C.S.H. v. E.M.H., 2013 ABQB 660

Court of Queen ’ s Bench of Alberta Citation: C.S.H. v. E.M.H., 2013 ABQB 660 Date: 20131108 Docket: 4803 153668 Registry: Edmonton Between: C.S.H. Plaintiff/Applicant - and - E.M.H. Defendant/Respondent Corrected judgment: A corrigendum was issued on November 18, 2013; the corrections have been made to the text and the corrigendum is appended to this judgment. _ ________________________________________ ______________ Reasons for Judgment of the Honourable Mr. Justice Robert A. Graesser _________________________________________ ______________ Introduction [ 1 ] On this special chambers application, the applicant, C.S.H., seeks: a. Interim monthly retroactive and ongoing child support;

b. Interim monthly retroactive and ongoing spousal support; c. Lump sum retroactive and ongoing child support; d. Lump sum retroactive and ongoing spousal support; e. An order transferring the respondent’s interest in the former matrimonial home in lieu of retroactive child support and spousal support, or in lieu of retroactive child support, and retroactive and ongoing spousal support; and f.

Costs. [ 2 ] The respondent, E.M.H., opposes the application and cross-applies for unsupervised shared parenting of the children, or alternatively specified unsupervised access to the children. [ 3 ] It is clear from the parties’ affidavits that there are unresolved matrimonial property issues as well. [ 4 ] I indicated on the application that the extent of the relief sought made it impractical, if not impossible, to deal with all issues on a special chambers application. Most of the argument focused on support issues, and this decision will focus only on child support.

Background [ 5 ] The parties were married in June, 1999 and separated in April, 2010. There are two children of the marriage, one now 12 and the other now nearly 11. The children had been fostered by the parties starting in 2004 and they were adopted in 2007. The children have been in the mother’s primary care throughout the separation. The father has had irregular access to the children since separation. Some of that access has been supervised. [ 6 ] When the parties separated, E.M.H. left the matrimonial home. C.S.H. and the children have resided in it.

E.M.H. made mortgage and other payments relating to the matrimonial home until sometime in 2012. He claims to have made over $79,000 in payments relating to the home. C.S.H. acknowledges that he made some payments but disputes the total amount, deposing that it is much lower. [ 7 ] E.M.H. has made no payments directly to C.S.H. for spousal support or child support (s. 3 or s. 7). [ 8 ] It is a fair observation that the parties agree on little if anything. C.S.H. disputes the extent of access E.M.H. has had with the children. C.S.H. disputes what E.M.H. claims to have paid.

C.S.H. claims that E.M.H. has a drinking problem. She claims that he is deliberately under-employed. C.S.H. deposes that there should be an open assessment before E.M.H. is allowed to have unsupervised access to the children. [ 9 ] E.M.H. deposes to difficulties in gaining appropriate employment and sets out his efforts at finding employment and taking employment far below his qualifications. He deposes that C.S.H. has never given him the opportunity to be more involved in the children’s lives or in decision-making for them.

He denies a drinking problem and deposes to being more involved in the children’s lives than C.S.H. gives him credit for. [ 10 ] One of the major areas of dispute is how to treat payments from the British Columbia government relating to the children. The children were adopted under a program whereby the parties received monthly support payments for the children.

The program, the Post Adoption Assistance program, “provides financial assistance to families who adopt children designated with special service needs or special placement needs and is intended to reduce financial barriers to adoption from ministry care”. [ 11 ] While the parties were together, they received approximately $700 per month per child from the program. After separation, C.S.H. arranged to have the payments directed to her alone.

The payments have continued and are expected to continue indefinitely. [ 12 ] While the payments are intended to be used solely for the benefit of the children, there are apparently no accounting requirements. Limited information on the program was provided for the special chambers application, however, various agreements between the parties and the B.C. Director of Adoption were in evidence before me. [ 13 ] E.M.H. argues that these payments should be taken into account when determining the parties’ incomes for support purposes.

He argues as a result that he should have no, or alternatively reduced, child support obligations.

At his present level of income, he argues that C.S.H. is already receiving more from the B.C. government than he would have to pay if he were required to make payments for the children under the Federal Child Support Guidelines . [ 14 ] C.S.H. argues that the payments are outside the scope of the Guidelines , and should not be taken into account either for spousal support or child support purposes. [ 15 ] C.S.H. points out that the funds are to be spent solely to meet the children’s needs, as the program is intended to provide assistance to parents who adopt children with special needs.

She has not, however, put forward any information as to how the funds are being spent, or what special needs (requiring financial expenditures) she has incurred or expects to incur for the children. Applicable Law [ 16 ] The Guidelines provide in s. 16 that income for the purposes of child support is determined using the sources of income under the heading “total income” in the T1 General form issued by the Canada Revenue Agency. That is conveniently described as “line 150

income”. There are possible adjustments in the Guidelines, but none of the adjustments are applicable here. [17] C.S.H.’s argument is simple: the payments from the B.C. government are not income; they are not required to be declared asincome and play no

part in her or E.M.H.’s tax returns. The Guidelines are clear that E.M.H. is required to pay child support on hisguideline income. [18] She relies on K.L.S. v. J.E.S., 2010 ABQB 410. That case is very similar to this one. There, Sullivan J. considered the effectof payments under the Alberta Post Adoption Benefits plan on the parties’ child support obligations. Sullivan J. held at paras. 7 and 8: [7] In this case the payments by the Government of Alberta to Mr. are for minor children. The children are dependant on both theirparents for continued support.

That is to say, Post Adoption Benefits do not mitigate in favour of the payor parent to reduce child support. [8] In keeping with the requirements of the Divorce Act and the Guidelines, Mrs. is required to pay support based on her taxableincome, her line 150 income. [19] Sullivan J. distinguished B. (J.R.) v. B. (C.F.), 1999 ABQB 254, which is a case involving the Assured Income for theSeverely Handicapped Fund (AISH). Veit J. held in that case that the father’s obligations to pay child support ended when his son beganto receive AISH payments. [20] E.M.H. argues that K.L.S. v.

J.E.S. ought to be distinguished because the case did not consider s. 15.1(5) of the Divorce Act.Section 15 provides: 15.1 (1)A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for thesupport of any or all children of the marriage. Interim order

(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interimorder requiring a spouse to pay for the support of any or all children of the marriage, pending the determination of the application undersubsection (1). Guidelines apply

(3) A court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with theapplicable guidelines. Terms and conditions

(4) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period oruntil a specified event occurs, and may impose terms, conditions or restrictions in connection with the order or interim order as it thinksfit and just. Court may take agreement, etc., into account

(5) Notwithstanding subsection (3), a court may award an amount that is different from the amount that would be determined inaccordance with the applicable guidelines if the court is satisfied (

a) that special provisions in an order, a judgment or a written agreement respecting the financial obligations of the spouses, or thedivision or transfer of their property, directly or indirectly benefit a child, or that special provisions have otherwise been made for thebenefit of a child; and (

b) that the application of the applicable guidelines would result in an amount of child support that is inequitable given those specialprovisions. [21] I inquired of counsel during argument how the British Columbia courts have treated payments under the program, and theyadvised that they had been unable to find any cases on the subject. Following argument, Mr. Skrobot, on behalf of E.M.H., providedBurhoe v. Goff, (1999), (NB KB), 213 N.B.R. (2d) 391 and J.R.B. v. C.F.B., 1999 ABQB 254 (cited above). [22] In Burhoe v. Goff, the child of the marriage was 21 and suffered from Down’s Syndrome.

He received a disability pension of$530 per month, and his mother received a respite allowance. The father sought to terminate child support of $100 per week, which wasthe amount based on the Guidelines. Graser J. noted that children over the age of majority may be entitled to support from the non-custodial parent. The case turned on s. 3(2)(

b) of the Guidelines which relate to children over the age of majority. There, he reduced theamount of support and concluded that the Guideline amount was not appropriate. I do not see that this case has any particular bearing onthe issues here. [23] In J.R.B. v. C.F.B., Veit J. referred to an Ontario case, Tracey v. Tracey, [1998] O.J. No. 3494 (Gen. Div.), Griffiths v.Griffiths, 1999 ABQB 193 , [1999] A.J. No. 283 (Q.B.) and Brown v. Brown, 1996 ABCA 2015 , [1996] A.J.

No. 658(C.A.). [24] In Tracey, the court declined to take a child’s Canada Pension Plan disability amount into account and did not reduce thefather’s child support obligations, distinguishing between child support and amounts being paid “directly or for the child” under the CPPdisability pension. [25] In Griffiths, the court considered s. 3(2) of the Guidelines, as was done in Burhoe and took the payments for adult childreninto account in reducing the payor’s Guideline obligations.

[ 26 ] Brown v. Brown dealt with AISH payments, but not in a manner relevant to Veit J.’s consideration of the issue in J.R.B. or to this case. [ 27 ] Collateral benefits have been considered in other cases. In Kaupp v. Kaupp , 2008 ABQB 372 , Lee J. reviewed authorities relating to consideration of Canada Pension Plan Benefits and child support. There, the recipient mother received CPP benefits (for the children) on account of the payor husband’s disability. The husband sought to have that amount deducted from his child support obligations.

One of the husband’s arguments was that if the CPP benefit was not deducted, it would amount to a windfall in his ex-wife’s hands. [ 28 ] Lee J. held at para. 13, following his review of the authorities, that the CPP benefits belonged to the child. While the benefits may result from the payor’s circumstances, it cannot be said that they have been made by or on behalf of the payor.

He did not consider the implications (if any) of s. 15.1(5) of the Divorce Act . [ 29 ] He considered instead the undue hardship provisions under s. 10(2), but concluded that he had no choice but to apply the Guidelines and order that full s. 3 support be paid. He did, however, decide that the applicant did not need to make any s. 7 payments having regard to the parties’ circumstances. [ 30 ] In Vickers v.

Vickers , 2001 NSCA 96 , the Nova Scotia Court of Appeal considered the treatment of children’s benefits under CPP and ruled that they were not to be taken into account in determining a party’s child support obligations. Analysis [ 31 ] There has been, as far as I can tell, no consideration in Alberta of s. 15.1(5) of the Divorce Act , as it applies to agreements between spouses and other parties, in this case the BC Director of Adoptions. It is curious that it was not raised in some of the cases dealing with collateral benefits, although many of the cases deal with support claims for adult children.

The Canada Pension Plan benefits cases make it clear that Canada Pension Plan benefits payable as a result of the payor’s disability are the property of the child (even though they may be payable to the child’s custodial parent). As child support under the Child Support Guidelines is not means- tested other than by virtue of the tables themselves (subject only to hardship claims), the parents’ obligation to pay child support is independent from needs. Presumably, under the Guidelines , support is payable by the non-custodial parent to the custodial parent even if the child’s means exceed that of the parents.

The Guidelines do not contemplate that a child (at least a child under 18 and not having withdrawn from his parents’ care) will use his or her own funds for support purposes. [ 32 ] The question here is then the extent to which the payments from the program belong to the children, or are otherwise to be considered under s. 15.1(5). Property of the Children [ 33 ] There is nothing in the program documents before me, or the agreement between the parties and the B.C. Director of Adoptions which suggests that the payments are the children’s and not the parents’.

While the funds are to be used solely for the benefit of the children, there are no restrictions on what may be “for the benefit of the children” and there is no accounting requirement. The funds are not paid in trust; they are paid absolutely to the parents.

The parents do not have to document or justify any spending to either the Director or the children. [ 34 ] The payments are described as being for the purposes of providing “financial assistance to families who adopt children designated with special service needs or special placement needs” and they are “intended to reduce financial barriers to adoption from ministry care”. The payments are thus clearly for the families and not just the children. [ 35 ] The cases dealing with CPP are in my view distinguishable. Treatment of Post Adoption Assistance Payments [ 36 ] There are two possible treatments.

Firstly, the payments could be treated as income to C.S.H. That would impact on the share of s. 7 expenses, but not on E.M.H.’s obligations to make s. 3 payments. [ 37 ] Secondly, s. 15.1(5) (if applicable) gives the courts discretion as to how to treat payments to the recipient spouse. [ 38 ] Having regard to the clear wording of s. 15.1(5)(b), I am satisfied that the courts can take these payments into account with respect to E.M.H.’s

section 3 obligations. That subsection provides: (

a) That special provisions in an order, a judgment or a written agreement respecting the financial obligations of the spouses, or the division or transfer of their property, directly or indirectly benefit a child, or that special provisions have otherwise been made for the benefit of a child; [ 39 ] The agreement between the parties and the BC Director of Adoptions is clearly a written agreement, and the payments to which the parties are entitled as a result of their adoption of the children are clearly made pursuant to an agreement “respecting the financial obligations of the spouses” which “directly or indirectly benefit a child” and they are clearly “special provisions (which) have otherwise been made for the benefit of a child”.

In Magotiaux v Magotiaux , 1999 ABQB 1006 at para 19 , Veit J. describes how “‘special provisions’ [have] been held to mean ‘unique provisions, not in the nature of periodic payments, made for the support of a child’ ( Fonseca ); The Shorter Oxford Dictionary (3 rd ed.) defines special as that which exceeds or excels in some way [that] ‘which is

usual or common’ or that which is ‘exceptional’ ( Wanstal ).” The payments from the BC Director of Adoptions are unique and regular provisions made for the support of a child. Further, they exceed that which is usual or common. [ 40 ] The agreement obliges the parents to use the funds for the benefit of the children. The agreement is also a special provision made for the benefit of the children.

The provisions of the agreement are thus brought within both aspects of s. 15.1(5). [ 41 ] I conclude that there is a discretion as to award something different from that which would otherwise be required under the Guidelines . Factors to Consider [ 42 ] One of the primary factors to consider is the needs of the children. Here, there is no information suggesting that the children have, at this stage of their lives, any special financial needs. C.S.H. has not put forward evidence suggesting that there is more than a normal amount of pre- and after-school care required.

There are no special expenses put forward, other than the need for orthodontics. Those would in any event be a s. 7 expense. [ 43 ] The adoption arrangements with the B.C. government included ongoing financial assistance. The manner in which the program is described suggests that the intention of the assistance program was to encourage adoptions by foster parents and to alleviate any financial hardship arising from adoption. [ 44 ] The court can take judicial notice of the fact that foster parents receive payments to offset the cost of looking after the foster children in their care.

I infer that the purpose of the program is to ensure that the family’s financial situation is not worsened by adopting the foster children rather than keeping them as foster children and receiving ongoing payments for doing so. This is especially so where the foster children have been described as having special needs. [ 45 ] In the context of this regime, are the obligations of divorcing parents toward these adoptive children different? It seems to me that the answer must be yes. The effect of the program is to continue compensation to the family to offset the additional costs occasioned by having the children.

In this context, the support obligations towards a child who is essentially being subsidized by the state should be less than those towards children for whom no payments are being made. [ 46 ] I recognize that this decision is at odds with K.L.S. v. J.E.S. I am persuaded that s. 15.1(5) of the Divorce Act is applicable to this situation. Sullivan J. did not consider the effect of that subsection in the Divorce Act . That may not have affected the result, but in my view, there is discretion under that subsection to take payments under the B.C.

Adoption Assistance Program into account when determining the parties’ s. 3 obligations. [ 47 ] The issue therefore is not whether the payments should be taken into account but, rather, how. It seems to me that E.M.H. should be entitled to the benefit of half of the payments, as the payments were initially being made to the parents jointly. On an ongoing basis, his half (some $700 per month) should firstly offset his

section 3 obligations to that extent. Secondly, if there is any surplus, the surplus should be used to offset his proportionate share of any

section 7 expenses. I do not see that on an annual basis, E.M.H. should ever find himself in a credit situation to be carried forward. The payments are to be used for the benefit of the children, regardless of his income. If his annual total obligations are less than his notional half of the benefits paid, he will not be entitled to any refund or to any credit against the following year’s obligations.

To the extent that his obligations are greater than his share of the benefits, he is obliged to top his payments up. [ 48 ] For Guideline income purposes, neither party should treat the benefits as income; E.M.H.’s proportionate share of s. 7 expenses will be based on the ratio his earned income bears to the total earned income of the parties.

C.S.H.’s Guideline income should be based on her earned income without regard to the benefit payments she receives. [ 49 ] When the parties have exchanged their financial information by June 30 in any year, adjustments will be made for the previous calendar year based on actual incomes and s. 7 expenses incurred during that calendar year, and ongoing payments will be adjusted accordingly, based on the previous year’s actual earnings and expenses. It goes without saying that C.S.H. is to disclose receipts from the program as part of her annual financial disclosure.

Guideline Incomes [ 50 ] C.S.H. has not made out a case that E.M.H. is deliberately underemployed so as to warrant the imputing of additional income to him. He may be underemployed having regard to his qualifications and experience, but the evidence before me falls short of establishing that he has failed to make reasonable efforts to gain suitable employment, let alone that he is deliberately underemployed. The standard required by Hunt v.

Smolis-Hunt , 2001 ABCA 229 , has not been met by C.S.H. [ 51 ] E.M.H.’s Guideline incomes for the relevant years should be set at the line 150 amounts shown in his income tax returns. C.S.H.’s Guideline income should be likewise set. [ 52 ] E.M.H. is entitled to credit for payments made in relation to the matrimonial home by way of mortgage, property taxes and insurance payments. Half of any principal reduction in the mortgage debt should be reduced from his credits.

I trust that the parties will be able to determine what payments have been made and the credit to which E.M.H. is entitled. [ 53 ] If they are unable to agree, they should before returning to court submit any receipts to an independent accountant for a review and a report as to what payments E.M.H. has made towards the matrimonial home. If after that report the parties are still unable to agree, they may return the matter to me for determination.

[ 54 ] The parties should also be able to calculate what E.M.H.’s s. 3 Guideline obligations have been since the date of separation based on his line 150 incomes for the relevant years. His proportionate share of any s. 7 expenses should also be determinable. Once those obligations have been calculated, his payments plus one half of the program receipts since separation will be deducted to determine the extent to which E.M.H. is in arrears of child support (if at all).

For the purpose of calculating these arrears (if any), the entire period should be used for the purpose of calculating obligations and credits. [ 55 ] I will retain jurisdiction to make any final calculations if the parties are unable to agree. Spousal Support [ 56 ] E.M.H.’s income for 2010 was $99,853.13. For 2011, it was $34,734.20. In 2012, it was $70,838.23. He deposes that he is likely to make $55,000 in 2013. [ 57 ] C.S.H. had no income in 2010, and earned $16,031 in 2011.

She earned $50,000 in 2012, and expects to earn a similar amount in 2013. [ 58 ] The disparity in incomes suggest that E.M.H. had a spousal support obligation for 2010 and 2011. However, by 2012 C.S.H.’s income, together with what she has received from the program for the children, suggests that there is little, if any, basis for spousal support in 2012. There appears to be no basis for ongoing spousal support when compared to E.M. H.’s current income level. [ 59 ] Until the amount of the credits to which E.M.H. is entitled has been established, the determination of any spousal support arrears cannot be made.

That issue is reserved until E.M.H.’s credits have been calculated. [ 60 ] Issues relating to securing arrears against the matrimonial home are premature, as it has not yet been established that there are any arrears. [ 61 ] The issue of costs is also reserved until credits, spousal support obligations and arrears (if any) have been determined. Heard on the 13 th day of September, 2013. Dated at the City of Edmonton, Alberta, this 7 th day of November, 2013. Robert A. Graesser J.C.Q.B.A. Appearances: Gerhard J. Seifner McLennan Ross LLP for the Plaintiff/Applicant Christopher J.

Skrobot Jomha Skrobot LLP for the Defendant/Respondent

_______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice Robert A. Graesser _______________________________________________________ This decision has been corrected by changing the following two paragraphs: [31] There has been, as far as I can tell, no consideration in Alberta of s. 15.1(5) of the Divorce Act , as it applies to agreements between spouses and other parties, in this case the BC Director of Adoptions .

It is curious that it was not raised in some of the cases dealing with collateral benefits, although many of the cases deal with support claims for adult children. The Canada Pension Plan benefits cases make it clear that Canada Pension Plan benefits payable as a result of the payor’s disability are the property of the child (even though they may be payable to the child’s custodial parent). As child support under the Child Support Guidelines is not means- tested other than by virtue of the tables themselves (subject only to hardship claims), the parents’ obligation to pay child support is independent from needs.

Presumably, under the Guidelines , support is payable by the non-custodial parent to the custodial parent even if the child’s means exceed that of the parents.

The Guidelines do not contemplate that a child (at least a child under 18 and not having withdrawn from his parents’ care) will use his or her own funds for support purposes. [39] The agreement between the parties and the BC Director of Adoptions is clearly a written agreement, and the payments to which the parties are entitled as a result of their adoption of the children are clearly made pursuant to an agreement “respecting the financial obligations of the spouses” which “directly or indirectly benefit a child” and they are clearly “special provisions (which) have otherwise been made for the benefit of a child”.

In Magotiaux v Magotiaux , 1999 ABQB 1006 at para 19 , Veit J. describes how “‘special provisions’ [have] been held to mean ‘unique provisions, not in the nature of periodic payments, made for the support of a child’ ( Fonseca) ; The Shorter Oxford Dictionary (3rd ed.) defines special as that which exceeds or excels in some way [that] ‘which is usual or common’ or that which is ‘exceptional’ ( Wanstal ).” The payments from the BC Director of Adoptions are unique and regular provisions made for the support of a child. Further, they exceed that which is usual or common.