Stevenson v. Winkler, 2011 ABQB 693

Court of Queen ’ s Bench of Alberta Citation: Stevenson v. Winkler, 2011 ABQB 693 Date: 20111110 Docket: FL04 01059 Registry: Grande Prairie Between: Tracy Michelle Stevenson Plaintiff - and - Grant Perry Winkler Defendant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice C.L. Kenny _______________________________________________________ Introduction [ 1 ] This matter came before me by way of a special chambers application. The parties resided together in a common law relationship for just over 4 years.

They have one child currently two and a half years old. They separated approximately March of 2010. The application is under the Family Law Act . For ease of reference, I will refer to the parties as wife and husband although they were never married. [ 2 ] The Wife seeks retroactive and ongoing child and spousal support from March of 2010.

Issues [ 3 ] The issues are as follows:

a) What is the husband’s guideline income for 2010 and ongoing.

b) Is the wife entitled to adult independent partner (spousal) support and if so, in what amount and for how long? Background [ 4 ] The parties started living together in November of 2005. Their son was born in June 2009. During the relationship, the husband worked outside of Canada most of the time. He owns and runs a company referred to herein as GT. He provides consulting services to that company with respect to design and engineering of sulphur plants and processes as well as many other related projects. The company is the sole source of his income.

He worked in the U.S. for about 2 years and in China for an extended period of time during the relationship. [ 5 ] During the relationship, the wife worked outside of the home in retail sales. She also did the accounting for the company and was paid $2,000 per month to do that work. She has completed grade 10 at school and was working a full-time job in the service sector when the parties met. Since the separation, the wife has been working part time for an overnight delivery company.

She earns approximately $1,000 per month for 3 hours work a day however the timing of the work is unpredictable and at odd hours so she would prefer to do something else.

A) What is the Husband’s guideline income for 2010 and ongoing [ 6 ] The husband’s income varies from year to year depending on the contracts he has. It is therefore appropriate to determine what is fair and reasonable having regard to the husband’s pattern of income over the last 3 years taking into consideration the corporate pre-tax income and the expenses deducted from income. (Sections 17-19 of the Alberta Child Support Guidelines ) [ 7 ] The corporate year end is August 31 st .

The pre-tax income of the company for the year ending August 2008 is $ (2,051), for 2009 it is $72,867, and for 2010 it is $110,520. [ 8 ] The wife takes issue with the expenses the husband deducts from the pre-tax income of the company. She provided a breakdown in her affidavit of what she thought was appropriate for each year in terms of expenses. She then provided a different calculation at the hearing of the special.

The husband had responded to her initial submissions but clearly was not able to respond to the new calculations presented at the special. [ 9 ] Having reviewed all of the expenses and each parties position with respect to each of those expenses, I will attempt to provide some guidance to the parties in how to calculate these in the years going forward so that they do not have to return to court every year to have the court decide the husbands income.

I will deal with the last 3 years income first and then try and set guidelines for the future. [ 10 ] It is of note as well that for the first 2 of the 3 year period, the wife did the book-keeping for the company. The final year, 2010, was done by an accountant. There are clearly expenses that may be deducted from income which are completely acceptable and proper according to Revenue Canada. They may be expenses however that do not properly reflect the actual income available to the husband for the payment of child support.

I will deal with the general categories in dispute between the parties having regard to the type of work done by the husband on behalf of the company.

[ 11 ] The husband advises that he, through the company, does construction supervision, commissioning of new projects, trouble shooting of existing facilities, employee training, design, manufacturing and sale of equipment, third party manufacturing and sales work. He has to get the work and then travel to different parts of the world to do the work. He is often away from Canada for the majority of any one year. He has to pay all of his own expenses many of which are ultimately recovered when he is paid. He clearly needs significant operating capital. [ 12 ] I will now deal with the areas of dispute between the parties with respect to the expenses.

a) Amortization - the wife says 100% of this deduction should be added back into income as the vehicles and tools that are amortized are in Canada and the husband does not use them except when he is back in Canada. They include trucks, a trailer he bought for a job that fell through, a quad, a snowmobile and tools used for his work. He uses the vehicles to visit plants and pipelines, make proposals, gather data, and access remote locations for inspections. He acknowledges personal use especially for the truck and is prepared to add back 50% of the deduction for this expense.

While he does not set aside an amount for amortization, he clearly must replace these vehicles when needed and requires them for his work. I would add back in 50% of the claimed expense for amortization over the 3 years.

b) Insurance - The wife suggests that 75% of this deduction be added back in. For the reasons explained above, I would add back in 50 % of this deduction for the 3 years.

c) Bank and credit card charges and loan interest - The wife suggests adding back in 50% of these expenses. The husband says nothing should be added back in. The charges are on a corporate bank account, the credit cards are used for his business expenses that he has to pay up front and then is reimbursed, and the interest on the loan relates to a trailer he bought for a project that fell through. I am satisfied these are all necessary and reasonable expenses and would not add back in any of these deductions.

d) Office expenses - The wife wishes to add back 100% of these. The husband says he is prepared to add in 15 % for personal use. These items include office supplies, technology such as computers and skype, visas, and postal charges. I am satisfied that a greater share of these expenses is available for child support and would therefore add back in 50% of these expenses.

e) Occupancy costs - This is the deduction the husband is allowed for using his home as his office to conduct business. The wife says all of this expense should be added back in. The husband says none of it should be added in as he is required by law to have an Alberta address for his company and if he did not use his house, he would have to rent business premises. The approximate deduction of $500 per month he says is not unreasonable for rent. The husband is right that this is a reasonable expense for tax purposes as he works from home however he would be paying for his house in any event and therefore those funds are available for child support. I would add in 100% of these expenses.

f) Property taxes and Utilities - On the same basis as above, I would add in 100% of these expenses.

g) Supplies - the parties agree these should be added back in at 50 %.

h) Telephone and communications - The wife would add back in 50% of these costs and the husband says 25% is more appropriate. I agree with the husband that given his job and the travel involved, communication is very important. He cannot conduct business without it. I am satisfied that only 25% of this expense should be added back in.

i) Rental - The husband says that from time to time he has to rent equipment. This is a third party expense. In 2010, it was for the rental of accommodation in China. I am satisfied this expense is totally proper and should not be added back in.

j) Vehicle expenses - The wife says 80% of these costs should be added in. The husband acknowledges 25 % as personal use in the first 2 years and 50 % in the 3 rd year. The difference in the first two years is that the wife was using the company vehicle. I will deal with this later in spousal support. I would add back in 50% of the vehicle expenses as related to personal use and available for child

support purposes.

k) Subcontractors - this expense is shown only on the financial statements for the third year. The husband gave an explanation for these expenses in his affidavit. The wife, in a responding affidavit, provided emails and other evidence which appear to indicate that many of the expenses claimed by the husband in 2010 under this heading involved loans or gifts to family members as well as the purchase of a snowmobile and yard care.

The Rules prevent the husband from filing a further responding affidavit to answer the wife’s allegations in this regard however in reviewing the evidence that she has attached to her affidavit, I am satisfied that the sum of $23,500 should be added back in to income for this year under this category. [ 13 ] Using the principles I have set up above, I find the income for the husband to be as follows for the last three years: 1) 2008 income (using the 2007/2008 financial statements) - pretax income $(2,051), add back expenses deducted of $45,200 for a total 2008 income of $43,149. 2) 2009 income (using the 2008/2009 financial statements) - pretax income $72,867, add back expenses deducted of $43,600 for a total 2009 income of $116,467. 3) 2010 income (using the 2009/2010 financial statements) - pretax income $110,520, add back expenses deducted of $60,211 for a total 2010 income of $170,731. [ 14 ] The average of the 3 above years income is $110,000 which is the income to be used for calculating the child support effective April 1 st 2010.

The husband will receive credit for any payments made toward this support to date. [ 15 ] Corporate financial statements and tax returns are to be completed within 6 months of the corporate year end. It is appropriate therefore for the parties to adjust child support effective March 1 each year starting March 1, 2012. By that time, the parties will have available the statements for the 2010/2011 corporate year end. They will then have to calculate the income for the husband for 2011 using the principles that I have set out above.

Once that is calculated, an average of the 3 most recent years is the income to be used to calculate the support effective March 1, 2012. The process will continue each year thereafter. [ 16 ] The husband will also pay his proportionate share of

Section 7 expenses. At the present time, I understand there are none other than child care as and when required. The wife will provide receipts for all such

section 7 expenses before the husband is required to contribute to them. [ 17 ] There will be the standard clause in the order requiring the exchange of financial information each year. In this case, since the husband is self-employed in a consulting capacity, the wife will require the financial statements of the company each year as well as the tax returns.

B) SPOUSAL ( ADULT INDEPENDENT PARTNER ) SUPPORT [ 18 ] The wife seeks spousal support until such time as the child attends school full-time. She is seeking the sum of $1350 per month effective March 1 st , 2010 which is her budget shortfall after taking into consideration the amount she earns presently from employment and other benefits and payments. She relies on sections 56-60 of the Family Law Act .

Those sections indicate that there is an obligation to pay spousal support and that the court should consider certain factors to determine if and for how long such support should be paid. [ 19 ] An Order was granted in February 2011 which provided that on a without prejudice basis the husband would pay child and

spousal support commencing March 1st 2011 until further court order. [20] In 2010 it should be noted that the husband paid to the wife a salary of $2000 per month to continue to do his books for him asshe had done in the past. These payments continued until December of 2010. In addition to this, he also paid to her a lump sum of$12,000 to help her get re-established in her own place. There is evidence before the court that the wife also lived in a common lawrelationship with another individual from December 2010 to September 2011.

She has also been working part time as indicated above. [21] The wife relies on a decision of the B.C. Supreme Court, J.L.W.S v. J.L.S 2007 BCSC 174 , [2007] B.C.J. No 247.The facts of that case are very similar to the facts here. The relationship was short , approximately 3 ½ years and they had one child borna year before separation. There was a consent order for interim spousal support. The wife in that case worked during the relationship andattempted to re-enter the work force after separation but was having some difficulties doing the same work as before because of the longhours involved.

The court found that the wife was not disabled and there was no reason she could not enter the work force. She chosechild care over employment. In that case, the Court awarded a further period of spousal support which took the wife to about 2 years postseparation. The Court remarked on the wife’s obligation to achieve self sufficiency and that the support was a bridge for her to do so. [22] This case is very similar. These parties have now been separated 1 year and 8 months.

The wife has been provided with asalary for part of that time, a lump sum payment, and has resided with another individual for a period of time. She has also receivedinterim support by court order. She has worked at a job that she does not feel is very satisfactory yet there is no indication in her affidavitof the efforts she has made to find other employment more suitable. The husband alleges that is because her boyfriend works for thesame company and that is why she stays with that employment which is sporadic and not suitable for her needs and that of her youngchild.

She clearly has skills that are marketable having worked in the retail and service sectors as well as doing the accounting for thehusbands company. She requires a transition period and I am satisfied that the period for such is almost at an end. I know she has theresponsibility for a young child however the husband must also contribute to any costs she may incur for daycare for the child.

Thereappears to be no explanation as to why she is not employed on a full-time basis at this time. [23] I order that the spousal support continue in the amount set out in the interim order to and including February 1st, 2012 atwhich time it will end. I am satisfied that a period of two years of support is more than sufficient to deal with the objectives of such anorder as set out in the Family Law Act and in the facts of this case. COSTS [24] The wife seeks solicitor and own client full indemnity costs.

In particular, she relies on the Rules of Court which allow suchan award in certain circumstances along with the case law. In particular, they refer me to the decision of Justice Moen in Brown v.Silvera, 2010 ABQB 224. I have reviewed that decision and am familiar with the principles and the Rules in awarding costs. The wifesays that she had to bring needless applications such as for financial disclosure, to recover a vehicle and to settle the terms of an order.The husband responds that all financial information was given to the wife as soon as it was available.

In particular, some of thestatements were not completed by the accountant but were given to her as soon as they were completed. They also indicate that theyagreed to her having the vehicle and so the application did not proceed nor did the application to settle the terms of an earlier order ascounsel agreed otherwise. The wife also points out that the husband has been deceitful to her and this court particularly in his affidavitdealing with subcontractors.

She had to locate all of the evidence to refute that evidence. [25] The Husband on the other hand had to bring applications to obtain access to his child and to prevent an anticipated move bythe wife which would take the child away from Grande Prairie. [26] Family matters are always difficult. There seems never to be an end to the applications and disputes. There has been a lot oflitigation in this matter to date and blame can be apportioned to both parties. These matters of income, child and spousal supporthowever, had to be dealt with.

It is not a straight forward matter and made more difficult by virtue of the corporate income. I haveattempted to set some principles that the parties can use for future years which may forestall further litigation. In the end result, I amsatisfied that the Wife is entitled to costs of this application but not on an indemnify basis. I am not satisfied that the conduct of thelitigation to date warrants such. I order costs in favour of the wife in the sum of $2,500 plus reasonable disbursements.

Heard on the 7 th day of November, 2011. Dated at Grande Prairie the 10 th day of November, 2011 C.L. Kenny J.C.Q.B.A. Appearances: Mr. Terry Prockiw for the Plaintiff Mr. Timothy Burnham for the Defendant