Benning v Harding, 2021 ABQB 755

Court of Queen’s Bench of Alberta Citation: Benning v Harding, 2021 ABQB 755 Date: 20210921 Docket: 4804 012019 Registry: Grande Prairie Between: Michelle Teresa Benning Applicant/Plaintiff - and - Darin Harding Respondent/Defendant _______________________________________________________ Reasons for Decision of the Honourable Madam Justice D.L. Shelley _______________________________________________________ Nature of the Applications [ 1 ] Ms. Benning seeks child support, spousal support and an advance in relation to her litigation costs.

Relevant to determining the Application is a determination of the income of the parties. [ 2 ] One day prior to the date which had been scheduled for the hearing of Ms. Benning’s Application, Mr. Harding filed documentation seeking to vary the existing parenting schedule. The Court records indicate that Mr. Harding filed 28 documents within five days of the date of the Special Chambers hearing, much of it outstanding disclosure materials of several hundred pages. [ 3 ] Ms. Benning objected to the hearing of Mr. Harding’s request for a variation to parenting, on the basis that it required a separate hearing.

Background [ 4 ] The parties began cohabiting in late 2006 or early 2007. They married in September 2018 and separated in May 2020. They have one daughter, who is 11 years old. Since separating, the parties have been involved in highly acrimonious and conflict laden litigation. Ms. Benning initially obtained an Emergency Protection Order against Mr. Harding. This was followed by a number of appearances before several Justices of this Court, dealing primarily with the Emergency Protection Order, a parenting arrangement, and Mr. Harding’s request to have Ms.

Benning’s counsel removed from the file. [ 5 ] The parties jointly own two Alberta Corporations, neither of which continue to operate. Mr. Harding is the sole owner of a US oil servicing company. He receives income via payments made by the US Corporation to an Alberta Corporation. [ 6 ] Ms. Benning did not work outside the home during most of the relationship and re-entered the workforce on a part-time basis in 2020. She has been earning approximately $1,000 per month. Mr.

Harding has produced a considerable amount of material in relation to matters that impact the calculation of his guideline income, a matter on which the parties take very different positions. [ 7 ] On January 22, 2021, Justice Marriott issued an extensive Order in relation to Mr. Harding’s obligation to pay household expenses, to pay uncharacterized support of $5,000 per month to Ms. Benning, and to provide outstanding disclosure by March 31, 2021.

The Order also provided that the matrimonial home was to be listed for sale and that an EICC was to be scheduled to address the issues of support and the preparation of a litigation plan. The parties were unable to resolve any issues at the EICC. [ 8 ] On March 17, Justice Jerke issued a Consent Order, pursuant to which Mr. Harding was to obtain an expert report valuing the Corporation from which he derives his income, as well as a determination of his guideline income.

Finalization of a litigation plan was postponed until after the expert report was received by the parties and was to be determined at a case conference thereafter. Position of the Parties Ms. Benning’s Position [ 9 ] Ms. Benning submits that Mr. Harding’s guideline income is in excess of $1 million per year, based upon the financial disclosure received to April 23. She submits that his 2021 earnings will be approximately $1,100,000.

This would result in a 2020 child support obligation of $10,903 per month and a 2021 child support obligation of $9,280 per month. [ 10 ] Although ordered to pay uncharacterized support by Justice Marriott, as of April 23 Mr. Harding had not made any payments, although he continued to pay the costs associated with the matrimonial home and the rental condominium. Ms. Benning submits that she is entitled to spousal support on both a compensatory and non-compensatory basis.

She submits that the range of spousal support indicated by the Spousal Support Advisory Guidelines is between $21,000 and $26,000 per month for 2020, and between $19,000 and $23,400 per month for 2021. She requests spousal support of $24,000 commencing August 2020. [ 11 ] Using her guideline income figures, Ms. Benning submits that Mr. Harding owes total child support arrears of $88,665 from August 2020 to April 2021. On the same basis, she submits that Mr.

Harding owes spousal support arrears of $216,000, against which he ought to be credited with a portion of the expenses he has paid toward the matrimonial home and rental condominium. [ 12 ] Ms. Benning submits that she is entitled to a $50,000 advance costs award/family property division advance because Mr. Harding has control of all of the parties’ substantial assets and earns a very substantial income. Such an award would assist her in pursuing her entitlement to support and an appropriate property division. Mr. Harding’s Position [ 13 ] Mr.

Harding submits that he “likely earned a total of $212,293.69 in 2020”. He submits that his income has been dropping in 2021 because of the Covid-19 pandemic and the state of the oil economy. He therefore submits that it is appropriate to look at his last four months of income, which he submits equalled $37,605.99 US. Mr. Harding suggests that this amount be averaged and extrapolated to an annual income. On that basis, he submits his guideline income should be set at $140,964.36 CAN. [ 14 ] Mr. Harding submits that the Court ought to impute income to Ms.

Benning on the basis that she is intentially under- employed. He takes the position that she has failed to provide evidence that she is regularly seeking full-time employment or any evidence as to her failure to obtain same. He suggests that an income of $31,200 (minimum wage) be imputed to her. [ 15 ] Mr. Harding submits that Ms. Benning is not entitled to compensatory spousal support because, although she did stay home for a period of time during the marriage, she has not suffered career-wise from the relationship because she could return to her prior occupation as a server. Mr. Harding submits that Ms.

Benning has refused to take steps to become self-sufficient and, on that basis also, she is not entitled to compensatory support. [ 16 ] Mr. Harding acknowledges on the one hand that Ms. Benning is entitled to some needs-based support. However, for several reasons, he also submits that he should not pay any to her. If the parties continue to share parenting, Mr. Harding submits that Ms. Benning is entitled to spousal support in the range of between $1,961 and $2,886 per month. However, Mr. Harding has applied for primary care of their child, on the basis that their child has run away from Ms.

Benning’s care on two separate occasions, refusing to return. Therefore, if Mr. Harding is awarded primary care, Mr. Harding submits that her entitlement to spousal support would fall to between $1,502 and $2,002 per month. Mr. Harding also submits that Ms. Benning’s budget of expenses ($7,719) is inflated and that he is paying most of her living expenses through payment of the house mortgage, condominium rent and the related expenses, as well as

paying the parties’ joint financial obligations. As a result, he submits that the Court should not order him to pay any spousal support to Ms. Benning. [ 17 ] In response to Ms. Benning’s request for advance costs, Mr. Harding takes the position that she has not met the requirements established by the Supreme Court of Canada in British Columbia (Minister of Forests) v Okanagan Indian Band , 2003 SCC 71 , as applied in Blaney v Murphy , 2020 ABQB 176 and Aiello v Aiello , 2020 ABQB 549 . In addition, Mr. Harding submits that Ms.

Benning’s motive in seeking an advance is her desire to bring improper and/or unsupportable applications, which he alleges she has done to this point. Analysis [ 18 ] Notwithstanding Mr. Harding’s delivery of a substantial amount of disclosure in the days immediately preceding the hearing of the Application, Ms. Benning’s counsel advised that there were still a number of outstanding items that had been ordered to be produced by Justice Marriott in January. Pursuant to para 4 of Justice Marriott’s Order, Ms.

Benning was given leave to seek solicitor and own client costs in relation to the issue of disclosure if Mr. Harding failed to provide his disclosure as ordered by Justice Marriott. At the hearing of the Application, counsel for Ms. Benning identified a number of specific items of disclosure which had not yet been provided. Counsel indicated that they would then work together to identify any other disclosure issues and would come back to this Court to deal with remaining issues.

I have not been contacted in that regard and do not know the current status of disclosure and whether there is still some to be provided. [ 19 ] What is obvious from the review of the materials that have been provided is that Mr. Harding has for some time used a corporate structure in order to minimize his payment of taxes. This is not uncommon and is often permitted and/or contemplated for income tax purposes. However, this is the very reason why businessmen such as Mr.

Harding must have their guideline income established through careful analysis of expenses and the like, unlike the simpler manner of establishing guideline income for a T4 employee. [ 20 ] At this point, in the absence of an expert report or reports addressing the issues that have been raised by Ms. Benning and which naturally arise from the manner in which Mr. Harding receives his claimed personal income, I am not inclined to accept his submission that he “likely” earned a total of $212,239.69 in 2020 and that it should be set at approximately $141,000 for 2021. In the somewhat limited time that Ms.

Benning and her advisors have had an opportunity to review Mr. Harding’s disclosure to date, they have identified several pieces of evidence which are at odds with Mr. Harding’s position. Some of the examples given by Ms. Benning are significant deposits for which there has been no explanatory documentation provided. Mr. Harding maintains that many of the questioned amounts have been used to pay corporate liabilities. Ms. Benning points out that the operating company which is the ultimate source of Mr.

Harding’s income had gross revenue of $7,600,000 in 2019, a November 2020 year-to-date gross revenue of $8,200,000, and gross revenue to February 2021 of $881,000. Gross income after expenses has remained stable at approximately $900,000 USD per year. [ 21 ] While I understand that Mr. Harding has structured his affairs so as to minimize his payment of personal taxes, it is difficult for this Court to determine, from the hundreds and hundreds of pages of materials provided, what his actual guideline income is.

It is not the task of a Chambers’ judge to undertake a forensic accounting in connection with an interim application of this nature. As has been pointed out repeatedly by this Court and by the Court of Appeal, businessmen in Mr. Harding’s position have the onus of providing the necessary disclosure so that appropriate professionals (chartered accountants, business valuators and the like) can prepare expert reports and provide expert opinions where required. That was recognized by Justice Marriott when she ordered Mr.

Harding to produce a detailed list of disclosure which included not only specific documents but “ Cunningham v Seveny disclosure for his corporations”. The parties, and Justice Jerke, recognized that such expert reports, determining a valuation of the businesses and of Mr. Harding’s guideline income, would be required and consequently these were ordered on March 17. [ 22 ] Mr. Harding failed to comply with Justice Marriott’s Disclosure Order (both as to the documentation and timing of the disclosure provided).

At the time of the Application, he had also failed to pay any of the $5,000 monthly support ordered by Justice Marriott in January. Mr. Harding’s explanation for not doing so is that he is unable to pay the ordered support. Mr. Harding is required to do more than assert that his obviously significant income is being fully utilized to satisfy corporate obligations and to maintain the matrimonial home and pay the rent of the condominium. He has failed to provide sufficient documentation to substantiate that position. Furthermore, his obligation to support his child and Ms.

Benning take legal priority over the payment of personal or corporate creditors. [ 23 ] I was advised at the Application that the matrimonial home has been listed for sale for approximately $2,000,000. I was advised that there is approximately $800,000 worth of equity in the property. I do not know the current status of the sale. [ 24 ] Mr. Harding requests primary care of the parties’ child on the basis of two incidents alleged to have occured in her mother’s care.

In September of 2020, when the shared parenting regime was ordered, the parties were ordered to make arrangements for their child to attend counselling immediately. In connection with the Application, I was not provided with a report from any such counsellor so I do not know if the counselling was commenced, was continued, or what the recommendations, if any, of the counsellor might be in relation to parenting.

In the absence of that information and how it might explain the alleged incidents, I am not in a position to order a change to the parenting regime. [ 25 ] I find that the evidence suggests that the $5,000 uncharacterized support payment ordered by Justice Marriott might, on an interim without prejudice basis, allow Ms. Benning to meet her basic needs, if Mr. Harding had been paying it and all of the expenses related to the matrimonial home and the rental condominium. Based on the information to date, however, it seems unlikely to be sufficient to even meet Mr.

Harding’s child support obligation, much less his spousal support obligation. Even if Mr. Harding were paying the Court ordered support, it is clear that this amount would result in a significant disparity in the parties’ ability to provide for their child while their child is in their respective care. [ 26 ] Ms. Benning was out of the work force for a number of years prior to separation. Following separation, she sought employment at a time when the COVID pandemic would have complicated any ability to obtain suitable employment. In all of the

circumstances, I conclude that it is not appropriate to impute income to Ms. Benning from the date of separation to the date of the application. [ 27 ] Mr. Harding is to continue to pay all expenses related to the matrimonial home and the rental condominium. In addition, the amount of the monthly uncharacterized support shall be increased to $10,000 per month effective May 1, 2021. Mr. Harding is to pay any outstanding arrears that have resulted from his non-payment of Justice Marriott’s Order, as well as any that arise as a result of the further support ordered pursuant to these Reasons.

This uncharacterized support shall continue until Mr. Harding has provided his full Court ordered disclosure and the expert reports ordered in respect of the valuation of his Corporation and his guideline income, and a reasonable period of time has been given to Ms. Benning and her experts to review and comment on such expert reports. In that regard, Mr. Harding has control of all of the parties’ assets. Until Mr. Harding provides evidence to the contrary, it appears there is considerable equity in at least the matrimonial home and likely in his operating corporation. Mr.

Harding is ordered to provide an advance of $50,000 to Ms. Benning, the characterization of which can be determined at trial if not otherwise agreed to by the parties. This will facilitate her ability to obtain experts to review the materials provided and to be provided by Mr. Harding, as well as to fund her costs of this litigation. I specifically reject the suggestion that it is being sought in order to fund improper applications, given that Ms.

Benning has been successful in relation to several of them. [ 28 ] Should the matrimonial home be sold, the proceeds of sale shall be held in a solicitor’s trust account until further Order of this Court or by agreement of the parties; with the exception of the payment of the $50,000 advance from such funds if it has not been paid prior to receipt of the sale proceeds. [ 29 ] Given the status of disclosure and the expert reports, it is premature to determine the question of spousal support or child support arrears.

Determination of those issues shall be adjourned until trial, if not agreed to by the parties prior thereto. [ 30 ] Ms. Benning is entitled to costs of the Application. On an interim basis, she is awarded double costs on

schedule C for a contested Special Chambers application. Enhanced costs are appropriate at this stage, given Mr. Harding’s failure to provided his Court- Ordered disclosure or to provide sufficient evidence to justify his non-payment of the Court-Ordered support. Notwithstanding this interim cost award in respect of this Application, Ms. Benning shall have leave to request additional costs in connection with this Application once the Court is in a position to determine the reasonableness of Mr. Harding’s position taken on this Application in relation to his guideline income and his ability to pay support.

Heard on the 28 th day of April, 2021. Dated at the City of Grande Prairie, Alberta this 21 st day of September, 2021. D.L. Shelley J.C.Q.B.A. Appearances: Veronica Donald Stringam LLP for the Applicant/Plaintiff Joel Sandor Grande Peace Law for the Respondent/Defendant