Thorlakson v Thorlakson, 2016 ABQB 52

Court of Queen’s Bench of Alberta Citation: Thorlakson v Thorlakson, 2016 ABQB 52 Date: 20160125 Docket: 4803 16327 Registry: Edmonton Between: Chantal Marie Thorlakson Plaintiff - and - Gordon James Thorlakson Defendant Corrected judgment: A corrigendum was issued on August 3, 2016; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.A. Jerke _______________________________________________________ Overview

[ 1 ] Chantal Thorlakson and James Thorlakson started co-habiting in 1989 while they were both in university. They married in August of the same year. They both continued university: Ms. Thorlakson completed a Bachelor’s degree in social work in 1992, and Mr. Thorlakson completed a Bachelor of Arts degree in 1991 then entered the faculty of law, where he earned a law degree in 1994. [ 2 ] Ms. Thorlakson started work as a social worker in 1992. Mr. Thorlakson began articles in 1994 and has remained with the same firm. They have two children: S.T. born in April, 1996 (now 19), and C.T. born in May, 2000 (now 15).

Both of them have their primary residence with Ms. Thorlakson. I previously made an order for joint custody, confirming hers as the primary residence, and clarifying Mr. Thorlakson’s access to C.T. [ 3 ] The Thorlaksons experienced difficulties in their relationship and separated, then reconciled, in 2009 and again in 2011. Their final separation, after nearly 24 years of marriage, was in January, 2013. By then Ms. Thorlakson was 44, Mr. Thorlakson was 46: she is now 46 and he is 49. Corollary relief was severed and a divorce was granted in 2014. Mr. Thorlakson has re-married. [ 4 ] Mr.

Thorlakson agrees to pay base support for both children under the Guidelines in the amount set out in the table, without adjustment. However, the amount of income to be used is in dispute. The matters which require judicial determination are therefore the amount of outstanding and go-forward child support; the amount of outstanding and go-forward spousal support, if any; and the division of matrimonial property and debt. [ 5 ] Each of the parties referred to a number of authorities which I have reviewed and considered. Resolution of this case depends mostly on a determination of the facts.

Division of Matrimonial Property [ 6 ] Both parties propose an equal distribution of the property acquired during the marriage on the basis that they would retain personal items, photography equipment, and firearms currently in their possession. Resolution of the remaining matrimonial property division requires determination of the couple’s distributable assets and debts, and their values. Each provided a proposed matrimonial property statement (Exhibits 2 and 9). My analysis follows the forms of these proposals. [ 7 ] After 24 years of marriage the couple has accumulated more debt than assets. I find that Ms.

Thorlakson must make an equalization payment to Mr. Thorlakson of $114,052.50 in order to equalize the overall net matrimonial debt of $55,355.00. To reach that conclusion I have examined the matrimonial assets and debts for which evidence was adduced at trial. [ 8 ] The former matrimonial home is distributable property. Both parties agree it should be retained by Ms. Thorlakson. Mr. Thorlakson contends that it should be valued at $642,000.00 based on a 2013 appraisal of $625,000.00; a 2014 proposed list price of $640,000; and the 2015 property tax assessment of $642,000.00. Ms.

Thorlakson contends that it should be valued at $617,500.00 as the mid-point between the 2013 appraisal and a 2015 appraisal of $610,000.00. Both parties urged the Court to decide the value even though the valuation evidence, all opinion, was not sworn. I fix the value at $626,000.00. That is the mid-point between the 2015 appraisal and the 2015 assessed value. There is no way to assess the weight of the various valuation opinions so I am simply using the two most current values.

The fact that the result is greater than the 2013 estimate and less than the proposed listing price offers some support for this finding. [ 9 ] Ms. Thorlakson remains responsible for the matrimonial home mortgage . The balance was about $598,000.00 on the date of separation. Ms. Thorlakson has lived in the home since separation and has made the mortgage, tax, and related house payments. The mortgage balance was reduced to about $564,700.00 by October, 2015. Ms.

Thorlakson has covered all of the expenses related to the home since separation, and it was those payments that resulted in the reduction of the mortgage debt. I find that she is entitled to retain the benefit of that reduction even though she has had the exclusive use of the home because she has also the borne the cost of the significant mortgage, and all the related home expenses. This is unlike Mr. Thorlakson, who has paid the interest on the consumer debt but has not paid down any of the principal. [ 10 ] Ms. Thorlakson is therefore entitled to deduct $598,000.00 for this matrimonial debt. [ 11 ] Ms.

Thorlakson will retain the 2009 GMC truck . Ms. Thorlakson contends that it should be valued at $15,000.00 based on her need to trade the truck in and a possible trade-in value of $15,000.00. She also provided her own research showing potential values from $15,000.00 to $21,000.00. Mr. Thorlakson contended the value should be $30,000.00, but did not provide any evidence to substantiate that. Both parties urged the Court to decide the value even though the valuation evidence, all opinion, was not sworn.

Whatever weight it might have, the best value on this evidence is $21,000: it is a possible retail value as found in Ms. Thorlakson’s exhibit 3(11), and it is the highest value proposed by her. Mr. Thorlakson traded in his old car for a notional trade-in value and will retain his 2013 BMW, which has no net value. [ 12 ] During the marriage the family was heavily involved with horse-back riding and competitions. After the separation the children and Ms. Thorlakson continued their involvement. The three horses have now been sold. Sweetgrass was blind, so no money was received.

Leo was sold for $2,000.00 and S.T. received the proceeds. Bonita was sold and Ms. Thorlakson will retain the sale proceeds of $3,000.00. The balance of the net sale proceeds after pay-out of the Scotia passport visa from the sale of the horse trailer is $5,191.00. This is retained by Ms. Thorlakson. [ 13 ] Ms. Thorlakson will retain her RRSP in the agreed amount of $27,277.00 less tax of $5,455.00; Mr. Thorlakson will retain his RRSP in the agreed amount of $31,064.00 less tax of $6,213.00. [ 14 ] Ms.

Thorlakson does not necessarily want the furniture, art, and electronics but she has had them since separation and still has them. She will retain these items. The evidence is sparse; perhaps the best that can be said is that this appears to be a household with now-used furniture. I fix a value of $10,000.00 to these items as proposed by Mr. Thorlakson.

[ 15 ] Consumer debt totalling $141,080.45 is matrimonial debt for which Mr. Thorlakson is responsible: $39,830.00 on the TD line of credit, $65,584.00 on the MBNA mastercard, $26,109.00 on the BMO mastercard, and $9,557.45 on the Scotialine line of credit. [ 16 ] Ms. Thorlakson is responsible for her RBC visa . The balance owing at separation was $2,638.78 which is matrimonial debt. The increase in that debt since separation is not an appropriate adjustment to the matrimonial property. [ 17 ] Ms.

Thorlakson contends that there is a matrimonial debt owing to her mother in at least the amount of $42,000.00 because she withdrew funds from her RRSP and provided $42,000.00 to Ms. Thorlakson for the purchase of a house in 2009. I find that Ms. Thorlakson has failed to prove on the balance of probabilities that there is a legal debt, and there are uncertainties about a potential equitable claim: • Many years have passed since the funds were provided.

If there ever was a legal obligation it is likely statute barred. • The mother has lived with the Thorlaksons for many years, rent-free. • The house which was purchased was sold and the proceeds used to purchase a different home. • The cheque does not make any reference to a loan or repayment, and no other documentation supporting a loan was put into evidence. [ 18 ] Both parties have incurred significant legal fees . In Ms. Thorlakson’s case her mother has provided her with funds to pay some of those fees.

I find that fees should be considered with respect to costs of this action, not as a matrimonial property debt. Ms. Thorlakson’s argument that her legal fees should be treated as matrimonial debt to level the playing field is more appropriate to an application for interim relief than for a final property distribution. [ 19 ] Mr. Thorlakson contends his contingent tax liability of $32,650.00 should be considered a matrimonial debt. In 2012 Mr. Thorlakson took about $111,000.00 out of his professional corporation by way of a shareholder’s loan, which normally results in treatment by CRA of the loan as income.

He testified that if the amount was considered income there would be tax of about 30% payable. Less tax is paid if the amount is taken out as dividends. Mr. Thorlakson, assisted by his accountant, has quite appropriately taken steps to defer or reduce the liability, and to reduce his tax burden. His 2012 tax filing, without considering the shareholder’s loan as either income or dividend, resulted in a $7,072.68 tax refund. As of the 2014 balance sheet, there is still a shareholder’s loan of $105,000.00 owing. It is unclear why CRA has not yet finalized the matter. [ 20 ] Ms.

Thorlakson points to the December 31, 2012 account balance in her and Mr. Thorlakson’s joint account ($12,000.00) and the professional corporation account balance ($13,000.00), neither of which is accounted for in the matrimonial assets. She contends that some or all of these balances should be set-off against the contingent tax liability. There is no real accounting for what became of these accounts post-separation, but the professional corporation balance sheet shows a shareholder deficit of $135,000.00 because its debts exceed its assets.

She agrees that the tax liability on the shareholder’s loan overdraft is a matrimonial debt but argues that it should be $17,500.00 based on an earlier position taken by Mr. Thorlakson: that liability is calculated by subtracting the $7,000.00 2012 refund from Mr. Thorlakson’s 2013 tax liability of about $24,500.00. [ 21 ] I find that Mr. Thorlakson has shown that he is responsible for tax liability due to the overdrawn shareholder’s loan prior to separation.

On the evidence before me I find that the amount of that liability is $25,500.00 based on the approximate tax for deemed income less the refund he actually received. There is so much other debt in the corporation that it cannot be said that the corporate bank balance must be set-off against the tax liability, it is just part of the overall negative corporate balance sheet. There is not enough evidence concerning transactions in the joint bank account after separation to conclude that the $12,000.00 must be similarly set-off. I am not satisfied that Ms.

Thorlakson did not receive some or all of the benefit of the $12,000.00 in the couple’s joint personal account. [ 22 ] Applying these findings to the divisible matrimonial asset and liability statement yields the following conclusions: • Mr. Thorlakson’s assets total $31,064.00. • Mr. Thorlakson’s debts total $172,793.45. • Mr. Thorlakson’s net assets, rounded, are ($141,730.00). • Ms. Thorlakson’s assets total $692,468.00. • Ms. Thorlakson’s debts total $606,093.78. • Ms.

Thorlakson’s net assets, rounded, are $86,375.00. • Total property for the couple is ($55,355.00). • Each party is entitled/obligated to half, namely ($27,677.50). • Ms. Thorlakson’s equalization payment to Mr. Thorlakson is $114,052.50. Child Support [ 23 ] Determination of Mr. Thorlakson’s responsibility for base child support requires determination of his income. Two questions need to be answered:

• Should the current year or the prior year be used? • What was Mr. Thorlakson’s income for the relevant years?

A) Should the current year or the prior year be used? [ 24 ] I find that Mr. Thorlakson’s income for the prior year should be used for the determination of his past obligations. Similarly, his income for the prior year should be used to calculate his on-going obligations, and the amounts should then be adjusted on May 1 commencing 2016 and continuing annually after that. [ 25 ] Mr. Thorlakson receives all of his income by payments from his firm to his professional corporation.

Annually, the firm allocates a budgeted income to him, and that has been steadily increasing. 80% of that is paid out by monthly payments during the budget year, but the remainder is not paid out until after the year-end. If the overall payment is less than the budget, which is rare, that is adjusted after the year-end. Historically there have been few downward adjustments from the budget, and those have been small. [ 26 ] A number of factors have contributed to this family’s negative financial circumstances: poor budgeting; spending beyond their means; and lack of proper planning. Mr. and Ms.

Thorlakson have both participated in what has led to their difficulties. Mr. Thorlakson’s child support obligations are significant and will continue for some time. In my view, the family is best served if Mr. Thorlakson’s go- forward obligations are based on his prior year income, adjusted on May 1 of the year-after-next as that will provide more certainty in the calculations, allow for the adjustment to Mr. Thorlakson’s budgeted annual allocation to the actual amount, and enable him more ability to plan for payment of the outstanding debts, tax liabilities, and support payments.

B) What was Mr. Thorlakson’s income for the relevant years? [ 27 ] Mr. Thorlakson contends that because he takes all his money out of the professional corporation each year his income tax return is an accurate reflection of his earnings. He proposes that his income should be fixed for go-forward payments at $330,000.00, which is the amount found as his guideline income in the 2015 interim order. [ 28 ] Annually, Mr. Thorlakson’s firm allocates income to him, all of it income he earns as a lawyer; $315,000.00 in 2012, $335,000.00 in 2013, and $340,000.00 in 2014.

The allocation for 2015 is not yet made, but the budgeted allocation is $375,000.00. Those funds are paid to his professional corporation, subject to Mr. Thorlakson’s ability to designate some of the funds to others under the firm’s trust arrangement, which he has done first to Ms. Thorlakson and now to his present wife. He has some control on how funds are paid out of his professional corporation namely, wages, dividends, or shareholder’s loans. His income tax returns show line 150 income of $133,100.00 for 2012; $303,100.00 (including RRSPs) for 2013; and $291,386 for 2014.

His professional corporation can also pay wages to others, and has done so. It previously paid wages to Ms. Thorlakson and may pay wages to Mr. Thorlakson’s wife in 2016. He testified that the professional corporation has business expenses, in the order of $10,000.00 to $15,000.00 per year. [ 29 ] The Guidelines provide as follows: 16. Calculation of annual income – 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 issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. ... 18.

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

section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situation 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,…for the most recent taxation year;

(2) Adjustment to corporation’s pre-tax income – In determining the pre-tax income of a corporation for the purposes of subsection (1), 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. [ 30 ] I find that the annual income amount stated on Mr. Thorlakson’s tax returns does not fairly reflect all the money available to him for the payment of child support.

The amount fairly available to him is the amount allocated each year to him by his firm, less the professional corporation’s business expenses. This takes into account not only Mr. Thorlakson’s total line 150 income, but also the other non-arm’s length allocations of Mr. Thorlakson’s earnings. [ 31 ] I am prepared to accept Mr. Thorlakson’s evidence, as Justice Graesser did in the April 2015 order, that the corporate expenses are $10,000.00 per year. While there may be some element of personal expenses in the corporate expenses there was no real exploration of that issue at trial.

In any event, the uncertainties are recognized by using the sum of $10,000.00 as deductible corporate expenses: the actual expenses on the financial statements are somewhat higher than that. The fact that Mr. Thorlakson derives some benefit from using a professional corporation does not mean that there are not some proper corporate expenses. [ 32 ] Mr. Thorlakson’s income for the purposes of child support calculations is therefore $305,000.00 in 2012; $325,000.00 in 2013; and $330,000.00 in 2014.

The 2012 income shall apply to the 2013 child support calculations; the 2013 income shall apply to the 2014 calculations; and the 2014 income shall apply to the 2015 calculations. It shall also apply from January 1 st to April 30, 2016. On

May 1 st , 2016 his income will be adjusted and calculated at his actual 2015 allocation less $10,000.00. If his actual 2015 allocation is $375,000.00 as per the budget, his income for the purposes of child support calculations is $365,000.00 starting May 1, 2016, whether his 2016 budget allocation is more or less. The actual, not budgeted, 2016 allocation will apply effective May 1, 2017. Using this formula, actual allocations are to be used for Mr. Thorlakson’s continuing child support obligations.

C) Conclusion [ 33 ] There have been two interim support orders. In June 2013 an order was granted based on an agreed annual guideline income of $273,333.00 with reference to the timing and 80:20 split for payment of the annual income. In April 2015 a go-forward order was granted based on an annual income for 2014 of $330,000, adjusted for corporate expenses. Ms. Thorlakson is not seeking any adjustment prior to May 1, 2013. [ 34 ] Applying my findings to Mr.

Thorlakson’s child support obligations for the two children yields the following conclusions: • Child support payable for May 1, 2013 to December 31, 2013: $4,176.00 per month. Paid $3,752.00 per month. Owing $424.00 x 8 months = $3,392.00. • Child support payable in 2014: $4,444.00 per month. Paid $3,752.00 per month. Owing $692.00 x 12 months = $8,304.00. • Child support payable in 2015: $4,511.00 per month. Mr. Thorlakson underpaid for four months at a rate of $3,752.00 per month.

Owing $759.00 x 4 months = $3,036.00. • The total amount owing under the final order for May 1, 2013 to December 31, 2015 is $14,732.00. • The go-forward child support is $4,511.00 per month from January 1 to April 30, 2016. Effective May 1, 2016, the monthly amount will be $4,980.00 if the 2015 budgeted allocation of $375,000.00 is confirmed. If the allocated budget is not what Mr. Thorlakson ends up receiving, the monthly child support will be calculated based on the actual 2015 allocation less $10,000.00. [ 35 ] S.T. is in her first year at Grant MacEwan University; C.T. is still in high school.

There was little evidence of expenses for post-secondary school. There was an indication of available RESP funds which are to be divided equally between the children, but no details were provided about those funds. No order was requested concerning post-secondary expenses. [ 36 ] Expenses for braces for the children of approximately $2,400.00 are outstanding. In the circumstances of the overall support payments, including the fact that Mr. Thorlakson is paying full guideline support on the totality of his income over $150,000, I order that those costs are to be the responsibility of Ms. Thorlakson.

The parties did not request any further order concerning s7 expenses. [ 37 ] In drafting the judgment, counsel will include an MEP enforcement clause. I also direct that there will be an annual exchange of information including Mr. Thorlakson’s corporate tax returns and financial statements, and information concerning his annual allocated firm income, both budgeted and actual. Both parties will also exchange their income tax returns. This exchange will occur on or before the first of May of each year. Spousal Support

A) Factual Background [ 38 ] Ms. Thorlakson was 20 years old and attending university when the couple married. She worked part-time as a personal care attendant while in university. She was 23 when she completed her social worker degree and entered the work force as a full-time social worker. She was well-respected in her profession. While Ms. Thorlakson was working S.T. was born, and she took 6 months maternity leave in 1996 before returning to work, staying about another 6 months. In total she was a social worker about 6 years.

After that she did not work outside the home, instead caring full-time for S.T. and C.T., who was born about two years later. [ 39 ] In 2002, when C.T. was about two, she enrolled at Metro College and by 2003 she completed a photography certificate program. She started her own photography business. Although she developed a specialty and received awards for her work the venture was not lucrative. She got a part-time instructor position at Metro College teaching photography while she ran her business. Even with that, the majority of her income was derived from money allocated to her from Mr.

Thorlakson’s professional income. [ 40 ] In 2009 the couple was experiencing challenges and separated. During that time Ms. Thorlakson took steps to get re-certified as a social worker. She passed the written examination but did not pass a required panel interview because she was not sufficiently acquainted with current practices and policies. She could have re-taken the panel interview after six months but has never done so. [ 41 ] In 2011 the couple again separated. That year she resigned her teaching position and put her photography business on hold.

She applied to the University of Alberta to pursue a psychology degree. This is a four year program, but because of her social work degree she was given two years credit. Full-time students take 3 to 5 courses for credit per term. In the winter 2012 she audited one course. The couple reconciled in May. She took one course in the spring session for credit and audited another. She registered for three courses in the fall 2012 but withdrew from two and audited the third. She testified that was because she was then experiencing depression, which she has overcome. [ 42 ] The couple separated in January, 2013.

In the winter 2013 she audited one course, and in the spring she took one course for credit. In the fall 2013 she took one course for credit and audited another. In the winter 2014 she took two courses for credit, another in

the spring, and another in the summer. She registered for four courses in the fall of 2014, one by audit. In the winter 2015 she registeredfor three courses but withdrew from one of them. She completed one course in the spring 2015, and another in the summer. She wasregistered for four courses at the time of trial and anticipates registering for four more in January, 2016. If she successfully completesthese courses she will graduate, four and a half years after being accepted to complete a two year program. [43] In December 2013 Ms. Thorlakson started working part-time at the barn where the horses were boarded.

Her income has beenminimal: $3,500.00 gross, $1,200.00 net in 2014. Recently she started working part-time at a group home for $20.00 per hour. [44] Ms. Thorlakson would like to complete her bachelor’s degree, obtain a master’s degree and work as a registered psychologist.She may need to obtain a PhD to do so. She believes this is the best way for her to become economically self-sufficient. [45] Mr. Thorlakson has been employed at the same firm since articles and is now a partner. He is obligated annually to obtain acapital loan which is advanced to his firm. The amount required is determined by the firm.

He testified that he is having difficultiesobtaining approval from his bank to make that loan because of his other debt obligations. He also testified that while it is unlikely andnot what he wants to do, if he ends up in bankruptcy he must cease to be a partner. But he is optimistic he could negotiate an arrangementto be a firm associate. [46] Other than the depression Ms. Thorlakson describes from around the time of the separation she seems to be in good health.There was no evidence of any chronic conditions at the time of trial. Mr. Thorlakson is in overall good health but is diabetic.

He receivesinjections but his activities are not otherwise materially affected. [47] Determination of spousal support requires consideration of these questions: -Is Ms. Thorlakson entitled to spousal support? -What income should be used for calculating Mr. Thorlakson’s spousal support obligations? -What is a fit and just amount of spousal support? -What is the duration of spousal support?

B) Is Ms. Thorlakson entitled to spousal support? [48] A Court may make an order requiring a spouse to pay such periodic sums as the Court thinks reasonable for the support of theother spouse: Divorce Act, RSC 1985, c3, s15.2(1). While entitlement is not contested here, a Court must still find that there isentitlement to spousal support. In Bracklow v Bracklow (SCC), [1999] 1 SCR 420, the Supreme Court of Canadaidentified three conceptual grounds for entitlement to spousal support. I find that Ms. Thorlakson is entitled to support on acompensatory basis.

This is described in Bracklow as follows: The theoretical basis for compensatory spousal support is the independent, clean-break model of marriage. Compensatory spousalsupport is generally sought for spouses who have left the work force to raise children and act as home makers, and recognizes that a stay-at-home spouse’s contribution has implicit monetary value. o This basis encourages rehabilitation and self-maximization of dependent spouses, and recognizes the social reality of shortermarriages and successive relationships.

When the relationship ends, the parties are entitled to what they have lost due to the marriage andits breakdown: para 28. o Compensation arguments can be grounded in the need to consider the “condition” of the spouse; the “means, needs and othercircumstances” of the spouse, including their lack of ability to support themselves due to foregoing career opportunities during themarriage; and “the functions performed by each spouse during cohabitation”: para 39.

See also Moge v Moge (SCC), [1992] 3 SCR 813. [49] As stated at para 15 of Bracklow, the grounds flow from the controlling statutory provisions and the relevant case law. Ofparticular importance are subsections 15.2(4) and (6) of the Divorce Act. Subsection 15.2(4) sets out factors the Court is to take intoconsideration, and (6) sets out the objectives of a spousal support order. [50] The reasons Ms. Thorlakson is entitled to spousal support on the compensatory basis are most clearly expressed by examiningthe four objectives in s15.2(6).

As stated in Moge v Moge, consideration must be given to all four factors – no single objective isparamount. [51] The first objective is to recognize any economic advantages or disadvantages to the spouses arising from the marriage or itsbreakdown. [52] This long term relationship falls into the category which courts often refer to as a “traditional marriage.” Ms. Thorlaksonworked full-time while Mr. Thorlakson finished his studies and articles. While his academic achievements and scholarships areadmirable, he benefited from Ms. Thorlakson’s economic contributions early in their marriage. Mr.

Thorlakson pursued his full-timecareer and advancement opportunities and Ms. Thorlakson took primary responsibility for the home and raising the two children, but thefamily also received help from Ms. Thorlakson’s mother. Overall I find that Mr. Thorlakson has been economically advantaged by themarriage. He and Ms. Thorlakson are also economically disadvantaged by the marriage because due to poor planning, over-spending,and bad management of personal affairs by both: there is a bulging obligation for income tax and a formidable consumer debt problem,for which Mr.

Thorlakson is personally responsible and for which Ms. Thorlakson must contribute.

[ 53 ] Ms. Thorlakson has been economically disadvantaged by the couple’s decision that she quit social work and stay home with the two children, but that disadvantage has been reduced by the flexibility she has enjoyed to study, market, and teach photography, and to participate with the children in their various activities, including horseback riding. She also had the opportunity during the marriage to re-certify as a social worker, which she chose not to complete. She has also been economically disadvantaged by the breakdown of the marriage and the cessation of her splitting of Mr.

Thorlakson’s income. [ 54 ] The second objective is to apportion between the spouses any financial consequences of child care over and above child support payments. The parties may have some RESP resources to assist the children to finance post-secondary education, but the details are not in evidence. The unaffordable expenses with respect to the children’s horses have been eliminated. Other than braces, there is no evidence of any other financial consequences of child care. [ 55 ] The third objective is to relieve any economic hardship of the spouses arising from the breakdown of the marriage. [ 56 ] Ms.

Thorlakson was not employed at the time of the separation and apparently experienced some depression then for a brief period. Her main hardship from the breakdown of the marriage was the loss of Mr. Thorlakson’s income. Mr. Thorlakson’s main hardship is related to the couple’s significant debt-load. Since separation he has paid interest, around $54,000.00, on the consumer debt but has not paid any of it down. He has tax problems which are worse now than at separation. But it is difficult to attribute this hardship to the breakdown of the marriage when Mr.

Thorlakson has chosen to obligate himself to a further $90,000.00 for a new BMW. Both parties have experienced the financial consequences of a protracted and acrimonious matrimonial dispute. [ 57 ] The fourth objective is, in so far as practicable, to promote the economic self-sufficiency of each spouse within a reasonable period of time. [ 58 ] Overall, I find that Ms. Thorlakson has not made reasonable efforts to become economically self-sufficient.

While it is understandable that it would take her sometime after separation to secure employment, her choice to pursue a psychology degree and master’s degree, particularly at the pace she has, just does not make sense. [ 59 ] In 2009, around the time of their first separation, Ms. Thorlakson took steps to be re-certified as a social worker.

She passed the written examination but did not pursue a second attempt to pass the panel interview even though she knew she had not passed because she was not familiar enough with current policy and protocols. [ 60 ] Around the time of their second separation she applied for admission to university. Yet she has the ability to work, as seen from her employment as a social worker, her achievements in photography, her work at the barn, and her work as a personal care attendant. [ 61 ] Her claim is that her goal to be a registered psychologist is her best opportunity to become economically self-sufficient.

But that is not borne out by the evidence. According to Mr. Thorlakson’s research there are currently jobs advertised for social workers and the average salary is $67,000.00 per year compared to $77,000.00 for psychologists. Ms. Thorlakson did not offer much evidence but contended that if she went back to work as a social worker she would be at an entry level, which is more like $44,000.00 per year. [ 62 ] Ms. Thorlakson’s intentions to advance her education are admirable, but I have real concerns about how she has actually advanced those intentions.

While it is understandable that it would take time for her to fully engage in the educational process, her current aspiration to complete this two year requirement in 4 ½ years is concerning. Her focus on obtaining a master’s degree through CityU without having a plan for significant employment income while attending, and her failure to look at alternatives including a master’s program at the University of Alberta, cast doubt on her intentions. Ms. Thorlakson testified that the CityU program was about 3 years including the practicum. The first 2 years are class-work, which is offered on Saturdays. Mr.

Thorlakson provided evidence that Ms. Thorlakson may have been already able to get admission to this program based on her social work degree and the completion of 3 psychology courses. Mr. Thorlakson also provided evidence that Ms. Thorlakson may meet admission requirements for a clinical specialization master’s program at the University of Alberta and the possibility that would qualify her to do work similar to a psychologist. Ms. Thorlakson is interested in pursuing a PhD after that, and a PhD may well be a requirement to be a registered psychologist.

That would take a number of years, still presumably without much income. [ 63 ] I find that Ms. Thorlakson is pursuing education, but not in a reasonable manner for becoming economically self-sufficient. Too many questions are unanswered. If a PhD is required to be a registered psychologist, given the slow progress to date, when would Ms. Thorlakson be job-ready? By 2025 when she is 56? How is that better than working as a social worker now? Why couldn’t she work as a social worker now while continuing her educational aspirations part-time? [ 64 ] Ms.

Thorlakson has the capacity to earn a reasonable income, and she is choosing not to do so. [ 65 ] In conclusion, Ms. Thorlakson is entitled to spousal support but the problem is these parties still have all of their consumer credit and income tax problems but now also have two households and significant legal fees.

C) What income should be used for calculating Mr. Thorlakson’s spousal support obligations? [ 66 ] I find Mr. Thorlakson’s income for the purpose of assessing spousal support determinations should be the same as that used for child support. The year to which that income applies for past obligations should also be the same, for the same reasons. [ 67 ] His income for the purposes of support calculations is therefore $305,000.00 in 2012 which applies to 2013 calculations; $325,000.00 in 2013 which applies to 2014 calculations; and $330,000.00 in 2014 which applies to 2015 calculations. His budgeted 2015 allocation is $375,000.00 from which should be deducted corporate expenses of $10,000.00.

[ 68 ] As of 2016, I find it is more beneficial to give the parties certainty by setting a single go-forward monthly spousal support payment based on the fact that is appears Mr. Thorlakson will continue to earn above $350,000.00 per year. [ 69 ] Ms. Thorlakson has chosen not to work, or at least not to work very much. She has enjoyed the benefit of interim spousal support payments and seeks on-going support until she can become self-sufficient. She says that will only be if she can become a registered psychologist. I find that Ms. Thorlakson is intentionally under-employed.

I am not saying there is any bad faith here, but I do infer that Ms. Thorlakson is intentionally and leisurely, pursuing education without supporting employment knowing, believing, and intending that it would be at Mr. Thorlakson’s expense. This course of conduct is just the latest development in the attitude which contributed, along with Mr. Thorlakson’s attitudes, to the family’s overall negative financial circumstances. [ 70 ] I find that Ms.

Thorlakson should have obtained entry level employment as a social worker by January 1, 2014, at an income of $44,000.00 per year and by now she should be at an average salary level of $67,000.00 per year. Her income is therefore set at $44,000.00 for 2014 and 2015, and $67,000.00 for 2016 and going forward.

D) What is a fit and just amount of spousal support? [ 71 ] Mr. Thorlakson has paid $4,865.00 per month in interim spousal support since May 1, 2013. Ms. Thorlakson is not seeking any adjustment prior to May 1, 2013, but argues that Mr. Thorlakson should pay $6,000.00 per month from May 1, 2013 and onward. [ 72 ] The basis of entitlement to spousal support is an important consideration in determining the amount and duration of spousal support. I have found that Ms. Thorlakson’s entitlement is primarily on the compensatory basis.

Spousal support issues such as quantum and duration are inter-related, and a judge must exercise discretion to determine an appropriate order. Langston J stated in Bennett v Bennett 2005 ABQB 984 at para 33 : In conclusion, the underlying philosophy of the Act is the fair and equitable distribution of resources to alleviate the economic consequences of marriage or marriage breakdown.

The role of the judge is to examine all the factors under s15.2(4) in the light of the stipulated objectives of support under s15.2(6) and exercise his or her discretion in a manner that equitably alleviates the adverse consequences of the marriage breakdown. [ 73 ] As I consider the s15.2(4) conditions, means, needs and other circumstances of the spouses, I note this was a long term traditional marriage, at least it was since 1997, but with unique aspects. Ms.

Thorlakson had no real losses until she ceased work as a social worker after S.T. was born, and she must have been aware in 2009 during their first separation that she should consider self- sufficiency. This was demonstrated when she sought re-certification as a social worker and applied for three jobs. That awareness was re- enforced in 2011 when she applied for admission to university during their second separation. [ 74 ] While Ms. Thorlakson’s current income is imputed, her prospects for employment are bright, she is still relatively young, and social work is stable employment. Mr.

Thorlakson’s firm position is perhaps risky, but he has a role within the firm regardless of whether he is a partner. He is also relatively young. I also believe that he can manage his challenges if he imposes more stringent budget requirements upon himself. [ 75 ] The family appears to have had a very nice standard of living including sports, outdoor activities such as hiking and photography, and horse related activities. Mr. Thorlakson had a very good income and the family spent all of it, and then some. Ms.

Thorlakson has maintained basically the same standard of living since the separation except she has sold the horses and trailer so the boarding, travel, and related costs of the horse activities have been stopped. But she has added tuition and other costs to pursue her education. Her mother now pays her $500.00 per month to live with her. [ 76 ] The main adjustment to Mr. Thorlakson’s lifestyle appears to be that he has, not improperly, put assets such as a matrimonial home into his new wife’s name. The lack of any real change in his standard of living is clear from his purchase of a $90,000.00 BMW.

He has paid the interest on the outstanding consumer debt (about $54,000 since separation), but none of the principal. [ 77 ] There is little evidence of what the parties planned for their retirement, or any other goals, while they were married. [ 78 ] Post-separation, the parties produced budgets which support a conclusion that they are both able to make adjustments which will allow them to address their needs and their support and debt obligations. Ms.

Thorlakson’s budget is remarkable for her mortgage payment which she stated can be reduced and her vehicle expenses which she hopes to reduce by trading in her truck. Mr. Thorlakson’s budget is remarkable for his BMW payment of about $1,300.00 per month, and about $1,600.00 per month for personal expenses which he agreed on cross-examination were paid for on his credit card in addition to his monthly budget expenses of about $10,000.00. [ 79 ] A relevant factor is that the children are 19 and 15. Mr. Thorlakson is paying child support for both because S.T. is attending post-secondary school. It appears that Mr.

Thorlakson will be responsible for child support for both children for some time. He has agreed to pay base support in accordance with the table even though his income is significantly greater than $150,000. [ 80 ] As to income from investments and other sources the only source here is Ms. Thorlakson’s mother who is currently paying her $500.00 per month for living expenses. [ 81 ] A review of these circumstances demonstrates that both these parties have opportunities, both have obligations, and both have room in their budgets to accommodate changes they both need to make.

They are both responsible for the accumulation of the matrimonial debt, and shall share in the repayment of it by virtue of the equalization payment. Generally, the spousal support advisory guidelines, while not binding, are considered a guideline and useful tool when determining spousal support: De Winter v De Winter 2013 ABCA 311 . In the case of a long-term marriage that accumulates debt, such as here, they are less significant. [ 82 ] Spousal support should reflect the circumstances of the spouses from time to time. I find that a fit and just amount of spousal

support is $6,000.00 per month commencing May 1, 2013, $5,750.00 per month for 2014, and $5,750.00 per month for 2015. Spousal support is set at $5,750.00 per month commencing January 1, 2016, and continuing thereafter, subject of course to variation on proof of a change in circumstances. [ 83 ] I am satisfied that a payment near the lowest end of the range in the spousal support advisory guidelines is justified in these circumstances and takes into account the factors I have set out above. Of the greatest importance are Ms.

Thorlakson’s intentional under- employment, her opportunities for increased income beyond that imputed to her, Mr. Thorlakson’s assumption of the couple’s entire consumer debt subject to the equalization payment, and the high amount of Mr. Thorlakson’s child support payments.

E) What is the duration of spousal support? [ 84 ] Ms. Thorlakson contends that support should continue indefinitely. The Court of Appeal has frequently supported the presumption that in long marriages, the duration of spousal support should be indefinite. But that is connected to the other factors and objectives informing a spousal support decision. For example in Riad v Riad 2002 ABCA 254 , the court said at para 43: After a long and traditional marriage, the ability of a stay-at-home parent to retrain or reintegrate into the workforce in order to become self-sufficient may be irreparably damaged.

In such cases, an indefinite, long-term support order would generally issue. [ 85 ] In Shaw v Shaw 2014 ABQB 165 , Justice Schutz, now of our Court of Appeal, ordered indefinite support, “because it is simply not possible in this case to determine the extent of her economic loss by reference to the budgets of the parties.” [ 86 ] But in this case Ms. Thorlakson’s whole approach was that when she is able to become a registered psychologist she can become self-sufficient. I am of the view that she can, and should, be doing that while she is still young, while working.

She is nearing the completion of her second undergraduate degree. The master’s program at CityU contemplates students employed on a full-time basis. There are other options open to her to achieve her goal of self-sufficiency, for example, the two year clinical specialization program master’s degree at the University of Alberta which may not even require a second undergraduate degree. [ 87 ] I have no doubt that Ms. Thorlakson is very capable, that she has opportunities, and that she is interested in self-sufficiency.

As confirmed in Heimsoth v Heimsoth 2009 ABCA 129 self-sufficiency means that she is “capable of supporting herself at a level in keeping with the standard of living she enjoyed during the marriage without the aid of financial support.” In this case, that means a standard of living within the means of the parties. I find that she should be able to accomplish this within 12 years from when she first embarked on the pursuit, which was January, 2012. The 12 year period is consistent with the Spousal Support Advisory Guidelines but pre-dates the final date of separation to the date when Ms.

Thorlakson started her efforts to become economically self-sufficient. This satisfies the compensatory nature of the award. Spousal support will continue until December 31, 2023, at which time it shall terminate.

F) Conclusion [ 88 ] Ms. Thorlakson is entitled to spousal support under the compensatory ground for spousal support entitlement. Mr. Thorlakson owes $30,320 for under-payment of periodic spousal support from May 1, 2013 to December 31, 2015. On-going spousal support is payable in the amount of $5,750.00 per month commencing January 1, 2016 and continuing up to and including December 31, 2023, at which time spousal support shall terminate. [ 89 ] Both parties support off-set of the arrears against other payments.

In the circumstances of this family, including the children, that seems to be in everyone’s best interest and the only real alternative. The outstanding child and spousal support payments in the total sum of $45,052 shall be set-off against the equalization payment of $114,052.50 owing by Ms. Thorlakson. The result is that Ms. Thorlakson owes Mr. Thorlakson $69,000.50. Consistent with the benefit to both parties of planning, consistency, and budgeting, that amount will be payable by a monthly off-set in the amount of $718.75 against the spousal support obligations. Mr.

Thorlakson’s actual spousal support payment to Ms. Thorlakson will therefore be $5,031.25 per month plus go-forward child support starting January 1, 2016. Concluding Remarks [ 90 ] Mr. Thorlakson’s overall annual responsibility as of May 1, 2016, for on-going child and spousal support will be in the order of $120,000 after considering the set-off. He will receive considerable tax benefit from the spousal support payments. He is budgeted to receive $375,000.00 from which he must pay his income tax, support payments, debt payments, and personal expenses.

In my view, with proper planning and restraint, he can achieve this, particularly because he has some flexibility in reducing his tax burden. Ms. Thorlakson can also cover the needs of the children and herself by using the same strategy and because she will be setting off her obligation to contribute to the matrimonial debt against her support payments. She has support for a period which will enable her to achieve economic self-sufficiency and to compensate her for the economic disadvantage of the marriage. [ 91 ] If the parties are not agreed on costs, they may be spoken to.

Heard on the 26 th , 27 th , 28 th and 29 th day of October, 2015. Dated at the City of Lethbridge, Alberta this 22 nd day of January, 2016.

R.A. Jerke J.C.Q.B.A. Appearances: S. A. McNeilly, Emery Jamieson For the Plaintiff, Ms. Thorlakson L. H. Bruyer, Gordon Zwaenepoel for the Defendant, Mr. Thorlakson _______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice R.A. Jerke _______________________________________________________

On page 14, at paragraph [82], the last sentence was corrected by replacing $5,500.00 with $5,750.00.