SCHERMAN QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2016 SKQB 29 Date: 2016 01 22 Docket: DIV 408 of 2004 Judicial Centre: Regina, Family Law Division BETWEEN: DONETTE DORTHY TESSIER and DARIN TESSIER Counsel: Carmen Khuu for the petitioner Estes Fonkalsrud for the respondent JUDGMENT MEGAW J. JANUARY 22, 2016 INTRODUCTION [1] The respondent applies for an order to discontinue his obligation to pay both child support and spousal support and further for all support arrears to be expunged. He relies upon s. 17 of the Divorce Act, RSC 1985, (2d Supp) and s. 14 of the Federal Child Support Guidelines SOR/97-175 [Guidelines]. [2] The petitioner opposes the application to completely discontinue the child and spousal support obligation and further opposes any adjustment of the arrears of support due. She concedes the spousal support should be discontinued effective January 31, 2016. [3] By order dated January 24, 2005, Mr. Justice McIntyre directed as follows: 5. An income of $150,000 having been imputed to the Respondent, DARIN TESSIER, he shall pay Child Support to the Petitioner, DONNETTE DOROTHY [sic] TESSIER, of $1,711.00 per month commencing December 1, 2004 and on the first day of each month thereafter. The arrears which will exist as of the date of this order are payable at the rate of $500.00 per month; 6. The Respondent, DARIN TESSIER, shall pay interim spousal support to the Petitioner, DONETTE DOROTHY [sic] TESSIER, of $500.00 per month commencing February 1, 2005 and on the first day of each month thereafter; 7. For the purpose of guideline income for sharing of s. expenses, the Respondent has an income of $144,000.00. The Petitioner has an income of $38,170.00. The Respondent’s proportionate share is 79%. The Respondent shall pay to the Petitioner commencing February 1, 2005, 79% of the after tax cost of any childcare expenses incurred by the Petitioner arising out of her employment and the Respondent shall pay his proportionate share to the petitioner within 10 days of production of receipts; [4] The decision of McIntyre J. was an interim order. There was no appeal taken from that order. The matter did not proceed any further. From the time the order was made, the respondent has underpaid on his support obligation and he has always been in arrears of the obligation. Since September, 2005, he has paid only the amount of $350.00 per month. He is presently significantly in arrears of support in an amount exceeding $220,000.00. He has not paid any support since June, 2015 (affidavit of petitioner, para. 47). [5] Over the years, the respondent has been pursued by the Maintenance Enforcement Office [MEO] for collection of the arrears. The first time he was summonsed to court on the issue of arrears, he was directed, again by Mr. Justice McIntyre, to pay $350.00 towards the arrears. He deposes he mistakenly thought he only had to pay this much in total and therefore, somehow, the support was adjusted downwards back in November, 2005. This explanation is provided despite the fact the respondent had the assistance of experienced counsel then and the subsequent pursuit of the respondent by MEO. The direction of McIntyre J. to pay arrears was made November 25, 2005. [6] The respondent has been before the court number of times since 2005. The matter appears to have been continually adjourned to permit the respondent an opportunity to provide further information. It was not until 2015 this variation application was brought on the issue of pursuit of arrears. [7] Over the years, the respondent has been involved in two areas from which it could be thought he would earn an income. The first area, generally, is as truck driver. In this occupation, he deposes he has been sporadically employed from the beginning of 2006 through to the middle of 2013. He indicates he has earned little from this area over the years. [8] In July, 2013, the respondent deposes he began working for Young’s Equipment in Regina. It appears he has been able to earn consistent income there. In 2013, he earned $55,987.06 from Young’s Equipment and Boyd’s Excavating. In 2014, he earned $75,025.70. In 2015, he earned $88,808.88. [9] The second area from which an income could have come is from an invention of the respondent’s to assist in the steering of Dodge trucks. For period of time starting in 2003, the respondent was involved in closely held corporation called Solid Steel Industries Ltd. This was the vehicle through which the steering invention was manufactured and sold. He had business partner. That relationship dissolved in late 2003. His brother then became his business partner. That relationship dissolved in about 2005. Both of the former partners, apparently, continued on with the manufacture and sale of the respondent’s invention. The respondent says he did not continue with any involvement in the invention. [10] It is unclear why the respondent discontinued any interest in this invention. It is unclear why the business relationships dissolved. It is unclear why the respondent, if this is the fact, did not pursue his interest in this invention. It is unclear whether any income could have been earned from this invention. The respondent has not provided any of this information in any sufficient detail. [11] The respondent indicates he suffered from mental health difficulties in the form of depression. He suggests these health problems began in about 2003 and continued perhaps right up to 2013. There is no medical support filed for these health difficulties. There is no indication any medical support was sought. He says the cause of the depression was the breakdown of his family. [12] The respondent deposes the mental health difficulties prevented him from working. He further says he did little other than live at his parents’ home. There is no material filed in support of his statements. [13] The respondent has partner named Vivian Dureault. It appears she has some corporate interest(s). It further appears the respondent did some truck driving work for Ms. Dureault. The petitioner suggests the respondent may have financial interest in the corporate interests of Ms. Dureault. The respondent denies this, but does not provide any material in support of this denial. He provides very little information of the relationship, work or corporate status. It appears the suggestion of potential income has merit. It is not apparent why the respondent has not provided information in this regard. [14] In January, 2006, the respondent made an assignment in bankruptcy. He indicates the bankruptcy was “subsequently stayed” (para. 12, affidavit of the respondent). There is very little information provided on the bankruptcy. There is no information provide on the reason for the stay. [15] The parties have two children. From the time the parties separated, the petitioner has been left essentially to raise and pay for the children by herself. The children have each attended post-secondary education. The respondent has paid none of these costs. The oldest child ceased to be child of the marriage in December, 2015, when she finished her post-secondary education. The youngest child continues to require child support. She is not expected to finish her education until the spring of 2017. [16] Against this factual background, the court has been asked to determine the following issues: 1. Should the support obligation be varied to reflect lower income than that which was imputed to the respondent in the original order of McIntyre J.? 2. Should the arrears of support be expunged as result of the lower income which is said to have been earned by the respondent? 3. What is the respondent’s ongoing obligation to pay child support? 4. What is the respondent’s obligation to pay post-secondary education costs? 5. Should there be an order of costs in this case? [17] By the time this matter arrived in chambers for argument, some items either had been agreed to or were not being contested as between the parties. This agreement significantly changed the landscape as to what actually needed to be decided by the court on the application. [18] Counsel for the respondent, who was not the same counsel that drafted the original variation/expungement materials, indicated the respondent was not relying on the fact of the mental health difficulties as support for the variation/expungement discussion. It was recognized there was complete absence of medical information or other support providing confirmation of the medical condition alleged or its impact on the respondent’s ability to earn income. Accordingly, it was submitted the court should have no regard for the information on the health difficulties. [19] Counsel for the respondent then indicated the court should proceed on the assumption the respondent could have been earning an income over the years equivalent to that which he actually earned at Young’s Equipment without overtime. This amount is $26.50/hour, equating to an annual income of $55,120.00. For 2014, the actual income was to be used to calculate arrears. Then, for 2015, and on go forward basis, the income of the respondent should be set at $88,808.88 and child support should be calculated accordingly. The submission provided arrears of support should then be adjusted in accordance with these income amounts. [20] The submission on suggested imputed income was based on recognition the respondent could have been earning consistent income. While this recognition is of assistance, it is not complete answer to the determination of an appropriate historical income for the respondent. [21] Counsel for the respondent further indicated the respondent was, and is, prepared to pay his proportionate share of post-secondary education costs. The issue will be what income is to be used to calculate the proportionate sharing. [22] Finally, as indicated, counsel for the petitioner conceded spousal support should come to an end effective January 31, 2016. As result of this concession, no argument was advanced on behalf of the respondent to vary the spousal support to an earlier date. [23] Against the backdrop of the facts and these representations, the indicated issues were raised. 1. Should the support obligation be varied to reflect lower income than that which was imputed to the respondent in the original order of McIntyre J.? [24] The respondent seeks to reduce his obligation to pay support, both past and ongoing. He seeks to have his support obligation recast according to what an appropriate, imputed income might be rather than that which was imputed to him in the original interim order. Whether that reduction occurs by way of variation of the order or expungement of arrears does not much matter to the respondent. will deal with the issue of variation first. [25] As indicated, the respondent, by way of submission in chambers, no longer asserts he should be assessed as having no income from 2005 to 2013. Rather, he suggests reasonable income figure over the years would have been $55,120.00. He says that figure accords with what he could have been earning at Young’s Equipment without the overtime being factored in. Again, he completely abandons the original position that his mental health problems prevented him from working. [26] The initial order was an interim order. The matter did not proceed beyond the interim stage. Rather, from April, 2005 through to the present, the respondent has been content to have the existing order in place and did not seek to challenge it by way of trial proceedings to obtain final order different from that pronounced by McIntyre J. [27] In approaching variation, the respondent needs to show material change in circumstances having occurred. The ability to vary an interim order has now been confirmed by the Court of Appeal in Prescesky Prescesky, 2015 SKCA 111 (CanLII) [Prescesky]. The requirement of establishing material change in circumstance is set forth in Willick Willick, 1994 CanLII 28 (SCC), [1994] SCR 670. While recognize am dealing with an interim order, due to the length of time that has elapsed think it appropriate to consider the order in the same context and with the same requirements for material change as is necessary for final order of the court. [28] The recent comments of Jackson J.A. in Prescesky regarding the realty of long-standing interim orders are applicable here. While it would have been preferable to have this matter proceed to final hearing, that is simply not the reality in this, like in many situations. Regardless, the task now is to determine whether the existing order ought to be varied retroactively to impute different, albeit lower, income than was imputed in 2005. [29] The respondent says simply he did not earn the income which was imputed to him by McIntyre J. What he is really saying is the imputed amount was wrong and he should not be saddled with such high income for the calculation of support purposes. While such an argument may have merit when dealing with finding of definitive level of income, which is in error, it does not have merit (necessarily) when dealing with an imputation of income. [30] As observed by Goebel J. in Abdellatif Abdellatif, 2015 SKQB 396 (CanLII): 18 While in many cases this might be sufficient to ground an application to vary (see: s. 14 of the Guidelines), in situation where the order sought to be varied was based upon imputed income, it cannot, in and of itself, be sufficient. Ryan-Froslie J. (as she then was) in Dooley Knight, 2003 SKQB 131 (CanLII), held that simply arguing that the amount imputed was excessive and did not reflect his actual income is not ground for variation. The court must assume that that prior order was correctly made and should not sit in appeal of that order. 19 similar sentiment was expanded upon in the recent decision of the Ontario Superior Court in Trang Trang, 2013 ONSC 1980 (CanLII), 29 RFL (7th) 364 [Trang]. In that case, the court held that an application to vary child support order based upon an imputed income also requires the payor to prove that the circumstances giving rise to the finding of imputed income have changed (see: paras. 51 to 60). The court held: 51 When court imputes income, that's determination of fact. It's not an estimate. It's not guess. It's not provisional order awaiting better disclosure, or further review. It's determination that the court had to calculate number, because it didn't feel it was appropriate to rely on or wait for representations from the payor. 52 party who argues that an imputed income level is no longer appropriate must go beyond establishing their subsequent "declared" income. They must address why income had to be imputed in the first place. They must present evidence of changed circumstances which establish that either: a. It is no longer necessary or appropriate to impute income. The payor's representations as to income should now be accepted, even if they weren't accepted before. b. Even if income should still be imputed, changed circumstances suggest different amount is more appropriate. 53 If "declared income" automatically prevailed on motion to change support, it would defeat the purpose of imputing income in the first place. It might even be disincentive for payors to participate in the initial court process. They could simply ignore support Applications as they often do. They could wait to see if the court imputes income, and how much. If dissatisfied with the amount, the payor could later return to court waving their tax returns, to suggest that the original judge got it wrong. 54 Support claimants should not be forced to go through this two-step process. Our family court system certainly can't afford it. 55 Similarly, the onus should not fall on the support recipient to establish why income should still be imputed on motion to change. That determination has already been made. The onus is on the support payor to establish that there should be change in the way their income is to be calculated. 56 If for example the original support order imputed income because the court concluded an unemployed payor should have been working, it would be illogical to allow the payor to extinguish that determination by returning on motion to change, with proof that he wasn't working. That wouldn't constitute change in circumstances. 57 If trial judge imputed income to self-employed person on the basis that their tax return didn't reflect cash sales and excessive write-offs, there should be presumption that so long as the payor maintains the same business activities and accounting practices, subsequent tax returns will be equally unreliable. 58 Imputed income matters. The reason why income had to be imputed matters. 59 If an aggrieved party feels income was wrongly imputed, they can take timely steps to correct the original determination. They can appeal. They can bring motion to set aside the order based on mistake or misrepresentation. 60 But if payor proceeds by way of motion to change, they must face the presumption that the original order was correct and the original imputation of income was correct. If they want to rely on their declared income, they must establish why this time their representations should be accepted by the court. agree with these comments. [31] When dealing with a request to vary, I must accept the original order was correct at the time it was made. must then determine whether material change has occurred requiring review of the order. Finally, in the event there is material change, what the effect of that change should be. Each step requires decision before moving to the next. [32] In this case, the respondent is able to establish he has been working at full time employment with Young’s Equipment from 2013 to the present. In those years he earned actual income from full-time position as set forth earlier in this decision. [33] accept the reality of the respondent’s present income, and that since 2013, it is as set forth. This actual situation does constitute material change. He is working full-time at this position. There is no suggestion he is under-employed in his new job. The effect of this change is that child support should be calculated from January 1, 2013 ongoing based on the actual incomes. The arrears for that timeframe will be similarly adjusted to reflect the actual income earned. make no adjustment of the spousal support. [34] For the time period 2005 to December 31, 2012, the respondent has not been able to establish why he was unable to work, much less earn the imputed income. The mental health issue is not consideration. But what that left for consideration was an individual who had significant income imputed to him, who apparently had not been reporting an income for several years, and no real explanation as to why he was unable to earn any income much less the income which had been imputed to him. [35] There was evidence presented regarding the business difficulties the respondent endured with respect to his steering invention. There was no evidence, or, perhaps more accurately, no sufficient evidence, to establish why he was unable to continue with the manufacture of the invention. There was no explanation provided as to why he could not have continued to manufacture the invention; whether the invention continued to be relevant; or what became of being “inundated” with calls for production of the invention. [36] Then, even if there was no ability to continue with the manufacture of the invention, why was the respondent not able to find employment in his chosen field, or otherwise to continue to earn an income. It appears he was truck driver and had certain mail routes. It does not appear why he could not continue to drive truck. It is not known what became of the mail routes and whether they continued to be available for him. [37] In short, there is nothing to explain what has changed. The respondent elected not to challenge the imputation of income made 10 years ago. As stated in Trang Trang, 2013 ONSC 1980 (CanLII), 29 RFL (7th) 364, the obligation does not lie on the petitioner to show why the imputed income is still appropriate. The order here under review was made some time ago by McIntyre J. The onus rests squarely on the respondent to justify the need for change. [38] I find the respondent has failed in his onus here for the years 2005 through to, and including, 2012. As result, there will be no variation of the order for that time period. 2. Should the arrears of support be expunged as result of the lower income which is said to have been earned by the respondent? [39] In determining whether arrears of support should be rescinded or reduced, the court is required to determine whether the payor can pay the arrears or whether the payor will be able in the future to pay the arrears. See Ross Vermette, 2007 SKQB 272 (CanLII), 309 Sask 17. [40] In Bowen Halliday, 2015 SKQB 152 (CanLII), McMurtry J. summarized the law with respect to determining the various factors to consider in an application to expunge arrears: 30 If parent does not pay the child support ordered and arrears have accumulated, the court must consider the following factors before determining whether to rescind, reduce or keep whole the obligation to satisfy the arrears. In Allaire Greyeyes, 2008 SKQB 81 (CanLII), 313 Sask 178 [Allaire], Wilson J. wrote: 12 In determining whether to remit arrears of child support, consideration must be given to the factors set out in Jensen v. Jensen (1990), 1990 CanLII 7661 (SK CA), 28 R.F.L. (3d) 350 (Sask. C.A.); Loshney v. Hankins (1993), 1993 CanLII 8920 (SK QB), 48 R.F.L. (3d) 67 (Sask. Q.B.); Wurmlinger v. Cyca, 2003 SKQB 152 (CanLII), [2003] S.J. No. 247 (Sask. Q.B.);Haisman v. Haisman, (1994), 1994 ABCA 249 (CanLII), R.F.L. (4th) (Alta. C.A.) and Aime v. Aime (1990), 1990 CanLII 2613 (MB CA), 27 R.F.L. (3d) (Man. C.A.). These factors are: (i) the nature of the maintenance order sought to be varied; (ii) the ongoing financial capacity of the payor; (iii) the ongoing needs of the child (or children); (iv) any unexplained delay in enforcing arrears; (v) any explanation as to the delay in seeking relief from the arrears; (vi) whether enforcement of payment of arrears would cause hardship to the payor; and (vii) the payor's ability to pay the arrears at the time they were incurred. 31 In Ross, Wright J. held further, at para. 16, that the failure of the payee to enforce child support order is only one factor to take into account when deciding whether to reduce or rescind arrears. She stated: .. Further, when there is an ability to pay, delay or the age of the children should not preclude enforcement unless it can be shown that there is demonstrable prejudice to the respondent and resultant hardship. Otherwise, the effect is to burden the custodial parent with disproportionate share of what is joint obligation. In Johnston v. Johnston (1997), 1997 CanLII 2833 (BC CA), 26 R.F.L. (4th) 131 (B.C.C.A.), Prowse J.A., while generally rejecting delay alone as factor to consider in an application to rescind arrears of child support, said as follows at para. 26: 26 There is, however, some authority for the proposition that the Court will consider delay as factor in assessing the issue of reduction or cancellation of arrears of maintenance if the payor is able to show that the delay has prejudiced him in some material way. (See, for example, Meyers v. Meyers (1995), 1995 CanLII 1797 (BC CA), B.C.L.R. (3d) (C.A.) at p. 6.) In order to establish prejudice, however, the payor must demonstrate not only that he could not pay at the time of the application, but also that he is unlikely to be able to pay in the future. This principle is referred to in Haisman v. Haisman (1994), 1994 ABCA 249 (CanLII), R.F.L. (4th) (Alta. C.A.); leave to appeal dismissed (1995), [1995] S.C.C.A. No. 86, 15 R.F.L. (4th) 51 (note) (S.C.C.). [emphasis mine] [Emphasis in original] [41] Here, the respondent is now earning $88,808.88 per annum. He has previously made an assignment into bankruptcy. do not know what effect that had. It appears he has no other obligations other than this outstanding one to his children and his former spouse. There is nothing to indicate he will not continue to earn the present level of income on into the future. [42] The respondent has paid little towards either the court order or his obligation to provide support. He has been in arrears from the time the order was granted and enforcement steps have been pursued by the MEO. In light of his recalcitrant approach to his support obligation, neither the passage of time nor the quantum of the arrears should deter from the fact he has avoided providing any meaningful financial support to his children and former spouse for the entire time the order has been in place. [43] The authorities speak to the balance which must be in place between recognizing prejudice to the payor by having to pay considerable sum of money and allowing the payor to escape his obligations if enough time elapses. The payor should not be rewarded in this regard for waiting out the payment obligations placed upon him. [44] There is no sufficient information to explain the lengthy delay in making this variation application. There has been continual attempt by MEO to enforce the arrears. [45] In the circumstances, I determine the payor does have the ability to pay the arrears. There is little doubt it will be onerous for him, but then, on the other hand, he has avoided paying anything for considerable period of time. In the result, am not prepared to expunge any of the arrears prior to 2013. [46] The arrears from 2013 to date will be adjusted to accord with the income as found. For the reasons stated, am not prepared to expunge any of those arrears. 3. What is the respondent’s ongoing obligation to pay child support; [47] The respondent shall pay child support for one child based on an income of $88,808.88 from the 1st day of January, 2016, and on the first day of each month thereafter, until varied by further court order. 4. What is the respondent’s obligation to pay post-secondary education costs [48] The respondent shall pay his proportionate share of the university expenses based on the parents being responsible for two-thirds of the total costs. This, then, finds the children being responsible for one-third of these expenses. This breakdown was proposed by the counsel for the petitioner and accepted by counsel for the respondent. [49] The actual amounts to be paid shall be calculated in accordance with the incomes which have found for the respondent over the applicable years. 5. Should there be an order of costs in this case? [50] The respondent has been largely unsuccessful in his application to vary and expunge. In addition, his failure to assist with the post-secondary expenses was brought to light during this application. While he accepted his obligation to pay these amounts, it was only done after the petitioner pursued the issue in her responding materials. [51] In all of the circumstances, direct the petitioner shall receive her taxable costs of this application to be paid forthwith and in any event of the cause. [52] Counsel shall prepare draft order in accordance with these reasons and submit same to me for review. In the event there is disagreement on the contents of the order, the parties have leave to have the matter placed before me by way of conference call to hear submissions. J. M. T. MEGAW
HELD: The application was dismissed. The court found with respect to the issues that: 1) the respondent elected not to challenge the imputation of income made in 2005. The court assumed that the imputation was correct. The respondent had not shown a material change required to vary the obligation nor had he met the onus to justify the need for a change to the amount of child support payable for the years 2005 to 2012. From January 2016, the respondent was ordered to pay child support for one child based upon his current income ; and 2) the respondent had not provided any meaningful financial support for his children for the entire period despite the fact that enforcement steps had been taken by the Maintenance Enforcement Office. The court determined that the respondent had the ability to pay the arrears and it would not expunge them. The arrears from 2013 to date would be adjusted to accord with the respondent’s current income.