Russell v. Russell, 2012 NSSC 258

SUPREME COURT OF NOVA SCOTIA (FAMILY DIVISION) Citation: Russell v. Russell, 2012 NSSC 258 Date: 20120710 Docket: 1202-060014, SFHD-041641 Registry: Halifax Between: Dawna Marlene Russell Applicant/Petitioner v. Paul Andrew Russell Respondent Judge: The Honourable Justice Beryl MacDonald Heard: May 23 and 24, 2012, in Halifax, Nova Scotia Counsel: Joyce Ruck De Peza, counsel for the Applicant Paul Andrew Russell, Respondent, self-represented By the Court: [ 1 ] The parties in this proceeding were divorced in December 2008. A Corollary Relief Judgment (the Judgment) was issued dated December 22, 2008.

The following provisions appeared in the opening paragraphs of that Judgment: AND UPON the parties having participated in a settlement conference on September 11, 2008 at which agreement was reached on all outstanding issues; AND UPON finding that the agreements reached between the parties at the settlement conference vary from the Federal Child Support Guidelines, but benefit the children of this marriage by providing for an unequal division of matrimonial property in favor of the wife, who has primary care of the children, and by minimizing the tax burden payable by the family, as a result of which the application of the applicable guidelines would result in an amount of child support that is inequitable given those special provisions;........

AND UPON IT APPEARING that Paul Andrew Russell has an annual income of $72,920.00 based on his average income for the last

three taxation years, and Dana Marlene Russell has no income but for various government benefits; AND UPON the parties having reached agreement on the possibility of future variations of support at their settlement conference, which agreements are contained in a Collateral Variation Agreement signed by both parties and their solicitors on the 29 th day of October 2008; [ 2 ] The Judgment required the Father to pay child support in the amount of $800.00 per month commencing October 15, 2008 and on the same date to pay spousal support in the amount of $1,100.00 per month. [ 3 ] The Collateral Variation Agreement (the Agreement) contained the following opening paragraphs: AND WHEREAS the child and spousal support contained in the Consent Corollary Relief Judgment is based on Paul Russell having income for support purposes based on his average income for the past three taxation years (2007, 2006 and 2005) of $72,920.00 and Dana Russell having no income from employment, as a result of which it is more tax advantageous to maximize spousal support and minimize child support, and the agreements reached herein are premised on that advantage; AND WHEREAS the parties have agreed to an unequal division of property in favor of Dana Russell, which was taken into account in determining the quantum and duration of support, and the agreements reached herein and contained in Consent Corollary Relief Judgment are premised on those arrangements; AND WHEREAS both parties understand and acknowledge that child support is nonetheless subject to variation in the event of a significant change in Paul Russell’s financial circumstances, and wish to address those potential changes by agreement, without resulting in changes to the anticipated spousal support arrangements, and without requiring court intervention; [ 4 ] The Agreement then provides : 1.

Child support pursuant to the Federal Child Support Guidelines based on an agreed income of $72,920.00 would be $1,330.00 per month. Spousal support was agreed to be $500.00 per month, for a total monthly payment of $1,830.00 per month, which was rounded up to $1,900.00 per month for settlement purposes; 2. The spousal support portion of the total support amount will not be subject to variation for 5 years from the first payment, regardless of changes in circumstances, and will terminate absolutely after not more than 7 years, regardless of changes in circumstances.

Spousal support shall be subject to variation, of quantum only, between years 5 and 7, in the event of a significant change in circumstances. 3. Based on a total support payment of $1,900.00 per month, the parties acknowledge and agree that there were significant tax incentives for Paul Russell to instead pay $1,100.00 per month as spousal support and $800.00 per month as child support. The parties each acknowledge and agree that there were no anticipated tax disincentives to Dana Russell from this arrangement.

On that basis it was agreed that support would be paid accordingly, and this was contained in the Consent Corollary Relief Judgment. 4. In the event of a significant change in Paul Russell’s income while spousal support remains payable, such that variation of child support becomes appropriate, only the child support shall be varied, and it shall be varied only in accordance with the same formula. The new child support amount is anticipated to be the table amount of child support based on Paul Russell’s new income, less $600.00 (to account for the adjusted spousal support.

So, for example, if Paul Russell’s income in 2009 is $100,000.00, the table amount would presumptively be $1,750.00. By way of this agreement, Paul Russell would continue to pay spousal support of $1,100.00 and child- support $1,150.00. 5. In the event that this arrangement, which is anticipated to provide tax benefit to Paul Russell without disadvantaging Dana

Russell, no longer functions in that manner for any reason, the proportions of child and spousal support may be varied for tax purposes by agreement of the parties, but at no time whatsoever will Paul Russell pay more than the net of tax equivalent of the table amount of child-support plus $500.00 spousal support, and at no time during the 5 year non-variation period will Dana Russell received less than the net of tax equivalent of the table amount of child-support plus $500.00 spousal support. [ 5 ] On April 21, 2011 the Mother filed a Notice of Variation Application.

She requested a retroactive and prospective order requiring the Father to pay a number of special and extraordinary expenses. She requested the order for payment commence January 1, 2009. On July 8, 2011 the Father filed his response to the Mother ’ s variation application and requested a retroactive variation to the amount of child support he was paying to the Mother. He wanted the variation order to commence January 1, 2010. [ 6 ] In the course of the preceding it was also clear the Father wanted to reduce the amount of spousal support paid to the Mother.

This may have been an appropriate request if the Agreement referred to in the Judgment was set aside. No formal application to set aside that Agreement was before the court and when I questioned the parties about their intent each informed me neither was seeking to set aside the Agreement. As a result I have not considered the principles and directions provided by Miglin v. Miglin , 2003 SCC 24 and Rick v. Bandsema , 2009 SCC 10 . [ 7 ] Resolution of the parties claims will require an

interpretation of the Judgment and the Agreement incorporated by reference into the Judgment. When courts are called upon to interpret agreements there are certain principles that govern that process. The court is to determine the mutual intention of the parties. The first place the court is to look for an understanding of that intention is by using the ordinary meaning of the words of the agreement. However if it is apparent the words used by the parties have a special or technical meaning the court will interpret the agreement in light of those meanings.

Courts are directed to interpret the agreement as a whole and to give effect to all parts of the agreement if possible.

The agreement is to be interpreted within the context in which it was made and with recognition of the matters to which the agreement relates. [ 8 ] In this case the Agreement related to the means by which money could be provided to the Mother for the support of three children who were to be in her primary care in a situation where there was not sufficient money to maintain their collective reasonable financial needs without finding a way to put more money in the Father ’ s pocket to fund those financial needs.

Because the Mother had no income whatsoever there would be no tax consequence to her if the majority of money she received to support the household came designated as spousal support. In fact by doing so the Mother would have more money coming into her household than she would have had if the Father provided the full table amount for the children. The full table amount would have resulted in the Father having less money to pay the Mother as spousal support because he would have no tax reduction as a result of paying child support.

I consider this to be, as did the judge who granted the Judgment, the type of circumstance contemplated by the Divorce Act

section 15.1 (5) : Notwithstanding subsection (three), a court may award an amount that is different from the amount that would be determined in accordance with the applicable guidelines if the court is satisfied (

a) that special provisions in an order, judgment or a written agreement respecting the financial obligation of the spouses, or the division or transfer of their property, directly or indirectly benefit a child, or that special provisions have otherwise been made for the benefit of the child: and (

b) that the application of the applicable guidelines would result in an amount of child support that is inequitable given those special provisions. [ 9 ] Given the context in which this Agreement was made I cannot accept there was any intent that the Father should pay more “child support” by permitting a later claim for

section 7 expenses. Variations were limited to variations in the table amount to be paid, and in resulting net incomes, if the circumstances described in paragraph 5 of the Agreement applied. The parties were looking for a means by which to put the maximum amount of money available in the hands of the Mother. The Agreement is based upon the understanding that the amount reflected in the Agreement was the maximum the Father could pay based on his then income.

In order to maintain that relative ability of the Father to provide significant financial support to the Mother, inclusive of her spousal support, variations were to reflect the mathematical formula used to create the amounts required to be paid initially. This would continue until the Mother’s entitlement to spousal support terminated on September 15, 2015. [ 10 ] Initially the Mother’s application does not appear to require the court to decide whether there is a change of circumstances justifying variation of the Judgment.

The Judgment is silent about payment of special or extraordinary expenses (section 7 expenses).

Both the Judgment and the Agreement refer to “child support” but the formula for child support and spousal support is based upon the table guideline child support amount. One might assume from these circumstances that only a change to the table guideline amount of child support would require proof of a change in circumstances. However, the word child support refers both to table guideline and

section 7 support. I am satisfied that a variation to the Judgement to add a contribution payment for

section 7 expenses is a request that requires proof of a change in circumstances. [ 11 ] The Mother testified there were very few

section 7 expenses at the time the negotiations occurred and as a result these were overlooked and not discussed. The Father ’ s submission is that both parties understood what type of child support could be provided by the terms of the child support guidelines and there was no financial ability for him to pay more than he agreed to pay in the manner in which he agreed to pay it. Given that both parties engaged experienced lawyers at the time the Agreement was negotiated I do not accept that

section 7 expenses were ignored. The Mother stated they were not significant at the time. I am satisfied that the Father expected, and the Mother knew he expected, her to look after all of the children ’ s financial needs from the money he agreed to pay. She was to live within her means. The structure and wording of the agreement is consistent with this

interpretation. [ 12 ] I understand the Mother ’ s dilemma in respect to the children. She wants them to participate in activities they enjoy. The parties daughter enjoyed skating as a recreation when the parties lived together. She had started skating competitively and this did increase the cost of this activity. [ 13 ] One of the parties ’ sons has become a very proficient hockey player. To increase his skill level requires that he attend hockey camps and training opportunities. Their other son had an opportunity to take

part in an expensive trip organized by his school. [ 14 ] Since the Judgment was issued the only change in the parties circumstances that might justify a variation to add a

section 7 contribution is the alleged increase in the cost of those expenses. The problem is the Agreement resulting in the Judgment contemplated the Mother would live within her means. This would suggest she had three choices: 1. She could have decided not to enrol the children in competitive skating and hockey. 2. She could have contacted the Father to enquire whether he would pay the expense or share in the cost. 3.

She could pay the expense herself recognizing she could not later ask the Father to reimburse her. [ 15 ] The Mother did not discuss the children ’ s changing recreational needs with the Father or discuss the additional expense that would result if the children participated in these activities at an advanced level. The Mother did not discuss the expensive class trip their son wanted to attend to determine whether the Father would assist with the cost. She unilaterally made the decision to “ permit ” these activities and she paid for them with some financial assistance from family and friends.

The skating may continue, although that is unclear. The hockey will continue, if it can be afforded. [ 16 ] Does a best interest of the child argument suggest the Court should ignore the premises upon which an agreement has been reached? Can the Mother participate in a process that discloses what each parent earns and must pay for reasonable personal living expenses and then ignore the obvious result of that process when the Mother finds she does not have enough money? A change in the children ’ s recreational activities and their cost can be contemplated at the time parties enter into their arrangements.

In this case the documents themselves suggest the Father was providing the Mother with the maximum amount of support he could pay. [ 17 ] Variation was a subject of the Agreement. The Judgment could be varied if there was “ a significant change in (the Father ’

s) financial circumstances ” . If this occurred only the table amount of child support was to change with a corresponding change, based upon a formula, for the spousal support. The Child Support Guidelines do not require a substantial change of income before a variation may be made. Any change in income that would result in a different table amount is sufficient.

Section 7 expenses are discretionary. My

interpretation of the Agreement is that only the table amount was to be varied. No variations for other purposes would occur unless they resulted from circumstances described in paragraph 5 of the Agreement. [ 18 ] In this case there is no change of circumstances that would permit a variation to add a

section 7 expense to the child support to be paid by the Father either retroactively or prospectively.

[ 19 ] Had I decided the Mother ’ s

section 7 claims could be pursued, I would not have accepted that she has “ proven ” those claims. [ 20 ] The Mother requested a sharing of the

section 7 expenses consisting of health-related expenses, expenses for their daughter ’ s skating, their son ’ s hockey and another son ’ s school trip. [ 21 ]

Section 7 of the Child Support Guidelines has wording that must be given meaning by decision makers. I have underlined those words. 7

(1) In a chid support order the court may, ...provide for an amount to cover ...the following expenses... taking into account the necessity of the expense in relation to the child ’s best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family ’s spending pattern prior to the separation... [ 22 ] The expenses for which contribution can be requested are: (

a) child care expenses incurred as a result of the custodial parent’s employment, illness, disability or education or training for employment; (

b) that portion of the medical and dental insurance premiums attributable to the child; (

c) health-related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counseling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses; (

d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs; (

e) expenses for post secondary education; and (

f) extraordinary expenses for extracurricular activities. EXTRAORDINARY [ 23 ] Expenses for primary or secondary school education or for an extracurricular activity are not shareable unless the expense is “ extraordinary ” . An amendment was made to the Child Support Guidelines to clarify what an extraordinary expense may be. Section 7 (1)(1.1) (

a) indicates an expense is extraordinary when it exceeds what the parent, who seeks sharing of the expense, can reasonably pay taking into account that parents income and the amount of child support he or she will receive. If the parent can not “ reasonably pay ” the expense, it is extraordinary and the court may order the other parent to contribute. However, if it is determined that a parent can reasonably pay the expense claimed it may still be an extraordinary expense. Section 7(1) (1.1) (

b) indicates that an expense a parent can reasonably pay may still be an extraordinary expense after consideration of a number of factors. Those are the relationship of the expense to the requesting parents income including the amount of child support he or she will receive, the nature and number of the extracurricular activities in which the children participate, the children special needs or talents, the overall cost of the programs and activities and any other similar factors considered relevant. NECESSITY

[ 24 ] There appears to be little controversy in decisions across Canada that the following are, except in very unusual circumstances, necessities: - child care - medical and dental insurance premiums - post secondary education - health- related expenses that exceed insurance reimbursement by at least $100.00 annually for physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses [ 25 ] Controversy can develop about the other expenses listed in

section 7. In particular controversy can develop in respect to the “ necessity ” for a child to be engaged in extracurricular activities. [ 26 ] I will comment upon the definition of the word extracurricular first. Dictionary

definitions of this word refer to activities performed by students that fall outside the realm of the school curriculum but are supported by or are under the auspices of the school attended by the student. The dictionary meaning of this word does not include what I will refer to as recreational activities although many extracurricular activities are also recreational. This difference has not been noted as far as I have been able to determine by courts rendering decisions under

section 7. Courts have interpreted the words “ extracurricular activities ” to include any type of recreational activity in which a child may be engaged whether it is under the auspices of their school or not. I have used this latter

interpretation although I am not at all satisfied that those who passed or approved of the child support guidelines ignored the distinction between the word extracurricular and the word recreational. [ 27 ] Necessity is to be defined by considering the “ child ’ s best interest ” . No doubt there may be universal agreement that engaging in extracurricular activities is in a child ’ s best interest. The devil, as they say, is in the details.

It may not be in a child ’ s best interest to be engaged in extracurricular activities in situations where the child is living a parent ’ s dream not of the child ’ s own choosing (to be a ballerina, for example). It may be in the child ’ s best interest to spend time with a parent rather than be enrolled in an extracurricular activity. With older children what the family provided for in the past may be an indicator of what is in the child ’ s best interest in the future but for young children there will be no pattern of enrollment in these activities to use as a guide.

The child may be as happy engaging in a different, less expensive, activity.

As is the case with all “ best interest ” decisions, everything will be determined based upon the information provided about the child, his or her character, interests, strengths, weaknesses, challenges, and previous and present involvement in extracurricular activities; about the family, how decisions about these activities were made in the past and presently, the support each parent provided and will provide to permit and encourage the child ’ s participation, and whether the activities may impede a child ’ s opportunity to develop a relationship with a parent.

REASONABLE [ 28 ] Not only must an expense be necessary, it must be reasonable in relation to the means of the spouses and those of the child and the family ’ s spending pattern prior to the separation. To determine a parent ’ s “ means ” one must examine not only annual income but also the mandatory and voluntary deductions from that income, the resulting net disposable income, the child tax benefits and credits available to the parent, the GST credit available and the cost of living for each parent. A parent must be able to cover his or her reasonable cost of living.

Each must be able to pay for a residence, food, clothing, transportation and all of the incidentals required to maintain a household for themselves and the children when the children are in his or her care. To focus only on income in a

section 7 analysis would be inequitable and may prevent a parent from having a meaningful relationship with a child because he or she, for justifiable reasons, has insufficient net income to maintain a suitable residence and provide for the child when in his or her care. Some

section 7 expenses result from voluntary parental decisions, recreational costs for example. Courts should not necessarily require a parent to contribute to those costs when the parent ’ s means indicate his or her ability to pay will only be achieved if that parent alters what a court has considered to be reasonable living expenses. Courts inclined to do so should be satisfied the parent can in fact “ live on less money ” before ordering a contribution to a

section 7 expense. [ 29 ] The order of analysis for a

section 7 expense is as follows: - Determine the parents ’ income for the relevant period;

- Determine whether the expense potentially falls within the categories listed in

section 7; - Determine whether an expense is extraordinary; - Determine whether the expense is a necessity in relation to the child ’ s best interest; - Determine whether the expense is reasonable; - Determine what amount, if any, a parent will be required to pay for a necessary and reasonable expense. PARENTS ’ INCOME [ 30 ] Until January 15, 2011 the Mother ’ s annual income, including child and spousal support, was $22,800.00 ($1,900.00 per month). She also should have been receiving a the child tax benefit and a GST credit of approximately $1,117.00.

She has not disclosed these on her Statement of Income although a quick income tax analysis of her situation would suggest these were available to her. [ 31 ] After January 15, 2011 her annual income decreased to $18,000.00 ($1,500.00). The benefits and credits would remain the same. It is not clear whether the word “ income ” used in the definition of extraordinary expenses is to include the child tax benefit and GST credit. This is money provided to a parent to assist with the expenses of raising children.

If it is not properly included here - it can be included when considering her “means” in determining whether the expense is “reasonable” . However, because I have no “evidence” about these benefits and credits I have not included them in my decision. There may be a reason why she did not receive these benefits or claim the credit. [ 32 ] The Father ’ s 2010 line 150 income was $48,457.63. He estimated his total annual income for 2011 at 50,000.00 and for 2012 he expects to earn between $60,000 and $65,000.00.

The Father ’ s primary employment is in the field of computer programming, maintenance, upkeep and general consulting about computer issues. He has been involved with some corporate structures in which he was a shareholder and he operates a businesses as a proprietorship. Because of the volatility within this employment area he has changed employers on frequent occasions. He has lost former clients of his private business. Although not introduced as an exhibit in this proceeding, his 2006 income tax return is part of the court file.

At that time his line 150 disclosed earnings of $66,560 as an employee, and a net income from the proprietorship of $4,611.86. This totaled $71,171.86. His 2005 income tax return is also part of the court file and the total combined incomes in that year was $71,347.56. I do not have a copy of his 2007 income tax return but his 2008 income tax return attached to Exhibit 3 in this proceeding discloses a line 150 income of $69,932.60 comprised of $42,547.72 earned employment income and $27,384.88 from his proprietorship, Russell Computer Services.

In 2009 the Fathers line 150 income was derived totally from the proprietorship and the annual income was $69,924.66. The Father describes various circumstances which resulted in a decrease in his consulting sales which forced him to try once again to become a regular employee. In 2010 he was only able to obtain part-time employment with an employer who late in 2011 offered him a full-time position. The Father ’ s Statement of Income filed July 8, 2011 suggests he will be receiving approximately $1,960.00 twice monthly from that employer.

He expects to continue to receive income from his consulting services and as a result he has estimated his 2012 total income to be in the vicinity of $60,000.00 to $65,000. However, he may have had some income from his consulting services in 2011. His evidence does not suggest he was unable to earn anything from that business and his estimate of his income for 2011 exceeds his employee income. [ 33 ] I accept the Father ’ s descriptions of the challenges he has faced in earning his income.

However close examination of his Statement of Business and Professional Activities reveals many items deductible for tax purposes that should not be deducted from his gross income for the purposes of child support. While he has not produced receipts to support the deductions from gross proprietorship income he lists those in his Statement of Business Activity attached to his Income Tax Returns. I intend to allow those that appear reasonable and I do recognize the penalties he would face for providing a false report to the Canada Revenue Agency.

I have not examined his 2009 Statement of Business Activity with an intent to add back items because, as will become evident later in this decision, nothing would be adjusted as a result of his income that year. [ 34 ] On the Father ’ s 2010 Statement of Business Activities I accept it would be important to advertise his service and he may have some small component of meals and entertainment in respect to clients. I accept he would have business tax, fees and licences to pay in order to operate his business and he would have some office expenses and require office supplies.

I will not deduct payment of property taxes nor for telephone and utilities, all of which relate to his home not to a rented facility. The Father primarily operates out of his home communicating by e-mail and his business is not one that increases telephone and utility expenses from ordinary household use. I am not satisfied that of the 60,000 kilometers he drove in 2010, 30,000 kilometers were driven to earn his business income. The nature of his work, as I understand it, would not require this much driving and much of his work is in the city.

I have added back the listed expenses to his net declared income for income tax purposes. When these are added back his total annual income for 2010 is $56,357.00. There is no question that during 2010 there were periods of time when the Father had no income at all available to him and this caused both his

living expenses and payments to the Mother to fall into arrears. However, the maintenance enforcement record indicates that as at March 23, 2012 there were no arrears owing on his account. [ 35 ] There is no basis upon which I would impute any additional income to the Father in 2010. [ 36 ] The Father has failed to provide his 2011 income tax return. He has merely estimated that income. I have nothing to support his estimate. He should have had his income tax return prepared and filed by the date of his appearance.

I note from his previous income tax return his proprietorship reports on a yearly basis with a December 31 st year end. As a result his total and net earnings from that business endeavor should been made available to the court along with his T-4 for his employee income. In 2011 he continued his part time employment with the same employer he worked for in 2010 and this became full time in the fall of 2011. With part time employment in 2010 and the addition of his consulting income he earned $56,357.00. It is likely he earned at least this in 2011 and possibly more.

It was his responsibility to provide the court with sufficient information to prove his income in 2011 was less than the income stated in the Judgment. The Father has failed to prove his income was reduced in 2011. [ 37 ] The Father ’ s 2012 income is higher than his projection for 2011 but without a better understanding about what happened in 2011 I am not prepared to rely on his estimates. He could have provided year to date information about the income from his consulting business in 2012. He did not do so.

Perhaps his full time employment will interfere with his consulting business but if that is the case he may be underemployed and subject to an imputation of income argument. In any event I find the Father has failed to prove an income reduction in 2012. [ 38 ] When the parties signed the Agreement they used an average of the Father ’ s previous three year total income amounts to determine the appropriate income upon which to apply the table guideline for child-support. The Agreement does not specify how income is to be calculated if a variation is requested.

One obvious assumption might be to once again use a three-year average. However the wording “ significant change in income ” it brings to mind a change in one year ’ s income that is well beyond the average or well below the average income used to establish the original support amount. This suggests that only the year in which the change has occurred is relevant. As a result I have used the income in each of the relevant years and I have not established an average. [ 39 ] The Father ’ s income for 2010 is $56,357.00. His income for 2011 and 2012 remains at $72,920.00.

HEALTH RELATED EXPENSES [ 40 ] The Mother ’ s request for contribution toward health related expenses are for prescription drugs and dental care. Eligible expenses must be “ health-related expenses that exceed insurance reimbursement of at least $100.00 annually ” . The Mother ’ s calculations are based upon the gross cost of medical and dental expenses. She has not deducted the insurance reimbursement. All three children, until recently, were covered under a medical and dental plan provided by the Mother ’ s friend.

The receipts she provided clearly identified what portion of each expense was paid by the insurer. The actual amount paid by the Mother in each year for all three children was $49.30 in 2009, and $440.37 in 2010. She submitted no receipts for any dental or other medical expenses in 2011 or thus far in 2012. She may therefore have had a claim for a proportional sharing of these expenses in 2010. They are “ necessary ” . [ 41 ] The Father now covers the children ’ s medical and dental expenses through a plan to which he has access. I do not know what, if any, amount the Mother may be required to pay in 2012.

If they exceed $100.00 she may have been able to request contribution if I had not decided that a requirement for the Father to contribute toward

section 7 expenses is excluded by the terms of the Judgment by virtue of the incorporation of the Agreement into that Judgment. EXTRAORDINARY EXPENSES School Trip

[ 42 ] I do not consider the son ’ s school trip in 2010 to be an expense for primary or secondary school education or for any other educational program. While the trip may have been educational in the broad sense, these trips more closely resemble an extracurricular activity. Therefore I must determine whether this expense was “ extraordinary ” . If it is not, the expense is not a

section 7 expense for which proportional sharing may be ordered. [ 43 ] The Mother alleges the trip cost $1,900.00. However, the only receipt provided is for $1,440.00. I cannot accept the Mother ’ s hand written note that the trip cost $1,900.00 when the receipt she provided to justify this expense suggests otherwise. Perhaps there were other expenses and she cannot find the related receipts. That is unfortunate but the court requires more than a hand written note when expenditures are contested. In addition there was evidence from relatives and friends that they paid some expenses for this trip.

However, no receipts were attached to their affidavits. [ 44 ] On what basis can I determine the Mother was able to “ reasonably cover ” the receipted expense. The wording of section 7 (1) (1.1)(

a) suggests I can make this decision by reference to her income including child support. However, this does not seem to provide enough information. A person on a low income who has few living expenses may reasonably be able to pay this expense, while a person with a significant income with additional dependents and greater living expenses may not be able to do so. In this case neither parent has filed a Statement of Expenses. The appropriate analysis of the question about the “ means ” of the parties should have suggested to them this information would be useful in the presentation of his or her case.

Nevertheless I must deal with what is before me. [ 45 ] Unfortunately I have very little objective criteria upon which to determine what the Mother can reasonably pay. I am perhaps invited to assume that an income of $22, 800.00 and later of $18,000.00 is so low that it barely covers the ordinary living expenses for the Mother and the children. This expense does represent almost the entire amount of the Mother ’ s monthly income. However over a 12 month period it would cost her $120.00 per month. This does not seem so unmanageable.

No poverty level information was provided and as I stated earlier no Statement of Expenses was provided. If I had to resolve this proceeding based on this issue I could have made a finding that the Mother had not proven these expenses were extraordinary. However I think it is important to comment further on this proceeding as if I did make a finding that the Mother could not reasonable pay this expense. Skating [ 46 ] This is an extracurricular activity. The expense must be extraordinary. I do not know what it originally cost the parties to pay for their daughter ’ s skating when they lived together.

The Mother estimated the cost for 2009 and 2010 at $1,140.11 per year. She has not produced receipts to substantiate this amount and as a result I do not know how she calculated so precise an amount. She has produced receipts for 2009 (and some from 2008) that may suggest lessons cost approximately $35.00 every two weeks, ($910.00 per year). However, it is questionable whether she would take lessons during the summer months. The Mother mentions cost for skates of $265.00 per year but this is her own hand written note. This pattern of incomplete receipt evidence is present throughout her claim.

While estimates can be considered for a prospective expense (section 7 does state that these expenses may be estimated) at the very least the estimate should be based upon reliable documentary evidence. A parent cannot merely write an expense amount on a piece of paper and expect that to form the foundation for an estimate. Past expenses must be supported by receipts to prove payment was made and in what amount. [ 47 ] The actual receipts for skating expenditures are as follows: $122.20 for 2009, $209.11 for 2010, $165.00 for 2011, and $60.00 so far for 2012.

The Mother could reasonable pay these expenses on a section 7 (1)(1.1)(

a) analysis. I cannot complete the section 7(1) (1.1)(

b) analysis until I have determined “ the nature and number of the extracurricular activities in which the children participate, the children special needs and talents and the overall cost of the programs and activities. ” Hockey [ 48 ] The Mother estimates her son ’ s hockey expenses in each year from 2009. Once again the Mother ’ s evidence about the estimates she has given for the costs associated with hockey are deficient. She has few receipts for the expenses she claims. The receipts she has provided discloses these expenses: - 2009 $ 379.60 - 2010 $1,156.90 [inclusive of a “ camp ” fee that may not be hockey related and a $25.00 late registration hockey fee]

- 2011 $ 150.00 The Mother has a handwritten note, her own, that equipment costs $1,200.00. There is nothing to verify this cost nor to suggest when it was incurred. [ 49 ] There is no documentary support for an expense in 2011 similar to the expense in 2010. I cannot merely assume a similar cost or base my decision on a general understanding that hockey is an expensive sport. I have nothing upon which to base an estimate for 2012. [ 50 ] Could the Mother reasonably pay these expenses? I have decided she could in 2009 and 2011 but not in 2010. Section 7 (1) (1.1) (

b) Analysis [ 51 ] I have no evidence of special needs that may require the children to be enrolled in programs accessed and paid for by the parent. However, this direction may suggest the cost of all other

section 7 expenses be included in the analysis and I have done so. [ 52 ] The total yearly and monthly cost of the medical expenses, school trip, skating and hockey expenses for these children during the years in question are: Yearly Monthly 2009 $ 551.10 $ 45.93 2010 $3, 246.38 $ 270.53 2011 $ 315.00 $ 26.50 2012 $ 60.00 $ 5.00 Although the Mother ’ s income in 2009, 2011 and 2012 is not significant, I am still of the opinion she could reasonably pay the expenses I have listed for those years and therefore none of them are “ extraordinary ” . [ 53 ] If I could make assumptions about the Mother ’ s economic circumstances - that her income was to low to adequately support herself and her family in 2010 and that expenditures totaling $3,246.38 would severely strain her resources, this would be the year her expenditures for the school trip, skating and hockey could have been considered extraordinary.

If I had made this finding I would then have to determine whether each of these expenditures was “ necessary ” and if so was the expense “ reasonable ” . NECESSITY School Trip [ 54 ] Was the school trip necessary? Counsel would invite me to conclude the trip is necessary based upon a general premise that these trips are beneficial to a child. I have decided more is required when a court is asked to order a parent to pay for expenses about which he or she has not been consulted and for which a parent may have refused to pay.

The Mother made reference to the feeling of exclusion her son may have experienced as he watched his friends go on this trip without him. However, the Father pointed out that for many of these trips the school or parents will hold a fund raiser to assist children ’ s parents with the expense. His son may have been able

to attend without his direct financial contribution. I do not know if all of this child ’ s classmates actually went on the trip. I do not know what the school expected the child to gain from this trip. I do not know the itinerary. I cannot conclude this trip was “ necessary ” . Skating [ 55 ] The Mother suggests their daughter suffers from low self-esteem and her participation in skating at the competitive level is important to her. There was no evidence about how frequently she skated, how well she is doing nor any evidence explaining how this activity has improved her self-esteem.

The actual receipts for skating expenses do not suggest this activity is a necessity. They suggest limited involvement. There is a suggestion she will be engaging in this activity in the future but there is no reliable estimate of the cost. Under these circumstances I do not have sufficient information to make a finding this activity was and is necessary. [ 56 ] I can accept the Mother is struggling financially and she has had expenses she herself could not pay. However, I must base my decision upon the legal principles that must be applied.

Not every financial hardship can be alleviated by or remedied in a court proceeding. I also cannot be blind to the fact that the Mother is housing and caring for one dog and 11 cats. This does call into question the appropriate utilization of limited funds. Hockey [ 57 ] The child who has excelled in hockey has been diagnosed with significant learning disabilities. His success and skill in hockey has contributed to his personal, social and psychological development.

The impact upon him if he can no longer participate at the competitive level is unknown but I do not considered it unrealistic to conclude it will be upsetting and may impede his developmental progress. The Father acknowledges this himself. I accept that participating in this activity is a necessity for this child. Reasonable [ 58 ] Was the expense for hockey reasonable in relation to the means of the spouses and those of the child and to the family ’ s spending pattern prior to the separation? I know little about he family ’ s spending pattern on extracurricular activities prior to their separation.

The Mother ’ s income in 2010 was $22, 800.00 and the Father ’ s was $56,357.00. The total cost for Hockey that year was $3, 246.38. Without information about their cost of living I have insufficient information to suggest this cost is reasonable based upon the “ means ” of the parties. [ 59 ] As a result of my analysis the Mother would have failed to prove entitlement to

section 7 expenses except for the medical expenses in 2010. [ 60 ] I will say that the Father should consider voluntarily paying for his son ’ s hockey given that it does appear to be assisting his personal and social development. However, the Mother should be providing him with documentary evidence of the cost before she asks him to contribute. [ 61 ] In respect to the Father’s request for a downward variation of the table guideline amount of child support, the child support guidelines in

section 14 state as follows: For the purposes of section 17 (4) of the Act, any one of the following constitutes a change of circumstances that gives rise to the making of a variation order in respect of a child support order: (

a) in the case where the amount of child support includes a determination made in accordance with the applicable table, any change in the circumstances that would result in a different child support order or any provision thereof;

[ 62 ] This is not a direction that the court must vary an order when there are changes in income. It merely establishes that any change in income that would yield a different table amount , is sufficient for a court to consider whether to vary the support order even if the change is not “substantial or material”, which was the previous requirement applied to variation requests. I say this because

section 17 of the Divorce Act provides: (1) a court of competent jurisdiction may make an order varying... prospectively or retroactively, (

a) a support order... (4) before the court makes a variation order in respect of a child support order, the court shall satisfy itself that a change in circumstances as provided for in the applicable guidelines has occurred since the making of the child support order...(my emphasis). [ 63 ] Courts across Canada have generally accepted a limit on the discretion appearing in

section 17 of the Divorce Act in respect to prospective table guideline child support awards and they will change the amount of child support to be paid if a parent has an increase or decrease in his or her income. The discretion still remains in respect to retroactive awards as a result of the decision in DBS v. SRG, LJW v. TAR, Henry v. Henry, Hiemstra v.

Hiemstra , 2006 SCC 37 . [ 64 ] In this case the Agreement reestablishes the “ substantial or material ” threshold before a variation is to occur. [ 65 ] The Father is requesting a retroactive variation beginning January 1, 2010. [ 66 ] In 2010 the Father ’ s income was significantly less than $72,920.00.

The Agreement provided a formula for variation; “ the new child support amount is anticipated to be the table amount of child support based on Paul Russell ’ s new income, less $600.00 (to account for the adjusted spousal support. ” Using this formula, the table guideline amount of child support for three children on an income of $56,357.00 is $1,050.00. If $600.00 is subtracted from that amount the remainder is $450.00. This $600.00 is then added to the $500.00 spousal support (the amount the parties set as the default amount of spousal support to be paid) resulting in a spousal support amount of $1,100.00.

This is not a situation mentioned in paragraph 5 of the agreement. The Father continues to have a tax benefit and no income tax is to be paid by the Mother on this amount of spousal support.

A rough net after income tax calculation for the Father and Mother is as follows: With table guideline child support at $1,050.00 and spousal support at $500.00: Father net after tax $2,008.00 Mother net after tax $1,550.00 With formula: Father net after tax $2,229.00 Mother net after tax $1,550.00 [ 67 ] Using the formula increased the Father ’ s ability to support the family without reducing the amount the Mother would have received if the full child support table guideline amount was paid in addition to her $500.00 per month spousal support. Nor did it affect her child tax and GST benefits.

They remain the same in both cases. [ 68 ] The Father was to pay combined child and spousal support from January 15, 2010 to and including December 15, 2010 in the amount of $1,550.00 per month for a total of $18,600.00. He in fact paid $1,900.00 per month for a total of $22,800.00. His total overpayment during this period is the total amount of $4,200.00. [ 69 ] The Father has been paying combined child and spousal support from January 15, 2012 until July 15, 2012 in the amount of $1,500.00 per month, a total of $10,500.00 to July 15, 2012.

He is supposed to pay $1,900.00 during this period, a total of $13,300.00, resulting in an underpayment of $2,800.00. Subtracting the underpayment from his overpayment results in a credit of $1,400.00. As a result the Father is to pay combined child and spousal support to the Mother in the reduced amount of $1,700.00 for seven months commencing August 15, 2012 to eliminate this credit over time. Beginning March 15, 2013 payment shall revert to $1,900.00 per month.

[ 70 ] I have considered the DBS factors in reaching my decision to retroactively vary the support payment based upon the Father ’ s reduced income. I have concluded this matter was brought forward in a timely manner. While the retroactive award has reduced the Mother ’ s income, variations were contemplated by the Agreement incorporated into the Judgment. Without evidence of the Mother ’ s cost of living it is not possible to evaluate the hardship she may suffer from this reduced award. The variation is granted as described in this decision. _________________________ Beryl MacDonald, J.S.C.