Wildeman v Wildeman, 2014 ABQB 732

Court of Queen ’ s Bench of Alberta Citation: Wildeman v Wildeman, 2014 ABQB 732 Date: 20141215 Docket: 4812 006479 Registry: Wetaskiwin Between: Kim Wayne Wildeman Applicant - and - Twylla Lee Wildeman Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice F.L. Schutz _______________________________________________________ Table of Contents I. Introduction . 2 II. Background . 2 III. Discussion and Analysis . 3 A. What Steps in the Analysis Must I Undertake? . 4

B. Applying the Facts of this Case to the Analysis Above . 10 C. What Is Ms. Shier’s Income for 2010 and Following? . 15 D. From What Date Should I Set Retroactive Child Support? . 16 IV. Conclusion and Costs . 17 I. Introduction [ 1 ] This matter came before me on November 6, 2014 as a special chambers application. Mr. Kim Wildeman sought numerous forms of relief from Ms. Twylla Wildeman (hereafter Ms. Shier). [ 2 ] This decision about Mr.

Wildeman’s guideline income under the Federal Child Support Guidelines SOR 97-175 (“ Guidelines ”) will answer the question of the amount to be paid for current or retroactive child support. The issue is this: what amount, if any, ought to be imputed to Mr. Wildeman’s guideline income because either he, or his common-law partner, has allegedly received personal benefit from corporations he controls? [ 3 ] Both parties’ counsel confirmed that their respective client wanted this matter dealt with now. Each party was aware that other court processes could be engaged, such as a viva voce hearing or a full trial.

But, for reasons of timeliness, cost-effectiveness and efficiency, they were content to have my decision based upon the materials filed for this special chambers hearing. [ 4 ] I satisfied myself that I could come to a just and fair result, recognizing that sending the parties away would consign them to another series of costly court manoeuvres. [ 5 ] In the spirit of moving this litigation along, I also agreed that after issuance of this decision I would permit further submissions pertaining to whether the son, Alexander Lorne Wildeman, was a child of the marriage between July 2013 and June 2014 and also, if necessary, about the characterization and amount of extracurricular and other expenses relating to the children of the marriage.

II. Background [ 6 ] Ms. Shier is a schoolteacher; thus, her income is as stated on Line 150 in her tax returns and is not in dispute. [ 7 ] The parties were married in July of 1997 and separated in July of 2009. They have three children: • Alexander Lorne Wildeman, born September 1994 (age 20); • Trisha Lee Wildeman, born April 1998 (age 16); • McKaylla Dawn Wildeman, born July 2000 (age 14). [ 8 ] Since June 1, 2014, Trisha Wildeman and McKaylla Wildeman have had their primary residence with Mr. Wildeman. [ 9 ] Ms.

Shier agreed to pay guideline child support based upon her Line 150 income as of June 2014 in the amount of $1,347.00. Ms. Shier has paid $1,500.00 per month for August, September and October and, according to Mr. Wildeman “acknowledges she owes Mr. Wildeman support for June and July of 2013.” [para 3, Affidavit of Kim Wildeman sworn 14 October 2014] [ 10 ] The disclosure process has been significantly delayed.

Speaking generally, it strikes me that the only legacy of delayed disclosure – other than added legal costs - is to frustrate the resolution of guideline income issues notwithstanding that child support is the right of children. [ 11 ] At the time of separation in 2009, Mr. Wildeman worked as a car salesman. Although his income was somewhat unpredictable, he was earning approximately $51,000.00 per year at that sales job. Ms. Shier submits, first, that inasmuch as her income has steadily risen since separation, one could reasonably expect the same of Mr. Wildeman’s income.

As a general proposition, I respectfully disagree, and it would not be appropriate simply to add some arbitrary annual increase to Mr. Wildeman’s past salary, a component for each year since the parties’ 2009 separation. This is not to say that on other bases and for other reasons, however, Mr. Wildeman’s income has not increased for the purposes of calculating guideline income. [ 12 ] The amount of guideline income to be attributed to Mr. Wildeman is complicated by the fact that in 2010, he started a company called Prairie Rose Bottled Water Ltd. (Prairie Rose).

Prairie Rose’s financial statements for the years ending July 31, 2010, 2011, 2012 and 2013 are in evidence. In addition, Mr. Wildeman and Sherida Carlton, his common-law partner, are shareholders in another company, Shermik Holdings Ltd. (Shermik). Shermik built and owns a commercial building and rents one of three commercial bays to Prairie Rose. The other two bays are rented to arm’s length entities. [ 13 ] Ms. Shier contends that there are a number of expenses that Prairie Rose and Shermik claim as corporate expense deductions that more properly ought to be characterized as personal benefits accruing to Mr.

Wildeman, or personal benefits accruing to Ms. Carlton - his non-arm’s length common-law partner. This is the essence of Ms. Shier’s case, and to which analysis I now turn.

III. Discussion and Analysis [14] Deciding fair and reasonable guideline income under

section 18 of the Guidelines can be a complex undertaking. Here, inaddition to the sworn affidavits and cross-examinations of the parties, I had the benefit of the opinion of Mr. Wildeman’s CharteredAccountant, Ms. Kushnerick. [15] Ms. Kushnerick’s opinion was filed with her affidavit on 5 November 2014, one day before the hearing, in response to Ms.Shier’s contention that I ought to add back to Mr. Wildeman’s guideline income certain corporate expense deductions because these werebenefits paid by Prairie Rose or Shermik to, or on behalf of Mr. Wildeman or Ms.

Carlton, persons with whom these corporations do notdeal at arm’s length. [16] I am aware of the Court of Appeal’s admonition that I risk falling into reversible error if I decide matters on the basis ofconflicting affidavits and documents that would support either party’s position. See, for example, Charles v Young, 2014 ABCA 200.Therefore, first I considered whether I could make sufficient findings of fact on the record to fairly determine Mr. Wildeman’s guidelineincome.

Asking this question inevitably led to the questions of who has the onus in these situations, and whether the onus shiftsdepending upon what corporate payment or benefit is being scrutinized. [17] Consistent with foundational rule 1.2 of the Alberta Rules of Court, and in the spirit of judicial proportionality urged by thedecision of the Supreme Court of Canada in Hyrniak v Mauldin, 2014 SCC 7, [2014] 1 SCR 87 and the decision of the Alberta Court ofAppeal in Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108, 572 AR 317, I decided that by applying the correct onuses Icould reach a fair and just result. [18] Now, to the steps in the analysis.

A. What Steps in the Analysis Must I Undertake? [19] I first reiterate that child support is the right of the child that cannot be bargained away. And, courts have no difficultyintervening where a spousal settlement agreement adversely affects the financial interests of the children: see Richardson v. Richardson, (SCC), [1987] 1 SCR. 857; and D.B.S. v S.R.G.; L.J.W. v T.A.R.; Henry v Henry; Hiemstra v Hiemstra, 2006 SCC 37, [2006] SCJ No. 37. Here, there was an agreement between the parties to deviate from the Guidelines.

I have no difficultyintervening in the parties’ agreement. [20] And, it must be top of mind that

section 1 of the Guidelines works to ensure that children continue to benefit from thefinancial means of both spouses following separation. The term “means” was given a broad

interpretation in Strang v Strang, (SCC), [1992] 2 SCR 112 at para 119, where the Court held the term “means” should include “all pecuniary resources, capitalassets, income from employment or earning capacity, and other sources from which the person receives gains or benefits.” Thisdefinition was later adopted in Leskun v Leskun, [2006] 1 SCR 920, 2006 SCC 25 at para 29. [21]

Section 1 of the Guidelines is the screen through which all judicial discretion must be filtered.

Section 1 of the Guidelinestells us that the balance of the provisions in the Guidelines are designed to achieve the objectives set out in

section 1. [22] It is through the prism of these legislated objectives, then, that all specific provisions of the Guidelines must be viewed,interpreted, and applied. The objectives are four-fold, no one objective having priority over, or more weight than, any other. These fourobjectives reflect valued community standards, and fundamental public policy principles: Objectives 1. The objectives of these Guidelines are (

a) to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spousesafter separation; (

b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective; (

c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders andencouraging settlement; and (

d) to ensure consistent treatment of spouses and children who are in similar circumstances. [23] The starting point is always the legislated objectives found in

section 1 of the Guidelines.

Section 21 is the next step, wherethe court looks at the mandatory disclosure that supplies necessary financial information including, in the case of persons who controlcorporations, the financial statements and a breakdown of all salaries, wages, management fees or other payment or benefits, paid to, oron behalf of, persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length. Afterlooking at the information disclosed under

section 21, the court then applies

section 16, or sections 17 to 20, as the case may be. [24]

Section 21 of the Guidelines provides a specific, mandatory disclosure mechanism to facilitate and meet these legislatedobjectives. Subsection 21(1) speaks to the obligation of the applicant seeking child support – in this case Mr. Wildeman - to makemandatory disclosure. In turn, subsection 21(2) speaks to the obligation of a spouse who is served with an application for child support,to produce the mandatory disclosure set out in subsection (1). [25] The obligation goes both ways:

Obligation of Applicant 21.

(1) A spouse who is applying for a child support order and whose income information is necessary to determine the amount of the order must include the following with the application: (

a) a copy of every personal income tax return filed by the spouse for each of the three most recent taxation years; (

b) a copy of every notice of assessment and reassessment issued to the spouse for each of the three most recent taxation years; (

c) where the spouse is an employee, the most recent statement of earnings indicating the total earnings paid in the year to date, including overtime or, where such a statement is not provided by the employer, a letter from the spouse’s employer setting out that information including the spouse’s rate of annual salary or remuneration; (

d) where the spouse is self-employed, for the three most recent taxation years (

i) the financial statements of the spouse’s business or professional practice, other than a partnership, and (ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the spouse does not deal at arm’s length; (

e) where the spouse is a partner in a partnership, confirmation of the spouse’s income and draw from, and capital in, the partnership for its three most recent taxation years; (

f) where the spouse controls a corporation, for its three most recent taxation years (

i) the financial statements of the corporation and its subsidiaries, and (ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length; (

g) where the spouse is a beneficiary under a trust, a copy of the trust settlement agreement and copies of the trust’s three most recent financial statements; and (

h) in addition to any income information that must be included under paragraphs (

c) to ( g ), where the spouse receives income from employment insurance, social assistance, a pension, workers compensation, disability payments or any other source, the most recent statement of income indicating the total amount of income from the applicable source during the current year, or if such a statement is not provided, a letter from the appropriate authority stating the required information. Obligation of Respondent

(2) A spouse who is served with an application for a child support order and whose income information is necessary to determine the amount of the order must, within 30 days after the application is served…provide the court, as well as the other spouse, or other assignee, as the case may be, with the documents referred to in subsection (1). [ 26 ] It is for good reason that

section 21 makes disclosure obligations mandatory. It is the primary, mandatory disclosure obligations under

section 21 of the Guidelines that supply necessary information, if a court determines that the amount of a spouse’s annual income under

section 16 would not provide the fairest determination of annual income. [ 27 ] The reciprocal obligations of the applicant and respondent are to each other, to the assignee of the order if any, and to the court. [ 28 ]

Section 21 disclosure, then, is absolutely necessary before a court can commence its analysis under sections 16 to 20. In this case,

section 21 disclosure was absolutely necessary before I could commence the analysis that engages subsection 18(2). Subsection 18(2) dictates what must be added to pre-tax income as benefits paid to, or on behalf of, non-arm’s length persons. [ 29 ] The language of

section 21 tracks the language of

section 18. The statutory language of subsection 18(2), too, is mandatory. Subsection 18(2) stipulates that all amounts paid by the corporation as salaries, wages, or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length” must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. [Underlining added] [ 30 ] For the sake of clarity, the precise statutory language in sections 16 to 18 bears repeating: 16.

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

Schedule III. 17.

(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.

(2) Where a spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the spouse’s annual income under

section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of

Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate.

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

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

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

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

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed thecorporation’s pre-tax income. 18(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporationas salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does notdeal at arm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in thecircumstances. [31] Also germane, says Ms. Shier, is

section 19 which permits me to impute income as I consider appropriate, in several stipulatedcircumstances, including “where the spouse has failed to provide income information when under a legal obligation to do so,”[Subsection 19(f))] or “where it appears that income has been diverted which would affect the level of child support to be determinedunder these Guidelines.” [Subsection 19(d)] [32] Miller v Joynt, 2007 ABCA 214 at para 21, 422 AR 150 notes that “there has been little uniform jurisprudence about thetreatment of corporate income when the corporation is owned and controlled by a payor parent.

There are few appellate cases [citationsomitted] and trial courts have taken different approaches.…” While the discussion there centered around the error in using the annualnet change in retained earnings as the starting point, rather than correctly using the corporation’s pre-tax income, the same may be saidabout the different approaches taken to amounts paid by a corporation under subsection 18(2), in the computation of pre-tax income. [33] Of significant assistance, though, is McIntyre J’s review of judicial thinking found in McCaffrey v Dalla Longa, 2008 ABQB183 at paras 240-242, 441 AR 122, which I summarize as follows: 1.

In adopting and applying the principles set out in Rush v. Rush [(2002), 2002 PESCTD 22 , 211 Nfld. & PEIR198], it falls first to the party making the assertion to adduce some evidence showing that the expense deductions shown in theshareholding spouse’s financial statements were improper for the purposes of determining the shareholding spouse’s guidelineincome. 2. If the one asserting impropriety makes out a prima facie case that such deductions were unreasonable, the onus will thenswitch to the responding party to rebut this presumption. 3.

To establish a prima facie case that the corporate expenses claimed by the respondent were improper under the Guidelines, theassertion must have more substance than a mere allegation of impropriety about the expense claims. 4. Evidence ought to be introduced as to why, for example, claimed travel, or entertainment or other expenses wereunreasonable given the nature of the business. 5. If the presumption of impropriety is established, it would fall to the shareholding spouse to prove the legitimacy of such expenseclaims. 6. This shifting evidential burden may be modified by statute.

In the case of non-arm’s length payments, the evidential burden hasbeen modified by the Guidelines. 7. In respect of the onus of proving that amounts paid by a corporation to non-arm’s length persons were legitimate payments, thisshifting evidential burden is modified. 8. Where amounts paid by the corporation are to non-arm’s length persons, subsection 18(2) of the Guidelines clearly places theonus on the shareholding spouse.

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

Section 18 does not place the onus upon the shareholding spouse, however, to show the reasonableness of all corporate expenses;rather, it places an onus upon the shareholding spouse to prove the reasonableness of any payments made to non-arm’s length parties. 10. For all other expenses, the shifting burdens explained in McCaffrey apply. [34] The McCaffrey analysis is very useful, providing the disclosure obligations under

section 21 have been fully met. If thedisclosure obligations under

section 21 are not met, then the Guidelines are very clear: unless the shareholding spouse establishes thatthe non-arm’s length payments were reasonable in the circumstances, all amounts paid by the corporation as salaries, wages ormanagement fees, or other payments or benefits, to or on behalf of those non-arm’s length persons must be added to the pre-tax income. [35] The plain reading of

section 21 imposes an initial, mandatory disclosure obligation upon Mr. Wildeman, and upon any spousewho controls a corporation. This mandatory disclosure must necessarily and logically occur first, before a court can address any of the

situations set out in sections 16 through 20. [36] To me, this is self-evident, yet

section 21 mandatory disclosure obligations often seem to be overlooked, ignored, or there isonly partial compliance. [37] As a general proposition, I suggest that given the incontestable evidentiary burden imposed by subsection 18(2) of theGuidelines upon the spouse who controls a corporation, to establish that salaries, wages or management fees, or other payments orbenefits, to or on behalf of persons with whom the corporation does not deal at arm’s length persons were reasonable in thecircumstances, persons who control corporations who fail to fully and honestly comply with

section 21 disclosure obligations do so attheir peril. [38] I find that in respect of both Prairie Rose and Shermik, Mr. Wildeman and Ms. Carlton are “persons with whom thecorporation does not deal at arm’s length.” [39] I find that Mr. Wildeman is a spouse (the definition includes former spouse) who controls corporations. Thus, it was Mr.Wildeman’s initial, mandatory obligation under subsections 21(f)(

i) and (ii) to include with his application for child support, for thecorporations’ three most recent taxation years, the financial statements of the corporations and a “statement showing a breakdown of allsalaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom thecorporation, and every related corporation, does not deal at arm’s length.” [40] I find that only part of this mandatory breakdown was provided by Mr. Wildeman, on the eve of the special chambers hearing.Yet, Mr.

Wildeman admitted during cross-examination that the only cellphone he has is a cellphone paid for by Prairie Rose, that thevehicle he uses for his own personal use is owned and paid for by Prairie Rose, and Mr. Wildeman’s own accountant offers the opinionthat some portion of the meals and travel paid for by Prairie Rose, and other expenses paid by Prairie Rose include some component forMr.

Wildeman’s personal benefit, although the amounts are not specifically broken down. [41] I read subsection 18(2) to require, for the purposes of subsection 18(1), that if the shareholding spouse fails to establish thatnon-arm’s length payments were reasonable in the circumstances, all amounts paid by the corporation as salaries, wages or managementfees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’s length must be added tothe pre-tax income. [42] I am aware that valid corporate objectives may differ from valid child support objectives. The purpose of

section 16 of theGuidelines is to allow the corporate veil to be lifted to ensure that money received as income fairly reflects all the money available for the payment of child support: Baum v Baum (1999), (BC SC), 182 DLR (4th) 715 at para 28, 7 RFL (5th) 231 (BCSC).

And, there seems to be broad judicial discretion engaged in determining what is fair and reasonable, an exercise in discretion that isalmost entirely fact driven. [43] In Goett v Goett, 2013 ABCA 216, 553 AR 275, the Court of Appeal was dealing with a situation where there had been atransfer of a corporation previously owned by the payor, for the purpose of avoiding child support obligations, and the parties were notdealing at arm’s length.

Echoing Baum, at para 15 the Court of Appeal says that “the purpose of the exercise is to ensure that the moneyavailable to the payor for the payment of child support is actually available for its payment.” [44] Miller reminds me, at para 26, that “[e]ach case must be determined on its own facts.” B. Applying the Facts of this Case to the Analysis Above [45] I understood Mr.

Wildeman’s position to be that all of his pecuniary resources, capital assets, income from employment orearning capacity, and other sources from which he receives gains or benefits, were reflected in the amount declared as his Line 150income. [46] Once Ms. Shier challenged this position, Chartered Accountant Kushnerick, who is familiar with the corporate accounting ofPrairie Rose and Shermik, produced an opinion about possible values of personal benefits paid by the corporations to, or on behalf of,Mr. Wildeman. [47] Ms.

Kushnerick deposes that the calculations set out in her letter of 29 October 2014 are accurate and are “in accordance withgenerally acceptable accounting principles.” [48] Prairie Rose provides bottled water to small and larger retail customers, including some oilfield supply and servicingcompanies. Including Mr. Wildeman, Prairie Rose currently employs four people full-time. [49] During submissions, counsel for Mr. Wildeman said that Ms.

Carlton does unpaid work for the company and therefore, Ms.Carlton ought to be entitled to her personal use of Prairie Rose’s 2011 Buick Enclave vehicle, in lieu of receiving paid wages or salary. [50] First, counsel submissions are not evidence. Second, I searched the evidence for any information about the type or quantity ofwork Ms. Carlton does for Prairie Rose. The only evidence I found was information supplied by Ms. Shier, who swears that Ms. Carltonuses Prairie Rose’s 2011 Buick Enclave as her personal vehicle, plus the evidence of Mr. Wildeman who swears that Ms.

Carlton workselsewhere as an LPN, a licensed practical nurse. [51] Third, even if I give some credence to the assertion that Ms. Carlton contributes some value to Prairie Rose, I find that thevalue of the personal benefit to Ms. Carlton of the use of the 2011 Buick Enclave significantly exceeds, in the circumstances, anycontribution Ms. Carlton may make to Prairie Rose. Therefore, the corporation’s payment for this 2011 Buick Enclave, or on behalf ofnon-arm’s length Ms. Carlton, is not reasonable in the circumstances.

[ 52 ] I am satisfied that Ms. Carlton’s personal vehicle, the 2011 Buick Enclave, is expensed through Prairie Rose because Ms. Shier swore in her October 23, 2014 affidavit at para 21 that this is Ms. Carlton’s personal use vehicle and also attaches Exhibit J. Exhibit J is Prairie Rose’s Capital Assets Permanent Working paper and includes as an asset the 2011 Buick Enclave at an original cost of $51,234.25. [ 53 ] I accept Ms. Shier’s evidence.

I also accept Prairie Rose’s evidence that the 2011 Buick Enclave is an asset since Prairie Rose’s Permanent Working paper was a document prepared in the ordinary course of Prairie Rose’s business; therefore, I admit Prairie Rose’s business document for the truth of its contents, in the absence of any evidence to the contrary. [ 54 ] I conclude that Ms. Shier has established a prima facie case that the 2011 Buick Enclave is a vehicle that is used for the personal benefit of Ms. Carlton, Mr. Wildeman’s non-arm’s length common-law partner. Mr.

Wildeman bears the burden under subsection 18(2) to establish that this benefits paid by the corporation to, or on behalf of, Ms. Carlton was reasonable in the circumstances. Mr. Wildeman has not met this burden so I must apply subsection 18(2) and add the value of this benefit to Prairie Rose’s pre-tax income. [ 55 ] Mr.

Wildeman says that although he works five or six days per week doing Prairie Rose business, he enjoys running his own business and due to increased flexibility as compared to his former sales job, he is available as a parent “as needed.” He says that although Prairie Rose is not losing money, “it is not overly profitable.” Mr. Wildeman says that he has tried to make enough money to start paying himself a monthly wage. In 2013, he deposes he was paid wages of $26,910.00. [ 56 ] During cross-examination on his affidavit, which is evidence at large, Mr.

Wildeman testified that he is now paid an hourly wage of $22.00 per hour. Extrapolated to an annual salary, this amounts to an income of approximately $45,760.00 per year. Mr. Wildeman says that this payment of an hourly wage is a relatively recent development. Since this cross-examination occurred in September 2014, I have taken that temporal factor into account. [ 57 ] I find that in 2013, Mr.

Wildeman’s was paid wages of $26,910.00 and that is reasonably commensurate with his contributions to the daily operations and management of Prairie Rose and, accordingly, reasonable in the circumstances. [ 58 ] I accept that during cross-examination, Mr. Wildeman concedes that the vehicle he uses as his personal vehicle is also owned and expensed through Prairie Rose. Although there was some suggestion in argument that Mr. Wildeman uses a truck he bought for one of his daughters as his personal vehicle, I do not accept this suggestion. Rather, I accept Mr.

Wildeman’s testimony that he uses Prairie Rose’s vehicle, currently a GMC 1500 vehicle, as his personal use vehicle. [ 59 ] The Chartered Accountant for Prairie Rose provided a Canada Revenue Agency (CRA) benefits calculator for Mr. Wildeman’s personal vehicle use benefit. No calculations were provided for Ms. Carlton’s personal use benefit of the 2011 Buick Enclave, although Ms. Shier made some suggestions about how that value ought to be calculated. [ 60 ] I find that using the CRA benefits calculator provided by Mr.

Wildeman’s accountant is the fairest method by which to extrapolate the value of the personal vehicle benefit paid by the corporation on behalf to Ms. Carlton. [ 61 ] Based on Ms. Kushnerick’s opinion, I attribute 50% of Mr. Wildeman’s use of Prairie Rose’s vehicle to personal use. [ 62 ] I attribute a greater percentage to Ms. Carlton’s personal use benefit of the 2011 Buick Enclave. A greater attribution is made to Ms. Carlton because she is employed full-time elsewhere. I settled on 85% of the 2011 Buick Enclave’s annual mileage as Ms. Carlton’s personal use component and give Ms.

Carlton the remaining 15% value of the benefit as earned by her and reasonably commensurate with her contributions to Prairie Rose for which she is not paid. This may be a generous calculation, it may be parsimonious. But, in the absence of evidence from Mr. Wildeman or Ms.

Carlton that would have assisted in the determination of what is reasonable, this is necessarily my fair estimate. [ 63 ] In reviewing the evidence, I initially found it difficult to discern what other Prairie Rose or Shermik expenses may carry a component of personal benefit, such as in the categories of vehicle maintenance and fuel, marketing, travel, meals and telephone costs.

I was assisted in my deliberations by the late-filed opinion of Chartered Accountant Kushnerick and her calculation worksheets, which calculations I accept. [ 64 ] Before I go to these other expenses, however, I note that in the years 2012 and 2013, Prairie Rose showed retained earnings: $17,138.00 in 2012 and $4,987.00 in 2013. From this, I infer that any wage or salary taken by Mr. Wildeman did not put the corporate balance sheet in a deficit position. I also infer that Prairie Rose is a going concern, because unless Mr.

Wildeman intended to bleed Prairie Rose dry, he would not have extracted any more money than that which the corporation’s ongoing daily operational requirements could reasonably withstand. Similarly, when Prairie Rose paid dividends to Mr. Wildeman, there was still value sitting on the balance sheet, presumably enough value to cover day-to-day operating expenses and to pay debt. [ 65 ] In my view, the balance sheets of Prairie Rose reflect a corporation that is growing its customer base and revenue stream.

The retained earnings are modest and amount to a holdback of undistributed cash for unforeseen contingencies. It is not fair to add back undistributed cash in a year where it is not actually paid out, unless the holdback of retained earnings is unreasonable. In this case, I cannot conclude that the holdbacks in 2012 or 2013 are unreasonable. If and when dividends are paid by the corporation to Mr. Wildeman from these retained earnings, those payments must be brought into account. [ 66 ]

Section 18 and

Schedule III dictate, however, that Prairie Rose’s past payment of corporate dividends to Mr. Wildeman in 2010 and 2013, as reported in his personal tax filings, must be brought into account as and when paid. [ 67 ] As for corporate dividends,

Section 5 of

Schedule III provides: Dividends from taxable Canadian corporations

5. Replace the taxable amount of dividends from taxable Canadian corporations received by the spouse by the actual amount of those dividends received by the spouse. [ 68 ] This provision must be taken into account, as I am bound by it. [ 69 ] In the absence of any tax calculations concerning the treatment of Mr. Wildeman’s receipt of corporate dividends, however, I decline to make any adjustment. [ 70 ] In addition to the personal use of Prairie Rose’s vehicles by non-arm’s length Mr. Wildeman and Ms. Carlton, as previously discussed, I find that Ms.

Shier also established a prima facie case that in respect of other corporate expenses paid by Prairie Rose to arm’s length persons or entities, in the categories of travel, meals, cellphone use and vehicle repair, embedded in these deductions are payments by the corporation to, or on behalf of, Mr. Wildeman and Ms. Carlton because they received personal benefit from portions of these corporate expense deductions. I find, too, that Mr.

Wildeman has satisfied the onus upon him to prove that a portion of these expenses were reasonable, in the circumstances. [ 71 ] To the extent that Chartered Accountant Kushnerick offers opinions about what may be reasonable percentage attributions for personal benefit, I accept her expert accounting opinion and set those attributions. [ 72 ] It is axiomatic that attributing additional income for child support purposes does not lead to the conclusion that there was anything wrong or untoward in what Mr. Wildeman or his accountant did in terms of deducting expenses and reporting of income for CRA purposes.

As Graesser J notes, “[m]any expenses are legitimately deductible from a company’s income for tax purposes while providing a non-taxable benefit to the shareholders”: Shaw v Przybylski , 2014 ABQB 667 at para 34 , [2014] AJ No 1239. That is not the problem. [ 73 ] Failing to disclose mandatory, necessary information is a problem, because failing to diligently comply with Guidelines processes undermines the court’s ability to fairly determine guideline income.

And, failing to disclose required Guidelines information potentially cheats children of their lawful entitlement to proper child support: this must not be countenanced. [ 74 ] In

summary, I have taken into account: • Mr. Wildeman’s personal vehicle use is based on CRA calculations of personal benefit as provided by Chartered Accountant Kushnerick. The total taxable benefit that could be imputed by CRA in calculating 100% personal benefit of having an employer provided vehicle is $38,279.52. I attribute Mr. Wildeman’s personal benefit to be one-half the total, at 50%, or $19,139.76. • Mr. Wildeman’s personal cellphone expense is estimated at 30% of total (as calculated by Ms. Kushnerick); therefore, his personal benefit is calculated to be $1,300.00. Ms.

Shier has not established a prima facie case that Ms. Carlton’s cellphone is also paid by Prairie Rose. • Mr. Wildeman failed to provide the mandatory breakdown of Ms. Carlton’s non-arm’s length personal benefit from her use of the 2011 Buick Enclave, so I have adjusted the CRA personal use benefit calculations, by attributing 85% of the vehicle’s use to her personal use; that is: $38,279.52 x 85%= $32,537.15. As for the remaining 15%, I find this amount to be a reasonable benefit earned by Ms. Carlton, in lieu of remuneration, and commensurate to her contribution to Prairie Rose.

In light of the evidentiary burden of Mr. Wildeman, I acknowledge this allowance may be generous. In my view, however, I am entitled to exercise my discretion and make this allowance, recognizing that the success of a new company usually requires more than merely the principal’s contribution. I balance giving this allowance with the recognition that the number of kilometers Ms. Carlton drives for personal benefit may be an over-estimate, as it is based on the CRA calculator’s use of 50,000 kilometers per year. When I determine that Ms.

Carlton drives 85% of 50,000 kilometers, or 42,500 kilometers per year, that may be high. Because Mr. Wildeman adduced no evidence on either aspect of Ms. Carlton’s vehicle use, I added back what I think is fair. • As for repair and maintenance of vehicles, although this is a separate line item expense on the 2010 and 2011 financial statements of Prairie Rose, it is combined on the other financial statements. At any given time, Prairie Rose owns at least four vehicles, two of which are partially used for personal use.

I infer from the nature of Prairie Rose’s business that its delivery vehicles and hauling vehicles travel farther, traverse worse road conditions, suffer more overall wear and tear, and probably break down and require parts and repair more often than the personal use vehicles driven by Mr. Wildeman and Ms. Carlton. Therefore, I have attributed roughly 2/3rds of the vehicle repair and maintenance charges for one out of four vehicles; that is: 2/3rds of 25% of the total vehicle repair expense deduction, to personal use benefits for vehicle repairs and maintenance.

Since Prairie Rose did not separate vehicle repair and maintenance in its 2012 and 2013 financial statements, I have averaged the first two years of expenses in this category and applied that average to the last two years. Again, there is a paucity of evidence on this point so I selected an amount I think is fair, in all the circumstances. • I have taken into account taxable dividends paid by Prairie Rose to Mr.

Wildeman and included these dividend payments in his Line 150 income. • Property taxes and utilities paid by Prairie Rose were adjusted by the tax and utilities authorities and were no longer an issue at the hearing. • Insurance payments were questioned by Ms. Shier, but I am not persuaded that these are unreasonable expenses given that Mr.

Wildeman is Prairie Rose’s principal, he physically works in Prairie Rose’s operations and his health is important to the company’s success. • Shermik showed a loss one year, and retained earnings the next; therefore, it is fair to look at those years collectively and balance losses against gains. • Finally, as it is my understanding that the CRA calculator line item “operating expense benefit” does include fuel costs and fuel is reflected in the total vehicle benefits calculation, to add an additional component for personal use fuel would be double-counting.

[ 75 ] One possibly fair method of determining Mr. Wildeman’s annual guideline income might involve taking his self-reported, self-declared Line 150 income and then adding back the personal use benefits that he and Ms. Carlton take from Prairie Rose and Shermik, as follows: 2010 2011 2012 2013 Mr. Wildeman’s personal use of vehicle 19,139.76 19,139.76 19,139.76 19,139.76 Mr. Wildeman’s personal cellphone expense 1,975.37 1,804.12 1,804.12 1,312.70 Ms.

Carlton’s personal use of Buick Enclave, attributing 85% 32,537.15 32,527.15 32,527.15 32,527.15 Repairs and maintenance of personal use of two vehicles 2/3rds of 25% 1,640.60 1,315.50 1,477.83 1,477.83 50% of travel/meals costs 1,680.00 1,507.50 1,314.00 3,791.00 Mr. Wildeman’s declared total Line 150 income 24,062.50 2,500.00 11,970.40 40,659.76 50% of retained earnings of Shermik, after adjusting loss with gains N/A N/A N/A 8.50 TOTALS: 81,035.38 58,794.03 68,233.26 98,916.70 [ 76 ] In this case, I find that a fairer method of determining Mr.

Wildeman’s annual guideline income is to use the Prairie Rose and Shermik Chartered Accountant’s calculations of “total income available for child support”- a phrase that I find to be synonymous with guideline income - and then add back the additional personal benefits not brought into account by Ms. Kushnerick. The additional personal benefits are Ms. Carlton’s use of the 2011 Buick Enclave, that portion of the vehicle repairs and maintenance deduction I have calculated to be a personal benefit, and the payment of dividends to Mr. Wildeman.

Using this method, the calculations are: 2010 2011 2012 2013 Total income available for child support including some expense add backs, as calculated by Ms. Kushnerick, including cellphone use, and travel and meals: 30,012.37 31,535.62 57,052.88 49,669.46 Ms. Carlton’s personal use of Buick Enclave, attributing 85% of CRA’s calculator to personal use: 32,537.15 32,527.15 32,527.15 32,527.15 Repairs and maintenance of personal use of two vehicles, that is 2/3rds of one vehicle: 1,640.60 1,315.50 1,477.83 1,477.83 Total income available for child support from Shermik, as calculated by Ms.

Kushnerick: (5,110.00) 7,981.00 Dividends paid by Prairie Rose to Mr. Wildeman: 24,062.50 13,750.00 TOTALS: 88,252.62 65,378.27 85,947.86 105,405.44 [ 77 ] Over the last three years, there has been a fluctuation in Mr. Wildeman’s income, so I am entitled to consider

section 17 of the Guidelines . I have determined that in light of Mr. Wildeman’s pattern of income over the last three years, the fair and reasonable determination would be to set the average of the last three years as Mr. Wildeman’s total income available for child support. Accordingly, I set Mr. Wildeman’s guideline income for child support purposes – for each of the calendar years 2011, 2012 and 2013 - at $85,577.00 per year [ 78 ] I now turn to Ms. Shier’s income. C. What Is Ms. Shier’s Income for 2010 and Following? [ 79 ] Ms. Shier’s total Line 150 income is reliable and I set Ms.

Shier’s guideline income as follows: 2010 2011 2012 2013 Total Line 150 income 87,153.36 98,697.88 94,645.56 91,868.00 D. From What Date Should I Set Retroactive Child Support? [ 80 ] Ms. Shier objects to retroactive recalculation of child support largely because of an agreement between the parties under which agreement the parties shared custody of the three children of the marriage, and under which neither party would pay child support.

There was also an agreement that the parties would share the costs of the children’s extra-curricular expenses. [ 81 ] In March of 2011, Alexander began living primarily with Ms. Shier while the parties continued shared parenting of Trisha and McKaylla. Ms. Shier remarried in July of 2012 but delayed moving to Edmonton until 2013 to allow the children time to transition. [ 82 ] In June 2014, the parties agreed that Trisha and McKaylla would reside primarily with Mr. Wildeman. The parties entered into a Consent Order dated 16 September 2014. [ 83 ] Ms.

Shier also objects to a retroactive recalculation of child support because there was no actual application for retroactive child support until its returnable date on 19 November 2013. This 2013 application was adjourned by consent as the parties needed to concentrate on urgent parenting issues. [ 84 ] Mr. Wildeman says that income has been a live issue since 2009 when Mr. Wildeman served a Notice to Disclose and Notice of Motion.

[ 85 ] During this hearing, Mr. Wildeman maintained that for some years Ms. Shier has made substantially more income than him, and sought a

section 3 child support order retroactive to 2010. [ 86 ] Mr. Wildeman asks that the extra-curricular expenses continue to be shared. Ms. Shier, on the other hand, says that the agreed extracurricular expenses may not properly be

section 7 expenses; rather, they may well be expenses more properly included in the table amount of any support payable. [ 87 ] At the time of this hearing, there was a relatively modest “equalization payment” due from one party to the other; therefore, once the parties have this decision, it may serve their interests to simply equalize the sharing of these expenses and then reach agreement on what expenses going forward will qualify for their equal sharing agreement. This would avoid the further expense of a

section 7 argument. [ 88 ] The authority that gives me discretion as to the appropriate date to use for retroactive awards is found in DBS v SRG. [ 89 ] In this case, it seems clear that both parties began the process of obtaining disclosure well before the filing date of Mr. Wildeman’s application in or about November 2013. Mr. Wildeman’s income for 2010, 2011 and 2012, plus the amount of corporately- deducted expenses for his personal benefit, would have been well known to him before fall 2013. The same can be said respecting Ms.

Shier’s disclosure of her Line 150 income. [ 90 ] Both parties were obliged by court order dated September 12, 2006 to provide annual disclosure of income information, the purpose of which, presumably, was to ensure that the children of this marriage were properly supported by the payment of child support as determined by the Guidelines . It may be that the parties’ ongoing acrimony clouded their perception or recollection of their respective legal obligations to their children: see

section 1 of the Guidelines . [ 91 ] Mr. Wildeman provided some breakdown of personal benefits paid by Prairie Rose but Ms. Kushnerick’s affidavit was filed only one day before the special chambers hearing on November 6, 2014. [ 92 ] Alexander has lived with Ms. Shier since March of 2011.

Shared parenting had been the norm for the two daughters, until the summer of 2014. [ 93 ] In the end result, however, since at least two the three children are undoubtedly children of the marriage, and Alexander may have been a child of the marriage until June of 2014, I will set the date for commencement of retroactive child support at 1 January 2010. The children are entitled to the benefit of adequate child support, in the past, at present, and in the future. IV.

Conclusion and Costs [ 94 ] Arrears accruing since 1 January, 2010, if any, shall be paid in increments of $200.00 per month to be paid in addition to the correct

section 3 table amount of child support. [ 95 ] If costs cannot be agreed, I invite brief written submissions at the earliest convenience of counsel, but no later than 60 days from today’s date. [ 96 ] In the meantime, I encourage the parties to access any form of mediation or counselling, or other non-adversarial processes as may be available that may assist in extinguishing, or at least limiting, the bitter conflict that seems to pervade the parties’ relationship. Heard on the 6 th day of November, 2014. Dated at the City of Wetaskiwin, Alberta this 15 th day of December, 2014. F.L. Schutz J.C.Q.B.A. Appearances:

Margaret Weir Andreassen for the Applicant Kim Wildeman Diane Ridley for Respondent Twylla Shier