Kelly v. Strickland, 2012 NSSC 207

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Citation: Kelly v. Strickland, 2012 NSSC 207 Date: 20120604 Docket: 1201-50702 Registry: Halifax Between: Robert Joseph Kelly Applicant v. Sheryl Marie (Kelly) Strickland Respondent Judge: The Honourable Justice Moira C. Legere Sers Heard: May 8, 2012 in Halifax, Nova Scotia Counsel: Robert Kelly, Not Present Kim Johnson for Sheryl Strickland By the Court: [ 1 ] Mr.

Kelly filed a notice of motion on September 7, 2010 before the Court of Queen's Bench of New Brunswick. [ 2 ] On January 3, 1996, the Family Court for the Province of Nova Scotia issued an order requiring the applicant to pay $400 per month for the support of the child beginning the 30 th day of December 1995, continuing thereafter each and every month until further order of the court.

[ 3 ] Arrears of maintenance as of December 12, 1995 were fixed at $1,800. [ 4 ] The Corollary Relief Judgment, dated the 24 th day of February, 1997, ordered Mr. Kelly to pay the sum of $400 per month tax deductible commencing the 30 th day of January 1997 and continuing thereafter. His income was $35,557. [ 5 ] Mr. Kelly seeks to vary the child support obligation for the support of Jessica Anne Kelly, (born December, 1992). Current Variation Application [ 6 ] Mr. Kelly suggested his current gross annual income from employment is $26,993 which would dictate an award of $227 per month in accordance with the Federal Child Support Guidelines and pursuant to

Section 17 and 18 of the Divorce Act . [ 7 ] He seeks a variation retroactive to January 1, 2009. [ 8 ] He further seeks a retroactive review of his child support obligations from 2002 to the current date to adjust arrears owing. [ 9 ] The child is currently 17 years of age. The respondent advises that the child of the marriage continues in high school, has suffered from anxieties, participates in flexible learning and education centre program as confirmed by the Halifax Regional School Board. The child is enrolled in math, global geography and design for the term February 2, 2012 and April 16, 2012.

Earlier Variation [ 10 ] This is not the first application to vary retroactively. In September 2010 Mr. Kelly applied to the New Brunswick Court to vary the Corollary Relief Judgement and was granted a provisional retroactive order varying downward his obligations. [ 11 ] The matter was put before the Supreme Court (Family Division) in Nova Scotia. A request was sent back to the originating jurisdiction for further disclosure. His application to vary was withdrawn. Provisional Hearing [ 12 ] At the time of the original order in 1996 Mr. Kelly was employed by the Canadian Armed Forces.

He is no longer a member of the Canadian Armed Forces. [ 13 ] Mr. Kelly advised his income fluctuated and he provided the New Brunswick court his Income Tax Returns from 2002 to the present date. [ 14 ] His affidavit indicated his income, at paragraph 6, as follows: 2002 - $43,912 2003 - $45,489 2004 - $26,284

2005 - $40,091 2006 - $44,235 2007 - $18,306 2008 - $19,438 2009 - $26,993 [ 15 ] Subsequent disclosure provided his 2010 tax

summary. Line 150 shows income of $24,648.35. [ 16 ] He has remarried and has two children from that marriage to support: one born July 2, 1999 and another born October 1, 1997. [ 17 ] He advises he suffers from post-traumatic stress disorder as a result of his service in the Canadian Forces. He advises he has significant back and leg pain and that he has a medical license for marijuana to address this pain.

He advises that in order to continue to provide himself with marijuana, he has to pay $300 a month for the purchase of this substance. [ 18 ] He advises that he would not be able to work without this marijuana. There is a very brief letter from a clinical social worker of the OSI (Operational Stress Injury) Clinic in Fredericton dated August 30, 2011 which confirms the treatment relates to a diagnosis of service related Posttraumatic Stress Disorder. I have no other medical information. [ 19 ] Mr. Kelly's financial statement shows a total annual income of $26,993. [ 20 ] He has not responded to

Section “ C ” in the Financial Statement (Form 72J) He did not list total property or total debts.

Part C of the request requires Mr. Kelly to also complete a statement of expenses. [ 21 ] Appendix 1 attached to Form 72J entitled "Calculation of Total Annual Income" advises Mr.

Kelly to "Include all sources of income used to calculate total income (line 150) on the T1 General Income Tax Return, whether taxable or not". [ 22 ] A Statement of Account from the New Brunswick Family Support Orders Service accompanies the application. [ 23 ] The account shows that as of September 7, 2010 there were a total arrears of $14,755.10, with outstanding fee arrears of $50 for a total of $14,805.10. [ 24 ] The New Brunswick Court was provided information which illustrated Mr. Kelly's income as depicted in the Income Tax Returns.

Using that information regarding his change in employment and the information regarding his new family, the Court recalculated his child support obligation retroactive to January 2002 reducing it accordingly. [ 25 ] The New Brunswick Court noted that there were numerous appearances in this application. The matter had been before the court a year and a half. [ 26 ] This appearance resulted in a provisional variation order pursuant to Section 17(1) and 18(2) of the Divorce Act dated September 28, 2010 and effective September 20, 2010 . The Court found: 1.

Arrears were fixed in the total amount of $4,911.36 as of September 2010. These arrears were to be discharged by monthly

payments of $40 beginning October 15, 2010 and continuing on the 15 th day of each and every month thereafter until discharged. 2. A Federal Garnishee would issue. 3. The court found the applicant's present annual income to be $26,993, resulting in a child support payment for Jessica Kelly born December 5, 1992 in the amount of $277 per month beginning October 15, 2010 and continuing on the 15 th day of each month thereafter until further order of the court. 4. The court ordered that enforcement would be for the reduced amount rather than the $400 monthly contained in the Corollary Relief Judgment.

Confirmation Hearing Third Party Order to Disclose [ 27 ] On September 14, 2011 in response to the provisional order granted by the Court of Queen's Bench and as a result of the request of counsel, this Court reviewed the documentation, issued a further Order to Disclose, demanding the matter be returned to New Brunswick and issued a Third-party Order to Disclose to the Department of Veterans Affairs (hereinafter "Veterans Affairs"). [ 28 ] The information that was returned to this Court, including the information from Veterans Affairs confirmed that there had not been full disclosure before the New Brunswick Court. [ 29 ] Mr.

Kelly failed to disclose his non-taxable Veterans Affairs' benefits. [ 30 ] As a result of the current Third Party Order to Disclose, the Court was informed that Mr.

Kelly earned the following from 2002 to 2012, in addition to what he had disclosed in his original application: Year Declared Income Grossed up Dept. of Veterans Affairs Benefits Total Income Recalculated Table Amounts 2002 $43,912 $4,199 $48,111 $399.00 2003 $45,489 $29,615 $75,104 $602.00 2004 $26,284 $29,394 $55,678 $461.00 2005 $40,091 $31,023 $71,114 $574.00 2006 $44,235 $33,361 $77,596 $620 / $667* 2007 $18,306 $32,047 $50,353 $436.00 2008 $19,438 $32,849 $52,287 $543.00

2009 $26,993 $34,521 $61,514 $533.00 2010 $24,648 $35,434 $60,082 $521.00 2011 $26,993** $36,917 $63,910 $554.00 2012 $26,993*** $37,980 $64,973 $563.00 * Table changed in May 2006. ** September 10, 2010 Statement of Income of applicant; no Returns filed. *** New Table amount for 2012. [31] The net Veterans Affairs' payments are disclosed in Exhibit "A" (pages 6 &7) attached to Ms. Strickland's affidavit swornFebruary 20, 2012. The gross Veterans Affairs' payments are as calculated by Child View, are set out as an attachment (Exhibit "B") toMs.

Strickland's affidavit of February 20, 2012. [32] As noted in counsel's brief, the correctness of grossing up Veterans Affairs' payments in determination of total income has beensettled in the following cases: Belisle v. Belisle, (ON SC), 2000 OJ 4744 Trewin v. Trewin, 2006 NBJ 421 L.D.F. v. S.J.F., 2007 BCSC 1800 Redding v. Redding, 2007 NJ 362 Bridger v. Bridger, 2008 NSSC 150 Cramm v. Mason-Cramm, 2009 NSSC 339 Snelgrove v. Snelgrove, 2011 NSSC 77 [33] At no time was Mr. Kelly's combined income less than what he earned when the first tax deductible order was issued. Variation Options [34] Ms.

Strickland contests the variation and asks that the Court retroactively reassess Mr. Kelly for payment in accordance withthe Guidelines based on his actual income as provided by him before the New Brunswick Court and, in addition, as reflected in theinformation provided by Veterans Affairs. [35] It is Mr. Kelly who opened up the possibility for this retroactive review back to 2002. [36] The Court in New Brunswick accepted his evidence and granted him a retroactive review. [37] Section 19(7.1) of the Divorce Act requires the court to make an order in accordance with the Guidelines.

[38] Section 19(5) of the Divorce Act states that the respondent is entitled to raise any matter that might have been raised before theprovisional court. [39] Therefore, I will address both Mr. Kelly's and Ms. Strickland's request for a retroactive review. [40] Exhibit "A" of Ms. Strickland' affidavit (January 18, 2012 letter from Veterans Affairs Canada) indicates that Mr. Kelly wasgiven the right to review the disclosure resulting from the third-party order and to make corrections if there were errors in thedisclosure. [41] Since Mr.

Kelly was in a position of knowledge of his actual income, he is not prejudiced by introducing it in this proceeding. [42] The New Brunswick Court had not been provided with this disclosure. The annual incomes used from 2002 to the present wereunderstated without inclusion of the grossed up Veterans Affairs' allowance. [43] As a result of Veterans Affairs' information, it now appears that child support should have been paid between 2002 and 2011 inthe total amount of $62,140. [44] Current and prospective support should be based on Mr.

Kelly's current income, inclusive of grossed up Veterans Affairs benefits, in the amount of $563 per month commencing January 1, 2012 and continuing on the 1st of each and every month until furtherorder of the court. [45] For that period of time between 2002 and 2011, Mr. Kelly actually paid $33,264.38. In a retroactive re-evaluation, there wouldbe a balance remaining with a retroactive adjustment of $28,875.62. [46] Arrears would exist as of January 1, 2012 to the date of this decision, in addition to the retroactive arrears. [47] The Court is directed by D.B.S. v.

S.R.G., 2006 SCC 37 , 2006 S.C.C. 37 to consider the following: Whether there is an existing order; Delay by the recipient in seeking the award; Conduct of the payor parent; Financial circumstances of the child; Hardship imposed by a retroactive award. [48] There was an existing order based on Mr. Kelly's then current disclosure.

[ 49 ] Notably, the Corollary Relief Judgment did not contain the ordinary order to disclose on an annual basis. [ 50 ] This provisional application began in New Brunswick on September 7, 2010.

The Provisional Order was placed before the Nova Scotia court on March 9, 2011. [ 51 ] An Order to disclose was sent back to the New Brunswick court. [ 52 ] This Court issued an Order to Disclose in order to provide the court with more complete information about (1) evidence of his Veteran Affairs' benefits retroactively; and (2) documentation confirming his current level of disability as alleged by him. [ 53 ] The Veterans Affairs' information was obtained not through Mr. Kelly; rather through a Third Party Order to Disclose. [ 54 ] The disclosure required from Mr.

Kelly relating to the missing information in his application in Part "C" a statement of property and debts was ordered and not disclosed. [ 55 ] This document could not have been overlooked by Mr. Kelly as his signature is affixed immediately below the empty form, where the statement of debts and property were to appear. [ 56 ] The information concerning his disability was not forthcoming. [ 57 ] Thus, historically Mr. Kelly has failed to respond to repeated requests from Maintenance Enforcement Program, the New Brunswick and the Nova Scotia courts. [ 58 ] Mr.

Kelly deliberately withheld information and initiated this, the second application, with incomplete financial disclosure, leading the court in New Brunswick to believe he was unable to pay due to hardship when in fact he could have paid more based solely on his annual income without consideration of hardship factors and second family factors. [ 59 ] This conduct is blameworthy ( D.B.S. v. S.R.G. , supra , paragraph 124 ). [ 60 ] As a result of the lack of disclosure, including income and asset and debts disclosure, I am unable to draw a conclusion that Mr. Kelly was unable to pay.

Nor am I able to forgive arrears. Undue Hardship [ 61 ] There is no formal request for an undue hardship application. The only income I have for Mr. Kelly's wife is her

summary for 2010 showing income of $15,076. [ 62 ] I also have insufficient disclosure of assets and debts to determine whether this retroactive adjustment would seriously prejudice the applicant. History of Enforcement

[ 63 ] There were repeated enforcement proceedings. Ms. Strickland was diligent in pursuant enforcement. Enforcement was problematic. [ 64 ] When enforcement proceedings originated in October 2004, Mr. Kelly failed to appear in court. [ 65 ] Mr. Kelly was required to file a sworn financial statement and other financial information. He failed to appear and disclose. The matter was rescheduled to March 5, 2004. [ 66 ] Mr. Kelly informed the Maintenance Enforcement Program that he was moving. The court date that was originally scheduled with the New Brunswick file and was transferred to Nova Scotia. [ 67 ] Ms.

Strickland learned that Mr. Kelly did not move from New Brunswick. She advised the New Brunswick Maintenance Enforcement Program and the matter was transferred back to New Brunswick in April of 2006. [ 68 ] Ms. Strickland advised that at that time Mr. Kelly advised the Maintenance Enforcement Program that he was applying for a disability pension and then would apply to vary his child support. [ 69 ] This was not initiated until November 2008 when the Maintenance Enforcement Program again applied for an enforcement order and Mr. Kelly was required to appear before the New Brunswick court on April 9, 2009.

It was at that time that he made his application to vary. [ 70 ] Mr. Kelly was garnished through his military pay office before he left the military. [ 71 ] Finally, under the old Corollary Relief Judgement, Mr. Kelly was receiving a tax deduction on any payments he made. [ 72 ] I have carefully reviewed the documentation on file to confirm the deficiencies.

I have seriously considered whether I should send back a further request for information regarding his property and that of his spouse and his debts due to the fact that the calculations of retroactive arrears results in a substantial arrears. [ 73 ] I have looked at Mr. Kelly's household income for 2010. Including the grossed up Veterans Affairs' benefits, his and his spouse's household income amounts to $75,158 for a family of four. [ 74 ] Ms. Strickland provided evidence regarding her struggle to support her daughter without consistent financial support.

She said at paragraph 6 of her affidavit ( March 4, 2011 ): ... I have had Septembers in which I could not drive my car in order to pay for school supplies, and our daughter has had to give up activities she loves because money was only available for necessities. [ 75 ] Her income for the purposes of calculating the gross up was in the vicinity of $30,000. [ 76 ] I cannot justify delaying a confirming order to undertake yet another attempt to get Mr. Kelly to disclose his full financial situation. Mr. Kelly has had the benefit of many efforts to ensure he had an opportunity to prove his claim.

To do so would seriously prejudice Ms. Strickland.

Confirming Order [ 77 ] I decline to adopt the Provisional Order given the court was provided incomplete information. [ 78 ] Mr. Kelly's current 2011 income inclusive of grossed up Veterans Affairs' benefits is $64,973. [ 79 ] I order Mr. Kelly to pay $563 per month, as per the New Brunswick tables, commencing January 1, 2012 and continuing each and every month until further order of the court or written agreement of the parties. [ 80 ] Arrears are owing from 2002 to the present based on a retroactive evaluation in the amount of $28,875.62 . This calculation retains for Mr.

Kelly the tax benefit he has received as evidenced in his 2010 Income Tax Return. [ 81 ] This figure was obtained by calculating support payable from January 2002 to December 2011. Mr. Kelly paid $33,264.38, leaving a balance of $28,875.62. [ 82 ] Given the failure of Mr. Kelly to provide asset and debt information or a full picture of his household income, I am unable to address his ability to pay these arrears. [ 83 ] I leave to the Maintenance Enforcement Program to enforce the arrears and to Mr.

Kelly to negotiate payment with the Maintenance Enforcement Program. [ 84 ] I add to this order the responsibility on Mr. Kelly to provide to the respondent full and complete copies of his Income Tax Returns together with all income statements and confirmation of any and all income whether taxable or not. He shall also provide forthwith each year his Notice of Assessment and/or Reassessment. [ 85 ] Should he fail to do so while he is under an obligation to support his daughter, the reasonable costs associated with obtaining that information will be borne by him. [ 86 ] Ms.

Strickland shall be obliged to provide to Mr. Kelly with written confirmation each year of the child's enrollment in school and copies of her reports on a regular basis. [ 87 ] Should the child leave school or home or become independent, Ms. Strickland is obliged to provide that information immediately in writing to Mr. Kelly to ensure that the current order can be adjusted as quickly as possible. Costs [ 88 ] Ms. Strickland has asked for costs in the amount of $5,000. This would be well within the Tariff rate. There were multiple appearances relating directly to Mr.

Kelly's non-disclosure. [ 89 ] I have considered the circumstances of Mr. Kelly's family, the award of retroactive child support as well as the right of Ms. Strickland to recover a substantial contribution to her costs.

[ 90 ] This is a confirmation hearing and thus while there have been multiple appearances, the appearances have been relatively short. [ 91 ] That is not to underestimate the diligence required by counsel in the preparation of documentation and search for disclosure. [ 92 ] I order costs in the amount of $3,000. Legere Sers, Moira C.