MacLeod v MacLeod, 2017 ABQB 738

Court of Queen’s Bench of Alberta Citation: MacLeod v MacLeod, 2017 ABQB 738 Date: 20171201 Docket: 4801 132619 Registry: Calgary Between: Thomas Hendrik MacLeod Applicant - and - Tessa Irena MacLeod Respondent Corrected judgment: A corrigendum was issued on January 25, 2018; the corrections have been made to the text and the corrigendum is appended to this judgment. _____________________________________________________ Endorsement of the Honourable Madam Justice M.H. Hollins _______________________________________________________ [ 1 ] Since their divorce on December 19, 2009, Mr. and Ms.

MacLeod have been co-parenting their daughter C., who is now 14 years old. They have cross-applied for a determination of child support, both retroactively and prospectively. [ 2 ] A Corollary Relief Order dated April 8, 2011 (the “2011 Order”) offset the parties incomes and pursuant to their shared parenting arrangement, directed a net child support payment from Mr. MacLeod of $1,777 per month. The 2011 Order also contained provisions for the annual exchange of financial information between the parties and for adjustments to be made where appropriate. [ 3 ] Within a year of the 2011 Order, Mr.

MacLeod’s income increased and he began paying child support of $1,991 per month, although the 2011 Order was not amended. The parties have not exchanged financial information for the last few years. Mr. MacLeod’s income increased substantially in the 2015 and 2016 years, but notice of this increase was not given to Ms. MacLeod, nor were any further voluntary changes made in the amount of support being paid. Mr. MacLeod’s employment was terminated in late 2016 and he received severance by way of salary continuance to and including June of 2017.

He continued to pay the $1,991 per month until July of 2017 but paid nothing for July and August. In September of 2017, he secured new temporary employment at $120,000 per annum. Pursuant to an interim order, he has paid $804 per month since September of 2017. In November of 2017, he began another job paying $230,000 per annum. [ 4 ] The 2011 Order imputed income to Ms. MacLeod of $30,000 per annum. She has not ever earned much in excess of that

imputed income level until January of 2017 when she found full-time employment paying an anticipated income of $60,000. [ 5 ] Notwithstanding Mr. MacLeod’s loss of employment, Ms. MacLeod continued to enforce the original 2011 Order, resulting in arrears. Mr. MacLeod asks this Court to extinguish his arrears and further to impute income of $85,000 per year to Ms. MacLeod for 2015 and 2016. Ms. MacLeod has also cross-applied for a determination of arrears based on Mr. MacLeod’s undisclosed income in 2015 and 2016, as well as arrears for C.’s special or extraordinary (s.7) expenses.

Material Change in Circumstances [ 6 ] Under s.17(4) of the Divorce Act , varying the 2011 Order requires a change in the circumstances since the making of that Order.

Section 14 of the Federal Child Support Guidelines (the “Guidelines”) provides that changes resulting in a variation of the amount payable, for example as a result of changing incomes, will constitute a change sufficient to satisfy the threshold test for variation. [ 7 ] While this case is a bit unique in that Mr. MacLeod’s new employment will generate almost identical income to that upon which the 2011 Order was based, the fact is that both parties have different jobs now than they had in 2011 and Ms. McLeod is making substantially more income now, which satisfies the test for a change in circumstances.

Imputing Income to Ms. MacLeod [ 8 ] The 2011 Order imputed income to Ms. MacLeod of $30,000 per year. Mr. MacLeod argues that I should impute income to Ms. MacLeod for 2015 and forward because she has been under-employed since completing her MBA from Athabasca University in February of 2015. [ 9 ] At the trial that gave rise to the 2011 Order, the trial judge expressly considered that Ms. MacLeod could and should become more self-sufficient if she was given the time and support needed to complete her MBA. However, since completing her MBA, Ms.

MacLeod did not increase her hours of work from 20-30 hours per week and did not increase her income until this year. [ 10 ]

Section 19 of the Guidelines provides that the Court may impute income where appropriate, including in situations where a spouse is intentionally under-employed. This is essentially what Mr. MacLeod is saying has happened since February of 2015. However, in Alberta, the test for imputing income also requires me to find that the person has “pursued a deliberate course of conduct for the purpose of evading child support obligations”. As our Court of Appeal said Hunt v. Smolis-Hunt ( 2001 ABCA 229 ): “We read the

section as requiring either proof of a specific intention to undermine or avoid support obligations, or circumstances which permit the court to infer that the intention of the obligor is to undermine or avoid his or her support obligations”. [ 11 ] I do not find that the evidence before me supports such a conclusion and I do not impute income to Ms. MacLeod. [ 12 ] Ms. MacLeod finished her MBA in the early spring of 2015 at which time she hired head hunters to assist with her resume drafting and job search. Finding nothing, she took a part time position in commissioned sales in July of 2015.

It is clear that this was work she enjoyed and in which she saw an opportunity for growth over time. Although she was not able to increase her earnings through 2016, that is not a particularly long time in which to adjust to a new job, try to increase sales and simultaneously assess what other opportunities might be available. [ 13 ] Mr. MacLeod provided comparable incomes for MBA graduates from Athabasca as well as from McGill University, Rotman School of Business (University of Toronto) and others. However, those are not programs (nor employees) in Alberta.

Our local economy has presented more challenges to those seeking work or additional work than has been the case elsewhere in the last few years. [ 14 ] But most importantly, even if Ms. MacLeod could have looked for better paying work or been more diligent in her search, that is not the test. There is no evidence upon which I can find or even infer that she remained under-employed for the purpose of avoiding child support obligations.

In fact, she complied with her child support obligations throughout and has searched for and now found work more in line with her training and which will allow her to make a more significant contribution to C.’s support. Retroactive Child Support Generally [ 15 ] Ms. MacLeod has cross-applied for an Order declaring Mr. MacLeod in arrears for 2015 and 2016 in the sum of approximately $17,000. This is comprised of additional s.3 child support that she says ought to have been paid if Mr.

MacLeod’s proper income levels had been used, as well as retroactive adjustments to the amount of his contributions to C.’s dance expenses. [ 16 ] The Supreme Court of Canada, in DBS v. SRG ( 2006 SCC 37 ), set out the test for determining when retroactive support ought to be ordered. I must consider:

(1) Did Ms. MacLeod delay unreasonably in seeking these adjustments?

(2) Has Mr. MacLeod engaged in blameworthy conduct?

(3) What have C.’s circumstances been for the time period in question? and

(4) Will a retroactive award cause Mr. MacLeod undue hardship? [ 17 ] Ms. MacLeod received Mr. MacLeod’s financial information for 2015 and 2016 only in the course of his application to

extinguish his arrears and reduce support as a result of his loss of employment. While both parties acknowledged that they have not been compliant with the 2011 Order in terms of financial disclosure, Ms. MacLeod cannot be said to have delayed given that she brought this application within months of receiving that information. [ 18 ] While Mr.

MacLeod’s failure to provide updated financial information may not seem “blameworthy” in the way we generally use that phrase, the fact is that where a payor knows that his income has increased, he has an obligation to ensure that he is paying the proper amount of support for his child. Particularly where the exchange of financial disclosure is required by Court Order, the failure to advise of a significant increase in income can be blameworthy, at least in a legal sense (see Goulding v. Keck 2014 A.J. No. 437 and Witwicki v.

Seifner 2013 ABQB 354 ). [ 19 ] While, as I have mentioned, the failure to provide financial information was mutual, the fact is that Ms. MacLeod’s income did not change significantly in the 2014-2016 time-frame while Mr. MacLeod’s did. I find that circumstances are such that it is fair and appropriate to now require him to pay the amount that ought to have been paid at the time, subject to adjustments as discussed further herein. [ 20 ] In terms of C.’s circumstances over the last few years, there is no indication that Ms.

MacLeod was disadvantaged in 2015 or 2016 by reason of receiving only $1,991 per month, even while Mr. MacLeod was earning far in excess of the $225,000 upon which the 2011 Order was based. C. remained involved in her activities, including dance, to the tune of $10,000-$12,000 per year. She has been a good student throughout and her parents have, much to their credit, cooperatively co-parented her through that time. [ 21 ] However, C. was entitled to share in the increase in her father’s income in 2015 and 2016, just as she undoubtedly would have done had the family still been intact.

Support is the right of the child. Finally, there was no argument advanced by Mr. MacLeod that a retroactive award made at this point would cause him hardship. Calculation of

Section 3 Retroactive Support [ 22 ] Ms. MacLeod originally sought an order for arrears in the amount of $23,435 but reduced that claim to approximately $17,000 at the application. She also included a calculation of her claim attached to her Concise Letter which showed total arrears of $15,979. I am setting Mr. MacLeod’s arrears at $13,107. [ 23 ] I have accepted Ms. MacLeod’s figures for the amount of support paid by Mr. MacLeod for 2015 and 2016 as Mr. MacLeod seemed to accept those as well.

However, I have not accepted her adjustments to his income based on what she believed were improperly claimed expenses against rental income. [ 24 ] For both 2015 and 2016, Ms. MacLeod contended that Mr. MacLeod’s rental income had not been properly reported, including the fact that she believed some of his expenses should not have been offset from that income source. I am not convinced that these adjustments are warranted, in part because they were accepted by Canada Revenue Agency. I note that Ms.

MacLeod’s own income contains the same types of business expense deductions. [ 25 ] In any event, her adjustments, even if accepted, are a very small percentage of his income for those years. There is a point at which these kinds of adjustments, particularly retroactively and for high incomes which are subject to discretion in any event, are not worthwhile. [ 26 ] Therefore for 2015, I find Mr. MacLeod’s Guideline Income to be $419,853.

Although his tax return lists an additional $21,500 as “other income” in 2015, these were settlement funds from a previous employer that were not deposited directly into an RRSP and not available to him, all of which I believe Ms. MacLeod conceded in argument. [ 27 ] For 2016, I find Mr. MacLeod’s Guideline Income to be $392,029, which excludes a $50,000 lump sum payment that was subject to a different provision of the 2011 Order and which generates arrears in a different manner addressed below. [ 28 ] For 2015, the net amount of child support owing by Mr. MacLeod is $8,034 and for 2016, it is $2,822.

In addition, the $50,000 lump sum payment that Mr. MacLeod received in 2016 ought to have generated a payment of 10.2% (or $5,100) at that time. Therefore for 2015 and 2016, Mr. MacLeod owes arrears of $15,956. [ 29 ] Against these arrears, I am offsetting adjustments for 2017. Mr. MacLeod paid the $1,991 per month to and including June, 2017 but has paid nothing for July and August when he had no income. Pursuant to an Order dated September 20, 2017, he has paid $804 per month based on that income set off against the $30,000 imputed to Ms. MacLeod. He has now begun employment paying $230,000 per year. [ 30 ] Ms.

MacLeod would not agree to reduce child support payments in July, 2017 when Mr. MacLeod was unemployed. Maintenance Enforcement has therefore recorded him as being in arrears. I am extinguishing all arrears recorded against Mr. MacLeod in 2017. [ 31 ] Ms. MacLeod’s income effectively doubled with her new job which began in January, 2017. She also ought to have adjusted support under the 2011 Order accordingly. Her Guideline Income for 2017 and going forward is $60,000.

For 2017, she ought to have paid $500 per month instead of the $241 per month she did pay, resulting in a deficiency of $2,849 for January to November, 2017. Setting this off against Mr. MacLeod’s arrears, the resulting arrears owed by Mr. MacLeod are $13,107.

Section 7 Retroactive Child Support [ 32 ] I am making a distinction between the increased s.3 support to which C. was entitled in the past and the retroactive s.7

reimbursements sought by Ms. MacLeod. It was apparent to me that both parents wholeheartedly support C.’s dance and that Mr. MacLeod, before he lost his job, was content to contribute to this significant expense. However, it should have been apparent to Ms. MacLeod that when Mr. MacLeod’s income went from $450,000 to $0, the family, C. included, would have to make some adjustments. [ 33 ] I commend Ms. MacLeod for figuring out a way to keep C. in dance for the 2017 year but I am not ordering any retroactive contribution from Mr. MacLeod. He made it clear that he was unable to contribute at his prior level and Ms.

MacLeod therefore assumed those payments for 2017 of her own volition. Indeed, this makes some logical sense as for the summer months, she had income and he did not. Current Child Support [ 34 ] Mr. MacLeod’s Guideline Income is $230,000 and Ms. MacLeod’s Guideline Income is $60,000. As their shared parenting arrangement continues, Mr. MacLeod will pay child support of $1,990 per month plus $800 per month towards his arrears, all set off against Ms. MacLeod’s child support obligation of $500 per month, making the net amount payable by Mr. MacLeod to Ms.

MacLeod $2,290 per month, beginning on December 1, 2017. [ 35 ] Ms. MacLeod has also asked for a review of C.’s extraordinary expenses, particularly her dance expenses. C. is very involved in dance at a relatively high level. The annual costs of her classes, costumes, competitions and travel has been approximately $12,000. Mr. MacLeod supports C.’s dance but, at least while he was unemployed, felt it was excessive. While he is now re-employed, it is still not at the levels of income he had in 2015 and 2016 and so, at Ms. MacLeod’s suggestion, I will cap the dance expenses for which Mr.

MacLeod is obligated to contribute at $10,000 per year. [ 36 ]

Section 7 expenses, which are to include dance expenses to a maximum of $10,000, summer camps that Mr. and Ms. MacLeod agree upon and any health care expenses over $100 and uncovered by either party’s insurance will be split 79% payable by Mr. MacLeod and 21% payable by Ms. MacLeod. [ 37 ] All the foregoing amounts may be enforced by the Department of Maintenance Enforcement. [ 38 ] Ms. MacLeod also asked for a variation to provide for the immediate payment of 10.2% of any lump sum payment received by Mr. MacLeod, as opposed to the current obligation which arises only on the payment of a bonus.

I decline to do this and in fact am going to extinguish that obligation entirely. Ms. MacLeod is now in a more financially secure position than she was in 2011 and so can await the annual readjustment to child support that would reflect Mr. MacLeod’s total eligible income. This is a simpler way of capturing income without distinguishing between bonuses and other lump sum payments that might affect Mr. MacLeod’s Guideline Income. [ 39 ] Mr. MacLeod will continue to maintain a life insurance policy as required by paragraph 4 of the 2011 Order.

He may, but is not required to, continue to contribute monthly to an RESP for C. over and above the child support ordered herein. [ 40 ] The parties will resume the exchange of their tax returns and Notices of Assessment each year by June 30 at the latest and will use those figures to adjust both s.3 and s.7 child support retroactive to January 1 st of that year, with any resulting lump sum payment being made no later than July 30 th of that year. [ 41 ] The parenting provisions of Justice Hunt McDonald’s Order of April 8, 2011 (paragraphs 17-40) remain in effect but the balance of that Order is vacated.

Heard on the 8 th day of November, 2017. Dated at the City of Calgary, Alberta this 1 st day of December, 2017. M.H. Hollins J.C.Q.B.A.

Appearances: Thomas Hendrik MacLeod Self-Represented Litigant Tessa Irena MacLeod Self-Represented Litigant _____________________________________________________ Corrigendum of the Endorsement of the Honourable Madam Justice M.H. Hollins _______________________________________________________ The child's name was replaced with the letter “C.” in paragraph 1 and throughout, and the birth date has been removed from paragraph 1.