McBean v McBean, 2017 ABQB 773

Court of Queen’s Bench of Alberta Citation: McBean v McBean, 2017 ABQB 773 Date: 20171213 Docket: 4801 105326 Registry: Calgary Between: Theresa Lynn McBean Applicant/Plaintiff - and - Robert Phillip McBean Respondent/Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice W.P. Sullivan _______________________________________________________ Introduction [ 1 ] On March 25, 2005, the parties signed a comprehensive Custody, Support and Property Agreement to resolve all the issues arising from their 9-year marriage that ended in 1999.

The Agreement arose after protracted and difficult settlement negotiations and mediation with Pat Blocksom, QC and Alan Beattie, QC while the parties were represented by leading and prominent family law counsel (Deborah J. Mason for the father and Laurie E. Allen for the mother). [ 2 ] A key issue in those negotiations was the determination of the father’s Guideline income for child support for the two children of the marriage. The father lived in Dubai and earned his income tax-free, in US dollars, and his remuneration included a cost of living allowance.

The agreement set out the Guideline income for the father and the mother, but then went on to document the father’s

agreement to pay child support in an amount higher than the table amount under the Federal Child Support Guidelines . The Agreement specifically states that this amount of support was in consideration of the entire Agreement. [ 3 ] The entire Agreement included an equal division of the extensive matrimonial property, a waiver of spousal support by the wife, and an equal sharing of an anticipated net profit interest in an enterprise the husband was involved in before the marriage, for which he had sought an exemption.

In the ensuing years, this net profit interest has resulted in payments of over USD$4.3 million to each party. [ 4 ] The Agreement contained a variation clause that stated the parties would exchange tax returns and notices of assessment each year and would calculate support based on actual income for the previous year. If these calculations determined that the father had underpaid child support, then the agreement stated he would make a lump sum balancing payment. [ 5 ] The parties did not exchange financial information as required.

Over the years, the mother’s counsel contacted the father’s counsel alleging that he owed significant sums of retroactive support. In particular, the mother’s counsel made such express allegations in 2008, 2011 and 2014. In each case, the father’s counsel replied to state that the father disagreed with the calculations for retroactive support, in that the calculation of Guideline income was contrary to the Agreement and that any pursuit of these claims would require a court application.

The mother commenced an application in 2012, but it was adjourned sine die . [ 6 ] In June 2015, after a failed mediation session with Mr. Beattie, the mother filed an application seeking $1.1 million in retroactive child support going back to the date of the Agreement. The grounds for her application and her calculations for retroactive child support were largely similar to those presented by her counsel in 2008, 2011 and contained in a 2014 unfiled affidavit.

The matter came before me in a contentious viva voce hearing in May 2017. [ 7 ] Since there is an Agreement but no court order, this application is an originating application for retroactive child support. The children were ages 20 and 22 on the date the application was filed and still in full-time post-secondary, so they were children of the marriage at the relevant time and satisfy the requirement set out in Calver v Calver , 2014 ABCA 63 . [ 8 ] The question before me is whether the mother is entitled to retroactive child support, and if so, in what amount.

On entitlement, I must consider the four factors set out in the leading case of DBS v SRG , 2006 SCC 37 :

i) Is there a reasonable excuse for the delay in bringing the application? ii) What was the conduct of the payor parent? iii) What are the circumstances of the children? iv) Will there be any hardship associated with a retroactive award? [ 9 ] If entitlement is established, I must decide the period of entitlement and the appropriate quantum of retroactive child support. The key question here is the determination of the parties’ Guideline income.

The mother calculates the father’s retroactive child support obligations based on his entire income; the father says the formula for Guideline income set out in the Agreement applies and by his accounting, he has overpaid child support. The Agreement [ 10 ] The Agreement is a comprehensive settlement of all issues arising from the marriage and its breakdown. As part of the property settlement, the mother retained the family residence in Calgary, then valued at $1.2 million, and all its furnishings.

The father transferred $300,000 of RRSPs into her name along with a $100,000 equalization payment, and she retained vehicles and Airmiles. In addition, as stated above, she received 50% of the father’s net profit interest in a project, which to date has resulted in transfers of more than USD$4.3 million to her offshore account. [ 11 ] With respect to child support, the father always understood and accepted his obligation to support his children. The key issue in dispute during the negotiations was his Guideline income.

The parties eventually agreed, and the Agreement so stipulates, that his Guideline income was CDN$202,800. The Agreement set the mother’s Guideline income at CDN$20,000. [ 12 ] I accept the father’s evidence as to how the parties reached the figure for his income. His remuneration during the mediations and settlement negotiations was USD$300,000 per year. This amount included a cost of living allowance of USD$15,000 per month. The parties agreed upon a monthly income of USD$10,000 for an annual salary of USD$120,000.

As tax-free income it was grossed up by 30% for a total income of USD$156,000, multiplied by the 1.3 exchange rate at the time, and resulted in an income of CDN$202,800. [ 13 ] I reject the mother’s evidence that she did not know how they reached this Guideline income figure. Having lived as an ex-pat when she worked as an engineer for Trans Canada in Australia and while living with the father in Doha, Qatar, she was familiar with ex- pat compensation schemes. She is highly educated, with a degree in Applied Mathematics and Chemical Engineering.

Further, I find that both parties had full and complete financial disclosure during the mediations that lead to the Agreement, which they acknowledged at paragraph 71 of the Agreement itself, and they were represented by skilled and experienced senior family law counsel who looked out for their respective interests. [ 14 ] The child support owing on a Guideline income of $202,800 was $2,800 per month. The evidence indicates that the mother said this was insufficient so they agreed the father would pay $4,000 per month. This amount normally would apply to an income closer to $300,000.

The father also agreed to pay $500 per month for

section 7 expenses, regardless of those actual expenses, for a total of $4,500 per month in child support. At paragraph 22 of the Agreement, the parties “acknowledge and agree” that the base child support exceeds the table amount in the Guidelines and “is in consideration of the entire Agreement.” They also agreed that there would be no reduction in child support unless the father’s income fell below the $202,800 figure.

[ 15 ] The parties further agreed that the mother would pay for the children’s coverage under Alberta Health Care and Blue Cross, although they would share any medical and dental expenses beyond insurance coverage pro rata. The mother was responsible for the children’s private school tuition fees, but the father would pay all costs associated with the children spending time with him in the Middle East or Europe. Analysis [ 16 ] Retroactive child support awards are retroactive in that they relate to a past, rather than a future, obligation.

The payor parent who allegedly owes support is being ordered to pay what, in hindsight, should have been paid before. These awards require the court to balance the interests of certainty and flexibility. [ 17 ] In this case, the parties set out the father’s child support obligations in a comprehensive settlement agreement negotiated through mediation, with the assistance of experienced family law counsel.

In DBS , at paragraphs 76 to 78 , the court referred to its earlier decisions in Miglin v Miglin , 2003 SCC 24 and Hartshorne v Hartshorne , 2004 SCC 22 , which emphasized the importance of encouraging spouses to resolve their own affairs and the complementary importance of courts deferring to that resolution. [ 18 ] To this end, courts should give considerable weight to agreements reached by parents and recognize that the parties likely considered their agreement holistically.

In DBS , Bastarache J. stated at para 78 that “it is often unwise for courts to disrupt the equilibrium achieved by parents.” [ 19 ] In Goulding v Keck , 2014 ABCA 138 the Alberta Court of Appeal noted that if the terms of an agreement provide an adequate amount of support and uphold the best interests of the child, and enforcement of the contract is not otherwise unconscionable, the court has an obligation to respect the parties’ agreement.

The Court also stated at paragraph 25 that “[w]here parents have set out their respective child support obligations by contract, that agreement also governs the relationship between the parties and the analysis in DBS must be viewed through that lens.” [ 20 ] Finally, in Goulding , the Court stated that a separation agreement is evidence of the mutual intentions and expectations of each party and when those intentions and expectations are adequate in accordance with the law, the court has no grounds to interfere or alter the parties’ arrangement. [ 21 ] My task on this application is to assess the DBS factors in the particular circumstances of this case to determine whether the mother is entitled to the retroactive child support she seeks.

I must “strive for a holistic view of the matter and decide [the] case on the basis of its particular factual matrix”: DBS , at para 99 .

i) Is there a reasonable excuse for the delay in bringing the application? [ 22 ] In DBS , the court held that the circumstances that surround the recipient’s choice not to apply for support earlier (if it was indeed a voluntary and informed choice) will be crucial in determining whether a retroactive award is justified. Delay in seeking child support will not be presumptively justifiable, although courts must be sensitive to the practical concerns associated with child support applications, such as inadequate resources, inability to access legal counsel, or intimidation or threats from the payor parent.

Delay by the recipient parent in bringing the application, if found to be unreasonable, favours against a retroactive child support award and respects the payor parent’s interest in certainty. [ 23 ] In 2007, the mother with the assistance of counsel filed a notice to disclose and sought information from the father.

The father’s counsel responded with information that his 2006 income remained the same as during the settlement negotiations: USD$10,000 per month, plus a USD$15,000 per month living allowance for a total monthly remuneration of USD$25,000. [ 24 ] In 2008, the father’s income increased such that his total monthly remuneration was USD$35,000. The mother’s counsel contacted the father’s counsel and alleged he owed CDN$320,988 in retroactive support going back to the date of the Agreement in 2005.

She based her calculation on the father’s total remuneration grossed up for income tax and multiplied by the exchange rate. The father rejected any such claim on the basis that it did not calculate his Guideline income as per their mediated Agreement. His counsel clearly stated that any demand for retroactive child support would require a court application. [ 25 ] The mother’s counsel sent a request to the father’s counsel for dates for a Special Chambers application.

The father’s counsel asked that the mother’s counsel begin with filing a Notice of Motion and Affidavit so that the father would know the claim to which he would have to respond. No such application was filed. [ 26 ] In 2009 and 2010, the mother contacted the father again regarding retroactive support and stated she would prefer to deal with it without counsel. The father reiterated his position that her calculation of his income violated their Agreement. [ 27 ] On December 23, 2011, the mother’s counsel sent a “formal demand” for more than CDN$385,602 of retroactive child support.

The father’s counsel replied immediately to state that they did not agree with the mother’s calculations; his counsel provided a more comprehensive response and detailed explanation later that year. [ 28 ] Although all this correspondence put the father on notice that retroactive child support was in issue, his counsel always responded to the effect that the mother’s calculation of Guideline income was not in accordance with the Agreement and that the father would not accede to any such request – that she needed to apply to court for this relief.

Although the mother brought an application in 2012, it was adjourned sine die . She brought her next application in July 2015. [ 29 ] In September 2008, the son moved to Dubai for 10 months. The father, through his counsel, advised that he would reduce his child support payments from $4,500 for both children to $2,250 for the daughter who remained in Calgary, but that he would cover all of

the son’s expenses, including his private school tuition in Dubai. He made no request for child support from the mother who earned over $500,000 that year. His letter stated that his offer was conditional on the mother dropping her claim for retroactive child support. [ 30 ] Similarly, the father’s counsel wrote to the mother in 2012 and explained his plan to continue making payments directly to the children for their post-secondary education costs. He stated these arrangements were conditional on her dropping any retroactive or prospective child support claims.

Although the mother never formally agreed to these proposals, she also never explicitly refused them. As Bastarache J. stated in DBS , the courts must be mindful of the certainty that fairness to payor parents often demands. [ 31 ] I find that the mother unreasonably delayed in bringing an application for retroactive child support. The barriers that parties often experience, such as inadequate resources or inability to access counsel, did not exist in this case.

The mother had ample resources, including a very high income of her own, and access to senior family law counsel since 2005, with whom she engaged regularly. She was aware from as early as 2008 that the father disagreed with the method by which she was calculating his Guideline income.

It was imperative upon her to bring an application at that time, rather than wait a further seven years. [ 32 ] I find that it is unreasonable to wait until 2015, 10 years after signing a comprehensive settlement Agreement, to bring an application for retroactive child support seeking 10 years of retroactive child support on the same grounds and based on the same calculations that were first proposed by her counsel in 2008 and again in 2011 and 2014.

This factor favours against a retroactive child support award. ii) What was the conduct of the payor parent? [ 33 ] This question considers whether the payor engaged in blameworthy conduct, which is defined at para 106 of DBS to mean anything that privileges the payor parent’s own interests over his/her children’s right to an appropriate amount of support.

Factors suggesting that a parent is not engaging in blameworthy conduct include the payor parent’s reasonably held belief that he is meeting his support obligations and the payor parent’s contribution towards expenses beyond his statutory obligations. [ 34 ] In Goulding , the Alberta Court of Appeal stated that failing to disclose a significant increase in the payor’s income may be “blameworthy conduct”.

Yet the court emphasized that “the real question is whether the payor’s conduct had the effect of privileging his or her interests over the child’s right to support.” [ 35 ] In Baker v Baker , 2016 ABQB 515 Topolniski J. discussed the situation of mutual blameworthiness. As in this case, the parties had a contractual obligation pursuant to an agreement to exchange annual financial disclosure. She found that the payor was blameworthy for breaching his contractual duty to disclose his income, but that the recipient likewise was blameworthy and that this was a mitigating factor.

She opined that the notion of mutual blameworthiness is consistent with the Supreme Court of Canada’s admonition to strive for a holistic view of the matter. [ 36 ] The mutual failure to disclose was not the end of the blameworthiness analysis. Justice Topolniski went on to determine whether the payor’s conduct privileged his interests over his children’s right to an appropriate amount of support. [ 37 ] In this case, upon signing the Agreement the father was paying more than the table amount under the Guidelines , based upon his agreed Guideline income.

In addition, between 2005 and 2015 the father paid fees in excess of $60,000 for the children’s memberships at the Glencoe Club and others. He also transferred, at the mother’s request, in excess of USD$28,792 to her offshore account for the benefit of the children. Over the years, he has paid for the children’s travel to visit him in Dubai and Europe and for travel with their mother to Ontario and Kelowna.

The father has also established a $500,000 trust fund for the children, to be distributed based on need for education or medical issues. [ 38 ] In 2010, when the daughter turned 18 and commenced university, the father paid her $10,000 per semester to cover tuition and living expenses and gave her a further $1,500 per month when she was not in school, for a total of $26,000 per year. Concurrently, he reduced the monthly support he paid to the mother by half. In 2012, he did the same for the son when he turned 18 and stopped paying child support to the mother entirely.

Although the daughter is no longer in school, the father continues to supplement her income by $1,500 per month. [ 39 ] The son lived with the father in Dubai throughout the 2008/2009 school year.

The father paid his tuition fees and all his living expenses and did not seek child support from the mother, who earned over $500,000 that year. [ 40 ] Although the father resisted the mother’s claims for increased support, the evidence is clear that he provided more to the children than the $4,500 per month mandated by the Agreement. [ 41 ] Both parties’ incomes changed from the amount set out in the Agreement, yet neither voluntarily disclosed those income changes. They did fulfill their disclosure obligations, albeit somewhat slowly, when asked.

The mother’s income was far above the $20,000 attributed to her in the Agreement. In 2005, the year of the Agreement, her employment income was $139,362 and in 2006 it had increased to $253,382.

Her total income in later years, including investment income, was as high as $622,933, although most years it fell between $100,000 and $250,000. [ 42 ] According to the father’s income figures (which he calculated according to his understanding of the Agreement), his income first increased to CDN$265,930, then decreased to CDN$126,400, before climbing significantly, first above CDN$300,000, and eventually above CDN$650,000 after 2012.

The mother based her calculations on his total income, which according to her calculations fell in the CDN$570,000 to CDN$780,000 for the first five years and then increased to between CDN$1 million and CDN$1.5 million. [ 43 ] When the mother approached the father for retroactive child support, he disclosed the increases in his income, but he disputed the means by which she was calculating his Guideline income and consequent child support obligations. He sought to apply the Agreement as he understood it. According to his calculations, over the 10-year period in issue, he has overpaid, not underpaid support.

All in all, the father held a reasonable belief that he had satisfied his child support obligations.

[ 44 ] The evidence does not establish that the father privileged his own interests over his children’s right to an appropriate amount of support to meet their actual condition, means, needs and circumstances. I find the father is a financially generous father who did not ignore, minimize or avoid his obligations. This factor favours against a retroactive award. iii) What are the circumstances of the children? [ 45 ] Children are entitled to the standard of living that they would have enjoyed while their parents were together.

In DBS , the Supreme Court noted at para 111 that a “child who is currently enjoying a relatively high standard of living may benefit less from a retroactive award than a child who is currently in need.” In other words, the argument for retroactive child support will be less convincing where the child has already enjoyed all the advantages (s)he would have received had both parents been supporting him/her.

Finally, on the facts of the case in DBS , the court at paragraph 141 described the trial judge’s finding that a retroactive order would not benefit the children as “crucial” and “most important” in its decision not to award retroactive child support. [ 46 ] In Goulding , the Alberta Court of Appeal noted that the payor parent cannot avoid paying a retroactive award simply because the recipient parent was able to provide for the child on her own.

The Court went on to state, however, that a judge may consider whether the child benefitted from some form of financial support over and above that which the recipient parent could provide alone, either from the payor parent or through some other means. [ 47 ] In the circumstances here, the two children have lived an extremely privileged life and benefitted from the high incomes of both their parents. They never wanted for anything.

In addition to the base child support the father paid to the mother while they lived with her, he contributed to their club memberships, to international travel and $26,000/year towards their university education once they reached the age of 18. [ 48 ] The children are now well past the age of majority at ages 25 and 23. They no longer live with the mother; in fact, they are no longer children of the marriage. There is no evidence to suggest that they will benefit from a retroactive award.

This factor militates against a retroactive award. iv) Will there be any hardship associated with a retroactive award? [ 49 ] A broad consideration of hardship is also appropriate in determining whether a retroactive award is justified: DBS , at para 114 . The payor parent must establish real facts from which the court can make a reasonable finding of serious hardship: Goulding , at para 57 . [ 50 ] In this case, there is no doubt the father has ample means. There was no evidence to support a hardship argument. This is the sole factor that falls in favour of a retroactive award.

Conclusion on entitlement to retroactive child support [ 51 ] Taking all four factors together and carrying out a holistic assessment of the particular circumstances of this case, I find that there is no entitlement to retroactive child support. There is no reasonable excuse for the delay in bringing the application. The mother has known from the start that the father disputed the basis upon which she was making her claim for retroactive child support.

She was represented by counsel and although there were some attempts to negotiate and set dates, there were long periods of time in which the father could have assumed that she would no longer pursue her claim. [ 52 ] According to the mother, the father has not met his child support obligations, yet according to the father, he has more than done so. It is clear that he has supported his children in a number of ways, by making payments pursuant to the Agreement, along with additional payments to third parties, the children directly, and even to the mother for travel and other purposes.

He held a reasonable belief that he had met his support obligations. [ 53 ] The children enjoyed a high standard of living, which both parents made possible. They are well past the age of majority and are unlikely to benefit from a retroactive award. [ 54 ] For all of these reasons, I find that there is no entitlement to retroactive child support. Quantum and period of entitlement [ 55 ] Even if I had found entitlement, I would not have granted the mother the full amount of retroactive child support she seeks.

Her calculations fail to consider the comprehensive nature of the Agreement between the parties and the manner in which they agreed to determine Guideline income. Further, the mother’s figures rely on a straight application of the Guidelines to total income, without taking into account

section 4 (incomes over $150,000) and without considering the direct contributions made to the children once they reached the age of majority (section 3(2)(b)). [ 56 ] I also would not have awarded retroactive child support for the full 10-year period the mother claims. Although she raised concerns about the amount of child support the father was paying relatively early on, her delay in bringing an application revived the father’s interest in certainty. Conclusion [ 57 ] For all of the above reasons, I dismiss the mother’s application. If the parties cannot agree on costs within 30 days, they may

speak to me on the matter. Heard on the 8, 9, 10, 11, 12, 15, 16 days of May, 2017 and the 30 and 31 days of August, 2017. Dated at the City of Calgary, Alberta this 13 th day of December, 2017. W.P. Sullivan J.C.Q.B.A. Appearances: Peter Hryniuk for the Applicant/Plaintiff A. Webster Macdonald, Jr., Q.C. for the Respondent/Defendant