LS v DS, 2017 ABQB 584

Court of Queen’s Bench of Alberta Citation: LS v DS, 2017 ABQB 584 Date: 20170927 Docket: 4804 008564 Registry: Grande Prairie Between: LS Plaintiff - and - DS Defendant Corrected judgment: A corrigendum was issued on November 2, 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 ] LS applies for an order setting the proper amount of

section 3 and

section 7 support for the parties’ daughter, KDS. KDS is now 22 years old and just graduated this April from a two-year post-secondary program. [ 2 ] Child support was last set by way of a consent order granted by Sisson J on November 13, 2012. That order dealt with child support arrears that had arisen between 2002 and 2012.

Following disclosure pursuant to notices to disclose in 2014, LS now applies for quantification of arrears from November 1, 2012 to April 30, 2017, a declaration that DS is in contempt of court for failing to disclose his financial information for 2013 and 2014, remedies for contempt and costs. [ 3 ] DS seeks a declaration that KDS was not a child of the marriage for some of that time frame, a reduction in his child support obligations having regard to the means and circumstances of KDS, a determination that he has overpaid child support over that period,

2012 $32,476.87 2013 0 2014 $17,347.41 2015 $9,469.65 and setoff of any overpayment against arrears that were ordered by the November 13, 2012 order. Background [ 4 ] The parties were married for some 18 years. They had three children. This application relates to the youngest, KDS. The consent divorce judgment dated November 28, 2002 set DS’s guideline income at $93,600 and LS’s at $21,373. DS was ordered to pay $1,560 per month as combined

section 3 and

section 7 support for the children. [ 5 ] The Divorce Judgment did not contain mandatory disclosure provisions. [ 6 ] In November, 2007 LS served a notice to disclose on DS. Proceedings to vary the 2002 Divorce Judgment ultimately resulted in the Sisson order of November 13, 2012 which set DS’s 2011 guideline income at $173,890 and LS’s income at $25,000. LS’s income was imputed, as she was not then working outside the home. [ 7 ] A consent order dated March 1, 2012 and signed by Veldhuis J (as she then was) settled child support arrears, and DS was ordered to pay $76,834 in child support arrears.

Ongoing child support was provisionally set and was ultimately set for 2011 by the Sisson order of November 13, 2012. [ 8 ] The Sisson order added $794 in further child support arrears (resulting from DS’s actual 2011 income) and further provided: 7. The Defendant shall pay 87.4% of KDS post-secondary schooling costs, including tuition, books, accommodation and other related costs, after funds are applied to those costs from student loans, bursaries, grants and other funding available for KDS and after funds are applied from KDS’s savings from employment.

The Plaintiff shall provide to the Defendant copies of documents which confirm these costs for KDS along with copies of documents which confirm the amount of funds applied to these costs before the Defendant’s 87.4% is determined. [ 9 ] The Sisson order also contained standard disclosure provisions, requiring the parties to exchange financial information by June 30 of each year. [ 10 ] At the time of the Sisson order, KDS was in Grade 12.

It is obvious that the parties contemplated that she would pursue post- secondary education, as had her siblings. [ 11 ] DS notes that he voluntarily paid post-secondary expenses for KDS’s elder sister. [ 12 ] Despite the disclosure provisions in the Sisson order, neither party provided the other with financial information in 2013. In 2014, due to a request by DS for information about KDS’s schooling, LS served him with a notice to disclose. DS responded with a notice to disclose to LS. [ 13 ] Over the past three years, the parties have litigated the issues. LS takes the position that DS has underpaid

section 3 child support by $30,588 and

section 7 expenses of $2,360.70 because of significant increases in DS’s income. Her income has not changed. DS argues that KDS was not a child of the marriage for the first two years following completion of Grade 12 in 2013. He acknowledges that KDS was a child of the marriage from September 2015 to April 2017 as she completed the program from which she recently graduated. [ 14 ] DS argues that although KDS was continuing her education during those first two years, she was not attending school on a full-time basis, and she was not achieving good grades.

KDS was not pursuing a particular career path but rather was upgrading. During that period, although she continued to live with her mother and stepfather, she was working. Thus, DS argues that KDS was not a “child of the marriage” as defined under the Divorce Act . [ 15 ] DS made the

section 3 payments ordered under the Sisson order until April 2017 when KDS graduated. He made the

section 7 payments for tuition and books for as long as the Maintenance Enforcement Program was enforcing his obligations but ceased to contribute to those expenses after MEP declined any further role in enforcement (in late 2016). [ 16 ] According to DS, he has overpaid child support by $44,889.51, and he asks that that amount be set off against any arrears remaining from the Veldhuis order in 2012. [ 17 ] LS submits that

section 3 child support should be based on DS’s line 150 income, as set out in the Child Support Guidelines. DS withdrew funds from his RRSPs during some of these years:

[18] DS disputes that these amounts should be included, noting that some of the funds were used to make a payment towards thematrimonial property settlement with LS, some of the funds were provided to his stepson when the stepson required financial assistance,and some of the funds were used to pay his child support obligations for KDS. [19] DS also argues that some of LS’s claim is barred by DBS v SRG, 2006 SCC 37, as the notice to disclose was filed onNovember 26, 2014, and that date should be determined to be the date of effective notice.

He also argues that LS unreasonably delayedbringing this application, and any discretion to award retroactive arrears should take into account that there is no evidence of anyhardship. LS and KDS were able to enjoy a high standard of living through LS’s new spouse, such that LS was not required to work tosupport an acceptable lifestyle. [20] DS submits that he is not in contempt of court as he has provided all disclosure following requests from LS. [21] LS seeks a declaration of contempt against DS as well as an award of $5,000 because of his contempt.

She seeks costs of thisapplication as well as for a previous application. She argues that retroactive maintenance going back to November 2012 is well withinthe three-year period mandated by DBS in cases where the debtor is guilty of blameworthy conduct. LS characterizes DS’s failure tocomply with the disclosure requirements in the Sisson order as blameworthy. [22] DS has not made any applications since the Sisson order.

He continued to pay the amounts ordered under the Sisson orderuntil KDS graduated. [23] I note that for the purposes of this application, KDS filed an affidavit explaining her circumstances, her earnings and hercontributions to her post-secondary education. She was cross-examined on her affidavit by DS’s lawyer. [24] I heard LS’s application on September 20, 2017 and I reserved to consider the matter. [25] There are several issues arising: 1. For what periods after June 30, 2013 was KDS a “child of the marriage”? 2. Should DS’s guideline income for 2012 through 2016 include the amounts of RRSP withdrawals? 3.

What amounts should KDS be responsible for, having regard to the provisions of paragraph 7 of the Sisson order? 4. What role does DBS v SRG play in this matter? 5. Is DS in contempt of court and, if so, what remedy should be imposed? 1. For what periods after June 30, 2013 was KDS a “childof the marriage”? [26] The Divorce Act, RSC 1985, c 3 (2nd Supp) defines “child of the marriage” in

section 2: child of the marriage means a child of two spouses or former spouses who, at the material time, (

a) is under the age of majority and who has not withdrawn from their charge, or (

b) is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from theircharge or to obtain the necessaries of life; (enfant à charge). [27] The leading authority on “child of the marriage” in the context of post-secondary education is Farden v Farden, (BCSC).

At page 5 of 7, Master Joyce noted that the determination “requires examination of all of the circumstances” and that itdoes not automatically flow from proof of attendance at a post-secondary institution. [28] The oft-quoted factors are: (1) whether the child is enrolled in a course of studies and whether it is a full time or part time course of studies; (2) whether or not the child has applied for or is eligible for student loans or other financial assistance; (3) the career plans of the child, i.e. whether the child has some reasonable and appropriate plan or is simply going to college becausethere is nothing better to do; (4) the ability of the child to contribute to his own support through part time employment; (5) the age of the child; (6) the child’s past academic performance, whether the child is demonstrating success in the chosen course of studies; (7) what plans the parents made for the education of their children, particularly where those plans were made during cohabitation; and (8) at least in the case of a mature child who has reached the age of majority, whether or not the child has unilaterally terminated arelationship from the parent from whom support is sought.

[ 29 ] There is no doubt that KDS’s grades coming out of Grade 12 were not high enough to enable her to pursue post-secondary education. She failed some courses, and her attendance was less than stellar. Upgrading was required. KDS sought some counselling and she was advised to take academic upgrading. KDS upgraded over a period of two years. She did not take a full course load, and instead went to school part-time and worked part-time. She acknowledges that she struggled with math and failed that program. Her marks in her first year of upgrading were bare passes.

In the second year, she took more courses but not a full course load. Her course load was greater in the second year of upgrading. [ 30 ] DS argues that since KDS’s course load was part-time, she did not obtain good marks, she admits missing some classes, and she was working part-time for the first two years after Grade 12, she was not a child of the marriage until KDS began a certificate- granting program in September 2015. [ 31 ] KDS explained why she did not work in the summer of 2013, as she had suffered an injury.

During the period from the fall of 2013 until the end of August 2016, she worked between 15 and 20 hours during the school terms, and full-time during the summers. She earned a total of $32,552.59 over that time. [ 32 ] KDS continued to reside with her mother and stepfather during this period, and her evidence on cross-examination was that she spent about $200 per month for clothes and entertainment. She apparently paid for her books and supplies.

Her mother paid for tuition, but DS paid his share when requested to do so by MEP. [ 33 ] KDS did not have a clear plan as to what program she wanted to pursue until the upgrading was complete after June 2015.

When she made a decision, she pursued a program, graduated from it, and is now employed in the field, earning a reasonable income (and one that she would not be earning but for the post-secondary education). [ 34 ] On cross-examination, she acknowledged to her father’s lawyer that she “was able to afford to cover all of her post-secondary schooling costs.” [ 35 ] This case raises a number of issues concerning “child of the marriage.” One

interpretation of the Divorce Act definition and the Farden factors appears to limit post-secondary education support to focused high achievers. Undoubtedly, the presence of a career plan and good grades makes supporting an adult child successfully pursuing a career plan very compelling. But what about the unfocused young adult, struggling with plans and with academics? [ 36 ] There is, I think, a valid argument that those young adults are actually more dependent than their focused, achieving counterparts. I recognize that parents should not be required to fund a young adult’s “gap year” and their travel plans.

Nor should parents be expected to support young adults who are more interested in partying and avoiding having to work than being productive in a useful program. [ 37 ] Here, KDS had some struggles with high school. Without upgrading, she had limited opportunities to pursue post-secondary education. She sought counselling and followed the advice: do academic upgrading. KDS did just that, and succeeded despite continuing to struggle with math. Once upgraded, she chose a career plan and pursued an appropriate program.

These efforts are to be commended and her successes over the last four years are at least as impressive and commendable as those of a focused, high-achieving young adult who has obtained a BSc, BA or BComm over the same four-year period. [ 38 ] Parental support of young adults pursuing post-secondary education (which includes upgrading high school marks and taking courses to make post-secondary possible) is not an absolute.

It is somewhat curious that the law obliges separated parents to support their child’s post-secondary education while parents who stay together may choose to support such education or tell their child to make it on their own. [ 39 ] That being said, support is not necessarily table amount

section 3 support for 12 months a year with the parents splitting other costs on a proportionate basis. Individual and family circumstances must be considered. For some young adults, they may be required to make substantial contributions to all costs surrounding their post-secondary education. Support may only be ordered for the actual months in class, with an expectation that non-school months require the child to work and pay his or her own living expenses.

It is rare when children are not expected to contribute to the cost of their post-secondary education through student loans (when available), scholarships (when the child is capable of achieving scholarships) and part-time work during the school months and full-time work during the summer months. [ 40 ] Agreements between the parents are also very important. That is one of the most significant factors here. The parties negotiated a settlement of LS’s claim for ten years’ worth of arrears.

Included in that settlement, documented by the consent orders in 2012, is DS’s agreement to fund KDS’s post-secondary education. At the time of the agreement, KDS was partway through Grade 12. Her struggles in high school were undoubtedly well known to her parents. In the course of this application, each points out academic and attendance difficulties during periods when KDS was with each parent. [ 41 ] The fact of KDS’s upgrading was presumably known to DS, or could have been discovered by him. He took no steps to inquire as to grades or attendance until the fall of 2014.

He has never brought any applications to vary his obligations, or to require production of information regarding KDS’s grades or attendance. [ 42 ] I am satisfied here that KDS remained a child of the marriage throughout the period from the summer of 2013 to April 2017. She pursued upgrading until she was able to formulate a career plan. Once she did so, she successfully pursued that career plan. [ 43 ] The fact that she was not in full-time attendance at school, and had summers away from school, does not automatically disentitle her from support. Her parents were free to negotiate different terms.

DS might have insisted on

section 3 support only being paid for school months. He might have insisted that KDS be responsible for a fixed percentage of tuition or other costs. He might have negotiated for regular updates on attendance and grades. Instead of any of that, he agreed to pay his proportionate share of post- secondary education costs, limited only by consideration of what KDS might be able to contribute herself.

[ 44 ] DS apparently took no steps to determine what KDS was doing to contribute until these proceedings were brought by him. During the entire period, KDS remained in her mother’s home. While it is arguable that some of the

section 3 payments may be a windfall to LS, and that she should have required KDS to pay some rent at least during the summer months, neither of these factors was built into the agreement KDS’s parents made as documented by the 2012 court orders. [ 45 ] DS points out that in Olson v Olson , 2003 ABCA 56 , the Court of Appeal held that the onus to prove that a child is a child of the marriage rests on the party seeking child support. It considered and approved the Farden factors.

In that case, the Court concluded that an adult child’s pursuit of sports training needed to be connected to the child’s career aspirations. On the facts in that case, the Court found no clear connection and did not order child support. [ 46 ] In Ewing v Ewing , 2009 ABCA 227 , the Court of Appeal noted the mandatory nature of the Guidelines (but for specified exemptions), and stated at paragraph 42: [42] These provisions make clear that once income has been determined a court must apply the applicable provincial Table for incomes under $150,000, the amounts of which vary according to number of children.

The Table amount is mandatory, subject only to specified exemptions provided in the Act and the Guidelines. The use of a mathematical calculation based on the Table amounts supports the objective outlined in

section 1(

a) of the Guidelines of setting a fair and efficient means of calculating child support. Parliament can be presumed to have considered all of the tax implications and the reasonable costs of child raising before setting the Table rates for incomes up to $150,000 – short of hardship or other legislative exemptions.

The mandatory Table rate avoids litigation and provides certainty for all incomes up to $150,000. [ 47 ] In Miller v Joynt , 2007 ABCA 2014 , the adult child “was not successfully attending school and achieving passing grades.” At paragraph 12, the Court of Appeal stated: [12] When the Farden factors are applied to this case, I am not persuaded the judge unreasonably concluded that the Mother had not discharged her onus of establishing that the son was a child of the marriage from January to April, 2005.

Another judge might have come to a different conclusion, but given the high standard of appellate review, this ground of appeal must be dismissed. [ 48 ] The Court of Appeal has consistently referenced the Farden factors, so I should expressly deal with them.

(1) Whether the child is enrolled in a course of studies and whether it is a full time or part time course of studies [ 49 ] KDS was enrolled in a counsellor-recommended course of studies initially – Academic Upgrading. She required that program because her Grade 12 marks were insufficient to allow her to pursue post-secondary education. Without upgrading, it was not reasonable to require KDS to have a plan. As soon as she upgraded, she formulated a plan and took an appropriate course of studies. These factors support her being considered a child of the marriage.

For the first two years, she did not attend full-time. Her part-time attendance for the first year might suggest less than full child support over that period, but not disqualify her from being considered a child of the marriage.

(2) Whether or not the child has applied for or is eligible for student loans or other financial assistance [ 50 ] The information on this application is clear that KDS did not apply for student loans or for scholarships. She did not apply for student loans because she believed she was ineligible for student loans because she was living at home with her mother and because of her father’s and stepfather’s incomes. This was not an unreasonable assumption on KDS’s part.

In addition, case law questions whether a child of affluent parents should be saddled with student loans and post-graduation debt when the parents can afford to fund the child’s education. [ 51 ] KDS’s explanation for not applying for scholarships was candid. She did not think her academic performance would make her eligible. Again, this was not unreasonable.

While an adult child should maximize the opportunity to obtain scholarships, bursaries and the like, eligibility for academic awards is not a pre-condition for being considered to be a child of the marriage. [ 52 ] There should be no negative consequences to KDS because of these factors.

(3) The career plans of the child, i.e. whether the child has some reasonable and appropriate plan or is simply going to college because there is nothing better to do [ 53 ] This factor is applied when there is the appearance that the child is pursuing unrealistic dreams with little likelihood of a resulting career, and when the child is simply postponing joining the real world and using the post-secondary time as party time or fun time. There is no evidence of that here. KDS applied herself and graduated. She worked part-time.

While she admitting missing some classes, her absences do not appear to have impacted her success. There is nothing negative here to suggest that KDS ceased to be a child of the marriage.

(4) The ability of the child to contribute to his own support through part time employment [ 54 ] KDS demonstrated an ability and a willingness to work part-time during the school year and full-time during the summer months. This is commendable. She earned $2,600 in 2013, $16,400 in 2014, $10,145.62 in 2015 and $3,360 in 2016. The agreement

between her parents required that her earnings be considered in the context of DS’s support obligations. This issue was not pursued by DS until late 2014 and remained unresolved until now. On cross-examination, KDS was forthcoming about her earnings and stated that she could have paid for her post-secondary expenses. I take that to mean that she could have paid for tuition and books but not room and board.

There was no information on transportation costs; she said that she had taken no holidays and estimated she had spent about $200 per month on clothing and entertainment. [ 55 ] Certainly for 2014, she had sufficient income to be solely responsible for any books and tuition. She had the same capacity in 2015. For 2016, she did not earn enough to make any significant contribution. No explanation for her minimal income in 2016 was provided.

(5) The age of the child [ 56 ] Over the relevant period, KDS was 18 to 22. Her age, and the fact that she went right into the academic upgrading out of Grade 12 and attended continuously until graduation, supports her being considered a child of the marriage.

(6) The child’s past academic performance, whether the child is demonstrating success in the chosen course of studies [ 57 ] KDS’s past academic performance compared with her success in graduating from her chosen program of study shows that she has improved her academic performance over the relevant period and has been successful. This favours her being considered a child of the marriage.

(7) What plans the parents made for the education of their children, particularly where those plans were made during cohabitation [ 58 ] The parents do not appear to have made any plans during cohabitation; they separated when KDS was young. They did make plans by way of their settlement and consent order in 2012. The agreement they made demonstrates a commitment to support KDS during post-secondary education. No conditions were placed on their agreement to support KDS, although there was an expectation that KDS contribute to the costs as she was able to do so.

These circumstances favour analyzing KDS’s income and resources over the period and determining what an appropriate contribution from her should be.

(8) At least in the case of a mature child who has reached the age of majority, whether or not the child has unilaterally terminated a relationship from the parent from whom support is sought [ 59 ] No information was provided to me as to KDS’s relationship with DS so this is not a factor to consider here. Conclusion on the Farden factors [ 60 ] As a result of my analysis above, I conclude that KDS remained a child of the marriage for the period July 1, 2013 to April 30, 2017. As a result,

section 3 child support, at table amounts, is payable during that entire period.

That is consistent with the agreement of the parties, and is also consistent with the majority of the Farden factors discussed above. [ 61 ] There is no doubt that DS and LS may have come to a different agreement than they did in 2012, but that agreement was on the eve of KDS attending post-secondary education, and by that time each parent must have had a good idea as to KDS’s academic achievements to date and her career plans, or the absence of career plans. [ 62 ] KDS’s success does suggest that the approach to her post-secondary education and career planning was reasonable.

She has completed a program that has provided her with reasonable employment. She pursued this course right out of high school and had no gap year, and no periods other than summer when she was not taking classes. She demonstrated the ability to pursue education and work part-time, which is something many young adults are unable or unwilling to do. 2. Should DS’s guideline income for 2012 through 2016 include the amounts of RRSP withdrawals? [ 63 ] LS argues that the RRSP withdrawals should be considered as income for the purposes of child support.

They are included in DS’s line 150 income for the relevant tax years. [ 64 ] LS cites Haig v Whitmore , 2015 ABQB 267 , as authority for RRSP withdrawals being included in a payor’s income for the purposes of child support. In Haig v Whitmore , Yamauchi J considers a number of authorities on RRSP withdrawals. It is clear that case law generally supports RRSP withdrawals being included as income for the purposes of child support.

He noted that in the cases where RRSP withdrawals were included in the payor’s guideline income, the payor had withdrawn RRSP amounts “to better their position through the acquisition of assets or payment of expenses (or were not explained)” (at paragraph 39).

[ 65 ] Yamauchi J noted that in McKenzie v Perstrelo , 2014 BCCA 161 , the British Columbia Court of Appeal observed that RRSP withdrawals had not been included as income where the amount had already been accounted for in the division of assets and had been used to fund legal fees, or where the amount was used to repay joint debt. [ 66 ] In that case, Yamauchi J did not include the RRSP withdrawals as guideline income because the amounts were used to pay child support arrears, RRSPs had been equalized “so this was a capital asset that belonged to him.” [ 67 ] Indeed, in that case Yamauchi J accepted the payor’s argument that including the RRSP withdrawals would be double- dipping. [ 68 ] In Choucair v Choucair , 2012 ABQB 381 , Hughes J recognized that the inclusion of RRSP income is fact-specific (at paragraph 38).

In that case, the evidence was to the effect that the payor cashed in RRSPs because he was short of cash in those years and needed some furniture. In the circumstances of that case, Hughes J declined to include the RRSP withdrawal in the payor’s guideline income. [ 69 ] I have always had difficulty with the concept that RRSP withdrawals should be included as income for child support or for spousal support. There is undoubtedly some double dipping. The payor’s income for support purposes is not reduced for any RRSP contributions. He or she thus pays support based on the gross income before the deduction.

If withdrawals are included for support purposes, the payor pays again. Is that fair? [ 70 ] In my view, an analogy can be drawn between RRSPs and tax-free savings accounts. If a payor invests some of his or her income from employment in an RRSP, there is a tax deduction for the amount of the contribution. However, when the RRSP is cashed in, the payor pays income tax on the entire amount of the withdrawal, being the original contribution together with any gain on the original contribution. For support purposes, the entire amount may be included.

If the payor invests in a tax-free savings account, when the payor withdraws money from the TFSA, nothing is taxable; neither the original amount of the investment nor any gain on it is taxable and nothing is added to the payor’s line 150 income. [ 71 ] I can certainly see (and accept) the argument that any gains on the amount invested in an RRSP should be added to income.

Just like any other investment income, the gain should be recognized for tax purposes as well as for support purposes. [ 72 ] But to generally include all RRSP withdrawals as income for support purposes, in my view, is unfair. [ 73 ] A stronger argument exists where the majority of the payor’s income comes from RRSP withdrawals. In such circumstances, the RRSP income is like pension income.

And in those circumstances, the needs of the payor’s children may outweigh the double- dipping argument. [ 74 ] Here, while the evidence on the subject is limited, it appears that DS’s RRSP withdrawals occurred shortly after the contributions. Before he became a salaried employee, his tax returns do not show significant RRSP contributions. After he ceased to be self-employed, DS made regular RRSP contributions, but appears to have withdrawn them in the same year or shortly after. [ 75 ] Judges have to do the best they can with the evidence available.

I recognize that the evidence as to how much of the withdrawals represented a return of the original investment and how much represented gain on the investment. There is some evidence that allows me to conclude that DS withdrew his RRSP contributions shortly after (meaning within a year or two) the investment was made. This is not a situation where withdrawals were likely more from the gains than from the principal. But it is not practical to order all disputes to trial. These days, trials are years away.

Special chambers is not the answer either, as special chambers bookings are (in Edmonton) some eight months or more away. [ 76 ] Here, I conclude that DS’s RRSP withdrawals should not be included in his income for support purposes. I do not focus on his explanation for the withdrawals. With respect to the principle that RRSP withdrawals should generally be included in income for support purposes, I have found no authorities binding on me to that effect. My view is that any gains on RRSP contributions should generally be included, but the original contributions themselves should generally not be included.

To the extent that there are non-binding authorities saying that RRSPs should generally be included in the payor’s guideline income, I respectfully disagree. [ 77 ] I say this because RRSPs are a capital asset. Unlike other capital assets, they have an associated income tax liability. Capital assets are generally not included in a payor’s guideline income. Here, there is no argument that the RRSPs were joint property. The parties separated and were divorced by 2002.

Matrimonial property division was agreed to long ago. [ 78 ] Even if the uses to which the withdrawals were put were considered, two of them fall within exceptions recognized by the cases: completing the division of property and paying child support. But I do not focus on those as I believe that the uses should be considered irrelevant, other than with any gains on the capital contributions to the RRSPs. [ 79 ] I realize this leaves arguments as to how to apportion between contributions and gains, but those arguments are fact-driven and will depend on the evidence in any particular case.

The gains (but not the original contributions) are non-recurring gains and may fall under

section 17 of the Child Support Guidelines enabling the Court to make the “fairest determination of income.” I consider that my approach here is consistent with the use of that

section and the Court of Appeal decision in Ewing v Ewing , 2009 ABCA 227 cited by DS. [ 80 ] In this case, there is no likelihood that gains were significant as withdrawals appeared to follow contributions in fairly short order. It would be arbitrary to guess what proportion might be gain, and I recognize that my decision favours the party who has this information and has not provided it.

But in the circumstances of this case, where the payor’s income without considering RRSP withdrawals is significant and approaches $250,000 for some of the years in question, I do not see that mischief is done by not including some amount as estimated gain. Where a payor’s income is modest, the RRSP withdrawals significant and the recipient’s needs are great, there may be less reason to give the benefit of the doubt to the payor. Here, the payor’s income is large, and his

section 3 payment is significant whether RRSP withdrawals are included or not.

[ 81 ] Different considerations may apply in cases where the payor’s RRSP income is the major source of income, and not including it would result in little or no child support being payable. But those cases are the exception and should not drive the rule. Each case and situation must be looked at on its own facts. [ 82 ] Thus, DS’s income for Child Support Guideline purposes should be recalculated to exclude any RRSP withdrawals for the relevant years. [ 83 ] There is no basis for me to vary LS’s guideline income.

She has not worked for a number of years, such that the income accepted by her for the purposes of the consent orders in 2012 should be used. It will be necessary to calculate a new “proportionate share” for each of the relevant years to vary the

section 7 expense sharing. 3. What amounts should KDS be responsible for, having regard to the provisions of paragraph 7 of the Sisson order? [ 84 ] Taking into account KDS’s candour on cross-examination, there is really no reason why she should not be responsible for her own tuition, registration, books and parking from the fall of 2013 to the end of 2015.

Her income in 2016 was modest, such that her modest contribution towards clothing and entertainment does not seem unreasonable. [ 85 ] KDS’s income for 2014 and 2015 was sufficient for her to be solely responsible for her tuition, books, parking and registration. DS paid his proportionate share of expenses for 2014, 2015, and 2016 until MEP stopped the

section 7 expenses. His support obligations, especially as adjusted to reflect his actual income, were a sufficient contribution to KDS’s expenses for 2013, 2014 and 2015. DS is entitled to a credit against his arrears for the amounts he contributed to the

section 7 expenses over that period. [ 86 ] From DS’s affidavit of August 24, 2017, it appears that KDS’s 2016 expenses were $4,617.98. Her 2017 expenses were $1,381.82. DS is responsible for his full proportionate share of those expenses, less the $2,609.99 he paid through MEP. [ 87 ] For certainty, DS’s 2017 expense proportion should be based on his 2016 income. [ 88 ] I leave it to Mr. Taylor (in the first instance) to do the necessary calculations. If the parties are unable to agree on the calculations, I reserve jurisdiction to finalize matters. 4.

What role does DBS v SRG play in this matter? [ 89 ] DS argued that there should be no retroactive adjustment before the date of effective notice. The evidence on this application is that notice was provided in November 2014, in response to DS’s request for information about KDS’s schooling. According to him, any adjustment (if ordered) should be effective only back to January 1, 2015. [ 90 ] LS argued that under DBS v SRG , the Court has jurisdiction to make a retroactive support award up to three years before the date of effective notice.

She argues that the necessary misconduct on DS’s part was his failure to voluntarily disclose the increases in his income, and to follow the disclosure provisions in the two 2012 consent orders. [ 91 ] Neither party provided the other with any disclosure until after November 2014 when this variation process began. DS says that any default on his

part is offset by LS’s default. [ 92 ] While DBS v SRG sets the presumptive date for any retroactive award as being the date of effective notice, the majority of the Supreme Court stated at paragraphs 123-124: 123 Once the recipient parent raises the issue of child support, his/her responsibility is not automatically fulfilled. Discussions should move forward. If they do not, legal action should be contemplated.

While the date of effective notice will usually signal an effort on the part of the recipient parent to alter the child support situation, a prolonged period of inactivity after effective notice may indicate that the payor parent’s reasonable interest in certainty has returned. Thus, even if effective notice has already been given, it will usually be inappropriate to delve too far into the past. The federal regime appears to have contemplated this issue by limiting a recipient parent’s request for historical income information to a three-year period: see s. 25(1)(

a) of the Guidelines. In general, I believe the same rough guideline can be followed for retroactive awards: it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent. 124 The date when increased support should have been paid, however, will sometimes be a more appropriate date from which the retroactive order should start. This situation can most notably arise where the payor parent engages in blameworthy conduct.

Once the payor parent engages in such conduct, there can be no claim that (s)he reasonably believed his/her child’s support entitlement was being met. This will not only be the case where the payor parent intimidates and lies to the recipient parent, but also where (s)he withholds information. Not disclosing a material change in circumstances — including an increase in income that one would expect to alter the amount of child support payable — is itself blameworthy conduct.

The presence of such blameworthy conduct will move the presumptive date of retroactivity back to the time when circumstances changed materially. A payor parent cannot use his/her informational advantage to justify his/her deficient child support payments. [ 93 ] There is a significant difference between failing to report increased income as opposed to decreased income. Since LS’s income was not increasing, her failure could only affect the

section 7 split, and a decrease might result in greater payments by DS. Failure to report increased income almost always deprives the child of the benefits of that higher income. [ 94 ] In this case, I have no hesitation in finding that DS is guilty of blameworthy conduct in failing to voluntarily disclose the

increases in his income in June 2013 and June 2014. It is true that neither party made a voluntary disclosure, but only DS benefitted fromthat. [95] A significant factor for me is that the Sisson order was finalized on November 13, 2012. It updated the Veldhuis order ofMarch 1, 2012. DS disclosed his 2011 income for the purposes of the November 13 order. His income for 2011 was only $7,500 higherthan it was for 2010. But by November 13, 2012, it must have been obvious to DS that his 2012 income would be significantly greaterthan his 2011 income. Eleven-twelfths of 2012 had passed.

His 2012 income was nearly $50,000 greater than his 2011 had been. In thesecircumstances, DS’s failure to voluntarily disclose his 2012 income by June 30 of 2013 is clearly blameworthy. [96] While LS’s conduct in not providing her disclosure as required by the 2012 orders is also blameworthy, I do not see her failureto comply with the court orders should bar her from making this claim. Her income had been imputed because she had chosen not towork outside the home. There is no indication that her circumstances changed in any material way. That does not excuse her failure tofollow the court orders.

In some cases, such failure might well be a bar to seeking a retroactive adjustment, because of the lack of cleanhands. But in her case, she was not suppressing information that would inevitably result in an adjustment to support. DS was. [97] I do not see that there has been any unreasonable delay in bringing the variation application by LS. I can understand somereluctance to get back into a dispute so quickly after resolving the previous one. There was no default in disclosure until after June 30,2013.

It is true that LS did nothing about the situation until the late fall of 2014, but I do not see an 18-month delay in the circumstancesof this case to be unreasonable. [98] Nor do I think it relevant that retroactivity should be influenced by the relatively high standard of living presumably enjoyedby both households. There is no evidence of extravagance, and no reference was made to either the hardship provisions in the ChildSupport Guidelines or the fact that DS’s income was over $150,000 under sections 4 or 10 of the Guidelines.

I do not think that eithersection would help DS here, in any event. [99] As a result, I order that DS’s child support obligations be varied retroactively to January 1, 2012. There is nothing in theconsent orders or the parties’ dealings that indicate that child support variations should be made effective July 1, based on the previousyear’s actual income.

That is a convenient way of dealing with child support adjustments, but requires the agreement of the parties or acourt order to that effect. [100] Absent agreement or a court order, the default is that support obligations should be varied for the calendar year, when thatcalendar year’s actual incomes are known. 5. Is DS in contempt of court, and if so, what remedyshould be imposed? [101] Contempt of court is a discretionary remedy.

Pintea v Johns, 2017 SCC 23 , 2017 SCJ 23, makes it clear that evencivil contempt must be proven beyond a reasonable doubt, including that the person had actual knowledge of the order or orders of whichhe is sought to be held in contempt. [102] That is something that is very difficult to prove, absent cross-examination or admission. Even with such proof, the Court muststill determine that there has been a wilful disobedience. [103] The absence here falls short of that. Mr.

Taylor urges that I send a strong message to parents who fail in their court-orderedresponsibilities, such as providing disclosure rather than waiting until it is demanded. I note that it does not really lie in LS’s mouth tocomplain about DS’s failure to comply, as she did not do so herself. [104] While there is some merit to Mr. Taylor’s argument, using contempt remedies should generally be treated as a last resort. I donot want to trivialize the mandatory disclosure provisions in support orders.

But the most effective remedy (at least in the first instance)is to consider non-disclosure and other breaches of orders in the context of cost awards. There may be a pattern of underpayment by DS,but there is no demonstrated pattern of disobedience of court orders. [105] I do not find DS in contempt of court; I do note that he breached the consent orders in 2012 by failing to comply with thedisclosure provisions in them. Costs [106] As discussed above, I intend to consider DS’s failure to comply with the 2012 orders in the context of costs.

His failure todisclose in a timely way impacted the timing of receipt of support; it did not ultimately reduce his support obligations. This is not asituation where he not only breached disclosure obligations but also failed to pay, leaving his child in distressed circumstances. KDS saidon cross-examination that she could have paid for her education.

I take that with a grain of salt, as it is unclear that KDS is aware of whather post-secondary education cost. [107] Nevertheless, it should be noted that from the time KDS finished high school and without factoring in the increases that willresult from this order, DS paid

section 3 support to LS (for KDS’s benefit) nearly $70,000 and contributed nearly $9,800 for tuition,books, registration and parking. That is no small contribution. [108] There is no information that KDS incurred any debt as a result of her post-secondary education, such that she will have beeneducated at her parents’ cost, with a modest contribution from herself.

[ 109 ] It is unfortunate that these proceedings have been necessary. It is also most unfortunate that KDS herself has been drawn into these proceedings; that should be avoided at almost all costs. Pitting a child directly against a parent is unhealthy, and in most cases unfair. Here, KDS should be grateful to her parents for their strong financial support. And in the end, it is LS who will benefit from this decision as additional funds will be payable to her. [ 110 ] LS is entitled to costs of these proceedings. That will include the initial application in this matter.

Because of DS’s failure to comply with the disclosure requirements of the 2012 orders, I would normally have increased the column of costs to a higher column instead of the normal Column 1 for proceedings such as this. But because of LS’s failure to comply herself, I will order only ordinary costs on Column 1. [ 111 ] I retain jurisdiction to finalize any calculations, including costs. Heard on the 20 th day of September, 2017. Dated at the City of Edmonton, Alberta, this 27 th day of September, 2017. Robert A. Graesser J.C.Q.B.A. Appearances: Glenn Taylor Taylor & Company for the Plaintiff Carley A.

Termeer Stringam LLP for the Defendant _______________________________________________________

Corrigendum of the Reasons for Judgment of The Honourable Mr. Justice Robert A. Graesser _______________________________________________________ The date in paragraph 60 has been changed from April 30, 2014 to April 30, 2017.