Gannon v. Gannon, 2014 NSSC 113

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Citation: Gannon v. Gannon , 2014 NSSC 113 Date: 2014-04-03 Docket: 1201-063707; SFHD-065026 Registry: Halifax Between: Shirley Therese Gannon Petitioner v. Phillip Roy Gannon Respondent LIBRARY HEADING Judge: The Honourable Justice Elizabeth Jollimore Heard: March 20, 2014

Summary: Mother applied to vary child support for children in a shared parenting arrangement, to obtain retroactive reimbursement of special or extraordinary expenses and for a declaration of entitlement to claim government benefits and tax deductions under the Income Tax Act . Child support calculated. Retroactive claim dismissed. Declaratory relief beyond the court’s jurisdiction to order. Key words: Corollary Relief Judgment, Divorce Act , Family- income tax, Family- child support- application to vary, Family- child support- retroactive, Federal Child Support Guidelines ,

Section 7 expenses Legislation: Divorce Act , R.S.C. 1985 (2 nd Supp.), c. 3, subsection 17(4) Federal Child Support Guidelines , SOR 97/175, subsection 7(3);

section 9 ; subsection 14 (b);

section 16 ;

Schedule III, subsection 1(

g) Income Tax Act , R.S.C. 1985 (5 th Supp.), c. 1 Tax Court of Canada Act , R.S.C. 1985, c. T-2, subsection 12(1) THIS INFORMATION SHEET DOESN’T FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET .

Supreme Court of Nova Scotia (FAMILY DIVISION) Citation: Gannon v. Gannon , 2014 NSSC 113 Date: 2014-04-03 Docket: 1201-063707; SFHD-065026 Registry: Halifax Between: Shirley Therese Gannon Petitioner v. Phillip Roy Gannon Respondent Judge: The Honourable Justice Elizabeth Jollimore Heard: March 20, 2014, in Halifax, Nova Scotia Counsel: Shirley Deveaux, on her own Phillip Gannon, on his own By the Court: Introduction [ 1 ] Shirley Deveaux has applied to vary a Corollary Relief Order and a more recent consent order. These orders relate to the children of her marriage to Phillip Gannon.

The children, Phillip Jr and Logan, are in a shared parenting arrangement. [ 2 ] Ms. Deveaux’s application is pursuant to subsection 17(4) of the Divorce Act , R.S.C. 1985 (2nd Supp.), c. 3. [ 3 ] Specifically, she wants child support varied as of May 1, 2013. This date is earlier than the date of the most recent variation order because, while the parties resolved an earlier variation application at a settlement conference in September 2012, the resulting order was not finalized by their counsel until July 2013. [ 4 ] Ms.

Deveaux asks that I award retroactive support to reimburse her for special or extraordinary expenses from 2011 to October 2012. [ 5 ] Additionally, Ms. Deveaux asks for a determination of who is entitled to apply for government benefits (such as the Canada Child Tax Benefit and Universal Child Care Benefit) and how any overpayment should be resolved. The threshold for varying a child support order [ 6 ] Before I may vary a child support order, I must be satisfied that there’s been a change of circumstances “as provided for in the applicable guidelines” since the most recent child support order was made.

This requirement is contained in subsection 17(4) of the Divorce Act . The applicable guidelines are the Federal Child Support Guidelines , SOR 97/175.

Section 14 of the Guidelines lists various changes in circumstances that allow for a variation of child support. [ 7 ] Phillip Jr and Logan have a shared parenting arrangement, so their support is not based on the tables. Their support is governed by

section 9 of the Guidelines . Subsection 9(

a) refers to the tables, but in Contino v. Leonelli-Contino , 2005 SCC 63 at paragraph 49 , Justice Bastarache, who wrote the reasons for the majority, was explicit that “full consideration” must be given to subsections 9(

b) and 9(

c) when determining child support for children in shared parenting arrangements. From my perspective, this means that child support is not based on the tables when it’s calculated pursuant to

section 9. [ 8 ] Where child support isn’t based on the tables, according to subsection 14(

b) of the Guidelines , the situations that allow for a variation of child support include any change in the condition, means, needs or other circumstances of either former spouse or the child

who’s entitled to support. [ 9 ] The parties agree that there has been such a change since the most recent order was made. They accept that the most recent variation order was made when they reached their agreement at the settlement conference in September 2012, not when their counsel finalized the order in July 2013. Ms. Deveaux has been on maternity leave since April 15, 2013 and will return to work on April 22, 2014. During this period her annual income was reduced from approximately $30,000.00 to $17,304.00. [ 10 ] When Ms. Deveaux was working, Logan attended a daycare near her home. When Ms.

Deveaux went on maternity leave, she removed Logan from that daycare. Logan attends daycare when staying with his father. Variation application [ 11 ] Ms. Deveaux asks that I vary child support as of May 1, 2013. Ms. Deveaux’s financial circumstances in 2013 are different from her financial circumstances this year: last year she worked for three and one-half months, while she will work for slightly more than eight months this year. As a result of this, I will review the issue of child support for each year. [ 12 ]

Section 9 of the Federal Child Support Guidelines and the Supreme Court of Canada’s decision in Contino v. Leonelli-Contino , 2005 SCC 63 govern the calculation of child support in shared parenting arrangements. 2013 Step one: subsection 9 (a) [ 13 ] The first step is identified at paragraph 44 of Contino v. Leonelli-Contino , 2005 SCC 63 : determine a simple set-off. To do this, I must first calculate each parent’s income for child support purposes. [ 14 ] Each parent identifies the receipt of some government benefit (the Universal Child Care Benefit, the Canada Child Tax Benefit or the HST rebate, for example) on his or her Statement of Income. According to

section 16 of the Guidelines , I’m to determine a parent’s annual income using the sources of income shown under the heading “Total Income” on a tax return, and to adjust these income sources in accordance with

Schedule III. That

Schedule tells me to deduct the Universal Child Care Benefit. So, at this stage in the analysis, I don’t consider the Universal Child Care Benefit. I ignore the Canada Child Tax Benefit and the HST rebate in determining each parent’s income because they are not income sources shown on their tax returns. [ 15 ] Ms. Deveaux’s income in 2013 was comprised of earnings and maternity leave benefits. She worked until April 15, 2013. According to her Record of Employment, she earned $9,442.31 prior to starting her maternity leave. She receives $1,292.00 each month in maternity leave benefits.

In 2013, this provided her with $10,982.00. Her total income for child support purposes was $20,424.31 in 2013. At an annual income of $20,400.00, Ms. Deveaux would pay $290.00 for her sons’ support. [ 16 ] Mr. Gannon had total earnings of $43,993.00 in 2013. As a civilian employee of the Department of National Defence, he pays dues to his union. Typically, these would be deducted from his earnings in calculating his income for child support purposes however, due to an oversight, union dues weren’t deducted from his income in 2013. At an annual income of $44,000.00, Mr. Gannon would pay $622.00 to Ms.

Deveaux for the support of their sons. The set-off amount is $332.00. [ 17 ] In her application, Ms. Deveaux asks me to order that Mr. Gannon pay her the new set off amount. [ 18 ] According to

section 9 of the Guidelines , the set off amount is the first step in calculating child support for shared parenting arrangements. [ 19 ] The set-off amount has no presumptive value. According to Justice Bastarache at paragraph 49 in Contino v. Leonelli-Contino , 2005 SCC 63 , the value of the set-off is bringing my focus to the fact that each parent must contribute to the children and that their fixed and variable costs must be measured before I make adjustments.

The first adjustment, addressed in subsection 9(b), considers the increased costs that arise from sharing custody and the second adjustment, addressed in subsection 9(c), ensures “the final outcome is fair in light of the conditions, means, needs and other circumstances of each spouse and child for whom support is sought.” Step two: subsection 9(b) [ 20 ] The second step is to take into account any additional costs that arise by virtue of shared custody.

This requires me to consider the exact nature of the shared parenting arrangement. [ 21 ] The boys are with their father from the end of the day on Tuesday until Thursday morning and on alternate weekends, from the end of the day on Friday until Monday morning. [ 22 ] The parents don’t live in the same neighbourhood. Phillip Jr attends school near his mother’s home. Mr. Gannon takes Phillip Jr to Ms. Deveaux’s and Phillip Jr walks to school from there. When Ms. Deveaux was working, she would take Logan to his daycare in her neighbourhood. Ms. Deveaux’s home is sufficiently far from Mr.

Gannon’s that when Logan is with his father, Logan attends daycare in his father’s neighbourhood and he’s continued to do this while his mother’s been on maternity leave. [ 23 ] At first, Mr. Gannon paid $190.00 bi-weekly for Logan’s daycare. At the end of September of 2013, Mr. Gannon began to receive a subsidy which reduced the bi-weekly cost to $165.54. In 2013, Mr. Gannon would have paid daycare costs of $4,768.78. Mr.

Gannon’s able to deduct this expense and, at his marginal tax rate of thirty percent, his after-tax cost of daycare in 2013 was $3,338.15. [ 24 ] I’ve deducted both the subsidy and the income tax saved as a result of claiming the child care deduction. This is required by subsection 7(3) of the Guidelines . [ 25 ] Mr. Gannon has been paying the entirety of the cost for Logan’s daycare when Logan is with him. Logan’s daycare

arrangements will likely end this fall when he begins school. [ 26 ] Mr. Gannon says that he must buy Phillip bus tickets ($26.00 every two months) and that he provides all of Phillip’s transportation between the parents’ homes. He didn’t estimate what this cost. Step three: subsection 9(c) [ 27 ] At paragraph 68 of Justice Bastarache’s reasons in Contino v. Leonelli-Contino , 2005 SCC 63 , he said that

section 9(

c) vests me with “a broad discretion for conducting an analysis of the resources and needs of both the parents and the children” and reminds me to be especially concerned with the children’s standard of living in each household and each parent’s ability to manage the costs of maintaining the appropriate standard of living. [ 28 ] I am mindful of Justice Bastarache’s comment at paragraph 51 in Contino v. Leonelli-Contino , 2005 SCC 63 : “one of the overall objectives of the Guidelines is, to the extent possible, to avoid great disparities between households.” While this comment was contained in his remarks about

section 9(

a) of the Guidelines , it was in the context of explaining why I retain discretion to modify the set-off amount if, considering the parents’ financial realities, the set-off would “lead to a significant variation in the standard of living experienced by the children as they move from one household to the other”. [ 29 ] According to Ms. Deveaux, the parties share expenses for the boys’ clothing, her mother cuts their hair and there’s no cost for school supplies. [ 30 ] In considering subsection 9(c), I look to the circumstances in each home.

While I may not consider government benefits as part of either parent’s income when calculating the set-off amount, they do comprise part of the resources in each home and I consider them at this point in my analysis. [ 31 ] At their mother’s home, the boys live with their step-father, half-sister and half-brother. The annual after-tax income in Ms. Deveaux’s home is $61,218.52, comprised of her income, her husband’s income and various government benefits.

Shirley Deveaux’s household income Income source Amount Shirley Deveaux’s after-tax income (20,424.31 pre-tax) 17,995.00 Canada Child Tax Benefit 10,067.52 UCCB 6,516.00 Charlie Deveaux’s after-tax income (32,000.00 pre-tax) 26,640.00 Gross annual household income 61,218.52 [ 32 ] Mr. Gannon does not cohabit or share expenses with anyone. The annual after-tax income in his home is shown below.

Phillip Gannon’s household income Income source Amount Phillip Gannon’s after-tax earnings (43,993.00 pre-tax, tax calculation considers deduction of day care expense) 31,701.00 Canada Child Tax Benefit 3,720.00 HST rebate 960.00 Gross annual household income 36,381.00 [ 33 ] Each household has cable television. Ms. Deveaux’s expenses for toiletries and clothing are higher than her former husband’s: she has a household of six people, including a baby. She claims, but does not explain, an expense of $170.00 per month for extra- curricular activities. No activities have been identified for the boys.

These may relate to her daughter. Her gift expense is $80.00: Mr. Gannon budgets nothing. He allocates $50.00 each month for holidays and entertainment, while Ms. Deveaux allocates $200.00 to entertainment and nothing to holidays. [ 34 ] It appears that neither parent has any current daycare cost for Phillip Jr who is thirteen. There is no mention of pre-school or after school care on Mr. Gannon’s Parenting Statement. [ 35 ] Phillip Jr has attention deficit disorder and oppositional defiant disorder for which he requires medication according to Ms. Deveaux. Mr.

Gannon has a health insurance plan that provides coverage for the boys. He pays $11.00 each month for this coverage. Ms. Deveaux says that Mr. Gannon’s plan doesn’t cover all the medical costs and she wants to purchase her own plan. Initially she said this would only cover the boys. She later said that it also insured her daughter to whom Mr. Gannon owes no support obligation. Her plan costs $81.51 each month. [ 36 ] Ms. Deveaux claims a monthly deficit of $796.30. This calculation doesn’t consider her husband’s contribution to the household’s costs.

I have estimated that Charlie Deveaux’s monthly after-tax income is approximately $2,220.00. He has not filed a Statement of Expenses, so I don’t know how his earnings are used. [ 37 ] Mr. Gannon claims a monthly deficit of $108.78. [ 38 ] The set-off amount calculated pursuant to subsection 9(

a) is $332.00. [ 39 ] Having regard to Mr. Gannon’s expense for Logan’s daycare, I determine that the appropriate amount of child support to be paid by Mr. Gannon to Ms. Deveaux is $242.00. I have calculated this amount by reducing the set off amount by $90.00, to reflect a

proportionate contribution by Ms. Deveaux to Mr. Gannon’s daycare cost. [ 40 ] In ordering this amount I am attempting to ensure each parent can manage the costs of maintaining the appropriate standard of living (noted in paragraph 68 in Contino v. Leonelli-Contino , 2005 SCC 63 ) and to “ avoid great disparities between households” (noted at paragraph 51 in Contino v. Leonelli-Contino , 2005 SCC 63). 2014 Step one: subsection 9(a) [ 41 ] Ms. Deveaux’s income in 2014 will be comprised of earnings and maternity leave benefits.

She is on maternity leave until April 15, 2013 and receives $1,292.00 each month in maternity leave benefits. In 2014, her total maternity leave benefits will be $4,522.00. Her annual salary is $30,000.00, so she will have earnings of $21,250.00 this year. Her total income for child support purposes in 2014 will be $25,772.00. At an annual income of $25,800.00, Ms. Deveaux would pay $376.00 for her sons’ support. [ 42 ] Mr. Gannon’s annual earnings are $43,993.00.

Because union dues were not deducted from his earnings in 2013 (and I did not consider them in my 2013 calculations), he is paying twice as much this year. His union dues in 2014 will be $1,289.28. According to subsection 1(

g) of

Schedule III, I am to deduct these from his earnings to determine the income upon which to base his payment of child support. His income of $43,993.00 is reduced to $42,703.72 by his annual payment of $1,289.28 in union dues. At an annual income of $42,700.00, Mr. Gannon would pay $605.00 to Ms. Deveaux for the support of their sons. [ 43 ] The set-off amount is $229.00. Step two: subsection 9(b) [ 44 ] I’ve reviewed the additional costs that arise by virtue of shared custody in paragraphs 20 to 26. These costs are different this year than they were in 2013 because the daycare costs are different this year.

Daycare costs will change when Logan begins school in September. Unfortunately, neither parent was able to tell me what child care will cost then. Ms. Deveaux knew what the Excel program would cost, but didn’t know whether Logan would be enrolled in that program. [ 45 ] In January and February of 2014, Mr. Gannon paid $65.54 bi-weekly for daycare. On March 1, 2014, the daily cost increased to $39.00 which is subsidized by $10.41. Bi-weekly, it costs Mr. Gannon $171.54, after his subsidy. Considering the different rates charged, I estimate his total 2014 daycare cost will be $2,892.62.

This estimate considers the daycare expense only until the end of August 2014 when Logan begins school. At his marginal tax rate of thirty percent, the net cost is $2,024.83. Step three: subsection 9(c) [ 46 ] The financial situation in Ms. Deveaux’s household in 2014 will be slightly better than it was in 2013 because of her return to work.

Shirley Deveaux’s household income Income source Amount Shirley Deveaux’s after-tax income (25,772.00 pre-tax) 22,057.00 Canada Child Tax Benefit 10,067.52 UCCB 6,516.00 Charlie Deveaux’s after-tax income (32,000.00 pre-tax) 26,656.00 Gross annual household income 65,296.52 [ 47 ] Based on her Statement of Expenses, Ms. Deveaux’s household deficit is halved. Again, this doesn’t consider any contribution by Mr. Deveaux. [ 48 ] The financial situation in Mr. Gannon’s household is changed because he now has a union dues deduction of $1,289.28 in addition to his child care deduction of $2,892.62.

Phillip Gannon’s household income Income source Amount Phillip Gannon’s after-tax earnings (43,993.00 pre-tax, tax calculation considers daycare expense and union dues deductions) 32,085.00 Canada Child Tax Benefit 3,720.00 HST rebate 960.00 Gross annual household income 36,765.00 [ 49 ] His household income, net of tax, is $36,765.00. [ 50 ] The set-off amount calculated pursuant to subsection 9(

a) is $229.00.

[ 51 ] Again, I consider that Mr. Gannon, alone, is bearing the cost of Logan’s daycare. I determine that the appropriate amount of monthly child support to be paid by Mr. Gannon to Ms. Deveaux is $165.00. I have calculated this amount by reducing the set off amount by $64.00, to reflect a proportionate contribution by Ms. Deveaux to Mr. Gannon’s daycare cost. Retroactive claims [ 52 ] Ms. Deveaux asks that I order Mr.

Gannon to contribute to daycare, day camp and medical expenses from 2011 until October 2012. [ 53 ] Claims for support on a retroactive basis are governed by the Supreme Court of Canada’s decision in D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry v. Henry; Hiemstra v. Hiemstra , 2006 SCC 37 . According to that decision, in deciding whether to make a support order on a retroactive basis, I am to consider: the reason for Ms. Deveaux’s delay in seeking this contribution; any blameworthy conduct on Mr. Gannon’s part that may have played a

part in this delay; the children’s needs (both now and at the time the support might have been paid); and whether a retroactive award would impose any hardship. [ 54 ] Considering whether I should make a retroactive award, I am to balance the competing principles of certainty and flexibility, while respecting the core principles of child support.

Those core principles are that: child support is the right of the children; the children’s right to support survives the breakdown of the relationship between the children’s parents; child support should, as much as possible, perpetuate the standard of living the children experienced before the parents’ relationship broke down; and the amount of child support varies, based upon the parent’s income. [ 55 ] The parties participated in a settlement conference in September 2012. At that time, there was disclosure of each parent’s income. This is recited in their consent order. Ms.

Deveaux knew her expenses for daycare, day camp and medical items: these costs were all detailed in the Statement of Special or Extraordinary Expenses she filed. [ 56 ] Here, neither parent provided any evidence about any of the considerations identified in D.B.S. v. S.R.G. ; L.J.W. v. T.A.R. ; Henry v. Henry ; Hiemstra v. Hiemstra , 2006 SCC 37 . [ 57 ] Ms. Deveaux says she filed her retroactive claim as soon as the order was issued following the settlement conference. However, she could have claimed these expenses in the earlier variation application that led to the settlement conference.

If she did not, she has not offered an explanation for her delay. Mr. Gannon’s disclosure has been current and there’s no evidence that he did anything to encourage delay. [ 58 ] Flexibility favours making a retroactive award, while certainty favours respecting the terms of the July 2013 order. [ 59 ] In light of the disclosure available during the most recent variation proceeding and the absence of any explanation why this relief wasn’t pursued in that proceeding, I dismiss Ms. Deveaux’s request for a retroactive variation.

Government benefits [ 60 ] The Corollary Relief Order of December 2010 incorporated the parties’ separation agreement and minutes of settlement. Paragraph 6 of their agreement provided that Ms. Deveaux “will receive any Child Tax Benefit eligibility that arises with respect to the children” and that “any Income Tax deductions that arises [sic] with respect to the children will be claimed” by Ms. Deveaux. [ 61 ] The consent variation order was negotiated at the September 2012 settlement conference and issued in July 2013.

It provided that each parent would claim one child on his or her tax return and would “be entitled to receive all subsidies and credits according to the rules of the Canada Revenue Agency.” It said that “each party shall be entitled to receive the Child Tax Benefit consistent with their shared parenting arrangement, their respective incomes and the Canada Revenue Agency regulations” and that when Logan no longer attended day care on a full-time basis, the parties “would be at liberty to agree” to alternate claiming either child on his or her income tax return. [ 62 ] Ms.

Deveaux asks that I order “who can claim which child on their income tax”. [ 63 ] At the hearing, I explained that eligibility to receive payments such as the Universal Child Care Benefit and the Canada Child Tax Benefit and to claim tax deductions is governed by the Income Tax Act , R.S.C. 1985 (5 th Supp.), c. 1.

If there are disputes over eligibility, the Tax Court of Canada has jurisdiction to decide the disputes according to subsection 12(1) of the Tax Court of Canada Act , R.S.C. 1985, c T-2. [ 64 ] Judges of the Tax Court aren’t able to pick who will receive the benefit: the judges determine who is eligible to receive a benefit or to claim a deduction based on an

interpretation and application of the Income Tax Act . [ 65 ] Justice Webb addressed this issue, at paragraph 29 in Calogeracos v. The Queen , 2008 TCC 389 . In that case, an order from the Ontario Court of Justice said that the children’s mother would be entitled to claim one child as “equivalent to married” for tax purposes and their father would be entitled to claim the other.

Justice Webb said, “[a]n Order of the Ontario Court of Justice, Family Court cannot amend the requirements of the Act and in particular cannot override the provisions of subsection 118(5) of the Act .” His comment applies equally to an order of this court. Conclusion [ 66 ] For each month in 2013, Mr. Gannon shall pay Ms. Deveaux child support of $240.00. Beginning on January 1, 2014, he shall pay her monthly child support of $165.00. Ms. Deveaux’s claim for a retroactive contribution to daycare, day camp and medical expenses from 2011 to October 2012 is dismissed. I dismiss,

for lack of jurisdiction, her request for a declaratory order with regard to the entitlement to receive government benefits or to claim income tax deductions. __________________________ Elizabeth Jollimore, J.S.C.(F.D.) Halifax, Nova Scotia