SDZ v TWZ, 2011 ABQB 496

Court of Queen ’ s Bench of Alberta Citation: SDZ v TWZ, 2011 ABQB 496 Date: 20110808 Docket: 4801 126950 Registry: Calgary Between: SDZ Plaintiff - and - TWZ Defendant Editorial Notice: On behalf of the Government of Alberta identifying information has been removed from this unofficial electronic version of the judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice G.H. Poelman _______________________________________________________ TABLE OF CONTENTS I.

Introduction.............................................................................................................. Page: 4 II. Facts........................................................................................................................ Page: 5

A. History of Relationship............................................................................... Page: 5 B. After Separation......................................................................................... Page: 6 III. Income of Parties................................................................................................... Page: 6 A. Introduction.................................................................................................. Page: 6 B. Legal Principles......................................................................................... Page: 7 C. Mr.

Z.’s Income........................................................................................... Page: 8 D. Ms. Z.’s Income........................................................................................ Page: 12 E.

Summary of Parties’ Incomes................................................................ Page: 14 IV. Conduct and Reliability of Evidence.................................................................. Page: 14 A. Introduction .............................................................................................. Page: 14 B. Disclosure................................................................................................. Page: 14 C. Child Support Payments......................................................................... Page: 15 D.

Conduct during Litigation........................................................................ Page: 16 E. Reliability of Evidence............................................................................. Page: 16 F. Ms. Z.’s Conduct...................................................................................... Page: 17 V. Child Support....................................................................................................... Page: 17 A. Base Child Support................................................................................. Page: 17 B.

Special or Extraordinary Expenses....................................................... Page: 18 VI. Spousal Support.................................................................................................. Page: 20 A. Introduction............................................................................................... Page: 20 B. Legal Principles....................................................................................... Page: 20 C. Entitlement................................................................................................ Page: 22 D.

Retroactive Spousal Support................................................................. Page: 24 E. Considerations in determining amount of spousal support................. Page: 26 (

i) Introduction................................................................................... Page: 26 (ii) Post-Separation Income Increases........................................... Page: 26 (iii) Income Disparity.......................................................................... Page: 27 (iv) Standards of Living...................................................................... Page: 28 F. Amount and Duration of Spousal Support............................................ Page: 30 VII. Division of Matrimonial Property........................................................................

Page: 33 A. General Principles................................................................................... Page: 33 B. Property Owned by Parties..................................................................... Page: 34 (i) “Agreements” between the Parties........................................... Page: 34

(ii)

Summary of Findings.................................................................. Page: 34 (iii) Reasons for Value Findings....................................................... Page: 37 C. Exempt Property...................................................................................... Page: 39 D. Property Presumed to be Equally Distributed...................................... Page: 40 E. In Specie Distribution.............................................................................. Page: 41 F. Final Distribution......................................................................................

Page: 42 VIII. Relationship between Retroactive Support Orders and Property Division... Page: 43 IX. Occupation Rent.................................................................................................. Page: 44 X. Conclusions and

Summary................................................................................. Page: 46 I. Introduction [ 1 ] Mr. and Mrs. Z. separated on January 15, 2006, after nearly 20 years of marriage. It took five more years for their disputes to come to trial. These reasons address the issues between them, based on the evidence adduced and argument submitted from April 4 to 8, 2011. [ 2 ] Those issues are, in

summary, as follows: Child Support. Ms. Z. claims child support for the two children of the marriage, who have continued to reside with her. Her claim includes base support and reimbursement for special or extraordinary expenses. She seeks a retroactive award for when no support was paid and to “top up” payments made for periods when Mr. Z.’s income exceeded the level on which support was initially calculated. Determinations on future child support obligations are also sought. Spousal Support . Ms. Z. did not apply to the court for pre-trial spousal support and has received none.

She seeks an award for retroactive support and future support. Matrimonial Property . The parties accumulated significant assets during their marriage. They had no debt. Since separation, additional assets (and some debt) have accumulated. The parties disagree on what assets should be divided, and in what proportion. Annual Income . To determine child support and spousal support, it is necessary to consider the parties’ annual income. Much of that is disputed, and therefore findings on annual income are necessary. Occupation Rent . Ms. Z. and the two children have remained in the matrimonial home. Mr.

Z. claims occupation rent as a set-off to Ms. Z.’s claim for support and property division. Conduct . Criticism of Mr. Z.’s conduct, primarily relating to disclosure of his financial affairs, is a large part of Ms. Z.’s case. Therefore, it is necessary to consider the parties’ conduct and any legal effect it should have on their positions.

[ 3 ] After a brief factual background, I deal first with the income and conduct issues, as they bear on the claims for support and property division. I then decide the claims for child support, spousal support and matrimonial property division. Finally, I consider the interrelationship of these findings, and address Mr. Z.’s claim for occupation rent. [ 4 ] A judgment of divorce will be granted, as that relief is not disputed. II. Facts A. History of Relationship [ 5 ] Mr. and Ms. Z. were born, respectively, in 1961 and 1963. Thus, they are now 48 and 45 years old.

They met as students at Red Deer College, where Ms. Z. was studying to become a paralegal. [ 6 ] Ms. Z. returned to Calgary to work as a paralegal. Mr. Z. transferred to the University of Saskatchewan to study commerce. After working for two years, Ms. Z. also enrolled at the University of Saskatchewan, first in journalism and then education. She continued to work as a paralegal in Calgary during the summers. They married in 1986. [ 7 ] In 1987, they moved to Calgary, as Mr. Z. had graduated with a bachelor of commerce degree and obtained employment at Pitney Bowes. Ms.

Z. finished her education degree at the University of Calgary. During the summers and for approximately three years following 1987, they stayed at Ms. Z.’s mother’s home, rent free. [ 8 ] While living there, they saved diligently. This enabled them to purchase their first home in August, 1990 with a large cash payment and smaller loans from Ms. Z.’s mother and a bank. Both loans were quickly repaid. In early 1992, they moved to another home, on an acreage in the Springbank area.

Again, with the exception of a small bank loan which was quickly repaid, they were able to purchase the home without incurring debt. [ 9 ] Mr. Z. continued to pursue a career in business. After Pitney Bowes, his employers included Dynegy Canada, Enerflex Systems Limited and, as of the parties’ separation, Siemens Canada. Ms. Z. worked as a teacher in the Calgary Public Board of Education system. In June 2005, Mr. Z. took a posting for Siemens based in Germany. From his Germany location he travelled extensively to other countries on business. [ 10 ] Mr. and Ms.

Z. have two children: LK, born in 1991 (20 years old); and MW, born in 1996 (nearly 15 years old). Ms. Z. took six months of maternity leave when L was born, and one year after M’s birth. Apart from these leaves, she worked full time until she obtained her “tenure” as a teacher. She then reduced her employment to part time for a period, but ultimately reverted to full time status. [ 11 ] Both children were encouraged to be very active at a young age.

Among other activities, L was involved in synchronized and dance skating, equestrian riding, drama, gym, soccer, dance, musical theatre, Brownees, Cubs and Ukrainian classes. M participated in a wide variety of sports, including hockey, and took art and guitar lessons. [ 12 ] Most of the child care responsibilities fell upon Ms. Z., with significant assistance from her mother for some years. Mr. Z. travelled extensively and when in Calgary worked long hours. While together, Mr. and Ms. Z. enjoyed a very comfortable, but not lavish, style of living.

They had a nice house of approximately 5,600 square feet on an acreage. Their children had the benefit of numerous activities. They went on southern vacations in the winters and camping trips in the summer. (They owned a vacation trailer which they towed with a truck.) Ms. Z. changed her vehicle every several years. Mr. Z. usually had the use of a company car. [ 13 ] In January 2006, L began “acting out,” according to Ms. Z. She went from being a happy, well-adjusted honour roll student to a girl who stopped studying and acted aggressively toward her mother and M.

She began a lengthy period of counselling and other forms

of treatment. Ms. Z. had the primary responsibility (with help from her mother) of responding to various emergencies involving L and taking her to medical and counselling professionals, while maintaining full-time employment. [ 14 ] Ms. Z. notified Mr. Z. in January, 2006 that she would be seeking a divorce and wanted a separation. She took steps to prevent him from attending at their Springbank home when he was in Calgary. Their date of separation is January 15, 2006. B. After Separation [ 15 ] Mr. Z.’s employment with Siemens terminated at the end of October 2008.

His next employment was with Waterous Power Systems, commencing June 1, 2009. He is president of Waterous (which is controlled by Wajax Income Fund). Ms. Z. has continued her full time career in education, now holding a specialist position as a language arts gifted learning leader. [ 16 ] The Springbank home is still occupied by Ms. Z. and the two children. Mr. Z. purchased another Calgary house and a condominium in Edmonton. He began paying base child support in December 2006, but has not paid “extraordinary” expenses for the children or spousal support. III. Income of Parties A.

Introduction [ 17 ] It is necessary to determine the parties’ incomes for the years 2006 and following, as part of determining entitlement to and the amount of child support and spousal support. There are significant differences between the parties’ positions, particularly with respect to Mr. Z.’s income. B. Legal Principles [ 18 ] The court’s jurisdiction to order child support is found in

section 15 of the Divorce Act [1] . That provision also directs that child support orders be made, except in limited circumstances, in accordance with the applicable guidelines, which are the Federal Child Support Guidelines [2] ( “Child Guidelines ” ). [ 19 ]

Section 1 of the Child Guidelines expressly states their objectives as, among other things, to reduce conflict and tension by making orders more objective, improve efficiency by giving courts and parties guidance in establishing levels of support, and ensure consistency of treatment. Sections 3, 4, 7, 8 and 9 provide for the determination of child support in various circumstances.

Presumptively, support is based on “the amount set out in the applicable table,” [3] but in any event, the income of the spouses is usually one of the main determining factors. [ 20 ] Sections 15 through 20 of the Child Guidelines set out the basis upon which the court is to determine a spouse’s annual income. Those sections should be interpreted and applied in light of the overall objectives of the Child Guidelines , which means the court’s approach should tend toward making calculation of child support more objective, efficient and consistent among a broad variety of litigants. Thus,

section 16 of the Child Guidelines provides that with limited exceptions, a spouse’s annual income will be taken as the amount set out under the heading “total income” in the standard income tax return form issued by Canada Revenue Agency. The relevant entry on the tax form is identified as “line 150.” [ 21 ] There will be a departure from this approach in the following cases:

a) Where it may be necessary to look at the previous three years total income because of a pattern or fluctuation in income;

b) Where there has been a non-recurring capital or business investment loss;

c) Where the line 150 income may not fairly reflect all the money available to a spouse because of his or her position as a shareholder, director or officer of a corporation;

d) Where it may be necessary to impute income to a spouse, because of intentional under employment, unusually favourable tax treatment, failure to provide income information, unreasonable deduction of expenses and a number of other factors;

e) Where an adjustment must be made because a spouse is a non-resident of Canada. [ 22 ] To ensure the ability of the spouses to make the objective calculations contemplated under the Child Guidelines , sections 21 through 26 impose obligations to provide documentation relevant to the factors necessary for income to be determined. [ 23 ]

Section 15.2 of the Divorce Act gives the court jurisdiction to make orders requiring a spouse to pay amounts that are determined as reasonable for the support of the other spouse. However, while the Divorce Act sets out the objectives of spousal support orders and the factors to be taken into consideration when making them, it does not provide for guidelines of the nature provided for child support orders.

The Spousal Support Advisory Guidelines ( “Spousal Guidelines ” ) prepared by Carol Rogerson and Rollie Thompson [4] have been recognized as a useful cross-check or starting point in the exercise of judicial discretion. [5] [ 24 ] Income of both spouses is relevant to both the factors and objectives of spousal support under

section 15.2 of the Divorce Act , and is an integral component to calculations under the Spousal Guidelines . The definition of income under the Child Guidelines is the starting point for determination of income under the Spousal Guidelines , although there may sometimes be distinctive income issues that arise under the Spousal Guidelines . In this case, I find no reason to use different annual incomes for the two types of support claims. C. Mr. Z. ’s Income [ 25 ] The parties agree that Mr. Z.’s Child Guidelines income for 2009 is $216,007.00. They also both used the figure of $371,667.00 for Mr.

Z.’s Child Guidelines income for 2010 and 2011, based on his employer’s earnings statement for the year ended December 31, 2010. [ 26 ] The parties disagree on income for 2006 through 2008. The points of contention focus on what, if any, adjustments to make to Mr. Z.’s line 150 income while living overseas (Germany from mid-2006 to August 2007; Abu Dhabi from September 1, 2007 to 2008); and what treatment to give a “final settlement” payment Mr. Z. received from Siemens on December 31, 2008. [ 27 ] Brenda Pask, a chartered accountant and chartered business valuator, testified as an expert on behalf of Ms.

Z. with respect to Mr. Z.’s income. She had difficulties because of insufficient information. When she prepared her initial report for an end of January 2011 deadline, Mr. Z. had not provided his 2008 tax return, 2008 notices of assessment, expense reports, credit card statements, and pay stubs for various periods. She was able to provide an updated statement on March 20, 2011, having just been provided with the 2008 income tax return and an earning statement for the period ending December 31, 2010. [ 28 ] Ms. Pask testified that, in her opinion, the best information on which to determine Mr.

Z.’s income for the years 2006 through 2010 was his line 150 reported income, as adjusted in 2008 by the “final settlement.” She stated that, based on the fact that Mr. Z. travelled on an expense account much of the time when based overseas, it was likely that additional income (plus a gross-up to reflect the fact that expense account reimbursement is not taxed, and the Child Guidelines deal with pre-tax income) should be imputed.

However, in the absence of information, she did not impute additional income. [ 29 ] Further, on the limited information available to her she did not accept that a departure from line 150 in Mr. Z.’s favour should

be made. He was filing tax returns as a Canadian resident, and tax treaties are in place to avoid double taxation. Full analysis of the impact of his time overseas would require additional information (including all tax filings, notices of assessment and notices of re- assessment) which Mr. Z. had not provided. [ 30 ] Ms. Pask did, however, make adjustments to the reported line 150 income of $158,250.00 for 2008:

a) The first adjustment was to add a bonus of $43,530.00, based on Mr. Z.’s discovery testimony that he received a bonus in the first quarter of 2008, and Ms. Pask’s noting that it was not declared on his 2008 income tax return.

b) The second adjustment was to add the “final settlement” from Siemens, shown on a bank account statement, in the amount $113,613.00. She assumed this represented a severance payment. Again, this amount was not declared on the 2008 income tax return.

c) A third adjustment was to gross up these two amounts by $100,468.00, reflecting the fact that Mr. Z. did not pay income tax on them, being the amount of the “personal income tax differential.” With these adjustments, she determined Mr. Z.’s Child Guidelines income to be $415,865.00. [ 31 ] Mr. Z. gave no satisfactory explanation for not providing his 2008 income tax return until well after the plaintiff’s expert report filing deadline. He acknowledged that he or his counsel had been asked specifically for it since at least July 2008.

At one point, he testified that he thought he provided it to one of his previous lawyers, and does not know why she failed to pass it on. [ 32 ] He acknowledged that the 2008 line 150 amount is inaccurate, and stated that during trial he gave his accountants instructions to file an amended return. Thus, his position is that no gross-up for the tax free benefit should be given. However, he disagrees with Ms. Pask’s adjustments to the principal amounts. [ 33 ] Mr. Z. claims that the amount of $113,613.00 included his bonus payment of $43,530.00 (and that Ms.

Pask had double counted it); salary of $15,526.00 for the last pay period he worked (which he testified was already included in the line 150 amount on his filed tax return); vacation pay of $23,250.00; and expense reimbursement of $34,760.00. He acknowledged that the bonus of $43,530.00 and the vacation pay of $23,250.00 (totalling $66,780.00) should be added to his 2008 income. There is no documentation in the evidence to support his breakdown of these amounts. [ 34 ] The first explanation Mr. Z. gave for these additional “final settlement amounts” came during his direct testimony at trial.

He explained that he had not focused on the issue until preparing the night before he testified, even though the issue had been addressed in Ms. Pask’s updated expert report of March 20, 2011. A document prepared by Mr. Z. explaining his breakdown of the $113,613.00 payment was admitted into evidence. On the objection of Ms. Z., supporting documents apparently provided by Siemens close to the time of payment were not admitted. (They had not been disclosed before Mr. Z.’s testimony, even though Ms. Pask had been cross- examined on the very points in issue.) [ 35 ] Apart from the 2008 adjustments, Mr.

Z. argues that his income while working abroad (2006 through 2008) should not be based on the line 150 amounts. Instead, he offered an analysis of his overseas compensation package prepared from, he said, information from Siemens. His recalculation reduces his income by amounts he states are meant to compensate for differences in purchasing power, taxes, social insurance coverage and company pension coverage.

It would reduce his line 150 income from $271,143.00 to $189,138.00 (2006) and from $283,397.00 to $197,686.00 (2007). [ 36 ] In my view, for 2006 and 2007 there is no basis to depart from the presumptive line 150 income in determining Mr. Z.’s Child Guidelines income. Mr. Z. has not provided the documentation necessary for a full and balanced evaluation. I am limited to his personal analysis, purportedly based on Siemens’ information. It shows only reductions to his income.

In fact, it is probable that as he was living for much of the time on expense accounts, he had personal benefits that would have to be added to his income as part of any complete analysis. He claims that none of his expense account information could be released for reasons of confidentiality imposed by his employer – not even his credit card statements. Ms. Z. apparently elected not to challenge that position before trial, and so it remains unresolved. (A litigant in the position of Mr. Z. seeking to make complete disclosure could probably have found a way to produce redacted information.)

[ 37 ] The determination of Mr. Z.’s income for 2008 is far from straightforward. The evidence clearly shows that there is undisclosed income that needs to be added to his filed line 150 income of $158, 254.00. Exact calculations are not possible because of the incomplete evidence, but that is Mr. Z.’s responsibility. [ 38 ] It is particularly disturbing that Mr. Z., if his testimony is accepted, only discovered these matters the night before Ms. Pask and he testified, and then put forward his own analysis of how the additional income should be evaluated. Of course, he testified after Ms. Pask.

His 2008 income was in dispute for some years in this litigation, and his failure to produce the 2008 income tax return until the eve of trial, and then his last-minute recalculation of the additional income (about which Ms. Pask had been left to guess) is an inexcusable breach of his duty of disclosure. [ 39 ] Nevertheless, based on his testimony and the documentation he prepared, I accept that the “final settlement” amount of $113,613.00 was not a severance payment, and included the bonus that Ms. Pask assumed was another additional, undisclosed, payment.

Further, I accept his demonstration that the “final pay” of $15,526.00 was included in the line 150 income in the filed income tax return: it is reasonable and was not challenged. [ 40 ] I am not prepared, however, to deduct from this amount the sum Mr. Z. attributed to expense reports. His failure to produce even the most basic information to justify his allocations leaves me unwilling to accept his bare word on this point. Further, on the evidence of the extent to which Mr. Z. travelled and Ms.

Pask’s opinion on the significant tax free personal benefits that would accrue in such cases, I conclude that at least part of Mr. Z.’s expense reimbursement was in effect tax-free, employer-paid, personal living expenses. [ 41 ] Recalculating Mr. Z.’s income for 2008 must be done without the benefit of refiled income tax returns or expert accounting evidence that could take into account various tax implications. In my view, the adjustments should be based on the approach taken by Mr. Z.’s counsel in cross-examining Ms. Pask and in presenting alternative scenarios in final argument.

That approach is to start with the calculation of Mr. Z.’s 2008 income in Ms. Pask’s updated expert statement, which she prepared without details of what the “final settlement” comprised; then to make such reductions from her total 2008 income figure of the principal amounts as I find justified; and then to estimate corresponding reductions of the benefit Ms. Pask added for tax free payments. [ 42 ] Ms. Pask made part of the calculation in cross-examination. The number she calculated was used by Mr. Z.’s counsel as one of the scenarios presented in final argument. The approach Ms.

Pask took to the calculation of Mr. Z.’s 2008 income if the $43,500.00 bonus was included in the $113,613.00 “final settlement” may be represented as follows: $415,865.00 -43,530.00 - 2008 income from Ms. Pask’s updated expert statement - Minus the bonus payment that Ms. Pask double-counted, by adding it to the “final settlement” number of $113,613.00, not knowing it was included therein - 27,830.00 - Minus the portion of the “personal income tax differential” of $100,468.00 represented by the bonus pay; calculated by taking the percentage that $43,530.00 bears to the total income added by Ms.

Pask of $157,143.00 $344,505.00 Thus, $344,505.00 would be Ms. Pask’s adjusted line 150 Child Guidelines income for Mr. Z. in 2008 if (as I accept) the bonus payment was double counted. [ 43 ] I have also found that the “final pay” of $15,526.00 is already included in Mr. Z.’s original filed income tax return, and thus his line 150 income of $158,258.00. It is therefore proper to make similar reductions for the principal amount and corresponding tax benefit, as follows:

$344,505.00 -15,526.00 - minus the “final pay” - 9,926.00 - minus 9.88% of the $100,468.00 personal income tax differential, being the proportion that $15,526.00 bears to $157,143.00 $319,053.00 [ 44 ] Thus, I find that Mr. Z.’s guideline income for 2008 is $319,053.00. D. Ms. Z. ’s Income [ 45 ] The only issue with respect to Ms. Z.’s income is whether her line 150 income should be adjusted for Child Guidelines purposes to add back deductions taken for an investment loss. [ 46 ] About one to one-and-one-half years before their separation, Mr. and Ms.

Z. jointly invested $50,000.00 in a golf course being developed by friends. Ms. Z. has maintained the friendship since the separation; Mr. Z. has no contact with them. Ms. Z. could give little information about the investment in her testimony, other than that it provides a membership which she does not use and golf passes she gives to friends. Mr. Z. has never golfed there. [ 47 ] For tax purposes, Ms. Z. claimed losses as deductions against her income of $14,899.25 (2007); $20,993.22 (2008); and $20,421.43 (2009). Mr.

Z.’s position is that her Child Guidelines income should be determined by adding these deductions to her line 150 income. The figures are as follows: Line 150 Adjusted Amount 2006 $80,072.00 $80,072.00 2007 $68,010.00 $82,909.25 2008 $68,355.00 $89,348.22 2009 $70,891.00 $91,312.43 2010 $95,040.00 $95,040.00 [ 48 ] Neither party tendered expert evidence on what impact the golf course investment losses should have in determining Ms. Z.’s income. Ms. Pask was asked for her opinion, but she declined to comment because she had not looked at Ms. Z.’s tax returns.

Thus, the issue must be addressed from the limited evidence available, the principles of the Child Guidelines and the authorities. [ 49 ] Neither party could provide significant detail about the “investment” other than it cost $50,000.00 initially, has given rise to some tax losses, and generates golf passes. Both parties presume it has value, but cannot say how much. They do not know if it can be sold or divided.

[ 50 ] It concerns me that Ms. Z. did not put forward any detail or documents on this asset. The promoters of the investment remain her friends and one of them attended parts of the trial. Ms. Z. has used the tax deductions. I presume the information would have been available to her, had she seriously sought it. [ 51 ] The Child Guidelines allow income to be imputed under section 19(1) where there has been a failure to provide income information when under a legal obligation to do so, and where the spouse unreasonably deducts expenses from income. I do not find that Ms.

Z. failed in her obligation to provide income information, although I have concerns with respect to this asset. However, I conclude that the tax deduction for the golf investment is unreasonable for purposes of determining Child Guidelines income. It was solely an accounting entry, which Ms. Z. did not make when she prepared her own tax returns in earlier years. It has had no impact on income available to meet her living expenses and support obligations. Furthermore, as with Hargrove v. Holliday [6] , the business loss and the investment were unrelated to Ms.

Z.’s main employment. [ 52 ] Perhaps the deduction is legitimate for tax purposes, but as section 19(2) of the Child Guidelines states, that is not the sole factor when considering whether the expense is reasonable for the purposes of Child Guidelines income. [ 53 ] For these reasons, I find that Ms. Z.’s income for Child Guidelines purposes is the adjusted amounts set out above. E.

Summary of Parties ’ Incomes [ 54 ] In

summary, I find that the parties incomes for the relevant years is as follows: 2006 2007 2008 2009 2010 Mr. Z. $271,143.00 $283,397.00 $319,053.00 $216,007.00 $371,667.00 Ms. Z. $80,072.00 $82,909.25 $89,348.00 $91,312.43 $95,040.00 [ 55 ] The incomes for 2010 will be used for any orders relevant to 2011 because there was no evidence of 2011 incomes. The parties, of course, retain their right to apply for variation orders pursuant to

section 17 of the Divorce Act . IV. Conduct and Reliability of Evidence A. Introduction [ 56 ] This case has been hard fought and there is significant acrimony between the parties, which can be seen from the history of proceedings and the exhibits and testimony at trial. Some of that attends most family lawsuits and should have no effect on evidentiary findings and judgment. In this case, it has become necessary to determine whether some of the parties’ conduct should have legal consequences.

[ 57 ] Ms. Z. submits that Mr. Z. was guilty of what the authorities refer to as “blameworthy conduct” throughout the entirety of this litigation. For relief, she asks for an unequal distribution of matrimonial property. B. Disclosure [ 58 ] I have already referred to examples of what I consider to be inadequate disclosure without reasonable excuse by both parties. For Ms. Z., I was critical of her failure to provide information about the golf course investment which, as between the two parties, would have been most easily obtained by her. I also noted what I consider to be the far more serious failure by Mr.

Z. to make timely disclosure of income information. [ 59 ] In her January 27, 2011 report, Ms. Pask set out in detail the information that Mr. Z. had not provided, despite it being necessary for the scope of her review. The missing information included Mr. Z.’s 2008 income tax return (which, as I noted earlier, was finally provided well after the deadline for Ms. Pask’s expert report), 2008 notices of assessment and re-assessment; expense reports and credit card statements for the period of Mr. Z.’s posting in Germany; pay stubs for numerous periods; numerous bank account statements; and benefits information.

As noted by Ms. Pask and confirmed in other exhibits, Mr. Z. undertook at examinations for discovery to provide much of this information, even though it was relevant and producible in any event, and still failed to make it available. [ 60 ] Neither Mr. Z. or his counsel seriously disputed the contention that his disclosure was often not adequate or timely. In his testimony, Mr. Z. acknowledged occasions in which he had probably not provided promised information. In some cases, he thought perhaps he had given it to a previous lawyer (he has had several), who failed to pass it on.

That is seldom an adequate excuse, and for reasons I give later, I do not accept Mr. Z.’s word on uncorroborated matters of that nature. C. Child Support Payments [ 61 ] I find that Mr. Z. also acted in a blameworthy manner with respect to child support payments. He paid no child support until December 2006, when an “Interim Interim Without Prejudice Consent Order” was granted on December 21, 2006 – following numerous notices and court appearances initiated by Ms. Z. [ 62 ] Even then, Mr. Z. did not pay retroactive child support.

He acknowledged in cross-examination that he was aware of an obligation to pay child support that varied with changes in income. When he was asked why he had paid no child support for the period January to November 2006, he initially stated “that’s why we’re here today.” He was challenged on whether it was really necessary to go to trial for this. He quickly changed his position, and said that no, it was not necessary. But, in fact, it was. [ 63 ] Furthermore, during 2008, support payments were discontinued and arrears exceeding $20,000.00 accumulated. At the amount Mr.

Z. was paying, that would be equivalent to about six months of payments. He claimed not to have noticed that payments were missing. It was not rectified until May 2009, shortly before a case management meeting. I do not accept Mr. Z.’s suggestion that he merely overlooked these payments. The amount was too substantial, and his dilatory response suggests that he was playing tactical games. [ 64 ] Reinforcing that conclusion is Mr. Z.’s response when a concern about the first missed child support payment was brought to his attention by Ms. Z.

She advised that she would be pursuing the matter through the Director of Maintenance Enforcement. Mr. Z. responded by email of January 31, 2008 that he mailed cheques to her upon his return to the Middle East. Further, he stated: However, should you wish to “flex your muscle” further to your threat of maintenance enforcement c/o Siemens go ahead, after all I am in the Middle East which is an Islamic state wherein Western law is not only ignored, but ridiculed.

Furthermore, I am not intimidated by your threat to bring our divorce to the attention of Siemens given that they are already well aware of my unfortunate past with you as well as my current marital status/relations.

[ 65 ] I accept that, at least in part, the arrears may have developed initially because of banking or mailing complications, but the level to which they rose and the time taken to pay them cannot be justified. D. Conduct during Litigation [ 66 ] The chronology of this action shows that Ms. Z. was repeatedly required to bring court applications for disclosure, responses to undertakings, and court-imposed deadlines. Ms. Z. was even required to file applications to obtain orders (ultimately by consent) to allow out-of-country travel with the children. Ms.

Z. was accused of being a “flight risk,” according to her testimony – which was an unfounded accusation, in light of her commitment to her Springbank home and long-term employment. [ 67 ] On December 23, 2010, Mr. Z.’s counsel agreed in a hearing before Chief Justice Wittmann that the property appraisals which the parties had obtained for a January 2011 trial date would remain the basis for property values at the new trial dates in April 2011. That fixed the value of the Springbank house and acreage at $840,000.00. Nevertheless, throughout the trial Mr.

Z. attempted to resile from this position, initially by collateral attacks on the appraisal, and then by proposing a bidding process for the property. As was conceded in final argument, that would have had the effect of requiring Ms. Z. to pay more than the value determined by the December 2010 order, if she wished to retain the asset. [ 68 ] Mr. Z.’s attitude to this litigation has been at best cavalier. On a number of occasions it rose to the level of deliberate obstruction, perhaps with the hope that Ms. Z. would exhaust her emotional and financial resources. E.

Reliability of Evidence [ 69 ] Furthermore, I do not find that Mr. Z. is a very reliable witness. His pattern of selective and limited disclosure at the pre-trial stages of this action show a desire to be less than forthcoming. His approach to valuation of matrimonial property was, in some cases, patently unreasonable. That will be addressed in its proper place. His reports of his annual income were inaccurate and cannot be relied upon without corroboration.

Finally, there are no good explanations for why his well-established, pre-separation pattern of aggressively paying down debt and building up savings quickly changed when he became embroiled in litigation with Ms. Z. He has two mortgages on which he has repaid no principal, and despite increasing income, he has failed to build up savings or investments in any appreciable manner. F. Ms. Z. ’s Conduct [ 70 ] Unfortunately, Ms. Z. appears to have too often fallen into the trap of responding in kind. Despite making claims for her children’s extraordinary expenses, she has made virtually no attempt to inform Mr.

Z. of what expenses were being incurred and seeking his consent. Despite requests, she provided only one budget in five years of litigation. Mr. Z. has accused her of being hostile throughout the post-separation period, and she is not entirely without fault. However, on the whole her conduct has not risen to the level where it should have legal consequences. I have seen no indication that she acted improperly, with the one exception relating to the golf club investment to which I have already referred. V. Child Support A. Base Child Support [ 71 ] Mr.

Z. paid base child support of $3,390.00 per month pursuant to a without prejudice order, commencing December 1, 2006. [ 72 ] Mr. Z. acknowledged during his cross examination that he has an obligation to pay child support from the date of separation (January 15, 2006) to the end of November 2006. He further acknowledged that, to the degree his income changed, he owes additional child support. He also acknowledged a continuing obligation.

[ 73 ] As noted above, the Child Guidelines provide that base child support is, except where otherwise provided, the amount determined by the applicable table. Neither party suggests another approach in this case, except for an issue on the status of L. Thus, with Mr. Z.’s income as the payor parent established, the determination of base child support is mainly a matter of reference to the table and mathematical calculations. [ 74 ] Assuming that Mr.

Z. continued to pay child support based upon the December 1, 2006 order, commencing December 1, 2006, his arrears through to the end of 2010 are as follows: Year Guideline amount Amount paid Arrears 2006 $3,695 x 12 = $44,340 $3,390 $40,950 2007 $3,857 x 12 = $46,284 $3,390 x 12 = $40,680 $5,604 2008 $4,327 x 12 = $51,924 $3,390 x 12 = $40,680 $11,244 2009 $2,967 x 12 = $35,604 $3,390 x 12 = $40,680 <$5,076> 2010 $5,022 x 12 = $60,264 $3,390 x 12 = $40,680 $19,584 Total child support arrears: $72,306 A similar calculation must be made for 2011. [ 75 ] Ms.

Z. is entitled to $5,022.00 per month for the support of L and M for the period January 2011 until there are no longer children of the marriage, based on a Child Guidelines income of $371,667.00 for two children (less amounts actually paid during that period) provided that if L is not in full time attendance as a student in September 2011, Mr. Z.’s child support payments will be $3,194.00 per month, based on the same income, for one child. [ 76 ] As L is now over the age of majority, questions arise concerning Mr. Z.’s obligation to pay child support under

section 15.1 of the Divorce Act , and section 3(2) of the Child Guidelines . She has been enrolled in post-secondary education in Calgary, but difficulties (described above) since her parents’ separation have caused problems in her scholastic performance. Her residence has at times been on campus, and at other times (as at the time of trial) with her mother. [ 77 ] However, during argument the parties’ positions modified to the point where there is now substantial agreement.

Even though L is not presently enrolled in an educational institution or working, she plans to resume full-time attendance as a student in September 2011. Mr. Z. is willing to continue paying base child support on her account until September 2011, and to continue it thereafter if she attends as a full-time student. His position is that if this does not occur, she will have had ample opportunity to plan for her independence. [ 78 ] Mr. Z.’s position is reasonable, and will be incorporated into the judgment.

The parties have not specifically addressed duration, and in light of the number of uncertainties, I find that it would be reasonable to set a review date of September 1, 2012 regarding Ms. Z.’s entitlement to child support for L, assuming that L remains enrolled as a full-time student for 2012 - 13. B. Special or Extraordinary Expenses [ 79 ] Ms. Z. seeks retroactive and continuing payments for special or extraordinary child support under

section 7 of the Child Guidelines . Section 7(1) allows the court to order payment to cover child care expenses incurred as a result of the custodial parents’ employment (or other unavailability), the child’s medical and dental insurance premiums, health-related expenses that exceed insurance

reimbursement by at least $100.00 annually, extraordinary education expenses that meet the child’s particular needs, expenses for post- secondary education, and extraordinary expenses for extra-curricular activities.

Orders may be made for those expenses by taking into account their necessity in relation to the child’s best interests, their reasonableness in relation to the means of the spouses and the child, and in relation to the family’s pre-separation spending pattern. [ 80 ] Section 7(1.1) sets out additional factors. “Extraordinary expenses” are those exceeding what the recipient spouse could reasonably cover, taking into account her income and base child support already received.

Further, the nature and number of activities, special needs and talents of the child and overall cost of activities are relevant factors. [ 81 ] On December 21, 2006 an “Interim Interim Without Prejudice Consent Order” was granted in which extraordinary expense payments were required to be made commencing December 1, 2006 for Mr. Z.’s proportionate share of annual skating and hockey expenses for, respectively, L and M. However, given the without-prejudice nature of the order, it cannot have a bearing on my consideration of Ms.

Z.’s claim for special or extraordinary expenses. [ 82 ] By the agreed statement of facts, it was established that when Mr. Z. moved overseas in 2005, L’s extra-curricular activities were competitive skating, synchronized skating and horseback riding; and M’s extra-curricular activities were karate, cubs, soccer, swimming and hockey. As of early 2011, the expenses seem to be limited to guitar lessons for M and horse stable expenses for L. However, L has also had Mount Royal University expenses in 2009 and 2010. In addition to these more significant items, the list of claims from Ms.

Z. includes numerous smaller items comprising medical and counselling charges, prescription expenses, dental expenses, school fees, summer camps, and recreational activities. [ 83 ] Mr. Z. complains that Ms. Z. has not consulted him with respect to incurring expenses for extra-curricular activities and has not provided him with current information or receipts for the amounts claimed. I accept that evidence. It has been held that a father does not have the right to input on such decisions, [7] although in my view Ms.

Z. could at least have provided courtesy copies of statements as expenses were incurred (rather than by response to undertakings at examinations for discovery, as was done in this case). [ 84 ] As noted, section 7(1.1) of the Child Guidelines expressly refers to spousal incomes and base child support as factors to consider. In my view, the expenses claimed by Ms. Z., having regard to her income (including the child support payments), do not fall within the special or extraordinary expenses contemplated by

section 7. Many of them are modest in relation to the incomes of the parties, and the more significant items are not outside what might be considered payable by Ms. Z. according to her income. [ 85 ] The only possible exception would be L’s post-secondary education. However,

section 7 expressly contemplates taking into account the means of the child. I must therefore take into account that L was the beneficiary under a trust and now is the legal owner of the approximate amount of $114,000.00. Mr. Z. has taken the position that an adult in possession of that sum of money ought to pay her own post-secondary education expenses. In my view, that is a reasonable position and I therefore also deny Ms. Z.’s claim to have L’s post-secondary education expenses proportionately reimbursed as a

section 7 expense. VI. Spousal Support A. Introduction [ 86 ] Ms. Z. has not received any spousal support since the parties’ separation on January 15, 2006. She claims both retroactive and ongoing spousal support. [ 87 ] Mr. Z. disputes her entitlement to spousal support or, if entitlement is found, to retroactive spousal support. The amount and duration of support are also in issue. B. Legal Principles

[ 88 ] As noted above, spousal support is a statutory remedy. It may be granted pursuant to

Section 15.2 of the Divorce Act . [ 89 ]

Section 15.2(4) requires that when making a spousal support order, “the court shall take into consideration the condition, means, needs, and other circumstances of each spouse.” Specific factors to consider include length of cohabitation, functions performed during co-habitation, and any order or agreement relating to spousal support. [ 90 ]

Section 15.2(6) provides that the objectives of a support order should: (

a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (

b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (

c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (

d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. [ 91 ] The Supreme Court of Canada held that there are three conceptual grounds for entitlement to spousal support: compensatory, contractual and non-compensatory. [8] The parties agree that Ms. Z.’s entitlement, if it exists, must be based on the compensatory model. Moge v. Moge [9] remains the leading decision for spousal support on the compensatory model. The Court of Appeal recently considered and applied the Moge principles in Shields v.

Shields . [10] [ 92 ] Moge articulated a number of principles that remain normative in spousal support cases. For purposes relevant to this case, they may be summarized as follows:

a) The support provisions of the Divorce Act “are intended to deal with the economic consequences, for both parties, of the marriage or its breakdown.” [11] While emotional and social benefits of marriage may be important, they are not easily quantified in economic terms and are not within the purview of spousal support law.

b) The equitable distribution of the financial benefits of the “economic unit” of marriage can be achieved through spousal and child support, division of property and assets, or a combination of these. The absence of accumulated assets may require support payments in order to effect an equitable distribution of resources. However, fair distribution “involves the development of parameters with which to assess the respective advantages and disadvantages of the spouses as a result of their roles in the marriage, as the starting point in determining the degree of support to be awarded,” [12] rather than a minute and detailed accounting.

c) The four objectives set out in

section 15.2(6) must all be considered. No single objective is paramount, and the fact that one of the objectives (such as economic self-sufficiency) may have been obtained does not necessarily dispose of the matter. Further, as the provision makes clear, there are cases in which the objective of self-sufficiency cannot realistically be achieved. Collectively, “the four objectives set out in the Act can be viewed as an attempt to achieve an equitable sharing of the economic consequences of marriage or marriage breakdown.” [13]

d) There are a non-exclusive number of compensable advantages and disadvantages envisaged by the Divorce Act . Where there are children of the marriage, financial consequences “extend beyond the simple loss of future earning power or losses directly related to the

care of children.” [14] Also to be considered are loss of seniority, missed promotions, and the demands of continuing childcare responsibilities after marriage dissolution. While not determinative, comparison of a spouse’s post-separation standard of living with the one enjoyed during the marriage and the one enjoyed by the former spouse may be “a revealing indication of the economic disadvantages inherent in the role assumed by one party.” [15] [ 93 ] The need for a balanced application of the factors and objectives in

section 15.2 of the Divorce Act was emphasized in Shields . The parties had been separated for eight years after a fifteen-year marriage. Both children were living independently and both spouses were working full time. The court summarized the proper approach as follows: The Divorce Act dictates that the amount and duration of spousal support shall be determined taking into consideration the condition, means, needs and other circumstances of each spouse.

While the recognition of any economic advantage or disadvantage arising from the marriage or its breakdown remains an overall objective to be considered by the court, that objective cannot dictate a result which guarantees that the payee spouse must support the other spouse ad infinitum . The Divorce Act does not require that spouses’ incomes be equalized to alleviate economic disadvantage arising out of the roles adopted by the parties in the marriage. Instead, the amount of support should be determined by the factors set out in the Divorce Act and interpreted in Moge .

According to Moge , a judge is required to consider the parties’ circumstances, including the duration of the marriage, their ages, their incomes and prospective incomes, the effects of property equalization, the stages of their careers, the marital standard of living, participation in household responsibilities, childcare obligations, and the parties’ reasonable standard of living expectations. [16] C. Entitlement [ 94 ] The following facts, which I find established on the evidence, are relevant to determining whether Ms. Z. is entitled to spousal support under

section 15.2 of the Divorce Act and the authorities considering it:

a) Ms. Z. bore the majority of child-care responsibilities throughout the marriage and separation. As in many cases, it cannot be established with certainty how this affected her career. However, from all the evidence and particularly Ms. Z.’s testimony, I accept that her decisions to work part-time for some years, her choice of school locations, her preoccupation with her children (especially L’s special challenges) and her loss of work days while assisting L were related to her child-care responsibilities and had an effect on her income and career progression.

b) Similarly, Ms. Z.’s child care responsibilities facilitated Mr. Z.’s business career. He could not have accepted roles requiring long working hours in Calgary and extensive travel and foreign postings without Ms. Z.’s commitment to provide the primary child care. It is a reasonable inference that the degree of his success is partly attributable to his freedom from day-to-day child-care responsibilities.

c) Ms. Z. received financial support from Mr. Z. at the beginning of their marriage. When they moved to Calgary, he was working and paid some of her continuing education costs. However, during that time she contributed financially by working each summer. Furthermore, they lived rent-free with Ms. Z.’s mother. Those two factors easily offset Mr. Z.’s financial support for a few years of tuition and related expenses.

d) Both parties have been successful in their chosen careers. Nevertheless, there has always been and remains a material difference in their incomes. As I have found, Ms. Z.’s career progress may have been adversely affected to some degree by her child care responsibilities, and Mr. Z. may have benefited by his relative freedom from those responsibilities.

It has been held that differences in income may be indicative of the economic disadvantages inherent in the role assumed by one party. [17] However, in my view the primary reason for the differentiation in income is the career paths the parties chose before marriage and before children. Those employed in the public education system have more limitations in their income potential than those working as business executives. Thus, I cannot find that all of the difference in income was caused by Ms. Z.’s role in the marriage.

e) Ms. Z. has maintained a good standard of living, but I accept her evidence that it has been circumscribed since separation. She has

benefited from occupancy of the matrimonial home, but has incurred costs for its maintenance and repair. She has maintained some independent purchasing power, as shown by her ability to take some trips and purchase a new car and other expenditures. However, she has also given up some things that she formerly enjoyed such as personal care appointments, theatre tickets and clothing purchases. [ 95 ] Based on these considerations, I find that Ms. Z. has established an entitlement to spousal support. An order is necessary to compensate for the disadvantages Ms.

Z. sustained, primarily arising from her child-care responsibilities; to recognize the fact that she experienced some economic hardship, compared to her pre-separation state; and to facilitate her progress toward economic self- sufficiency. Stated more positively, spousal support will recognize Ms. Z.’s non-monetary contributions to the “joint endeavour” that was the marriage between these parties; and provide an equitable sharing of the advantages Mr. Z. received as a result of Ms. Z.’s efforts during their marriage. [18] D.

Retroactive Spousal Support [ 96 ] A claim for retroactive spousal support covering a period of five years, during which no spousal support payments were made, raises many difficulties. In addition to the usual issues of entitlement, amount and duration, there are concerns about the fairness of awarding large retroactive amounts and their possible impact on property division. [ 97 ] I have already found entitlement to spousal support. The factors giving rise to that entitlement were in place as of January 15, 2006, the date of separation.

Thus, the claim for retroactive support plainly raises a legitimate issue. [ 98 ] I find the British Columbia Court of Appeal’s approach in Reis v. Bucholtz [19] persuasive and helpful in considering what, if any, retroactive spousal support to award. Reis v. Bucholtz applied the D.B.S. [20] factors, which are authoritative when considering retroactive child support, to claims for spousal support. I will therefore organize my findings according to the four factors set out in D.B.S. , applied to spousal support in Reis v. Bucholtz . [ 99 ] Excuse for Delay . When Ms.

Z. commenced this action on February 16, 2006 (one month following separation), she included a claim for “support for the Plaintiff in an amount the Court deems just and equitable” in her statement of claim’s prayer for relief. In an affidavit sworn on December 7, 2006, she set out particulars for a child support claim, and then asked for spousal support, as follows: I am also entitled to support for myself. We have been together for just short of twenty years, and Tim makes, conservatively speaking, in excess of three times my income.

The Spousal Support Advisory Guidelines indicate a range of support for me from $2,905.00 per month, to $4,255.00 per month. I seek support at the higher end of the range due to the fact I maintain, on my income alone, the entirety of the expenses for our most significant asset, namely, the matrimonial home. [ 100 ] Ms. Z. did not pursue a pre-trial application for spousal support. She explained that she had too much difficulty with other aspects of her litigation, including many attempts to obtain full financial disclosure from Mr.

Z., and had to choose how to spend her limited litigation budget. [ 101 ] In my view, it does not lie in Mr. Z.’s mouth to complain that Ms. Z. failed to pursue spousal support more aggressively. He was aware of Ms. Z.’s position, and showed recognition of a liability for spousal support in his 2008 and 2009 estimated net-worth statements. At trial he testified that he believed there would eventually be a spousal support claim. [ 102 ] Conduct of Payor .

In the context of child support obligations, Bastarache, J. held that “courts should take an expansive view of what constitutes blameworthy conduct,” and characterized such conduct as anything that prefers the payor’s interests to a child’s right to support. [21] As I have held elsewhere in these reasons, Mr. Z.’s conduct is blameworthy at least when measured against that expansive definition. [ 103 ] Circumstances of Recipient Spouse . Unlike in Reis v. Bucholtz , Ms. Z. did not have a “meagre” income and did not accumulate substantial debts while not receiving spousal support.

Nevertheless, as explained later, I have found that she was required to

moderate her standard of living as compared with her pre-separation standard of living and the post-separation lifestyle of Mr. Z. She should not be penalized for living debt-free. [ 104 ] Hardship of Payor . Mr. Z.’s income has been on an upward trajectory for some time, and his net asset base remains relatively substantial. In addition, as explained later, I have found that he probably has a greater monthly surplus than his budgets reveal. As noted, he was aware of the likelihood of a spousal support claim.

Thus, there is no hardship in requiring him to pay what should have been paid before. [ 105 ] There remains the question of the commencement date for calculation of retroactive support. As in D.B.S. and Reis v. Bucholtz , my view is that the obligation should be calculated from the date on which “effective notice” of spousal support was given. The presumptive three-year limit for retroactive child support in D.B.S. is not, in my view, applicable to claims for retroactive spousal support. As held in Lapp v. Lapp , [22] that limit arises from the three-year disclosure period in

section 21 of the Child Guidelines . Where effective notice was given, there is no reason to impose a similar time restriction for spousal support claims. In any event, the exception for blameworthy conduct that would extend the period beyond three years under the D.B.S. test would apply here. [ 106 ] I am not convinced that the “boiler-plate” language in the statement of claim’s prayer for relief was effective notice in this case. I conclude that Ms. Z. gave effective notice of her spousal support claim in her December 7, 2006 affidavit.

It was not necessary for her to “renew” her notice by subsequent claims or a formal application; that is demonstrated by Mr. Z.’s awareness of a potential liability. [ 107 ] For evidence on the history of this action, I rely primarily on Ms. Z.’s affidavit sworn June 7, 2010. It indicates there were court appearances on December 11 and December 21, 2006 regarding consent orders, and the “Interim Interim Without Prejudice Consent Order” of December 21, 2006 was ultimately the only direction for child support payments. It contains no reference to spousal support, although I presume Ms.

Z.’s December 7, 2006 affidavit (containing details of child support and spousal support claims) was before the court at that time. Nevertheless, that affidavit was filed with the clerk of the court on January 2, 2007. [ 108 ] The record, therefore, does not establish when the claim for spousal support embedded within the December 7, 2006 affidavit came to Mr. Z.’s attention. I conclude that the best date to use for effective notice of the spousal support claim is January 1, 2007. I therefore find that Ms. Z. has established entitlement to retroactive spousal support commencing then. E.

Considerations in determining amount of spousal support (

i) Introduction [ 109 ] The amount of spousal support must be determined according to the factors and objectives set out in

section 15.2 of The Divorce Act . Those factors and objectives also govern the duration of an award, including any retroactivity. [ 110 ] I have already identified the objectives that in my view entitle Ms. Z. to spousal support on the compensatory model, and the primary factors relevant in this case. I turn now to the facts that are most helpful in determining the proper amount of support. (ii) Post-Separation Income Increases [ 111 ] Mr.

Z. argues that his post-separation increases in income, at least beginning with his employment at Waterous in June, 2009, should not be considered when determining spousal support. It was a new job, obtained with no assistance from Ms. Z., and markedly different from his previous one in increased responsibility, more accountability and greater hours. He argues that he earns more money due to his labour. [ 112 ] I conclude, however, that I should consider all of Mr. Z.’s post-separation income when determining spousal support. I have

found that Ms. Z.’s role as the parent primarily responsible for the home and children was instrumental in enabling Mr. Z. to dedicate long hours and extensive travel to his business career. After the parties’ separation, Ms. Z. continued to perform the primary parenting role that enabled Mr. Z. to maintain long hours of work, extensive travel and different home bases. Finally, Mr. Z.’s career has naturally progressed from the one that developed during the parties’ cohabitation. Mr. Z. has worked for some time in the same general industry, holding relatively senior managerial or executive positions.

It is of no moment that he found a new employer without Ms. Z.’s help. (Her involvement in finding him new work would have been unusual, even during their cohabitation.) [ 113 ] Ms. Z. has established that she contributed to the acquisition of Mr. Z.’s career credentials, and thus contributed to the ability to earn increased income, to paraphrase Langston, J’s words. [23] Ms. Z. has also met the test established in Hartshorne v.

Hartshorne , in that “there is a clear temporal link between their marriage and this increase [in income] with no intervening change in [his] career.” [24] (iii) Income Disparity [ 114 ] From my findings on income, it is obvious that Mr. Z.’s income rose steadily, with the brief exception of a short period of unemployment in 2009. In 2010, he earned $100,000.00 more than in 2006 – a 37 percent increase. By contrast, Ms. Z. is earning $15,000.00 more, an 18 percent increase. [ 115 ] The income disparity cannot be assigned entirely to disadvantages suffered by Ms.

Z. during the marriage or to the advantages her role conferred on Mr. Z. As noted above, the career paths they chose are largely responsible for this divergence. However, Ms. Z.’s career was consistent with her primary responsibilities for the children and Mr. Z.’s career was, to say the least, much less amenable to someone with primary child care responsibilities. Further, I found that Ms. Z.’s career was probably affected to some degree by sacrifices she made, while Mr. Z. could not have committed to very long working hours and extensive travel (presumably factors in this financial rewards) without Ms.

Z. undertaking almost the entirety of child-care responsibilities. There is thus some causal connection between their relative career paths and corresponding financial reward on the one hand, and the marital roles each of them undertook on the other. (iv) Standards of Living [ 116 ] The growing income disparity is more directly relevant to the parties’ post separation standards of living. Mr. Z. attempts to minimize this difference. He states that he continues to live “frugally.” In referring to an expenditure on one of Ms.

Z.’s credit cards, he remarked that at least he did not often shop at Holt Renfrew. [ 117 ] Much more evidence would have been desirable for assessing the parties’ comparative standards of living. There is only one budget from Ms. Z., dated August 2006, exhibited to an affidavit sworn December 7, 2006 seeking child and spousal support. Ms. Z. and her counsel explained that other budgets were not provided (even though requested by Mr. Z.) because Ms. Z. simply lives within her means and finds it difficult to budget for unpredictable expenses.

That is a poor excuse for not providing highly relevant evidence, particularly considering that budgets are by their nature approximations. [ 118 ] Despite these limitations, some inferences can be drawn from Ms. Z.’s August, 2006 budget. Her total monthly income was $6,333.33 (based on a $76,000.00 salary), and total expenses were $5,325.00. (The parties had been separated since January 2006, but Mr. Z. was not yet paying child support.) From those expenses, Ms.

Z. paid for all the repairs, maintenance, utilities, insurance, taxes and yard work required at the house and acreage; groceries; school lunches; clothing for herself and the children; car maintenance; and school and recreation costs for the children – to select just a few items. [ 119 ] The budget might be considered “frugal,” to use Mr. Z.’s term. There was no cable television and no child care expenses. It is difficult to identify any items that were for Ms. Z. personally rather than for her and her children.

However, her personal clothing expenses for that month were identified at $300.00. [ 120 ] Since August 2006, Ms. Z.’s income has risen and she receives child support. She continues to incur significant expenses at the home and for her children, but has been able to take some vacations (although some were more modest than before – such as borrowing cabin accommodations) and purchase a new car.

[ 121 ] The evidence contains four budgets prepared by Mr. Z., for January 2008, December 2008, November 2009 and September 2010. I have doubts about their reliability, primarily because the income stated for each budget is significantly below that established in the evidence. Nevertheless, some inferences may be drawn, so I summarize them as follows:

a) In January 2008, Mr. Z. stated that his annual income was $248,109.00, or $20,675.00 monthly. (I found it to be $319,053.00, or $26,588.00 monthly.) His expenses for that month totalled $12,686.36.

b) In December 2008, Mr. Z. gave his income as nil, indicating that he was unemployed (even though substantial final pay was received from his employer that month). His expenses were $22,144.00 for the month. This was obviously unusual, because it purported to represent a period of unemployment, and there were large expenses for income tax and rent on a short-term furnished apartment with amenities.

c) In his November 2009 budget, Mr. Z. gave an annual income of $180,000.00, or $15,000.00 monthly. (I found it was $216,007.00, or $18,000.00 monthly.) His total monthly expenses were $13,734.00.

d) The final budget, for September 2010, showed the same annual income of $180,000.00. (I found it be $371,667.00, or $30,972.00 monthly.) His total monthly expenses were $14,459.00. [ 122 ] Thus, Mr. Z. was also able to live within his means, except for the anomalous month of December 2008. A selection of some items from these budgets allow some inferences on Mr.

Z.’s standard of living: - Groceries : $500.00 for each budget except $333.00 for January 2008. - Dining out : $200.00 for each budget, except $370.00 for the first. - Entertainment : $135.00 for the last two budgets, $296.00 for January 2008, and $70.00 for December 2008. (This includes cable tv, movies, concerts and clubs.) - Travel : $525.00 for the last two budgets. - Sports Equipment: $100.00 for the last three budgets. - Nutrition (within the recreation category) : $250.00 for the last two budgets, and $150.00 for December 2008. - Clothing: Starting from the earliest budget, $481.00, $200.00, $600.00 and $200.00, respectively. - Alcohol : $100.00 for each of the last three and $120.00 for the first one. - Home repairs: $450.00 for November 2009, $250.00 for September 2010. - Home improvements : $300.00 for November 2009, $300.00 for September 2010.

The expenses (of which these are only examples) are generally not excessive. It would be inaccurate to describe Mr. Z. as more frugal than Ms. Z., however, given their different responsibilities and obligations. His figures show a comfortable amount of discretionary spending. [ 123 ] On Mr. Z.’s budgets, there is a modest monthly positive balance with the exception of the anomalous month. That surplus would be significantly larger if the correct income figures were used. [ 124 ] Furthermore, Mr.

Z. shows no contributions to investments or financial obligations except for a monthly RRSP payment and interest-only payments for the debt on his Calgary and Edmonton homes. That is inconsistent with his approach to financial obligations throughout the entire period of his cohabitation with Ms. Z. They avoided mortgages for the two homes they purchased, and quickly paid off the loans incurred. His bank accounts have not grown but remain in a good surplus position. Mr. Z. gave no convincing explanation

for why he has, apparently, chosen not to increase the equity in his homes and investment accounts. In fact, Mr. Z. often professed ignorance when asked basic questions about his finances. For example, he claimed not to know what his monthly net income was. [ 125 ] I cannot fault Ms. Z. for her suspicions about whether she received full disclosure of Mr. Z.’s financial circumstances. On the evidence, I conclude that his income level is supporting a more liberal lifestyle than is reflected in his budgets, and a lifestyle exceeding the one available to Ms. Z. Mr.

Z.’s frequent refusal or neglect to provide basic financial information justifies this inference. [ 126 ] While Ms. Z. has maintained a comfortable lifestyle, I find that it is significantly below the one she enjoyed before separation. She testified to the high standard of living she enjoyed with Mr. Z. and their children. They travelled frequently, to a wide variety of destinations including Hawaii, Palm Springs, Disneyland and Disney World. They stayed in very nice hotels or resorts. They always rented vehicles. They did many activities and saw many sites.

The children were enrolled in many activities, all of which required financial commitment. Mr. Z. had memberships at a downtown club and a golf club, while Ms. Z. had a relatively large disposable income for her own use. She stated that after separation, she has been required to significantly curtail expenditures on herself and her children, and constantly deals with financial worries related to repair and maintenance of the house and property. The children’s activities have been reduced. [ 127 ] Mr. Z. painted a different picture in his testimony.

He stated that before separation their lifestyle was under average for their income level. They were not big spenders and lived frugally. Each year, they took one major trip, a smaller trip often to family, and did some camping with their truck and trailer. Where possible, he used points earned from business travel to fund their vacations. [ 128 ] The difference between pre-separation and post-separation standards of living for Ms. Z. need not be precisely measured. It suffices to determine whether there is a material difference, and I am satisfied that there is. It would not be credible to suggest otherwise.

Before separation, the couple had a sizable income and substantial savings, both of which they shared, many vacations, and freedom from financial worry. Ms. Z. does not live in straightened circumstances, but she has needed to make adjustments to live debt free on a reduced income. F.

Amount and Duration of Spousal Support [ 129 ] The authorities contain repeated reminders that, to paraphrase Bracklow , there are no hard and fast rules for quantifying spousal support; instead, courts must look at all the statutory factors in light of the stated objectives of support, and exercise discretion to equitably alleviate adverse consequences of a marriage breakdown. [25] I am particularly mindful that spousal support orders must be based on the circumstances of the parties in each case. [26] [ 130 ] In my view, it is not consistent with the circumstances of the Z.s’ marriage or the factors and objectives in the Divorce Act for these parties’ incomes to be equalized.

While I have found that Ms. Z. was disadvantaged to some degree by her role in the marriage, and Mr. Z. financially benefited from the freedom her role gave to him, they chose different careers at the very beginning of their relationship. Furthermore, their relatively frugal and debt-adverse choices meant that they did not use their full income to support a lavish lifestyle. Instead, they saved money by building equity in their homes and accumulating savings. Ms.

Z. will benefit from those choices in the division of property. [ 131 ] In my view, it is useful to deal separately with the period January 1, 2007 through August 31, 2011. From January 1, 2007, Ms. Z. remained primarily responsible for both children. Those years were probably her most challenging as a parent, given the separation and L’s difficulties. She was attempting to establish the next stage of her career, but had no spousal support and obtained child support only after repeated court applications.

However, L plans to resume full-time attendance as a student in September 2011, and has reached the age where independence from her parents must be expected soon. [ 132 ] There is no need to calculate each year’s support payments separately. For practical purposes, I am dealing with an award for the entire pre-trial period, and several months thereafter (but only one month after these reasons are issued). I find that a proper award for the period would be, on average, $50,000.00 per year. It recognizes the parties’ respective economic advantages and disadvantages arising from the marriage or its breakdown, Ms.

Z.’s ongoing child-care responsibilities, and her reasonable expectations for a standard of living. I also recognize that Ms. Z. is making significant progress towards economic self-sufficiency.

[ 133 ] A court has discretion to award lump-sum payments under

section 15.2(1) of the Divorce Act . However, it has been held that lump-sum orders for spousal support should not generally be granted, even for retroactive spousal support; and reasons must be given for ordering a lump-sum payment. [27] Further, lump-sum orders must take into account the loss of tax deductibility. [28] [ 134 ] As explained later in these reasons, Ms. Z. will be required to pay a substantial amount to Mr. Z. to effect the form of equal distribution of property I have found to be just and equitable. Furthermore, Mr.

Z.’s counsel, submitted a number of helpful scenarios in final argument for the equalization necessary to accomplish property division, one of which was ordering lump-sum payments for retroactive support obligations. Accordingly, in my view this is a proper case in which to order that spousal support payments be made in the form of a lump sum. [ 135 ] Before considering tax implications, my finding would generate an entitlement of $233,333.00 (four years at $50,000.00, plus 8/12 of $50,000.00; or 56 months at $4,167.00).

The “ChildView Child Support Calculations, Version 2011.1.0" calculation of that amount, after taking into account the net cost of the annual payments, would be $142,352.00 ($2,542.00 per month). I therefore find that amount reasonably reflects a lump-sum payment based on my determination of spousal support obligations, taking into account the adverse tax implications of a lump-sum award. [ 136 ] As noted above, for spousal support findings I consider it reasonable to conclude that Ms. Z.’s parental responsibilities will be substantially reduced by September 2011.

I also realize that she continues to have primary parenting responsibilities for M, who will then be 15 years old. [ 137 ] I also take into account my finding that in 2010, Mr. Z. had his best earning year yet; and I find it likely that his income will continue to increase, at least in the short term. From 2007 through 2010, the total difference between the parties’ incomes was $831,515.00; the total of their average incomes was $774,368.00. Ms. Z.’s total income for the period was $368,610.00. Given the duration and nature of the parties’ marriage, it is proper that Ms.

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