Ramsay v Mackintosh, 2013 ABQB 80

Court of Queen ’ s Bench of Alberta Citation: Ramsay v Mackintosh, 2013 ABQB 80 Date: 20130204 Docket: 4803 115780 Registry: Edmonton Between: Glenna Ramsay Plaintiff/Respondent - and - Duncan Mackintosh Defendant/Applicant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice L.D. Acton _______________________________________________________ I. Nature of the Matter [ 1 ] The issues of Mr. Mackintosh ’ s Guidelines income for 2003 to 2012 and s 7 expenses for 2001 to 2012 were directed to trial by the case management judge.

The trial lasted four days, during which time I heard evidence from Dr. Glenna Ramsay; Mr. Mackintosh; expert Brenda Pisco; and the Chief Financial Officer (CFO) of Fire Protection Inc., Bradley Gaucher. II. Evidence

A. Family Background [ 2 ] Dr. Ramsaey and Mr. Mackintosh were married and had two children but the marriage failed. Minutes of Settlement were entered into on October 27, 2000, which provided that both children were to have their primary residence with Dr. Ramsay. The December 28, 2000 divorce judgment provided that, commencing November 1, 2000, Mr. Macintosh was to pay Dr. Ramsay $508 per month in child support, plus a percentage of add-on expenses. [ 3 ] At the time of the separation, their daughter Stephanie was four years old and their son Austin was two years old. Mr.

Mackintosh was an employee of Fire Protection Inc., earning approximately $36,000 per year, and Dr. Ramsay was a practising family physician. [ 4 ] Mr. Mackintosh ’ s evidence was that on separation he moved out of the matrimonial home into a basement suite. He subsequently moved in with his parents. Ten years ago, he purchased a 1956 bungalow which he has gradually renovated to provide the room necessary to accommodate his children. [ 5 ] Dr. Ramsay stayed in the matrimonial home until 2001 or 2002, when she moved to a house with a swimming pool, which she thought would be fun for the children.

They lived there for five years. As she was finding the homeit too much to maintain on her own, she had a smaller three-bedroom home built six years ago and has lived there ever since. so she had a smaller home built six years ago and has lived in that three bedroom home in the Hamptons ever sinceShe testified she paid off the mortgage on her home a year ago. [ 6 ] The evidence from both parents is that the children have always been involved in many activities over and above their schooling. Stephanie participated in high energy activities such as competitive dance and cheerleading music.

She went to the Victoria School for the Performing Arts. Both children were involved in Taekwondo. Austin played soccer and even attended he went to the Soccer Academy in Edmonton for a number of years. Aand additionally, he was involved in baseball, football and gymnastics. Both children took Taekwon-do and had various music and singing lessons. [ 7 ] Dr. Ramsay ’ s evidence was that she set her clinical practice

schedule around taking the children to school and being there when they got home. Mr. Mackintosh was available to take the children to their Saturday activities so that Dr. Ramsay was able to do clinic work on Saturdays. [ 8 ] Mr. Mackintosh testified it was Dr. Ramsay who registered the children in school and in the extracurricular activities and he went with the flow. [ 9 ] According to Mr. Mackintosh, he did not have overnights with the children when they were small because he and Dr. Ramsay agreed that consistency and structure were was what the children needed.

He started taking the children for overnight access in 2008, when Stephanie was thirteen and Austin was eleven years old. [ 10 ] Austin began attending a school in British Columbia in the fall of 2012. In June 2012, Shelley J held that no support was payable for Austin as of September 1, 2012 but the school costs were to be treated as s 7 expenses. [ 11 ] In June 2012, Shelley J ordered that child support be recalculated to reflect Stephanie ’ s residence had been shared from September 1, 2011. B. Matters Giving Rise to the Dispute

[ 12 ] Through the years, Mr. Mackenzie increased the amount of base support he paid, but did not provide all of the requested financial disclosure. [ 13 ] In 2009, Dr. Ramsay served Mr. Mackintosh with a notice to disclose as she wanted disclosure of what he was receiving as a result of his employment with and shareholdings in Fire Protection Inc. Mr. Mackintosh failed to respond to that notice. Dr. Ramsay then brought an application to vary child support. Mr. Mackintosh failed to appear. Jeffrey J granted an order on August 10, 2009 imputing to Mr.

Mackintosh an income of $120,000 pursuant to the Federal Child Support Guidelines , SOR/97-175 and requiring that, commencing July 1, 2009, he pay Dr. Ramsay $1,700 per month in child support and 50 percent of s 7 expenses. When a further notice to disclose was served on him, Mr. Mackintosh again failed to disclose. He continued to fail to disclose or to attend court hearings. [ 14 ] On September 9, 2010, Mr.

Mackintosh was found in contempt by Moen J, who ordered him to pay child support of $2,756 per month for 2007 and 2008 based on an imputed income of $200,000 and $3,086 per month for 2009 and 2010 based on an imputed income of $225,000. Mr. Mackintosh successfully appealed that order, the Court of Appeal affording him another opportunity to provide disclosure. Ultimately, Shelley J was assigned to case manage the matter. [ 15 ] Dr. Ramsay sought retroactive child support to 2003. On June 28, 2011, Shelley J ordered that Mr.

Mackintosh pay retroactive support for January 2001 to June 2011, with his Guidelines income for each year to be based on his line 150 income as per his personal income tax returns and one-third of the increase in annual retained earnings of Fire Protection Inc. This calculation was to be on an interim “ without prejudice ” basis. Shelley J set the retroactive s 3 base support payable by Mr. Mackintosh at $157,257. She ordered that ongoing support until trial of the issue was to be calculated using Mr. Mackintosh ’ s 2010 income tax return and one-third of the increase in the company ’ s annual retained earnings.

She set the ongoing s 3 base support at $2,831 per month starting on July 1, 2011. Mr. Mackintosh ’ s proportionate share of s 7 expenses was set at 43.56 percent. Shelley J stayed enforcement on payment of the retroactive support award provided Mr. Mackintosh remained current with payment of the ongoing s 3 base support and paid Dr. Ramsay $2,000 per month towards the retroactive support. [ 16 ] On June 11, 2012, Shelley J remitted the issue of Mr. Mackintosh ’ s Guidelines income for 2003 onwards to trial.

Whether certain claimed expenses for the years 2001 to 2012 are proper s 7 expenses also was in issue at the trial. [ 17 ] In relation to the determination of Mr. Mackintosh ’ s Guidelines income, I heard evidence from Mr. Gaucher, the CFO for Fire Protection Inc. As well, I heard from Ms. Pisco, who was qualified as an expert to give opinion evidence on business valuations and on the calculation of child support under the Federal Child Support Guidelines . [ 18 ] Dr. Ramsay submits that one-third of the retained earnings in Fire Protection Inc. should be imputed to Mr.

Mackintosh ’ s income for purposes of calculating his child support obligations. It is Mr. Mackintosh ’ s position that the income Dr. Ramsay seeks to impute to him was not and is not available for distribution to the shareholders of the corporation, as it is required for ongoing business operations. There is no dispute between the parties that Mr. Mackintosh has not received those monies. C. Corporate Interests [ 19 ] Mr. Mackintosh is a one-third shareholder of Fire Protection Inc., a company specializing in fire protection equipment, including the provision, installation and maintenance of sprinkler systems.

There are two other shareholders of the company, one of whom is Mr. Gaucher. Mr. Mackintosh bought into the company in 2003 and about four months later Mr. Gaucher came on board. The company was in a precarious financial state at the time. Mr. Gaucher testified this was likely the result of the previous shareholders ’ practice of paying themselves out from corporate income, leaving little in the company. Mr. Mackintosh, Mr.

Gaucher and the third shareholder all worked for the company, but as a result of its shaky financial state, they did not take any salary for three months in 2004. [ 20 ] Since 2004, Fire Protection Inc. has grown and expanded. The company has increased its revenues and profits, the number of its employees has increased from 20 to 90, and it has expanded its leasehold space, first in 2006 and again in 2013. Further evidence of its success, and a point Mr. Gaucher took pride in, was the company ’ s ability to weather the economic downturn in 2008. [ 21 ] Mr.

Gaucher testified as to the manner in which financial decisions of the corporation are made. Although the other shareholders may be consulted for their input, ultimately the financial decisions are determined through discussions between himself as the CFO and the corporate accountant. Mr. Gaucher explained that Mr. Mackintosh would not have been able to withdraw money from

the corporation without his partners ’ consent, and this consent likely would not have been forthcoming as the company had plans to continue to grow and expand into the future. [ 22 ] The manner in which the company chose to grow was through use of its retained earnings, rather than incurring additional debt on its line of credit. Mr. Gaucher gave evidence it would have been possible to negotiate a higher line of credit with the bank, but the company only required $1,000,000. He testified that, given the company ’ s previous financial state, conservative business practices were preferred. [ 23 ] Mr.

Gaucher ’ s evidence was that Mr. Mackintosh had borrowed from the company in 2011 and 2012, which he understood was to assist Mr. Mackintosh in paying for certain legal matters. He said the only reason the loans were approved was because the shareholders knew the company was in a position to pay bonuses the following year and, therefore, Mr. Mackintosh would be able to repay the loans from his bonuses. [ 24 ] In 2012, large bonuses of $150,000 were paid to the shareholders as managers of the company.

These were a result of the company ’ s financial planning strategy of “ bonusing down ” to take advantage of the small business deduction and to avoid tax implications. [ 25 ] I turn now to Ms. Pisco ’ s evidence. Ms. Pisco discussed the pre-tax income and retained earnings shown on the company ’ s financial statements. According to Ms. Pisco, an increased line of credit could have been negotiated given the company ’ s healthy financial condition.

Additionally, in her view, the line of credit that was available was not being used to the maximum for a corporation with assets and working capital of this significance. Her opinion was that Fire Protection Inc. could borrow to put the funds set out in her charts into the hands of Mr. Mackintosh. [ 26 ] Ms. Pisco was not asked, nor did she address, whether it was possible for Mr. Mackintosh to take the proposed one-third of the retained earnings out of the company given its corporate structure and his status as a minority shareholder.

Mom submits that the retained earnings in this three person company should be taken out from each of the profitable years and 1/3 ascribed to Dad and added to his line 150 income as if he had actually taken that money out of the company as income. There is no disagreement as to the facts that he did not take this money out as income. Indeed, as a minority shareholder, he would not have been able to do so without his partners' consent since they had plans and goals to build and invest in the company as was explained by CFO Brad Gauther.

The company was demonstrating its success by its increasing capital assets, along with its increasing employees, expanding leasehold space in 2006 and again expanding its leasehold space into 2013. Mr. Gauther testified as to the sorry state of affairs when he first came on board in 2003 and how the three of them were unable to even take salaries for themselves for three months in 2004. He testified as to how proud he was of the corporation's ability to survive and make a small profit during the recession in 2008.Ms.

Pisco was not asked, nor did she address, whether or not it was possible for Dad to take this money out of the company as it was structured under its corporate organization. Her evidence was limited to how much money was there as retained earnings and opine that a line of credit existed which, in her view, was not being used to the maximum available to a corporation with assets and working capital of this significance. Her evidence was that the corporation could and should borrow to put the funds she set out in her charts in the hands of this Defendant father.Mr.

Gauther's evidence was that Dad did borrow from the company several times in 2011 and 2012 to pay for legal matters as far as he knew.

His evidence was the only reason the borrowing was approved was because the shareholders knew the were in a position to have bonuses paid out in the following year and the money lent could be repaid from Dad's share of those bonuses.The bonuses are "real income" and once paid can be used to increase guideline income if there is a reasonable probability that they will continue into the future.The evidence in this trial is that this is a very successful and well managed company and thus, it is highly probable if the economy continues on track, thatDad will continue to earn a good managerial salary and can expect to continue receiving these significant bonuses into the future. [ 27 ] Mr.

Mackintosh did not call rebuttal expert evidence to refute Ms. Pisco ’ s report. He agreed the report accurately reflected the retained earnings and pre-tax income of the company, as shown on the company ’ s financial statements. However, he disagreed with Ms. Pisco ’ s conclusions that the retained earnings were available for distribution to the shareholders. He relies on Mr. Gaucher ’ s evidence as to the company ’ s business practices and rationale for maintaining the retained earnings in the corporation.

In my view, had these retained earnings been paid out to the three shareholders, the same would not necessarily be able to be said about this company. I accept Mr. Gauther's analysis of the reasons for the company's success being careful and prudent money management. That included avoiding the earlier practice engaged in by the previous two owners who took out the earnings of the company instead of plowing the earnings back into the company to build it into a bigger and better business and in that way, ran it into the ground before the current owners came on board.Thus, Ms.

Pisco's hypothetical of taking out the available cash instead of using it for the betterment of the corporation (which, of course, has increased Dad's income and thus has benefited the children by his generating a much greater income than the $36,000 he was earning in 2001) is flawed reasoning in that Dad did not have the power to do this. This is not a one-person

company. Second, suchactions could very well have doomed the company to the failures it had been experiencing before the current management took over with its new fiscally responsible approach. III. Analysis A. The Law on Shareholders ’ Interests and the Federal Child Support Guidelines [ 28 ] Dr. Ramsay asks me to invoke the provisions of ss 17 and 18 of the Guidelines , which read as follows: 17(1) If the court is of the opinion that the determination of a spouse ’ s annual income under

section 16 would not be the fairest determination of that income, the court may have regard to the spouse ’ s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. . . . 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. [ 29 ] The case law provides some guidance on how s 18 is to be interpreted.

First, it is clear from the authorities that s 18 of the Guidelines may apply to shareholders who share ownership and control of the company with others: Kowalewich v Kowalewich , 2001 BCCA 450 at para 48 , 19 RFL (5th) 330 ; Chapman v Summer , 2010 BCCA 237 at para 5 ; EMM v JIM , 2012 BCSC 372 at para 22 .

Second, the onus is on the shareholder spouse to provide the necessary evidence that the corporation's pre-tax income is not available to him or her: Nesbitt v Nesbitt , 2001 MBCA 113 at para 21 , 156 Man R (2d) 238 ; Soucie v Soucie , 2010 BCSC 1783 at para 13 ; Hausmann v Klukas , 2009 BCCA 32 at para 51 , 64 RFL (6th) 54 , leave to appeal to SCC ref ’ d [2009] SCCA No 135. [ 30 ] The courts are reluctant to intervene in corporate affairs and to impute income where the business is conducted between arm ’ s length parties or where the payor is not the controlling mind of the business: EMM at para 23 ; Pallot v Pallot , 2010 BCSC 1146 at para 28 . [ 31 ] In EMM at para 24 , Meiklem J refused to impute one-third of the corporate pre-tax income to the defendant, a minority shareholder, as there was no evidence the defendant had the ability to bring about a greater distribution of corporate income.

Meiklem J distinguished Soucie and Chapman on the basis that in those cases the other shareholders of the corporations at issue were family members of the payor, and there was evidence the payor could influence the amounts paid out by the corporation, whereas in EMM there was a lack of such evidence. [ 32 ] The case before me is similar to EMM in that Mr. Mackintosh is a minority shareholder in a corporation and the other shareholders are at arm ’ s length to him. He has no ability to compel the payment out of the retained earnings of the corporation.

[33] Mr. Mackintosh relies on Bembridge v Bembridge, 2009 NSSC 158, 73 RFL (6th) 147. MacDonald J in that case referred toTrueman v Trueman, 2000 ABQB 780 at para 35, 273 AR 334, in which Johnstone J commented at para 35 that financing expansionand growth of a company out of earnings rather than incurring substantial debt is an acceptable business objective.

She expressed theview the court should not interfere with the business and management practices of a corporation unless the pre-tax earnings of thecompany represent monies available to the payor shareholder for the payment of child support without impairing the ongoing operationof the company. [34] MacDonald J in Trueman noted at para 36 that other courts have suggested that in making a decision pursuant to s 18,consideration should be given to a number of factors, including: the historical practice of the corporation for retaining earnings; therestrictions on the corporation’s business, including the amount and cost of capital equipment required; the type of industry involved andthe environment in which it operates; the potential for business growth or contraction; the level of corporate debt; how the corporationobtains its financing and whether there are banking or financing restrictions; and the control exercised by the parent over the corporation.At para 37, MacDonald J cautioned that: Failure to understand exactly where the additional money can be found to increase the parent’s income can lead to an incorrect result andultimately, if the parent cannot find the expected additional money, may undermine the operation of the corporation and eventually “killthe goose that lays the golden egg”. [35] Another decision I find relevant is Koester v Koester, (ON SC), [2003] OTC 1140, 50 RFL (5th) 78, adecision of the Ontario Superior Court of Justice, with facts analogous to those before me.

In Koester, Stayshyn J was asked to imputeretained or pre-tax earnings from a corporation to the respondent’s income for the purpose of calculating child support. The respondentwas the owner of 50 percent of the shares of the corporation and the other shareholder was an independent and arm’s length party. [36] The company in Koester was a new one. It was expanding rapidly and was involved in large construction projects. It hadsignificant indebtedness and the debt to equity ratio was not healthy.

Stashyn J at para 43 accepted expert evidence that the respondent ineach of the years in issue had taken as salary all of the money that was fairly available to him as a co-owner operator of an expandingspecialized construction business.

At para 44, he found this was not a situation where the evidence disclosed the respondent had begun todiminish his salary or dividend income or the corporation had dramatically increased its retained earnings subsequent to imposition onthe respondent of child support obligations. [37] At para 33 of Koester, Stayshyn J identified the following five questions that a court should ask about the nature of thespouse’s relationship with the corporation before it considers whether or not to exercise its discretion under s18: (

a) Because of the separate legal entity of the corporation, should there be a general reluctance by the Court to automaticallyattribute corporate income to the shareholder? (

b) Is there a business reason for retaining earnings in the company? (

c) Is there one principal shareholder or are there other bona fide arm’s length shareholders involved? (

d) What is the historical practice of the corporation for retaining earnings? (

e) What degree of control is exercised by the spouse over the corporation? [38] Stayshyn J commented at para 35 that businesses must operate in the real world and there may be valid and legitimatebusiness reasons to maintain retained earnings in a corporation and not making them available to shareholder owners, either by way ofsalary or dividend. In the end result, Mr. Justice Stayshyn declined to impute any portion of the retained earnings of the corporation intothe income of the respondent.

B. Should

Section 18 Be Applied? [ 39 ] I turn first to address the five questions identified by Stayshyn J in Koester . First, there is no evidence that this corporation is being used in any way to reduce Mr. Mackintosh ’ s child support responsibilities. This weighs in favour of the Court ’ s reluctance to pierce the corporate veil and automatically attribute corporate income to the shareholder. [ 40 ] Second, the evidence is that there are several bona fide business reasons for leaving the retained earnings in the company. Mr. Gaucher testified the company utilized retained earnings for growth and expansion.

He also testified the previous financial state of the company caused the current shareholders to engage in more conservative business practices, and they preferred to utilize the retained earnings rather than incur debt to carry on business operations. [ 41 ] Third, the company has two other bona fide arm ’ s length shareholders. [ 42 ] Fourth, the historical practice of this company is to keep a substantial working capital base in the form of retained earnings.

The bonuses paid out in 2012 were not a deviation from this historical practice, but rather were a result of the company ’ s tax planning strategy of “ bonusing down ” to maintain the benefit of the small business deduction. [ 43 ] Finally, the evidence is that Mr. Mackintosh has little or no control over what distributions are made to the shareholders. That decision largely is made by Mr. Gaucher in consultation with the corporate accountant. [ 44 ] I accept Mr.

Gaucher's analysis of the reasons for the company's success being careful and prudent money management, which included avoiding the practice engaged in by the previous two owners who took out the earnings of the company instead of plowing those earnings back into it to build it into a bigger and better business. [ 45 ] As well, I find that Ms. Pisco's hypothetical of taking the retained earnings out of the company instead of using it for its betterment is flawed. First, it is clear from the evidence Mr. Mackintosh did not have the power to do this.

This is not a one-person company, but a situation where minority shareholdings are involved. Second, leaving the retained earnings in the company was a legitimate and bona fide business decision. Removing those earnings could very well have doomed the company to the failures it had experienced before the current management took over with its new fiscally responsible approach. I would also note that by leaving the retained earnings in the company, Mr.

Mackintosh ’ s salary has increased substantially from the $36,000 he was earning in 2001, thereby benefiting the children in the form of increased s 3 support payments. [ 46 ] Therefore, I decline to impute any of the retained earnings or pre-tax income of Fire Protection Inc. to Mr. Mackintosh ’ s income for the purpose of determining his Guidelines income pursuant to ss 17 and 18 of the Federal Child Support Guidelines .

Section 18 of the Guidelines is not intended to be a tool for the Court to second guess bona fide business decisions of a corporation. C. Mr. Mackintosh ’ s Guidelines Income [ 47 ] There is no dispute Mr. Mackintosh ’ s Guidelines income for each of 2001 and 2002 was $36,000. [ 48 ] I find Mr. Mackintosh ’ s Guideline s income for the subsequent years to have been as follows: Year Income

2003 $95,213 2004 $57,600 2005 $72,293 2006 $109,945 2007 $128,192 2008 $142,989 2009 $192,510 2010 $173,572 2011 $182,692 2012 $339,323 D.

Section 7 Expenses [ 49 ]

Section 7 of the Guidelines states: 7(1) In a child support order the court may, on either spouse's request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family's spending pattern prior to the separation: (

a) child care expenses incurred as a result of the custodial parent's employment, illness, disability or education or training for employment; (

b) that portion of the medical and dental insurance premiums attributable to the child; (

c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses; (

d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child's particular needs; (

e) expenses for post-secondary education; and (

f) extraordinary expenses for extracurricular activities.

(1.1) For the purposes of paragraphs (1)(

d) and (f), the term "extraordinary expenses" means (

a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, takinginto account that spouse's income and the amount that the spouse would receive under the applicable table or, where the court hasdetermined that the table amount is inappropriate, the amount that the court has otherwise determined is appropriate; or (

b) where paragraph (

a) is not applicable, expenses that the court considers are extraordinary taking into account (

i) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse wouldreceive under the applicable table or, where the court has determined that the table amount is inappropriate, the amount that the court hasotherwise determined is appropriate, (ii) the nature and number of the educational programs and extracurricular activities, (iii) any special needs and talents of the child or children, (iv) the overall cost of the programs and activities, and (

v) any other similar factor that the court considers relevant.

(2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by thespouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child. [50] Section 7(1.1) of the Guidelines did not come into effect until 2007.

Nevertheless, I apply the same definition to the term“extraordinary expense” to the expenses claimed before then. [51] In terms of s 7 expenses, the Court must look at the combined income of the parents and their spending pattern prior toseparation to help determine what might be proper s 7 expenses in the circumstances of each case: Sanders v Sanders, 1998 ABCA 155at para 11, 42 RFL (4th) 239, adopting the reasoning in Middleton v MacPherson (1997), (AB KB), 204 AR 37 atpara 35 (QB). [52] In the present case, what properly may be characterized as a s 7 expense varies from year to year, taking into considerationthe increasing income of the parties.

The parties’ incomes are summarized from the evidence as follows: Year Dr. Ramsay’s Income Mr. Mackintosh’s Income Total Family Income 2001 $62,708 $36,000 $98,708 2002 $117,122 $36,000 $153,122 2003 $139,441 $95,213 $234,654

2004 $127,796 $57,600 $185,396 2005 $136,776 $72,293 $209,069 2006 $156,066 $109,945 $266,011 2007 $198,215 $128,192 $326,407 2008 $226,173 $142,989 $369,162 2009 $241,644 $192,510 $434,154 2010 $266,480 $173,572 $440,052 2011 $227,245 $182,692 $409,937 2012 $236,000 $339,923 $575,923 [ 53 ] The majority of expenses which Dr. Ramsay seeks to have classified as s 7(1)(

f) expenses throughout the years relate to dance and music lessons and athletic extra-curricular activities. After 2001, most of these activities are not properly classified as “ extraordinary ” for a family with such a high income level. What I have found to be proper s 7 expenses are delineated below. [ 54 ] In 2001, Dr. Ramsay incurred expenses for dance, music, skating and gymnastics for one or both children amounting to $2,432.49. Prior to separation the children had taken

part in a variety of extra-curricular lessons. They had both started piano at a young age and Stephanie had been dancing since she was two. The dance and piano activities in particular were quite expensive. I am prepared to find that continuing with such extra-curricular activities was in the children ’ s best interests and reasonable in view of the family income. However, as Dr. Ramsay ’ s income was still quite modest that year, I consider these to have been s 7(1)(

f) extraordinary expenses in 2001. Dr. Ramsay also claims a dental expense from June 4, 2001 of $106.85, and the June 29, 2001 Thibodeau hearing aid cost for Stephanie of $19.05. Section 7(1)(

c) of the Guidelines allows only that portion of health-related costs which exceeds insurance reimbursement by $100.00 to be claimed. While there is evidence the health-related expenses listed are for the amount over and above the insurance reimbursement, there is no indication they reflect only that amount in excess of $100.00 over the amount reimbursed. Accordingly, I find that only $25.90 is a proper s 7(1)(

c) expense. Dr. Ramsay explained that the children ’ s attendance at the River Valley outdoor camp permitted her to attend work. I allow the $82.00 cost for it under s 7(1)(a). The total s 7 expenses for 2001 are $2,540.39. [ 55 ] Although the costs of Stephanie ’ s dance and the children ’ s piano lessons increased in 2002, Dr. Ramsay ’ s income almost doubled that year and her income and the family income remained relatively high after that time. As a result, I do not consider the costs of the children ’ s extra-curricular activities in 2002 or onwards to be extraordinary.

The only expenses for that year which I will allow as s 7 expenses are Austin ’ s May 6, 2002 summer camp expense of $47.00, the $94.00 cost of the River Valley outdoor centre, and the amount of the dental charges for January 9, 2002 ($111.71) and September 4, 2002 ($148.86) which exceeded $100.00, being $160.57. The total s 7 expenses for 2002 were $301.57. [ 56 ] The total family income increased substantially in 2003.

I find the only appropriate s 7 expense for that year to be the cost of the summer camp “ Out and About Edmonton ” paid on June 10, 2003 in the amount of $50.00. [ 57 ] In 2004, I find the only appropriate s 7 expense to be for the July 5, 2004 tennis camp ($80.00), which I view as a specialty form of summer child care. [ 58 ] In 2005, I do not find any of the expenses sought to be appropriate s 7 expenses. Again, at this income level, dance, gymnastics, piano lessons, and Taekwon-do are not extraordinary expenses.

This also applies to the additional fees for Victoria School, a school specializing in the performing arts and requiring fees above and beyond the typical school fees.

[ 59 ] In 2006, I find the appropriate s 7 expenses to be for the four psychological services on August 25, 2006, September 23, 2006, November 7, 2006 and August 18, 2006 for a total cost of $215.00, and the dental cost on August 9, 2006 of $154.48, for a total of $369.48, less $100.00 = $269.48. [ 60 ] In 2007, there are claims for dental work which are s 7 expenses. Additionally, there are several specialty summer camps which in essence are summer childcare and, therefore, qualify as s 7 expenses. Dr. Ramsay admitted in oral testimony that she inadvertently duplicated certain costs in her documentary evidence.

I have eliminated the duplicates in the calculation that follows.

For 2007, I find the appropriate s 7 expenses to be the costs of the Metro Class Camp, including the registration fees paid on April 17, 2007 for both Stephanie and Austin of $529.00 and $728.00 respectively, and all other fees associated with the Metro Camp totalling $444.00 for Stephanie and $266.00 for Austin; the University of Alberta summer camp cost on May 2, 2007 of $199.00; the unspecified summer camp costs on May 2 and 13, 2007 of $94.00 and $1,685.00 respectively; the sports camp cost on May 2, 2007 of $398.00; and the Metro Education cost on April 17, 2007 of $1,257.00 and again on July 11, 2007 of $178.00.

In addition, I allow the orthodontic costs of $395.00 and dental costs of $228.72 and $247.56 in that year; less $100.00. The total s 7 expenses in 2007 were $6,549.28. [ 61 ] In 2008, I find the appropriate s 7 expenses to be the volleyball camp charge on May 13, 2008 of $787.00; various summer camps charges on May 13 and May 14, 2008 totalling $1,685.00; and orthodontic expenses on May 28, July 2 and July 24, 2008, totalling $1,225.00, less $100.00; for a total of s 7 expenses in that year of $3,597.00. [ 62 ] In 2009, Austin began attending an Edmonton Soccer Academy.

Although his tuition for attending this specialized school is considered an extraordinary expense, the other associated school fees would be covered by s 3 support just as the Victoria School fees are covered. I find the appropriate s 7 expenses in 2009 are Austin ’ s tuition for the Soccer Academy paid on September 9, 2009 of $2,000.00; costs for Camp Nakamun on April 19, 2009 of $590.00; and NAIT summer program expenses on April 20 and 22, 2009 of $698.00 and $210.00 respectively.

Also considered s 7 expenses are the prescription costs for Stephanie on April 8, 2009 of $59.70; three prescriptions for Austin on August 4 and December 22, 2009 for $59.70 and $15.00 respectively; and a dental expense paid on May 5, 2009 of $195.76; less $100.00.

Section 7 expenses for 2009 total $3,728.16. [ 63 ] In 2010, I find the s 7 expenses to be the cost of the cheerleading competition in Hawaii for Stephanie on December 6, 2010 of $1,167.16; the school Pom trip charge of $400.00 paid on November 22, 2010; Austin ’ s Soccer Academy tuition paid on October 21, 2010 of $1,976.00; a summer soccer camp on May 29, 2010 of $40.00; the Metro Education cost on August 25, 2010 of $135.45; and the two dental charges on June 3 and August 12, 2010 of $80.88 and $24.58 respectively, less $100.00; for a s 7 total that year of $3,724.07. [ 64 ] In 2011, I find the only appropriate s 7 expense to be Austin ’ s Soccer Academy tuition of July 5, 2004 for $2,226.00. [ 65 ] In 2012, Austin began attending Brentwood College School in Mill Bay, British Columbia.

Madam Justice Shelley ordered that all expenses associated with Brentwood are proper s 7 expenses ($4,349.41 up to the end of November). For 2012, I find the only “ pre-Brentwood ” s 7 expenses to be the four dental expenses incurred on February 13 and August 14, 2012 totalling $213.38, less $100 = $113.38. In 2001,the family income was: $88,708.00.

I find that the appropriate s.7's in 2001 as set out in the evidence would be the dental costs of June 4, 2001 of $106.85 and the Thibodeau cost of June 29, 2001 of $19.05 for a total of $125.90.The activities sought to be claimed as extraordinary are: dance expenses, music lessons, skating gymnastics, and a dentist visit which I accept was for one child, and treatment for Stephanie ’ s ears from Thibodeau ’ s. The only extraordinary expenses would be the dental expense and the Thibodeau claim.In 2002, the family income was: $153,122.00.

In 2002 the appropriate s.7's are Austin ’ s summer camp May 6, 2002 of $47.00, the two dental costs of January 9, 2002 of $111.71 and September 4, 2002 of $148.86, for a total cost of $307.57. The activities sought to be claimed as extraordinary are: Dance fees, and costumes, music expenses, figure skating costume and fees, summer camp, gymnastics, soccer costs and dental expenses. In my view, the properextraordinary expenses at this income level are the dental cost and the summer camp which act as childcare for Mom ’ s employment during the summer.

The other activities would be expected of children in a home with parents earning an income of that high level Rolls v. Rolls, 2000 ABCA 262 In 2003, the family income was: $234,654.00. In 2003 the appropriate s.7 would be Out and About Edmonton Camp paid on June 10, 2003 of $50.00. The activities sought to be claimed as extraordinary are: Music lessons, choir costs, camp fees, and tae kwon do classes. I would find no extraordinary expenses to the camp fees substituting as childcare in those activities at that level of income in that year.In 2004, the family income was: $194,376.00.

In 2004 the appropriate s.7 is the tennis camp of July 5, 2004 of $80.00. The activities sought to be claimed as extraordinary are: Dance involvements, gymnastics, piano lessons, tennis camp, and tae kwon do. Again, I would find these not to be extraordinary expenses in

this family income level.In 2005, the family income was: $209,069.00The activities sought to be claimed as extraordinary are: The school fees for Victoria School for the Arts, dance clothing, music lessons, a class at the Art Gallery, and Taw kwon do. I would not find any extraordinary expenses in this year.In 2006, the family income was: $265,951.00. In 2006 the appropriate s.7's would be the psychological services on August 25, 2006, September 23, 2006, November 7, 2006 and August 18, 2006 for a total cost of $215.00.

The dentist ’ s service on August 9, 2006 of $154.58, for a total s.7's for the year 2006 of $369.48. The activities sought to be claimed as extraordinary are: Again, the Victoria School fees, dance costs, music lesions, rock climbing, tae kwon do - none of which are extraordinary. Psychological counseling and a dental expense fall under the category of extraordinary expenses.In 2007, the family income was: $326,407.00.

In 2007 I find the appropriate s.7 costs to include the Metro Class Camps including the registration fee on April 17, 2007 of $529.00, the sewing class of $89.00, basketball $59.00, cooking $89.00, volleyball $59.00, photography $89.00, soccer $59.00 for Stephanie. The registration cost on April 17, 2007 for Austin of $728.00, the July 11, 2007 Metro Education fee of $178.00 and the volleyball cost of $59.00, drama of $59.00, math of $89.00, soccer of $59.00 in Metro Education for Austin.

I also find the U of A summer camp cost of May 2, 2007 of $199.00, the summer camp costs of May 2, 2007 and May 13, 2007 of $94.00 and $1,685.00 respectively. Acceptable s.7 costs a sports ’ camp for $398.00 and the Metro Education April 17, 2007 of $1,257.00 fee to be a s.7 for summer camp costs. In addition there was an orthodontic cost of $395.00 and dental costs of $228.72 and $247.56 in that year for a total s.7 cost in that year of $7,909.28. The activities sought to be claimed as extraordinary are: the Victoria School fees which, with this increased income level would not be extraordinary expenses.

There are two claims for dental work which are extraordinary expenses. There are several specialty summer camps which are in essence summer childcare and thus qualify as s.7 expenses. In Dr. Ramsay ’ s evidence she has listed the U of Asummer camp (May 2) twice, as well as the Metro Education Soccer, Basketball, and Volleyball costs. I have eliminated the duplicates.In 2008, the family income was: $369,165.00.

In 2008 the appropriate s.7 costs are volleyball camp of $787.00, summer camps for $855.00 for Stephanie, summer camps of $525.00 and $305.00 which were paid on May 13 and 14, 2008 and orthodontic exam and records and a payment for orthodontics of $1,225.00. The total s.7 expenses allowable for 2008 would be $3,697.00. The activities sought to be claimed as extraordinary are: Increasing amounts of dance costs but consistent with the increased family income available to provide for the increased s.3 child support. The tae kwon do continues, as do the school fees and piano lessons.

The only extraordinary expense this year is the orthodontic exam, records, the payment for orthodontic services, and the summer camps. In 2009, the family income was: $434,154.00.

For 2009 the allowable s.7 expenses would be a prescription for Stephanie on April 8, 2009 of $59.70, Austin ’ s tuition for the Soccer Academy of $2,000.00, three prescriptions for Austin December 22, 2009 $3.49, August 4, 2009 of $59.70, December 22, 2009 of$11.51, Camp Nakamun paid on April 19, 2009 for $590.00, a summer camp cost the NAIT summer program paid on April 20 and April 22, 2009 of $698.00 and $210.00 respectively and the dental cost paid on May 5, 2009 of $195.76 for a total s.7 expense for that year $3,828.16.

The activities sought to be claimed as extraordinary are: Prescription costs and some dental expenses and Austin's Soccer Academy tuition of $2000.00 along with the summer camps would be extraordinary expenses. The other soccer fees associated with his attending that Edmonton school would be covered by s.3 just as the Victoria School fees are covered by s.3. Other than that, with this substantial joint income of the parents, the dance, soccer, piano lessons, and tae kwon do are not extraordinary expenses.In 2010, the family income was: $440,052.00.

Allowable s7 expenses for 2010 would be the cheerleading competition in Hawaii for Stephanie of $1,167.16 plus the accommodation portion of $400.00. Austin ’ s Soccer Academy tuition of $1,976.00 and a summer soccer camp of $40.00. The Metro Education camp on August 25, 2010 of $135.45 and the two dental charges for $24.58 and $80.88 all coming to a total of $3,824.07. The activities sought to be claimed as extraordinary are: dance costs, school fees, soccer fees, baseball fees, all of which are proper s.3 expenses.

The Cheerleading Competition in Hawaii is an extraordinary expense as is Austin's Tuition to the Soccer Academy for this school year along with the summer camp expenses. And there are two dental expenses that are proper extraordinary expenses.In 2011, the family income was: $409,937.00. For 2011 the only s.7 expense would be the tuition for the Soccer Academy of $2,226.00. The activities sought to be claimed as extraordinary are: Soccer and football plus the Soccer Academy tuition. The only one which is extraordinary is the tuition.In 2012, the family income was: $575,923.00.

For the year 2012 up to the pre-Brentwood time where Justice Shelley has made an Order the appropriate s.7 expenses which would be allowable would the two trips to the dentist whichinclude four invoices of $52.76, $58.46, $52.76 and $49.40. For pre- Brentwood expenses of $213.38. The activities sought to be claimed as extraordinary are: The dental costs would be extraordinary expenses. The other costs, including driver training would not be considered extraordinary for a family with children of this age with this combined income.

Justice Shelley has already determined that all costs associated with Brentwood College School are s.7 expenses. [ 66 ] On the miscellaneous years ’ claim, none of the items claimed will be allowed. Those that are identified as dental have no indication as to whether they are or are not related to the children. Further, and the other items are not sufficiently detailed for me to identify them as appropriate s7 expenses's.

In these circumstances, I will not grant the s 7 expenses sought. and accordingly I will not grant the s.7 expenses for them in the circumstances. [ 67 ] Shelley J ’ s order is clear that the costs and expenses associated with Austin's attending Brentwood College School are s7 expenses.

When the monthly statements arrive, they are to be paid by each parent in accordance with each parent's proportionate share, subject to the qualification noted below. [ 68 ] If one parent requests that Brentwood put Austin on a ferry or bus for that parent's sole benefit, that parent will bear the entire sole cost of the itemized expense.

However, aAirfare home shall always be a shared s7 expense, even if, for some reason, Austin spends that time with friends and not his parents. (just to be clear) such that if for some reason Austin spend that time with friends, neither parent is arguing that it should be deducted from their share. [ 69 ] I now turn toOn the issue of the up-coming field trip to Washington, DC, and other such opportunities Austin may might have as a result of his being registered in this special school., Iin my view, the missed time at home is part of the "cost" of this kind of education, an issue that has already been decided by Shelley J. which has already been decided and undertaken.

For Austin to be denied full participation in the opportunities available to him during his time at Brentwood this three year period would be a dreadful waste of his attending such a school, and unfair to him in the circumstances.

[ 70 ] On the issue of Stephanie's technical residence, I am not changing Shelley J's order. From the evidence of Dr. Ramsay, I believe that Stephanie is not sure of what she wants to do, or what she will do, now or in the immediate or near future. She could easily decide to move to Mr. Mackintosh ’ s and stay there for the next several months. Dr. Ramsay testified that she is supportive of Stephanie doing what she wants to do and that she supports her in making her own decisions. D. Costs [ 71 ] This matter went to trial because of Dr. Ramsay ’ s contention that Mr.

Mackintosh ’ s Guidelines income should include his proportionate share of the retained earnings of Fire Protection Inc. I have not agreed with that argument. Nor have I awarded Dr. Ramsay all of the s 7 expenses which she claimed. In the circumstances, Mr. Mackintosh is entitled to his costs of the trial on Column 2. Heard on the 8, 9, 10 and 11 th days of January, 2013. Dated at the City of Edmonton, Alberta this 4 th day of February, 2013. L.D. Acton J.C.Q.B.A. Appearances: Laura Bruyer for the Plaintiff (Respondent) Brooks Topp for the Defendant (Applicant)