MAW v PCW, 2014 ABQB 703

Court of Queen ’ s Bench of Alberta Citation: MAW v PCW, 2014 ABQB 703 Date: 20141117 Docket: 4801 149162 Registry: Calgary Between: MAW also known as MAF Plaintiff/ (Defendant by Counterclaim) - and - PCW Defendant/ (Plaintiff by Counterclaim) _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice R.E. Nation _______________________________________________________ [ 1 ] The trial in this matter dealt with a number of issues: the parenting regime for two children, retroactive and ongoing support for the children, retroactive and ongoing spousal support, and the division of matrimonial property.

[ 2 ] After seven days of evidence, during argument, the parties reached an agreement to settle the matrimonial property portion of the claim, as well as all arrears of

Section 7 expenses for the children up to June 30, 2014. Thus, the remaining issues are: the parenting regime, the determination of appropriate guideline income amounts, retroactive

Section 3 payments, ongoing child support payments, and spousal support. [ 3 ] Extensive evidence was called during the trial on matrimonial property matters. Although this court no longer has to decide these issues, some of this evidence is referenced as it is material to the assessment of the credibility and reliability of the evidence of the parties. In addition, the property settlement is referenced as it is material to the issue of spousal support. 1.

Background Facts [ 4 ] The parties married on March 22, 1997 and separated on May 1, 2011, when MAW moved out with the two children, their son, born in 2001 and their daughter, born in 1999. [ 5 ] The parties met and started dating in 1993. At the time they met, MAW was 21. She had graduated from high school and was working with Equifax Canada in a clerical position. PCW, who was 29, was a licensed heavy duty mechanic.

He was employed in Crossfield, working on farm machinery. [ 6 ] The couple moved in together in 1995 and lived in a mobile home, which was placed on land that was part of a farm owned by PCW’s father. [ 7 ] When they started living together, both parties kept their own personal bank accounts, but they also put money into a joint account to meet expenses. When disputes arose as the joint account was overdrawn on a monthly basis, that account was closed. PCW then added MAW as a user on his credit card, and he paid the monthly balance from his bank account or with a line of credit.

After closure of the joint account, MAW felt that she paid an unfair burden of family expenses proportionate to income, as she paid all child care expenses and most grocery expenses from her personal account. [ 8 ] MAW stopped working at Equifax when she became pregnant. After the children were born, she worked some waitressing jobs and then as a receptionist and ultimately obtained her current employment working a .8 position for Alberta Health Services in a doctor's office. [ 9 ] Upon the birth of the couple's second child, the couple decided to trade in their first home, for a new modular home that was larger.

It was placed on the same footings as the old home. At this time, PCW's sister, PW gave $60,000 by cheque to PCW, to help purchase the new home. [ 10 ] After that gift in 2001, an additional $360,000 was gifted by various cheques from PW. These were mostly written to PCW, although two were written to the couple in their joint names. [ 11 ] In addition to the cheques, various shares were acquired by way of gift or purchase in a company, Celtic Exploration Ltd. (Celtic), which was connected to PW's husband.

These shares were the major asset held by the parties at the time of separation. [ 12 ] In late 2012, Imperial Oil made an offer to pay $24.50 for each share of Celtic, and to provide a specified number of Kelt shares upon redemption of the Celtic shares. As a result of this offer, a court order dated March 4, 2013 directed that the entire sum of the proceeds of sale of both the plaintiff's and the defendant's shares be held in an interest bearing trust account at their respective lawyer's office, until further agreement of the parties or court order. [ 13 ] PCW’s father owns two quarters of land.

In the past, he farmed one quarter and rented to PCW the 110 arable acres in the other quarter to grow barley. Increasingly over the years, PCW assisted his father in the farming operation, and now he does all the farming on his father's land. He describes his farming operation as a hobby farm; he does farm duties on the evenings and weekends. [ 14 ] PCW does the farming on his father's quarter for free, in his words: "as a son". Any income from that quarter goes to his father. PCW pays his father $30 an acre to farm the 110 acres on the quarter that he rents, and he keeps the revenue from that crop.

The operation is subject to all the variable conditions on an Alberta farm: in bad years, the only income might come from hail insurance; in good years, gross revenue has been as high as $58,000; and in wet years, reduced revenue results from the removal of the crop to sell as hay. The farming operation has always shown a loss for income tax purposes. [ 15 ] Over a period of years, concluding in 2009, MAW obtained a land administration certificate from SAIT.

She has not looked for jobs in that area to date, not wishing to work downtown and concerned that she will not have the flexibility that she has in her current job, to drive the children to their activities and be available for them. [ 16 ] In the month prior to separation, MAW purchased a condominium in Airdrie; it has an agreed value of $380,000 and a present mortgage of $207,473. The downpayment was financed by the sale of some Celtic shares. [ 17 ] In February, 2012, the parties agreed to a without prejudice interim consent order, using a guideline income of $43,500 for MAW and $70,000 for PCW, which set the

section 3 child support amount at $1,013 per month starting December 1, 2011. $109.51 per month was set for

section 7 expenses based on 62% of a dance class expense of $100.50 monthly and $47 monthly towards orthodontic expenses. In addition, a direction was made for a lump sum payment to be made by PCW as his proportionate share of

section 7 expenses already paid by MAW up to November, 2011. The order included a clause that neither party should incur

section 7 expenses for the children, other than the orthodontic, and dance class expense, to which they expected the other party to contribute, without the express written consent of the other party, which consent was not to be unreasonably withheld. [ 18 ] In June, 2012 MAW applied for and obtained an ex-parte Emergency Protection Order (EPO), as a result of an altercation between herself and PCW which occurred when she drove their son to PCW's house. There was contradicting evidence about what

occurred. PCW was charged with assault, and subsequently acquitted at trial. [ 19 ] The result of the EPO was that contact between PCW and the children was restricted, and a series of access orders were made in June and July, 2012. Over time an access arrangement was reached under which the children were picked up or dropped off down the street from MAW's residence. The EPO between the parties remained in place until June, 2014. [ 20 ] In February, 2013, MAW brought an application to adjust child support to reflect guideline income for PCW of $158,876, which was his line 150 income on his tax return in 2011. The court set his T4 income as his guideline income, which was $66,896, with a

section 3 payment of $951 a month, retroactive to June 1,

Section 7 expenses were requested, but not dealt with by the court at that time. [ 21 ] PCW has demonstrated that he is a hard and steady worker. After working for 25 years for the same company, he lost his job there in June, 2011. PCW was unemployed for three months, thereafter finding employment in the town of Trochu. This employment is about 1.5 hours drive away from his home each way, requiring substantial hours of travel. He generally works an eight hour day, Monday to Friday. When he is required to repair vehicles or equipment in the field, he tries to take the calls nearer to home, if possible. [ 22 ] PCW and MAW do not communicate well. Working out payment for the children's

section 7 expenses has been a challenge, to say the least. [ 23 ] The matrimonial property settlement directs that PCW pay MAW $175,000 in two installments in 2014, and transfer $50,000 in RRSPs to her by way of a tax free roll over. In addition she is to receive 20,000 shares in Celtic Exploration. This leaves each party effectively the owners of 50,000 shares (or the proceeds therefrom) in Celtic, which pretax translates into $1,225,000 (50,000 X $24.50) plus the associated Kelt shares.

The Celtic shares must be redeemed by 2016, so the parties both have reported in the past and will in the future declare substantial capital gains on their tax returns in relation to those transactions between 2011 and 2016. They have received and will receive significant cash as a result of the redemption of those shares. 2. Comments on the Evidence of Each Party [ 24 ] The tone of this trial was highly contentious. It is necessary to comment on the evidence of each party. I do not question the credibility of each party, they were each invested in their position and genuine in their evidence.

However, for various reasons set out below, I am concerned about the reliability of some of their evidence. Some of their evidence was given little weight, when considered against the comments and findings below. 2.1. MAW [ 25 ] MAW was clearly invested in and very righteous about certain positions, to the point of exaggeration. When challenged on these, she retreated to suggestions that she did not know, or did not understand matters.

I will illustrate this with three examples. [ 26 ] One example was MAW's intense fixation at trial that although in the past she paid the cost of child care, PCW always declared that as an expense on his tax return, and got a refund. This meant that MAW did not get a tax refund, nor did PCW compensate her for the tax benefit he received for the deduction for child care expenses that he did not pay. Although MAW spent trial time complaining about this, the accountant who prepared both returns was forced to deduct the child care from the lower income earner (PCW), in compliance with rules set by Revenue Canada.

Further, on examination of PCW's tax returns, there were only two years during the marriage when PCW wrote off these items: in 2003 when he declared $8,412 of child care expenses and 2004 when he declared $10,273 of child care expenses. [ 27 ] Another example is evidence around money. It is clear that money was a very divisive issue in the relationship. MAW gave the impression in her direct evidence that she paid for all the groceries for the family. It was clear from review of the joint credit card statements, that some (not all) groceries were paid using the joint Visa, which monthly balance was paid by PCW.

Another small, but clear, example is MAW’s emphasis that PCW's refusal to pay for any scholastic books was clear evidence of how "cheap" he was. MAW suggested that she had to pay for any books that were bought. However, various cancelled cheques were produced which demonstrated that PCW paid for some (not all) of these books, and in several cases, MAW had written the cheque on his account, which he had signed. [ 28 ] A third example is MAW's insistence that she knew little about the accounting for the farm, and that PCW was very secretive.

In fact, it was clear from cross examination that she had put various receipts together to take to the accountant, Mr. Benwood, and had dropped off and picked up tax returns and financial statements and was present at some meetings where there were financial discussions with the accountant or financial advisor. From this evidence I find that she was exaggerating her lack of knowledge. I do accept that she did not understand the complete financial picture of the family finances. [ 29 ] MAW was cross-examined about some inconsistencies between her testimony at questioning and her evidence at trial.

She testified that she had taken her jewelry when she separated. When later asked to produce the jewelry for appraisal, she testified that it was all missing; she last saw it when she was living with PCW and she did not know where it was, suggesting it may be in the safe in the matrimonial home. [ 30 ] MAW sold 10,000 Celtic shares in 2013, but did not declare it as a capital gain on her 2013 tax return. She indicated that she felt if she left the cash in her broker's account, she did not have to pay the tax on it in that year.

Also, she testified that she did not understand she had to pay the $245,000 received from the sale of 10,000 Celtic shares into her lawyer's trust account under the terms of the 2013 Court order, even though she had done so with the proceeds from the other 10,000 shares sold. She testified that she could not understand the number of shares she had in Celtic, even after separation.

No doubt some of the share transactions were potentially confusing, but with both an accountant preparing her tax returns and a lawyer advising her, I do not accept that she took the steps one would expect to report her taxes properly, comply with the court order to preserve funds, or to inform herself about certain transactions.

She used the words "I guess so" and "thank you for explaining" sarcastically in cross-examination when confronted with some of this evidence. 2.2. PCW [ 31 ] PCW tried to minimize the issues that had obviously arisen over finances during the marriage. He testified that the couple had a joint account, but there were problems with overdraws. After closing the joint account he suggested that the couple used a joint Visa for all expenses, and he covered payment for the Visa from his account or a line of credit.

He testified that there were no restrictions put on spending, and pointed out some of the charges by MAW on the joint credit card. However, looking at those statements, they did not cover the entire spending pattern of the family. They did not cover all grocery expenses for a family of four, or everyday items for young children. When one considers all the transactions, it is clear that PCW had control over the majority of the money in the matrimonial regime. PCW is challenged by writing, accounting, and the computer, in fact, he often has others fill out cheques for him to sign.

MAW certainly did this during the marriage at times. To that extent, he is correct in his assertion that she knew some of the expenses. However, she did not know the entire operation and had very little control over it.

PCW controlled the vast amount of the financial dealings, other than what MAW earned in her employment and thus had in her bank account. [ 32 ] PCW spent substantial time during his direct examination at trial trying to trace the cheques from his sister, PW, into and between his various bank accounts and ultimately to purchase an item, in an effort to trace the use of the monies, and establish various exemptions.

Through his long and belaboured direct examination on this point, it was painfully clear that he was not really sure where the monies had come and gone, but he was following the tracing created and worked out by others. Several times he testified that monies went from one account into a "US account" when that was not true, and he had to correct the evidence. It was also clear from all the evidence, that at times during the pre-trial disclosure, he had taken a position or indicated that funds went to one account, or to buy something and that was later found to be incorrect and corrected.

This slow and laborious use of trial time demonstrated that it was not surprising that MAW would express confusion when trying to understand how much money came into the marriage and where it all went. The tracing was far from clear. [ 33 ] PCW steadfastly insisted in evidence that he did not believe in living beyond his T4 income. The reality is that his spending was often in excess of this amount, when one views his line of credit and Visa debts. Money from his sister was often used to pay these debts.

Thus, although he insisted the money from the Celtic shares should be only for his retirement, this outcome is unlikely, given his past fiscal management, and level of spending. [ 34 ] PCW thought nothing of forging MAW's signature on a cheque made out to them jointly from his sister for a holiday after Christmas, seemingly for the ease of depositing the joint money into his bank account. [ 35 ] PCW persists in using control over money to continue the friction between him and MAW, as he never made any suggestion or communicated about how to fund

section 7 expenses despite testifying that he had no problem paying certain amounts. 3. Custody [ 36 ] The two children, currently 15 and 13 years old, left the matrimonial home with their mother at the time of separation in May, 2011. They have continued to live with her in Airdrie since that time. Decisions about the children have been made almost exclusively by MAW. [ 37 ] The mother wants sole custody of the children, with sole decision making authority, and for the children to be able to decide when they will see their father.

The father wants joint custody, and to be involved in decisions affecting the children. Both parents agree that the children are able to decide when they want to see their father, and communicate directly with him in that regard. [ 38 ] It is clear that the mother has been the primary caregiver for the children since separation. She is strident in terms of what she feels is necessary for them.

She has been the one who has been available for them, and takes the time to organize their schedules, drive them to activities and generally oversee their life. [ 39 ] The father sees the children approximately every second weekend. He works full time, with overtime in the seeding and harvest season, at which time he also needs to seed and harvest the family farm. His employment involves a long commute, which impacts his ability to drive the children to and from activities after school.

The reality of his employment is that his time for the children is largely restricted to weekend time, which farming will sometimes occupy. He has taken the children on holidays in the past. [ 40 ] The evidence suggests that both parents love their children, and the children are comfortable with the current arrangement, where they live with their mother, and see their father on alternate weekends, or as otherwise mutually arranged, and for some holiday time.

The reality of their teenage activities after school means that until each has a driver's license, the mother will be the one who accommodates the driving needed for their schedules. [ 41 ] The parents have problems communicating. The mother's e-mails entered at trial are curt and dictatorial; the father is passive, not always replying promptly, or at all.

Having said that, recently the parents jointly agreed to their daughter changing school in the fall of 2014 to a private school, and they filled out the necessary forms for that to occur. [ 42 ] The hard feeling between the parties is best illustrated by MAW’s testimony in cross- examination that PCW was a "horrible father". She also testified that she did not think the father would be around for the children after the litigation. MAW does not feel that her children have a close relationship with their father, and she does not think that they respect him.

She does not like the children's mood when they return from their access visits. [ 43 ] PCW knows the buttons to push to annoy MAW. He has steadfastly ignored requests to pay a proportionate share of ongoing

section 7 expenses, suggesting that they all be sent to his lawyer. This is all while seeing his daughter continue to dance, which had been expensive in the past, and his son continue to be involved in sporting activities. It is difficult for this couple to communicate as MAW is pushy and aggressive and PCW is passive. [ 44 ] MAW does not accept that PCW's monetary contribution to the children is adequate or valuable.

PCW seems to lack an appreciation that communicating about the children's schedules and activities with their mother and working out a financial regime to pay for their extracurricular activities is necessary and desirable. [ 45 ] Considering the above, and the ages of the children, I am directing that the parties are to have joint custody of the children. Although they do not communicate well, there is no reason to exclude either parent from the decision making. I note they have recently managed to cooperate on the one major educational decision that has had to be made since separation.

Due to their age, the children will increasingly take over much of the communication with their parents about their needs and wishes. The parties are to consult on all essential decisions about the children. The children's primary residence will continue to be with the mother, with reasonable parenting time with the father as arranged between the children and their parents. 4. Support for the Children [ 46 ] The quantum of child support, both retroactive and ongoing was an issue at trial. PCW took the position that he had paid exactly what was ordered in February, 2012.

Once the February, 2013 order was granted, he paid the revised

section 3 amounts from that date forward, and continued to pay the monthly amount ordered for

section 7 expenses under the February, 2012 order. [ 47 ] MAW took the position that she was owed

section 3 and

section 7 amounts, as she felt PCW's guideline income should have been set for all years since separation at $158,000, to reflect the declared income on PCW's 2011 tax return, which included income from capital gains. [ 48 ] The 2012 order clearly was made without prejudice to any decision at trial, which would allow a full examination of the income of the spouses. The February, 2013 order was made in morning chambers, and dealt with the interim payments retroactive to June, 2012. A trial affords a full investigation into the earning of both parties, as well as an understanding of the pattern of income. 4.1.

Guideline Incomes [ 49 ] In this case, various issues arise and complicate the setting of guideline incomes: (1) how to treat the large capital gains which the parties have received and will continue to receive until at least 2016, (2) how to treat PCW’s annual losses from his farming activities; and (3) how to treat the substantial gifts that PCW received from his sister. 4.2.

The Law [ 50 ] The law is not in dispute in the determination of these issues; rather it is the application of the law to the facts that is contentious. [ 51 ] The law is set out in The Federal Child Support Guidelines , SOR/97-175 ("Guidelines"). The objectives of the guidelines are set out in

section 1 , and are designed: (1) to establish a fair standard for children that ensures that they continue to benefit from the financial means of both spouses after separation; (2) to reduce conflict and tension between the spouses by making the calculation of child support more objective; (3) to improve the efficiency of the legal process by giving guidance; and (4) to ensure consistent treatment of spouses and children who are in similar circumstances. [ 52 ]

Section 16 of the Guidelines sets out that a spouse's annual income is determined using the sources of income set out under the heading "total income" in the T1 general tax form. This is generally the line 150 amount. In some cases, that income is adjusted based on sections 17 to 20 of the Guidelines. [ 53 ] Where that Guideline income is over $150,000,

section 4 states that the amount of the child support order is the amount determined under

section 3 (the table amount), or if the court considers that amount to be inappropriate, in respect of the first $150,000 the amount of

section 3, and in respect of the balance, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children and the amount, if any, determined under

section 7. 4.3. How to treat Capital Gains in Establishing Guideline Incomes [ 54 ] Complicating the issue of guideline income is the fact that in 2011 both parties sold some Celtic shares and declared substantial income from capital gains: MAW declared $98,107 and PCW declared $86,204. They both disposed of further shares in 2013, which again resulted in substantial capital gains. In the matrimonial property division, both parties will hold shares that will have to be converted into cash and will attract substantial capital gains between trial and 2016.

Starting in the 2017 taxation year, each party will have largely T4 income, but perhaps some smaller dividend or capital gains, depending how they use or invest the funds received from the sale of the Celtic shares. [ 55 ] The parties must liquidate their Celtic shares by 2016, but can control if and when they take capital gains between now and then. The shares will be transformed to substantial cash amounts. Each party can choose how they use this money. Looking at the past, MAW chose to use the money she liquidated in 2011 to buy her home, and pay household and moving expenses.

PCW used his money to pay down debt and credit cards, in other words, to support his lifestyle, as well as use some monies toward farm machinery for his "hobby" farm. The funds liquidated since 2011 were held in trust pending the trial, and are now in each party's hands. The funds clearly

allow the parties to live above the lifestyle allowed by their employment income, and they have both done so. [ 56 ] This money generally benefits the children. For example, the mother liquidated some shares in 2011 and bought a new condominium in to which the children moved. Although the 2013 liquidations were initially held in trust, the funds when released result in cash for both parties to use as they please.

This is the reason that in general, capital gains are included in the calculation of guideline income, the onus being on a person who wishes to exclude them to show why exclusion should occur. [ 57 ] The question of large, but not always standard or recurring annual amounts and their treatment in terms of their inclusion in the calculation of Guideline incomes has been discussed extensively in case law, in relation to issues such as the collapse of: registered funds such as RRSP's; non-recurring dividends; and severance payments. [ 58 ] A review of the case law indicates that there is no clear rule about inclusion or not, the decision in the discretion of the trial judge.

Fraser v Fraser , 2013 ONCA 713 held that RRSP income is presumptively part of a spouse's income for child support purposes, and the party seeking to exclude it bears the onus to show that its inclusion would not result in a fair determination of income. The court has to look at the reason for the transaction and the use of the funds. Whether the amount has already been accounted for in the division of assets is also a consideration. The operative consideration is fairness, in accordance with the wording of the guidelines, as reflected in the objectives set out in

section 1. (See: Brown v Brown , 2014 BCCA 152 ). [ 59 ] Considering the objectives of the Guidelines , and the fact that these capital gains are generally from the disposition of large amounts of shares, providing significant cash injections far beyond the income of both the husband and the wife, suggests it is fair that they be included in income for guidelines purposes for both spouses, in the years in which they occur. Each spouse receives these benefits.

Balanced against this, is the consideration that the shares were divided as matrimonial property, which may mitigate against considering them as guideline income, as each spouse received the same amount. Although they are being dealt with as property between the parties, they have been sold in the past to enhance each party’s lifestyle, and they must be converted into cash by 2016. At the point they are sold, and converted into cash, the monies will significantly improve each party’s financial liquidity.

The parties jointly have committed to expenses for the children (e.g. the daughter’s schooling) which they can only pay with this increased money. Thus, it is fair that these capital gains be considered as income for the purposes of establishing guideline income for establishing

section 3 amounts and the proportional sharing of

section 7 expenses. There is no reason to depart from the general guideline definition, as capital gains are treated as income for taxation purposes, and are part of the line 150 income. [ 60 ] Although counsel for PCW argued it is a "double dip" to use capital gains from the sale of the Celtic shares in the calculation of guideline income, this is not so. Firstly, the concern about double dipping is generally raised in relation to spousal support, not child support. In addition, although the use of capital gains will increase the

section 3 amounts substantially, it will also affect the

section 7 percentage split (for example, in 2013, MAW would likely have had a higher proportionate share of

section 7 costs, based on her guideline income including capital gains taken but not reported for tax purposes). Also, it is clear the parties will have to commit some of their capital gains for the support of the children, as they have committed to private school education for at least their daughter for the next year, and both indicated an intention to pursue this for their son also. Thus, at least some of the monies from the shares is viewed by both of them as available for the children.

The quantum of the monies has a significant effect on the lifestyle that is available for both parties, in the unique circumstance of this family. 4.4. Inclusion of G ifts in the Assessment of Guideline Income [ 61 ] Counsel for MAW argued that gifts should be considered in imputing income to PCW, as he regularly received substantial gifts from his sister which he used to pay off credit card debt or buy material goods that substantially upgraded his lifestyle.

She argued that these were important to consider in imputing to PCW a guideline income above the $150,000 level. [ 62 ] Counsel for PCW opposed gifts being considered in the setting of Guideline income, arguing the gifts are not guaranteed, nor is it appropriate in the context of PW's evidence or the facts of this case. [ 63 ] Counsel for MAW provided three cases in support of her argument: Bak v Dobell , 2007 ONCA 304 , Teichman v Johnson , 2010 ABQB 643 and Simpson v Bettenson , 2014 ABCA 21 .

In all three cases, the payor had no or limited income, but was clearly receiving monies from elsewhere and living a lifestyle that reflected excess income. [ 64 ] The Bak case specifically considered the situation where gifts had been received to support a man who was unemployable due to medical issues.

The court held that in considering whether it is appropriate to include the receipt of gifts by imputing Guideline income, a court will consider a number of factors, including: the regularity of the gifts; the duration of their receipt; whether the gifts were part of the family's income during cohabitation that entrenched a particular lifestyle; the circumstance of the gifts that earmark them as exceptional; whether the gifts do more than provide a basic standard of living; the income generated by the gifts in proportion to the payor's entire income; whether they are paid to support an adult child through a crisis or period of disability; whether the gifts are likely to continue; and the use, purpose and nature of the gifts. [ 65 ] I accept PW’s evidence that she gave money to her brother either for specific purchases or at times to generally help out, and that those gifts would not continue, now that the Celtic shares are redeemable.

I do not find these gifts are such that they support imputing a higher income to PCW. They were sporadic, not guaranteed, and unlikely to occur in the future. In addition, his income is not meager or difficult to ascertain. 4.5. PCW's Guideline Income [ 66 ] PCW's income includes his T4 income from his work as a heavy duty mechanic. This income in 2008 was $58,023, and in 2013 was $66,807. His highest T4 income was $78,354 declared on his 2010 tax return. His T4 employment income is properly included in the calculation of his guideline income.

[ 67 ] PCW runs a farming operation which has generated a net loss every year for tax purposes. This negative amount is deducted from his T4 and other income, in calculating his line 150 income. As well as being able to write off the farming expenses, he is entitled to write off for taxation purposes various household costs, such as: utilities on the house, phone, vehicle and home insurance, some vehicle repairs, fuel, and some interest payments.

Because of his ability to write off the loss of his farming operation against other income, the effective tax on his employment income is less than usual; indeed, he generally has received a refund of some of the tax deducted at source from his T4 income. [ 68 ] The ability to write off some expenses that are personal or family related, that would not generally be written off for non-farm wage earners, results in a more favourable tax treatment for PCW. When this occurs,

section 19 of the Guidelines allows the court to impute income, in this case, better described as adjusting income. [ 69 ] In considering whether to impute income, I can consider that PCW has a style of life in excess of his reported income.

Also, he chooses to work for free on his parent's farm, when he could request some compensation for these services. [ 70 ] Considering the above, the objectives of the guidelines require that PCW's guideline income be calculated each year by adding his T4 income in a given year plus any capital gains and any investment income (as included in line 150), but not the deduction of his farm losses. [ 71 ] This calculation for two years in the past and likely some years in the future (at least until 2017) puts PCW's guideline income over $150,000, and as a result, I must consider

Section 4 of the Guidelines . Any

section 3 amount assessed on income over $150,000 is subject to adjustment if the court considers it appropriate, considering the condition, means, needs and circumstances of the children, and the financial ability of each spouse to contribute to their support and any

section 7 amount. In the circumstances, regarding the claim for retrospective support, I find it is appropriate to require PCW to pay the full

section 3 amount be paid on amounts over $150,000. This is reasonable considering the needs of the children and the comparative situation of the spouses. [ 72 ] Allowing the discretionary part of the

section 3 amount over the $150,000 in the future should reduce the conflict between the parents over the funding of questionable

section 7 expenses. With

section 3 amounts at this level, MAW cannot say she does not have adequate or appropriate amounts for the children’s needs. It should put an end to her vocal complaints that PCW does not adequately provide for the children and end the constant e-mail requests for smaller amounts that she has incorrectly suggested are

section 7 expenses. 4.6. MAW's Guideline Income [ 73 ] MAW has worked a .8 position for several years. Her evidence is that both the need to drive their daughter to her dancing and commitment to Young Canadians in Calgary, and their son’s involvement in sports makes it hard for her to work longer hours, or change employment where she may lose the flexibility in scheduling she now enjoys.

She drives from Airdrie to Calgary to work, and needs flexibility to accommodate the children's transportation to after school activities-both in Airdrie and Calgary. [ 74 ] MAW makes her income from her employer, who reports the amount on a T4 form at year end. Her income shows a gradual rise due to cost of living increases. Her income from employment has increased from $38,240 in 2008 to $46,000 in 2013. She has a health and dental plan, as well as pension benefits through her employment. In 2013 she collapsed part of an RRSP in order to meet her expenses, declaring a line 150 income of $62,012.

She did not have access to substantial monies from the shares, held in trust at that time. [ 75 ] In light of the long hours PCW works and the children's needs, I accept that I should not impute to MAW a full time income. Until the children have their driver's licenses and can look after their own transport to activities after school, it is reasonable that she continue to work a .8 schedule. Her guideline income will be set at her T4 amount.

To this must be added the substantial capital gains she made in 2011 and those she should have declared in 2013, and also those declared in the future, for the reasons outlined in paragraphs 54 to 59 of this decision. Also, after application of the law outlined in paragraph 58, her 2013 guideline income should include the collapse of an RRSP. 4.7.

Retroactive Adjustment [ 76 ] In accordance with the above reasoning and decision, PCW's guideline income since the separation should have been calculated as follows: 2011-$80,243 T4 + $1,178 investment+$86,204 capital gains=$167,625. 2012-$66,896 T4+$104 interest=$67,000 2013-$66,807 T4+$1,300 interest+$129,000 capital gains=$197,107 [ 77 ] Likewise, MAW's guideline income since the separation should have been calculated as follows: 2011-line 150-$141,824 2012-line 150-$46,241 2013-line 150-T4 $46,961+$51.34 dividend+RRSP $15,000=$62,012.

This amount will have to be adjusted, as MAW's evidence is clear that she received substantial capital gains in 2013, and her tax form requires amendment to reflect those amounts. [ 78 ] The

Section 3 payments using PCW's guideline incomes set out above should have been as follows:

Year Calculations Amount 2011 $2,099+($17,625 X.0134=$236.17)=$2,335.18 (6 months X $2,335) $14,010 2012 $953 (12 X $953) $11,436 2013 $2,099 + ($47,107 X .0134=631.23) = $2,730 (12 months X $2,730) $32,760 Total: $58,206 Amounts Paid: 2011 ($800 X 6=$4,800) + $1,013 $5,813 2012 (5 X $1,013=$5,065) + ($951 X 7=$6,657) $11,722 2013 $951 X 12 $11,412 Total: $28,947 [ 79 ] The total arrears on

Section 3 payments to December 31, 2013 are therefore $29,259 ($58,206-$28,947). 4.8. Ongoing

Section 3 Payments [ 80 ] The parties will determine ongoing

section 3 payments using the previous year's guideline income, with an adjustment made July 1 every year, after the exchange of income tax returns. This means PCW's payments for 2014 are $2,730 per month. Thus from January 1, 2014 to the date of the completion of the trial he should have paid $24,570 (9 X $2,730). He paid $8,559 ($951 X 9) meaning $16,011 is owing. [ 81 ] For 2015, PCW's payments will be based on the 2013 guideline income, until July 1, at which time the parties will have viewed each other's tax return, which shall be exchanged by May 31. At that point, the parties will adjust the amounts paid in 2014, to bring the

section 3 and the proportionate sharing of

section 7 expenses to the correct amounts, having the actual 2014 tax returns. This will allow them to calculate the guideline income, in accordance with the method set out in this judgment. In addition, the monthly

section 3 payments to be paid from July 1, 2015 to July 1, 2016 shall be adjusted to reflect the 2014 guideline income amounts. 4.9. Ongoing

Section 7 Expenses [ 82 ] MAW is concerned as to date she has been fronting

Section 7 costs. Her suggestion was to create a joint bank account into which both parties deposit money, so she can write cheques for

section 7 amounts, without having to use her money and wait for reimbursement. This suggestion was not acceptable to PCW, as he has concerns about how the money will be used. The concern arises from the previous inflated claims for

Section 7 expenses and the problems the couple has historically had over money and joint bank accounts. I am concerned because a joint bank account has been problematic in the past. Also, MAW has an unrealistic expectation of what proper

Section 7 amounts are. The ability to withdraw amounts without consultation would create problems. [ 83 ] The foreseeable ongoing

Section 7 expenses are essentially the sports and dance activities. In addition, there is the cost of the school for their daughter to attend, a private school which will support her continued academic studies, but allow her to continue to train in dance, and pursue her involvement in the Young Canadians. Both parties have cooperated to fill in the paper work for that school.

Both are supportive of her going to that school. [ 84 ] Because of the low level of communication between the parents, I am directing that they are each initially responsible to pay to the school 50% of the tuition, and they are each to make arrangements with the school directly to pay that 50%. The parties will adjust this amount between themselves effective July 1, for the amount paid in the previous calendar year, using any correction necessary due to the appropriate proportional sharing based on their Guideline incomes. [ 85 ] At the level of the

section 3 payment that PCW is ordered to pay, most miscellaneous expenses for school, school uniforms, clothing, running shoes, haircuts, annual fees for public school, lunch cards, etc. are not proper

section 7 expenses. The parties are to proportionally share dance fees for their daughter and sports fees for their son (activity registration costs only) up to a total of $5,000 a year for both children. After that amount, a discussion must take place and agreement reached for the expense, or the parent who bears the expense cannot insist on repayment.

Because of the low level of cooperation, MAW is to initially front any expenses for their daughter’s dancing expenses up to $2,500, and PCW is to initially pay for any expenses associated with their son's sports costs up to $2,500. [ 86 ] The children are getting to an age where they must discuss their activities and the associated expenses with their parents, and this must occur with their father and their mother. MAW can no longer pay all bills and suggest she is entitled to reimbursement; PCW cannot ignore e-mails or discussion about expenses or partial expenses for the children that must be discussed.

No doubt further discussion may involve any number of items that are not

section 7 expenses: computers, philosophy on car purchases, independent travel, etc. [ 87 ] MAW has displayed in the past a poor understanding of what costs are truly a

section 7 expense, she added numerous items to her

section 7 claim at trial which are questionable. It is hoped that the higher

section 3 amount will alleviate financial concerns she has, and the past practice of demanding many items for the children as

section 7 expenses. In addition, with the higher

Section 3 payment on a guideline income over $150,000, school clothing, uniforms, sports equipment, running shoes and items of this kind are not

section 7 expenses. The

section 7 expenses this couple should consider are: private school fee expenses; medical or dental expenses for the children; health related expenses after reimbursement from MAW’s plan; their daughter's dancing fees; and their son's sports activities. 5. Spousal Support [ 88 ] MAW claimed ongoing support, as well as retroactive spousal support from May 1, 2011 to trial. Counsel argued that MAW should receive a lump sum spousal support payment of $250,000, looking at her contribution to the marriage, her disadvantaged position,

the income of PCW and the fact his sister has provided significant cash injections into the marriage. It was argued this would effect a clean break between the parties. PCW’s counsel opposed any payment of spousal support, arguing that it was not justified in law, looking at each party’s income and situation. 5.1. The Law [ 89 ] The relevant law in determining entitlement and quantum of spousal support is

section 15.2 of the Divorce Act , RSC, 1985, c 3 (2nd Supp). It provides in subsection 4 that the court must take into consideration the condition, means, needs and other circumstances of each spouse including the amount of time the spouses cohabited, the functions performed by each spouse during cohabitation and any order, agreement or arrangements relating to the support of either spouse. [ 90 ]

Section 15.2(6) sets out the objectives of a spousal support order. The order must recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown, apportion between the spouses any financial consequence arising from the care of any child over and above an obligation for the support of any child of the marriage, relieve any economic hardship of the spouses arising from the breakdown of the marriage and in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. 5.2.

Application of the Law to the Facts [ 91 ] In this marriage, PCW was the primary breadwinner, and he worked long hours as a mechanic and farming. MAW spent some years at home with the children, and then eventually returned to employment on a .8 basis. She was the primary caregiver for the children.

She did all the cooking, cleaning, and laundry until the couple had some housekeeping help in the years just prior to separation. [ 92 ] In addition to the chores and duties inside the house and for the family, MAW was involved with the farm operation at times by helping with: the fuelling and cleaning of machinery or vehicles; the driving of combines or equipment; any care or assistance required by her in-laws, while others were busy with farm work; and errands related to the farm. She estimated these duties took 20 to 30 hours in the fall and 10 to 20 hours in the spring.

MAW's counsel in argument suggested that MAW had "three or four full time jobs", claiming these were child care, household supervision and cleaning, looking after the farm, looking after the PCW’s parents and her salaried employment outside of the home. This is an overstatement. It is clear that MAW was primarily responsible for the children, and did the majority of the housekeeping work and management, as well as maintaining less than full time employment outside the home.

However, her work on the farm was seasonal and her help given to PCW’s parents was not extensive nor outside the assistance to aging parents expected in any normal family situation. [ 93 ] Although MAW was out of the workforce for a few years, she has considerable work experience in her current position.

In addition, she earned a certificate in land administration in 2009, during the marriage, which she has chosen not to use to date, but may use in the future. [ 94 ] Her claim for support is based on her work towards the family enterprise during the marriage, and her current work situation in a .8 position, as opposed to a desire to retrain.

In a few years, once the children are out of high school, she can decide to work full time, or use her land administration designation in an alternate career. [ 95 ] PCW is 51 years old, and as far as anyone can foresee, will continue to work as a heavy duty mechanic and to farm the two quarter sections owned by his father. He may well inherit some or all of the farm, that is unknown and irrelevant here. It is likely he will continue to farm and receive the tax losses that go with that.

He continues to work as a full time mechanic; despite the fact his continued employment involves driving 147 km each way to work. [ 96 ] PCW obtained his qualifications before the marriage, but has been able to pursue his career uninterrupted by marriage and has taken on increased farming responsibilities as his parents have aged. [ 97 ] The couple's style of life was far above what one would expect from their incomes, as a result of gifts received from PCW's sister. They took a number of vacations to Whitefish and used her condominium there. There were other trips to Las Vegas.

Having said that, they did not live a lavish lifestyle. Each has an equal number of shares in Celtic (or proceeds from the sale of those shares) which provide monies they would not have acquired, without the family connection to PW. [ 98 ] The division of the Celtic shares has been dealt with as a matter of matrimonial property. As a result, the assessment of spousal support should be based on income from the party’s earning capacity, not including declared capital gains. To include the capital gains from the Celtic shares when looking at income for spousal support may result in double counting.

Also, if capital gains were considered as income, there is little differential between the income of MAW and PCW in 2011, but in 2013, MAW would have an income far in excess of PCW. [ 99 ] It was argued by the Plaintiff that the cash gifts by PW merit consideration in assessing a spousal support amount. I do not agree. I was impressed by PW's straightforward evidence. There is no question her husband's business success allowed her to give generously to family members.

However, there is no intention to continue these gifts, and they clearly were gifts to PCW, with the exception of the two amounts made out to both parties for vacations.

This is not a source of income, or a guaranteed entitlement that is a proper consideration in the assessment of spousal support. [ 100 ] It cannot be ignored in the assessment of spousal support that both parties leave the marriage with Celtic shares or the cash derived therefrom with a value over $1,000,000 as a result of gifted shares and PCW’s presence on the president's list, with the accompanying entitlement to buy shares at a favorable rate. [ 101 ] MAW earns a T4 income in the range of $46,000, PCW earns a T4 income in the range of $66,000. There is not a large differential in these two amounts.

[ 102 ] When I look at the facts of this case, I am unable to find that MAW is entitled to support under the sections enumerated under the Divorce Act . On a compensatory support model she has not suffered economic disadvantage arising from the marriage and its breakdown. On a non-compensatory support model, she is not in a situation of true need or hardship. Each party is economically self- sufficient. [ 103 ] As a result, MAW's claim for retroactive and future spousal support is dismissed. 6.

Conclusion [ 104 ] The parents will have joint custody of the children, with residential care with MAW and access to PCW, as arranged by the children. [ 105 ] A total of $45,270 is owed by PCW to MAW for retroactive

Section 3 payments to the end of September, 2014. [ 106 ] The

Section 3 payment commencing October 1, 2014 shall be $2,730 a month, payable on the first day of each month until July 1, 2015. [ 107 ]

Section 7 expenses shall be paid from July 1, 2014 as defined in paragraphs 84 through

Section 7 expenses as defined in this decision are to be proportionately shared between the couple in accordance with the ratio of their guideline incomes for the year in which the expenses are incurred. [ 108 ] The parties shall provide their filed income tax returns to each other by May 31 each year. At that point, the parties shall make any adjustment to the amounts paid in the previous year, to bring the

section 3 and the proportionate sharing of

section 7 expenses to the correct amounts. Having the actual tax return for the previous year will allow for the exact calculation of the Guideline income applicable to the previous year, in accordance with the method set out in this judgment. In addition, at this time the monthly

section 3 payments to be paid from July 1 of that year until June 1 of the next year shall be adjusted to reflect the actual Guideline income amounts derived from the tax return for the previous year. [ 109 ] To complete full disclosure, MAW shall provide her amended 2013 tax return to PCW within 30 days of filing, and no later than March 31, 2015. [ 110 ] Either party may bring an application to deal with costs, if no agreement can be reached within 60 days. Heard on the 16 th day of June, 2014 to the 20 th day of June, 2014 and the 24 th day of September, 2014 to the 26 th day of September, 2014.

Dated at the City of Calgary, Alberta this 17 th day of November, 2014. R.E. Nation J.C.Q.B.A. Appearances: Erin J. Kuzyk, Dunphy Best Blocksom LLP for the Plaintiff/(Defendant by Counterclaim)

Peter G. Wells, Foster LLP for the Defendant/(Plaintiff by Counterclaim)