Cheng v Sze 2020 ONSC 937 provides even more fodder to write a blog. This blog will again focus on the same case and on a new issue which relates to calculation of amount payable for child support.
Child Support [54] Since April 2019, the respondent has been paying child support of $532 per month based on an income of $35,000 per year.
[55] The respondent’s Line 150 income for the years 2012 to 2018 are: 2012: $31,279 2013: $23,301 2014: $22,027 2015: $21,098 2016: $39,361 2017: $25,498 2018: $15,395
[56] The applicant submits that the respondent should be paying child support on the basis of an imputed income of $75,000.
[57] The respondent earned between $60,000 and $70,000 per year as an employee until 2009. In that year he started his own business as an IT consultant, working for various clients. He acknowledges earning approximately $35,000 per year until 2014, when he was involved in an automobile accident, which, he alleges, severely curtailed his ability to work. He has provided no medical evidence to support this position. Moreover, his income tax returns do not, in fact, show any decline in income after 2014; in fact, 2016 was his best reported year.
[58] The respondent has not applied for any employment since 2016. He testified that he has not looked for a job since 2016 because he has been taking care of his now 16 year old and 14 year old daughters since that date.
[59] The respondent acknowledges that, as an IT consultant, he charges his clients $70.00 per hour.
[60] The applicant points out that, at $70.00 per hour, the respondent billed less than 5 hours per week in 2017, and less than 4 hours per week in 2018. The respondent testified that his hours worked in 2018 were particularly low because that was the year that they had to sell the matrimonial home, and he stayed home to clean the house for the showings. He expected a significant increase for 2019, because he has picked up new clients.
[61] The applicant also points to documents signed by the respondent where he has claimed an annual income of $48,000 (his rental application) and $70,800 (a car loan application dated May 1, 2015). The respondent testified that he did not fill in these amounts, but only signed the applications after they were filled in by others.
[62] Sections 19 of the Child Support Guidelines, O. Reg. 391/97 addresses imputing income to a spouse and sets out a non-exhaustive list of circumstances in which income may be imputed. These circumstances include intentional under-employment or failure to report income from sources such as cash payments.
[63] In this case, the applicant alleges that the respondent earns a substantial portion of his income in cash, which is not reported, and therefore, his notices of assessment do not accurately reflect his income.
[64] The onus is on the party seeking to impute income to the other party to establish an evidentiary basis on which this finding can be made. As noted by the Court of Appeal in Drygala v. Pauli (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711 (C.A.), at para. 44, when considering the proper basis for imputing income under s. 19 of the Guidelines, there must be “a rational basis” underlying the figure selected and the exercise of the court’s discretion must be “grounded in the evidence.” See also: Mason v. Mason, 2016 ONCA 725, at para. 127.
[65] The applicant’s position on this issue is, in my view, entirely reasonable. The respondent is an educated individual who earned between $60,000 and $70,000 until 2009. He acknowledges that he bills his time at $70.00 per hour. His explanations for working only 4 or 5 hours per week strain credulity. The $75,000 annual income proposed by the applicant would equal only 22 billable hours per week based on a 48 week year. The respondent has provided no explanation to justify an income of only $35,000 per year.
[66] Accordingly, the respondent’s child support for two children is $1139 per month, calculated on the basis of an imputed income of $75,000 per year, retroactive to May 2019.
[67] The respondent did not dispute the validity of the s.7 expenses claimed by the applicant, only his pro rata share based on his income. Based on the imputed income of $75,000, s.7 expenses will be shared equally by the parties since the applicant’s income is approximately the same as the respondent’s imputed income.
Blog Analysis:
From an average of approximately $30,000 a year as income as claimed by the respondent the court ultimately imputed an income of $75,000 per annum on him.
This is a huge difference of $45,000. How did this happen? The respondent indicated that he was charging $70 per client and the analysis indicated that he was only working for approximately 4 to 6 hours a week. The judge plainly said that working such few hours strained credibility. In other words, the judge did not believe the testimony or the evidence given by the respondent.
The judge instead and correctly so, imputed that the respondent was actually working a full regular and normal week and was intentionally claiming or acting under employed. As a result keeping in mind the child support guidelines, the judge imputed that the current income would be $75,000 a year.
The client needs a thorough and competent lawyer who can analyze the fact situation such that there’s no inconsistency between the paperwork and the testimony and that the testimony is actually believable by the court. Trust and belief is very important. First impressions matter. We will ensure that the client is thoroughly prepared and ready for Trial at Shankar Law.
At Shankar Law, we are happy to assist and guide you through your spousal, matrimonial and divorce challenges. We work mainly in three counties: Huron, Bruce, and Grey and span several cities (Southampton, Kincardine, Goderich, Wiarton, Hanover, Dundalk, Walkerton, Meaford, Markdale, Chatsworth), through our two locations in Port Elgin and in Owen Sound. We look forward to serving you.