Brochu v Brochu, 2017 ABQB 31

Court of Queen’s Bench of Alberta Citation: Brochu v Brochu, 2017 ABQB 31 Date: 20170106 Docket: 4801 164527 Registry: Calgary Between: Kathleen Margaret Brochu Applicant - and - Lyle Saul Brochu Respondent Corrected judgment: A corrigendum was issued on January 16, 2017; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice J.

Antonio _______________________________________________________ The Application [ 1 ] This is an Application for retroactive and ongoing child support, raising the following five issues: 1) Does this Court have jurisdiction to hear the claim for retroactive support for M? 2) Should retroactive base support ( Federal Child Support Guidelines , s 3) be awarded, and if so in what amount? 3) Should retroactive support for special or extraordinary expenses ( Federal Child Support Guidelines , s 7), and if so, for which expenses and in what amount? 4) In what amount should ongoing s 3 and s 7 child support be paid? 5) Should there be an award of costs?

Timeline and non-contentious facts [ 2 ] Kathleen Brochu (“the mother”) and Lyle Brochu (“the father”) were married on January 11, 2008. They have two children: M, born in 1997, and A, born in 2000. The parties separated in January 2014, but both remained in the matrimonial home until June 2014. Since then the children have resided primarily with the mother. Both parties retained legal counsel in March 2014. [ 3 ] In March 2015: • the father filed a Statement of Claim for divorce.

Under the heading “children”, he wrote “The Plaintiff [father] proposes financial arrangements for each child as follows: As per the Federal Child Support Guidelines ”; • a mediation session through this Court’s Dispute Resolution Officer (DRO) Program was scheduled, but the father failed to attend; and • the mother filed a Notice to Disclose. [ 4 ] After two extensions, a consent order for disclosure of the father’s financial information was filed in May 2015. [ 5 ] In October 2015, the mother extended a settlement offer. The father did not reply.

A few months later he retained new counsel. [ 6 ] In May 2016: • the mother filed an application for retroactive and ongoing child support; and • the father retained his current counsel. [ 7 ] In June 2016, the parties attended a DRO session, and subsequently entered into an interim consent order in which the father agreed to pay child support for A in the amount of $222 per month, based on an annual income of $27,200. [ 8 ] In November 2016, the mother again extended an offer to settle, but received no substantive reply from the father. [ 9 ] The mother is employed full time as a nurse.

Her income for the relevant years was: Year Income 2014 $103,599 2015 $95,552 2016 $90,482 [ 10 ] M turned 18 after the father’s Statement of Claim and the mother’s Notice to Disclose were filed, but before the mother’s application for retroactive and ongoing child support was filed. She has not attended school since her 18 th birthday. Therefore she is no longer a child of the marriage for purposes of child support. The mother’s position [ 11 ] The mother seeks retroactive base and s 7 support from the father, from June 1, 2014 to the present for A and from June 1, 2014 to her 18 th birthday for M.

Relying on Calver v Calver , 2014 ABCA 63 at para 28 [ Calver ], she says that this Court has jurisdiction to award retroactive child support for M because the Notice to Disclose was served before M’s 18 th birthday. [ 12 ] She asks this Court to impute the following incomes to the father, calculated by adding the income shown on the father’s tax returns, income from a rental property and “extra cash income”: Year Income Reported Rental Cash Total 2014 $56,133 $7,500 $10,000 $73,633 2015 $35,031 $3,750 $10,000 $48,781 2016 $27,200 $3,750 $10,000 $40,950 Ongoing $40,950 [ 13 ] From May 2013 (pre-separation) until July 2016, the parties co-owned a rental property.

The mother asserts that the father resided in the property, along with renters, from the separation until the sale of the property, except for the period from January to August 2015. She says the property generated revenue of $1,650 per month. Further, she argues that for the periods of his residency at there the father should personally pay 50% of the carrying costs for the property, and should set off only 50% of the carrying costs against the property’s revenue. The result, she says, is $8,184 of annual income.

She asks this Court to impute $7500 rental income per year to the father. [ 14 ] The mother asserts that during the marriage, the father earned cash by flipping motor vehicles and that in the DRO session he mentioned that he continues to do so. Quoting Bradley v Fire-Trol Canada Co , 2005 BCHRT 212 at para 42 , she argues that “settlement discussion should not be allowed to make inadmissible a statement which may well go to the proving of the very issue which will determine the outcome of the action.” In oral argument, counsel for the mother acknowledged that she arrived at the $10,000 figure by

“just choos[ing] a number”. [ 15 ] Should this Court find that the father owes arrears, the mother asks that he begin paying $150 per month toward them. When the property division is finalized, any net amount owing could be set off. [ 16 ] The mother seeks her costs in the Application, arguing that the matter could have been resolved had the father participated in settlement discussions in good faith.

The father’s position [ 17 ] The father argues that this Court lacks jurisdiction to award retroactive child support for M because no application for child support for M was filed until after M had ceased to be a child of the marriage. He submits that the Court’s jurisdiction in these circumstances depends on the bringing of an application for child support, as distinct from “effective notice” as that term is used in DBS v SRG , 2006 SCC 37 [ DBS ].

Since a Notice to Disclose may serve purposes other than laying the groundwork for a child support claim, the father says it should not constitute an “application” for jurisdictional purposes.

He relies, inter alia , on Carmichael v Kiggins , 2010 ABQB 78 at para 19 , quoting DBS at para 88-90 , for the rationale that “[c]hild support is for children of the marriage, not adults who used to have that status.” [ 18 ] The father says that his base income for child support purposes should be that shown on his tax returns: Year Income 2014 $56,133 2015 $35,031 2016 Not provided [ 19 ] The father denies earning any additional cash income. He objects to the mother’s attempt to rely on a statement allegedly made during the DRO session, which was a “without prejudice” settlement discussion.

The father relies on Leonardis v Leonardis , 2003 ABQB 577 and Alberta (Director of Child Welfare) v CHS , 2005 ABQB 695 for the principle that communications within settlement discussions, even in the family law context, may not be disclosed to the court. The only recognized exception is to prove the existence and contents of a settlement. [ 20 ] He provided an accounting for the rental property revenue and carrying costs.

He has not expressly deposed that he lived in the rental property for most of the time from separation until the property was sold, but he has deposed that he did not live there between January and August 2015. Applying all the carrying costs against the rental income results in net losses throughout the relevant time period.

Based on these rental losses and the servicing of some matrimonial debt, he asserts that he suffered an undue hardship justifying a departure from the support outlined in the Federal Child Support Guidelines , SOR/97-175 [ Guidelines ]. [ 21 ] The father agrees that s 7 expenses should be divided proportionately, but disagrees with some of the items claimed.

Specifically, he argues that • bus tickets and cell phones are not “extraordinary”; • he should be obligated to pay proportionally toward only one dance class per child, saying that the children’s enrolment in multiple classes was without his consent; and • he had health and dental insurance until February 2015, but the mother never contacted him to access his coverage; therefore, he implies, his obligation toward these expenses for this period should be reduced. [ 22 ] The father made no submissions regarding costs.

Issue 1: Jurisdiction to hear the claim for retroactive support for M [ 23 ] The judgment of the Alberta Court of Appeal in Calver at para 26 to 29 is dispositive: In DBS , the Supreme Court held that “material time” (in the definition of “child of the marriage” in subsection 2(1) in the context of

section 15.1(1) of the Divorce Act ) means the time of the retroactive support application: paras 88-89. It added that “one who is over the age of majority and is not dependent, is not the type of person for whom Parliament envisioned support orders being made ... child support is for children of the marriage, not adults who used to have that status”. It held that “it will not always be possible for a court to enforce an unfulfilled child support obligation ... because of the limited enforcement jurisdiction of courts as conferred by statute”: para 90.

In Henry (decided at the same time as DBS ) the Supreme Court found enforcement jurisdiction existed when the payor had been served with a notice to disclose his income while the child was still a child of the marriage. That is, the Court permitted retroactive support even though the child was no longer a child of the marriage when the application for retroactive support was filed.

This exception to the general rule set out in DBS was explained at para 150 : I would add that the eldest child ... was no longer a child of the marriage when the Notice of Motion for retroactive support was filed. ... this fact has no effect on the jurisdiction of the court to make a retroactive child support order under the Divorce Act . Because Mr. Henry

did not disclose his income increases to Ms. Henry earlier, she was compelled to serve him with a Notice to Disclose/Notice of Motion in order to ascertain his income for the years relevant to this appeal. This formal legal procedure, contemplated in the Guidelines and a necessary antecedent to the present appeal, sufficed to trigger the jurisdiction of the court under the Divorce Act. Because it was completed prior to the time the eldest child ceased being a child of the marriage, the court was able to make a retroactive order for this daughter.

In short, a court’s jurisdiction to make a retroactive support order exists if the child is still a child of the marriage when the payor is served with an application: (

i) for retroactive support ( DBS ); or (ii) to disclose income ( Henry ). These principles apply to retroactive claims for

section 7 expenses…[emphasis added] [ 24 ] Since the mother’s Notice to Disclose predated M’s 18 th birthday, the application for support was brought while she was a child of the marriage. [ 25 ] This conclusion means I need not consider whether the father’s request for child support in his Statement of Claim may also be considered an “application” for jurisdictional purposes. If nothing else, it does make it difficult for the father to assert that he did not know child support would be an issue between the parties, or to rely on the principle of certainty as discussed in DBS at paras 63-64, 68, 80 .

Issue 2: Retroactive base support [ 26 ] Though perhaps technically accurate, it feels like a strain on meaning to describe the support sought in this case as “retroactive”. Child support has been live and unresolved since the separation, or at the very least since the Statement of Claim was filed. The lag between real time and court scheduling would seem to make this version of retroactivity virtually inevitable.

Nonetheless, I have applied the analysis from DBS and concluded that a retroactive order of support should be made. [ 27 ] Retroactive child support, though not presumptive, is not exceptional ( DBS at para 5 ). In the absence of a child support order or any payments, it is generally unreasonable for the non-custodial parent to rest on the belief that he has been satisfying his obligations toward his children.

Exceptions may arise in special circumstances, such as hardship or ad hoc sharing of expenses with the custodial parent. ( DBS at para 80 ). [ 28 ] At paras 100-116 of DBS , the Supreme Court listed four factors to be considered in deciding whether to order retroactive child support: 1) Reasonable excuse for why the support was not sought earlier : Here, there was no meaningful delay. Immediately after the separation, there was a dust-settling period.

Then the father filed his Statement of Claim, including his claim for child support per the Guidelines ; then the mother began pursuing settlement options, without the father’s full cooperation; then she brought her action; then the parties waited for a hearing date. Since some of the mother’s resolution efforts were mandatory under this Court’s procedures, she cannot be faulted for pursuing them.

In any event, litigants should hardly be discouraged from seeking to resolve their issues out of court. 2) Blameworthy conduct of the payor parent : The father’s recognition of the issue, complete lack of payment until entry of the July 2016 consent order, and reluctance to engage in settlement discussions may not rise to the level blameworthiness within the meaning of DBS , but they do not erect a barrier to an award of retroactive support. 3) The circumstances of the children are unremarkable.

Nothing suggests that A and M have experienced deprivation, but the father’s child support obligations do not disappear because his children do not require his financial support ( DBS at para 38 ). 4) The potential of undue hardship to the payor parent: The father’s claim to undue hardship is based on the carrying costs of the rental property and some unspecified matrimonial debt. In my analysis below, I account for the former and lack sufficient information to act on the latter.

Further, I understand that a matrimonial property agreement is pending, and that any retroactive support can be set off against the equalization payment owing to the father. Therefore, an order of retroactive child support would not cause the father undue hardship. In what amount should retroactive base child support be ordered? [ 29 ] The father’s reported income is not in dispute.

The live issues here pertain to the rental income and the alleged cash income, and whether the Guideline support amounts should be reduced due to undue hardship borne by the father. [ 30 ] I agree with the mother that half of the carrying costs for the rental property should be paid by the father for the periods of his residence there. If only half the property was being used for “business” purposes, only half of the carrying costs should be attributed to the “business”. However, in calculating the income I will use the father’s more precise figures.

The results are as follows: Year Rental revenue Total costs Net of 50% costs 2014 $16,400 $22,224 $5,288 2015 $12,300 $22,368 $1,116 2016 $8,200 $11,184 $2,608 [ 31 ] I decline to attribute any cash income to the father for two reasons. The first is lack of information; I have been provided with no basis for the mother’s suggested figure of $10,000 per year. The second reason is settlement privilege. [ 32 ] Settlement privilege is premised on the public policy goal of encouraging the settlement of disputes without the need to resort

to litigation.

It allows the parties to freely discuss and offers terms of settlement without the risk of having admissions and concessions made in the settlement process used against them later ( Sable Offshore Energy Inc v Ameron International Corp , 2013 SCC 37 at para 2 [ Sable ]; Bellatrix Exploration Ltd v Penn West Petroleum Ltd , 2013 ABCA 10 at para 21 [ Bellatrix ]). [ 33 ] Settlement privilege protects communications when three criteria are met: (1) a litigious dispute exists or is within contemplation; (2) the communication was made with the express or implied intention that it would not be disclosed to the court in the event negotiations failed; and (3) the purpose of the communication was to attempt to effect a settlement ( Bellatrix at para 26 ; Calgary (City) v Costello , 1997 ABCA 281 at para 60 ).

Even where these criteria are met, communications may be disclosed in court “when the justice of the case requires it” – that is, when “a competing public interest outweighs the public interest in encouraging settlement” ( Sable at paras 12, 19 ). Exceptions to settlement privilege have been made for particular purposes, such as proving that a settlement was reached, or to determine its terms, or to assist in deciding costs ( Bellatrix at para 29 ).

None of the existing exceptions applies here. [ 34 ] Courts have the ability to establish other exceptions to settlement privilege, but should do so with caution ( Bellatrix at para 31 ). The privilege plays an important role in encouraging non-litigated resolution of disputes. It should not be lightly disturbed. [ 35 ] The DRO program is a mandatory step in the Calgary Court of Queen’s Bench (a similar but differently-named program exists in Edmonton).

Family Law Practice Note 4 provides that, subject to exemption by fiat, “no application for child support shall be heard in Chambers unless a DRO has noted on the court file that a DRO Session has been completed.” The DRO “shall attempt to negotiate settlement”.

The Dispute Resolution Officer Program Information Sheet published on the Alberta Courts’ website advises litigants that: Any conversations that you have with the DRO and each other are “without prejudice” – that is, neither party may bring up these settlement discussions with the judge in court . (If you reach an agreement, though, the agreement can be discussed in court) [ 36 ] Here, both parties and their then-counsel signed a DRO Acknowledgement form that stated in part: We understand that this Dispute Resolution process is confidential and that neither party may call the DRO as a witness in any proceedings, and that these proceedings are on a “Without Prejudice” basis and neither party may use anything said or done in this proceeding as evidence in Court.

This Acknowledgement was filed with the Court on July 6, 2016. [ 37 ] I have little difficulty in concluding that settlement privilege applies to the DRO communications. There would need to be a compelling public policy concern to persuade me to make an exception to this class privilege, particularly in the face of this Court’s processes and the parties’ own written recognition of them.

The mother’s claim of a “material fact” exception, purportedly created by a British Columbia Human Rights Tribunal, is insufficient. [ 38 ] In the result, the following annual incomes are attributed to the father: Year Father’s income Reported Rental Total 2014 $56,133 $5,288 $61,421 2015 $35,031 $1,116 $36,147 2016 $27,200 $2,608 $29,808 [ 39 ] The father will pay retroactive child support from June 1, 2014 to December 31, 2016 for A and from June 1, 2014 to her 18 th birthday for M, based on the total annual incomes shown above, per s 3 of the Guidelines .

Issue 3: Retroactive award for special or extraordinary expenses [ 40 ] At the oral hearing of this application, the mother agreed to revise her initial claim for s 7 expenses by removing haircuts, school clothes, hot lunches and bras. In her revised spreadsheets, provided to the Court after the hearing, she continued to list dance bras, “body things” and school clothes; these should also have been removed. None of these items is special or extraordinary.

For the same reason, I agree with the father that bus fees and cell phones should be excluded from s 7 support. [ 41 ] The father suggests that the mother could have defrayed medical and dental costs by asking for his insurance information. I note that he could also have offered her his insurance information. I make no adjustment to the claimed health-related costs. [ 42 ] The remaining disputed expenses pertain to A’s dance classes. The father says that the majority of these expenses were incurred without his consent.

In considering this category of expenses, I am guided by s 7 of the Guidelines , which provide that I may order the father to contribute to “extraordinary expenses … for any other educational programs that meet the child’s particular needs” and to “extraordinary expenses for extracurricular activities”.

However, in making any such an award I must take 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.” [ 43 ] I find that A’s dance tuition fees were a reasonable expense, but the costs associated with competitions, costumes and unspecified “supplies” were not. [ 44 ] The father shall pay a proportionate share of the permissible expenses from June 1, 2014 to December 31, 2016, and for similar expenses going forward, subject to any further order of this Court.

Issue 4: Ongoing child support [ 45 ] The mother has asked this Court to set the father’s Guideline income for 2017 at the level she calculated for 2016, which was $40,950. For the above reasons, I am unable to accept her calculation, but I will apply her logic and set the father’s 2017 Guideline income at $29,808. He shall pay s 3 support for A in accordance with this amount, and a proportionate share of permissible s 7 expenses. I note that the 2016 figure is mainly based on EI income.

Should the father obtain employment, or other provable income, or should there be any other material change in circumstances, the parties may take such steps as they see fit. [ 46 ] Given the father’s low income at present, I will not order an ongoing monthly payment

schedule for arrears, but will permit a lump sum to be paid out of the pending matrimonial property settlement. Issue 5: Costs [ 47 ] The mother shall have her costs of this application on Column 3. Order [ 48 ] Counsel should draft a form of order for my signature based on the foregoing, inserting the usual clauses about future exchange of financial information, enforcement guidance, and such other mechanical terms on which they can agree. Heard on the 8 th day of December, 2016. Dated at the City of Calgary, Alberta this 6 th day of January, 2017. J. Antonio J.C.Q.B.A. Appearances: Farrah E.

Kohorst for the Applicant Fraser Gordon for the Respondent _______________________________________________________ Corrigendum of the Reasons for Judgment of

The Honourable Madam Justice J. Antonio _______________________________________________________ In the citation line the wrong number was used. The correct citation is Brochu v Brochu, 2017 ABQB 31.