Moors v Moors, 2013 ABQB 740

Court of Queen ’ s Bench of Alberta Citation: Moors v Moors, 2013 ABQB 740 Date: 20131217 Docket: 4801 109817 Registry: Calgary Between: Gordon Ian Moors Plaintiff/Respondent - and - Wendy Joyce Moors Defendant/Applicant _ ________________________________________ ______________ Reasons for Judgment of the Honourable Madam Justice S.L. Hunt McDonald _________________________________________ ______________ Applications [ 1 ] The parties were married on May 22, 1999, separated on November 1, 2001, and were divorced September 5, 2003.

There is one child of the marriage, namely, Danielle Joan Moors born in 1998 (aged 15). [ 2 ] The parties executed a Minutes of Settlement Agreement (the “Agreement”) dated June 1, 2002. [ 3 ] This application was filed by Ms. Wendy Joyce Moors (“Ms. Moors”) on July 30, 2012, seeking retroactive child support back to from at least May 2010, or even further depending on Mr. Moors’ earning capacity since the Agreement was signed in 2002. In addition, she requests an increase of child support to $10,000.00 per month going forward, plus costs of her application. [ 4 ] After the application was filed by Ms. Moors, Mr.

Moors reluctantly agreed to Danielle moving to Kelowna, BC with her mother for the start of school in September 2013. [ 5 ] Mr. Gordon Ian Moors (“Mr. Moors”) filed, a cross-application on May 17, 2013, requesting that: (

a) counselling for Danielle continue and that the court order a transition to a counsellor in Kelowna, BC if recommended by Ms. Pupp; (

b) an order directing parenting time so that he receives maximum contact with Danielle, which will be designed to provide him with the time and flexibility to develop a meaningful parenting plan which may include: i. The purchase of accommodation in Kelowna and the hiring of a manager so that he may stay in Kelowna a week a month; ii. Access to Danielle which involves frequent travel on long weekends and other weekends when he can get away;

iii. Maximum time over holidays with Danielle;

c) The appointment of a parenting coordinator, case management justice or arbitrator who has powers to order ongoing parenting, and penalties for unreasonable failures to accommodate parenting time and which can operate inter-provincially and in a timely manner; and (

d) such further and other creative solutions to the issues as deemed by this honourable court and such further and other relief as may be deemed appropriate and costs. [ 6 ] On August 10, 2012, Justice Rawlins ordered Mr. Moors to pay child support of $8000.00 per month commencing September 1, 2012 and continuing until a further Order of the Court. She also ordered that Mr. Moors pay Ms. Moors the sum of $10,000.00 on a without prejudice basis towards s 7 expenses. [ 7 ] On June 19, 2013, I ordered child support on an interim basis in the amount of $8000.00 per month until further Order of this Court.

Background [ 8 ] At the time the Agreement was signed, Mr. Moors’ guideline income was $1.2 million gross per annum. Ms. Moors’ guideline income was $80,000.00 gross per annum. [ 9 ] Clause 6.4 of the Agreement set out a monthly child support amount of $4,000.00 per month, plus a cost of living index. A paid lump sum award of child support in the amount of $540,000.00 was agreed to and set out in clauses 6.2 and 6.3 of the Agreement. [ 10 ] With the cost of living increases provided for in the Agreement, Mr. Moors now pays the sum of $4,500.00 monthly for child support to Ms.

Moors. [ 11 ] Clause 6.6 of the Agreement provided that

section 7 extraordinary expenses were subsumed within the monthly child support provision of $4,000.00 and the prepaid lump sum child support award of $540,000.00. [ 12 ] Otherwise, Mr. Moors has not contributed to

section 7 expenses except for Danielle’s tuition in 2012 at Rundle College, Young Explorer and tutoring expenses, and $10,000.00 in 2012 for orthodontic treatment for Danielle. [ 13 ] In the Agreement, the parties agreed that Ms. Moors would not commence an action to vary the child support unless Mr. Moors’ “real income” exceeded $1.2 million per annum and if she did so, Mr. Moors could raise as a defence his prepayment of child support and argue that his “true income” was less than $1.2 million because of requirements to reinvest in his various businesses. [ 14 ] The parties have joint custody of Danielle.

Danielle was in the primary care of Ms. Moors until September 2004, and then was in a shared parenting arrangement until May 2010, when she returned to the primary care of Ms. Moors. [ 15 ] The Agreement signed by the parties in 2002 did not define the phrase “true income” or “real income” other than a final statement in clause 6.10 which provided that at the time of signing the Agreement, “Mr. Moors’ true income was less than $1.2 million because of requirements to reinvest in his various businesses.” Parenting History [ 16 ] Initially, Ms. Moors had primary care of Danielle with a generous parenting

schedule agreed to for Mr. Moors, and subsequently, when Danielle turned six years of age in 2004, the parties commenced a shared parenting arrangement which was contemplated and arranged in the Agreement in clause 5.2. That shared parenting continued until 2010 when Ms. Moors obtained a temporary order permitting her to move to Edmonton, AB with Danielle. [ 17 ] The temporary order was based on a mobility application commenced by Ms. Moors and was granted on the basis that a bilateral assessment occur.

Once the assessment was completed, a Consent Variation Order was entered into between the parties dated January 17, 2012, which confirmed the status of parenting was that of the parents’ joint custody of Danielle, with her primary residence and day-to-day care and control being with Ms. Moors. [ 18 ] Ms. Moors and Danielle subsequently returned to Calgary in July 2012. This past summer they moved to Kelowna, BC. Danielle commenced school in Kelowna in September 2013. Preliminary Application by Mr. Moors [ 19 ] At the commencement of the hearing, there was a preliminary application by Mr.

Moors based on his assertion that he had not received proper income disclosure from Ms. Moors. He asserted that Ms. Moors had never reported capital gains, interest income or rental income during the period when she worked as a real estate agent. He requested an adjournment pending proper disclosure being ordered by this Court. Alternatively, Mr. Moors requested that the court find that a negative inference could be drawn against Ms. Moors due to the alleged gap in her disclosure. [ 20 ] Mr. Moors also pointed to Ms. Moors’ failure to provide her net worth calculations.

He stated that approximately $300,000.00 of earnings of Ms. Moors have not been accounted for in the undertakings he received. [ 21 ] Ms. Moors answered that her net worth is entirely irrelevant to the Court’s determination of retroactive and ongoing child support. She conceded that the only period that such factor might have relevance was during the shared parenting regime from September

2004 to May 2010. She postulates that perhaps the $300,000.00 that Mr. Moors alleged is missing was spent on child support and for purposes of maintaining herself during a time when she experienced a marked drop in her earnings. [ 22 ] In argument on the preliminary application Ms. Moors reminded the Court that there was a waiver of spousal support at the time of signing the Agreement in return for her receiving the equity in the matrimonial home valued at $650,000.00. Ms.

Moors received no other matrimonial property other than the equity in the matrimonial home. [ 23 ] She states she is willing to have a sum of $150,000.00 per year attributed to her for purposes of calculating her guideline income to meet Mr. Moors concern expressed in his preliminary application requesting further disclosure. [ 24 ] There has never been an increase in child support ordered since the date that the Agreement was executed. [ 25 ] Ms. Moors argues that her income is largely irrelevant as the issue before this court must be decided under

section 4(b)(ii) of the Federal Child Support Guidelines. [ 26 ] In his preliminary application Mr. Moors complained that Ms. Moors had not updated her sworn Statement of Assets and Liabilities before this court hearing commenced. However, I note that Mr. Moors did not provide a sworn Statement of Assets and Liabilities and was obtuse in his replies during cross-examination on his Affidavits in not being able to even estimate what his corporate interests might be worth. A net worth statement for Mr. Moors was certainly not included in Ms.

Grays’ Expert Report. [ 27 ] The preliminary application was adjourned to the end of Counsel’s submissions and the hearing proceeded. It was not revived upon completion as the Court did not require further disclosure before adjudicating the issues raised. Issues [ 28 ] The issues that need to be decided in this case are: (

a) Whether the Respondent’s income for purposes of the Federal Child Support Guidelines has exceeded $1.2 million annually virtually every year since 2002 when the Agreement was signed? (

b) Further, even if the Respondent’s “real income” did not exceed $1.2 million per annum, can a court award a different amount of child support than was agreed to by the parties in their Agreement? (

c) Is the Applicant entitled to retroactive child support? (

d) What is the appropriate amount of child support? Expert Evidence on Guideline Income [ 29 ] Mr. Moors provided an expert report from Trek Financial and Valuation Advisors Ltd. (“Expert Report”) written by Ms. Sharon Gray, CA, CBV for the purpose of calculating his guideline income for the years 2002 to 2011. The figures for 2012 were not yet available when Ms. Gray prepared the Expert Report. [ 30 ] Ms. Gray was qualified as an expert for purposes of giving expert evidence relating to assessing guideline income. Her qualifications were accepted by counsel for Ms. Moors. [ 31 ] Under the normal T4 approach set out in s 4(

a) of the FCSG, Mr. Moors' income would be as follows for the years 2002 through to 2012 which are calculations from T4s’ he received in the relevant years. For the same period of time, Ms. Moors’ income, based on her T4s for the same period are provided as well. In addition, a column with monthly child support calculations prescribed under

section 4(

a) of the FCSG is included to show the amount payable monthly by Mr. Moors should he be paying pursuant to his line 150 of T4’s received during relevant years. Year Mr. Moors’ Income

Section 3 monthly Child Support

Section 4(

a) FCSG Ms. Moors Income 2011 $ 4,295,358.00 $ 38,611.22 $ 2,097.51 2010 $ 5,482,227.00 $ 46,633.93 $ 0.00 2009 $ 5,790,856.00 $ 49,257.28 $102,645.18 2008 $ 6,939,955.00 $ 59,024.62 $ 50,265.25 2007 $ 5,664,327.00 $ 48,181.78 $ 1,558.24 2006 $ 4,080,038.00 $ 34,715.32 $ 4,081.88 2005 $ 2,898,641.00 $ 21,800.81 $ 65,238.33 2004 $ 1,894,648.00 $ 14,270.86 $ 33,088.08 2003 $ 2,580,283.00 $ 19,413.12 $ 72,449.46 2002 $ 1,167,581.00 $ 8,817.86 $ 86,733.76 TOTAL $40,793,915.00 $432,157.69 [ 32 ] For the ten year period of income from 2002 to 2011, Mr. Moors earned an average of $4,079,392.00 per annum.

[ 33 ] For the last three years for which Ms. Gray had information disclosed to prepare her Expert Report from 2009 to 2011, Mr. Moors earned an average of $5,189,480.33 per annum for which child support payable would be approximately $44,995.58 per month if calculated taking line 150 income from his T4’s, as prescribed in s 4(

a) of the FCSG. [ 34 ] Ms. Gray’s Approach 1 set out in her Expert Report calculated Mr. Moors’ guideline income based on his T4 income set out in clause 31 above. This approach included in Mr. Moors’ annual income the “notional” bonuses declared to Mr. Moors by his corporate interests, regardless of the fact the majority of the after-tax bonus amount was retained by the Varsity Group of Companies (“VGC”) in Mr. Moors’ shareholders account. [ 35 ] As an alternate approach, Ms.

Gray also employed Approach 2 in her Expert Report which is an assessment based on cash payments, benefits and investment income received by Mr. Moors from VGC for his personal use for the same period of time, namely 2002 to 2011. [ 36 ] Ms. Gray testified that using Approach 2 to calculate Mr. Moors’ guideline income is reasonable due to the various reasons given for holding funds in Mr.

Moors’ shareholders account to fund and sustain his business operations as agreed to in the 2002 Agreement, and his inability to extract all amounts payable to him as his T4’s would suggest. [ 37 ] The premise behind Approach 2 used by Ms.

Gray is that there is a clause contained in the Agreement that provides in clause 6.10 that the “husband as a defence to any application for variation in child support may raise the fact that he has prepaid $540,000.00 in child support, and further, that his true income is less than $1.2 million because of requirements to reinvest in his various businesses.” [ 38 ] At the time the Agreement was signed by the parties, paragraph 16.2 of that Agreement notes that Mr.

Moors had shareholdings and interests in seven companies collectively referred to as the VGC and “other business interests disclosed during the course of the divorce proceedings.” The seven companies were: • 788714 Alberta Ltd. • Automax Sales Inc. • Varsity Plymouth Chrysler

(1994) Ltd. • Autovision Investments Ltd. • 706404 Alberta Limited • Vancouver Chrysler Dodge Jeep • Winnipeg Dodge Jeep [ 39 ] A chart on page 8 of the Expert Report shows that Mr. Moors “other business interests” in the VGC in 2002 included two further interests, one in Ponoka Ford Mercury and one in 1002223 Alberta Ltd., for a total interest in a total of nine companies. His ownership interests in the nine companies were in proportions varying from 12.5 percent to 50 percent. [ 40 ] At the time of this court hearing, Mr. Moors’ ownership interests in the VGC at 2012 have expanded to include the companies and percentage interests shown on page 16 of the Expert Report (See

Schedule “A” attached). In addition to his original nine corporate interests (some of which have been wound up into other companies, or one which has ceased to exist but the land is leased out), an interest in eleven additional companies has been acquired by him. [ 41 ] Ms. Gray explained that the methodology used to increase Mr. Moors’ interest in the VGC as shown in the chart is through a process that each year when a bonus is declared to Mr. Moors and other shareholders of the various VGC, the net amount of the bonus less income tax paid is re-credited to the respective shareholders’ loan account.

In most instances no monies equal to the net bonus (bonus less taxes) were paid out to Mr. Moors. Rather, the bonus was a notional bookkeeping entry only. [ 42 ] In retaining these notional bonus amounts within the group of companies, Mr. Moors, and his shareholder partners, have been in a position to finance the continued operation of the various companies, plus acquire an interest in new companies as monies accumulated. [ 43 ] It is noted in the Expert Report that Mr.

Moors’ draws on his various shareholders loans are restricted by his degree of ownership, and whether restrictions over the extraction of funds by Mr. Moors, as noted in the Varsity Unanimous Shareholders Agreement (“USA”), have been followed. [ 44 ] The methodology used by the VGC has been to provide financing and working capital requirements for their various business interests by retention of after-tax bonus amounts in the shareholder’s account. In addition, retention of these shareholder loans has given Mr.

Moors and his various partners an opportunity to provide key dealer managers with the incentive to become a partial owner of a dealership within the VGC. The managers are given an opportunity to prove they are committed, successful and can be profitable. [ 45 ] This business model has allowed for the expansion of the VGC by eleven new corporate interests being acquired or developed. Mr. Moors and his principal partner Mr. McManes hold ownership interests, as well as the dealer managers. Initially, Mr. Moors and Mr. McManes put up most of the capital to provide for the inception of new dealerships.

Agreements are then concluded with the dealer managers which allows them to acquire a larger percentage of interest over a period of time, up to a maximum of 50 percent ownership of a dealership. As a result, Mr. Moors’ and Mr. McManes’ ownership in the new dealerships dilute over a period of time. But they still end up owning 50 percent of the new dealership at the end of the accretion period negotiated with the dealer manager.

Child Support Lump Sum [ 46 ] Ms. Gray provided present value calculations in her Expert Report to show that the value of the $540,000.00 lump sum child support paid by Mr. Moors ranges from a low of $8,008.00 a month to a high of $10,924.00 depending on the present value rate and the number of years. [ 47 ] Mr. Moors would have been paying at least $10,000.00 per month for the entire time since 2002 if one accepts the average guideline income calculated by Ms. Gray to be $1,071,000.00. Legislation [ 48 ] The relevant provisions in the Divorce Act , RSC 1985, c 3 ( 2 nd Supp) provide in part as follows:

Section 26.1(2) provides:

(2) The guidelines shall be based on the principle that spouses have a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation. The relevant Federal Support Child Guidelines , SOR/97-175 provide in part: 15.

(1) Subject to subsection (2), a spouse’s annual income is determined by the court in accordance with sections 16 to 20.

(2) Where both spouses agree in writing on the annual income of a spouse, the court may consider that amount to be the spouse’s income for the purposes of these Guidelines if the court thinks that the amount is reasonable having regard to the income information provided under

section 21. 16. Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General Form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. 18.

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under

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

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

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or (

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. (

a) Has the Respondent’s income for the purposes of the FCSG exceeded $1.2 million annually virtually every year since 2002 when the Agreement was signed? The Applicant’s Position [ 49 ] Ms. Moors asserts that Mr. Moors’ income has exceeded $1.2 million every year since 2002. Ms. Moors challenges Mr. Moors’ assertion that he is required to reinvest his income in his businesses and that his bonuses are notional. She argues that the case law is replete with authority for the proposition that income will not be attributed where a spouse leaves profit in the company to acquire new assets. [ 50 ] Further, Ms.

Moors argues that the money that Mr. Moors reinvests in new companies should not be at the expense of child support. If he withdraws money from his shareholders’ account and buys other investments Ms. Moors notes that Ms. Gray does not count this as income. Ms. Gray’s response, when challenged on this issue in cross-examination, is as follows: On occasion, Mr. Moors received funds that were immediately used to invest in another dealership as he holds the majority of his ownership personally.

We excluded those amounts in our calculations as we are of the view that these amounts were only received by him to fund a dealership investment and would not have been otherwise paid out for his discretionary use. [ 51 ] Further, Ms. Moors argues that there is clear evidence that Mr. Moors is able to withdraw additional amounts on his shareholder account in addition to his salary. For example, in 2011 there is a $16,000.00 payment for a vacation property. Counsel for Ms.

Moors also pointed out that in 2010 he wrote a cheque to his sister for $25,000.00, indicating that he can withdraw additional amounts when required. The Respondent’s Position [ 52 ] Mr. Moors argues that his line 150 income is not the most appropriate information in order to determine his guideline income.

In the Agreement, the parties agreed to guideline incomes for the parties, a threshold of $1.2 million per year for a variation and that Mr.Moors could raise as a defence the need to reinvest the profits in his businesses. Mr. Moors has reinvested funds in his business and hasstated that his shareholder loan account continues to be committed to growth and lending agreements. [53] Mr. Moors relies on Bartkowski v Bartkowski, 2001 BCSC 1724 [Bartkowski] where the court stated that a court may applys 18 of the FSCG to increase or decrease Guideline incomes based upon the needs of a corporation, provided the payor proves thoseneeds. [54] Further, Mr. Moors submits that

Schedule “A” of the Expert Report prepared by Ms. Gray summarizes the actual fundsreceived by Mr. Moors between 2002 and 2011, and she has grossed up the sums for tax. He proposes that the figures in Ms. Gray’sreport should be used as his guideline income. Analysis [55] In the Agreement signed by the parties in 2002, the parties agreed to guideline incomes for the parties: a threshold of $1.2million per year for a variation and that Mr. Moors could raise as a defence the need to reinvest profits in his businesses. [56] Ms.

Moors relies on G (RE) v G (TWJ), 2011 SKQB 269, where the Court stated that the Appellant “should not be able toexpand his business and thereby increase his net worth at the expense of his children. The children are entitled to share in the fruits of hislabour through an increase in child support”: at para 93. In that case, the wife argued that the husband’s income determined pursuant to s16 of the Guidelines did not fairly reflect all of the income available to him for child support purposes.

Specifically, the wife argued thatall of the pre-tax income of his corporations should be attributed to him and the “add back” salary paid to his common law spouse andthe purchase price of the vehicles he used personally. Alternatively, she argued that the Court should impute income to her husbandbased on the “discretionary income” available in the company as calculated by the wife’s financial expert. [57] The Court stated at para 153: To trigger s. 18, it is not necessary to find any wrongdoing or any blameworthy conduct on the part of the shareholder parent. (See:Kowalewich v.

Kowalewich, 2001 BCCA 450, 19 R.F.L. (5th) 330 at para. 40). The test is one of "fairness". There may be valid businessreasons why pre-tax income should not be attributed to a shareholder parent but as Justice Martinson pointed out in Baum v. Baum(1999), (BC SC), 7 R.F.L. (5th) 231 (B.C. S.C.) at para. 28: [28] Valid corporate objectives may differ from valid child support objectives. The purpose of s. 18 is to allow the court to "lift thecorporate veil" to ensure that the money received as income by the paying parent fairly reflects all of the money available for thepayment of child support.

This is particularly important in the case of a sole shareholder as that shareholder has the ability to control theincome of the corporation. See Bhopal v. Bhopal, [1997] B.C.J. No 1746 (S.C.), Blackburn v. Elmitt (1997), (BCSC), 34 R.F.L. (4th) 183, (B.C.S.C.) and McCrea v. McCrea (1999), (BC SC), 1 R.F.L. (5th) 320 (B.C.S.C.). [58] Mr. Moors relies on Bartkowski. In that case, the husband owned several companies with his brother. The husband arguedthat the income figure reported was erroneous and that most of the money was reinvested back into the companies in order to minimizetheir tax liabilities.

He argued that his income for the purposes of determining maintenance should be his salary, bonus and benefits. TheCourt noted that the choice of s 18 alternatives may turn on the degree of corporate control exercised by the prospective payor.

TheCourt also noted that s 18 requires presumption and intrusion by the court into a company’s affairs. [59] The Court in Bartkowski, was of the view that the cases revealed a presumption “that the corporation’s pre-tax income will beassumed to be available to the shareholder payor for the payment of child support unless compelling evidence is led by the payor spouseto support the conclusion that re-investment is necessary to sustain the company as a viable enterprise”.

While the court recognized thatthe Defendant’s tax planning should be encouraged because it increased the overall wealth of the companies, he could not utilize his taxplan to prevent a “fair and realistic income” being attributed to him especially if the lower income does not reflect the increase in hispersonal wealth. The Court attributed Mr. Bartkowski’s compensation at $300,000.00 although the wife was alleging that it should beover $800,000.00 Mr. Bartkowski had originally submitted that his income was $255,000.00. [60] Ms.

Moors also relies on Kowalewich v Kowalewich, 2001 BCCA 450, 92 BCLR (3d) 38 [Kowalewich] where the fatherowned and operated a small business. The Court of Appeal noted that for many small business owners it is difficult to determine themoney available for child support as the “Total Income” on the spouses’ T1 General Form bear no relationship to the actual moneyavailable. However, a court’s effort to ensure fairness does not require a court to “second guess business decisions” at para 44.

Further,the Court stated at para 58: It seems to me regard should also be had to the nature of the company’s business and any evidence of legitimate calls on its corporateincome for the purposes of that business. Justice Drake cautioned about not killing the goose who lays the golden eggs. Monies neededto maintain the value of the business as a viable going concern will not be available for support purposes. In my view they should not beincluded in determining annual income. [61] In Royer v.

Butler, 2010 BCSC 667 [Royer],the defendant was self-employed through limited companies working as a generalcontractor and working on developments in which he had an equity interest. The Plaintiff sought a review of the defendant’s guidelineincome. In 2008, the parties agreed that after review of the defendant’s guideline income, the defendant’s child support payments wouldbe varied. The issue for determination was to determine the defendant’s guideline income for 2008.

The court accepted the defendant’sevidence as to what income his company had available to it in 2008 for allocation between its business purposes and the defendant’sfamily purposes. The court reviewed Mr. Justice Hall’s decision in Teja v Dhanda 2009 BCCA 198. At para 52, Justice Shabbits stated: He says at paragraph 13 that the Kowalewich factors have no application in the case before him for the reason that the paying parent didnot demonstrate that there were legitimate calls on the pre-tax corporate income of the company, other than his desire to build up savingsin the company. He writes this:

Through the guidelines, Parliament has said that children are entitled to support based on the full income available to the payor spouse. The payor's desire to accumulate savings, to the detriment of the child, is not a legitimate factor to consider. In my view the opinion letters of the accountants, Mr. Murdock for the plaintiff and Mr. Johnson for the defendant, reflect the instructions they received from counsel.

The evidence contains no close analysis about what might be a reasonable allocation of the defendant companies' corporate income to take account of their need for working capital. [Emphasis added] [ 62 ] In Nesbitt v Nesbitt , 2001 MBCA 113 , the Manitoba Court of Appeal stated that the onus of proving that a decision to leave money in a corporation is reasonable from a business point of view lies with the spouse who exercises control over the corporation: at para 19-21. [ 63 ] Mr. Moors must satisfy this Court that he had a legitimate business purpose and that it is reasonable to keep profit in the corporations.

The difficulty lies in sorting through the complex business arrangements that are in place for the VGC and determining the level of capital that is required to be reinvested in the businesses. This requires a deeper analysis of Ms. Gray’s Expert Report and her testimony during the hearing. [ 64 ] The evidence establishes that when Mr. Moors signed the Agreement he had business interests in nine companies. His ownership interests in the nine companies were in proportions varying from 12.5 percent to 50 percent. At the time of the hearing, Mr.

Moors’ ownership interests in the VGC had expanded to include an interest in eleven additional companies that had been acquired by him. [ 65 ] Each year a bonus is declared to Mr. Moors and other shareholders of the various VGC. The net amount of the bonus less income tax paid is recredited to the respective shareholder loan account. In most instances, no monies equal to the net bonus were paid out to Mr. Moors. Rather, the bonus was a notional bookkeeping entry only. In retaining these notional bonus amounts within the group of companies, Mr.

Moors and his shareholder partners have been in a position to finance the continued operation of the various companies plus acquire an interest in new companies as monies accumulated. [ 66 ] Ms. Gray points out that Mr. Moors’ draws on his various shareholder loans are restricted by his degree of ownership and whether restrictions over the extraction of funds by Mr.

Moors, as noted in the Varsity USA, have been followed. [ 67 ] The business model used by VGC has been to provide financing and working capital requirements for their various business interests by retention of after-tax bonus amounts in the shareholder account. In addition, retention of the shareholder loans has given Mr. Moors and his various partners an opportunity to provide key dealers managers with an incentive to become a partial owner of a dealership within the VGC. [ 68 ] It was stressed to the Court that this conservative practice of providing for the financing requirements of the VGC has allowed Mr.

Moors and his various partners to maintain their position in the automobile business, particularly during the 2008 and 2009 world financial crisis. [ 69 ] In the Expert Report, Ms. Gray noted that Mr. Moors is a 50% shareholder in certain of the VGC companies. For other companies he is considered to be a minority shareholder. Ms. Gray believes that the ownership interest held in the individual companies is one important indicator as to the degree of control Mr. Moors might otherwise have on the distribution of earnings to him. [ 70 ] There are clauses in the Varsity USA providing that Mr.

Moors has an obligation to pay all loans advanced to him by Mr. McManes, prior to Mr. Moors unilaterally being able to draw out any shareholder loan credit he has within the VGC. However, the parties have not strictly adhered to all of the terms of the USA. Mr. Moors has received payments from his shareholder loan account prior to him making full payment of sums he owes to Mr. McManes. The general rule adopted by them seems to be that they both must agree before either receives a payment from the VGC. [ 71 ] Ms.

Gray stressed the importance of high level financing in the form of shareholder financing, as well as the use of funds with respect to the expansion of the business. [ 72 ] Ms. Gray acknowledged that due to the complexity of the corporate group activities and the characterization of amounts declared by the VGC, this matter is not straightforward. The decision as to what extent certain amounts should be included in Mr. Moors guideline income is a legal issue. [ 73 ] One of the major exclusions made by Ms. Gray from income to be included in Mr. Moors guideline income in her Expert Report were funds Mr.

Moors received which were immediately used by him to invest in another dealership. Ms. Gray excluded these amounts in her calculations, as she was of the view that these amounts were only received by him to fund dealership investments and would not have otherwise been paid out for his discretionary use. [ 74 ] In addition, Mr. Moors won a windfall of $50,000.00 cash associated with a MasterCard contest in 2007, and these funds were not taken into account. [ 75 ] Ms. Gray did add into her calculation of guideline income any of Mr.

Moors’ personal expenses on corporate credit cards charged against his shareholder loan in the VGC. [ 76 ] Under Approach 2, and using three different methodologies, Ms. Gray calculated Mr. Moors’ income on average for the 10 year period of 2002 to 2011 in her Expert Report to be in the range from $1,071,000.00 per year to $1,340,000.00 per year. [ 77 ] She testified that the figure of $1,071,000.00 does take into consideration the sum of $866,138.00 received by Mr. Moors in 2011 to pay off the mortgage on his personal residence. [ 78 ] Ms.

Gray concluded that the $1,071,000.00 annual income amount was the most reasonable estimation of Mr. Moors’ annual

income for the years 2002 to 2011. [ 79 ] In the Expert Report, Ms. Gray considered an alternate scenario under Approach 2, namely if there may be additional funds available to Mr. Moors from the VGC companies. To conduct this review she considered the VGC in two groups: 1) VGC companies in which Mr. Moors had a 50% interest, which included Varsity Chrysler Autovision and Richmond Chrysler Jeep and 2) VGC companies in which Mr. Moors held a minority interest, less than 50% and in most cases 25% to 37.5% (“Minority Interest Companies”). [ 80 ] Ms. Gray estimated what Mr.

Moors’ income may have been if he had received 50% of the notional bonus declared by the 50% Interest Companies. At clause 72 of the Expert Report she states: Adjusting the amounts otherwise received by Mr. Moors of $10.7 million (including investment income), by the $2.7 million as discussed above, suggests Mr. Moors’ Guideline Income would be in the range of $13.4 million, had these additional amounts from the 50% Interest Company had [sic] been available to Mr.

Moors for the 2002-2011 period. [ 81 ] She noted that whether this additional $2.7 million would have been paid requires consideration of whether: • Mr. McManes would have agreed to these excess amounts being paid; • If the VGC had capacity to pay the amount (which is more likely in the more recent years than in the pre-2009 years); • The general economic environment that existed; and • The other banking and financial commitments that had been assumed by VGC group, for which those additional funds would otherwise be required. [ 82 ] With respect to the Minority Interest Companies, Ms.

Gray did not believe that it was reasonable to consider a 50% bonus as the minority interest gave Mr. Moors limited discretion over the ability to extract funds. Further, certain of the Minority Interest Companies were new ventures and although they reported profits and declared notional bonuses to the shareholders, including Mr. Moors, it is reasonable to assume these funds would have been required to pay off operating loans. Mr.

Moors has received limited cash payments from the Minority Interest Companies suggesting either that funds have been reinvested elsewhere or possibly were not available for distribution. [ 83 ] Assuming 50% of the notional bonus could have been paid to Mr. Moors from the 50% Interest Companies, the amounts available to Mr. Moors may have been as much as $13.4 million over the 10 years or about $1.34 million per year. [ 84 ] In calculating the sums set out in her Expert Report, Ms. Gray confirmed she was not able to obtain banking records for Mr. Moors prior to 2005, as they were unavailable. In addition, Mr.

Moors’ 2008 Notice of Assessment was not made available to her. [ 85 ] In cross-examination Ms. Gray concurred that there had been no adherence by Mr. Moors and his principal partner Mr. McManes in respect of the provisions of the USA that all bonuses payable to Mr. Moors should first be used to pay off loans made to him by Mr. McManes. [ 86 ] As set out in the Schedules to Ms. Gray’s Expert Report, there have been large amounts of funds that have been kept in the VGC, after payment of tax, as a credit shown as Mr. Moors’ shareholder loan. He then has used those funds to acquire shares in new companies.

These include the eleven new companies that have been acquired by Mr. Moors since the Agreement was signed in 2002. [ 87 ] Ms. Gray agreed that she treated any deposit of funds that were used then by Mr. Moors for purposes of financing a new operating company as monies “required to reinvest in his various businesses.” They were not considered by Ms. Gray as personal funds going to Mr. Moors, but rather a reinvestment in his various corporate interests. [ 88 ] For example, in 2009, Mr.

Moors received some $600,000.00 over and above his normal monthly deposits. $500,000.00 was reinvested by him to secure financing for a Gateway operating company, thus reducing Mr. Moors’ income for that year by $500,000.00. [ 89 ] The Schedules setting out Mr. Moors’ expenses from 2002 to 2011 list such items as miscellaneous expenses for $45,700.00 which included a cheque in July 2010 for $10,000.00 to pay off his sister’s VISA account and a cheque to her in January 2009 for $2,000.00. In addition, Mr.

Moors gave a cheque of $100,000.00 to his father in January 2008. [ 90 ] There was also money taken out of “miscellaneous” which includes Mr. Moors’ investment in a company called Calgary Scientific in 2007, 2008 and 2009 for a total amount of approximately $627,034.00. In 2008, Mr. Moors received $1,600,000.00 in addition to his normal payroll monthly receivables, which he then reinvested for the acquisition of Sherwood Park Dodge Chrysler. $30,000.00 was invested in Storm Ventures International in 2005. [ 91 ] In 2007, Mr.

Moors invested $50,000.00 in a personal investment through First Energy Capital, plus wrote a cheque that same year to Artists of the World for $12,000.00. [ 92 ] There are also loans given by Mr. Moors to third parties, as well as deposits totalling up to $260,000.00 as income from the VGC which do not appear to be a shareholder transaction. [ 93 ] In addition, in cross-examination, Ms. Gray admitted that she was told verbally that there was money coming in from Cayman accounts which she was advised only went directly into the VGC bank account.

She confirmed that she did not see any records or have an opportunity to review any records from the offshore accounts. [ 94 ] The cross-examination responses of Ms. Gray leaves the court to question whether Mr. Moors should be required to take into account income from his interests in the VGC into his personal income as money available to Ms. Moors for payment of child support pursuant to the provisions of

section 18 of the FCSG.

[95] The conclusions regarding guideline income found in Ms. Gray’s Expert Report are valid only if the Court accepts theassumptions she relied on in preparing the report. Ms. Gray did not count purchases in new dealerships as increasing Mr. Moors’ income.She assumed that Mr. Moors had to leave all the funds accumulated in his shareholder account solely for purposes of financing hisbusiness interests.

She did not differentiate between monies held in his shareholder account to satisfy debt covenants and working capitalrequirements of the original nine companies from the new companies acquired after the 2002 Agreement was signed by the parties. [96] In my view, this is a situation where an individual is growing their personal worth at the expense of child support. While Iunderstand that there are legitimate business reasons for reinvesting money back into the business, there has to be consideration ofmoney used to acquire new businesses. Ms.

Gray’s response was that the money is treated as an “in and out” because there would bedraws on VGC and the cheque would effectively be directed to a new investment. In 2002, Mr. Moors has an ownership interest in ninecompanies and now he has an ownership interest in a further eleven companies. In my view, there is inadequate information about theamount that is required to maintain the business and Mr. Moors had failed to prove that the businesses required that amount of profitreinvestment although I do accept a need for operating capital going back into his business.

Further, there is evidence that he is able towithdraw large amounts from his shareholder account when required. For example, in 2011, he withdrew $1,000,000.00 and paid out hispersonal mortgage in the amount of $886,138.00 [97] In spite of that, I do accept the business reality that certain funds have to be reinvested. In my view, this is not a case wherethere is blameworthy conduct on the part of Mr. Moors’. However, it is a question of fairness: “valid corporate objectives may differfrom valid child support objectives.” Bartkowski at para 48. In this case, I find that Mr.

Moors has more income than he claims to assisthim in contributing to child support. [98] The question then becomes, what is Mr. Moors’ guideline income? I find his income has exceeded $1.2 million dollars peryear, since the Agreement was signed. In reaching my conclusion, I have taken into account the following: • While I accept that a certain amount of monies are required to be reinvested, I am not persuaded that the decision to reinvest tosuch a great extent was a legitimate business need. • I accept Ms.

Gray’s alternate scenario under Approach 2, where he would have received at least 50% of the notional bonusdeclared by the 50% Interest Companies. He has a higher degree of control in these companies. • At the time the Agreement was signed by the parties, Mr. Moors had shareholdings and interests in nine companies. Hisownership interests in the nine companies were in proportions varying from 12.5% to 50%. At the time of the hearing, Mr. Moors’ownership interests in the VGC included an interest in an additional eleven companies having been acquired by him. • One of the major exclusions made by Ms.

Gray from income to be included in Mr. Moor’s Guideline Income in her Expert Reportwere funds Mr. Moors received which were immediately used by him to invest in another dealership • Mr. Moors has the ability to withdraw large amounts from the shareholder accounts when required. For example, in 2011 hewithdrew a large amount to pay off his personal mortgage. [99] Although I accept that Mr. Moors had a legitimate business purpose in reinvesting a significant amount back into thecompanies, he has failed to adduce appropriate evidence as to the fair proportion needed for business purposes. I accept Ms.

Gray’salternate scenario under Approach 2, namely that Mr. Moors had more ability to extract funds from companies of which he had a 50%interest in. For the above reasons, I accept that at a minimum he could have received 50% of the notional bonus declared by the 50%interest companies. This amounts to $13.4 million over the 10 year period which means his income would have been at least $1.34million per year since 2002. Effect of the Agreement on Child Support [100] The parties signed the Agreement in 2002, with advice from independent legal counsel.

Pursuant to the Agreement, the partiesagreed to a comprehensive child support plan. Family law permits and encourages spouses to work out their own arrangements throughthe use of separation agreements: LMP v LS, 2011 SCC 64 at para 14. At the same time, contract law principles are not rigidly applied inthis context: at para 15. [101] Section 17(4) of the Divorce Act, authorizes the court to vary a previous support order if a change of circumstances occurs. Indeciding whether the conditions for variation exist the court must look at whether there has been a material change in circumstances.

Ifconditions for variation exist, the trial judge should then proceed to determine what variation should be made. [102] Ms. Moors relies on Willick v Willick, (SCC), [1994] 3 SCR 670 [Willick]. In Willick, the Supreme Court wasasked to deal with the effect that a settlement agreement has on child support.

The Court noted that courts are not bound by child supportagreements although it will operate as strong evidence that at the time each accepted its terms as adequately providing for the needs ofthe children: at 686-687 [103] The Court, in Willick, stated at 691-692: Having found that the conditions for variation exist, the trial judge should proceed to determine what variation should be made. The trialjudge must re-assess the needs of the children in light of the change. The needs of children are not assessed in a vacuum but are affectedby the standard set by the means of the parents.

When the means of parents are limited, the children's needs may be satisfied by the barenecessities. In these circumstances the children are required to do without some things which would be available to them if the means ofthe parents were greater. The reasonable expectation of the children for future support upon marriage break-up is conditioned by thestandard of living of the parents at the time. This expectation is not frozen as of the date of marriage break-up.

If there is a significantchange in the circumstances of one of the parents subsequent to the support provisions, the reasonable expectations of the children will

be affected. In this regard I agree with the statement of Kelly J.A. in Paras v. Paras, supra, at p. 134, when he states: Since ordinarily no fault can be alleged against the children which would disentitle them to support, the objective of maintenance shouldbe, as far as possible, to continue the availability to the children of the same standard of living as that which they would have enjoyed hadthe family break-up not occurred. Accordingly, a significant increase in the means of the payor parent may require that the needs of the child include benefits thatpreviously were not available. See Goncalves v.

Goncalves (1986), (BC SC), 49 R.F.L. (2d) 376 (B.C.S.C.) andFriesen v. Friesen, supra. If the situation is reversed, the needs of the children may require that the needs of the children be scaleddown. There is, however, a limit to the extent to which the reasonable expectations of children to increased support payments cancontinue by reason of increases in the wealth of the payor spouse. It must not be forgotten that we are dealing with maintenance and notincome sharing.

If the children are already being maintained at a very high standard a change, even a significant change, in the wealth ofthe payor spouse will not in itself entitle the children to increased support so as to permit them to live in luxury simply to emulate thelifestyle of their parent. Such an expectation on the part of children would not be reasonable. [104] Ms. Moors claims that there have been three major changes which would justify an increased child support award: 1. Danielle was 4 years of age when the Agreement was signed, and she is now 15 years old and therefore has much higher expenses. 2. Mr.

Moors and Ms. Moors shared parenting between September 2004 until May 2010. Ms Moors had Danielle in her primary carein May 2010. 3. Mr. Moors has had very significant increases in his income over the years. [105] In my view, there has been a change in circumstances since the last child support order was made. Significantly, Ms. Moors hashad Danielle in her primary care since May 2010. At the time of signing the Agreement, this child care arrangement was not foreseen bythe parties and can be viewed as a material change in circumstances. In addition, I have found that Mr.

Moors’ salary exceeded $1.2million per year, in the years subsequent to signing the Agreement. (

b) What amount of child support should have been paid retroactively and prospectively? Retroactive Child Support [106]

Section 15.1 and 17 of the Divorce Act, provides statutory authority for awarding retroactive child: 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. 17.

(1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively, (

a) a support order or any provision thereof on application by either or both former spouses; or (

b) a custody order or any provision thereof on application by either or both former spouses or by any other person.

(2) A person, other than a former spouse, may not make an application under paragraph (1)(

b) without leave of the court.

(3) The court may include in a variation order any provision that under this Act could have been included in the order in respect ofwhich the variation order is sought.

(4) Before the court makes a variation order in respect of a child support order, the court shall satisfy itself that a change ofcircumstances as provided for in the applicable guidelines has occurred since the making of the child support order or the last variationorder made in respect of that order. [107] The Supreme Court of Canada clarified the law respecting retroactive child support orders in S(DB) v (G)SR; [W(LJ) v R(TA;Henry v Henry], 2006 SCC 37, [2006] SCR 231 [DBS].

Justice Bastarache, for the majority, held that parents have an obligation tosupport their children in a manner commensurate with their income and that child support is the right of the child: DBS at paras 54, 60.As much as possible, children are to be provided with the same standard of living they enjoyed when their parents were together andchild support will vary based on the income of the payor parent: DBS at para 111. [108] The general rule set out in DBS is that, assuming entitlement is established, an order for retroactive child support will go backno more than three years prior to the date the recipient gave effective notice to the payor parent of the requested change in support.

Inthis case, Ms. Moors is requesting retroactive support from May 2010 when Danielle returned to her primary care. [109] In DBS, the Court identified a number of factors that should be taken into consideration in deciding whether or not retroactivesupport is appropriate: the reason why increased support was not sought earlier; the conduct of the payor parent; the circumstances of thechild; and any hardship that might result from a retroactive order. [110] The Court of Appeal has recently commented on the proper approach to retroactive child support.

In Ewing v Ewing, 2009ABCA 227 [Ewing], the parties entered into a settlement agreement stating that child support may be varied on “an important change incircumstances of either of the parties or either of the children.” The agreement was reached in February 2002 with the subsequentdivorce judgment and corollary relief order incorporating the provisions of the agreement. A variation consent order was granted onNovember 13, 2003. The applicant wife sought an order for arrears dating back to May 1, 2002.

The Court of Appeal held that where asupport agreement exists between the parties, such agreement should be considered valid absent any evidence it was entered intoimproperly.

[ 111 ] If an award of retroactive child support is warranted, it will be ordered from the date that the payor parent was given effective notice of the claim for additional support for a maximum three year pay period. If the payor engaged in blameworthy conduct, such as failing to disclose an increase in income or misleading the recipient parent about the amount of income, then the three year period can be extended.

However, “it is entirely conceivable that retroactive support could be ordered where a payor parent engages in no blameworthy conduct”: DBS at para 99 . [ 112 ] The first factor to examine in retroactive award is delay. Delay in seeking child support is not presumptively justified and will be crucial in determining whether a retroactive award is justified: DBS at para 100 . In my view, the delay on the part of Ms. Moors in applying for retroactive child is related to her inability to accurately ascertain Mr. Moors guideline income.

Further, the parenting arrangement did not change until 2010. [ 113 ] The second factor is the conduct of the payor parent. In DBS the court characterized blameworthy conduct as follows at para 106: Courts should not hesitate to take into account a payor parent’s blameworthy conduct in considering the propriety of a retroactive award. Further, I believe courts should take an expansive view of what constitutes blameworthy conduct in this context.

I would characterize as blameworthy anything that privileges the payor parent’s own interests over his/her children’s right to an appropriate amount of support. [ 114 ] On the facts before me, I do not find that Mr. Moors necessarily engaged in blameworthy conduct, but I do find that he has placed his business interests over that of his obligations of child support. [ 115 ] In determining whether a retroactive award is justified, the present and past circumstances of the child must be taken into account.

In DBS , the court stated at para 111: A child who is currently enjoying a relatively high standard of living may benefit less from a retroactive award than a child who is currently in need. As I mentioned earlier, it is a core principle of child support that, after separation, a child's standard of living should approximate as much as possible the standard (s)he enjoyed while his/her parents were together. Yet, this kind of entitlement is impossible to bestow retroactively. Accordingly, it becomes necessary to consider other factors in order to assess the propriety of a retroactive award.

Put differently, because the child must always be the focus of a child support analysis, I see no reason to abstract from his/her present situation in determining if a retroactive award is appropriate. [ 116 ] On the facts before me I accept that Ms. Moors would like to provide Danielle with a standard of living that approaches the lifestyle that could be offered by her father. I find that the original Agreement was drafted ten years ago and Danielle’s needs have changed. She is older now and would like to get involved in further extra-curricular activities including skiing and golfing.

Further, from the evidence adduced at trial it became clear that Danielle may have some health issues, the nature of which has not been confirmed. [ 117 ] In my view, a retroactive award from May, 2010 is justified. [ 118 ] Complicating the situation in this case is the lump sum payment of $540,000 child support, by Mr. Moors that was included in the original Agreement between the parties.

Clause 6.2 of the Agreement states, in part, as follows: Further, the Husband as a lump sum prepayment award of child support shall settle upon the Wife the sum of $540,000 by discharging the mortgage registered against the Matrimonial Home. [ 119 ] Ms. Gray estimated the value of the $540,000 payment over a nine year period. After considering the lump sum prepayment of $540,000, and the additional monthly child support payments of $4000.00 increasing to $4500.00,the resulting monthly payments for 9 years were $9,600,00; $10, 200.00 or $10,900.00. Ms.

Gray applied present value factors ranging from 0, 2.5% and 5% to consider the value of money benefited associated with Ms. Moors receiving the lump sum prepayment of support of $540,000. [ 120 ] Ms. Moors submits that Mr. Moors has been paying an incorrect amount of child support for the last ten years. In other words, the amount should have been $10,000 per month and therefore each month the amount has been approximately $6000.00 short.

Therefore, she argues that the prepayment of $540,000 has been exhausted. [ 121 ] In my view, the lump sum payment must be attributed to child support over the last 139 months (June 2002 to December 2013), which is the period of time since Mr. Moors paid off Ms. Moors’ mortgage. It is a difficult exercise to attribute a present value to the sum of money over the last ten years as it was originally paid down on a mortgage and the funds cannot be traced through to present day. Therefore, I attribute a 0% value to the $540,000 lump sum prepayment. According to my calculations, Mr.

Moors was paying closer to $8,235.00 per month since the Agreement was signed. I arrived at this figure by using an approximate average of the payments as they increased from $4,000.000 to $4,500.00 over the time period. That amount of $4,350.00 was suggested by Ms. Gray in her Expert Report. [ 122 ] As I have arrived at the amount of $10,000.00 (which is justified in the

section below) for child support, the shortfall from May 2010 to December 31, 2013 (139 months) is $77,600.00. From this, a deduction of $10,000.00 should be made for the payment Mr. Moors made in accordance with Justice Rawlins’ Order dated August 10, 2012. [ 123 ] There should be a further deduction as Mr. Moors has been paying $8,000.00 in child support since September 1, 2012 (16 months). I calculate that sum as follows: $8,000.00 - $4,350.00 = $3,650.00 x 16 = $58,400.00. [ 124 ] Therefore, I award an amount of $9,260.00 retroactive child support which is to be paid to Ms. Moors by the end of 2013.

High Income Child Support [ 125 ] In order to determine the appropriate amount for monthly child support payments, it is necessary to examine

section 4 of the FCSG which deals with situations where a payor’s salary exceeds $150,000.

[126] Danielle was in the primary care of Ms. Moors until September 2004. She then was in a shared parenting arrangement until May2010, when she returned to the primary care of her mother. [127] Ms. Moors relies on Royer and submits that Danielle is “entitled to be maintained in a style and at a monetary level that reflects[her] parents’ guidelines incomes” and “the issue is not whether they can get by on less.” Royer at para 74. [128] Mr. Moors submits that a review pursuant to s 4(

b) of the FCSG requires a determination of the appropriate child support basedupon the conditions, needs, means and other circumstances. Mr. Moors argues that based upon the conditions, needs and circumstancesof Danielle, the budgets and asset information submitted and historic patterns of his voluntarily paying s 7 expenses, together with thetremendous benefit received by Ms. Moors from investing the lump sum paid of $540,000, that the child support plan in the Agreement,has been enough to meet all of Danielle’s basic and discretionary needs. He argues the child support paid has also been sufficient to fundMs.

Moors while she has been out of the workforce in recent years, indicating that the sum paid actually exceeded the amount needed forDanielle. [129] Further, Mr. Moors submits that there is a ceiling to the Table Amounts owed for children of wealthy parents. Ten thousanddollars per month in child support as payment for one child with a payor parent who has not engaged in blameworthy conduct is, in hisview, high. Mr. Moors argues that Danielle already has an excellent lifestyle. He argues that Ms. Moors owns her home, she has twovacation properties and Danielle is in private school which is paid by Mr.

Moors. [130] Mr. Moors challenged some of the expenses put forward by the Ms. Moors in her proposed budget for Danielle totalling$10,450.00 per month. For example, under oath Ms. Moors indicated that Danielle was no longer figure skating. Further, Ms. Moorsadmitted that she no longer had a gym membership. According to the Mr. Moors, the

section 3 expenses add up to $5700.00 per month.The

section 3 expenses include housing, cabin, utilities, cell phone, groceries, pet care, restaurant meals, toiletries, clothing, grooming,transportation, entertainment, vacation, electronics, gifts, allowances and miscellaneous. The

section 7 expenses total $4750.00 permonth. This includes school uniform, private school fees, tutoring, gym membership and trainer, golf and ski lessons, skating, soccer,biking golf, ski equipment, soccer fees, golf membership and ski pass. Ms. Moors acknowledged that Mr. Moors has bought golf clubsand skis for Danielle. Further, Mr. Moors argues that the costs of a gym membership and trainer of $1,200.00 are excessive and the costsof the golf membership and ski membership are also excessive. [131] Mr.

Moors also points out that he agreed to pay for all of Danielle’s post-secondary fees as a term of the Agreement. Analysis [132] One of the stated objectives of the FCSG is “to establish a fair standard of support for children that ensures that they continue tobenefit from the financial means of both spouses after separation”: s 1(a). [133]

Section 3 provides that the presumptive amounts of child support is set out in the relevant provincial tables according thenumber of children and the income of the spouse and the amount, if any, determined under s 7. [134] Where the paying spouse’ income exceeds $150,000.00 different considerations may come into play and the Table amount ofsupport can be varied if the court considers the amount to be inappropriate.

Section 4 provides as follows: 4. Incomes over $150,000 – Where the income of the spouse against whom a child support order is sought is over $150,000, the amountof a child support order is (

a) the amount determined under

section 3; or (

b) if the court considers that amount to be inappropriate, (

i) in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under theage of majority to whom the order relates; (ii) in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition,means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute tothe support of the children; and (iii) the amount, if any, determined under

section 7. [135] Once income has been determined a court must apply the applicable provincial table for incomes under $150,000, the amountsof which vary according to the number of children. The Table is mandatory subject only to specific exemptions.

Section 4 of the FSSGprovides for two possibilities when income exceeds $150,000.

First, support will be calculated on the basis of the Table which provides abase amount which varies with the number of children plus a percentage of the income over $150,000. [136] If application of the Table results in an inappropriate amount, child support with be the Table amount with respect to the first$150,000 of a spouse’s income, plus an amount the court considers appropriate with respect to the balance of the income having regardto the condition, means, needs and other circumstances of the children and the financial ability of each spouse to contribute. [137] The leading case with respect to the application of s. 4 of the FCSG is the Supreme Court of Canada decision in Francis vBaker, (SCC), [1999] 3SCR 250 [Francis] where the court dealt with the principles applicable to support applicationswhen the payor has an income over $150,000.

There is a presumption that the table amounts apply and the payor has the onus to rebutthat presumption. The court then looks at the condition, means, needs, and other circumstances of the children, the financial ability ofeach parent to contribute to their support and determines if the Table amount is inappropriate. If so, the Court should use the Tableamount for the first $150,000 and then set any further amount.

[ 138 ] The Alberta Court of Appeal in Ewing , summarized the basic principles from Francis , at para 46 : i. There is a presumption that the Table applies to all incomes, including incomes over $150,000. A party seeking to deviate from the Table has the onus of rebutting the presumption. (paras. 41, 43) ii. Children can expect the Table amount on the first $150,000 and a fair additional amount for that portion that exceeds $150,000. The closer the amount is to $150,000, the more likely it is that the Table amount will be awarded. (para. 41) iii. Where the presumption is rebutted, the Guideline figures can be increased or reduced under

section 4. (para. 42) iv. The test for deviation from the Table amount is that the evidence in its entirety must be sufficient to raise a concern that the Table amount is inappropriate. The evidence for departure from the Guidelines must be clear and compelling. A party seeking deviation is not required to testify or adduce evidence and no unfavourable conclusion should be drawn from a failure to do so. It is recognized that a party may not possess the required relevant evidence. (para. 43) v.

The actual situation of the children is central, and the condition, means, needs and other circumstances of the children must be considered in the assessment of the initial determination of inappropriateness and the determination of appropriate support. (para.44) No single element of legislative purpose is to be given more weight than the actual circumstances of the children (para. 39). A proper construction of

section 4 requires that the objectives of predictability, consistency and efficiency on the one hand, be balanced with those of fairness, flexibility and recognition of the actual "condition, means, needs and other circumstances of the children" on the other. (para. 40) vi. To determine appropriateness the court must be armed with sufficient information, and trial judges have discretion to determine on a case-by-case basis whether a child expense budget is required to provide that information and they have the power to order it. (para. 45) Custodial parents are not required to produce child expense budgets in all cases under

section 4. vii. Although frequently child support results in a benefit to the wife, the legislative objective is maintenance for the children rather than household equalization or spousal support. (para. 41) viii. While standard of living can be considered in assessing need, at some point support payments will meet even a wealthy child's reasonable needs. When the Table amount is so in excess of the child's reasonable needs it must be considered a functional wealth transfer to a parent, or de facto spousal support. (para. 41) ix.

The test for whether expenses are reasonable will be met by the paying parent if the budgeted expenses are so high as to "excee[d] the generous ambit within which reasonable disagreement is possible": Bellenden v . Satterthwaite , [1948] 1 All E.R. 343 at 345 . (para. 49) [ 139 ] In Ewing , the father was paying $13,776.00 per month. The Table amount for the relevant time period was in the range of $25,000.00 to $28,000.00 per month. There was no evidence to show that these increased funds were required.

The children’s lifestyle had not changed in any way since support was increased from $6000.00/month to $13,776.00/month: they lived in the same home since the parties’ separation, they were involved in minimal extracurricular activities, etc. The mother demonstrated no need for increased retroactive support. The Court of Appeal found that the father had rebutted the presumption that the Table amount was appropriate and concluded that the existing level of support was sufficient; no retroactive support was required.

The father’s income was $3,343,927.00 in 2005 and $1,953,636.00 in 2006 with an average income over three years of $2,134,975.00. The chambers judge applied the FCSG to these figures, without adjustment, and exercised his

section 4 discretion by declining to depart from the Table amounts. [ 140 ] The Court of Appeal held that the chambers judge committed four errors, which included failing to examine the actual, means, needs and circumstances of the children. While a judge is not generally required to give detailed reasons there must be sufficient reasons of how a finding is made to allow the parties to understand the decision and to allow for meaningful appellate review.

The judge failed to do this in this case. [ 141 ] The Court pointed out that neither the fact that the payor has sufficient income to pay retroactive support nor the fact that he is wealthy and will continue to make support payments are relevant to whether increased support would amount to a redistribution of capital or a payment of spousal support.

While the sheer size of the award is not determinative of its impropriety, at a certain point, as Bastarache J noted in Francis , “the applicable Guideline figure is so in excess of the children’s reasonable needs that it may be considered to be a functional wealth transfer to a parent or de facto spousal support” [ 142 ] Ms. Moors relied on the case of Selleck v Selleck , 2011 ABCA 374 [ Selleck ]. In Selleck , the father earned between $454,000.00 and $1.5 million per year during a three year period. Mr. Selleck had paid child support of approximately $280,000.00 for two children.

The parties had three children, ages 18, 21 and 23 at the time of the appeal. Between 2007 and 2011 the oldest child attended university away from home in 2010 and lived with the father for 30 to 40 percent of the time prior to that date. The mother applied for the Table amount of support. The Appellant argued that the mother had received adequate support in the amount of $285,000.00 of four years and that any further funds would amount to a wealth transfer.

He argued that that there was nothing before the courts to demonstrate that the Respondent incurred debt to meet the children’s needs or that the children were deprived of any opportunity because child support was inadequate. [ 143 ] The chambers’ judge, Justice Nation ordered the father to pay child support at the midpoint of the Table amount for one and two children based on his actual income and ongoing support for one child .

He was ordered to pay retroactive support of over $225,000.00 for a total payment for a “child and a half” over three years of more than $565,000.00. [ 144 ] Justice Nation determined that a strict application of the Table amounts would result in a functional wealth transfer or de facto spousal support. Therefore, she took the midpoint between the guideline table amount for one and two children. The Court of Appeal agreed with her approach and noted that her analysis revealed a “meaningful appreciation of the risk of wealth transfer” and betrayed “no misapprehension of the factual underpinnings” at para 18.

Justice Nation had carefully considered the specific means, needs and other

circumstances of the children and accepted that certain expenses such as those for vehicle and home renovations were reasonable. [ 145 ] In applying the principles in Francis to determine appropriate amounts, I would make the following observations. Ms. Moors is not requesting the Table amounts. Ms. Moors presented a proposed budget of costs. The budget shows expenditures of $10,450.00 per month. [ 146 ] It should be noted that it is not a requirement for Ms. Moors to supply budgetary information absent a court order: Ewing at 63. [ 147 ] I acknowledge that Ms.

Moors is not working and appears to be quite capable of doing so. In s 26(2) of the Divorce Act , the Court speaks to the requirement of both parents making a financial contribution to their children in accordance with their ability. [ 148 ] However, the Agreement was drafted ten years ago and the means and needs of the child have changed. Further as found earlier, Ms. Moors has effectively been receiving $9,050.00 per month when you factor in the lump sum child support payment. Accordingly the $10,000.00 sum Ms. Moors requests is in my view reasonable on a go forward basis.

In addition, the private school fees are now in the proposed budget from January 1, 2014 going forward. Both parties have testified that Mr. Moors was previously paying for the private school fees. [ 149 ] In conclusion and in light of the realities of Danielle’s needs, the parents’ means and the actual expenses I find that a reasonable amount of child support is $10,000.00 per month, commencing January 1, 2014. This amount includes all s 7 expenses including private school tuition for Danielle. This is not an excessive amount, considering Danielle’s needs and the means of Mr. Moors. [ 150 ] On a final note, Mr.

Moors’ counsel did not make reference to the cross-application in submissions. It is unclear whether Mr. Moors has abandoned his claim. [ 151 ] According to the Agreement, the parties are to attend upon Dr. Gary Kneier (or a mutually agreed upon replacement such as Dr. Larry Fong) in order to determine what is in Danielle’s best interests regarding shared parenting and access. This should continue. [ 152 ] With respect to Mr. Moors’ anticipated increased costs to have access to Danielle, it is my finding that such costs should be borne by Mr. Moors given his significant income. Costs [ 153 ] Ms.

Moors attached as Exhibit J, to her May 17, 2013 Affidavit, a copy of the legal and professional fees which she has incurred over the last ten or eleven years. The total amount is $211,941.00. Clearly, almost the majority of the costs are associated with previous matters. Both parties have taken litigious positions in the past and have a history of not being able to come to agreement without the assistance of legal counsel or a parenting coordinator. [ 154 ] I award costs and all reasonable disbursements of this application in favour of Ms.

Moors. [ 155 ] If parties are unable to agree, they may speak to costs by January 31, 2014. Heard on the 5 th day of September, 2013. Dated at the City of Calgary, Alberta this 17 th day of December, 2013. S.L. Hunt McDonald J.C.Q.B.A. Appearances: Ms. Laurie Allen, for the Defendant/Applicant Ms. Elizabeth Stock,

for the Plaintiff/Respondent

Schedule A Mr. Moors’ Corporate Ownership Interests - (VGC Companies at 2012)