M.W. Applicant And: K.T. Respondent, 2019 NLSC 14

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR FAMILY DIVISION Citation : M.W. v. K.T. , 2019 NLSC 14 Date : January 25, 2019 Docket : 200302U0088 Between: M.W. Applicant And: K.T. Respondent Before: Justice Alexander MacDonald Place of Hearing: St. John’s, Newfoundland and Labrador Dates of Hearing: December 3, 4 and 5, 2018 Appearances: Matthew G. Rowe Appearing on behalf of the Applicant K.T. Appearing on her own behalf Authorities Cited: CASES CONSIDERED: Duffett v. Duffett , 2010 NLTD(F) 16; Lynch v. Lundrigan , 2004 NLCA 35 ; Brown v. Brown , 2010 NBCA 5 ; S. (D.B.) v.

G. (S.R.) , 2006 SCC 37 ; Corcios v. Burgos , 2011 ONSC 3326 ; Dring v. Gheyle , 2018 BCCA 435 ; S mith v. Helppi , 2011 NSCA 65 ; W.(B.) v. G.(J.) , 2014 NLCA 5 STATUTES CONSIDERED: Interjurisdictional Support Orders Act , S.N.L. 2002, c. I-19.2 ; Family Law Act , R.S.N.L. 1990, c. Q-3 ; Federal Child Support Guidelines , SOR/97-175

REASONS FOR JUDGMENT MacDonald, J. :

SUMMARY [ 1 ] M.W. and K.T. met in 1994 and became a couple. Their son N.T. was born on February 9, 1995. They separated shortly after. The Ontario Superior Court of Justice, Family Court issued a child support order on February 20, 1996 (“Order”). The court ordered that M.W. pay $700 a month beginning on March 1, 1996. [ 2 ] The Court ordered the amount indexed to the cost of living in accordance with Ontario legislation. The Federal Child Support Guidelines , SOR/97-175 (“ Guidelines ”) table amounts did not exist, but if they did, it would suggest that M.W.’s income was about $89,000 [1] .

In fact, he earned $48,359 [2] . The monthly support amount now is $1,049.87 [3] . This would suggest M.W.’s income is about $117,500 [4] . [ 3 ] Shortly after N.T.’s birth, K.T. and N.T. moved to Newfoundland and Labrador. M.W. remained and still lives in Ontario. [ 4 ] N.T. turned 19 in February 2014. He finished his postsecondary education and became an apprentice near the end of June 2014. He earned $45,650.29 in 2014. [ 5 ] The Order remains in effect. M.W. was current with his child support payments on June 30, 1999.

Since then, despite paying K.T. child support of $82,696.71, ($54,808.23 since July 1, 1999) [5] , he has accumulated $100,347.52 [6] in arrears. [ 6 ] M.W. seeks termination of child support retroactive to N.T.’s 19th birthday. He seeks forgiveness of arrears. He does not seek recovery of any amount he may have overpaid. [ 7 ] I find that N.T. ceased to be a child of the marriage on June 30, 2014 and M.W.’s obligations to pay child support ended then. I order forgiveness of his arrears. issueS 1. When did N.T. cease to be a “child of the marriage”? 2.

Is M.W. entitled to forgiveness of arrears accruing under the Order? a. Has M.W. established a material change in circumstances since the Order? b. If so, what test must M.W. satisfy to obtain forgiveness of his arrears? Has M.W. satisfied the test? c. What is the retroactive date for forgiveness? 3. What is M.W.’s income for child support purposes? 4. What child support should M.W have paid? Witnesses [ 8 ] M.W. testified on his own behalf. He is a talented man whose resume lists an array of animal and human, safety and rescue skills. He is passionate about his profession.

He has little understanding of his personal financial situation, or that of his company, TTEMS. During most of his career, his friend D.L. looked after his finances. [ 9 ] D.L. met M.W. when he took him to a Cub’s father and son dinner. He considers himself more of a big brother rather than the father figure I believe he is. D.L. is an accountant and worked in the food wholesale business for many years. Throughout M.W.’s life, D.L. has supported him financially and otherwise.

In fact, M.W. could not support himself without D.L.’s assistance. [ 10 ] In 1996, M.W. earned $48,359, as reported on line 150 to the Canada Revenue Agency (“CRA”). This is the highest such income he earned. He worked as a contractor for Oshawa Foods, an Ontario based wholesaler. Oshawa had outsourced maintenance for its facilities. D.L. was instrumental in placing the contract with M.W. Oshawa Foods later sold its operations to Sobey’s and the outsourcing ceased. With that sale went M.W.’s income. D.L. continues to support M.W. [ 11 ] K.T. testified on her own behalf.

She had a relatively short relationship with M.W. and both would likely have moved on without the other but for the birth of their son. They have not lived in the same province for more than 20 years. K.T. raised N.T. on her own. [ 12 ] She has no direct knowledge of M.W.’s financial situation. Her investigations have led her to believe that he has accumulated substantial assets and therefore must have earned more money than he reported to CRA. [ 13 ] T.W., M.W.’s ex-wife with whom he has two children, were together for 17 years until they separated and divorced.

She was the company bookkeeper during 2006, 2007, 2008 and 2009 but under questioning, it became apparent she did not understand M.W.’s or the company’s finances. She could not answer basic questions relating to the company’s losses. In fact, she denied these losses and she referred these questions to D.L.

ANALYSIS Issue 1: When did N.T. Cease to be a “Child of the Marriage”? [ 14 ] I find that N.T. ceased to be a child of the marriage on June 30, 2014, when his mother confirmed he was 19, finished his education and obtained employment as an apprentice linesman. He earned $45,650.29 in 2014. I find that M.W.’s obligations to pay child support ended on that date. Issue 2: Is M.W. entitled to Forgiveness of Arrears Accruing under the Order? A: Has M.W. established a Material Change in Circumstances since date of the Order? [ 15 ] I find that M.W. has established a material change in circumstances that arose while the arrears accumulated. [ 16 ] I have jurisdiction over this matter by virtue of

section 36 of the Interjurisdictional Support Orders Act , S.N.L. 2002, c. I-19.2 (“ ISO ”), as both parties have accepted this Court’s jurisdiction over the application. Pursuant to section 13(2), I am to apply the law of Newfoundland and Labrador. [ 17 ]

Section 47 of the Family Law Act , R.S.N.L. 1990, c. Q-3 , allows me to vary the Order retroactively if M.W. can establish a material change in circumstances. Pursuant to Regulation 12, a material change in circumstances includes a “change in the… means ... of a parent” or in the “case of an order for child support made under the Act before April 1, 1998”. [ 18 ] The Ontario court issued the Order before April 1, 1998. Furthermore, the amount of child support in the Order was not determined in accordance with the Guidelines , as they did not yet exist. Handrigan J. in Duffett v.

Duffett , 2010 NLTD(F) 16, observed that if a court made an order before the Guidelines came to effect in May 1, 1997, there is a presumptive change in circumstance. Therefore, on this ground alone, I find that M.W. has established a material change in circumstances. [ 19 ] Furthermore, I find that M.W.’s income for 1999 until 2014 would not justify the ordered child support payment. Rowe, J.A., as he was then, discussed this argument in paragraph 14 in Lynch v. Lundrigan , 2004 NLCA 35 .

He observed that “I see no basis for the UFC judge’s [apparent] view that when a former spouse applies for full remission of arrears it is not open to them to argue [as well] that they should have been paying a lesser sum than that ordered or that the amount ordered should not have been payable throughout the whole period since the order or both”. This is the case here. [ 20 ] I also find that M.W. has established a material change in circumstances as there has been a change in M.W.’s means during the period the arrears arose. B. What Test must M.W. Satisfy to Obtain Forgiveness of His Arrears? Has M.W.

Satisfied the Test? No Fault Approach [ 21 ] I find that the test set out in the New Brunswick Court of Appeal in Brown v. Brown , 2010 NBCA 5 , is applicable in this jurisdiction. The application of this test allows me to forgive M.W.’s child support arrears and I do so. [ 22 ] The Court of Appeal established a two-part test. The first is, was there material change in circumstances during the period of retroactivity.

The second is, would the court grant a child support reduction but for his untimely application. [ 23 ] The New Brunswick Court of Appeal ruled that a trial judge should not ask why M.W. failed to take timely application for retroactive variation nor be concerned about K.T.’s efforts to prevent accumulation of arrears. The Court concluded that fault plays no role in applications for forgiveness of arrears.

The Court directs a judge “to confirm that a lower amount of support was payable despite the failure to pay a higher amount”. [ 24 ] The New Brunswick Court of Appeal found this approach consistent with the Supreme Court of Canada’s ruling in S. (D.B.) v. G.(S.R.) , 2006 SCC 37 (“ DBS ”).

That case outlined the factors applicable to retroactive increases in child support. [ 25 ] The New Brunswick Court of Appeal limited application of DBS to that circumstance alone and concluded “it is one thing to demand immediate payment of monies with respect to past obligations that only recently matured and quite another to seek an order that recalculates and reduces amount owing with respect to debt never paid”. [ 26 ] It found support for this distinction in paragraph 1 of DBS where the Supreme Court indicated “these appeals do not concern the non-payment of arrears; they concern the enforceability and qualification of support that was neither paid nor claimed when it was supposedly due”.

Furthermore, the Supreme Court in paragraph 98 observed, “these factors are not meant to apply to circumstances where arrears have accumulated”. [ 27 ] I find the Court of Appeal’s approach compelling. I will apply this approach in Newfoundland and Labrador. T his approach was considered by the British Columbia Court of Appeal in Dring v. Gheyle , 2018 BCCA 435 and the Nova Scotia Court of Appeal in Smith v. Helppi , 2011 NSCA 65 . The Newfoundland and Labrador Court of Appeal in paragraphs 8 and 11 of W.(B.) v.

G.(J.) , 2014 NLCA 5 , acknowledged that the DBS principles applicable to awards of retroactive child support are distinguished from those applicable to arrears. [ 28 ] M.W. has established a material change in circumstances that arose while the arrears accumulated. I now turn to the second test.

[ 29 ] I find that M.W. is entitled to retroactive reduction of arrears. I find that he should have paid what the Guidelines provide for his properly calculated annual income, not the ordered indexed $700 a month. K.T. suffers no prejudice, as she need not return money she neither received nor was entitled to. [ 30 ] If I had concluded that the New Brunswick Court of Appeal approach is not applicable in Newfoundland, I would apply the DBS factors as the Ontario’s Superior Court of Justice did in Corcios v. Burgos , 2011 ONSC 3326 . DBS Factors and Forgiveness of Arrears [ 31 ] The Ontario Court took a different

interpretation of paragraph 98 of DBS . It concluded that the Supreme Court meant that an analysis using the DBS factors is inappropriate when a party seeks forgiveness of arrears based on a current inability to pay. The court will apply the DBS factors only when a party seeks forgiveness because of a change in circumstances that arose during the period of retroactivity. [ 32 ] M.W. has established a material change in circumstances that arose during the period of retroactivity.

I may exercise my discretion and forgive his arrears by considering the following factors: The Nature of the Obligation to Support [ 33 ] The Ontario court issued the Order before the Guidelines . It provided for cost-of-living adjustment without regard to M.W.’s income. It would be unlikely that a Newfoundland and Labrador court would issue such an order after 1997. I consider this a factor to allow me to forgive the arrears. The Ongoing Financial Capacity of M.W. [ 34 ] M.W. made financial disclosure for both corporate and personal income.

I find that his income would not support child support amount contained in the Order. Furthermore, M.W. has no realistic current or future ability to pay these arrears. In fact, he may have difficulty meeting his living expenses without the continued support of D.L. Ongoing Need of N.T. and K.T. for N.T.’s Support [ 35 ] N.T. is no longer a child of the marriage. He is independent and works as a linesman. M.W. did not need to support him after June 30, 2014. However, this in itself is not a factor to forgive arrears because his mother supported him before then.

My ruling, however, provides K.T. with the amount of child support that M.W. should have paid based on his income. An Unreasonable and Unexplained Delay on the part of K.T. Enforcing Payment [ 36 ] I find that K.T. took reasonable actions to collect the ordered child support. She provided evidence of numerous efforts to ensure payment. Unreasonable and Unexplained Delay by M.W. Seeking Relief from his Obligations [ 37 ] M.W. commenced this application 18 years after the Order. However, he made other unsuccessful attempts to vary it. [ 38 ] M.W. first applied for variation in 2002.

The Ontario Superior Court of Justice issued a provisional Order on July 29, 2002 reducing his child support to $163 a month. The court imputed income of $20,000. Ontario authorities filed the Order with this Court on May 13, 2003 under the provisions of the ISO . [ 39 ] On April 16, 2003, this Court required further information from M.W. The transcripts show that there was confusion on the then relatively new process. This Court dismissed the provisional order 15 months after the Ontario authorities failed to file requested additional information.

This was three months before the 18 months stipulated in section 31(3.1) of the ISO [7] . [ 40 ] M.W. applied again in 2012. A Newfoundland and Labrador Provincial Court judge at two adjourned preliminary hearings referred to the proceeding as an ISO hearing. At the hearing on the merits on November 16, 2012, another judge concluded it was not an ISO hearing. He dismissed the application in M.W.’s absence. There is no evidence M.W. ever knew about this date, or that the court required he attend. [ 41 ] Finally, M.W. made this application in 2014.

The application languished for two years because M.W. says he could not afford to pay legal and accounting fees associated with the application. D.L. testified that he eventually funded these fees, and once funded, M.W. proceeded diligently. [ 42 ] In the circumstances, I find that M.W. has provided reasonable reasons for his delay. [ 43 ] I note that the New Brunswick Court of Appeal, in providing a rationale for this no-fault approach, commented in paragraph 34, “…there are many reasons why a payer might fail to seek a timely variation order with respect to an existing support obligation.

So too may the payer lack the money or the where-with-all to proceed with the matter.” I find this is the situation here. Hardship Occasioned by a Reduction of Arrears or Payment of Arrears [ 44 ] If the payment of arrears will cause undue hardship, the Court may exercise its discretion by looking at N.T.’s needs and M.W.’s current financial capacity. I may also consider whether M.W. might have prospects in the future to repay these arrears. [ 45 ] N.T. has become a successful young man. He no longer needs the support of his mother and has not since June 30, 2014.

K.T. should be proud of the fine young man she raised. She did not receive the full benefit of the Order. She managed to raise him through her hard work. I admire her parenting. However, she should only be entitled to the child support payments that accurately reflect M.W.’s

ability to pay. [ 46 ] I find that M.W. has no reasonable likelihood of increasing his income above the average he has been earning. M.W. is unlikely to earn even this income without the continuing financial support of D.L. I find he has no realistic ability, either now or in the future, to pay the arrears. [ 47 ] K.T. will not suffer any undue hardship. This decision orders an amount of child support a court would have ordered at the time of M.W.’s change in circumstance. Furthermore, M.W. does not seek return of any overpayment. C.

What is the Retroactive Date for Forgiveness? [ 48 ] I may make a retroactive order to July 1, 1999. Brown v. Brown directs me not to ask why M.W. failed to take a timely application for retroactive variation. I am “to confirm that a lower amount of support was payable despite the failure to pay a higher amount”. The essence of the outcome is the court will put the payer in the position he always should have been in. [ 49 ] Brown v. Brown eliminates fault from the analysis. The DBS factors limiting the period of retroactive relief mostly relate to whether and when the parents took various steps.

This is inconsistent with a no-fault approach and I do not apply them in this case. [ 50 ] However, the court in Corcios v. Burgos ruled that the DBS factors do apply. If I were to do so, I conclude that I must swap the term “recipient” for “payer”, and then attempt to apply the principles. So altered, the Supreme Court directs that the payor is “not required to take any legal action”. All that is required is the payor give “effective notice”. [ 51 ] On July 29, 2002, M.W. obtained a provisional Ontario order reducing his child support to $163 a month based on imputed income of $20,000.

I find prior to this order, K.T. had knowledge of M.W’s attempts to reduce his child support and she then knew, as the Supreme Court put it, that the “current amount of child support needs to be re-negotiated.” DBS allows me to adjust retroactively child support to July 1, 1999. [ 52 ] However, the Supreme Court also commented that, “it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor [swap to recipient] parent”.

It also stated “however, in order to avoid having the presumptive date of retroactivity set prior to the date of effective notice, the payor [swap to recipient] parent must act responsibly”. [ 53 ] I would find it is difficult to impose any responsibility obligation on a recipient in these type of cases and I do not do so. [ 54 ] Corcios v. Burgos dealt with this anomaly by stating the obligation to act responsibly applies only to the payer. The payer must make complete and continuous disclosure of all material changes during the period of retroactivity.

The disclosure should allow the recipient to assess the claim of the payer. I do not consider this a reasonable test and it essentially makes fault the central issue in any arrears forgiveness application. [ 55 ] However, if I were required to apply this requirement, I conclude that M.W. gave “formal notice” to K.T. of his intention to seek retroactive forgiveness of arrears when he filed the 2002 variation application. [ 56 ] I find his income disclosure satisfied the test in Corcios v. Burgos .

It allowed the Ontario court to deem income of $20,000, slightly more than my determination of his actual 2002 income [8] . He disclosed income in his 2012 application and again in this matter. He has no obligation to disclose contemporaneously each change in his annual income. K.T. could have little doubt that M.W. claims he pays too much child support. Issue 3: What is M.W.’s Income for Child Support Purposes? [ 57 ] I must determine M.W.’s income for child support purposes, by considering his line 150 income, any potential non-taxable cash receipts, and income and benefits accruing to him from his company.

I also will consider whether his inheritance has any impact on his income and whether he is underemployed. [ 58 ] M.W.’s income for child support purposes for 1999 to and including 2014 will the greater of the minimum wage in any year, and his line 150 income, an allowance for unreported cash receipts, a deemed return on an inheritance from his mother’s estate and income deriving from benefits he receives from the company. [ 59 ] M.W. filed his 2000 to 2017 personal income tax returns and notices of assessment, his 1996-1998 notices of assessment and his 1999 income tax return.

From 2005 to 2017, he also was the principal shareholder and director of TTEMS. He filed company financial statements and income tax returns for these years. [ 60 ] A

summary of the line 150 income earned by M.W. is contained in Table 1 and by his company in Table 2. Table 1: M.W. Line 150 income - amounts are in $ Year Income Year Income Year Income 1999 5,493 2006 7,237 2012 14,580 2000 14,026 2007 0 2013 9,391 2001 4,149 2008 1 2014 6,214 2002 11,622 2009 2,945 2015 19,022 2003 32,917 2010 3,240 2016 22,890

2004 19,517 2011 1 2017 24,210 2005 5,335 Year Income Year Income Year Income 1999 5,493 2006 7,237 2012 14,580 2000 14,026 2007 0 2013 9,391 Table 2: TTEMS Corporate Income- amounts are in $ Year Revenue Expenses Profit or (Loss) 2005 32,080 52,563 (20,483) 2006 63,232 73,819 (10,587) 2007 65,108 91,718 (26,610) 2008 113,176 130,208 (17,033) 2009 71,540 94,913 (23,373) 2010 102,556 107,280 (4,725) 2011 125,579 117,015 8,564 2012 130,348 165,210 (34,862) 2013 70,026 120,399 (50,372) 2014 58,141 83,061 (24,920) 2015 92,761 110,333 (17,572) 2016 89,454 112,055 (22,600) 2017 117,696 142,205 (24,509) [ 61 ] K.T. bears the burden of inputting income to M.W.

She says the CRA information does not reflect his income for four reasons. First, she says that M.W. received cash in compensation for services. Second, she says he received an inheritance on the death of his mother. Third, she says his company incurred personal expenses on his behalf. Fourth, she says the company employed T.W. and her salary was a form of income splitting. Cash Compensation [ 62 ] Her evidence of cash payment were four cheques to him from the St.

John’s Ambulance Association totaling $868, two in 2013 and two in 2017. [ 63 ] T.W. testified that while she was keeping the company’s books, it received no cash revenue. She reported all revenue and expenses in CRA filings. D.L. confirmed this evidence and testified that he did not include cash paid to M.W. in his personal income tax return. [ 64 ] I find that the company had no cash transactions and if others made cash payments for services, they paid them to M.W. I may impute cash non-taxable income to M.W. based on these type of cash payments. I have no evidence other than the St.

John Ambulance Association cheques. On that evidence, I will deem $2,000 yearly as a non-taxable adjustment to M.W.’s income. Inheritance [ 65 ] On cross-examination by K.T., M.W. acknowledged that he was a 50 percent beneficiary of the estate of his mother who died in 1998. The estate was valued at $327,544.80. He says that he received net proceeds of $110,000 after expenses administering the estate. The Ontario support enforcement agency garnished $20,000 to bring his arrears of child support up-to-date.

The residual was $90,000 and he says T.W. “blew the money”. [ 66 ] M.W. provided no evidence that his ex-wife dissipated this money nor did she confirm this fact. Therefore, I will add to his annual income a return of 3.5 percent as proxy of the return he could have earned from this inheritance. I have rounded-up this return to $3,200. I deem this amount as a yearly non-taxable adjustment to M.W.’s income. Personal Expenses Incurred by Company [ 67 ] I reviewed the Company’s 2005 to 2017 financial statements. The expenses I consider may have an impact on M.W.’s personal income are:

a) meals and entertainment,

b) travel and accommodation,

c) cell phone

d) automobile fuel, insurance, maintenance, repairs and lease payments,

e) amortization and

f) non-arm’s length payments to T.W. Meals and Entertainment, Travel and Accommodation, Cell Phone and Vehicle Expenses [ 68 ] M.W. and D.L. both testified that the majority, but not all, of these expenses directly related to the business. Therefore, I will add a portion of these expenses to his income. In the absence of better evidence, I will attribute 30 percent of these expenses yearly as a non-taxable adjustment to M.W.’s income. Amortization [ 69 ] I may also add to his income a portion of non-cash accounting adjustments for amortization.

A company should re-invest in new equipment and therefore, a portion of the amortization is reasonable. The availability of cash from the company in spite of its losses is an indicator that does not re-invest in depreciated assets. This will adversely affect the company’s future. [ 70 ] That being said, a portion of this non-cash accounting expense is available for distribution to shareholders. I will attribute 30 percent of the amortization in each year as a non-taxable adjustment to M.W.’s income.

Attributed Income from Company in Loss Position [ 71 ] TTEMS has accumulated losses. The 2014 balance sheet shows a liability of $168,040.59 to “MasterCard”. M.W. and T.W. had no comprehension of what this amount was, nor could they answer the question “where was the money coming from” to cover the company’s losses. D.L. indicated this was an accounting entry used to describe the cash he provided to cover the company’s losses. [ 72 ] I find that the company has only survived because of D.L.’s loans to the business. Further evidence of D.L.’s support is contained in M.W.’s October 2007 bank statement.

These show deposits of $3,890 in one month, in a year when M.W. had little line 150 income. D.L. testified that he transferred these amounts from his bank account. [ 73 ] Because of D.L.’s largess, the company had access to at least $168,040.59 in additional cash. This amounts to a subsidy by D.L. of $16,804 a year over 10 years. This gives rise to the issue, can I impute from the company if it is only available because D.L. provided the cash? Stated another way, how can I impute income from a company that is incurring annual losses funded by the charity of a family friend? [ 74 ] I find that I may.

D.L. is acting as a lender, albeit a very charitable one. Income earned by a company is different from income imputed to an individual by virtue his employment with that company. I can attribute income sourced from the company’s loans. Non-Arm’s Length Payments to TW [ 75 ] T.W. testified that the company paid her employment income of $6,200 in 2008, $3,926.75 in 2009, $7,813.52 in 2010, $16,857.02 in 2011 and $28,878.64 in 2012. The company made these payments despite being in a loss position in every year except 2011. T.W. is not at arm’s length to the company. [ 76 ] Pursuant to

section 16 to of the Guidelines , I can add this salary to M.W.’s income. However, I accept that for at least some of this time she did the company books. I cannot overlook however, that D.L. did most of the company financial reporting. Therefore, I will attribute her salary in excess of $4,000 as a taxable adjustment to M.W.’s income. Other Allegations of Undisclosed Income [ 77 ] T.W. had no detailed knowledge of M.W.’s or his company’s finances. However, she testified that she believes the company suffered no losses. She believes M.W. underreported his line 150 income.

She testified that as a couple they had more cash than would be consistent with his reported income [ 78 ] She is receiving child support from M.W. On May 26, 2014, an Ontario court ordered he pay support based on earning the Ontario minimum wage, which the court deemed to be $20,000. This income is consistent with the income I allocated to him. I therefore do not accept her evidence on his income. [ 79 ] The parties introduced evidence about their 2011 acquisition of a farm in Grand Valley, Ontario. T.W. and D.L. purchased the property for $560,000.

The vendor took back a $10,000 mortgage and the parties obtained additional private mortgages of $530,000. The parties to the transaction expected the mortgages would act as bridge financing until a replacement mortgage. [ 80 ] T.W. and D.L. testified that M.W. was not on the deed or the mortgages because his credit rating and income did not support the loans. [ 81 ] The parties eventually lost the home to the lenders. M.W. is bitter about this, blames his loss of the house on his ex-wife, and considers she “destroyed his dream”.

The circumstances of this transaction and its unraveling dispel the notion he has access to large amounts of undisclosed cash. Under-Employment [ 82 ] Finally, I must ask, given the losses sustained by the company, and M.W.’s low line 150 income, should M.W. have continued to work at a business that was unsustainable. Was he in fact underemployed? [ 83 ] I find that M.W. should not have continued to pursue his line of work when it was financially unsustainable. Therefore, in any year if his income is less than the Ontario minimum wage, I will deem he earned the minimum wage.

Calculation of Income [ 84 ] Table 3 is M.W.’s income calculated by adding to his line 150 personal income: 1. $5,200 a year in deemed non-taxable cash honorariums and return on inheritance; 2. For the years since the company’s incorporation in 2005, 30 percent of the company’s’ expense for

a) meals and entertainment - advertising and promotions in 2005 and 2006,

b) travel and accommodation,

c) cell phone [9]

d) vehicles,

e) amortization charges (from the company’s income statement, not its balance sheet); and 3. T.W.’s 2008 to 2012 salary in excess of $4,000. [ 85 ] I will gross up the amounts referred to in sub-paragraphs 1 and 2 by 25 percent as an approximation of the application of the Ontario marginal income tax rate. I will not gross up the amount in sub-paragraph 3, as T.W. would have paid income tax. [ 86 ] If these amounts are less than the Ontario minimum wage for the year in question, I will impute his income to be the Ontario minimum wage for a 40-hour week, 52 weeks a year.

Table 3 Imputed Income - amounts are in $ Year Line 150 Impute Min wage [10] Income Year Line 150 Impute Min wage Income 1999 5,493 6,500 14,248 14,248 2007 0 20,440 16,640 20,440 2000 14,026 6,500 14,248 20,526 2008 1 31,771 18,200 31,772 2001 4,149 6,500 14,248 14,248 2009 2,945 22,827 19,760 25,772 2002 11,622 6,500 14,248 18,122 2010 3,240 28,118 21,840 31,358 2003 32,917 6,500 14,248 39,417 2011 1 33,351 21,840 33,352 2004 19,517 6,500 14,872 26,017 2012 14,580 44,900 21,840 59,480 2005 5,335 17,205 15,496 22,540 2013 9,391 24,429 21,840 33,820 2006 7,237 19,301 16,120 26,538 2014 6,214 22,896 22,880 29,110 Issue 4: What Child Support should M.W have Paid? [ 87 ] Child support calculated under the Guidelines is set out in Table 4.

He has no obligation to pay child support for N.T. after June 30, 2014.

Table 4 Table Amount of Child Support $ per month Year Income $ Child support total Year Income $ Child support Total $ 1999 [11] 14,248 115 690 2007 20,440 175 2,100 2000 20,526 171 2,052 2008 31,772 290 3,480 2001 14,248 115 1,380 2009 25,772 220 2,640 2002 18,122 141 1,692 2010 31,358 286 3,432 2003 39,417 340 4,080 2011 33,352 309 3,708 2004 26,017 232 2,784 2012 59,480 541 6,492 2005 22,540 198 2,376 2013 33,820 290 3,480 <May 2006 26,538 237 1,185 2014 [12] 29,110 238 1,428 >May 2006 228 1,596 Total support 44,480 Conclusion [ 88 ] M.W. paid $54,808.23 from July 1, 1999 to December 12, 2018.

He should have paid $44,480. Therefore, I order that M.W.’s child support arrears accrued under the Order are forgiven and discharged. [ 89 ] M.W. made no claim against K.T. for return of any overpayment of child support. COSTS [ 90 ] I granted M.W.’s application. However, K.T. established that M.W.’s line 150 income does not represent his income for child support purposes.

In these circumstances, I make no order for costs. _____________________________ Alexander MacDonald Justice [2] line 150 of his 1996 CRA filing [3] As of November 1, 2018 [5] As of December 12, 2018 [6] Ibid. note 1 [10] $6.85/hr. until 2004, 2004 - $7.15, 2005 - $7.45, 2006 – $7.75, 2007 - $8, 2008 – $8.75, 2009 – $9.50, 2010-2014 - 10.25, 2014 – $11, 2015 - $11.25, 2016 - $11.40, 2017 – $11.60. In years the rate changed I have assume it was in effect for the entire calendar year