S.M.G. v. M.G.S., 2011 ABQB 319

Court of Queen ’ s Bench of Alberta Citation: S.M.G. v. M.G.S., 2011 ABQB 319 Date: 20110512 Docket: FL03 17200 Registry: Edmonton Between: S.M.G. (also known as S.M.D.

D) Applicant - and - M.G.S Respondent _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice E.A. Marshall _______________________________________________________ I. Introduction [ 1 ] This case concerns the maintenance payable for the support for the child of the parties, who was born in 1996. Mother claims retroactive support for the child, while father claims ongoing support for the child, who has resided with him since December 2009.

The parties appeared before me without counsel in an oral hearing which had been ordered because the parties were unable to come to an agreement regarding the issues and there were conflicting affidavits about the facts. II. Facts

[ 2 ] I have heard the testimony of the parties and seen numerous exhibits, mainly in affidavits which were referred to in testimony. I have come to the following conclusions regarding the facts. The parties were never married but after cohabiting, separated in 1998. Mother assumed the primary care of the child on August 12, 1999. Mother took father to court to obtain support and the parties consented to an Order in this court providing for monthly support of $200 payable to the mother. The order was silent on any obligation of either party to provide future financial disclosure.

Father made the required payments and was an involved father in the parenting of the child. [ 3 ] Early in 2003, mother decided to move to Ontario with her husband and the child. Father was alarmed about the effect of the proposed move upon his relationship with the child. He filed an application in Provincial Court for custody and access. The parties engaged in mediation on May 15, 2003 before going into Provincial Court. At that time, father offered to increase maintenance to $300 per month providing:

(1) Mother repaid $2000 she owed him,

(2) She paid for the cost of flying the child back to Edmonton for access visits,

(3) She took out $200,000 life insurance on her life for the benefit of the child, and

(4) She paid an outstanding debt to his father and she allowed the child to stay in school for the rest of the school year. One of the reasons mother would not agree to accepting $300 per month support was the fact that father was paying $438 per month support to Maintenance Enforcement for another child from another relationship.

Although they were unable to reach agreement on the terms set out above, they did agree to some matters; they agreed to a consent order providing for joint custody, primary residence of the child with mother, that the child would remain in Alberta until the school year ended and there would be access to father for specified periods in summer and otherwise, including weekly phone access. [ 4 ] Mother moved to Ontario and contrary to the Provincial Court Order, took the child out of school to move with her in May 2003.

Mother was clearly displeased with the maintenance she was receiving at the time and retained counsel. On June 6 th , Edmonton counsel wrote to father providing the address and phone number of mother, asking when he wished to exercise his two weeks summer access and also requesting three years income tax returns because the $200 amount "seems extremely low." Father responded by mail and although he addressed access, he said nothing about furnishing earnings information.

Counsel wrote him again requesting disclosure but he responded by letter of July 11, saying he would still pay $300 but if mother wanted disclosure, she and her husband must provide complete financial disclosure. Mother saw a lawyer in Ontario about pursuing father for increased support but was advised the costs would likely exceed any benefit gained. [ 5 ] From that point, communications between the parties ended.

Father made a few phone calls to the child but all communication ceased from or to father from mother and the child On October 27, 2008, mother applied under the Ontario legislation for an Interjurisdictional Support Order by filing a Support Variation Application in Waterloo, Ontario. In the application, she stated she sought a child support order for $796 per month starting as of January 6, 1999. [ 6 ] At the end of 2008, mother moved back to Edmonton and visits of the child with her father were resumed. In January 2009, mother advised father she was seeking an increase in child support.

On April 22, 2009, mother' application, which she had made in Ontario, came before me in Court in Edmonton. Notice had not been effected upon father but there was some evidence by means of a process server's affidavit that father was evading service, which he roundly denied before me in his oral testimony. I made an Interim Interim Order which assumed a guideline income of $98,000 for father and provided, without prejudice, for monthly support of $863 commencing January 1, 2009.

Father paid the increased amount with arrears to Maintenance Enforcement. [ 7 ] In December 2009, the parties agreed that the child would reside with her father. On January 25, 2010, father filed an application in this court for support of the child from mother. In response, mother resisted the application and sought an order increasing

the maintenance father had paid in the past and setting the arrears of maintenance payable by him. Since that time there have been various orders requiring disclosure of financial information from father and his solely owned corporation, 873031 Alberta Ltd. A stay of all enforcement proceedings was imposed and the oral hearing was eventually directed. [ 8 ] Although mother had gained desirable employment after her return to Edmonton in 2008, she was laid off her work in March 2010 and has been unemployed since that date. Her only income since that time has been Employment Insurance and a CPP pension.

I am satisfied she has made diligent efforts to regain employment but has not found any at present. She relocated to Victoria, B.C. late in 2010 to reconcile with her husband. [ 9 ] The parties Line 150 income is as follows: 2003 2004 2005 2006 2007 2008 2009 Mother 23821 50300 58528 46991 43828 31884 62276 Father 42185 50580 64656 162291 75000 50079 42000 Father's corporation has a net income and retained earnings since 2003, as follows: 2003 2004 2005 2006 2007 2008 2009 873931 Alberta Ltd. Retained earnings 16327 6926 12994 67674 75890 121621 131250 873931 Alberta Ltd.

Net Income 4070 -9302 5967 54780 8216 45731 9208 [ 10 ] In relation to her application for arrears, mother does not claim s.7 expenses prior to her return to Alberta in 2009 although she incurred day home costs through the years. For 2009 she claims the following extraordinary expenses: Orthodontic $4267.12 School fees $ 925.00

III. Mother’s Claim for Retroactive Maintenance [11] It can be readily seen that the monthly support paid by father was substantially below the 1997 Guidelines. His personalincome, quite apart from considering his corporation’s, in 2003 was $42,100.00 which required a payment of $350.00 per month. Thisrepresented the year with his smallest declared income until 2009. I will have more to say respecting his 2009 income. The markedincrease in father’s personal income in 2006 was a result of his sale of a four-plex which he owned. He had acquired it several yearsbefore and sold it in 2006.

His capital gain totalled $168,566.00 and his taxable income was one-half of that amount - $84,283.01. As aresult, when this amount was added to his employment income of $80,600.00, his total income set out in Line 150 of his tax return was$161,941.22. The commensurate child support payable under the Guidelines is $1,414.00 per month. [12] Father is a welder who owns his own business. It is operated through his corporation and he is the only employee of thecorporation. He owns five trucks with electric welders which carry on oilfield welding in the Nisku Industrial Park.

He hires welderswho work on an hourly basis, each utilizing a truck and welder. They are subcontractors and are paid about $40-50.00 per hour eachweek. Father’s corporation submitted bills to the respective drilling companies which often do not pay his corporation for one month ormore. I accept father’s evidence that the business is a “feast or famine” in the sense that there can be a great deal of demand for hiscorporation’s services during certain periods while there are also lengthy slack periods when no work is available. This pattern is fairlytypical in Alberta’s energy patch.

Factors Determining whether Retroactive Support should be Ordered A. Is there a reasonable excuse for why support was not sought earlier? [13] In the Supreme Court of Canada case D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry v. Henry; Heimstra v. Heimstra,2006 SCC37 , [2006] 2 SCR 231, para. 101, a reasonable excuse may include the lack of financial or emotional means to bring anapplication. It seems evident here that given the disregard of father to requests for disclosure in 2003, that he was unwilling to providesuch without a court application, which mother could not afford. B.

Conduct of Father - the Payor Parent [14] From the evidence of father, I am satisfied that after the child moved to Ontario in 2003, he deliberately chose to sever anyconnection with her by emotionally putting her out of mind. It appears likely he focussed his attention on gaining custody of his otherchild, a son who moved in with him in 2004. While father denies any blameworthy conduct as set out in D.B.S., I have no doubt that hisconduct was blameworthy, in his particular circumstances.

While father maintains that the $200.00 monthly support he was paying wasnot far below his Guideline obligation in 2003 and 2004, no such rationale is possible for the profitable years he enjoyed from 2006 andonward. Blameworthy conduct is simply defined as anything that places the payor parents’ own interests over his child’s right to anappropriate amount of support.

D.B.S. states a payor parent cannot hide his income increases from the recipient parent in the hopes ofavoiding larger child support payments (para.106). [15] I can find no mitigating factors which would give me any reason to find the conduct of father was not blameworthy inignoring his obligation to support the child when his financial circumstances had changed so markedly from the time when the parentshad agreed on $200.00 per month support. I conclude the blameworthy conduct occurred from 2006, when father enjoyed substantiallyincreased income, both personally and through his corporation. C.

Father’s Guideline Income [16] Father’s income in 2006, as indicated previously, shows he made a $168,000.00 profit from the sale of the four-plex, onlyhalf of which was taxable. In addition, his corporation enjoyed the highest net profit of any year in the last ten. The financial statementsof the corporation show the 2006-2009 net income of the corporation in the respective years was $54,780.00, $8,216.00, $45,731.00, and$9,208.00.

[ 17 ] Section18(1) (

a) of the Alberta Child Support Guidelines A.R. 147, 2005 states as follows: 18(1) Where a parent is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the parent’s annual income as determined under

section 16 does not fairly reflect all the money available to the parent for the payment of child support, the court may consider the situations described in

section 17 and determine the parent’s annual income to include (

a) all or part of the pre-tax income of the corporation and of any corporation that is related to that corporation, for the most recent taxation year, or (Emphasis added) [ 18 ] The case of Miller v. Joynt, [2007] A.B.C.A. 214 dealt with the attribution of pre-tax income in a corporation to the payor parent. In that case, the corporation was wholly owned by the payor, in circumstances substantially similar to that of father in this case.

The Court of Appeal concluded there was no basis for attributing only a portion of the corporate pretax income to the payor but all the pretax corporate income ought to have been attributed to the payor for Guidelines purposes (para. 37). [ 19 ] I am satisfied the annual income declared by father in his personal tax returns does not fairly reflect and represent the amount of money properly available for child support.

The personal line 150 income should be increased by the net income of the corporation in each year from 2006 to 2009 to determine the guideline income. [ 20 ] With respect to the 2009 personal income tax return of father, his business income, being the only income he showed, was $42,000.00. When I queried this because the corporation showed $52,000.00 paid in wages in that year, father stated that the corporation chose to pay just $42,000.00 in wages to him personally in 2009. The remaining $10,000.00 was be retained by the company until after January 1 st , 2010.

In these circumstances, I conclude that the Line 150 income of $42,000.00 does not reflect his correct income because the corporation was actually showing $52,000.00 payable to him as wages. D. Circumstances of the Child [ 21 ] D.B.S. states that a retroactive award is a poor substitute for an obligation that was unfulfilled at an earlier time.

Parents must endeavour to ensure that their children receive the support they deserve when they need it most, but because this will not always be the case of a retroactive award, courts should consider the present circumstances as well as the past circumstances of the child in deciding whether such an award is justified (para.110). [ 22 ] At the time more support should have been paid, mother was earning significant income. The only evidence of any real hardship to mother is that which occurred when the child required extensive orthodontic work after the return to Alberta.

Father did not assist in payment of such expenses or school fees. This was clearly burdensome to mother. There was also evidence before me of the child requiring special school instruction and tutoring at certain times. It also appears that the child is an active child from the number of activities she is pursuing at the present time such as indoor and outdoor soccer, gym and swimming.

Doubtlessly, mother incurred some similar expenses while caring for the child in Ontario and during 2009 in Edmonton. [ 23 ] However, since the child is presently in the care of her father and would appear to be enjoying a relatively high standard of living from the activities in which she engages and the holidays taken with her father, it is difficult to see how a retroactive award given directly to mother will meet the needs of the child.

The benefit to the child from a retroactive award was also considered in the D.B.S. decision where it states that retroactive awards will not always resonate with the purposes behind the child support regime (para 95). The Supreme Court stated that this will be so where the child would get no discernible benefit from the award. However, it also identified that there are a myriad of factors that a court should consider and that none of the factors, including the circumstances of the child is decisive of the issue (para 99).

E. Hardship Occasioned by a Retroactive Award [ 24 ] It is evident that I must be attentive to the fact the calculation of a retroactive award is not linked to what father can afford. Some hardship to him and perhaps his son may result from the disruption of father’s financial affairs through an award although it may not always be possible to minimize hardship.

It is evident that while I must attempt to create a retroactive award that minimizes hardship; nevertheless, hardship to father is not as great a concern because of his blameworthy conduct and because of the overarching principle that parents need to fulfill their obligations to their children, even if they do so retroactively. D.B.S . , paras. 116, 54 . F. Calculation of the Retroactive Award - Date of Award and Quantum [ 25 ] Date for a retroactive award was also extensively reviewed in the D.B.S decision.

Four options were given for when an order may start: date when application is made to court; the date when formal notice was given to the payor parent; the date when effective notice was given to the payor parent; and the date when the amount of child support should have increased. In the circumstances of this case, I believe that the amount of child support should have increased early in 2006 when the father had a significant increase in income.

The reason for picking this date is further strengthened by the fact that this is the time when I determined that blameworthy conduct occurred ( D.B.S . , para. 124 ). [ 26 ] In considering the mother's argument to have retroactive maintenance start in 2003, I am guided against that starting point by two reasons.

First, that even as I found that the mother did raise discussions for a variation back in 2003, it is clear that when a prolonged period of inactivity follows those discussion and those discussions do not move forward, the payor parent is left with a sense that the payor has met his entitlements to his child. Secondly, related to the first point, it is usually inappropriate to delve too far into the past, even when there is blameworthy conduct.

I am guided by D.B.S. again when it states that more than a three year period, prior to formal notice is usually inappropriate. [ 27 ] As I believe formal notice was initiated with the ISO application in the early months of 2009, going back three years from this point, puts me at approximately the same point that I reached when the father should have come forward with his increase in income. [ 28 ] The proper guideline income of father, by including his corporation’s net income with his personal line 150 income and the revision for 2009 is as follows: 2006 2007 2008 2009 Father 217,071 83,216 95,810 61,208 [ 29 ] The respective guideline amounts payable for each year are as follows. 2006 2007 2008 2009

1,880 731 843 531 [ 30 ] The actual date of the change of residence of the child was early in December 2009. An Order of April 6, 2010 was given providing the date of change of residence. For the purpose of calculating child support the date should be December 1, 2009. Accordingly, the monthly support payable by father will end on that date. The 2006 arrears total $20,160.00, the 2007 are $6,372.00, the 2008 are $7,716.00 and the 2009 is an overpayment of $3,984.00 due to the fact that the Support Variation Order of April 22, 2009 was retroactive to January 1, 2009. The retroactive support totals $30,264.00.

In addition, the special expenses for 2009 total $5,192.12. Mother’s 2009 guideline income from Line 150 is $62,276.00. Since father’s guideline income is $61,208.00, he is responsible for 49.6% of the expenses, which is $2,843.00. [ 31 ] The grand total of arrears amount to $33,107.00. In finding this amount of arrears, I am mindful of the Supreme Court’s comments in paras. 127-130 of D.B.S. Although I have used the amounts set out in the applicable Tables, I have not done so without regard for the factors of hardship and the time periods which are applicable.

I find the resulting amount to be fair in the circumstances of the case. IV. Child Support Payable by Mother [ 32 ] Mothers Line 150 income for 2010 totalled $36,371.33, from her wages, severance pay and EI. Accordingly, the basic child support payable is $299 per month, from the Guideline table. I assume her income for December 2009 was one-twelfth of her 2009 income of $69,398.00. So the Guideline amount payable for December 2009 is $608.00. In 2011, she has had neither employment nor EI since February. Her widow’s benefit from CPP is approximately $365.00 per month.

The EI she received in January was approximately $1,726.00 and $457.00 in February. On an annualized basis, her income for January would be $25,092.00 resulting in a guideline payment of $215.00 per month. Although it appears some support would be payable for February, I decline to order such, nor for any subsequent month until mother obtains employment. V.

Special Expenses Claimed by Father [ 33 ] Father claims a substantial list of special expenses from 2010 as follows: Outdoor soccer $ 220.00 School books 75.00 Glasses 220.00 Prescription 78.04 Dental: 416.60 300.00 552.01 Counselling: 160.00 170.00 160.00 Arch supports 425.00

Indoor soccer 260.00 Soccer shoes 124.92 Swim wear 209.63 Gym member 142.86 Flights to Ontario 732.00 Guitar lessons (per month) 80.00 Personal trainer (per month - for two 300) 150.00 Yoga classes (together 60.00 ÷ 2) 30.00 [ 34 ] Section 7(1) of the Alberta Child Support Guidelines refers to special or extraordinary expenses.

It states: 7(1) In a child support order the court may provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of the parents and those of the child and to the family’s spending pattern prior to separation [ 35 ] The necessity of the expense in relation to the child’s best interests is the first consideration.

On this basis, it is difficult to justify gym membership, guitar lessons, a personal trainer or yoga. The second consideration is the reasonableness of the expense in relation to the means of the parents. The family’s spending pattern is of little relevance because of the lapse of time since the parents’ separation. Health related expenses which are proper are: Glasses $220.00 Prescriptions 78.00 Dental 416.00 300.00 552.00 [ 36 ] The claim for school books is allowed - $75.00. Both parents are anxious for their daughter to have counselling so the total of $490.00 is allowed.

I will allow the claim for arch supports of $425.00 because it is health related. Section 7(1) (

a) to (

f) makes clear that child care expenses along with medical, dental and health related expenses are, assuming they are reasonable, a given. Expenses for education and extracurricular activities must be extraordinary to be considered. Soccer is a popular extracurricular activity and since it is an accepted extraordinary expense, summer and winter soccer fees are allowed - $480.00. I do not find the expenses soccer shoes, swim wear and flights to Ontario are truly extraordinary. The total allowed for 2010 special expenses is $3,036.00. [ 37 ] Mother’s Guideline income is $36,371 and fathers is $61,208.

Her share of the special expenses is 37.2% or $1,129.39. [ 38 ] Mother’s child support payable to Feb 1, 2011 is as follows: December 2009 $ 608.00 S.3 Jan-Dec 2010 (12 x 299) $3,588.00 Special expenses for 2010 $1,129.39 January 2011 $ 215.00

Total: $5,540.39 This amount $5,540.39 shall be set off against the arrears payable by the father, thereby reducing them to ($33,107.00 - $5,540.39) $27,566.61. [ 39 ] Insofar as ongoing child support, mother shall pay according to her income, when she regains employment. She shall provide copies of her first pay stub to father to establish what her likely child support shall be. She shall also provide copies of her pay stubs semi-annually at the end of June and the end of each year. Mother asked for reduction of her payment to enable her to fly her daughter to Victoria for access visits.

She plans to see her daughter every second month by flying to Edmonton and flying her daughter to Victoria on the remaining months so they can have monthly visits. Each monthly visit will cost approximately $500.00. This would result, if she deducted her access costs, in no support paid to father until her annual income approached $60,000.00. Given the finances of the parties, I rule that such access costs should only be deducted twice each year. This will be in addition to summer vacation times mother and daughter spend together when no deduction of access costs from support will occur. VI.

Payment of Arrears by Father [ 40 ] Mother stated in final argument that she had no desire to take action through Maintenance Enforcement to ruthlessly enforce collection of arrears. I order a stay of enforcement of collection of arrears on a temporary basis, that is, until mother gives written notice otherwise to MEP. I have made this order in the hope that the parents will make some agreeable arrangement to pay the amount. If the parties had lawyers, it seems more likely they could come to a creative arrangement such as father purchasing a RESP for their daughter’s education with the funds.

I refer to this because mother indicated her desire to use the funds for the benefit of her daughter, when she could demand full payment for the years in which she deprived herself when proper support was not paid. VII. Costs [ 41 ] Both parties, particularly mother, provided written material including case law, supporting their positions. The major consideration in any cost award is the success of the parties. In this case, the major issue was retroactive maintenance payable by father; mother has been largely successful on that issue.

In all the circumstances, I conclude that she should have costs of the hearing of $1,000.00 inclusive of disbursements. Mother is responsible for $500.00 costs awarded at an earlier hearing so the costs remaining payable by father are $500.00. VIII. The Order [ 42 ] In

summary; 1. Mother will have judgment for child support arrears for 2006 to December 1, 2009 of $33,107.00, inclusive of s.7 expenses. 2. Father will have judgment against mother for child support arrears for December 1, 2009 to January 31, 2011 for $5,540.39 inclusive of s.7 expenses, leaving a net judgment for mother of $27,566.61. 3. No ongoing support shall be payable by mother until further order or agreement between the parties. Mother shall provide financial disclosure. Father shall also provide financial disclosure.

4. There will be a stay of enforcement of arrears until mother notifies Maintenance Enforcement, in writing, to proceed. 5. Mother shall have costs of $1,000.00 less $500.00 costs owing by mother for a net judgment against father for costs of $500.00. Heard on the 13 th day of April, 2011 to the 15 th day of April, 2011. Dated at the City of Edmonton, Alberta this 12 th day of May, 2011. E.A. Marshall J.C.Q.B.A. Appearances: S.M.G. (Mother) on her own behalf M.G.S. (Father) on his own behalf