The COVID-19 pandemic has caused a number of financial challenges for businesses and individuals. As a result, the federal government has implemented several initiatives to provide relief to Canadians, including multiple extensions of the deadline to file personal tax returns in 2020. However, these initiatives cannot be cited as a reason for delaying financial disclosure in support disputes, according to a recent Ontario Superior Court of Justice decision.
Father Unilaterally Altered Terms of Minutes of Settlement
In Isabelle Juteau v. Daniel Orr, the parties in the case were married for seven years and had three young children. The respondent father was a successful real estate agent whose earnings were completely commission-based. The applicant mother began studying to become a nurse in 2015 and graduated in 2020.
The parents entered into minutes of settlement for child and spousal support in July 2018. For the purposes of setting the amount of child support, the father’s income was deemed to be $200,000 per year. The mother was unemployed while she focused on her studies.
The father started paying an agreed-upon $5,000 each month for spousal and child support but, in July 2019, he unilaterally changed the terms of the minutes of settlement (the “Agreement”) and reduced the payments to just over $3,600 per month. The mother claimed he had done so in bad faith as a punishment for her not completing her nursing program a year sooner than she did. The mother stated that she hoped to start work as a nurse relatively soon.
The mother claimed that despite her repeated requests, the father did not provide her with evidence of his 2019 income. Considering his income from 2016 to 2018, she argued that an imputed income of $230,000 would be fair and reasonable.
In response to a July 2020 email from the mother’s lawyer asking the father to confirm his 2019 income, he wrote, “I think the gross will be about 350 similar to 2016 (net could be about 225 to 235)”. The father subsequently claimed that there were no valid reasons to explain the mother’s refusal to seek part-time employment in 2019. He said the effects of COVID-19 were having a negative impact on his income and as a result, he had not yet filed his 2019 returns.
Unilateral Decision to Decrease Support Payments was ‘Improper’
Justice Marc Smith found that the father altered the terms of the Agreement in 2019 “by unilaterally lowering the combined monthly spousal and child support from $5,000.00 to $3,602.00. In his affidavit material, the Father acknowledges that he was ill-advised to decrease the support payment and upon consulting with legal counsel, the arrears were immediately paid.”
Justice Smith added that the father’s action “to unilaterally decrease the support payments was certainly improper and not in the best interest of his children, as they would be directly impacted. I accept the Father’s explanation and do not find that it was done maliciously or in bad faith.”
Covid Pandemic Does not Excuse Failure to Provide Financial Disclosure
The father requested that the court impute income to the mother for 2019 since she was only taking one course and made no effort to obtain a part-time job. Despite having only one university course, the mother claimed that any part-time work would have to accommodate her parenting and school responsibilities. She said childcare for the children would come to $1,162.06 per month and she asked the father to contribute to the costs. He refused, so she found that it wasn’t feasible to find part-time work that would cater to her circumstances.
The father claimed that, due to the pandemic, the Canada Revenue Agency extended timelines and that he had until mid-August to file his income tax returns, but the judge disagreed:
“I can appreciate that the current pandemic has brought on new challenges for us all, but I do not believe that it should be used as an excuse not to provide financial disclosure. The Father’s obligation under the Agreement was to provide financial disclosure by no later than July 1st.”
Tax Return Not Necessary to Provide Evidence of Income
The judge accepted that the father would have not been able to provide a Notice of Assessment, since he had not yet filed his income tax return. However, as a self-employed individual, he should have kept commission records that would have enabled him to provide some form of documentation to the mother that confirmed his 2019 income.
Financial disclosure was required by the terms of the agreement, said Justice Smith, “but more importantly, it is a fundamental principle in family law, imposed upon all parties involved in litigation.”
The court ordered the father to pay the mother $3,230 a month in spousal support based on his imputed income of $230,000 and the mother’s imputed income of $40,000.
For advice on family law matters, contact the offices of Toronto family law firm Boulby Weinberg LLP. Our experienced family lawyers focus exclusively on Ontario family law for clients based locally and internationally. Contact us online or by phone at 647-494-0113 to schedule a consultation.