respondent’s income.
[29] Lastly, the applicant believes the respondent resides with his wife and two children and is refusing to list other income earners in his financial statements and/or has put assets in his wife’s name.
Position of the Respondent:
[30] The respondent submits that he lost his job at XTM through no fault of his own and gave advance notice to the applicant. He attempted to work with the applicant in the hope that he would transition to new employment without impacting his support obligations, but the applicant would not consider any reduction and/or compromise.
[31] The respondent further submits that he diligently searched for a comparable job for seven months, but the market was not conducive to his search and his termination from XTM made it harder to secure employment. He accepted the first job offer he received after making a concerted effort to find employment commensurate with his skills.
[32] According to the respondent, his lack of income determined his inability to pay support, but stresses that he restarted making child and spousal support payments based on his current income in or around March 2024 when he was financially able to do so. He has been paying $2,197 per month in child support, which he states is the amount commensurate with an annual income of $160,000 under the Guidelines and $1,359 per month in spousal support.
[33] The respondent submits that the arrears owing to FRO are based on his 2022 income and that, pursuant to the 2022 Order, his income ought to have been adjusted for 2023. By his calculation, he has in fact over paid child support in 2023 by approximately $8,000.
[34] The respondent argues hardship as the 2022 Order requires him to pay $3,277 per month in child support and $4,023 per month in spousal support for a total of $7,200 per month. If he were required to continue to pay this amount, this would leave him with only $2,448 per month to pay all of his other expenses, which he submits total $6,227.06 on a monthly basis.
[35] Conversely, he argues that reducing support would not present a hardship for the applicant as the requested reduction would leave her over $800 per month for discretionary and unexpected expenses.
[36] In respect of spousal support, the respondent submits that he has met the 30% threshold set out in the 2022 Order regarding a material change in that his current salary of $160,000 is more than 30% less than the $250,000 income set out in the 2022 Order.
[37] In terms of his potential bonus, the respondent submits that his employer Vopay is not currently profitable, having lost $3 million in 2023, and it is expected to continue to lose a greater amount in 2024. He states that the projections show that the company will not become profitable until 2026 at the earliest and has not paid bonuses to its employees since its inception in 2014. He does not anticipate receiving a bonus for this year.
[38] While the respondent admits that his RRSPs have increased since 2023, he advises that the increases are entirely due to changes in the markets.
[39] With respect to business expenses, the respondent states that his role at VoPay require constant travel and the reimbursements to him on account of his travel expenses and therefore do not constitute income.
[40] The respondent further denies that he has remarried or lives with his girlfriend and her children.
[41] In terms of the allegations relating to his previous conduct in the litigation regarding material non-disclosure, the respondent submits that he was following the process as he understood it, that the decision on appeal was unique and that it is irrelevant to this motion.
Position of FRO:
[42] According to FRO, as of November 12, 2024, the total amount of periodic payments in arrears is $74,207.10.
[43] FRO does not take a position on the entitlement of support or prospective enforcement, but does oppose any order that stays its enforcement of the support arrears.
[44] Pursuant to section 20(6) of Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, Chapter 31 (the “FR Act”), the enforcement of a support deduction order is not affected by an order staying the enforcement of the related support order unless the underlying order is stayed.
[45] FRO was originally served with the respondent’s motion in April 2024, but noted that the applicant was not a party to the motion as required given the language set out in section 20(6) of the FR Act. The motion was thereafter adjourned to include the applicant.
[46] FRO submits that the stay of support arrears is an equitable remedy that requires the respondent to come to court with clean hands and to show hardship and urgency and that the respondent has failed to meet the test for the stay of enforcement of his arrears. Specifically, FRO argues that the respondent has not come to court with clean hands given that he has not met his full financial disclosures and has not complied with the 2022 Order by unilaterally ceasing payment of support.
[47] Further, FRO submits that the respondent has brought this refraining motion and the Motion to Change without first making diligent efforts to comply with the 2022 Order. The Statement of Arrears shows that the respondent only made one voluntary payment of $25 from October 2023 to March 2024. An additional payment of $122 was received on December 21, 2023 by way of FRO’s enforcement.
[48] FRO queries as to why the respondent did not direct any of his savings to paying support and argues that the respondent has prioritized his own financial well being over his support obligations.
[49] Lastly, FRO submits that the respondent has delayed proceeding with his Motion to Change and this motion.
Legal Principles
[50] Pursuant to section 17(1) the Divorce Act, R.S.C. 1985 (the “Act”), the court may make an order varying, rescinding or suspending, retroactively or prospectively, a support order or any provision of one on application by either spouse. Section 17(4) of the Act, however, requires that before a court makes a variation order in respect of a support order, the court must be satisfied that a change of circumstances has occurred since the making of the order.
[51] Enforcement by the FRO cannot be stayed unless the underlying support order is stayed or suspended under section 17(1) of the Act, but section 17(4) and section 17(4.1) provide that an order under s. 17(1) can be made only if there is a qualifying change in circumstances (see Alalouf v Sumar, 2023 ONSC 6604 (Ont SCJ) at para. 9).
[52] The parties agree that the test to be met in determining whether an interim variation of a final order and a stay of the previous order should be granted is set out in Berta v Berta, 2019 ONSC 505.
[53] In Berta v Berta, Kurz J. articulates the test at paragraph 40 as follows:
The moving party must establish
a. a strong prima facie case;
b. a clear case of hardship;
c. urgency; and,
d. the moving party has come to court with “clean hands”.
[54] In terms of the test for satisfying the court that a strong prima facie case has been met by the moving party, at paragraph 37 of Berta, Kurz J. cited with approval the test articulated in R. v. Canadian Broadcasting Corporation, 2018 SCC 5 at para. 17 as follows:
This brings me to just what is entailed by showing a "strong prima facie case". Courts have employed various formulations, requiring the applicant to establish a "strong and clear chance of success"; a "strong and clear" or "unusually strong and clear" case; that he or she is "clearly right" or "clearly in the right"; that he or she enjoys a "high probability" or "great likelihood of success"; a "high degree of assurance" of success; a "significant prospect" of success; or "almost certain" success. Common to all these formulations is a burden on the applicant to show a case of such merit that it is very likely to succeed at trial. Meaning, that upon a preliminary review of the case, the application judge must be satisfied that there is a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice.
[55] Further, as set out by the Divisional Court in S.H. v. D.K, 2022 ONSC 1203, the test for granting a temporary variation of a final order is “stringent”, requiring any supporting evidence to be quite “compelling”.
[56] In Yip v. Yip, 1998 Carswell 262 (Ont. H.C.), MacFarland J. was not satisfied that the payor had a prima facie case where the payor has not filed a proper financial statement until very shortly prior to the hearing and had not paid support for approximately 6 months, and refused to grant the payor’s application to restrain enforcement of support.
Discussion
[57] As set out by Kurz J. in Berta v Berta, to be successful on this motion, the respondent must establish a) a strong prima facie case; b) a clear case of hardship; c) urgency; and d) he must come to court with clean hands.
a) Strong Prima Facie Case
[58] While the respondent has a compelling case for the reduction of child support based on his 2023 income caused by the loss of his job, I am unable to find that the respondent has established the required strong prima facie case. I make this finding primarily on the basis that the respondent has failed to provide sufficient disclosure of his 2023 income by failing to file his income tax return for 2023.
[59] The 2022 Order required the parties to exchange copies of their income tax returns prior to the adjustment of the Table child support. This was not done. While the respondent does not wish to file his 2023 tax return because it will be garnished by FRO, I do not find this to be an acceptable explanation or excuse for not complying with the 2022 Order, particularly when the respondent seeks to recalculate the support in his favour.
[60] Without documentation from the CRA confirming the respondent’s 2023 income, I am unable to find that there is a “strong and clear chance of success” or a strong likelihood on the evidence presented that the respondent will succeed on his motion to readjust child support for 2023.
[61] With respect to the variation of spousal support and the adjustment of the support obligations based on the respondent’s 2024 income and prospective support payments, I likewise do not find that the respondent has established a strong prima facie case.
[62] Firstly, the respondent’s bonus entitlement for 2024 has not yet been determined. The respondent submits that his present employer, Vopay, is not currently profitable, that the company has not paid bonuses since 2014 and that a bonus is not anticipated this year or any time in the future. No supporting documentation was provided by the respondent to support this submission. In my opinion, based on the respondent’s submissions regarding the history of bonuses at his company, the respondent ought to have been able to provide some supporting documentation from his employer to substantiate that he would not be receiving a bonus for 2024. I find that his failure to do so raises questions as to whether in fact he will receive a discretionary bonus or not.
[63] Respondent’s counsel advises that the respondent will not know if he receives a bonus until sometime in February 2025. Given this, I find the calculation of his 2024 income to be premature.
[64] Further, the applicant argues that the respondent’s income should be imputed on the basis that he is underemployed and that reimbursement of certain expenses that may relate to personal expenses may need to be added to his income. The applicant also argues that the respondent may be concealing assets or additional income with his romantic partner. I note that Part 3 of Form 13.1 financial statement requires the respondent to provide information on other income earners in the home because he is attempting to reduce spousal support. I find that these issues are better to be addressed on the Motion to Change with the benefit of a full record, particularly given the respondent’s history of material non-disclosure.
b) A Clear Case of Hardship
[65] Although I have found that the respondent has failed to meet the first criteria of the test for an interim stay and variation of a final order, which is determinative of the motion, I will nevertheless proceed with my analysis of the balance of the test.
[66] In respect of whether the respondent has established a clear case of hardship, I am also not satisfied that the respondent has satisfied his burden. The respondent has failed to file an updated financial statement since July 22, 2024.
[67] Based on the financial statements the respondent has filed, the respondent appears to have significant savings which he may be able to draw upon pending the determination of his Motion to Change. While the savings may be locked into RRSPs, the two RRSPs collectively total approximately $709,000 as at July 19, 2024. There also appears to be equity of approximately $280,000 in the property he owns in Brampton. There has been no explanation or evidence proffered by the respondent to demonstrate why he cannot access these funds to pay his support obligations pending his Motion to Change or what prejudice, if any, he might suffer should he be forced to access those funds to pay his support obligations.
[68] Further, the fact that he has opted not to file his 2023 income tax return in full knowledge that he will be receiving a large refund pending this motion (which has been delayed), weighs in favour of a finding that this is not a clear case of hardship.
[69] Overall, I find that the respondent has also failed to establish that this is a clear case of hardship.
c) Urgency
[70] The respondent was terminated from his job in July 2023, yet he did not commence his Motion to Change until January 2024. Since the commencement of his Motion to Change, the respondent has not diligently prosecuted his claim. In fact, the respondent failed to schedule a settlement conference in spite of the parties’ belief that one had been scheduled in July of 2024.
[71] Consequently, I find that the respondent’s motion was not brought or pursued on a timely basis, and find that the respondent has not satisfied the criteria of urgency.
d) Clean Hands
[72] Lastly, I find that the respondent has not come to court with clean hands. I make this finding for the following reasons:
a. the respondent unilaterally ceased paying support in October 2023;
b. in spite of the significant amount of arrears, from October 2023 to March 2024, the respondent only made one voluntary payment of $25;
c. in March of 2024, the respondent unilaterally commenced paying support in accordance with his own calculations regarding his income and the quantum of support;
d. he has failed to file 2023 income tax return because he does not wish FRO to garnish his anticipated large return; and,
e. he has failed to provide an updated Financial Statement in advance of this motion.
[73] Given the above, I find that this is a clear case where the respondent ought to be deprived of the equitable relief being sought due to his failure to come to court with clean hands. I find that the respondent has been prioritizing his own personal needs over his support obligations to his family.
[74] Overall, I find that the respondent has failed to meet each prong of the requisite test to temporarily vary his support obligations and to stay the arrears.
Order
[75] For the reasons set out above, the respondent’s motion is dismissed.
[76] I encourage the parties to settle costs. Should the parties be unable to resolve costs of the motion, the applicant may deliver written costs submissions of up to 2 pages (excluding his costs outline and any offer(s) to settle) within 15 days, and the respondent may deliver his written costs submissions on the same terms within a further 15 days. Reply submissions on costs may not be delivered without leave.
[77] A settlement conference is scheduled for December 9, 2024 at 10:00 a.m. If either party needs to attend the settlement conference virtually, they will need to request the accommodation in advance.
Yamashita J.
Released: November 25, 2024