Zdyb v Zdyb, 2017 ABQB 44

Court of Queen’s Bench of Alberta Citation: Zdyb v Zdyb, 2017 ABQB 44 Date: 20170123 Docket: 4803 169952 Registry: Edmonton Between: Brenda Cheryl Zdyb Applicant - and - Jason Jonathan Alexander Zdyb Respondent Corrected judgment: A corrigendum was issued on February 3, 2017; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Robert A.

Graesser _______________________________________________________ Introduction [ 1 ] Brenda Cheryl Zdyb served a notice to disclose on Jason Jonathan Alexander Zdyb in December, 2016. Mr. Zdyb provided the disclosure he believed he was required to provide. Ms. Zdyb was not satisfied with the disclosure and on the return date for the disclosure application sought an order that Mr. Zdyb comply with sections 11 through 15 of the Notice to Disclose. For convenience, I am attaching a copy of the Notice to Disclose prescribed by the Family Law Rules of Court as Appendix I. [ 2 ] Mr.

Zdyb objects to providing further disclosure, arguing that he has complied with his obligations under the Notice to

Disclose. Background [ 3 ] The parties started cohabiting in the spring of 2001 and they were married in August 2003. They have two children, and they are sharing custody of the children. The parties separated in September 2012. [ 4 ] The parties were divorced on January 19, 2015 following a joint statement of claim for divorce and joint request for divorce. [ 5 ] Under the terms of the divorce judgment, Mr. Zdyb is to pay child support of $2,116 per month plus 75 percent of

section 7 expenses. The Child Support Recalculation Program was not engaged. Mr. Zdyb is to pay spousal support of $3,200 per month “payable on the first day of each month commencing March 1, 2014 until further review which shall not occur before June 1, 2017 or Court Order”. [ 6 ] The parties entered into a consent variation order pronounced September 3, 2015 reducing Mr. Zdyb’s child support obligation to $2,029 per month, recognizing higher income earned by Ms. Zdyb despite an increase in Mr. Zdyb’s income. The

section 7 division was varied to 70/30 to reflect the change in the parties’ earnings. [ 7 ] Neither party has brought an application to review child support. Positions of the Parties [ 8 ] Ms. Zdyb says that the information in sections 11 through 15 of the Notice to Disclose is needed by a financial expert she has retained to do a forensic audit of Mr. Zdyb’s finances. This appears to be motivated because of what Ms. Zdyb perceives to be a drop in Mr. Zdyb’s income, as well as the prospect that spousal support may be reviewed after June 1, 2017. [ 9 ] Mr.

Zdyb argues that since the only proceeding that disclosure might presently be related to is a child support variation, he need only provide the information in sections 1-9 of the Notice to Disclose. He has done so, and no further disclosure is appropriate at this time. Asset disclosure [ 10 ] At the outset, I should note that there is a significant difference between disclosure related to income and disclosure related to assets. Income-related disclosure is relevant to child and spousal or partner support; asset disclosure is generally only relevant to property divisions.

That is a generalization and there are exceptions, but those exceptions are factually driven. [ 11 ] The form for the Notice to Disclose under the Family Law Rules is Form FL-17. It is a combination of the disclosure requirements in the Federal Child Support Guidelines and the Alberta Family Law Act . That form is also a hybrid regarding disclosure of income and disclosure of assets. [ 12 ] Rule 12.41 of the Family Law Rules says: 12.41(1) The procedure set out in this rule is in addition to any other disclosure procedure or obligation under any Part of these rules or under any enactment.

(2) The procedure set out in this rule applies to the proceedings listed in rule 12.38(1)(

a) to (h).

(3) A party may file a notice to disclose, in Form FL 17, requesting only those documents that are relevant and material to the proceeding.

(4) If a final determination has been made in a proceeding relating to (

a) child support, (

b) spousal support, or (

c) adult interdependent partner support, the procedure may be used only once per year without the requirement for a variation application to be commenced.

(5) Where the notice is filed under subrule (4), only the documents referred to in items 1 to 9 on the form may be requested, unless the Court orders otherwise.

(6) The notice to disclose under subrule (3) and any documents required to be disclosed to the other party pursuant to subsection 21(1) or 25(4) of the Federal Child Support Guidelines (SOR/97 175 ) or section 21(1) or 22(4) of the Alberta Child Support Guidelines (AR 147/2005 ) must be served on the respondent in the manner set out in rule 12.55 not later than one month before the application is scheduled to be heard or considered as set out in the notice to disclose. [ 13 ] Subrule 12.41(5) is clear that after a final determination has been made relating to child support and spousal support, only items 1 to 9 may be requested, unless otherwise ordered by the Court.

[ 14 ] A judgment for divorce and corollary relief is a final determination of these issues.

The fact that a determination may be varied at a later date on a change in circumstances of the parties, or even on the terms contained in the judgment, does not make the determination something less than “final”. [ 15 ] For the purposes of the Rules of Court, “final” should be contrasted with “interim” or “interlocutory”, which describe orders granted along the way to a final determination in the granting of the divorce judgment itself. [ 16 ] The Divorce Act refers to child support orders and spousal support orders in sections 15.1(1) and 15.1(2) respectively, and “interim orders” for either type of support in sections 15.1(2) and 15.2(2) .

Here, orders under sections 15.1(1) and 5.2(1) are in place. These orders are in place unless and until varied under section 17(1). [ 17 ] Section 25(1) of the Federal Child Support Guidelines (which apply to this matter) provides: 25(1) Every spouse against whom a child support order has been made must, on the written request of the other spouse or the order assignee, not more than once a year after the making of the order and as long as the child is a child within the meaning of these Guidelines, provide that other spouse or the order assignee with (

a) the documents referred to in subsection 21(1) for any of the three most recent taxation years for which the spouse has not previously provided the documents; (

b) as applicable, any current information, in writing, about the status of any expenses included in the order pursuant to subsection 7(1); and (

c) as applicable, any current information, in writing, about the circumstances relied on by the court in a determination of undue hardship. [ 18 ] Disclosure under the Federal Child Support Guidelines relates to disclosure of the information referenced in section 21(1), which is very similar to items 1 – 9 in the Alberta Rules of Court form for disclosure. [ 19 ] Disclosure for the purposes of Family Law Act proceedings is generally governed by

section 4 of the Family Law Act General Regulation, which includes the expanded form of disclosure including bank account statements, credit card statements, investment details, a monthly budget and a sworn itemized list of the party’s income, assets and liabilities. [ 20 ] However, as noted, disclosure for child support applications under

section 21 of the Alberta Child Support Guidelines is very similar to the disclosure requirements under the Federal Child Support Guidelines , and makes no reference to bank account statements, et cetera. [ 21 ] It is useful to highlight the differences between the Federal and Alberta Guidelines and the Notice to Disclose under the Family Law Act . [ 22 ] Section 21(1) (

c) of the Federal Child Support Guidelines requires production of “the most recent statement of earnings”, whereas section 21(1) (

c) of the Alberta Child Support Guidelines requires production of the most recent three statements. [ 23 ] Section 21(1)(

f) of the Federal Guidelines requires production of corporate information where the spouse “controls” a corporation.

Section 21(1(

f) of the Alberta Guidelines speaks of situations where “a parent controls a corporation or has an interest of 1 percent or more in a privately held corporation”. [ 24 ] The Notice to Disclose form under the Family Law Rules references the Alberta Guidelines’ requirements of three statements and “control or 1 percent”. [ 25 ] These differences may be relevant in other cases; they are not in issue in this case. [ 26 ] Here, Ms. Zdyb has simply served a notice to disclose on Mr. Zdyb. She used the Family Law Rules form. She was entitled to do so under the Family Law Rules of Court.

But there is no application pending. Undoubtedly, the results of the notice to disclose will inform her as to whether there has been a change in circumstances warranting an application to vary child support. [ 27 ] There is also no application pending for a variation of spousal support. In either case, there has been a “final” determination of these issues, such that Ms. Zdyb has no right to require production of the information beyond that specified in items 1 to 9 in the Notice to Disclose. Corporate benefits [ 28 ] Ms. Zdyb also complains that Mr.

Zdyb’s disclosure does not provide adequate information as to the benefits he receives from his corporation. Mr. Zdyb has produced the corporation’s financial statements for the relevant periods. [ 29 ] I did not previously read the disclosure requirements as requiring people to quantify personal benefits received from corporations in which they are shareholders where those benefits are things like home office expenses, travel and entertainment, automotive and the like.

I had considered that issue to be addressed at questioning and expert opinions or judicial determination, or some combination of these, as to whether something should be added to T4 or dividend income from such a closely held corporation in the individual circumstances of the shareholder payor. [ 30 ] That has now changed as a result of the Court of Appeal decision in Cunningham v Seveny , 2017 ABCA 4 . In that case, the Court of Appeal dealt with the disclosure obligations of parents who are shareholders, directors or officers of a corporation, proprietors,

partners or self-employed under the Alberta Child Support Guidelines. [31] The Court of Appeal stated at paragraphs 17 and 18: [17] Goett at paras 10-12, stipulates that the Federal Child Support Guidelines, SOR/97-175 are to be interpreted purposively and aremeant to establish a fair standard of support for children which ensures that they will continue to benefit from the financial means of bothparents after separation and divorce.

The same applies to the provincial Guidelines applicable to this appeal, as the latter guidelines wereestablished for the same purpose and are to like effect. [18] Consistent with the federal guidelines, sections 18-21 of the provincial Guidelines recognize that the taxable income declared in atax return completed by a self-employed parent or a parent who is a shareholder, director or officer of a corporation whose incomederives from a corporation or business undertaking, may not fairly reflect the amount of the parent’s annual income for child supportpurposes.

If a court is of the opinion that the amount of the parent’s annual income is not fairly reflected, it may consider some or all ofthe pre-tax income of the parent’s corporation or an amount commensurate with the services that parent provides to the corporation, aslong as that amount does not exceed the pre-tax income of the corporation.

It is manifest that a determination of the reasonableness ofexpenses claimed in reduction of annual income is a core, and critical, aspect of the court’s decision-making function. [32] In circumstances involving shareholder, director, or officer parents, the Court observed at paragraphs 23 - 25: [23] The latter provision must also be interpreted broadly for child support purposes where a parent’s corporation or businessundertaking is the primary vehicle through which he or she earns income.

It includes not only a requirement to provide a statement of allpayments or benefits, but also a sufficient explanation to facilitate the recipient’s assessment of the reasonableness of these payments orbenefits in the context of determining income available for discharge of child support obligations. [24] This separate and additional requirement to disclosing financial statements under section 21(1)(d)(

i) is reinforced by section 18(2)of the Guidelines, which provides that where a Court is of the opinion that a parent’s annual income does not fairly reflect the moneyavailable for child support, “all amounts paid by the corporation as . . . payments or benefits . . . must be added to the pre-tax income,unless the parent establishes that the payments were reasonable in the circumstances” (emphasis added).

A court cannot make aninformed decision under the income sections of the Guidelines (sections 15-20), unless and until full and complete disclosure is madeunder section 21(1) or (2) of the Guidelines. [25] We endorse the dicta in Roseberry v Roseberry, 2015 ABQB 75 at paras 61-99, Alta LR (6th) 215 [Roseberry], rev’d onother grounds 2015 ABCA 218 , 68 RFL (7th) 30.

To establish a parent’s income for Guideline purposes, income declared atLine 150 of the disclosing party’s annual tax return may not accurately reflect the value of personal benefits that parent receives fromself-employment, a partnership or a corporation controlled by the parent, or over which the parent has more than a 1% interest. Commonexamples include personal use of corporate vehicles, computers, cellphones, personal benefits associated with travel, entertainment andpromotional expenses, and other non-arm’s length expenditures.

A parent whose income is derived from such a source, where the sourcededucted expenses for income tax purposes that may have resulted in a personal benefit to the parent and, therefore, may be relevant indetermining child support obligations, must disclose those deductions.

In addition, if the parent takes the position that those deductionsdid not result in the parent obtaining a personal benefit, an explanation is required for why those expense deductions (or a part of them)should not be attributed to the parent’s income for child support purposes. [33] The Court continued: [26] Furthermore, a parent challenging the reasonableness of the corporate or business expenses is not legally required to firstestablish a prima facie case that such expenses are unreasonable before disclosure becomes necessary.

Simply put, in matters concerningchild support, the required disclosure arises at the outset and continues to be the obligation of the disclosing parent throughout theduration of all child support proceedings. [27] The content of required disclosure must be sufficient to allow meaningful review by the recipient parent, and must be sufficientlycomplete and comprehensible that, if called upon, a court can readily discharge its duty to decide what amount of the disclosing parent’sannual income fairly reflects income for child support purposes.

The issue is whether full deduction of an expense results in a fairrepresentation of the actual disposable income of the party, and the court must balance the business necessity of an expense against thealternative of using that money for child support: Julien D Payne, “Some Notable Family Law Decisions from 2014 to 2015” (2015) 44:3The Advocates’ Quarterly 271 at 295. [34] The Court concluded at paragraph 28: [28] So as to leave no doubt about the correct principle: the evidential and persuasive onus under sections 18-21 of either the federal orprovincial Guidelines as to the reasonableness of expenses, rests with the self-employed or corporate parent throughout, and is the mosteffective means by which to serve the best interests of the child. “Because this information is required in order to properly assess theamount of child support that is payable, its disclosure is part of the obligation to pay support”: Roseberry at para 86.

As provided byYungwirth J in Roseberry, information regarding corporate expenses is within the knowledge, possession and control of the shareholder,director or officer parent, not the challenging parent, and that information is relevant and necessary to determine income for childsupport guideline purposes. Moreover, the obligation to provide a reasonable explanation for expenses fits soundly within the initial onuson the claiming parent under

section 21 of the Guidelines to provide adequate disclosure of their corporate and personal income andexpenses.

As noted in Roseberry at paras 61 and 67, lack of full disclosure or “[n]on-compliance with disclosure requirements causesgreat difficulty for litigants, creates a backlog of retro-active support applications, and most importantly, interferes with the ability of thepayor, recipient, and the Court to make a timely and proper assessment.” That is what has occurred in this matter. [35] Thus, as noted at paragraph 30, it is the responsibility of the disclosing parent to provide relevant and material disclosure. [36] As also noted at paragraph 33, disclosure where corporations, partnerships or self- employment are involved will requiregreater detail, and more time and expense to complete the necessary tasks.

[ 37 ] This becomes especially so in cases where the disclosing parent exercises a high level of control over the business entity’s financial affairs. Cunningham v Seveny involved a partner in a small law firm and greater disclosure was directed.

However, the Court of Appeal suggested at paragraph 34 that “had this case involved a larger law partnership, relevant and material disclosure might have been most quickly and cheaply achieved by having the managing partner provide a letter confirming that expenses claimed in the partnership financial statements conferred no personal benefit on the disclosing parent”. [ 38 ] The Court held at paragraph 35: [35] Simply put, parties ought not to be put to time-wasting, money-draining line-by-line justifications of every dollar that has been spent.

In keeping with the foundational rules, pre-trial disclosure must not become a process that wholly consumes the very parental resources that otherwise would be available for child support.

And, parties must bear in mind that supervising courts will continue to take a very dim view of litigation antics or abuses that detract from, or thwart, the overarching objectives of child support legislation, the foundational rules and disclosure obligations. [ 39 ] Their analysis squarely places the disclosure burden on the parent who derives self-employment income or receives income or benefits from a closely held corporation.

The burden of establishing the reasonableness of the expenses is likewise emphasized in this decision. [ 40 ] Section 21(1) of the Federal Child Support Guidelines deals specifically with self-employment, partnerships and controlled corporations. The parent applying for a child support order and whose income is necessary to determine the amounts under the order (presumably where shared parenting or

section 7 expenses are involved) must provide disclosure with the application. Disclosure includes: (

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

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

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

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

i) the financial statements of the corporation and its subsidiaries, and (ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length; [ 41 ] From my experience reviewing disclosure that has been provided in matters that have come before me, it seems that providing the “statements” referred to in (d)(

i) and (f)(

i) are the exception rather than the rule. [ 42 ] Thus an applicant who controls a corporation must make this mandated disclosure with the application, and under section 21(2) a respondent who derives this type of income must make this mandated disclosure within 30 days of service. [ 43 ] The Federal Child Support Guidelines provides for a “notice to disclose” process in

section 25 : 25

(1) Every spouse against whom a child support order has been made must, on the written request of the other spouse or the order assignee, not more than once a year after the making of the order and as long as the child is a child within the meaning of these Guidelines, provide that other spouse or the order assignee with (

a) the documents referred to in subsection 21(1) for any of the three most recent taxation years for which the spouse has not previously provided the documents; (

b) as applicable, any current information, in writing, about the status of any expenses included in the order pursuant to subsection 7(1); and (

c) as applicable, any current information, in writing, about the circumstances relied on by the court in a determination of undue hardship. [ 44 ] Required “documents” undoubtedly includes the “statements” described in section 21(1) (d)(

i) and (1) (f)(i). [ 45 ] Subject to the minor differences discussed above, the Alberta Child Support Guidelines mirror the same process in sections 21 and 22 . [ 46 ] I conclude that the Cunningham disclosure is now required when a child support order is sought either under the Family Law Act or the Divorce Act , as well as whenever a notice to disclose is served on the other parent.

In referencing “notice to disclose”, I intend to be generic whether it be a notice under the Federal or Alberta Guidelines, or under the Family Law Rules.. [ 47 ] It is unclear from Cunningham or either of the Guidelines how this disclosure obligation will be satisfied.

It is a fair observation that the disclosure obligation will depend on a number of factors, the most important of which is the degree of control exercised by the parent shareholder, director, or officer, partner or proprietor. [ 48 ] In cases of a closely held operation, such as a sole proprietorship (incorporated or not) or where the parent is a majority

shareholder, or where the shareholder and another non-arms-length party control the finances, detailed breakdowns of expenses are now required, together with evidence as to the amount or percentage of personal benefit from any of the expenses. It is now not sufficient to rely only on financial statement line items unless there is obviously no possibility of a personal benefit being derived from such an area of expense.

A letter or advice from the corporation’s accountant that expenses have been treated in accordance with Canada Revenue Agency requirements and generally accepted accounting principles will not suffice. [ 49 ] While the Court of Appeal admonishes parties to avoid a time- and expense-wasting exercise, I fear that such an exercise is virtually mandated where one of the parties has more than T4 income. [ 50 ] For guidance on how to satisfy these disclosure obligations, reference should be had to Yungwirth J’s 2016 decision, Sweezey v Sweezey , 2016 ABQB 131 .

There, at paragraph 48, Justice Yungwirth provides a very helpful guide to this disclosure: [48] As a general rule, the shareholder should provide at least the following: 1. a brief explanation concerning each payment category, including: a. the nature of the payment/expense; b. how it was calculated; c. why it was a reasonable corporate expenditure; d. whether any amounts paid or owing in relation to that category provided or resulted in a personal benefit to the shareholder or other non-arm’s length person (common examples of such expense categories in closely held corporations are vehicle, travel, promotion, phone, and insurance).

This would include an explanation for: i. what portion of the total expense formed the personal or non-arm’s length benefit; ii. how this was calculated; iii. a description of any services performed for the corporation by a non-arm’s length person (such as a new partner/spouse of the shareholder), and information regarding whether the salary s/he was paid for the services was commensurate with the market value of the services; and 2. documentation to support all of the above explanations, such as invoices and receipts regarding non-arm’s length payments.

Spousal support applications [ 51 ] Cunningham does not expressly expand disclosure in spousal support applications, although it is certainly arguable that is should be applied to all situations covered by the disclosure provisions in the Family Law Rules of Court. Asset disclosure conclusion [ 52 ] Cunningham does not expand disclosure of asset or expense information and in particular the information described in items 11 through 16. Disclosure of this information would require an application to the Court for expanded disclosure.

Such an application would require a supporting affidavit setting out the reason why expanded disclosure is appropriate. [ 53 ] For the purposes of a variation application for either child or spousal support, the issue is whether there has been a change in circumstances. Generally, only income information is relevant to the application. If Ms. Zdyb has some compelling reason to question Mr. Zdyb’s disclosure as it relates to his income, that might support an application to compel expanded disclosure. [ 54 ] But in the absence of some compelling reason, Mr.

Zdyb should not have to provide details as to his spending, his investments or his assets. No compelling reason has been made out. The Divorce Act encourages the parties to be self-sufficient after the divorce, and a divorced party should only be compelled to provide personal financial information to his or her ex-spouse when reasonably required to do so. [ 55 ] The fact that Ms. Zdyb has consulted a forensic accountant to provide some analysis of Mr. Zdyb’s income and that the forensic accountant wants to see the expanded disclosure is not enough. Ms.

Zdyb would in these circumstances have to provide sworn information as to what information she requires and why it is required. Hoping that expanded disclosure might reveal something of use is not enough. [ 56 ] If Ms. Zdyb wants to pursue expanded disclosure relating to bank accounts, investments and assets, she will have to make an application supported by appropriate evidence to support such an application. Benefits from corporation conclusion [ 57 ] Mr. Zdyb has produced the corporation’s financial statements for the relevant period. He is the sole shareholder of that corporation.

His statement of expenses have line items totalling $80,062, including significant expenditures for automotive, “life insurance on executives”, meals and entertainment, salaries and wages and travel. No details have been provided, and there is no quantification of any personal benefits derived from any of the expenses. There is no “statement” accompanying Mr. Zdyb’s response to

Ms. Zdyb’s notice to disclose. [ 58 ] Following Cunningham , Mr. Zdyb will have to provide greater details of the corporation’s expenses, and quantify the value of any personal benefits obtained from any of the expenses. Evolving case law will have to determine the form such an explanation might take and the sufficiency of any explanation. [ 59 ] For automotive expenses, it might suffice to say, for example, “The corporation expensed $9,939 relating to automotive expenses incurred relating to the shareholder’s 2015 Ford F-150 truck.

The expenses included costs for gas, oil, maintenance and repairs, insurance, licencing and depreciation. The expenses claimed represented a 50/50 split of the expenses between business and personal use which represents my best reasonable estimate. Personal use has been factored into the amount of expense charged to the corporation. Receipts and invoices will be produced if requested.” [ 60 ] This description would likely satisfy my

interpretation of the disclosure, leaving questions only as to the appropriateness of the business/personal use split and the extent to which depreciation (a non-cash item) still needs to be considered. [ 61 ] Meals and entertainment are more problematic, as there is different income tax treatment for meals and some types of entertainment. I offer no suggestion as to how personal benefits (if any) might be described or negated other than through a letter from the entity’s accountant or tax advisor.

There is undoubtedly a personal benefit when the corporation pays for an employee’s or officer’s meals or entertainment, even if the event is a legitimate business event. Quantification of such benefits are more art than science. Mr.

Zdyb will simply have to do the best he can in providing his own estimate and quantification of the personal benefits he received. [ 62 ] It would likely be necessary to describe to whom rent is paid if a home business is involved; similarly it may be necessary to negate that any expenses such as rent, or salaries and wages were paid to anyone not at arm’s length. [ 63 ] Whether receipts and invoices are required in all cases is yet to be determined, although a literal reading of the Guidelines and the Rules’ form of Notice to Disclose suggest they are at least regarding non-arm’s length transactions. [ 64 ] In short, I do not see how a proper explanation might be provided without going through the line-by-line analysis decried in Cunningham . [ 65 ] I do not fault Mr.

Zdyb. Cunningham was handed down on January 12, 2017. This application was heard on January 16, and Mr. Zdyb’s disclosure had been provided before then. [ 66 ] That being said, his disclosure is now inadequate, and he is required to provide details of the corporation’s expenses. [ 67 ] In the first instance Mr. Zdyb should provide a written statement containing reasonable details of the expenses claimed by the corporation and a quantification of the percentage or amount of any personal benefit derived from any of the expenses.

This might be provided by way of a narrative, recognizing that with some expenses, he may have to obtain advice from his financial advisors as to the correct explanation. Actual letters from accountants and auditors and/or opinions from forensic accountants should be necessary only in the event the receiving parent decides to pursue the issues further, or challenges the disclosing parent’s statement and opinions. Conclusion [ 68 ] Ms. Zdyb’s application for production from Mr. Zdyb relating to items 11 to 16 of the Notice to Disclose is dismissed. [ 69 ] Mr.

Zdyb’s disclosure relating to the corporation’s expenses is inadequate, and Mr. Zdyb is required to provide, within 30 days from the date of this decision, an explanation of the expenses claimed by his corporation and a quantification of the personal benefits received by him in connection with any of these expenses. Observations [ 70 ] Cunningham is a very significant decision. It will have a broad impact on a high percentage of support claims.

While it will undoubtedly result in more fulsome disclosure, it will likely generate a flood of notices to disclose and may well create a cottage industry of experts weighing in on personal benefits from corporate expenses in a way the courts have not seen before. Heard on the 16 th day of January, 2017. Dated at the City of Edmonton, Alberta, this 23 rd day of January, 2017.

Robert A. Graesser J.C.Q.B.A. Appearances: Brenda Cheryl Zdyb, Applicant Self-represented Jason Jonathan Alexander Zdyb, Respondent Self-represented APPENDIX I Form FL-17 [Rule 12.41(3)] COURT FILE NUMBER Clerk’s Stamp COURT COURT OF QUEEN’S BENCH OF ALBERTA JUDICIAL CENTRE PLAINTIFF (Indicate if Applicant/Respondent) DEFENDANT (Indicate if Applicant/Respondent) DOCUMENT NOTICE TO DISCLOSE / APPLICATION

NOTICE TO PARTY SERVED WITH THIS DOCUMENT: This notice is combined with a court application. You are a Respondent. Unless you provide all of the financial information and documents requested below and receive confirmation that the Applicant has cancelled the hearing, you must be in Court when the application is heard as shown below: Date: Time: Where: Before Whom: Go to the end of this document to see what you can do and when you must do it.

WARNING If you do not provide the financial information and documents requested below within the one- month period required by this notice and you do not provide an objection in the manner indicated below, you risk having a penalty imposed on you or an order or sanction being imposed against you by the Court.

ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT (If this form is being used after there has been a final determination in a proceeding relating to child support, spousal support, or adult interdependent partner support, only the documents in items 1 to 9 may be requested.) You are hereby required to provide to the Applicant within one (1) month of service of this Notice: 1. A copy of every personal income tax return you have filed for each of the 3 most recent taxation years.

If you have not filed a tax return for the previous year, you must provide copies of your T4, T4A, and all other relevant tax slips and statements disclosing any and all sources of income for the previous year. 2. A copy of every notice of assessment and reassessment issued to you for each of the 3 most recent taxation years, or a copy of the Canada Revenue Agency printout of your last 3 years’ income tax returns. 3.

If you are an employee, a copy of each of your 3 most recent statements of earnings indicating your total earnings paid in the year to date, including overtime, or where such a statement is not provided by your employer, a letter from your employer setting out that information, including your rate of annual salary or remuneration. 4.

If you receive income from employment insurance, social assistance, a pension, workers’ compensation, disability payments, dividends or any other source, the most recent statement of income indicating the total amount of income from the applicable source during the current year or, if such a statement is not provided, a letter from the appropriate authority stating the required information. 5. If you are a student, a statement indicating the total amount of student funding you have received during the current academic year, including loans, grants, bursaries, scholarships and living allowances. 6.

If you are self-employed in an unincorporated business:

(

a) particulars or copies of every cheque issued to you during the last 6 weeks from any business or corporation in which you have an interest, or to which you have rendered a service; (

b) the financial statements of your business or professional practice for the 3 most recent taxation years; and (

c) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom you do not deal at arm’s length, for the 3 most recent taxation years. 7. If you are a partner in a partnership, confirmation of your income and draws from, and capital in, the partnership for its 3 most recent taxation years. 8. If you have a 1% or more interest in a privately held corporation: (

a) the financial statements of the corporation and its subsidiaries for its 3 most recent taxation years; (

b) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length for the corporation’s 3 most recent taxation years; and (

c) a record showing your shareholder’s loan transactions for the past 12 months. 9. A detailed list of any special or extraordinary expenses claimed (where child support is an issue) as well as copies of receipts or other documentation providing the amount of those expenses, namely: (

a) child care costs; (

b) health care and extended medical and dental insurance premiums attributable to the child;

c) uninsured health care and dental expenses; (

d) extraordinary educational expenses; (

e) post-secondary educational expenses; and (

f) extraordinary expenses for extracurricular activities. 10. If you are a beneficiary under a trust, a copy of the trust settlement agreement and copies of the trust’s 3 most recent financial statements. 11. Copies of all statements and cancelled cheques for all bank accounts held solely or jointly in your name for the most recent 6 months. 12. Copies of credit card statements for all credit cards solely or jointly in your name for the most recent 6 months. 13. Your monthly budget of expenses (where spousal or adult interdependent partner support is an issue). 14. A sworn itemized list of your income, assets and liabilities (in the form attached as

Schedule A). 15. Copies of the most recent statement for all RRSPs, pensions, term deposit certificates, guaranteed investment certificates, stock accounts and other investments in your name or in which you have an interest.

16. A list of any exemptions claimed (where the action involves the division of matrimonial property). The requested documents are to be delivered to: Note: In circumstances where the particulars of the income of the party serving this Notice are necessary to determine the amount of child support, including circumstances where the parties have shared or split custody or parenting, or there are

section 7 expenses being claimed, the party serving the Notice to Disclose is required to send to the other party with this Notice to Disclose, his or her information equivalent to the information being requested. WARNING If you do not come to Court on the date and at the time shown above, either in person or by your lawyer, the Court may: (

a) order you to provide the documents to the Applicant by a specific date; (

b) order payment of support in an amount the Court considers appropriate, drawing an adverse inference against you and imputing income to you; (

c) order you to pay costs to the Applicant up to an amount that fully compensates the Applicant for all costs incurred in the proceedings; (

d) order that your employer, partner or principal, or any other person, provide to the Applicant and/or the Court, any or all of the financial information requested by the Applicant that is within the knowledge of, in the custody of, or under the control of that person; (

e) grant any other remedy requested by the Applicant. If you want to present any evidence to the Judge hearing this application, or if you object to providing the financial information and documents requested, you must (

a) swear or affirm an affidavit stating the evidence you want to present or your objection to providing the financial information and documents requested and the reasons for your objection, (

b) file the affidavit with the court clerk, and (

c) serve the affidavit on the Applicant or the Applicant’s solicitor a reasonable period of time before the application is scheduled to be heard.

SCHEDULE A to Form FL-17 STATEMENT OF INCOME, ASSETS AND LIABILITIES This is the statement of income, assets and liabilities of [name] the [Plaintiff/Defendant] in this action.

A. INCOME All of my sources of income and amounts of income per month are as follows: (

a) Employment income of $ from [employer] ; (

b) Employment insurance benefits of $ ; (

c) Worker’s Compensation Benefits of $ ; (

d) Interest and investment income of $ ; (

e) Pension income of $ ; (

f) Government assistance income of $ from [source] ; (

g) Self-employment income of $ ; (

h) Other income of $ from [source] . My total income last year as indicated at line 150 of my [year] tax return was $ . I expect my income at line 150 of my tax return this year to be $ . B. ASSETS Asset Particulars Date Acquired Value (Estimated) 1. Real Estate (List any interest in land, including leasehold interests and mortgages, whether or not you are registered as owner. Provide legal descriptions and indicate estimated market value of your interest without deducting encumbrances or costs of disposition.)(Record encumbrances under debts.) 2. Vehicles (List cars, trucks, motorcycles, trailers, motor homes, boats, etc.)

3. Financial Assets (List savings and chequing accounts, cash, term deposits, GICs, stocks, bonds, Canada Savings Bonds, mutual funds, insurance policies (indicate beneficiaries), accounts receivable, etc.) 4. Pensions and RRSPs (Indicate name of institution where accounts are held, name and address of pension plan and pension details.) 5. Corporate/Business Interests (List any interest you hold, directly or indirectly, in any corporation, unincorporated business, partnership, trust, joint venture, etc.) 6.

Other (List anything else of value that you own, including precious metals, collections, works of art, jewellery or household items of high value. Include location of any safety deposit boxes.) C. DEBTS Debt Particulars Date Incurred Balance Owing Monthly Payment 1. Secured Debts (List all mortgages, lines of credit, car loans, and any other debt secured against an asset that you own.)

2. Unsecured Debts (List all bank loans, personal loans, lines of credit, overdrafts, credit cards and any other debts that you have.) 3. Other (List any other debts, including obligations that are relevant to a claim for undue hardship – e.g. car lease payment) I, [name] solemnly declare that the facts set out in this document are true. I make this solemn declaration conscientiously believing it to be true and knowing that it is of the same force and effect as if made under oath.

Declared before me to be true on [date] , 20 [year] , at [city] , Alberta. ___________________________________ Signature of person completing document _______________________________________ Commissioner for Oaths in and for Alberta _______________________________________ Print name and expiry/Lawyer/Student-at-Law NOTE: It is an offence to make a false declaration.

_______________________________________________________ Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice Robert A. Graesser _______________________________________________________ The decision has been corrected by including the Appendix referenced in paragraph [1].