Litt v Litt, 2013 ABQB 235

Court of Queen ’ s Bench of Alberta Citation: Litt v Litt, 2013 ABQB 235 Date: 20130419 Docket: 4801 151555 Registry: Calgary Between: Patricia Marie Litt Plaintiff/respondent - and - Blair Alexander Litt Defendant/applicant _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice G. H. Poelman ________________________________________________ TABLE OF CONTENTS I. Issues for Determination................................................................................................... Page: 3

II. Status and Primary Care of Children................................................................................ Page: 4 1. Breanne................................................................................................................ Page: 4 2. Alexander and Simon........................................................................................... Page: 5 III. Ms. Litt ’ s Income............................................................................................................ Page: 6 IV. Mr.

Litt ’ s Income............................................................................................................ Page: 6 V. Conclusions..................................................................................................................... Page: 8 I. Issues for Determination [ 1 ] The parties, Ms. Litt and Mr. Litt, each apply for child support. The issues concern current and retroactive child support obligations for three children, Breanne (now about 20 years old) Alexander (17) and Simon (15). [ 2 ] The parties married in 1984. In May 2006, Mr.

Litt moved out of the matrimonial home (where Ms. Litt continued to reside) and, in December 2007, into a home very close to the matrimonial home. This allowed the children to easily go back and forth between the two residences. [ 3 ] They agree that they were separated at latest by June 2010 (a date conceded by Mr. Litt in his questioning). However, it is very much in dispute whether the date of separation for determining support obligations should be much earlier. [ 4 ] Ms. Litt argues that the parties separated in May 2006, when Mr. Litt moved to a separate residence. However, Mr.

Litt argues that they were not separated, based on a number of indicators: he continued to regularly provide significant funds and assets to Ms. Litt; they had nine vacations together from mid 2006 to mid 2010, in which they were sexually intimate; he maintained and paid mortgage obligations on the matrimonial home; and their living arrangements easily facilitated the children moving back and forth between the two homes. Mr. Litt argues that the relationship was only severed after Ms. Litt became aware around June 2010 that he was seeing someone else. [ 5 ] Ms.

Litt disputes most of these facts, including the number, types and purposes of the vacations, the sexual intimacy, and the nature and extent of financial support. [ 6 ] The evidence on this significant point, covering a four-to five-year period of their relationship, is remarkably brief. It comprises a few paragraphs in several brief, competing affidavits, and a number of pages of questioning.

It does not address at all, or in adequate detail, most of the factors the authorities (which were submitted after the hearing) hold are required to make a determination of when separation occurred. [ 7 ] Further, where there is evidence, there are important contradictions on material points, such as how often the parties vacationed together, why they did so, whether they were intimate during those times, and what degree of financial interrelationship continued to exist after May 2006.

The authorities repeatedly warn against deciding applications where the affidavits conflict on important points that the chambers judge cannot resolve. [1] [ 8 ] In light of the expense of these types of proceedings, I have attempted to make a finding on the date of separation. Unfortunately, given the limited evidence and the contradictory nature of much of what is available, I have concluded that it is not possible, proper or fair for me to do so. Any decision on the record before me would be arbitrary, and thus improper and unfair to both

parties, having regard to the significant consequences that decision might have. [ 9 ] Therefore, I confine my decision to relief for the period commencing July 1, 2010. The parties may apply to set down for trial of an issue the determination of the obligations for the period before that date or, preferably, have them determined as part of a trial of all remaining issues. II. Status and Primary Care of Children 1. Breanne [ 10 ] Breanne finished high school in June 2006, and intermittently worked and attended some post-secondary education thereafter.

In October 2010, she moved out of the matrimonial home (where she had resided with Ms. Litt) and moved in with her boyfriend, with whom she has lived since. Her boyfriend has an engineering degree, and has been employed continuously with Pepsi Canada, first in the Calgary area, and now in Vancouver, where they both reside. [ 11 ] Breanne attended Vancouver Film School from June 2011 to June 2012, and was supported in part by Ms. Litt. [ 12 ] Mr.

Litt has an obligation under the Divorce Act [2] and the Federal Child Support Guidelines [3] (“ Child Guidelines ”) to support “a child of the marriage”, defined in section 2(1) of the Divorce Act as where the child is over the age of majority and unable because of illness, disability or other cause to withdraw from the charge of her parents or obtain the necessaries of life. [ 13 ] In my view, Breanne ceased to be a child of the marriage at latest in October 2010, when she moved in with her boyfriend. She has shown the ability to earn income and live independently.

There is no evidence that Breanne required support from Ms. Litt, however commendable it may be that support was provided. [ 14 ] It is not necessary for me to determine whether Breanne ceased to be a child of the marriage before October 2010. The application for child support was commenced in 2012. For a child support order to be made, the child to whom it relates must have been a child of the marriage when the application was first made. [4] [ 15 ] Thus, Ms. Litt’s claim for child support for Breanne is dismissed. 2.

Alexander and Simon [ 16 ] The parties’ two sons lived for significant periods with each parent, making it difficult to determine which parent has child support entitlement or obligations at different times. The evidence is consistent that from January 2012 until the hearing, Simon lived continuously with Mr. Litt. Likewise, from January 28, 2013, Alexander lived continuously with Mr. Litt. For other periods, there is less clarity. [ 17 ] I have carefully reviewed the affidavits and transcripts of questioning of both parties regarding time each son lived with each parent.

For the period July 1, 2010 to January 2012 for both sons, and for 2012 until January 28, 2013 for Alexander, the evidence establishes that each parent had each of the sons for various lengthy periods. Further, for some periods the sons lived on alternating weeks with each of their parents. The evidence differs on exact periods and lengths of time each son spent with each parent for some of these periods. [ 18 ] There are no records showing exact periods of each son’s residence with each parent.

It is not possible to calculate all of these exact times, in the absence of clear records, limitations in the parties’ memories, and some contradictory evidence (although much of the

evidence is broadly consistent). Where there are differences between the parties’ testimony (in affidavits or questioning) on parenting time, I generally prefer Mr. Litt’s testimony. His answers are simple and straightforward, without apparent regard to his interest; on the other hand, Ms. Litt’s evidence was notably more guarded, evasive and much less forthright. While only limited credibility findings can be made on this record, suffice it to say that Ms. Litt’s evidence does not convince me that she had either son for materially longer periods of time then did Mr.

Litt. [ 19 ] For the purpose of determining child support, I find that from July 1, 2010 to December 31, 2011, the two sons were with each parent an equal amount of the time; from January 1, 2012 to January 31, 2012, Alexander was with each parent an equal amount of time, and Simon was with his father full-time; and from February 1, 2013, both sons have been and continue to be primarily resident with Mr. Litt.

Where I have found equal parenting time, I have not necessarily been able to fix the exact percentage based on the state of the evidence, but have been satisfied from the evidence that the arrangements fell within the shared parenting regime of

section 9 of the Child Guidelines . In those cases, I am satisfied on the evidence that neither party had the relevant son for materially more than 50 percent of the time. Further precision is not necessary given the ease with which the children went between homes within close proximity, and the fact that they had adequate accommodation and other provisions available in each home, from parents who were often earning comparable levels of income. [ 20 ] The parties agree that a simple set-off of child support obligations, based on the Child Guidelines , is appropriate for the periods of shared custody.

Accordingly, I direct as follows: a. July 1, 2010 to December 31, 2011: there will be a set-off of the amounts which would be paid by each of the parties to the other, based on equal shared parenting and two children. b. January 1, 2012 to January 31, 2013: there will be a set-off of the amounts which would be paid by each of the spouses based on equal shared parenting for one child (Alexander), and Ms. Litt will pay child support without set-off to Mr. Litt for one child (Simon). c. February 1, 2013 forward: Ms. Litt will pay child support to Mr. Litt, without set-off, for two children. III. Ms.

Litt ’s Income [ 21 ]

Section 16 of the Child Guidelines provides that a spouse’s annual income will be determined using the sources of income set out under the heading “total income” on the standard income tax return form issued by Canada Revenue Agency (identified on the tax form as “line 150"), adjusted in accordance with

Schedule III. [ 22 ] It is common ground that Ms. Litt’s income for child support purposes should be set as her line 150 income. The evidence discloses that amount to be $54,967 for 2010 and $56,495 for 2011. IV. Mr. Litt ’s Income [ 23 ] Sections 17 and 18 of the Child Guidelines allow departure from “total income,” as adjusted by

Schedule III, in a number of cases. Those potentially applicable here are: 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; or 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.

[ 24 ] Mr. Litt worked as a realtor and landlord for the relevant times through his corporation, Rivergreen Realty Inc. He acknowledges that the properties held in Rivergreen and the value of the corporation form part of the matrimonial property to be divided with Ms. Litt. He receives tax benefits by deducting expenses from income earned through the corporation.

On the other hand, he argues (and I find the evidence supports) that a reasonable portion of the income is required to maintain the properties from which rental income is earned, as well as supporting his commissioned real estate business. [ 25 ] The parties agree that it would not be reasonable to use the “total income” figures from Mr. Litt’s personal income tax returns to determine his child support obligations.

They differ on what approach to take in setting his income. [ 26 ] The financial statements for Rivergreen show commission income and rental income, before expenses and taxes; they give a detailed listing of expenses, according to various categories; they show net income, after deduction of expenses but before income tax; they show the amount of income tax paid; and they give the balance of retained earnings held in the corporation (which Ms. Litt’s counsel agrees are not the same as cash). [ 27 ] Mr. Litt argues that a reasonable approach is to use his gross commission income for Child Guidelines purposes.

In questioning, he testified that his commissions really constitute his income. Further, it is argued that rental income should not be included, because it largely goes to maintain the properties, and the value of the properties (and the company itself) are part of the matrimonial property in which Ms. Litt will share. [ 28 ] Ms. Litt suggests taking the total net income (commission and rental), after deduction of all expenses but before tax; and then adding back selected expense items on either a 100% or 50% basis. As Ms.

Litt’s counsel points out, this approach sometimes yields an income close to the one derived from Mr. Litt’s approach; and sometimes it yields a higher or lower income. [ 29 ] I find that Mr. Litt’s approach is the most reasonable and consistent, on the limited information available. It does not give Mr. Litt the benefit of any expense deductions, and reasonably separates out only income that relates to assets requiring maintenance and available as part of the distribution of matrimonial property. [ 30 ] Mr. Litt’s gross commission income is $69,365 for 2010, $40,541 for 2011 and $49,762 for 2012.

Those figures are significantly less than for the years 2006, 2007 and 2008, although significantly higher than 2009. However, there is no evidentiary basis for me to find they do not fairly represent Mr. Litt’s gross commission income. Indeed, as noted, the approach proposed by Ms. Litt results in similar income for some years, thus tending to confirm the reasonableness of Mr. Litt’s approach. [ 31 ] Mr. Litt’s counsel suggests an average of three years to address the fluctuation, and I agree that would be appropriate given section 17(1) of the Child Guidelines .

That average is $53,222. [ 32 ] In addition, I must take into account that much of this income is not taxed, because of the expenses which may be deducted within Riverview to reduce tax. The Child Guidelines are based on before-tax incomes, and thus an adjustment should be made to reflect Mr. Litt’s better financial position compared to a parent earning a fully-taxable income of $53,222. [ 33 ] I have no evidence of what tax rate should be used to adjust this income. In my view, a 10% gross up would be fair, even though it is less than the tax rate that would normally apply to incomes in this range.

I recognize that some of the expenses added back to Mr. Litt’s income are probably cash outlays that are legitimate deductions from income for Child Guidelines purposes, and he is paying income tax on part of the income I have set. [ 34 ] Thus, for purposes of child support, I set Mr. Litt’s income for 2010, 2011 and 2012 as $58,544 per annum ($53,222 plus 10%). V. Conclusions

[ 35 ] In

summary, as explained above: a. Base child support will be calculated according to the incomes and obligations at various times as I have determined them; b. Extraordinary expenses (including orthodontic payments made by Mr. Litt) will be shared according to the incomes I have determined according to the dates the payments were made; and c. The parties will exchange financial information by June 30 of each year, and necessary adjustments will be based on current income information, with a rolling three-year average of Mr.

Litt’s gross commission income and a ten percent gross up. [ 36 ] I expect the parties will be able to arrive at precise numbers based on my findings and the application of the Child Guidelines . They have leave to apply to address any matters that require clarification arising out of these reasons, and may speak to costs if they cannot agree. Heard on the 14 th day of March, 2013. Dated at the City of Calgary, Alberta this 19 th day of April, 2013. G. H. Poelman J.C.Q.B.A. Appearances: Dale O. Ellert, Ellert Law for the Plaintiff Lois M. Sparling and Craig T.

Aitken, Vallance Sparling for the Defendant [1] Nieuwesteeg v. Barron , 2009 ABCA 235 , paras. 9 and 10 .

[2] R.S.C. 1985, c.3 (2nd Supp .). [3] SOR/97 - 175 , am. [4] D.B.S. v. S.R.G . , 2006 SCC 37 , [2006] 2 S.C.R. 231 , paras. 88 and 89 .