A few weeks ago I wrote about a few court decisions Should a Spouse Who Refuses to Disclose Income Be Permitted to Appeal Court’s Best-Guess Estimate? http://tinyurl.com/bpvarm5 in which a paying spouse had failed or refused, after separation, to be forthcoming with his or her income. In such scenarios – as a means of fostering the general principle that parties should be scrupulously forthcoming in their disclosure to each other – a court will impute (i.e. take a best guess at) income levels, and set spousal or child support accordingly.
A recent Ontario court decision illustrates this. Stetler v. Stetler involved a couple who had married in 2001 and had a child together in 2007. The wife also had a child from a previous relationship. They separated in 2009.
At the time of separation, the husband owned a small construction business, and also participating in farming with his grandfather on the family-owned farm. Yet his declared income for 2009 was about $5,000, and for 2010 it was $4,000. He did not file a tax return for 2011 at all, claiming that he had no income whatsoever, and stated that he would not be paid for his work on the farm until the year’s corn crop was harvested.
Notwithstanding this alleged lack of income, the wife brought an application for child support, claiming that the husband was actually hiding his income. The court considered the facts, and concluded that the husband’s construction business featured a good deal of “under-the-table” work for which he received cash payments, so that he could avoid paying income taxes. It also pointed out that by failing to call the grandfather to testify, the court was entitled to draw an adverse inference in relation to income from farming (i.e. that the grandfather would be unable to provide evidence that was supportive of the husband’s legal position). Similarly, the court was entitled to draw an adverse inference from the fact that the husband had failed to call his own sister to testify, especially since she acted as his accountant.
The court summed up its assessment as follows:
This is one of those cases in which the payor spouse puts his concerns about money ahead of his obligations to his spouse or children. Not only has the Applicant not filed an Income Tax Return for 2011 taxation year, but he claims to have earned no income whatsoever for the first six months of this year. He has a history of having income imputed to him by the courts both in his prior divorce proceedings and in this one. June 26, 2009, Taylor J. imputed annual income of $36,000 to this man. On April 21, 2011, Turnbull J. imputed $18,000 per annum from the first of May 2009 to the first of April 2011 and then $25,000 from the first of May 2011 on. In respect of his prior divorce proceedings his income was imputed at $37,500 in 2006 and on consent imputed at $33,700 in June 2008.
So not only does the Applicant not tell the tax authorities what he earns, but he has not shared that information with the court. He has clearly dragged his feet and simply said “go ahead – guess”.
The Applicant is a man who does not want to disclose his income. In fact I have come to the view that he is hiding his income. I found totally incredulous his evidence that his working on the farm almost full-time for his father produces no income for him, nor do I believe him when he says he has no expectation as to how much income his labour produces. He filed no income tax return for 2011 and says he has made no income for 2012. Apparently, he’s waiting for the corn to come in before he gets payment for both 2011 and 2012. He says he has no inkling as to the basis of his payment by his father, nor any expectation of what will be paid. I find this to be incredible.
The Applicant is quite prepared to concede that his income should be imputed. In fact, he asks that it be imputed at $25,000 per annum, just like Turnbull J. found in April of 2011. But he lays no foundation for that. I find that plea of his to be a ploy to avoid the court imputing greater income to him.
In the end, the husband’s income for child support purposes was imputed to be $36,000. Essentially, the husband was expecting the court to guess his income; if he was unhappy with the court’s guess – and in absence of concrete information which was in his possession – then he had only himself to blame.
For the full text of the decision, see:
Stetler v. Stetler, 2012 ONSC 4466; additional reasons at 2012 ONSC 5674 http://canlii.ca/t/fs8w1
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