L.R.B. v. K.L. Date:, 2013 BCPC 434

Citation: L.R.B. v. K.L. Date: 20130131 2013 BCPC 0434 File No: 05-2890 Registry: Williams Lake IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY RELATIONS ACT , R.S.B.C. 1996 c. 128 BETWEEN: L.R.B . APPLICANT AND: K.L . RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE E.L. BAYLIFF Appearing on their own behalf: L.R.B . Appearing on their own behalf: K.L . Place of Hearing: 100 Mile House , B.C.

Date of Hearing: July 31 & December 28, 2012 Date of Judgment: January 31, 2013 [ 1 ] K.L. applies to change or cancel $15,637.80 in arrears of child support (#25) which have accrued pursuant to an Order made on February 23 rd , 2010. K.L.’s application is opposed by L.R.B., who is the mother of their 13 year old daughter W.L.L.B. who I will refer to by the English language version of her name, “Y.B.L.B.”. [ 2 ] K.L. is a member of the Cree First Nation ([omitted for publication]) and he generally makes his home in Alberta or Saskatchewan.

His employment is often on reserve and therefore not subject to income tax. L.R.B. is a member of the [omitted for publication] First Nation ([omitted for publication] Band, near 100 Mile House, B.C.). Y.B.L.B. primarily resides with L.R.B. [ 3 ] The figure of $15,637.80 in arrears is taken from the Family Maintenance Enforcement Program (FMEP) records, as of December 21 st , 2012.

An up to date statement was faxed to the court on December 28 th at the time of the hearing in Williams Lake and I direct that this document be marked Exhibit 6 in these proceedings. [ 4 ] For the reasons which follow I have decided that the arrears must be reduced to a little over $2,000. As for ongoing child support and special expenses, I find that K.L. has a Guideline income of $47,900 and I order that he pay a total of $293 bi-weekly ($202 regular child support plus $91 special expenses) for the support of Y.B.L.B. commencing on February 15 th , 2013 and continuing every second Friday thereafter. 1 .

Background [ 5 ] Between 2006 and the present there have been five different Court Orders dealing with child support. They have fluctuated between Interim Orders requiring K.L. to pay between $200 and $250 bi-weekly (January 10 th , 2006, August 24 th , 2007 and July 31 st , 2012) and Final Orders where he was required to pay the much higher sum of $779 per month (May 23 rd , 2006 and February 23 rd , 2010). K.L. has not always regularly attended court.

It is not surprising that the occasions when he has failed to attend court are the two occasions when the court imputed to him a much higher income and ordered that he pay the much higher amount of monthly child support. [ 6 ] The current round of litigation was initiated by K.L. on May 14 th , 2012 when he filed his application to change or cancel my Order of February 23 rd , 2010 which had required him to pay the higher amount of $779 per month.

His position is that while he has made enough money at times to justify a child support payment in this range, on average , his income has been considerably lower, in the range of $45,000 per year which would equate to a child support payment of about $400 to $450 per month or $200 to $250 bi-weekly. He argues that if the court calculates how much child support he ought to have paid over the years using these more accurate and realistic figures, it will be seen that he owes no arrears of child support.

In fact, he argues that he has actually over paid – though he does not seek to make an issue about that. [ 7 ] L.R.B.’s position is that K.L. should pay what the Federal Child Support Guidelines require for the support of Y.B.L.B. She points out that income tax records are not a good way of determining K.L.’s income because much of his income has been earned on reserve over the years and the records provided to the Canada Revenue Agency of such payments may be less than fully accurate.

For example, the income tax returns provided by K.L. when the matter was in court on July 31 st , showed him earning zero income in 2009 and 2010 which clearly was impossible. (On December 28 th K.L. conceded this and filled in the blanks somewhat by producing documentation that reveals earnings of about $30,000 and $68,800 respectively during these two years.) [ 8 ] L.R.B. also emphasizes that this is not some sort of “money grab” on her part.

She testified that the child support paid by K.L. is vital in assisting her to meet the very real costs of raising Y.B.L.B., particularly since both she and K.L. wish their daughter to have good opportunities in her youth that will set her up well to succeed as an adult. K.L.’s Guideline Income [ 9 ] K.L. and L.R.B. are both well educated people with Master’s degrees. K.L.’s degree is in the area of education and counseling psychology. He is working on his PhD in clinical psychology and has just finished a year of non-degree related study at the University of Victoria financed by student loans and RRSP’s.

As of November he is once again employed back in Saskatchewan, this time at the [omitted for publication] First Nation Health Centre as a mental health counselor, earning approximately $63,000 per year. [ 10 ] It has proved somewhat difficult to pin down K.L.’s total annual income over the years. This is partly because he typically works in other provinces. He has also moved around over the years. Also, he did not file tax returns for the years 2007 through 2011 until sometime during 2012, so those records were not available until recently.

Finally, as noted, much of his work is done on reserve. [ 11 ] K.L. provided a helpful

summary of his income over the years between 2007 and 2012 which was marked Exhibit 4. He has also produced supporting documentation for all entries on Exhibit 4 except for the student loans he obtained from Alberta and Canada in 2011 and 2012 and his most recent employment with [omitted for publication] First Nation. [ 12 ] The supporting documentation that K.L. has provided for his income in earlier years are Canada Revenue Agency (CRA) information slips. These are gathered together in Exhibit 5.

K.L. testified that a number of his employers did not generate T4 slips until K.L. asked them to do so this past summer. (K.L. explained that this is why his income tax summaries, Exhibit 2, show much lower income levels than his income

summary, Exhibit 4. ) As I understand it, the employers who did not provide information slips until recently are “[omitted for publication]” (for work done by K.L. in 2008 and 2009), [omitted for publication] First Nation (for work done in 2009 and 2010), and “[omitted for publication]” (for work done in 2010 and 2011). K.L. explains that following the July 31 st

appearance, when L.R.B. questioned the income information set out in his tax returns, particularly the fact that he was shown as having zero income in 2009 and 2010, he telephoned these various employers and asked them to generate T4 slips for him. He said that because income earned on reserve is not subject to income tax, First Nations bands will sometimes not bother generating T4’s unless requested to do so. [ 13 ] I do have some concern about relying on Exhibit 4 and Exhibit 5 as an accurate indication of K.L.’s income over the years.

CRA information slips are not original documents in the same way that a pay stub, cancelled cheque or bank statement would be. Nor has their accuracy necessarily been verified by CRA. In this case it is clear that CRA has not even seen the information slips in Exhibit 5 as they were generated after K.L. filed his tax returns in the summer of 2012. Their accuracy is therefore dependant upon the reliability of the process by which they are generated.

In a case such as this where they are being issued for work done some years back it seems to me that there is a risk of records having been lost and I question whether the information being used to generate these T4’s is accurate? Another question that comes to mind is whether the employer who is generating these documents is operating “at arm’s length” from the employee?

Both parties were self-represented so these issues may not have been subjected to the same scrutiny as would be the case if counsel were involved. [ 14 ] While these doubts exist about the reliability of the numbers set out in Exhibits 4 and 5 , there is really no evidence to substantiate my concerns. Therefore, I will accept the numbers provided by K.L. I find that the evidence establishes that it is more probable than not that Exhibit 4 is a reasonably accurate

summary of K.L.’s income for the years 2007 to 2012. [ 15 ] I turn now to the question of how to deal with the fluctuations in K.L.’s income. For example, in 2007 he made $15,000 but the following year he made $38,500 and in 2011 he made as much as $95,400. Then in 2012 his income dropped down to $20,700 because he was back in university. [ 16 ] K.L. argues that the best approach is to average his income over the years. L.R.B. questions whether it would be more advantageous to Y.B.L.B. if child support were calculated on the income for each year.

I have calculated it both ways and conclude that it is more advantageous for Y.B.L.B. if child support is calculated on an average income as K.L. has argued, so that is the approach I will take. [ 17 ] What years should I use in calculating K.L.’s average income? I have decided to use the years 2006 to 2013 inclusive because I believe it gives a more accurate picture than the shorter time frame of 2007 to 2012. It also overlaps fairly well with the records maintained by FMEP which go back to May, 2006 (see p. 1 of 1 at the beginning of Exhibit 6 ).

And, the 2006 to 2013 time frame takes into account the fact that I must use this opportunity to set a realistic and accurate figure for ongoing child support for Y.B.L.B. and not simply deal with the question of arrears. [ 18 ] K.L.’s accumulated income for the years 2007 to 2012 inclusive is set out in the seventh column of Exhibit 4. It is $269,425 . For the year 2006 I will impute to him the figure of $35,327 . This comes from his evidence and from documents attached to the Financial Statement he filed back on August 21 st , 2007.

It includes a “gross up” of 25% to account for the fact that the income was earned on reserve and not subject to income tax. For the year 2013 I will impute to K.L. the figure of $78,700 . This is based on his evidence that he expects to earn about $63,000 per year in his current employment with [omitted for publication] First Nation. I have added to that a “gross up” of 25% because the income is being earned on reserve and not subject to income tax.

When these figures are added together they total $383,502 which I will divide by the 8 years (2006 to 2013 inclusive) to arrive at an average figure of $47,900. [ 19 ] I therefore impute to K.L. an income for Federal Child Support Guideline purposes of $47,900.00 for each year from 2006 to 2013 inclusive. The $3,000 Penalty [ 20 ] On February 23 rd , 2010 I imposed a penalty on K.L. of $3,000 pursuant to s. 92 of the Family Relations Act for his failure to make financial disclosure during that round of litigation.

The FMEP recorded this in their account statement and it constitutes part of the $15,637.80 of arrears recorded in Exhibit 6. K.L. argues that this sum should be deducted from the arrears, because he says he was not notified of the court date on that occasion and therefore it was unfair to penalize him for failing to appear with the necessary financial documentation. I have reviewed the court file and see that a Notice of Hearing was sent to the address shown on K.L.’s application and I also note that his notice was never returned to the Court Registry by the post office.

As well, I have reviewed the transcript of the February, 2010 hearing. L.R.B. testified at that time that she had informed K.L. of the court date in an e-mail. Given this evidence, plus the history of the matter, which included an Interim Order in 2007 reducing the amount of child support pending a hearing and then no follow up on the part of K.L., and the cessation of payments by him altogether in 2008 and 2009, I conclude that my decision to impose the penalty was justified. It will therefore continue to stand as part of the arrears.

Arrears of Special and Extraordinary Expenses [ 21 ] Special and extraordinary expenses for Y.B.L.B. must be factored in to the calculation of arrears. [ 22 ] Prior to February 23 rd , 2010 there was no court order requiring K.L. to contribute to Y.B.L.B.’s special or extraordinary expenses. On that date, in the absence of K.L., I ordered that he pay half of Y.B.L.B.’s special expenses and that he do so at least once every calendar year. As no particular figure was set, the FMEP account statement does not include any arrears of special or extraordinary expenses that may have existed.

If the evidence reveals arrears of special or extraordinary expenses they must be added to the $15,600 of arrears of regular child support recorded in the FMEP account statement marked Exhibit 6. [ 23 ] L.R.B. testified that she reported to FMEP every single payment made by K.L. to her, or to a third party, on behalf of Y.B.L.B.

This important assumption therefore underlies my calculation of arrears – namely, that all payments made by K.L., whether for Y.B.L.B.’s special or extraordinary expenses (things like figure skating costs, math tutoring, 4-H and school trips) or for regular child support, are recorded in the account statement, Exhibit 6.

[ 24 ] What, then is the evidence concerning Y.B.L.B.’s special or extraordinary expenses and K.L.’s contribution to them? [ 25 ] At the hearing on February 23 rd , 2010 L.R.B. testified that Y.B.L.B. was in figure skating and that she received math tutoring weekly during the summer months and went on a school ski trip for a total expense of about $1,020/year [i] and that K.L. had recently contributed a total of $300 towards these expenses. (Her evidence appears to be corroborated by the 27 January, 2013 “direct payment” of $300 documented in Exhibit 6.) [ 26 ] The evidence I heard on December 28 th , 2012 did not touch on Y.B.L.B.’s special and extraordinary expenses for the rest of 2010 and for 2011.

It was only her special expenses in 2012 that were discussed in any detail and I will review that evidence in a moment. As for the rest of 2010 and for the year 2011, I will simply estimate, conservatively, that Y.B.L.B.’s special expenses totalled $1,100 during that period. [ 27 ] Moving now to special expenses in 2012, L.R.B. testified that Y.B.L.B. received tutoring in math throughout most of the year, bought a hot lunch at school once a week and participated annually in 4-H, (she estimated 4-H cost about $2,000 in the previous year).

Based on this evidence I estimated a total of about $3,500 [ii] /year in 2012. [ 28 ] Thus, the total special or extraordinary expenses payable on behalf of Y.B.L.B. between 2009 and 2013, inclusive is estimated to be $5,620.00 calculated as follows: 2010: $1,020 2011 (estimate): $1,100 2012: $3,500 [iii] Total: $5,620 K.L.’s half share of this sum is $2,810.00 and I find that this is the amount of special and extraordinary expenses he was required to pay for Y.B.L.B. by reason of the Court Order of February 23 rd , 2010.

Calculation of Arrears of Child Support [ 29 ] I generally agree with the approach taken by K.L. in Exhibit 4 to the calculation of arrears, except for the fact that he has not allowed for his half share of Y.B.L.B.’s special and extraordinary expenses incurred between February 2010 and the present. Also, the numbers I am using are somewhat different. I agree with him that when his child support obligations over the years are calculated using his average income, there are no arrears of regular child support. In fact, K.L. has slightly overpaid.

However, when special and extraordinary expenses are factored in, it will be seen that K.L. does owe arrears of $2,018.45 . [ 30 ] The calculation is as follows: - Assume a Guideline income of $47,900 for each year from 2006 to present; - The table [iv] amount of regular child support payable for Y.B.L.B. from 2006 to present at this income is as follows: 2006 to 2011 = $445/month = $5,340/year x 5 years = $26,700 2012 = $438/month [v] = $5,256/year x 2 years = $10,512 Total $37,212 - The amount of special or extraordinary expenses payable for Y.B.L.B.: $ 2,810 ; - The total amount of child support (regular support plus special expenses) payable by K.L. for Y.B.L.B.: Regular child support: $37,212 Special or extraordinary expenses: $ 2,810 Total $40,022 - The total amount of child support already paid by K.L. from 2006 to present is as follows [vi] : Sum paid in 2006/2007 before enrollment: $ 3,400.00 Sum paid after enrollment (see p. 8 of 8): $34,603.55 Total $38,003.55 - Difference between amount of child support payable and amount paid: Amount payable: $40,022.00 Amount paid: $38,003.55

Total arrears of child support: $ 2,018.45 [ 31 ] In my view the arrears owing by K.L. must be reduced to the sum of $2,018.00. [ 32 ] I reach this conclusion bearing in mind the rather stringent test set out in s. 98(2) and (3) of the Family Relations Act of B.C.

I may reduce arrears only if I am satisfied that it would be “grossly unfair not to do so” bearing in mind K.L.’s efforts to comply with the earlier Orders, his explanation for any delay in bring on his application to vary the earlier Orders and any special circumstances I consider relevant. [ 33 ] The key factor throughout the history of this matter has been what Guideline income the court found from time to time on behalf of K.L. That finding, in turn, hinged on what, if any, financial disclosure the court received from him.

Despite certain concerns, which I expressed earlier, the documentation he has presented in the current round of litigation satisfies me that his income has fluctuated a great deal over the years, and that an average income in the range of $47,900 is a more accurate reflection of his income over time than the much higher figure found in the February 23 rd , 2010 and May 23 rd , 2006 Orders. [ 34 ] As for his efforts to comply with the earlier orders, the FMEP statement indicates that K.L. has sometimes made a good effort to support his daughter but for other, long stretches of time, such as in 2008 and 2009 he, for some reason, paid nothing at all despite the fact that it now appears he was making a reasonable income in the $30 to $40,000 range during both those years (see Exhibit 4). [ 35 ] As for the delay in bringing on the current application it appears that K.L. was able to pay the higher amount of child support in 2011, the year in which he made his best income to date, but then when he went back to university for 2011/2012 his income dropped dramatically and it was this which prompted his application to vary. [ 36 ] When I consider the various factors it does seem to me “grossly unfair” not to reduce arrears in the way I have indicated.

The simple fact is that had I known in February 2010 what I now know about K.L.’s average income, I would not have set child support at the level I did. [ 37 ] The final issue to consider regarding the arrears is how, and when, they will be paid. Given that Y.B.L.B. currently has quite high special expenses for orthodontic work (‘braces’) and this is expected to last for a couple of years, I have decided to give K.L. until May 30 th , 2015 to pay the rather small sum of arrears ($2,102.45) which I have found he still owes.

My thought in choosing this date is that Y.B.L.B. should be finished with her braces by the fall of 2014 and this will give K.L. 6 months to save the money up to get L.R.B. paid up for the arrears. Ongoing Child Support for Y.B.L.B. [ 38 ] K.L. is currently employed with the [omitted for publication] First Nation as a mental health counselor.

I have concluded that it is preferable for the time being, at least, to use his average income of $47,900 as the basis for the calculation of child support (his so- called “ Guideline income”) rather than his actual income [vii] even though his actual income is currently considerably higher. K.L. does have a history of moving around a good deal and his income has fluctuated. It seems likely that basing an ongoing child support order on his average income is more likely to result in stability in terms of regular payments and less frequent litigation.

I would, however, caution K.L. that because I have decided to calculate ongoing child support on his average income rather than on his considerably higher actual income, a court may not be receptive to any future applications to reduce or cancel arrears or, even to lower the amount of ongoing child support due to the fact that he is having a low income year.

It may be that the court would say in response to such application: “you should have planned ahead and saved money during your high income years such that you could continue to pay child support at the rate set even in low income years.” [ 39 ] The table amount of child support for one child at a Guideline income of $47,900 is $438/month. [ 40 ] Concerning ongoing special and extraordinary expenses for Y.B.L.B. I have decided that it is preferable to set out an amount in the Order rather than rely on a general statement that he “pay half” as was done back in 2010.

With a set amount in the Order, the FMEP will be able to take enforcement action regarding special expenses as well as regular child support, should that prove necessary. [ 41 ] Deciding on the amount that K.L. should contribute for special expenses is more difficult because it is impossible to predict with complete accuracy what activities Y.B.L.B. will be involved in the future and what the cost will be.

It does seem likely though, that Y.B.L.B.’s special expenses for 2013 will be similar to those in 2012 with one important additional cost, namely, orthodontic work (‘braces’) which Y.B.L.B. was fitted with, as I understand the evidence, in November, 2012. The cost will be a total of about $6,000 spread over the next couple of years. K.L. questions whether L.R.B. has tried hard enough to get coverage for this expense from the Government of Canada Indian health program. I gather L.R.B. feels she has already exhausted that option – without success.

Fortunately, both K.L. and L.R.B. have extended health benefits which, according to their evidence, will cover a total of about $3,500 of the orthodontic expense. This leaves approximately $2,500 to be covered by the parents over an approximately 2 year period ($1,250 per year for 2013 and 2014). [ 42 ] Thus, I find that the special expenses for Y.B.L.B. in 2013 and 2014 will be approximately $4,750/year [viii] . Divided between L.R.B. and K.L., each must bear about $2,375/year.

This equates to a monthly payment of $198. [ 43 ] In total, therefore, K.L. will be required to pay $636/month for the support of Y.B.L.B.. This is made up of regular child support of $438/month plus an allowance for special or extraordinary expenses of $198/month. [ 44 ] K.L. has, in the past, preferred to pay support for Y.B.L.B. bi-weekly (every two weeks). This will result in a bi-weekly payment of $293 ($202 regular child support + $91 special expenses = $293). Conclusion 1. K.L.’s application to reduce arrears of child support is largely successful and I hereby reduce arrears to the sum of $2,102.45;

2. This sum shall be paid in full to L.R.B. not later than May 30 th , 2015; 3. The Order of February 23 rd , 2010 is varied as it concerns child support as follows; 4. K.L. has an average income for Guideline purposes of $47,900; 5. K.L. shall pay the sum of $438/month child support for Y.B.L.B., by way of bi-weekly installments of $202 commencing on Friday, February 15 th , 2013 and continuing every second Friday thereafter; 6.

K.L. shall pay the sum of $198/month towards the special or extraordinary expenses of Y.B.L.B., by way of bi-weekly installments of $91 commencing on Friday, February 15 th , 2013 and continuing every second Friday thereafter; 7. For greater clarity, K.L. shall pay the total sum of $293 bi-weekly for the support of Y.B.L.B., commencing February 15 th , 2013 and continuing every second Friday thereafter. 8.

L.R.B. shall provide K.L. with a copy of all receipts and invoices for special or extraordinary expenses incurred by or on behalf of Y.B.L.B. so that he can monitor the accuracy of his contribution to these expenses. 9. K.L. shall maintain Y.B.L.B. on any extended health benefit program to which he is entitled by his terms of employment with the goal of reducing the amount of special or extraordinary expenses payable by the parents. ____________________________ E. L.

Bayliff Provincial Court Judge [i] Figure skating: approximately $560/year; Math tutoring: $30/week for June, July and August = $360/year and a school skiing trip to Mt. Timothy costing $100. See Transcript, February 23, 2010, p. 7, l. 42 to p. 10, l. 17. [ii] Math tutoring: $40/week for 30 weeks (estimate)/year = $1,200; hot lunches: $10/week for 36 weeks (estimate)/year = $360; 4-H: about $2,000/year. [iii] I have not included in this figure the cost of orthodontic work for Y.B.L.B. (‘braces’) even though L.R.B. started spending money on this in the fall of 2012.

I intend to take this expense into account when fixing an amount for ongoing special or extraordinary expenses for 2013 and years following. See below. [iv] As K.L. has earned his income over the years in Saskatchewan, Alberta and British Columbia I have decided to use the B.C.

Table. [v] The Federal Child Support Tables were amended, effective December 31, 2011. [vi] Taken from the FMEP records, Exhibit 6, including both “page 1 of 1” showing payments in 2006 and the 8 page Account Statement showing payments since enrollment in the program in February 2007 until present. [vii] K.L.’s current, actual income is $63,000, which grossed up by 25% to account for the fact that he is not required to pay income tax on this sum, is $78,750.00 [viii] Math tutoring: $40/week for 30 weeks (estimate)/year = $1,200 + hot lunches: $10/week for 36 weeks (estimate)/year = $360 + 4- H: about $2,000/year = approximately $3,500 + $1,250/year for braces = $4,750/year.