



COURT OF APPEAL FOR ONTARIO

CITATION: McMaster-Pereira v. Pereira, 2021
    ONCA 547

DATE: 20210729

DOCKET: C68444

Feldman, Harvison Young and
    Thorburn JJ.A.

BETWEEN

Connie McMaster-Pereira

Applicant (Respondent)

and

Michael Pereira

Respondent (Appellant)

Gary S. Joseph and Julia McArthur, for
    the appellant

Paul J. Daffern, for the respondent

Heard: April 16, 2021 by video conference

On appeal from the order of Justice
    Peter A. Douglas of the Superior Court of Justice, dated June 12, 2020, and
    from the costs order, dated August 21, 2020.

Harvison Young J.A.:

[1]

This is an appeal by the appellant father from
    an order requiring him to pay child support and securing his child support
    obligations against his interests in certain property and corporations and from
    a related costs order. The central issues before the trial judge were the
    determination of the fathers income from 2014 to 2019, and the effect of
    changes in the residences of the children over that period on the support
    amounts.

[2]

The trial judge found that the father had failed
    to disclose his true income, and moreover, had taken various steps to conceal
    his income. The trial judge imputed income, determined the quantum of ongoing
    child support, awarded retroactive child support and, in light of the fathers
    efforts to avoid paying support, imposed a charging order against his home and his
    interests in companies of which he was a shareholder.

[3]

For the following reasons I would dismiss the
    appeal.

A.

Facts and Decision Below

[4]

The parties were married in 2001, and they are
    the parents of four children ranging in age from 9 to 20. They separated in
    2011 and divorced in 2013. The father operated a trucking and related
    businesses.

[5]

In May 2013, the parties executed minutes of
    settlement which became the final order of Graham J. in July 2013 (the Graham
    Order). The Graham Order dealt with issues of support, custody and access.
    Salient provisions, for the purposes of this appeal, included the fathers
    obligation to pay support in the amount of $3,000 per month based on the fathers
    imputed income of $109,000 per annum and the mothers imputed income of $6,000
    per annum, with a provision that the mother could not seek an increase in child
    support unless she could show a positive material change in the fathers
    income, or he failed to pay the $3000 per month. The minutes of settlement provided
    that $637 per month was spousal support, but that the entire monthly amount of $3,000
    would be characterized as child support. The Graham Order also provided that
    the parties were to provide updated income disclosure to each other annually.

[6]

In July 2017, the mother commenced a motion to
    change seeking a retroactive increase of the amount of child support paid by
    the father from April 2014 onward. The father responded with his own motion to
    change, dated September 2017, which requested not only a dismissal of the mothers
    motion, but also a change to the parenting arrangements. The parties engaged in
    alternative dispute resolution and as a result, the issues for trial were
    identified as (1) the income of the father; (2) the amount of child support;
    and (3) the parenting arrangements for their youngest child.

[7]

The central issue in this appeal is the trial
    judges determination of the fathers income between 2014 and 2017. The
    appellant also challenges the charging order and the costs order.

[8]

The trial judge found that the fathers income
    for the years between 2014 and 2019 was $454,037, $322,940, $478,562, $442,337,
    $345,848, and $457,631 respectively. For the purposes of calculating child
    support, the trial judge used a three-year average to soften the dramatic
    fluctuations in the fathers income. At the outset, the trial judge noted that
    the mother was credible and reliable, but that he had concerns with the
    fathers evidence, and accordingly ascribed more weight to the mothers
    evidence unless there was reliable evidence to support the fathers position.
    The father had not only failed to disclose his true income to the mother, but
    he had gone to considerable lengths to conceal the true amount of the income
    that he had that was actually available for the support purposes.

[9]

The trial judge determined the fathers income
    by considering: documentary evidence; the evidence of an expert retained by the
    father to prepare an analysis of his 2016 and 2017 income; the evidence of an
    expert retained by the mother qualified in bookkeeping, tax preparation, and
    identifying expenses; and evidence regarding his employment benefits (use of
    vehicle and credit card), cash income, income-splitting with his girlfriend,
    and lifestyle and assets. The mothers income for the years between 2014 and 2019
    was $33,086, $33,359, $22,353, $30,409, $37,988, and $52,098 respectively. This
    was based on her income tax returns and other employment documentation.

[10]

The trial judge determined that there had been
    obvious changes in circumstances, both in respect of care and control of the
    children and in respect of the parties respective incomes. As a result, there
    were changes in circumstances within the meaning of s. 17(4) of the
Divorce
    Act
, R.S.C. 1985, c. 3 (2nd Supp.) and s. 14 of the
Federal Child
    Support Guidelines
, S.O.R./97-175 (CSG) that justified considering
    changes to the Graham Order.

[11]

With respect to prospective child support, the
    trial judge ordered that the father pay set-off support in the amount of $6,671
    per month from July 2020 onward based on an income of $415,272, which was a
    three-year average of the fathers 2017-2019 income. This amount included child
    support for the eldest child, who despite being over 18 years of age, qualified
    as a child of the marriage.

[12]

The trial judge also allowed the mothers claim
    for retroactive child support. The father was required to pay retroactive child
    support for the period from August 2016 to June 2020 in the amount of $222,484 at
    the rate of at least $3,708 per month.

[13]

The trial judge ordered that the fathers child
    support obligations be secured against the fathers house, as well as against any
    interest in corporations of which he was a shareholder. He based this on his
    conclusion that the father had demonstrated that he cannot be trusted to fulfill
    his obligations to the children, as he has failed to pay child support
    commensurate with his actual income and has concealed sources of income. Finally,
    the trial judge ordered a parenting arrangement of equally shared parenting
    time on a week-about schedule for the youngest child.

[14]

In a separate costs endorsement, the trial judge
    ordered the father to pay $204,913.81 in costs to the mother.

B.

Discussion

[15]

The appellant father raises a number of issues
    on this appeal:

1)

Did the trial judge err in his imputation of the
    appellants income for the purposes of his ongoing child support obligations?

2)

Did the trial judge err in finding that support
    arrears were payable, or did he err in the determination of the quantum?

3)

Did the trial judge act without jurisdiction in
    making the charging order?

4)

If the appellant is unsuccessful on the appeal,
    should he be granted leave to appeal the costs order on the basis that the
    amount was not proportionate to the issues determined by the court?

(1)

Imputation of income for ongoing child support

[16]

While the appellant father acknowledges that
    many of the trial judges conclusions are based on findings of fact and
    credibility which are entitled to a high level of deference from this court, he
    argues that the trial judge erred in law in imputing income to him for the
    purposes of determining his ongoing or go-forward child support obligations
    by declining to rely on his most current income information. The appellant
    submits that he had given up his income from other sources and that his
    $180,000 salary amount was the amount that should have determined his ongoing
    income for child support purposes. The reason that this amount should have been
    used, according to the appellant, is because s. 16 of the CSG should be read in
    conjunction with s. 2(3) of the CSG which provides that where, for the purposes
    of the CSG, any amount is determined on the basis of specified information, the
    most current information must be used.

[17]

I do not accept this argument. The trial judge
    did not accept the fathers evidence that a salary of $180,000 per year from
    his new employment with Premier Concrete Pumping beginning in September 2019
    accurately represented his current income and that he had no other sources of
    income. His decision to reject this evidence must be viewed in the context of
    the findings of fact that he made with respect to the fathers income, which
    included that the father had refused to provide full disclosure or interfered
    with others providing disclosure of his financial information, for example in
    relation to his cash income, his work benefits, income-splitting with his
    girlfriend, and his ownership of assets. While the father claimed that he left
    his previous job and now earned an income of $180,000, the trial judge
    determined that he had not offered a sufficient explanation for doing so. As he
    stated at para. 210 of his reasons:

In his evidence [the
    father] said he changed jobs to PCP because he wanted a T4 job. He says his
    income is now $180,000 per year. He has not satisfactorily explained why he
    would leave an employment/self-employment arrangement that was generating a
    very generous income, in favour of one generating much reduced income.

[18]

Moreover, the trial judge did not believe the
    fathers evidence that he no longer had any cash income after September 2019
    and concluded that he likely still had cash income that remained undisclosed
    and undeclared, given the fathers readiness to withhold full disclosure and
    actively deceive the mother and the court.

[19]

In short, the trial judge only resorted to imputing
    income to the father after rejecting the fathers evidence that a salary of $180,000
    per year was a true representation of the fathers go-forward income. That was
    a finding that was well grounded in the record and for that reason, the trial
    judge was entitled to consider the fathers previous three-year average of his
    income as the basis for the go-forward child support calculations. I see no
    reversible error that could justify interfering with the trial judges
    conclusions on this point.

[20]

Alternatively, the appellant father argues that
    even if the trial judge appropriately imputed income, he misapprehended the
    evidence in calculating the appellants go-forward income by inadvertently
    grossing up certain amounts. Misapprehensions of evidence do not typically
    involve questions of law:
R. v. Morrissey
(1995), 97 C.C.C. (3d) 193
    (Ont. C.A.), at p. 218. Where a misapprehension of evidence is palpable, in
    that it is obvious, plain to see, or clear, and overriding, in that the misapprehension
    goes to the root of the challenged finding of fact or very core of the outcome
    of the case, appellate intervention is justified:
Waxman v. Waxman
,
    2004 CanLII 39040 (Ont. C.A.), at paras. 296-97, leave to appeal refused,
    [2004] S.C.C.A. No. 291;
Carmichael v. GlaxoSmithKline Inc
., 2020 ONCA
    447, 151 O.R. (3d) 609, at para. 125, leave to appeal refused, [2020] S.C.C.A.
    No. 409.

[21]

In the DivorceMate calculations for 2019
    attached to the trial judges reasons, an auto gross up was applied to the experts
    calculation of the fathers spending for that year, his personal use of two work
    trucks, his personal use of a work credit card, and his cash income, all
    classified as other non-taxable income. An auto gross up was not applied to his
    girlfriends income, classified as diverted income. The trial judge did not
    err in determining which figures should be grossed up, and the application of auto
    gross up was consistent with the trial judges determinations. There were no
    palpable and overriding errors in the trial judges calculations and gross up
    of these figures warranting appellate intervention.

(2)

Retroactive child support

[22]

After this appeal was heard, the Supreme Court
    of Canada released
Colucci v. Colucci
, 2021 SCC 24. Although
Colucci
directly addressed a payors request that his arrears be rescinded and that
    child support be retroactively decreased, the decision also set out a revised
    approach for cases where a recipient applies to retroactively increase child
    support. The parties were invited to and did make submissions on the relevance
    of
Colucci
to this appeal, and I have considered them.

[23]

In summary, the revised approach in
Colucci
requires first that the recipient establish a past material change in
    circumstances. Once that has been established, a presumption arises in favour
    of retroactively increasing child support to the date the recipient gave the
    payor effective notice of the request for an increase, up to three years before
    formal notice of the application to vary. Effective notice requires only that
    the recipient broached the subject of a potential increase with the payor. If
    there was no effective notice, child support should generally be increased back
    to the date of formal notice. Due to the presumption that is triggered by
    establishing a past material change in circumstances, the factors in
D.B.S.
    v. S.R.G.
, 2006 SCC 37, [2006] 2 S.C.R. 231 are no longer necessary in
    determining whether child support should be retroactively increased. However,
    they are still relevant in guiding the courts exercise of discretion to depart
    from the presumptive date of retroactivity where the result would be otherwise
    unfair. Finally, once the court has determined that support should be
    retroactively increased to a particular date, the increase must be quantified
    in accordance with the CSG:
Colucci
, at paras. 6, 71-73 and 114.

[24]

One of the principles underpinning this approach
    to the variation of child support is adequate, accurate, and timely financial
    disclosure:
Colucci
, at paras. 32, 48-54. The child support regime is
    a system that creates informational asymmetry and is tied to the payors
    income, and it would be unfair and contrary to the childs best interests to
    require the recipient to police the payors ongoing compliance with their
    obligations: at para. 49. As the court emphasized, at para. 50:

This is why frank
    disclosure of income information by the payor lies at the foundation of the
    child support regime. In
Roberts v. Roberts
, 2015 ONCA 450, 65 R.F.L.
    (7th) 6, the Court of Appeal described the duty to disclose financial
    information as [t]he most basic obligation in family law. A payors failure
    to make timely, proactive and full disclosure undermines the policies
    underlying the family law regime and the processes that have been carefully
    designed to achieve those policy goals. Without proper disclosure, the system
    simply cannot function and the objective of establishing a fair standard of
    support for children that ensures they benefit from the means of both parents
    will be out of reach. [Citations omitted.]

[25]

The appellant father submits that the trial
    judge erred in law in finding that he owed retroactive child support to the
    mother. He argues that there was no material change in circumstances.
    Alternatively, even if retroactive support was appropriate, he submits that the
    trial judge erred in his determination of the fathers past income and thereby
    erred in calculating the quantum of retroactive support owed. He claims that
    the trial judge made reviewable errors and misapprehended the evidence on his
    income. He also asks this court to reduce his monthly retroactive support
    payments to $1,000 per month, due to his high debt load.

[26]

I do not agree that the trial judge made any
    error in granting a retroactive increase in child support or in determining the
    quantum. While the trial judge did not have the benefit of the reasons in
Colucci
,
    his conclusion was consistent with the revised approach to applications for
    retroactive increases in child support.

[27]

First, after an extensive analysis, the trial
    judge determined the fathers income for the period between 2014 and 2019, and he
    found that there had been changes in circumstances that justified considering
    changes to the Graham Order. He also noted that the Graham Order was predicated
    on the fathers income of $109,000, but that even the father himself submitted
    that his income was significantly higher for every year that followed. I would
    not disturb these findings.

[28]

There was no misapprehension of evidence or
    other reviewable error regarding the fathers past income. It is important to
    note that the trial judge arrived at the amounts of the fathers income for the
    years from 2014 to 2019 through an exhaustive and meticulous analysis of the
    evidence before him. In the course of this analysis, he made numerous findings
    that the father used an array of tactics to avoid disclosing his real income,
    including income-splitting with his girlfriend, not taking formal ownership of
    a vehicle to conceal the asset from the courts scrutiny, withholding
    information about cash income, and failing to disclose personal benefits that
    were obtained through the use of a vehicle and credit card associated with his
    employment.

[29]

The fathers failure to disclose the benefits
    received from his employment caused the fathers own expert, who was retained
    to prepare an analysis of the fathers 2016 and 2017 income, to withdraw his
    opinion. The trial judge made credibility findings against the father,
    observing that in his testimony, the father was non-responsive, evasive,
    contradictory, confused regarding his accounts, and ill-informed of his
    personal finances. The trial judge concluded that he would treat the fathers
    evidence with considerable caution and give it reduced weight in light of his
    concerns. It was open to the trial judge to weigh and accept or reject the
    evidence of the father and other witnesses, and to draw adverse inferences
    against the father given his incomplete disclosure, to determine the fathers
    income. The trial judge also noted that he was not confident that he had the
    full picture as to the fathers asset holdings, stating that [w]ith his
    demonstrated readiness to withhold evidence regarding his finances, it is more
    likely than not that there are assets yet to be revealed. The trial judges
    findings of fact were carefully grounded in the record before him, and the
    assumptions he made and inferences he drew were reasonable.

[30]

Second, as a material change in circumstances is
    established, the presumption to retroactively increase child support to the
    date the recipient gave the payor effective notice is triggered. The mother
    first made her request for financial disclosure in July 2016, which was within
    three years of the mother giving formal notice of an application to vary in
    July 2017. The trial judge concluded that the appropriate date of
retroactivity was August 1, 2016, the first day of the first month
    following notice to the father. The appellant does not appeal the finding on
    the appropriate date of retroactivity and agrees that this conclusion is supported
    in light of
Colucci
.

[31]

Third, the trial judge proceeded to the issue of
    quantum and found that the father owed $222,484, based on his detailed and
    specific calculations of the fathers past income. The trial judge then turned
    to consider the impact of the burden of this sum upon the father, concluding
    that if stretched over a period of 5 years at an additional $3,708 per month,
    the father could manage this with his significant income. As noted above, the
    trial judge did not make any reviewable errors in his determination of the
    fathers past income, and I see no errors in his calculation of the quantum of
    retroactive support payable.

[32]

As the appellant points out,
Colucci
does
    support the use of creative payment options in the context of a request for
    rescission of arrears and proven payor hardship. The point, however, is that
    payment over time is preferable to rescission, not that there is any automatic
    entitlement to any particular terms of payment. I see no basis to justify
    interfering with the trial judges discretion in setting the terms of payment
    at $3,708 per month, especially in light of his findings that the fathers
    claims of hardship lacked the support of credible and reliable evidence on his
    financial circumstances and that the fathers income was consistent with a
    payor of substantial means who could afford the payment terms as ordered.

[33]

In addition, relevant to both the first and
    second grounds of appeal on determining the fathers current and past income,
    the trial judge had invited the parties to address any errors in his
    calculations in their costs submissions. The appellant had the opportunity at
    that time to address any alleged errors relating to the determination of his
    income, such as whether certain amounts should have been grossed up, and the
    resulting quantum of retroactive child support. The appellant did not do so. In
    sum, I see no errors in the trial judges determination that retroactive child
    support was payable or in the quantum ordered.

(3)

Charging order

[34]

The appellant submits that the trial judge had
    no jurisdiction to make a charging order to secure the appellants child
    support obligations, in part, because the mother did not plead that security
    for support should be made by way of charging order. The appellant further
    argues that the criteria to be considered by the court in exercising discretion
    to grant a charging order are limited to those cited in
Reid v. Catalano
,
    2008 CanLII 9379 (Ont. S.C.), at para. 138, and that a charging order is not
    justified in these circumstances. The factors listed in
Reid
are as
    follows:

i)

where a party has a history of dissipation of
    assets, that is, unable to handle money;

ii)

where the party is likely to leave the
    jurisdiction and become, in effect, an absconding debtor;

iii)

where the party has, in the past, refused to
    honour a support obligation, whether it came by court order or contract or has
    refused to provide support at all;

iv)

where the party has a poor employment history,
    or has indicated that he or she, will leave their employment.

[35]

There is no merit to this argument. In
    accordance with s. 15.1(4) of the
Divorce Act
, the court may impose
    terms, conditions or restrictions in connection with the [child support] order
    or interim [child support] order as it thinks fit and just. Section 12 of the CSG
    adds that the court may require that the amount payable under the child support
    order be paid or secured, or paid and secured, in the manner specified in the
    order.

[36]

In imposing a charging order, the trial judge
    noted that s. 12 of the CSG permits me to require that the amount payable be
    paid and secured in the manner specified in the order. He accurately observed
    that considerable latitude is afforded to judges in crafting appropriate
    security, and he stated that it was clear that the father had significant
    undeclared cash income and other undisclosed sources of income and benefits. The
    trial judge concluded that he had concerns regarding whether the father could
    be trusted to fulfill his child support obligations, given the fathers
    previous conduct, at paras. 309-10:

There are reasons to be concerned about the [father]s
    intentions regarding satisfaction of the child support obligations I am
    imposing upon him. He has demonstrated he cannot be trusted to ensure his
    children receive the child support to which they are entitled. He did this by
    failing to pay support at a level commensurate with his actual income. He
    actively concealed sources of income by failing to disclose personal expenses
    paid by his income sources. He concealed his beneficial ownership of the
    Mercedes Benz vehicle. He encouraged Ms. Sciacca to withhold relevant
    disclosure from his own lawyer.

In short, the [father]
    cannot be trusted to fulfil his obligations to the children.

[37]

I see no error in the trial judges
    determination that the circumstances of this case, including the fathers
    conduct, justified the imposition of a charging order. There is a broad
    discretion pursuant to s. 15.1(4) of the
Divorce Act
accorded to trial
    judges to impose charging orders in appropriate cases, and s. 12 of the CSG
    expressly provides a court with this authority: see
Katz v. Katz
, 2014
    ONCA 606, 377 D.L.R. (4th) 264, at para. 71. Moreover, the factors that may be
    considered are not limited to those set out in
Reid
.

[38]

The appellant father also initially argued that
    the charging order was overbroad because it included corporations in which he
    did not have an interest. However, in oral submissions before this court,
    counsel indicated that this argument would not be pursued because it was clear
    that the charging order only covered corporations in which the appellant was a
    shareholder, which could be easily recognized.

(4)

Costs order

[39]

In the event that the appeal is not successful,
    the appellant father also seeks leave to appeal the trial judges costs order.
    He alleges that the trial judge erred in failing to apply the principles of
    proportionality and reasonableness.

[40]

To succeed on an application for leave to appeal
    a costs award, strong grounds on which this court could find that the trial
    judge erred in exercising their discretion must be shown:
Hobbs v. Hobbs
,
    2008 ONCA 598, 54 R.F.L. (6th) 1, at para. 32. A court should only set aside a
    costs award on appeal if the trial judge has made an error in principle or if
    the costs award is plainly wrong:
Hamilton v. Open Window Bakery Ltd
.,
    2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[41]

I see no error in the trial judges exercise of discretion
    in his disposition of costs. In ordering the father to pay around $205,000 in
    costs, enforceable as support, the trial judge noted that the mother was
    undoubtedly the successful party and presumably entitled to costs. He examined
    her bill of costs, concluded that some portion of the mothers claim for costs
    was duplicative and excessive, and reduced the amount significantly. While her
    bill of costs appeared to be excessive, the trial judge observed that the
    fathers conduct in relation to disclosure contributed significantly to the
    time expended by the mothers counsel.

[42]

The trial judge determined that the appropriate
    approach was to allow partial indemnity costs in a greater amount than
    otherwise proportionate on a motion to change. The mother incurred additional
    expense in having to pursue the truth about the fathers income, the trial was
    11 days long and focused almost entirely on his income, and the unusually high
    amount of costs was justified in light of the circumstances and the fathers
    unreasonable conduct. He also again referred to his findings about the fathers
    income suggesting a much greater ability to afford this burden than that which
    he urges upon me in his submissions. The trial judge stated that:

Relieving him of
    even some of this burden would be incompatible with the objectives of costs as
    set out in
Serra v. Serra
, [2009] O.J. No.1905 (Ont. C.A.), a failure
    to recognize the impact of [the father]s unreasonable conduct upon [the
    mother] and an opportunity missed to discourage litigants from engaging in
    conduct that drives litigation inexorably forward without apparent regard to
    the consequences.

[43]

The costs award was proportionate and reasonable
    in light of the issues at trial, the length of the trial, and the conduct of
    the father. The trial judges findings of fact thoroughly document the fathers
    conduct in not only failing to proactively disclose his income over the years,
    but in actively attempting to mask or hide it. This greatly contributed to the
    time expended by counsel. As the appellant father has failed to demonstrate
    strong grounds, I would deny leave to appeal the costs award.

C.

Disposition

[44]

I would dismiss the appeal and deny leave to
    appeal costs. As agreed by the parties, costs of the appeal in the amount of
    $15,000, inclusive of disbursements and HST, will be payable to the successful
    party, the respondent mother.

Released: July 29, 2021
K.F.

A. Harvison Young J.A.

I agree K. Feldman J.A.

I agree J.A. Thorburn J.A.


