RNG v JRG, 2016 ABQB 593

Court of Queen’s Bench of Alberta Citation: RNG v JRG, 2016 ABQB 593 Date: 20161107 Docket: 4812 007846 Registry: Wetaskiwin Between: RNG Applicant - and - JRG Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Robert A. Graesser _______________________________________________________ Introduction [ 1 ] Several issues arise in this Family Law Special Chambers application, being: (

a) RNG’s guideline incomes for 2013, 2014 and 2015; (

b) Section 3 child support arising from those incomes; (

c) Section 7 expenses from the time of the divorce judgment and RNG’s responsibility for his appropriate share of them; and (

d) Arrangements for

section 7 expenses ongoing. Background [ 2 ] The parties were married on July 7, 2000. They have three children: VAG, age 15; ARG, age 13; and MSG, age 13. The parties were divorced by a divorce judgment dated January 8, 2013. The divorce followed a settlement agreement between the parties dated December 14, 2012. [ 3 ] RNG’s guideline income was set in the divorce judgment as $69,058.11; JRG’s was set at $25,970.00. The parties agreed

that they would share parenting of the children. [ 4 ] The divorce judgment mirrored the settlement agreement regarding child support. They agreed to pay their proportionate shares of

section 7 expenses. The definition of

section 7 expenses came directly out of the Federal Child Support Guidelines , Can. Reg. 97-175. [ 5 ] Additionally, the parties agreed to share equally non-extraordinary expenses “including but not limited to school fees, school clothing, other clothing, footwear, toiletries and haircuts”. [ 6 ] Each party agreed (and was ordered in the divorce judgment) to give the other party reasonable notice before incurring any

section 7 expense. Neither party was to unreasonably withhold his or her consent to share the

section 7 expenses. The Maintenance Enforcement Program was to manage the

section 7 payments, with the party incurring the expense submitting a copy of the receipt to MEP. [ 7 ] Paragraph 15.10 of the agreement provides that child support was to be reviewed annually, commencing July 1, 2014 with no retroactive adjustments. [ 8 ] Both parties apparently declared bankruptcy in 2013 because of matrimonial debt. [ 9 ] JRG’s line 150 incomes have been: 2013 $36,312 2014 $46,624 2015 $42,051. [ 10 ] JRG deposes that she provided her income information to RNG each year following the divorce judgment, as provided in the divorce judgment. She says that RNG did not do so.

According to JRG, RNG told her in the fall of 2015 that his income was less than it had been and he said his payment obligations needed to be adjusted. [ 11 ] Following production of records, it appears that RNG’s employment circumstances changed in 2013. He ceased working for A-Tech, his former employer, in May and began to work for a company owned by his sister. The company appears to have taken over the work RNG was doing directly for A-Tech.

His total earnings according to his filed tax returns show a line 150 income of $76,845. [ 12 ] In 2014, he continued to work for his sister’s company, doing much as he had done while working directly for A-Tech. His line 150 income for 2014 was $41,976. He apparently received $14,500 in “subsistence payments”. [ 13 ] RNG explains in his affidavit sworn in support of his application that he has not filed a 2015 income tax return. During 2015, RNG bought the company from his sister and continued to work through it.

He has produced a pay stub for the end of 2015 showing year-to-date earnings on December 26 as being $41,971.16. [ 14 ] When RNG’s affidavit was sworn on February 1, 2016, he stated that he was currently out of work as a result of the slowdown in the Alberta oil economy. He had done some construction work with friends, but had earned little income from that. No financial statements were available from that unsuccessful venture. [ 15 ] He says that he has now found steady work with Cargill, at an annual salary of $45,000.

He also works part time at a local bar. [ 16 ] The company he bought from his sister is now owned by his current partner, who paid him $2,500 for the shares in 2016. [ 17 ] RNG’s current (2016) guideline income is not in dispute. [ 18 ] While RNG is up to date with his

section 3 payments, he has paid nothing towards

section 7 expenses since the divorce judgment, and MEP has not enforced any of them. Analysis Guideline Income [ 19 ] From the parties’ separation agreement and the divorce judgment, it is clear that the parties’ incomes are to be determined as at July 1 each year. Adjustments are made on a go-forward basis, and there is no retroactive adjustment. [ 20 ] That is a convenient and sensible way of making child support arrangements, although it undoubtedly works much better when the parties’ incomes are relatively stable and predictable.

Where a party’s income fluctuates significantly, paying ongoing support on the basis of the previous year’s income generally means that a party may well pay less while he or she is having a good year, and more when a bad year follows a good one. In those circumstances, parties must be careful to make contingency plans. [ 21 ] Here,

section 3 child support starting July 1, 2014 should have been the offset amount based on RNG’s 2013 line 150 income of $76,845 and JRG’s line 150 income of $36,312.

Section 7 expenses should be based on the parties’ proportionate shares of those incomes. [ 22 ] Although both parties apparently went bankrupt in 2013, bankruptcy does not affect their child support obligations.

[ 23 ] For the period starting July 1, 2015,

section 3 child support should have been the offset amount based on JRG’s 2014 line 150 income of $46,624 and RNG’s 2014 income. His line 150 amount is $41,976. He did not seek any adjustment until the fall of 2015.

It is, in my view, significant that he sought no adjustment, and provided no income information, in 2014 when his income had increased to $76,845 over the amount stated in the divorce judgment ($69,058.11). [ 24 ] JRG objects to his 2015 obligations being based on the declared $41,976 on several bases, one being that his income was significantly lower in 2014 despite doing the same work for the same ultimate employer.

She points to the fact that he began to do the same work for his sister’s company, which had contracted with his former employer to do the work that RNG had previously done for them. [ 25 ] Secondly, she points to subsistence income and challenges that as being a legitimate expense. [ 26 ] The sister’s company’s income statement for 2013 shows gross revenues of $93,669 for a seven-month period. The 2014 financial statements show gross revenues of $194,423. The 2015 statements show gross revenues of $114,887. Law [ 27 ] JRG refers to a number of cases concerning the

interpretation and application of Hunt v Smolis-Hunt , 2001 ABCA 229 , and urges me to impute income to RNG because of underemployment or attributing income to him from his sister’s corporation. She cites: Mercer v Mercer , 2004 ABQB 551 ; VLW v JEW , 2007 ABQB 358 ; Bercier v Isaac , 2008 ABQB 377 ; Ryan v Ryan , 2009 ABQB 416 ; and Rensonnet v Uttl , 2016 ABQB 95 . [ 28 ] In Mercer v Mercer , Watson J (as he then was) dealt with Hunt v Smolis-Hunt and concluded there that Mr. Mercer was “not working up to the standard” and as such was for the purposes of s 19(1)(

a) of the Guidelines intentionally under-employed. [ 29 ] Kenny J found that a father who continued his education for an extended period of time was intentionally evading adequate child support in VLW v JEW . [ 30 ] In Bercier v Isaac , Ross J analyzed the reasonableness of the wife’s decision not to work for the husband’s contracting company.

She noted that if voluntary decisions regarding unemployment were unreasonable, she should be presumed to have intended the consequences of those decisions (at para 26). [ 31 ] Lee J took a similar approach in Ryan v Ryan , noting that the effects of unreasonable voluntary decisions are presumed to be intentional. [ 32 ] And in Rensonnet v Uttl , Poelman J adopted the same type of reasoning in imputing income to the father. [ 33 ] RNG references a number of cases in relation to Hunt v Smolis-Hunt and

section 19 of the Child Support Guidelines: KCM v BTM , 2015 ABQB 317 ; McCaffrey v Dalla Longa , 2008 ABQB 183 ; and Wildeman v Wildeman , 2014 ABQB 732 . [ 34 ] In KCM v BTM , Gates J dealt with Hunt v Smolis-Hunt and adopted an approach similar to that of Ross J in Bercier v Isaac . The respondent’s explanation for a change in employment and the reasons for any change invite an assessment of the reasonableness of the decision. [ 35 ] McCaffrey v Dalla Longa considered the onus of proving that expense claims are reasonable or unreasonable.

McIntyre J held at para 240 that the person challenging the expense has the initial onus of making out a prima facie case that the deduction or expense is unreasonable. The onus then switches to the respondent to rebut the presumption. [ 36 ] That makes sense, as to hold otherwise would require the respondent to prove the validity and reasonableness of every expense item.

I do not think it would be an appropriate use of court time to pore over restaurant bills and argue that the respondent should have had chicken rather than steak. [ 37 ] In Wildeman v Wildeman , Schutz J (as she then was) provided a template for approaching challenges to expenses at para 33, relying heavily on McCaffery v Dalla Longa. Application of Law [ 38 ] I will now approach the facts in the light of these authorities.

It is frequently recognized that where someone is a sole shareholder or a controlling shareholder in a small corporation, there are personal benefits derived from the corporation that fall within a

grey area between taxable benefits and legitimate corporate expenses. [39] I need not cite case law attributing some portion of business expenses to a controlling shareholder as personal benefits andthus adding to the person’s guideline income for child support purposes. [40] At the outset, I would observe that it is difficult to determine from financial statements alone what actual items of expense fallunder general categories such as automotive, travel, supplies, office, meals and entertainment and amortization. [41] The Federal Child Support Guidelines provide at para 18: 18

(1) 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’sannual income as determined under

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

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

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

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed thecorporation’s pre-tax income.

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation assalaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal atarm’s length must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. [42] In this regard, I am guided by Yungwirth J’s recent decision in Sweezey v Sweezey, 2016 ABQB 131. In that case, Ms.Sweezey sought to impute income to Mr. Sweezey partly on the basis of inadequate and incomplete financial disclosure. [43] In observing that section 189(1)(

a) allows the court to pierce the corporate veil to address a payor’s potential “diversion,manipulation or sheltering of income”, Yungwirth J stated at para 30: [30] If the court is of the view that the income determined under s. 16 does not fairly reflect all the money available for the payment ofchild support, the court may also consider the shareholder spouse’s pattern of income and non-recurring losses (s. 17) and determinewhether or not it is appropriate to find that the spouse’s annual income includes all or part of the pre-tax income of the corporation forthe most recent taxation year.

In determining the pre-tax income, payment to or on behalf of non-arm’s length parties must be added tothe pre-tax income unless the spouse establishes that the payments were reasonable in the circumstances. [44] With respect to the onus of proof in this area, Yungwirth J concluded at para 31 that the onus is “squarely on the shareholderspouse to establish that the non-arms’ length salaries, wages, management fees, and other payments and benefits were reasonable in thecircumstances”. [45] She considered McCaffrey v Dalla Longa and commented at para 42 and 43: [42] I am mindful of the line of cases requiring the claiming spouse to first establish that arm’s length corporate expenses are primafacie unreasonable, following which the burden shifts to the shareholder spouse to prove reasonableness.

The courts in such cases havereasoned that placing the onus on the shareholder to establish the reasonableness of expenses could result in virtually all businessexpenses being added back to pre-tax income: Bekkers v Bekkers, [2008] OJ no 140 (Sup Ct Just), McCaffery v Dalla Longa, 2008ABQB 183 , Hrenyk v Berden, 2011 SKQB 305 . [43] However, in my view this ignores the initial onus on the shareholder to provide adequate disclosure and undermines the purposebehind s. 21(1)(f).

The shareholder who controls a corporation has control over the information which provides the basis upon which todetermine what portion of each category of expenses and other payments represents a personal benefit to a non-arm’s length person orcorporation.

If there is no such personal benefit in relation to a certain category, the shareholder, in explaining the nature of the expense,need only indicate this. [46] I agree with Yungwirth J’s analysis, and would add that while the approach in McCaffrey v Dalla Longa, as refined inWildeman v Wildeman makes sense, different considerations apply where the respondent has failed to make full and adequatedisclosure, including disclosure of corporate records under s. 18 of the Guidelines. [47] Such conduct by itself permits the imputation of income under s. 19 of the Guidelines, in accordance with Goett v Goett, 2013ABCA 216. [48] This case does to some extent involve inadequate or incomplete disclosure as much of the information relating to thecorporation that employed RNG is in the control of his sister and RNG professed ignorance of much of the corporate information. [49] I recognize that the corporation was initially controlled by RNG’s sister.

That being said, it appears to me from thecircumstances here that there was no good business reason for RNG to quit his job with A-Tech, have his sister’s company contract withA-Tech to do RNG’s work, and then only pay RNG a salary. It is unclear what role, if any, his sister played in actually earning incomefor her company. [50] I infer from the information before me that the sister’s ownership of the corporation was a convenience to assist RNG, likelyin light of his 2013 bankruptcy.

I do not suggest that there was anything improper in RNG and his sister doing so, but it also had theeffect of distorting RNG’s income for child support purposes. Additionally, RNG’s lack of disclosure until it was to his advantage to doso is troubling, and raises the spectre of Hunt v Smolis-Hunt.

[ 51 ] Eventually, RNG produced the corporation’s financial statements for the relevant period, although there is no disclosure for much of 2015 while RNG was attempting to work in the construction industry. He was the sole shareholder of the corporation during some of the period while this application was pending. It would appear that corporate records have been produced by him, even for periods where he was an employee and not shown as a shareholder or director or officer.

There is limited information as to exactly what his sister did for the corporation and what salary and benefits she took from it. [ 52 ] The transcript of his cross-examination for the purposes of this application shows that RNG had an incomplete understanding of the corporation’s finances and business affairs. [ 53 ] For the reasons expressed below I do not need to make a determination one way or another whether the change in employment was specifically motivated to lower his child support payments. RNG has continued to make his

section 3 payments as directed in the settlement and in the divorce judgment. Nevertheless, the employment changes certainly appear to have had the effect of reducing or lowering his child support payments. [ 54 ] At its simplest, RNG has failed to satisfy me that the change in employment status was reasonable in the circumstances.

It appears to have been motivated by an attempt to improve his financial situation, and the gross revenues for the corporation exceed the income he had formerly earned as an employee. [ 55 ] In 2013, salaries and wages were paid totalling $33,051, but there were also pre-tax earnings of $30,000. In 2014, salaries and wages totalled $109,653, and pre-tax earnings were nearly $5,000.

For 2015, salaries and wages were reduced to $55,695, and the corporation suffered a loss of $22,000. [ 56 ] What I glean from this is that RNG’s available income, and the income on which he should have paid child support, did not decline until after the summer of 2015. His sister may well have provided valuable services to the corporation and earned her full payments and benefits from the corporation. But RNG has not satisfied me that a portion of her earnings, let alone some of the other corporate expenses, should not be attributed to him for the purposes of paying his fair share of the children’s expenses.

Another way of stating this is that RNG has not provided a reasonable explanation for structuring his future earnings in this fashion, rather than keeping his existing employment with A-Tech as long as it was available. [ 57 ] That determination puts RNG squarely within McCaffrey and Bercier . [ 58 ] For the purposes of this application, I consider RNG to be the shareholder of the corporation at all material times.

The situation suggests a resulting trust in favour of RNG relating to his sister’s ownership of the shares, and that is borne out by her transfer of the shares to him for nominal consideration. [ 59 ] I agree with Yungwirth J. in Sweezey that the onus in these circumstances is on the shareholder to “provide a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, non-arms’ length persons or corporations. This includes any personal benefits...” (at para 35, referencing sections 21(1)(

f) and 21(2) of the Guidelines ). [ 60 ] This type of information has not been provided, such that this case does not turn on onus, but rather

section 23 of the Guidelines , allowing the court to draw an adverse inference against the spouse who fails to provide the necessary information. Conclusion on income [ 61 ] I find that for the period commencing July 1, 2014, RNG’s child support obligations should be based on his 2013 income of $76,845. For the period commencing July 1, 2015, his income should be considered to be the same as his 2013 income because for 2014, I consider that his income was at least equal to if not greater than what he earned in 2013, despite what was shown in his income tax return.

That follows from my determination that he made inadequate disclosure of the corporation’s expenses, as well as my determination that his change in employment status has not been shown to be reasonable by him. [ 62 ] I do not think this is unfair to RNG. Firstly, he did not seek any adjustment until the fall of 2015. He should have disclosed his increased income in June or July, 2014 and avoided an adjustment in JRG’s favour at that time. From the period when he started working for his sister’s company until at least the end of 2014, the company appears to have done well.

It is only reasonable to assume that RNG saw this change as an opportunity to do better, instead of merely continuing on as A-Tech’s employee. It is difficult to see that this worked to his disadvantage, at least until 2015. [ 63 ] RNG has not filed a tax return for 2015. From looking at the company financial statements, revenues for 2015 were some 40 percent less than they were for 2014. That is not surprising having regard to the nature of the corporation’s work in the oil patch. RNG was unemployed for part of the year, and only started employment in the spring of 2016 at a salary of $45,000.

He will make some additional funds working part time, and estimates that will be approximately $2,600. [ 64 ] Recent case law suggests that the Courts need to look at a party’s actual earnings and base child support obligations on what a party actually has with which to pay child support. That is especially so in these economic times when many Albertans find themselves unemployed, underemployed, or working for far less than they did when the economy was healthier. Child support orders need to reflect the parties’ realities. A large number of families are struggling to make do with less.

For the other expenses to qualify as

section 7 expenses, they must be “extraordinary” as defined by the Child Support Guidelines and the cases interpreting the Guidelines. [ 65 ] This point is made by Veit J in Ozipko v Ozipko , 2015 ABQB 521 at para 4 . [ 66 ] If I were to follow the parties’ formula (as contained in the settlement agreement as well as in the divorce judgment), child support for the period starting July 1, 2016 and going to June 30, 2017 would be based on the parties’ 2015 incomes. For 2015, I consider that RNG likely earned 40 percent less than he did in 2014. That would amount to $46,000.

[ 67 ] I have no doubt that RNG has struggled and is likely still struggling. His once $76,000 income has dwindled to $45,000, and he is required to supplement that by part-time work. [ 68 ] So commencing July 1, 2016 and continuing until further court order or agreement of the parties, the

section 3 child support shall be the offset amount based on an imputed income of $47,600 for RNG and JRG’s actual 2015 earnings of $42,051.

Section 7 expenses will be based on the parties’ proportionate shares of their combined earnings.

Section 7 expenses to date [ 69 ] JRG claims that RNG should reimburse her for his proportionate share of a number of

section 7 expenses she has incurred since the parties were divorced. [ 70 ] She claims the following expenses: Music lessons $3,624.00, and ongoing at $200 per month School supplies $827.91 Cell phones $4,550.00, and ongoing at $55 per month per child Guitar and amp $640.00 Drum set $500.00 Hot lunch $4,500.00 School fees $690.00 Volleyball $508.25 Ski trip $150.00 Soccer unknown [ 71 ] These amounts total nearly $16,000. That seems like a lot, but that total represents some three and a half years of expenses.

Averaged over that period brings the amount to $4,600 per year, or approximately $380 per month, for three children. I do not suggest that $380 per month is a trifling amount, but this approach puts the claim in a better perspective than simply looking at accumulated arrears. [ 72 ] Approached in this fashion, RNG’s share averaged over that period of time would have amounted to approximately $250 per month. [ 73 ] As for school supplies and school fees, the parties’ agreement requires them to pay 50 percent each.

There is no principled reason to depart from that, and RNG should reimburse JRG 50 percent of those amounts already incurred, and on a go-forward basis. If MEP is to continue to be involved, the party incurring an expense they consider appropriate to be reimbursed should provide a copy of the receipt to the other party and to MEP at the same time. [ 74 ] For the other claimed expenses, it should be observed that there is really no “one size fits all” application for extraordinary expenses. Section 7(1.1) defines “extraordinary expenses”:

(1.1) For the purposes of paragraphs (1)(

d) and (f), the term extraordinary expenses means (

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. [ 75 ] The definition itself requires an analysis of the unique circumstances of the parties and the families affected. What may be “extraordinary” in one family is not extraordinary in another. Some families will easily and happily absorb hockey or figure skating expenses, while others may struggle with community league soccer costs. There is no universal determination that all children are entitled to a certain level of extracurricular activities. It depends on a number of factors, specific to the particular child and his or her

family. [76] For guidance in this area, there is a very helpful, recent decision from the Ontario Superior Court, Liberty v Liberty, 2014ONSC 957. There, Harper J referenced the Ontario Court of Appeal decision in Andrews v Andrews, (1999), (ONCA), 45 OR (3d) 577 (ONCA) at para 12: [12] In Andrews v. Andrews (1999), (ON CA), 45 O.R. (3rd) 577, the Ontario Court of Appeal succinctly set out theconsiderations for an expense to properly qualify under

section 7 of the Guidelines at paragraph 14. In

summary: (1) the expense must be extraordinary; (2) the expense must be necessary in relation to the best interest of the children; and (3) the expense must be reasonable having regard to the means of the parents and their spending patterns for the children duringcohabitation. [77] One of RNG’s objections to contributing to

section 7 expenses is the absence of his prior consent or approval to any suchexpenses. The parties agreed that

section 7 expenses would be pre-agreed, and that was carried forward into the consent divorcejudgment. [78] On that subject, Harper J stated at para 13: [13] There is no requirement that the expense be agreed to in advance of the child being enrolled in the activity. The agreement of theseparents that was incorporated into a court order provided for joint custody with shared decision-making on all major issues, such asmedical care, education, and religion. In the event there was a disagreement, the parties were to avail themselves of the services of aparenting coordinator or mediator.

The agreement is silent as to what is to happen if a parenting coordinator or mediator failed to producean agreement. [79] He concluded at para 14: [14] Nevertheless, I am of the view that whether a parent was consulted or consented to an activity for a child is only one factor thecourt should consider when determining if the activity is extraordinary, necessary in the children’s best interest, and reasonable havingregard to the means of the parents and their spending pattern while they were together. [80] Once the parties refer their disputes to the Court for determination, the Court is bound to consider the matter having regard tothe best interests of the children, such that any agreement between the parties takes on less significance. [81] Justice Harper also cited the Manitoba Queen’s Bench decision Correia v Correia, 2002 MBQB 172 at para 15: [15] In Correia v.

Correia, 2002 MBQB 172 , Justice Allen set out a number of factors to be taken into account in determiningthe reasonableness of a

section 7 expense in relation to the means of the parents: • The combined income of the parties; • The fact that two households must be maintained; • The extent of the expense in relation to the parties' combined level of income; • The debt position of the parties; • Any prospects for a decline or increase in the parties' means in the near future; and • Whether the non-custodial parent was consulted regarding the expenditure prior to the expense being incurred. [82] None of these decisions are, of course, binding on me, but I find them particularly helpful in this case. [83] I adopt Harper J’s conclusion that he is not bound by the parents’ agreement on prior consultation.

His adoption of the factorsdescribed in Correia provides a practical, principled basis on which to approach

section 7 expenses. [84] Here, I have no information on the current households of the parties, beyond the fact that RNG has repartnered and has ayoung child with his new partner. RNG’s affidavit says that his partner is presently on maternity leave, but otherwise I have noinformation on her income or contribution to their household expenses. [85] JRG has also repartnered, but there is no information on his contribution to household expenses. [86] All I know is that the parties likely had until 2015 a combined income of approximately $110,000 before payment of taxes,CPP, EI and the like.

There are now two households that must be maintained. I have no information on their take-home pay or theirexpenses so do not know the extent of any “disposable income”.

Common sense tells me that disposable income would be limited. [87] For the period commencing July 1, 2016, however, the combined incomes total less than $90,000. [88] The parties filed for bankruptcy in 2013, so it is a reasonable assumption that they have little by way of assets, although theirdebts to that time have been reduced if not eliminated. [89] At the present time, there is no indication that the parties have prospects of greater earnings, although it seems clear that once

the Alberta economy improves and there is work in the oil patch, RNG may have the opportunity to return to his former income level. All of that is prospective and, at this stage, speculative as to if and when. [ 90 ] Several of RNG’s cases are of assistance in seeing how some judges have treated various

section 7 claims: McCaffrey v Dalla Longa , 2008 ABQB 183 ; Calver v Calver , 2014 ABCA 63 ; Shaw v Przybylski , 2014 ABQB 667 ; Tapuska v Tapuska , 2009 ABQB 655 ; and Battershill v Battershill , 2007 ABQB 53 . [ 91 ] Specifically, in Calver v Calver , the Court of Appeal accepted the legitimacy of a living allowance paid to him by his employer because he worked one week on and one week off in Fort McMurray. [ 92 ] McCaffrey v Dalla Longa also considered the legitimacy of living allowances, in that case in the situation of an MLA. [ 93 ] I rejected a claim for reimbursement of a school hot lunch program in Shaw v Przybylski , holding that lunches were normally part of

section 3 expenses. [ 94 ] Tapuska v Tapuska noted at para 10 that “cellphone expenses are not by definition

section 7 expenses.” [ 95 ] Battershill v Battershill emphasizes the importance of receipts and stated at para 39 that the Courts should not (absent the agreement of the parties) order reimbursement of unreceipted expenses. Conclusion on retroactive

section 7 expenses [ 96 ] JRG has been receiving

section 3 child support of $763 per month. To the period ended June 30, 2015, I do not see that it was unreasonable for the three children to have music lessons and to participate in sports. None of these expenses seems excessive. When the costs are spread over a monthly basis, the costs do not seem unreasonable having regard to the parties’ incomes at the relevant times. [ 97 ] I conclude therefore that RNG should reimburse JNG for his proportionate share of the music lessons, musical instrument costs, volleyball and the ski trip. [ 98 ] Having regard to the incomes of the parties, and the level of

section 3 child support paid by RNG, these expenses are extraordinary. It is in the children’s best interests to participate in these expenses and the costs, when spread over the year, are not excessive having regard to the parties’ incomes. [ 99 ] Ordinarily, school lunches are

section 3 expenses. A party receiving child support should not expect the other parent to pay an additional amount for lunch. On a go-forward basis, that is my determination. For retroactive support, however, the information before me is that JRG paid for the school lunches regardless of the parenting rotation. In other words, she paid for the children’s lunches while they were with RNG. [ 100 ] It is clear that having an appropriate lunch is in the children’s best interests.

It is not clear that the cost of the school lunch exceeds by any significant margin what it may cost to bring an appropriate lunch from home. I do not intend to embark on any such analysis in any event. [ 101 ] It does not appear that RNG was consulted about this, and it is unclear when JRG first sought reimbursement. From the evidence on the application, these apparently ended before the application. [ 102 ] I am unclear as to whether or not JRG provided receipts for the school lunch program.

I assume that if receipts have not been provided already, they could be made available by the school. [ 103 ] I conclude that RNG should reimburse JRG for 50 percent of receipted school lunch program costs. These should be paid on the basis of who had the children in their care when the lunches were provided and not on the basis of the parties’ proportionate incomes. [ 104 ] As for cell phones, they are certainly an extraordinary expense as JRG’s income does not support $165 per month for cell phones for the children. That subsumes a significant portion of the

section 3 payment being made to her. That being said, there is no evidence before me that the cell phones are necessary for the children. In Liberty v Liberty (at paras 33 and 34 ), the cell phone expense was allowed as the use of the cell phones was tied to communications with the respondent. Here, the parties share parenting so communications with the children are not likely an issue. [ 105 ] Absent some pressing need for cell phones, I do not see them as a necessity or anything other than a luxury. Luxuries are not really contemplated in

section 7. In this family, or in these families, there is not sufficient available income to fund luxury items. [ 106 ] These children are at an age when they might be expected to earn their own spending money to fund luxury items that their parents cannot reasonably be expected to buy for them. As difficult as it may be for some children to accept, cell phones are not a necessity and should not be encouraged as a recreational activity. [ 107 ] I disallow the cell phone expenses in the circumstances of this case, recognizing that there are undoubtedly many circumstances

in many families where cell phones may well be important for communication and safety reasons. Ongoing

section 7 expenses [ 108 ] The parents made a reasonable agreement as to

section 7 expenses. Because of their shared parenting arrangements, it is reasonable to divide predictable school expenses (such as books, school clothing, school fees and field trip costs) on a 50-50 basis. [ 109 ] I think the current level of extracurricular activities is appropriate; exposure to music and athletics is healthy, and the current level does not seem to be excessive as to either quantity or cost. By taking out the cell phone costs, the annual

section 7 expenses will be more in the range of $3,300. The parties’ proportionate shares are nearly equal, such that RNG’s share will be less than $150 per month. That amount does not appear excessive, especially since RNG’s

section 3 offset payment will reduce to about $100 per month in light of my findings regarding the parties’ 2016 incomes. [ 110 ] That being said, I think any replacement of musical instruments should be a joint decision and not a decision unilaterally made by one of the parents. Similarly, expensive school programs like out-of-province travel should be a joint decision. Unfortunately, if the parents are unable to agree on such matters, there are no inexpensive alternatives to coming to court, unless the parents could agree on an arbitrator or decision-maker.

Section 7 decisions do not need a professional parenting coordinator and in my view, any experienced family law practitioner should be able to quickly gather sufficient information on an issue to make a reasonable decision. [ 111 ] Cell phones are not extraordinary expenses in the present circumstances of these families and are an unaffordable luxury. [ 112 ] I would encourage the parties to explore available options for decision-making that do not involve a lot by way of time and cost. [ 113 ] I am grateful to counsel for their thorough briefs and oral arguments. [ 114 ] If costs are not agreed, the parties may write to me within 30 days as to their respective positions.

Heard on the 8 th day of September, 2016. Dated at the City of Edmonton, Alberta, this 7 th day of November, 2016. Robert A. Graesser J.C.Q.B.A. Appearances: Jeremy Lewsaw Skovberg Hinz for the Applicant RNG Jeffrey Spady Knaut Johnson Francoeur for the Respondent JRG