Jones v Jones, 2014 ABQB 669

Court of Queen ’ s Bench of Alberta Citation: Jones v Jones, 2014 ABQB 669 Date: 20141104 Docket: 4801 112742 Registry: Calgary Between: Elizabeth Ann Jones, now known as Elizabeth Ann Moore Applicant - and - Robert Melvin Jones Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice B.A. Millar _______________________________________________________ Introduction [ 1 ] The Applicant, Ms. Moore, seeks retroactive child support, ongoing child support, and payment of ongoing

section 7 expenses from the Respondent, her former husband Mr. Jones. [ 2 ] The evidence on this application includes affidavits and their associated exhibits sworn by each party, a reply affidavit sworn by Ms. Moore, and a transcript of Ms. Moore’s questioning on her affidavit. Factual Background [ 3 ] The parties married in May 1988, separated in August 1999 and divorced in August 2002. There is one child of the marriage, Charlotte, born in 1996. She is now 18 years old. The parties entered into a Custody and Access Agreement in July 2000 that provided for shared parenting. The shared parenting arrangement ended sometime between September and December 2012 (the exact end date is

in dispute) when Charlotte was 16 years old. There is no dispute that from January 2013 until August 2014 Charlotte resided with her mother. [ 4 ] In February 2002, the parties entered into a Support and Property Agreement (the “Support Agreement”). The Support Agreement provided for child support based on 75% of the difference between the Table amounts calculated in accordance with the Guidelines that each party would owe the other if that party had primary care of Charlotte. The initial child support payment was for $421.50/month from Mr. Jones to Ms. Moore based on a presumed income of $170,000 for Mr.

Jones and $95,000 for Ms. Moore. The Support Agreement provided that the parties would share

section 7 expenses in proportion to their Guidelines incomes, 64% for Mr. Jones and 46% for Ms. Moore. [ 5 ] The Divorce Judgment and Corollary Relief Order dated August 14, 2002 reiterated the terms of the Support Agreement. Both documents require the parties to exchange financial information annually and retroactively adjust support accordingly.

For example, clause 5 of the Divorce Judgment and Corollary Relief Order states: The Plaintiff and Defendant shall exchange financial information prior to June 1 st , 2003 and each subsequent year and at that time shall make any adjustments necessary to child support paid for the prior year, retroactively, to reflect each party’s actual income. [Emphasis in original.] [ 6 ] Mr. Jones lost his job as Vice President Business Development at Tidal Energy Marketing in 2002. He received a significant severance payment making his income for 2002 approximately $300,000.

He was unable to find a permanent position and began consulting, but he had limited success in building a practice. As a result, his income dropped significantly in 2003 (to $45,045) such that Ms. Moore would have owed child support pursuant to the Support Agreement. [ 7 ] In November 2004, the parties entered into an informal agreement (the “2004 Agreement”) modifying their child support obligations. The exact details surrounding the creation of this agreement are unclear; however, the record shows the parties agreed there would be no reconciliation of child support payments for 2003 and 2004.

Going forward, the parties agreed there would be no more

section 3 monthly payments; they would share

section 7 expenses equally, except for the future cost of university; Mr. Jones would pay for Charlotte’s tuition and books for up to four years of university; and Ms. Moore solely would claim the equivalent to spouse deduction (instead of sharing the benefit of the credit with Mr. Jones). [ 8 ] The following email from Ms. Moore to Mr. Jones dated November 24, 2004 and titled “Re Child Support,

Schedule Changes et al” contains the essential terms of the 2004 Agreement: “My thoughts on child support are as follows: Effective upon agreement, there would no longer be any transfer of child support payments. As you are aware, the child support payment since January 2003 is ~ $20.00 per month. There would be no reconciliation of support payments, either for 2003 or 2004 to date. We would continue to share

Section 7 expenses 50/50 As you are aware, your 50% contribution to the after school program is on an after tax basis. I propose that is [sic] continue and all

Section 7 expenses that provide tax advantages be paid by me and reimbursed by you on an after tax basis. I propose that you agree to pay for Charlotte’s tuition and books for four years of university. The cost estimate of this is as follows: Current costs of tuition and books is approximately $7000 per year. During the time period that Charlotte will attend university the cost would rise to approximately $10,000 per year (assumes an annual inflation factor of 3% and university commencing in 2014).

I am not sure if contributions to RESP’s would be sufficient to cover these costs but would will [sic] leave it up to you as to how you would finance university costs. We would no longer split tax deductions for equivalent to spouse, in other words, I would be entitled to the entire deduction.” [ 9 ] Although the email message was included in Mr. Jones’ affidavit, Ms. Moore acknowledged in questioning that the message came from her and that it reflected the deal they struck in 2004: Q So you do recall the email that is in Bob’s affidavit, and you do recall an agreement that you were going to split

Section 7 expenses 50/50? A I wouldn’t describe it as an agreement, a formal agreement, an executed agreement, a court order. Q I’m not asking you to give me a legal opinion. Between the two of you, the deal always was we’re going to reconcile back and forth to do a 50/50 split; is that not correct? A That’s correct. Q And at any time prior to initiating these proceedings, did you ever go back to Bob and say, Well, hang on, I don’t think that’s fair? A I did not. Actually maybe I’ll clarify that. What period are you talking about?

Q After 2004. A So I don’t recall going back and asking for a re-look after 2004. [ 10 ] Even though the Support Agreement mandated that any amendments be in writing, signed by the parties, with independent legal advice and witnessed by the parties’ lawyers, the parties followed the terms of the 2004 Agreement until December 2012 when Ms. Moore filed her Notice to Disclose. [ 11 ] In accordance with the 2004 Agreement, neither party provided financial disclosure to the other nor did either party seek to revisit child support during this eight year period. They shared

section 7 expenses on a 50/50 basis and facilitated the reconciliation of these expenses through the use of a joint bank account. Ms. Moore claimed sole benefit of the equivalent-to-spouse amount on her income tax return. Mr. Jones saved $45,000 in an RESP for Charlotte. Although not related to the 2004 Agreement, Mr. Jones also put funds aside in a trust account for Charlotte’s benefit. The value of the trust account in January 2014 was $175,000. According to Mr. Jones, its value increased to approximately $208,000 by August 2014. [ 12 ] On December 19, 2012 Ms.

Moore filed a Notice to Disclose and the parties exchanged financial information. The disclosed information revealed that both parties’ incomes have increased substantially from the incomes of $170,000 and $95,000 presumed in the Support Agreement. Mr. Jones’ and Ms. Moore’s respective Guidelines incomes for 2002 through 2013 are as follows: Mr. Jones Ms.

Moore 2002 $232,461 $146,410 2003 $45,045 $136,211 2004 $124,549 $127,366 2005 $293,539 $162,164 2006 $435,666 $162,120 2007 $386,099 $222,895 2008 $507,628 $216,800 2009 $553,066 $219,101 2010 $670,714 $268,715 2011 $809,207 $210,887 2012 $974,899 $274,699 2013 $1,178,173 $292,709 [ 13 ] Having received this disclosure, Ms. Moore now brings an application for the following relief: • An order of retroactive child support in the amount of $236,622 payable by Mr.

Jones to her for the period of July 1, 2004 up to and including December 31, 2012, pursuant to the terms of the Support Agreement entered into between the parties on February 21, 2002, and the terms of the Divorce Judgement granted on August 14, 2002. • An order for ongoing child support payable to her by Mr. Jones from January 1, 2014 in the full Guidelines amount based on Mr. Jones’ Guidelines income. • An order for ongoing s 7 expenses, being post-secondary tuition, fees and books, to be shared in proportion to the parties’ Guidelines incomes. [ 14 ] Mr.

Jones acknowledges that Charlotte has been living in her mother’s primary care since December 2012. He has paid $115,352 of retroactive support for 2013 based on an income of $1,178,173 (after deducting for amounts already paid in 2013). Ms. Moore stated in her affidavit that she is prepared to accept this sum as the current quantum of retroactive support for 2013. Position of the parties [ 15 ] Ms. Moore relies heavily upon the Alberta Court of Appeal’s recent decision in Goulding v Keck , 2014 ABCA 138 , which applies DBS v SRG , 2006 SCC 37 . She argues the Support Agreement required Mr.

Jones to disclose his significant increase in income and pay child support accordingly. She submits his failure to do so is blameworthy conduct and has deprived Charlotte of the benefit of that support. She quotes from Goulding at para 25 in which the Court stated: “...where parents have set out their respective child support obligations by contract, that agreement also governs the relationship between the parties and the analysis in DBS must be viewed through that lens.” [ 16 ] Mr. Jones argues that the parties governed themselves by the terms of the 2004 Agreement.

Section 3 child support payments and annual financial disclosure stopped, but the parties shared all

section 7 expenses on a 50/50 basis, Mr. Jones contributed $45,000 towards an RESP, and Ms. Moore retained sole benefit of the equivalent to spouse tax credit. [ 17 ] Mr. Jones distinguishes Goulding on the basis it did not consider a shared parenting situation with incomes over $150,000. He submits the facts herein are more akin to Archibald v Archibald , 2007 ABQB 486 , in which Rowbotham J refused to order retroactive support prior to the date of formal notice. The parties had a shared parenting arrangement and the father’s income was over $150,000.

The parties did not exchange financial disclosure, although the mother was aware that the father’s income had increased. There was no evidence to support a finding that the children were deprived of support since separation and the judge found at para 62 that “due to the shared parenting regime, they were well provided for in both homes. They were able to participate in any activity they chose.” Accordingly, Rowbotham J concluded at para 63 that she could not “find any basis upon which to order child support earlier than the date of formal notice...”

Analysis Retroactive child support [ 18 ] In DBS , the Supreme Court of Canada set out a two stage process to deal with retroactive support. First, the Court must consider four factors to determine if the applicant has established entitlement to retroactive support: 1) is there a reasonable excuse for why support was not sought earlier; 2) what was the conduct of the payor parent and was it blameworthy; 3) what are the past and present circumstances of the child; and 4) will there be hardship associated with a retroactive award.

By adopting a holistic fact-based analysis, DBS aims to provide fairness to all parties: Goulding at para 24 . [ 19 ] If entitlement to retroactive support is established, then the court must determine the appropriate retroactive date and the quantum of child support payable in accordance with the Guidelines . In DBS , the Supreme Court stated at para 5 that the date of effective notice is often the most appropriate date from which retroactive payments should commence.

In some circumstances, particularly where there has been blameworthy conduct, the retroactive date can pre-date the date of effective notice, although “it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent”: DBS at para 123 . [ 20 ] Ms. Moore filed her Notice to Disclose in December 2012. This is the date of effective notice. Mr. Jones acknowledges that the parenting arrangement changed by this time and concedes that he owes child support from January 2013 onwards. As mentioned above, Mr.

Jones has paid retroactive support for 2013 in the amount of $115,352 based on an income of $1,178,173. I find this payment has satisfied his obligation for retroactive support for 2013. [ 21 ] The question before me is whether Ms. Moore has established entitlement to retroactive support prior to the date of effective notice for the eight year period from 2004 to 2012.

a) Is there a reasonable excuse for why support was not sought earlier? [ 22 ] Child support in Canada is an application-based regime and the responsibility of ensuring the proper amount of support is being paid does not lie uniquely with the payor parent: DBS at para 56 . [ 23 ] Ms. Moore filed a Notice to Disclose in December 2012 when it was clear the shared parenting arrangement had ended. Now she seeks retroactive child support for an eight year period dating back to 2004. She argues she did not know Mr.

Jones’ income had increased and places the blame on him for failing to disclose his income throughout this time. [ 24 ] Ms. Moore claims that she was intimidated by Mr. Jones’ controlling and emotionally abusive behaviour during the marriage and that she wanted to keep the peace after the separation. Ms. Moore also states she was worried about the emotional impact on Charlotte if she asked for disclosure and increased child support while the parties shared parenting. [ 25 ] Mr. Jones denies any negative interactions with Ms.

Moore and the record shows the parties dealt with each other quite well in relation to sharing expenses and managing their joint bank account over the years. A variety of emails exhibited in Mr. Jones’ affidavit show very civil communications related to adjusting parenting time, setting up extra-curricular activities, joint decision making in relation to health and dental care, etc. [ 26 ] The evidence also shows that Ms. Moore sought detailed financial disclosure when Mr. Jones lost his job in 2002.

She immediately took action in early 2003, obtained the advice of legal counsel and requested disclosure related to his consulting business. While Ms. Moore did not proceed with a court application or sign an agreement with lawyers at that time, she subsequently negotiated the 2004 Agreement directly with Mr. Jones. [ 27 ] At the outset, Ms. Moore benefitted from the new arrangement: she did not pay child support to Mr. Jones for 2003 and 2004 when his income was lower than hers, she retained sole benefit of the tax deductions for Charlotte, and Mr.

Jones assumed sole responsibility for Charlotte’s university tuition and books. [ 28 ] Ms. Moore did not seek disclosure from Mr. Jones for eight years, nor did she disclose the increases in her income. This behaviour was in full compliance with the 2004 Agreement between the parties. She has provided no reasonable excuse for the delay in seeking a change to how the parties dealt with child support.

b) What was the conduct of the payor parent and was it blameworthy? [ 29 ] Ms. Moore argues that Mr. Jones accepted two positive obligations in the Support Agreement: to disclose his income every year and to pay support commensurate with his income in accordance with the Guidelines . She relies on Goulding for the proposition that a failure to disclose a significant increase in the payor’s income may be blameworthy conduct. Yet Ms. Moore had these same obligations under the Support Agreement.

In a shared custody situation in which child support is calculated based on 75% of the set off amount, both parties are payor parents with disclosure obligations, even if one parent inevitably becomes the net payor. [ 30 ] Ms. Moore argues that Mr. Jones only told her of his changed circumstances when it was to his benefit to do so, such as when he lost his job in 2002, but that he failed to disclose anything when his circumstances changed for the better and his income increased significantly. Again, I note that Ms.

Moore’s income more than doubled in the period from 2004 to 2012 and that she provided no disclosure in this time period. What is good for the goose must be good for the gander. [ 31 ] If failure to disclose financial information in these circumstances is blameworthy conduct, then both parties engaged in such conduct. Both parties are payors pursuant to their shared parenting arrangement and both parties had substantial increases in income that

they did not disclose. Neither party knew if he or she was the higher income earner or if he or she might be responsible for a net support payment. Mr. Jones has not tried to hide his income. He simply did not disclose it, just as Ms. Moore did not disclose hers. The parties’ mutual failure to disclose was in accordance with the 2004 Agreement. [ 32 ] Furthermore, Mr. Jones has not favoured his interests over those of his child. He has provided for her in his home under the shared parenting regime. He has paid 50% of her

section 7 expenses and he has set aside funds for her post-secondary education in an RESP. He has also set aside a trust fund presently valued at more than $200,000. [ 33 ] This is not a case like Schick v Schick , 2008 ABCA 196 in which the father intentionally and repeatedly misled the mother as to his income. Also, unlike Schick , neither Ms. Moore nor Charlotte has experienced financial difficulty or pressures that have negatively affected their standard of living. Charlotte has benefitted from both parents’ increased incomes and has experienced a high standard of living in both homes.

c) What are the past and present circumstances of the child? [ 34 ] Ms. Moore argues that a loss of benefits to Charlotte must be presumed from Mr. Jones’ failure to pay the Guidelines amount of support. She relies on Goulding at para 52 in which the Court stated: The “needs” of the child must be approached through a more specific inquiry: did the child receive the same benefits and support as if he or she had been supported by both parents?

To answer this question, a loss of benefits must be presumed where the payor parent has failed to pay the amount of support required under the Guidelines over a prolonged period of time. [ 35 ] The Court of Appeal went on to say, however, that “it will be open to the court to consider whether the child did benefit from some form of financial support over and above that which the recipient parent could provide alone, either from the payor parent or through some other means.” Furthermore, in DBS the Supreme Court noted the argument for retroactive child support is less convincing “where the child already enjoyed all the advantages (s)he would have received had both parents been supporting him/her”: at para 113. [ 36 ] I find that as a result of the shared parenting arrangement Charlotte has received the support of both parents and has benefitted from the increase in each of their incomes.

Charlotte has enjoyed and continues to enjoy a high standard of living. She attended Rundle Academy private school, at an annual cost ranging from $8,000 to $12,000, and she participated in extracurricular activities, including diving and rock climbing. The parties each paid for 50% of these expenses. [ 37 ] This is not a case like Conway v Conway , 2014 ABQB 508 in which Erb J found at para 39 that the children did not receive the same benefits and support in their respective parents’ households.

She held they would have benefitted from an increased availability of funds in the father’s household to contribute to his ability to better support them there. There is no evidence to suggest that either Ms. Moore or Charlotte have suffered any hardship as a result of the parties’ financial arrangements since separation and I decline Ms. Moore’s suggestion that I presume such loss. [ 38 ] Nor do I find that Charlotte’s present circumstances suggest the need for retroactive support. She currently attends SAIT and lives in private rental accommodation. There is $45,000 in an RESP, saved by Mr.

Jones, for her education. She is also the beneficiary of a $200,000 trust fund established by Mr. Jones.

d) Will there be hardship associated with a retroactive award? [ 39 ] Hardship is not a particularly relevant consideration on the facts of this case. Mr. Jones submits he has governed himself and arranged his financial affairs in reliance on the 2004 Agreement. Nonetheless, it is clear he has the means to pay retroactive support if awarded.

e) Conclusion [ 40 ] Although the Support Agreement provided for annual disclosure of financial information, neither party complied. Furthermore, the parties made a subsequent agreement, the 2004 Agreement, in which they agreed to forgo ongoing financial disclosure. They abided by the terms of this second agreement for eight years.

Charlotte benefitted from the support of both parents under the shared parenting regime. [ 41 ] In DBS , the Supreme Court at para 6 encouraged courts to be open to ordering retroactive support where fairness to children dictates it, but warned that courts also should be mindful of the certainty that fairness to payor parents demands.

Later, at para 96, the court noted that “unlike prospective awards, retroactive awards can impair the delicate balance between certainty and flexibility.” The court stated fairness demands that obligations change to meet changing circumstances, yet “when obligations appear to be settled, fairness also demands that they not be gratuitously disrupted”: DBS at para 96 . I find the parties have satisfied the obligations agreed upon in the 2004 Agreement. [ 42 ] I draw support for my conclusion from Duckett v Duckett , 2013 ABQB 635 in which Poelman J discussed the application of

section 15.1 of the Divorce Act in the context of an application for retroactive support. He explained that

section 15.1(3) states that presumptively child support will be ordered in accordance with the Guidelines , however, s 15.1(5) provides that a different amount may be awarded “if the court is satisfied (

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

b) that the application of the applicable guidelines would result in an amount of child support that is inequitable given those special provisions.” [ 43 ] Poelman J opted to give some deference to “the considered mutual decision of the parents”, since they had implemented the terms of an agreement without any evidence of disadvantage to their children. He found at para 18 that it would be inequitable to impose the Guidelines retroactively in place of the parties’ agreement:

To undo this agreement more than two years later and apply the Guidelines as though it did not exist would, in my view, be inequitable within the meaning of

section 15.1(5)(b). [ 44 ] The same is true here. The parties abided by the 2004 agreement for eight years and Charlotte was well provided for in both homes throughout this time. Although the set-off payment provided for in the Support Agreement would have resulted in a net payment to Ms. Moore, it would be inequitable to apply it retroactively at this stage. Ms. Moore has not established entitlement to retroactive support for the period between 2004 and 2012. Ongoing child support [ 45 ] This leaves the question of prospective child support from January 2014 onwards. Section 3(2) of the Guidelines provides that child support for children the age of majority or over is either: (

a) the amount determined by applying these Guidelines as if the child were under the age of majority; or (

b) if the court considers that approach to be inappropriate, the amount that it considers appropriate, having regard to the condition, means, needs and other circumstances of the child and the financial ability of each spouse to contribute to the support of the child. [ 46 ] Ms. Moore seeks ongoing child support based on the Tables while Charlotte lives with her and attends post-secondary education. She proposes the parties share

section 7 expenses related to tuition and books proportionate to their incomes. Charlotte no longer lives in her mother’s home, so this proposal is somewhat moot. [ 47 ] For the period of January to August 2014, Mr. Jones has paid $2,833 per month support based on his base salary. His total income for 2014 is not yet clear, so he proposes paying $8,953 per month based on an income of $1,000,000 for the eight months from January to August, with no further retroactive support being payable. Going forward, Mr.

Jones proposes that he pay Charlotte’s full tuition and book expenses for up to four years of post-secondary education and that the parties share her other living expenses such as rent, utilities and food proportionate to their incomes. [ 48 ] I accept Mr. Jones’ proposals. He shall pay child support of $8,593 per month for the eight months from January to August 2014 based on an estimated income of $1 million; there will be no retroactive adjustment of this amount to reflect his actual income. Going forward, Mr.

Jones shall pay Charlotte’s full tuition and book expenses, in keeping with the parties’ 2004 Agreement, and the parties shall share her other living expenses proportionate to their incomes. Costs [ 49 ] Mr. Jones has been largely successful on this application. He is entitled to his costs. Heard on the 18 th day of September, 2014. Dated at the City of Calgary, Alberta this 4 th day of November, 2014. B.A. Millar J.C.Q.B.A. Appearances: Gillian A. Sinclair Dunphy Best Blocksom LLP for the Applicant

Barbara Widdowson, QC Widdowson Kachur Ostwald Menzies LLP for the Respondent