



COURT OF APPEAL FOR ONTARIO

CITATION: Stevenson v. Smit, 2014 ONCA 521

DATE: 20140704

DOCKET: C57977

Weiler, MacPherson and Cronk JJ.A.

BETWEEN

Helen Stevenson

Respondent (Applicant)

and

Peter Smit

Appellant (Respondent)

Daniel S. Melamed and Charley Levitan, for the appellant

Herschel I. Fogelman and Oren Weinberg, for the
respondent

Heard: July 3, 2014

On appeal from the order of Justice Carolyn Horkins of
the Superior Court of Justice, dated October 29, 2013, dismissing appeals from
the order of Justice H.L. Katarynych of the Ontario Court of Justice, dated May
17, 2012.



By the Court:

I.        Background

[1]

The parties are former spouses.  They married in 1989, separated in 2003
and divorced in 2004.  There are three children of the marriage, aged 19, 18
and 14, respectively.

[2]

In 2005, following their separation, the parties entered into a
separation agreement (the Agreement).  It provided, among other matters, that
neither party would pay child support in accordance with the Child Support
Guidelines (the Guidelines).  Rather, the parties agreed that they would
share equally all major expenses concerning the children of the marriage,
including private school tuition, activity fees, camp fees, and post-secondary
education expenses.

[3]

When the Agreement was signed, the appellant, Peter Smit (the father),
was engaged in forming a new company, and had minimal income (his income had
been declining for four years).  After execution of the Agreement, his income
in most years continued to decline.  He met his share of the childrens special
expenses by drawing down on or liquidating some of his then considerable
capital assets.

[4]

In this fashion, the father met his obligation to pay 50% of the
childrens special expenses until 2008, when he defaulted and informed the
respondent, Helen Stevenson (the mother), that he could no long satisfy his contractual
child support obligations.

[5]

After the fathers default, the mother applied to the Ontario Court of
Justice for an order quantifying the fathers arrears of child support for
enforcement purposes.  The father countered with an application to terminate
his child support obligations under the Agreement as of November 1, 2008, and
to substitute in their stead a requirement that he pay child support in
accordance with the Guidelines.  The father claimed that he had [lost] the
ability to liquidate capital to support his children, that he had insufficient
income to pay the agreed child support, and that these allegedly unforeseen and
unanticipated factors constituted material changes in circumstances justifying
relief from his child support obligations under the Agreement.

[6]

The application judge disagreed.  After a three-day trial, she held that
the father had failed to establish a material change in circumstances.  She
therefore dismissed his application to change his child support obligations
under the Agreement.  She also set a schedule for the fathers payment, over
time, of his arrears in child support and for his future payment of his share
of the childrens ongoing special expenses.

[7]

The father appealed.  By order dated October 29, 2013, Horkins J. of the
Superior Court of Justice dismissed his appeal.

[8]

The father appeals to this court.  Following oral argument, we dismissed
his appeal, for reasons to follow.  These are those reasons.

II.       Issues and Discussion

[9]

The father argues, first, that the application and appeal judges erred
by failing to find a material change in circumstances as contemplated by s. 14
of the Guidelines.  In the alternative, he submits that foreseeability of a
change in circumstances is not the appropriate test for variation under the
Guidelines of contractual child support obligations.

[10]

In
the circumstances of this case, we disagree.

[11]

The
application judge found that the fathers need to resort to capital to meet his
child support obligations, the fact that he was in an income-earning slump,
and the fact that his income was in decline were factors plainly known to the
parties at the time they entered into the Agreement.

[12]

The
application judge further found that the father had untapped income-earning
potential and that he had chosen to resort to his capital (including an
equalization payment in the approximate sum of $1 million paid to him by the
mother) to satisfy his child support obligations and to finance his own
lifestyle, as well as his various business ventures.

[13]

These
findings were amply supported by the evidentiary record.  They are dispositive
of the fathers first ground of appeal.  They compelled the conclusion that the
father failed to establish a material change in circumstances within the
meaning of that term under the applicable authorities.  The appeal judge did
not err in deferring to this central finding by the application judge.

[14]

Nor
can the fathers claim that the application and appeal judges erred in their
appreciation of the governing test for the variation of special contractual
child support obligations on the basis of a material change in circumstances be
accepted.  Both judges recognized that this test is definitively set out in
Willick
v. Willick
, [1994] 3 S.C.R. 670.  Foreseeability lies at the heart of this
test: if the matter relied upon as constituting a material change in
circumstances was known at the time of contract formation, it cannot ground a
variation request.

[15]

The
father next argues that the judges below both erred, in effect, by requiring
him, without imputing income to him, to comply with a child support order that
he cannot possibly honour.

[16]

We
do not accept this submission.  The application judge considered, and rejected,
the fathers contention that the mothers application constituted a request to
impute income to him.  She pointed out, correctly in our view, that imputation
of income was not the task at hand.  The issue before the application judge
was not whether the father, in fact, was positioned financially to meet his agreed
child support obligations.  Rather, the issue was whether, at the time the
Agreement was entered into, it was objectively foreseeable that the father
would be required to encroach on his capital to satisfy those obligations,
given that he did not then and may not in the future have the income to do so. 
No material change in circumstances having been demonstrated, imputation of
income to the father was essentially irrelevant.

[17]

In
our view, the fathers remaining grounds of appeal are similarly without
merit.  Contrary to his contention, the application judge did not fail to
consider the Guidelines.  To the contrary, she expressly recognized that, in
this case, the parties freely and knowingly elected to enter into special
arrangements regarding child support, outside the parameters of the
Guidelines.  The parties were entitled to do so, as long as the childrens
needs for and entitlement to support were not bartered away.  That did not
occur in this case.

[18]

Finally,
the fathers complaint that the application judge erred by failing to credit
him for the full amount of the private school bursaries that were obtained for
the children also fails.  On our reading of the transcript, the mother did not
concede that the father was entitled to full credit for the bursaries.  In any
event, the application judges treatment of the issue  according each parent
equal credit for the bursaries  cannot be faulted.

III.      Disposition

[19]

For
the reasons given, the appeal is dismissed.  The respondent is entitled to her
costs of this appeal and of the motion for security for costs, fixed in the
total amount of $12,500, inclusive of disbursements and H.S.T.



Released:



JUL -4 2014                                     Karen
M. Weiler J.A.

KMW                                               J.C.
MacPherson J.A.

E.A.
Cronk J.A.


