Walker v Walker, 2016 ABQB 181

Court of Queen ’ s Bench of Alberta Citation: Walker v Walker, 2016 ABQB 181 Date: 20160324 Docket: 4801 138741 Registry: Calgary Between: Tammy June Walker Plaintiff - and - Robert Gordon Walker Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.T. McCarthy _______________________________________________________ Introduction [ 1 ] The Mother filed an application on May 8, 2015 to enforce a standing order of the Court with respect to child support.

The parties appeared in chambers on May 15, 2015 and the matter was adjourned to a special hearing on November 26, 2015. The Father subsequently brought his own application to vary the amount of child support he pays to the Mother. The Court heard the applications together. Specifically, the Father asks this Court to vary paragraph 5 of a previous Consent Order dated October 11, 2013 granted by the Honourable Madam Justice Horner. Paragraph 5 of that Order reads as follows: The Father shall continue to pay the full guideline amount of

Section 3 child support in accordance with his income and in accordance with paragraph 6 of the Divorce Judgment and Corollary Relief Order (“Divorce Judgment”) granted on April 12, 2011, by the

Honourable Mr. Justice Mahoney, as though the parents are not in a shared parenting regime, notwithstanding paragraph 1 of this order and shall not apply for any set-off calculation for the purposes of

Section 3 child support calculations. Background [ 2 ] The parties were married in May 1999. They had one child during their marriage, a son named C who is now 14 years old. They separated in December 2008 and divorced in April 2011. The Divorce Judgment gave the parents joint custody of C, and the parties took turns taking care of him. The Judgment established a two-week rotation, whereby the Father had C for five nights, and the Mother had him for the following nine nights. This continued until October 11, 2013 when the parties agreed to a new shared parenting arrangement as part of a Consent Order.

Reflecting a desire to ensure their son spent an equal amount of time with each of his parents, the parties agreed to split their time with C 50-50. Despite the fact that C would begin spending an equal amount of time at each parent’s home, the Consent Order required the Father to continue paying child support as though the Mother was still the primary caregiver, using an income formula prescribed in the original Divorce Judgment. [ 3 ] The Father works in commercial real estate. His income can vary significantly from year to year.

As a result, the Divorce Judgment prescribes a three-year rolling average for the purpose of calculating the Father’s Guideline income. On February 13, 2014, this Court denied an application by the Mother to amend the terms of the Divorce Judgment and issued a third order affirming the continued validity of the same formula. Paragraph 1 of that order states: [Father’s] guideline income shall be calculated using the exact formula as set out in the Divorce Judgment and Corollary Relief Order (Without Oral Evidence) granted by the Honourable Justice B.E.

Mahoney on April 12, 2011 (the “Divorce Judgment”) and shall continue to be calculated in accordance with the same, subject to a material change in circumstances [emphasis added]. [ 4 ] Under the terms of the Consent Order, the Father’s support payments were scheduled to increase in July 2014, reflecting an increase in his average income. Instead, the Father continued to pay $4,517, the same amount he had been paying from the date of the Consent Order to the end of June 2014.

If the Consent Order was strictly enforced, the Father’s monthly support obligation would have been $6,367.48 from July 2014 to June 2015, and it would have increased to $8,192.96 from July 2015 onward. [ 5 ] Justice Anderson granted an Interim Without Prejudice Order on May 26, 2015 requiring the Father to pay $6,367 per month based on a Guideline income of $712,720 until the issue of child support could be addressed in this application. Issues 1. Has there been a material change in circumstances such that this Court may vary the previous child support order? 2.

What amount of child support is appropriate in these circumstances?

a) Does

section 4 or 9 of the Federal Child Support Guidelines apply?

b) What amount of support is appropriate?

c) How should the parties allocate

section 7 expenses? 3. How much do the parties owe in arrears? Analysis Issue 1: Has there been a material change in circumstances such that this Court may vary the previous child support order? [ 6 ] The Divorce Act , RSC 1985, c 3 (2nd Supp), s 17(1)(

a) states that this Court “ may make an order varying, rescinding or suspending, prospectively or retroactively, (

a) a support order or any provision thereof...” [emphasis added]. Therefore, this Court has discretion in choosing whether to grant or dismiss an application to vary child support, but it must exercise its discretion in accordance with statute and common law.

For instance, section 17(4) of the Act stipulates that: Before the court makes a variation order in respect of a child support order, the court shall satisfy itself that a change of circumstances as provided for in the applicable guidelines has occurred since the making of the child support order or the last variation order made in respect of that order [emphasis added]. [ 7 ] Since this Court’s most recent order dated February 13, 2014 merely upheld the status quo on child support, the operative order for the purpose of this analysis is the Consent Order agreed to by the parties and accepted by this Court on October 11, 2013. [ 8 ] In Alberta, “applicable guidelines” refers to the Federal Child Support Guidelines , SOR/97-175 [ Guidelines ]: see Divorce Act , supra , s 2(1).

Section 14 of the Guidelines provides: For the purposes of subsection 17(4) of the Act, any one of the following constitutes a change of circumstances that gives rise to the making of a variation order in respect of a child support order:

(

a) in the case where the amount of child support includes a determination made in accordance with the applicable table, any change incircumstances that would result in a different child support order or any provision thereof; (

b) in the case where the amount of child support does not include a determination made in accordance with a table, any change in thecondition, means, needs or other circumstances of either spouse or of any child who is entitled to support; [...] [9] Regardless of whether (

a) or (

b) applies, it now seems well established that in both instances the change must be materialbefore the Court may vary the support order.

Indeed, the parties to this application agree that the correct standard was stated in Willick vWillick, (SCC), [1994] SCR 670 at para 20, 125 Sask R 81 (SCC), in which Justice Sopinka held that a change undersection 17(4) of the Divorce Act “means a [material] change, such that, if known at the time, would likely have resulted in different terms.The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied onas the basis for variation” [emphasis added].

This is a threshold question that asks whether the conditions for variation exist: Willick,supra at para 19. [10] In some cases, courts across this country have ruled that if a particular change was unknown yet reasonably foreseeable, thenthat is sufficient to preclude the applicant from relying on that event as a material change later on: see e.g.

Stevenson v Smit, 2014ONCA 521 at paras 14–16, 241 ACWS (3d) 908 in which the Ontario Court of Appeal held that “[f]oreseeability lies at the heart of thistest: if the matter relied upon as constituting a material change in circumstances was known at the time of contract formation, it cannotground a variation request.” The Court in that case proceeded to apply a test of objective foreseeability, finding that because the Father’sencroachment upon his capital to cover his child support obligations was objectively foreseeable at the time he entered into a separationagreement, there had been no material change in circumstances when that event came to pass. [11] In her concurring reasons in Willick, however, Justice L’Heureux-Dubé states at para 101: “the fact that a change wasobjectively foreseeable does not necessarily mean that it was contemplated by the parties” [emphasis added].

It follows that unless thechange was known or—at the very least—actually, demonstrably contemplated by the parties at the time, the applicant may argue thatthe change is material: see also Willick, supra at para 69 of L’Heureux-Dubé J’s reasons. [12] Whether

section 14(

a) or (

b) of the Guidelines applies to the present case depends on whether the original Consent Order isproperly construed as having been made “in accordance with the applicable table.” Although the Order uses the table amount for thepurpose of calculating the Father’s child support obligation, he pays 100 percent of the table amount with no set-off.

This is despite thefact that a simple set-off based on both parents’ incomes is the proper starting point for determining an appropriate amount of support ina shared parenting arrangement under the Guidelines, s 9: Contino v Leonelli-Contino, 2005 SCC 63 at paras 41, 44, [2005] 3 SCR 217.In Contino, supra at para 31, Justice Bastarache, writing for the majority, held that “not only is there no presumption in favour ofawarding at least the Guidelines amount under s. 3, there is no presumption in favour of reducing the parent’s child support obligationdownward from the Guidelines amount.” In other words, while a simple set-off based on the tables is the starting point, it is but onefactor to consider in determining an appropriate amount of support.

In shared parenting situations, the tables have “no presumptivevalue”: Contino, supra at para 49. [13] I am unable to find that the amount of child support in the present case “includes a determination made in accordance with theapplicable table” per

section 14(a). This approach is consistent with this Court’s previous application of

section 14: see e.g. Perron vHlushko, 2015 ABQB 595 at paras 5–6, 258 ACWS (3d) 367 [Perron], in which Pentelechuk J held that

section 14(

b) of the Guidelinesgenerally applies in cases of shared parenting. See also Gannon v Gannon, 2014 NSSC 113 at para 7, 239 ACWS (3d) 706, in whichJollimore J held that it is inaccurate to say child support is determined in accordance with the tables when it is calculated under

section 9. [14] The problem is that, strictly speaking, the amount of child support in this case was not calculated under

section 9. In fact, byprohibiting the Father from seeking a set-off at a later date, the Order limits

section 9’s ordinary operation. In Kozma v Kozma, 2012NSSC 380, 223 ACWS (3d) 148, the Supreme Court of Nova Scotia appears to have recognized the difficulty in interpreting

section 14of the Guidelines when the parties have previously agreed to a child support order that departs from the ordinary operation of

section 9: Shared parenting suggests the parties’ [sic] would trigger the provisions of

Section 9 of the Guidelines to determine the amount of childsupport to be paid. [...] These parties chose to ignore

Section 9. The Father agreed to pay the full guideline amount. Although theAgreement required an annual adjustment of the amount to be paid based upon the line 150 amount from the previous year, the Fathernever provided the mandated yearly Income Tax Returns and the Mother never asked for them until she commenced this application. [...]Can the Father now invoke

section 9 in respect to a parenting plan that has not changed to effectively reduce the amount of child supporthe will pay? [15] In the present case, the parties also chose to ignore

section 9 and the Father agreed to pay the full Guideline amount based onan annual adjustment. In deciding whether

section 14(

a) or (

b) ought to trigger the court’s review in such circumstances, the Court inKozma held: Unfortunately neither of these sections appear to assist the court when a child support Order does include a determination made “inaccordance with the applicable table” in a situation where the parties may have chosen to use

Section 9, but did not, choosing

Section 3instead [emphasis added]. [16] As a result, the Court proceeded to apply the material change in circumstances test without specific reference to either section14(

a) or (b). [17] In my view, the Consent Order in this case does not determine child support “in accordance with the applicable table,” butrather eschews the starting point under the tables at

section 9 in favour of a more flexible approach based on the parties’ mutualintentions in October 2013.

Section 15.1(7) of the Divorce Act expressly permits consent orders like the one at issue here to deviate fromthe Guidelines:

Notwithstanding subsection (3), a court may award an amount that is different from the amount that would be determined in accordance with the applicable guidelines on the consent of both spouses if it is satisfied that reasonable arrangements have been made for the support of the child to whom the order relates. [ 18 ] In this way, the Father’s support payments are not truly determined in accordance with the table or

section 9, but rather by the Consent Order. Coupled with the fact that the parties share time with C equally and in light of the Supreme Court’s reasons in Contino , I am satisfied that

section 14 (

b) of the Guidelines is the applicable provision. [ 19 ] Therefore, the question is whether the Father has demonstrated any change in the condition, means, needs or other circumstances of either spouse or of any child who is entitled to support that, if known at the time, would likely have resulted in different terms to the Order. In Perron , supra at para 8 , Pentelechuk J held: In my view, a material change in circumstances under s 14(

b) of the Guidelines , should be interpreted in a broad and contextual way. It is not limited to demonstrating a change in income, but can take into account any material change in the means or circumstances of the parties. For example, a disability or change in health of a parent or child, receipt of an inheritance, a new partner who contributes to expenses or the addition of a new dependant could all trigger the requisite change in circumstances [emphasis added]. [ 20 ] I agree.

The operative word in this passage is that the addition of a new dependant could constitute a material change in circumstances so as to reopen the issue of child support. The addition of a new dependant does not by itself open the gates; the Court must be satisfied that if the change had been known at the time, it would have likely led to different terms in the Order. [ 21 ] In his affidavit, the Father swears to four changes in his circumstances, which I accept were not known to him at the time he agreed to pay full child support in spite of the parties’ shared parenting arrangement: 1.

His earnings, which are used to calculate his Guideline income, have increased from $350,926 in 2011 to $736,933 in 2012 to $1,050,300 in 2013 before dropping to $959,178 in 2014. 2. He remarried. 3. He and his current wife took guardianship of a second child in October 2014, not including their first son who was born at some time after September 2013 but before the Consent Order was granted. 4. He and his current wife are expecting another child in May 2016. [ 22 ] None of these facts are in dispute.

The Mother challenges only whether these amount to material changes at law or, in other words, whether this Court may properly reopen the issue of child support at all. In particular, counsel for the Mother argued that, because the Father was a man of considerable means in 2013 when he agreed to pay the full table amount, he would likely have consented to the same terms even if these changes had been known or actually contemplated at the time of the Order .

This argument also presupposes that the Court would likely not have considered the terms of the Consent Order to be inappropriate if it had known of these changes in circumstance at the time. [ 23 ] In October 2013, the Father knew he had a newborn with his wife and that his 2012 income had more than doubled his 2011 earnings. I accept that the Father did not know his earnings would continue to increase as much as they did, or that he would remarry, take guardianship of another child, and have another baby.

In DBS v SRG , 2006 SCC 37 at para 66 , [2006] 2 SCR 231, the Supreme Court of Canada clearly stated that an increase in income is a material change in circumstances as it would alter the amount payable under the tables. Here, however, the 2013 Order specifically contemplates changes in the Father’s income and opts for a three-year rolling average based on the parties’ annual disclosure of their financial records as stipulated in paragraph 6 of the Divorce Judgment and incorporated into paragraph 5 of the 2013 Order.

This formula is fair in the circumstances because it benefits the child when the Father’s income drops in a given year, and it benefits the Father when his income increases unexpectedly in another.

Accordingly, in Haig v Whitmore , 2015 ABQB 267 at paras 11–12 , 253 ACWS (3d) 868, Yamauchi J held that there was no material change in the circumstances of a Father who sought to vary his child support payments after his income had dropped because the original order that he sought to vary had contemplated reductions or increases in his income. [ 24 ] While Haig did not include a rolling average to calculate the payor’s Guideline income, the orders in Haig and the present case are distinguishable from the alternate scenario in which the Court assesses child support based on present income levels and imposes no automatic recalculation.

In that situation, one of the parties would have to apply to vary the order because an increase or decrease in income would affect the amount of support payable under the tables. By contrast, if a standing order requires an ongoing annual adjustment based on changes to the parents’ incomes, then one could argue that a subsequent change in the payor’s income will not normally constitute a material change in circumstances unless it can be demonstrated that the change is so significant that it (

a) was not contemplated by the parties and (

b) would have likely resulted in different terms under the order. In this case, the increase in the Father’s income from $736,933 in 2012 to $1,050,300 in 2013 is less than the difference between his income in 2011 and 2012. Thus, the parties knew at the time of the original Order that the Father’s income could fluctuate by as much as $386,000 in a single year.

This is presumably why the Court accepted a three-year rolling average as appropriate in the circumstances. [ 25 ] However, counsel for the Father argued and I agree that if the Father had known the legal consequence of such fluctuations would be to increase his monthly child support payments from $4,517 to $8,192.96 in 12 months, then it is unlikely he would have waived his right to apply for a set-off under

section 9 of the Guidelines . Put differently, the Father’s consent to the 2013 Order cannot be construed as having set in stone each parent’s child support obligations now and forever. There is a point at which an increase in income, even one that is incorporated into an automatic adjustment, will exceed a child’s needs and reasonable discretionary expenses such that it would be unreasonable for the Court to conclude that the parents would not have done anything differently.

Understood in this way, the Father’s substantial increase in income is a material change in circumstances that would entitle the Court to reassess the appropriate amount of support. [ 26 ] The addition of new dependants is another material change in the Father’s circumstances that entitles this Court to consider

whether the terms of the Order ought to be varied. I am not persuaded by the argument of the Mother’s counsel that the Court shouldassume spouses living in Alberta generally have multiple children, and that the Father therefore contemplated the possibility that hewould gain two additional dependants in as many years. There is no evidence to support that conclusion.

It is debatable whether or notdifferent terms would have been ordered in 2013 if the Father had known then that he would experience this change in circumstances.Indeed, counsel for the Mother argued that the Father likely would have consented to pay the full table amount notwithstanding that hewould soon have a total of three other dependants. He already knew he had one other dependant, which did not dissuade him fromconsenting.

Furthermore, it is doubtful that a judge would have exercised his or her discretion not to sign a consent order in which theFather agreed to pay the full table amount outside the ambit of the Guidelines, s 9, simply because he had three other dependants. TheConsent Order may be regarded as a bargain struck by the parties whereby the Father agreed to pay the full table amount in exchange forthe Mother’s consent to a shared parenting arrangement.

In that context, the Father and this Court might not have done anythingdifferently. [27] However, if a consent order could never be varied in these circumstances, then it would create a disincentive for parents toreach agreement, which would undermine the objective of the Guidelines, s 1(c) “to improve the efficiency of the legal process by givingcourts and spouses guidance in setting the levels of child support orders and encouraging settlement.” [28] In the result, I am satisfied that (

i) the Father’s increased support payments and (ii) the addition of two minor dependants arematerial changes in the condition, means, needs or other circumstances of the Father that, if known at the time, would have likely led theFather to do things differently—that is, to agree to different terms. Issue 2: What amount of child support is appropriate in these circumstances? [29] Having found that there has been a material change in the Father’s circumstances, the Court must consider what amount ofchild support is appropriate. This requires the Court to consider sections 4 and 9 of the Guidelines.

a) Does

section 4 or 9 of the Federal Child Support Guidelines apply? [30] As the parties share custody equally,

section 9 of the Guidelines applies. It states: Where a spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the courseof a year, the amount of the child support order must be determined by taking into account (

a) the amounts set out in the applicable tables for each of the spouses; (

b) the increased costs of shared custody arrangements; and (

c) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought [emphasisadded]. [31] In Contino v Leonelli-Contino, 2005 SCC 63 at para 24, [2005] 3 SCR 217, the Supreme Court of Canada held that

section 9is imperative in that it obliges courts to consider the three enumerated criteria in any application for child support in the shared parentingcontext. A key difference between

section 9 and

section 4, which deals with payors whose incomes exceed $150,000, is that in theformer

section the tables have zero presumptive value; they are merely a starting point for analysis in

section 9(a). “Full consideration”must also be given to factors (

b) and (c). No one factor is more important than the others. By contrast, the table amounts arepresumptively reasonable in

section 4: Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is (

a) the amount determined under

section 3; or (

b) if the court considers that amount to be inappropriate, (

i) in respect of the first $150,000 of the spouse’s income, the amount set out in the applicabletable for the number of children under the age of majority to whom the order relates; (ii) in respect of the balance of the spouse’s income, the amount that the court considersappropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and thefinancial ability of each spouse to contribute to the support of the children; and (iii) the amount, if any, determined under

section 7 [emphasis added]. [32] Under

section 4, the payor must provide clear and compelling evidence that the table amount is inappropriate before a courtmay exercise its discretion to deviate from that amount: Francis v Baker, (SCC), [1999] 3 SCR 250 at para 43, 50 RFL(4th) 228 [Francis]. The “clear and compelling evidence” standard is not part of the

section 9 analysis because there is no similarpresumption to rebut: Contino, supra at para 22. [33] Rowbotham J (as she then was) considered the relationship between sections 4 and 9 of the Guidelines in Archibald vArchibald, 2007 ABQB 486 at paras 25–29, 427 AR 271. At para 25, she held that while

section 9 establishes a “complete code” forsetting child support in cases of shared parenting, the principles embodied in

section 4 and elucidated in cases like Francis are relevant tohigh income earners even when they are in a shared parenting arrangement. Likewise, Sirdevan v Sirdevan, 2010 ONSC 2375 at paras36, 40, 99 OR (3d) 424 supports the proposition that

section 4 is not directly applicable to cases of shared parenting; however, the “clearsimilarity” between the language in sections 4(b)(ii) and 9(

c) suggests that the principles in

section 4(b)(ii) may help guide courts inexercising their discretion under

section 9(c): Sirdevan, supra at para 36. Therefore, in this case the Court must apply the

section 9

framework developed by the Supreme Court in Contino , bearing in mind that “in high income cases, reasonableness of discretionary expenses replaces the concept of need”: Archibald , supra at para 28 .

b) What amount of support is appropriate? [ 34 ] According to Contino , supra at para 37 ,

section 9 involves a two-part determination: 1. Does each party have the child for not less than 40 percent of the time over the course of a year? 2. If so, what amount of support is appropriate, having regard to the three factors listed in

section 9 ? [ 35 ] The parties agree that the Mother and Father each have C for 50 percent of the year. Thus, the parties meet the threshold for

section 9 ’s application. The only question is what amount of support is appropriate. To make that determination, I will turn to the three factors in

section 9 .

i) the amounts set out in the applicable tables for each of the spouses [ 36 ] Unlike sections 3 and 4, Parliament intended

section 9 of the Guidelines to emphasize “fairness, flexibility and recognition of the actual conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought, even if to the detriment of predictability, consistency and efficiency to some degree.” Still, while there is no presumption for or against the table amounts,

section 9 (

a) affirms that a simple set-off pursuant to the tables is an appropriate starting point for the analysis: Contino , supra at paras 39–41 . [ 37 ] Accepting that the Father’s three-year average income for the purpose of calculating the Guideline table amount is $712,720 for the year July 1, 2014 to June 30, 2015, his corresponding Child Support Table amount is $6,367.48 per month. The Mother’s income for the same period was $47,700. Her table amount is $383.86 per month. After subtracting the Mother’s amount from the Father’s, the tables yield $5,983.62 as a starting point.

This amount purports to approximate the average expenditure of parents with referable incomes. It does not represent the maximum that the payor can afford or the minimum that he should be required to pay: Contino , supra at paras 47–48 . The value of this starting point is twofold: first, it emphasizes that both parents must contribute to the support of their child and, second, it reminds the Court to consider each parent’s fixed and variable costs before making adjustments to reach a fair outcome: Contino , supra at para 49 . ii) the increased costs of shared custody arrangements [ 38 ]

Section 9(

b) recognizes that the total cost of raising children may be greater in shared custody situations than in situations of sole custody: Contino , supra at para 52 . Contino asks the Court to examine each parent’s child expense budget. Here, the Father’s budget of monthly expenses attributable to C totals $1,886.04. The Mother submitted two budgets into evidence. The first is dated April 16, 2015 and totals $11,240.65. The second is dated November 9, 2015 and totals $13,370.34, reflecting what the Mother says are her increased monthly expenses.

Importantly, she combines her monthly expenses with her son’s and it is not immediately apparent which of these costs are attributable only to her versus her son. [ 39 ] The Father submitted a spreadsheet of the Mother’s budget that more accurately depicts the Mother’s monthly expenses in relation to C. That amount was $3,799.61 under her initial budget. Plugging in the Mother’s increased expenses into the same spreadsheet suggests that she incurs approximately $4,399.59 in monthly expenses that directly or indirectly benefit C. This assumes, of course, that each party’s budgets are legitimate.

Both parents spend $6,285.63 per month on C combined. Counsel for the Father explained at the hearing that the Mother’s $3,799.61 amount includes a vacation allowance but no provision for the Mother’s debt repayment. [ 40 ] Mother’s counsel emphasized that courts should be wary of relying too heavily on child expense budgets attached as exhibits to sworn affidavits, citing Francis , supra at paras 46–49 . I am cognizant of the inherent problems with such budgets.

However, in Contino the Supreme Court of Canada clearly states that examining the budgets and “actual expenditures of both parents” is usually necessary to determine if shared custody has led to increased costs globally, due to the duplication of costs in two homes. Therefore, an examination of the parties’ budgets is essential to the analysis under sections 9 (

b) and (c): Contino , supra at paras 52–53, 58, 70, 77 . [ 41 ] Tracking the reasons in Contino , the next step is to determine the ratio of incomes between the parents. The Father earned 93.73 percent of the parents’ combined income in 2013 using his rolling average of $712,720, or 95.66 percent using his actual income of $1,050,300 in 2013. Even in 2014, when the Mother’s income increased to $50,933 and the Father’s income decreased to $959,178, the Father was still earning 94.96 percent of the parents’ combined incomes.

If the Court uses the three-year average based on KPMG’s October 30, 2015 calculation, the Father still earns 94.73 percent of the parents’ combined incomes. Thus, he should pay for approximately 95 percent of C’s total expenses. Ninety-five percent of C’s total expenses is $5,971.35. [ 42 ] Next the Court must account for how much the payor is already contributing to the child’s monthly expenses. Since the Father already pays $1,886.04 while C is in his care, this leaves an additional $4,085.31 per month that the Father is reasonably expected to cover as his share of expenses attributable to C.

The Supreme Court directs this Court to verify how the parents’ actual contributions compare to their table amounts: Contino , supra at para 50 . Under the existing Order, the Father is contributing $8,253.04 per month ($6,367 in child support paid to the Mother plus $1,886.04 in child costs he pays directly) and, if the 2013 Order remained unchanged, this amount would jump to $10,079 ($8,192.96 in child support plus $1,886.04 in direct costs) from July 2015 onward.

These figures should be contrasted with the Father’s $6,367 table amount and the $5,971.35 in actual expenditures attributable to C for which the Father is responsible, and of which he incurs $1,886.04 personally. These direct costs are reasonable and to be expected as a result of the duplication that typically arises where more than one parent pays to house, feed, and generally care for the child: Contino , supra at para 52 .

[ 43 ] However, the analysis does not end there. iii) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought [ 44 ] The Court has “broad discretion” under

section 9 (

c) to assess the resources and needs of the parents and the child, adjusting the support award as this Court sees fit while bearing in mind the need to establish a fair standard of support for the child and fair contributions from both parents: Contino , supra at para 68 . Contino , supra at para 55 mandates a contextual, case-by-case inquiry that considers at least three things: 1. The Mother may have substantial fixed costs that are unaffected by the additional time that the child spends away from her home: Contino , supra at paras 54–55 . 2. In a variation application under

section 9, the Mother may have validly incurred expenses based on her legitimate expectations about how much child support she expected to receive under the existing Order: Contino , supra at para 55 . 3. The Court must consider the relative standard of living in each household, having regard to each parent’s net worth and his or her ability to pay the increased costs of shared parenting: Contino , supra at para 68 .

In particular, I am mindful that “in cases where there is a significant disparity in income between the parents, reductions in the basic amount of child support may undermine a lower-income custodial parent’s ability to make adequate provision for the child or children, and will certainly exacerbate the differences in standard of living between the two parental homes”: Contino , supra at para 54 , citing Carol Rogerson, “Child Support Under the Guidelines in Cases of Split and Shared Custody” (1998) 15 Can J Fam L 11 at 20–21. [ 45 ] The set-off amount in

section 9(

a) is $5,983.62. The Father would only be required to pay the Mother $4,085.31 per month based on his 95 percent share of child-related expenditures. However, as in Contino , there is no evidence that the Mother’s fixed or variable costs have decreased. Moreover, despite the Father’s concern that some of the expenses in the Mother’s revised budget may be unreasonable or illegitimately incurred, her budget is not entirely unreasonable when one considers that she expected to receive the Father’s full table amount without any set-off, adjusted to account for changes in his income year over year.

The fact that the Father’s combined monthly contribution tops $8,253.04 suggests that some adjustment to the set-off amount is warranted. I also consider the fact that he has two new dependants (five in total including his wife) relevant to the Court’s consideration of the Father’s “other circumstances.” But this too must be weighed against the obvious: the Father has a much greater ability to absorb the increased costs associated with shared parenting than the Mother, who earns between 5 and 10 percent of what the Father earns in one year.

Although there is no precise evidence of either party’s net worth, I can infer from his high income that the Father’s net worth is much greater, despite the fact that he has a mortgage while the Mother does not. [ 46 ] I am not satisfied based on the evidence before the Court that C’s standard of living varies significantly when he moves between the parties’ homes. Neither parent lives lavishly. Although the Mother swears that her house is in disrepair and needs fixing, her latest budget includes an allowance for repairs and maintenance.

If anything, the evidence suggests that C’s standard of living may be higher while he is in his Mother’s care than when he is with his Father, the sole exception being the Father’s suggestion that C’s Mother has sent their son to his house in clothes that are “ripped, torn and too small.” This has also been addressed in the Mother’s latest budget, which doubled C’s clothing allowance to $125 per month. [ 47 ] As I indicated above, the principles arising from the jurisprudence on

section 4 of the Guidelines may also guide the exercise of the Court’s discretion at this stage. In Willick , supra at para 25 , Justice Sopinka observed: There is…a limit to the extent to which the reasonable expectations of children to increased support payments can continue by reason of increases in the wealth of the payor spouse. It must not be forgotten that we are dealing with maintenance and not income sharing.

If the children are already being maintained at a very high standard a change, even a significant change, in the wealth of the payor spouse will not in itself entitle the children to increased support so as to permit them to live in luxury simply to emulate the lifestyle of their parent. Such an expectation on the part of children would not be reasonable. [ 48 ] Similarly, the Supreme Court acknowledged in Francis , supra at para 41 that: ...child support undeniably involves some form of wealth transfer to the children and will often produce an indirect benefit to the custodial parent.

However, even though the Guidelines have their own stated objectives, they have not displaced the Divorce Act , which clearly dictates that maintenance of the children, rather than household equalization or spousal support, is the objective of child support payments. [...] While standard of living may be a consideration in assessing need, at a certain point, support payments will meet even a wealthy child’s reasonable needs.

In some cases, courts may conclude that the applicable Guideline figure is so in excess of the children’s reasonable needs that it must be considered to be a functional wealth transfer to a parent or de facto spousal support. I wholly agree with the sentiment of Abella J.A. that courts should not be too quick to find that the Guideline figures enter the realm of wealth transfers or spousal support. [ 49 ] The “so in excess” test has no place in

section 9, where the tables have no presumptive value and the courts have broad discretion in setting child support based on the parties’ actual circumstances. At the same time, however, the reasonableness of a parent’s discretionary expenses related to the child is paramount in high income cases: Archibald , supra at para 28 . This modification to the

section 9 analysis recognizes that child support in high income cases may exceed the child’s basic needs to some extent and still be reasonable in light of the child’s reasonable expectation to a comparable standard of living in each home. [ 50 ] It is erroneous to suggest that if the full table amount of $10,045 was appropriate in Francis , then the full table amount of $6,367.48 must be appropriate in this case. First, the parents in Francis had two children, not one. Second, the father in Francis lived a lavish lifestyle (see para 53), whereas here the Father does not.

Third, Francis was not a case of shared custody. Awarding the full table amount without any set-off would ignore the Mother’s responsibility to contribute financially. [ 51 ] Counsel for the Father cited Ewing v Ewing , 2009 ABCA 227 , 457 AR 238 and asked this Court to apply the reasons in that

case to the present facts. However, Ewing is also distinguishable because the parents in that instance did not share custody. It dealt only with a situation in which the payor’s income exceeded $150,000. Nevertheless, Conrad JA’s comments in Ewing , supra at para 61 are relevant to this Court’s analysis under

section 9 and to understanding the effect that changes to one parent’s income has on the terms of a variation order: Children should not be held to the standard of living in place at the time of their parent’s separation and should, where feasible, enjoy the standard they might have had but for the divorce. However, not every increase in annual income translates into a change of a family’s lifestyle, even when the family is intact and not embroiled in litigation. A family would often treat exceptional increases in income differently than increases that are routinely anticipated.

Furthermore, while some wealthy families live luxurious lifestyles, that is often because of extraordinary capital bases, rather than extraordinary increases in income alone. Moreover, not every wealthy family lives at the same standard as every other wealthy family. [ 52 ] In the present case, there does not appear to have been a discernable increase in C’s standard of living since the Father’s child support payments increased to $6,367 per month.

Indeed, the Mother’s child expense budget dated November 9, 2015—over five months after the increase was ordered—is still under the $4,517 she had been receiving since 2013. This leads the Court to infer that any significant amount greater is a de facto wealth transfer. Furthermore, the Mother’s budget from March 30, 2009 disclosed $9,966.59 in total monthly household expenses at a time when she was receiving less than $3,000 in child support, whereas her budget dated April 16, 2015 totals $11,240.65, an increase of only $1,274.06 over six years.

This is despite the fact that by April 2015 the Mother was claiming $6,367.48 per month in child support. Thus, the increase in support has not led to a significant increase in C’s standard of living. [ 53 ] Fairness and flexibility govern the Court’s discretion under

section 9(c). Taking all of these factors into consideration, I conclude that child support should be set at $5,000 per month, effective June 1, 2015. This amount acknowledges the Mother’s fixed costs and additional debt payments on lines of credit she took out to pay for C’s living expenses; the Father’s ability to pay; the parents’ joint responsibility to contribute financially to C’s upbringing; the reasonableness of the parties’ discretionary expenses; and the fact that the Father has been contributing well in excess of what he would be required to pay under the simple set-off amount.

Furthermore, although the Father’s Guideline income was scheduled to increase to $915,470 for the purpose of calculating child support payable beginning July 2015, I note that the Father’s actual income for 2014 ($736,933) more closely approximates the $712,720 average used for the purposes of this analysis. I am satisfied that this is an appropriate Guideline figure for present purposes, given that the support award at that rate well exceeds the child’s actual needs and reasonable discretionary expenses.

Based on the evidence, anything greater would amount to a de facto transfer of wealth. [ 54 ] The parties should continue to disclose their annual incomes so that each can assess whether there has been such a significant change in their relative incomes as to constitute a material change in circumstances.

c) How should the parties allocate

section 7 expenses? [ 55 ] At the hearing of this application, the Mother suggested that she was willing to split

section 7 expenses 50-50 with the Father, despite the fact that they would normally be shared in proportion to the parents’ incomes: Guidelines , s 7(2). Meanwhile, the Father sought a determination as to what expenses would count as special or extraordinary to provide the parties with certainty going forward. Indeed, his counsel doubted whether any sharing of

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

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

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

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

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

e) expenses for post-secondary education; and (

f) extraordinary expenses for extracurricular activities [emphasis added]. [ 56 ] It is worth noting that

section 7 is a closed list. For the purpose of paragraphs 7(1) (

d) and (f), section 7(1.1) defines the term “extraordinary expenses” as: (

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

b) where paragraph (

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

i) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse would receive under the applicable table or, where the court has determined that the table amount is

inappropriate, the amount that the court has otherwise determined is appropriate, (ii) the nature and number of the educational programs and extracurricular activities, (iii) any special needs and talents of the child or children, (iv) the overall cost of the programs and activities, and (

v) any other similar factor that the court considers relevant. [ 57 ] The parties’ Divorce Judgment, which governs the parties’ eligible

section 7 expenses to this day, limits which expenses are shareable to the following items: a. All out of pocket medical and dental expenses in excess of $100.00 per year; b. The amount of healthcare insurance premiums directly related to the additional coverage for the child; c. Hockey registration, fees and equipment; d. The child’s camps; and e. Daycare. [ 58 ] Contino , supra at para 71 indicates that “a claim by a parent for special or extraordinary expenses falling within s. 7 of the Guidelines …can be examined directly in s. 9 with consideration of all the other factors.

Section 9(

c) is conspicuously broader than s. 7 .” Similarly, in Metzner v Metzner , 2000 BCCA 474 at para 52 , 80 BCLR (3d) 133, a

section 4 decision cited by Rowbotham J (as she then was) in Archibald , supra at para 33 , the British Columbia Court of Appeal held that there was “no advantage” to separating extraordinary expenses from the high income earner’s regular support payments, opting instead to set child support in the table amount. Likewise, in Moors v Moors , 2013 ABQB 740 at para 149 , 579 AR 59, Hunt McDonald J declined to order additional

section 7 expenses because they were already included in the mother’s budget. [ 59 ] What will count as a special expense in this case should be limited for two reasons. First, the amount of support that the Court orders under

section 9 already contemplates an allowance for special expenses that the Mother may incur while C is in her care. Second, the child expense budgets upon which the

section 9 analysis is based include a number of special expenses that would have otherwise been subject to

section 7 sharing. However, the Court must be careful to craft an order that is practical. Subsuming

section 7 expenses in the child support award ascertained under

section 9 may be attractive, but this approach virtually guarantees that the parties will be back before the Court when one party refuses to pay for a special expense simply because he or she happens to have C in his or her care during the week when the expense comes due. Therefore, to avoid such disagreement and to provide certainty for the parties, it is appropriate in the circumstances to order the parties to share

section 7 expenses equally. The items listed at paragraph 5 of the Divorce Judgment shall continue to be the only expenses eligible under

section 7, excluding daycare, which C no longer needs. For greater certainty, I do not consider the following items to be extraordinary in the context of this case, nor are they ordered on this application: clothing, suits, shoes, bicycles, skateboards, skis, cell phones, computers, vacations, school fees, and school supplies. In other words, both parents must use their own income and, in the Mother’s case, the support payments she receives, to purchase these items.

Issue 3: How much do the parties owe in arrears? [ 60 ] In Haisman v Haisman , 1994 ABCA 249 , 157 AR 47, the Court of Appeal considered when it may be appropriate to cancel arrears.

The Court held at para 32: In short, in the absence of some special circumstance, a judge should not vary or rescind an order for the payment of child support so as to reduce or eliminate arrears unless he or she is satisfied on a balance of probabilities that the former spouse or judgment debtor cannot then pay, and will not at any time in the future be able to pay, the arrears. [ 61 ] The Court of Appeal also held at para 41 that arrears for the maintenance of children shall not be capped at one year.

Declining to order arrears in the present case would effectively condone the Father’s disobedience of the existing Consent Order when he ought to have brought his application to vary sooner: see e.g. the Court of Appeal’s criticism of the “rule against hoarding” in Haisman , supra at paras 44–50 . Furthermore, delay by one parent in attempting to collect arrears of child support is irrelevant to this Court’s decision on a variation application: see Haisman , supra at para 51 . [ 62 ] The Father did not specifically request arrears in his application.

The Mother, on the other hand, sought arrears when she filed her application to enforce the status quo. I am satisfied that either party can now or could at some point in the future pay arrears if this Court so ordered. Therefore, the Father is responsible for 11 months of arrears from July 2014 through May 2015 under the terms of the existing Consent Order.

In addition, the Mother must reimburse the Father for the 10 months ending March 2016 in which he paid more support than appropriate as directed by the Interim Without Prejudice Order. [ 63 ] The Court assesses arrears as follows: Child Support Arrears Month Father Owed ($) Father Paid ($) Outstanding ($) July 2014 6367.48 4517 1850.48 August 2014 6367.48 4517 1850.48 September 2014 6367.48 4517 1850.48

October 2014 6367.48 4517 1850.48 November 2014 6367.48 4517 1850.48 December 2014 6367.48 4517 1850.48 January 2015 6367.48 4517 1850.48 February 2015 6367.48 4517 1850.48 March 2015 6367.48 4517 1850.48 April 2015 6367.48 4517 1850.48 May 2015 6367.48 4517 1850.48 20355.28 Month Father Owed ($) Father Paid ($) Overpayment ($) June 2015 5000 6367 1367 July 2015 5000 6367 1367 August 2015 5000 6367 1367 September 2015 5000 6367 1367 October 2015 5000 6367 1367 November 2015 5000 6367 1367 December 2015 5000 6367 1367 January 2016 5000 6367 1367 February 2016 5000 6367 1367 March 2016 5000 6367 1367 13670 2014

Section 7 Expense Arrears $1,362.77* payable to the Mother *This amount excludes the cost of baseball cleats, which do not strictly fall within the list of eligible

section 7 expenses under the Divorce Judgment. Net arrears payable to Mother: Child support of $6,685.28 ($20,355.28 - $13,670) +

section 7 expenses of $1,362.77 = $8,048.05 Net arrears payable to Father: $0 Order [ 64 ] Paragraphs 5 and 6 of the Consent Order dated October 11, 2013 are set aside. A new Order issues as follows: 1. The Father shall pay the Mother $5,000 per month in child support beginning June 1, 2015 until the child begins post-secondary studies. 2. The parties shall adjust the amount of support payable annually in accordance with the Bank of Canada’s Inflation Calculator, beginning June 1, 2016. 3. The Mother and the Father shall pay for eligible

section 7 expenses in equal shares. Eligible

section 7 expenses shall be limited to those listed at paragraph 5 of the Divorce Judgment and Corollary Relief Order (the “Divorce Judgment”) granted on April 12, 2011 by the Honourable Mr. Justice Mahoney, excluding daycare. 4. The Father shall pay the Mother $8,048.05 plus pre-judgment interest in accordance with the Judgment Interest Act , RSA 2000, c J- 1, s 4(2), representing a payment of arrears for child support up to March 31, 2016 and

section 7 expenses up to December 31, 2014. 5. The Mother and the Father shall continue to provide disclosure in accordance with paragraph 8 of the Divorce Judgment. [ 65 ] The parties may make an appointment to speak to costs if they fail to agree, although I note that each has succeeded in part on this application.

Heard on the 26th day of November, 2015. Dated at the City of Calgary, Alberta this 24th day of March, 2016. J.T. McCarthy J.C.Q.B.A. Appearances: Micah Chartrand for the Plaintiff Laurie Tymchuk for the Defendant