Bazian v Bazian, 2014 ABQB 694

Court of Queen ’ s Bench of Alberta Citation: Bazian v Bazian, 2014 ABQB 694 Date: 20141223 Docket: 4803 150240 Registry: Edmonton Between: Tanya Theresa Bazian Plaintiff/Applicant - and - Lance Everett David Bazian Defendant/Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Donald Lee _______________________________________________________ Background [ 1 ] This is an application by Ms. Bazian (the “Mother”) seeking retroactive and ongoing

Section 3 child support, and retroactive and ongoing

Section 7, expenses from the Respondent Lance Bazian (the “Father”). [ 2 ] The parties were married in July 2004, separated in January 2009, and the Divorce Judgment/Corollary Relief Order (without oral evidence) was granted by consent in July 2010. There are presently two children of the marriage ages six and eight years

old. [ 3 ] Both parties acknowledge that there has been a significant change in circumstance sufficient to warrant a variation of the Divorce Judgment in this matter given the increase and changes in the parties’ guideline income. [ 4 ] The Divorce Judgment granted the Mother sole custody and primary residency of the children, and set the parties annual guideline incomes at $79,000.00 each. The Father was ordered to pay monthly child support of $1,137.00 plus an additional $675.00 per month for his share of the

Section 7 expenses. [ 5 ] The Father moved to Louisiana in the spring of 2013 and he currently resides there. The Mother resides in Edmonton with the children and she has since remarried, giving birth to another child in July 2014. [ 6 ] The Mother’s application and her Notice to Disclose were both filed in February 2014, and the Father was served in March 2014. Issues (

a) What is each parties Guideline Income; (

b) What is the appropriate amount of ongoing and retroactive

Section 3 child support; (

c) What is the appropriate amount of ongoing and retroactive

Section 7 support payable; (

d) What is the appropriate date of retroactivity. Annual Guideline Incomes [ 7 ] It is not disputed that in 2011 the Father’s line 150 was $111,836.00, and 2011 the Mother’s guideline income was $104,537.00. It is also not in dispute that in 2012 the Father’s line 150 was $128,286.00 and in 2012 the Mother’s guideline income was $109,151.00. [ 8 ] In 2013 the Father moved to Louisiana and received income from employment in both Canada and the United States. He has not provided his Income Tax Return for 2013, but did provide a T4 showing 2013 employment income in Canada of $31,290.74.

The Father has also provided a W-2 form, which is the United States’ equivalent to a T4 form, showing 2013 income of $105,405.70. The total income for the Father then from Canada and the United States according to the T4 and the W-2 is $136,696.44. In 2013 the Mother had T4 income from her only employer of $92,822.22 [ 9 ] For 2014 the Father has provided a paystub from his American employer’s payroll for the pay period ending March 29, 2014.

At that time the Father had a total gross year-to-date income of just under $37,000.00 which extrapolated over the course of the remaining nine months would equate to an annual income of $147,781.84 Subsequently the Father produced an updated June 21, 2014 paystub showing year-to-date income of just under $60,000.00, which extrapolated for the year is approximately $127,000.00. The average of these two extrapolated figures is approximately $137,000.00. [ 10 ] The Mother’s payroll income ending March 21, 2014 showed a year-to-date salary of just over $25,000.00, or the equivalent of $100,000.00 per year.

She indicated in her Supplemental Affidavit that she expects her 2014 income to include commissions for a total of $112,761.00. [ 11 ] To date the Father has been paying monthly

Section 3 child support of $1,137.00 pursuant to the Divorce Judgment, although these payment began to be made sporadically starting in 2013. The Mother deposes that on multiple occasions she asked the Father for updated annual income information but she received nothing until this application was filed in February 2014. The Father did then respond to the Mother’s request to voluntarily change his

Section 7 payments based on child care costs changes, but he did not vary his

Section 3 support, nor did he provide financial disclosure. [ 12 ] The Mother’s position is that the Father’s gross income for 2014 for the first three months of approximately $37,000.00 should result in a finding that his 2014 annual income will be approximately $148,000.00. This would result in

Section 3 child support payable of $2,069.00 monthly commencing June 1, 2014. [ 13 ] The Father’s position is that he relocated from Alberta to Louisiana in 2013, and that his employer paid moving expenses to various third parties, therefore his W-2 includes income that was no actually earned or received by him. The Father has provided the Court with a letter from his employer dated August 26, 2014 that says that relocation expenses made to third party vendor are taxable under American law, and that the these relocation expenses totalled $41,957.99.

Although this amount was included in the Father’s gross income by his employer, he in fact did not receive or earn this as income. [ 14 ] The Father submits that

Section 20 of the Federal Child Support Guidelines (“FCSG”) sets out that where a spouse is a non- resident of Canada, the spouses’ income is determined as though the spouse is a residence of Canada. Under Canadian Tax Law, it is submitted that moving expenses paid by an employer are not a taxable benefit, so that accordingly the Father’s reported income for 2013 should be reduced by $41,957.99.

After deducting this amount, it is submitted that the Father’s Guideline income for 2013 would be $93,887.00. [ 15 ] The Mother says the Father’s 2013 annual income should be approximately $137,000.00, as reported, without any deductions being allowed because Section 19(2) of the FCSG indicate as follows:

19(2) For the purpose of paragraph (1)( g ), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act . Conclusion – Annual Guideline Incomes for 2011 to 2014 of the Parties [ 16 ] I have determined the annual guideline income for the parties for the previous three years 2011 to 2013 to be as follows: 2011 [ 17 ] In 2011 the Father’s Line 150 Income was $111,836.00. In 2011 the Mother had a Line 150 Income of $104,537.00.

The parties agree that the arrears for 2011 are $3,359.00. 2012 [ 18 ] In 2012 the Father’s Line 150 Income was $128,289.00. In 2012 the Mother had a Line 150 Income of $109,151.00. The parties agree that the arrears for 2012 are $6,425.00. 2013 [ 19 ] In 2013, I have determined that the Father’s income is $94,000.00. I agree with the Father’s argument that

Section 20 of the FCSG determines the Husband’s income as if he is resident in Canada, which results in the deduction of his moving expenses of approximately $42,000.00 from his 2013 income of $136,696.00 for a total of $94,000.00. The Mother’s argument with respect to Section 19(2) of the FCSG has generally been applied to shareholders of corporations, and the like, not U.S. – Canada employment situations.

In 2013 the Mother had T4 Income from her only employer of $92,822.22. 2014 [ 20 ] The Father has provided a paystub from his employer, Baker Hughes, from their USA payroll for the pay period ending March 29, 2014. At that time he had total gross year to date income of $36,945.46. Extrapolated over the course of 12 months, this equates to annual income of $147,781.84. [ 21 ] At paragraph 11 of his Unsworn Answers, the Father indicates he has worked in both the United States and Canada.

At paragraph 13 of the Unsworn Answers the Father indicates he has year to date income as at July 21, 2014 of $59,698.87 and he provides a paystub for the period ending June 21, 2014. This is unsworn evidence not yet before the court, and is from his USA payroll. It is not clear what income the Father had in Canada. [ 22 ] The Mother submits that the Court should only be relying on sworn evidence, accordingly, $147,781.00 is the appropriate income to use in calculation of the appropriate amount of child support payable for 2014. Alternatively, a three year average should be used pursuant to

Section 17 of the Federal Child Support Guidelines - $137,603.00. [ 23 ] The Mother has provided a paystub for the period ending March 31, 2014. It shows year to date salary of $25,005.50 which is equivalent to approximately $100,000.00 annually. She also had commission income of $12,761.90.

She indicates at paragraph 7 of her Supplemental Affidavit that she does not expect to receive any further commission income in 2014, and that she expects her 2014 income to be $112,761.00. [ 24 ] As for the Father’s 2014 income, the move to Louisiana has not necessarily led to an increase in his income given that it has been fluctuating on an almost monthly basis. Accordingly, simply extrapolating an amount for his income based on his March 31 st or June 21 st 2014 paystubs is not necessarily accurate or fair.

The Father submits that his 2014 guideline income should be the same as his 2013 guideline income $93,887.00, or the average of the previous three year’s income which would be $111,336.00. The Father agrees that the 2014 guideline income can be reviewed when the 2014 earnings year has been completed. [ 25 ] I conclude that ongoing

Section 3 child support will be payable on the basis of the Father’s estimated 2014 income of $111,336.00, which figure is arrived at by taking the average of his previous three years income pursuant to Section 17(1) of the FCSG as I calculate it, with moving expenses deducted. The Mother’s guideline income on an ongoing basis for 2014 is estimated to be pursuant to her Supplemental Affidavit $112,761.00. For purposes of ongoing

Section 7 expenses because these two figures are very close to being equal, the parties will share

Section 7 expenses on a go forward basis equally. The ongoing child support payments based on these guideline incomes will commence July 1, 2014 in accordance with the Child Support Guidelines. [ 26 ] Additionally paragraphs 17, 18 and 22 of Lavergne v Lavergne 2007 ABCA 169 are applicable here, and they read as follows: 17 Looking at the words of the Guidelines in context indicates that in most circumstances, the payor's current income is to be used to determine the amount of child support. The Guidelines do not state that the past year's income is the basis for calculating support.

Section 16 could have, but does not, define annual income as income stated on the previous year's income tax return.

Section 16 should be read together with s. 2(3) of the Guidelines which provides: Where, for the purposes of these Guidelines, any amount is determined on the basis of specified information, the most current

information must be used . [Emphasis added] 18 Reading s. 16 with s. 2(3) directs that for the Guidelines , the most current information about those sources must be used. A court following this directive would end up with an estimate of the payor's current annual income. ... 22 The appellant is correct that the Guidelines strive to achieve a simple and certain means of calculating income to determine child support.

But he overlooks the ultimate objective, fairness, in his proposal that past year's income, as reflected by line 150 of the payor's income tax return, determine the level of child support for the following year. That approach will often sacrifice fairness for efficiency and certainty.

The child is entitled to be supported according to the payor's current income, if ascertainable, and if not, by a reasonably accurate estimate of the payor's current income with an adjustment at year's end once the actual income is known. [ 27 ] In accordance with Lavergne , a child is entitled to support according to the payor’s current income if ascertainable, and if not, by a reasonable estimate of the payor’s current income with an adjustment at year end once the actual income is known.

Therefore given the significant fluctuations in the Father’s income currently, a provision will be added to my Court Order that the child support amount paid each year will be adjusted once tax returns are exchanged on or before June 30 th of the following year, and further that a retroactive adjustment will be made, without the Mother having to come to Court. This is particularly important in this case because the Mother believes that the Alberta MEP recalculation program does not apply since the Father resides outside the jurisdiction.

Retroactive Child Support [ 28 ] The Supreme Court of Canada in D.B.S. v S.R.G. , 2006 SCC 37 determined that it is appropriate to award retroactive child support where a court order is in place and there has been an increase to a payor parent’s income that is not reflected by an increase in the amount of child support paid. [ 29 ] The Mother submits that retroactive child support should begin as of January 2011.

The Father responds that any retroactive child support should only be payable from the time he received effective notice of the Mother’s application which is submitted to be August 2013. [ 30 ] The Father argues that he was unaware of the relation between the amount of child support payable, and any increase as to his income.

I conclude that this submission is difficult to accept given that there were Consent Variation Orders entered into which clearly represented a change in the amount of child support payable as the Father’s income increased. [ 31 ] Furthermore the Father goes onto argue that because he had no legal representation in the divorce proceedings, he should not be found responsible for not increasing his child support payments as his income increased, since he had no knowledge or legal advice that this should occur.

However I note in this regard the Father also settled a law suit regarding a motor vehicle accident around June 2009, and the Father had engaged the offices of his current counsel to represent him with respect to the motor vehicle law suit.

In March 18, 2010 in a Consent Variation Order, entered into almost three years after the initial Consent Divorce Judgment and Corollary Relief Order was also witnessed by, and the Affidavit of Execution commissioned by, employees of the law office the Father’s current legal counsel. [ 32 ] I conclude that if the Father did not receive any legal advice with respect to his child support obligations, it was certainly not because he did not have the opportunity to find out. [ 33 ] A recent Court of Appeal decision in this Province Goulding v Keck 2014 ABCA 138 considered the issue of retroactive child support and interpreted the Supreme Court of Canada’s decision in D.B.S. in considerable detail. [ 34 ] Our Court of Appeal in Goulding concludes that D.B.S. does not stand for the following propositions at paragraph 22: 1. the terms of an agreement can be overlooked; there must be blame worthy conduct toward retroactive child support; 2. the recipient must put forward evidence of a significant financial need of the child(ren) before a retroactive award is granted; 3. nor the payor can avoid a retroactive award by simply asserting hardship without providing evidence of it. [ 35 ] The Court of Appeal in Goulding then went onto consider the four factors addressed in D.B.S. , as follows: 1. “reasonable delay”; 2. “blameworthy conduct” is described as follows at paragraph 43 and 46: 43 "Blameworthy conduct" is a legal concept created and defined in DBS .

It is a term of art. In DBS, the court defined blameworthy conduct expansively to include "anything that privileges the payor parent's own interests over his/her children's right to an appropriate amount of support" (at para 106). Once the payor parent engages in such conduct, there can be no suggestion that he or she thought that his or her obligations were being met over the relevant period ( DBS at para 124) ... 46 The respondent's conduct, whether intentional or not, was in breach of his obligations under the Agreement and was blameworthy. Forgetting is not a defence in the law of contracts.

Moreover, even an honest and blameless error on the part of the payor does not

absolve him or her of responsibility for paying the support to which the child has been entitled: Burchill v. Roberts at para 31, citing Tedham v. Tedham , 2003 BCCA 600 , 20 BCLR (4th) 56, leave to appeal to SCC dismissed, [2004] SCCA No. 4, referred to with approval in DBS at para 99. 3. “circumstances of the child” as described in paragraph 50 to 53: 50 The circumstances of a child and the issue of "need" deserve careful attention under the DBS analysis. The child is entitled to a standard of living that he or she would have enjoyed while his or her parents were together ( DBS at para 111).

With this key principle in mind , DBS says that the child's circumstances could be considered as one factor in the court's exercise of discretion in awarding retroactive support (at para 112). 51 In considering this, DBS does not impose an evidentiary burden on the recipient parent to prove "significant need" on the part of the child in order to succeed in an application for retroactive support. A payor parent cannot avoid a retroactive award by arguing that, despite his or her past default, the recipient parent was able to sufficiently care for the child on his or her own ( Swiderski v.

Dusseault, 2009 BCCA 461 , 98 BCLR (4th) 40 at para 42 ). 52 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 ( Burchill v. Roberts at para 49). The payor parent is not entitled to choose the form or means of support given to his or her children ( Swiderski v. Dusseault at para 39).

However, 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. This consideration, however, is not determinative. 53 By requiring evidence of the child's "significant need" from the appellant, the chambers judge erred. Even if it could be said that the child's needs were met in a basic sense, this fact alone is insufficient reason to deny retroactive support.

There was no evidence here which suggested that the child received the same level of financial benefits and support, as required under the Guidelines, as if she had been supported by both of her parents. To the contrary, given the respondent's prolonged and substantial failure to provide support commensurate with his income under the Guidelines, need on the part of his child is presumed. 4. “Hardship” as described in paragraph 57 and 58: 57 Hardship, however, is not an abstract or impressionistic concept to be asserted by a payor in an effort to avoid a retroactive award.

To weigh against granting retroactive child support, the payor parent must establish real facts from which a reasonable finding of serious hardship could be made. A bald or vague assertion of hardship is not sufficient. The obligation to pay support at the Guidelines amount for a prior period is not a hardship ( Greene at para 87). The payor does not suffer hardship by having to pay money which he or she may otherwise owe. 58 Even where hardship is established, courts have broad discretion to mitigate hardship to the payor through a structured payment plan.

Indeed, statutory regimes provide judges with discretion to structure child support awards as a lump sum, a series of periodic payments, or a combination of the two: see, e.g.,

section 11 of the Guidelines . Application of the Law from Goulding and D.B.S. to the Present Application Delay [ 36 ] There is contradictory evidence before me as to whether the Mother repeatedly requested the Father’s updated financial information. The Mother indicates that she requested it repeatedly but that the Father was difficult to contact and was generally unresponsive. The Father states that this updated financial information was never requested, but that he offered to provide it.

In any event pursuant to the Divorce Judgment the Father had a mandatory obligation to provide his complete Income Tax Return and Notice of Assessment each year on or before June 30 th . The Father has clearly failed to do so, notwithstanding his income increased significantly since the Divorce Judgment. The Father only provided his financial information after the Notice to Disclose and this application was begun in February and March of 2014.

There is no evidence that the Mother was aware of the magnitude of the Father’s annual salary increases, the Father has worked outside of Canada for much of 2013, and presently remains in the U.S.A. The Mother sought legal advice in the fall of 2013 regarding the enforcement of the Divorce Judgment in Louisiana after the Father ceased abiding by its terms. [ 37 ] I conclude that there has been no “unreasonable delay” on behalf of the Mother.

Blameworthy Conduct [ 38 ] The Supreme Court of Canada defined blameworthy conduct in D.B.S. to include “anything that privileges the payor parent’s own interests his/her children’s right to an appropriate amount of support (paragraph 43 and 44). Paragraph 44 of our Court of Appeal decision in Goulding states as follows: 44 DBS says that failing to disclose a significant increase in the payor's income may be "blameworthy conduct". No level of conduct that prejudices the rights of the child can be encouraged ( DBS at para 107).

That may be the case not merely where a payor intimidates or lies to the recipient parent, but also "where (s)he withholds information" ( DBS at para 125). Since DBS , many courts have held that a failure to disclose amounted to "blameworthy conduct", weighing heavily in favour of a retroactive award (See: Koback ; LL v. GB ;

Burchill v. Roberts; Greene v. Greene , 2010 BCCA 595 , 12 B.C.L.R. (5th) 330; Witwicki v. Seifner, 2013 ABQB 354 at para 28 ; Young v. Smith, 2013 ABQB 521 ). The payor's subjective intention is rarely relevant - the real question is whether the payor's conduct had the effect of privileging his or her interests over the child's right to support. [ 39 ] Accordingly even though the Father may have had made an honest and blameless error in this matter, it does not absolve him for responsibility from paying the support to which the children have been entitled (paragraph 46 of Goulding ).

Circumstances of the Children [ 40 ] Children are entitled to a standard of living that they would have enjoyed while their parents were together. There is no evidentiary burden on the recipient parent to prove significant need. A loss of benefits is presumed where payor parent has failed to pay the amount of support required under the guideline over a long period of time (paragraphs 50 to 53 of Goulding ).

In this case there is no evidence to suggest that the children have enjoyed the same standard of living they would have enjoyed had the parties remained together, and in fact the Mother’s evidence is that her new husband makes significantly less than the Father. [ 41 ] Accordingly I conclude that the Father is to pay child support commensurate with his income pursuant to the guidelines, and that there was a loss in the benefits that the children should have received. Hardship [ 42 ] The Father submits that an award of retroactive support would cause him undue hardship.

He points out that as a result of a Canada Revenue Agency debt related to tax arising from an inheritance that he received just prior to the parties’ separation of approximately $30,000.00, he does not have sufficient funds to make the total monthly child support payments that he previously had been making. [ 43 ] The Father also submits that cost of facilitating parenting time has caused him undue hardship. However I note that the Divorce Judgment he consented to in 2009 provided him with six days of parenting time a month, but it appears he has rarely exercised that access time.

Since the separation the Father has only exercised parenting time a handful of times a year and generally only for a few hours at a time. [ 44 ] Furthermore as the Mother points out the Father’s undue hardship did not stop him from planning to go to the Dominican Republic in November with his new wife and the children. The Mother current circumstances are that she has a new born baby as of July 2014, and she has returned to work at her office on September 2 nd , 2014.

Her new husband is on paternity leave in order to assist with the children and the new born, and is receiving employment insurance as a result. [ 45 ] I conclude that no case of undue hardship has been made out by the Father. The Father just prior to separation received a gift in the form of $30,000 inheritance for which he is responsible to pay tax on, and he has simply failed to do, incurring interest and penalties in the meantime. This does not constitute undue hardship.

Nor does the additional cost of facilitating parenting time constitute undue hardship because it was the Husband that chose to relocate, and furthermore he has rarely exercised his parenting time. Conclusion - Retroactive Child Support [ 46 ] I conclude that a retroactive child support order from January 1, 2011 is warranted in these circumstances. The Mother is not guilty of any unreasonable delay in this matter, notwithstanding she only sought legal advice in August 2013 regarding the enforcement of the Divorce Judgment.

The Divorce Judgment clearly required yearly disclosure of financial information, and the Father failed to provide this. Irrespective of whether the Mother demanded this information or not, the information had to be provided. There has been no unreasonable delay on the part of the Mother, and in accordance with Goulding even an honest and blameless error on the part of the Father does not absolve him from his responsibility to pay proper child support. The circumstances of the children are such that the need on their

part is presumed. [ 47 ] The Father submits that the cost of facilitating parenting time Louisiana causes him undue hardship, yet he has only rarely ever exercised his parenting time. The Father moved to Grande Prairie shortly after the parties separated by his own choosing, and now again has relocated to Louisiana on his own accord. [ 48 ] I further conclude that the Father has failed to provide sufficient evidence of his claim of “undue hardship” because of his finances.

The Father claims hardship partly as a result of the Canada Revenue Agency $30,000.00 debt that is related to an inheritance he received just prior to the parties’ separation. The inheritance was an exempt property and was considered exempt in the parties’ matrimonial property distribution. The Father received the entire benefit of the inheritance and, he is responsible for the liability associated with it. It also appears that a significant amount of the Canada Revenue Agency debt is interest accrued as a result of the Father’s inability to address this Canada Revenue Agency issue in a timely fashion.

The children should not have to suffer as a result. [ 49 ] Having concluded that there is insufficient evidence to warrant any undue hardship claim, and given the large amount of arrears in this matter, I will allow the Father to repay the amount owing at the rate of $750.00 a month commencing February 1, 2015. Heard on the 11 th day of September, 2014. Additional submissions received September 18 th , 2014 and October 9 th , 2014.

Dated at the City of Edmonton, Alberta this 23 rd day of December, 2014. Donald Lee J.C.Q.B.A. Appearances: Mark H. Demas Majeski and Company for the Plaintiff Jordan Bienert Tarrabain Raponi & Company for the Defendant