M.P. v. A.F. Date:, 2016 BCPC 278

Citation: M.P. v. A.F. Date: 20160826 2016 BCPC 278 File No: 1343775 Registry: Prince George IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: M.P. APPLICANT AND: A.F. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S.K. KEYES Appearing on their own behalf: M.P. Appearing on their own behalf: A.F. Place of Hearing: Prince George , B.C.

Dates of Hearing: July 14 and 16; October 1, 2015 Date of Judgment: August 26, 2016 [ 1 ] Mr. F. and Ms. P. lived together as spouses from December 1996 to March 23, 2013. They have one child together, H.M.F., born [omitted for publication], now age 18. Ms. P. seeks child and spousal support. FINDINGS OF FACT [ 2 ] It is not disputed that Mr. F. has been self-employed throughout the time the parties were together and since then. Ms. P. worked outside the home as an office assistant earning an income of approximately $30,000 per year but left that employment when the branch closed in approximately 2000.

Since that time she has remained at home. She declared a small income from Mr. F.’s business for a number of years, but this figure represented income splitting; Ms. P. did not actually do any work for the business until she began some light bookkeeping duties in 2013, for which Mr. F. paid her $100 per month, until that employment ceased in February 2015. [ 3 ] Ms. P. was diagnosed with Bi-Polar Disorder in 2008. She had suffered manic episodes before then but had not been informed of a diagnosis. She was hospitalized in 2008 and again in 2013, but aside from those occasions, was able to care for H.M.F.

She now takes medications to stabilise her moods, help her sleep, and avoid depression. She says the effect of her condition is that she does not handle stress very well. Aside from the bookkeeping, she has done volunteer work, but she has not sought employment. She said her doctor feels she is not yet ready to go back to work and recommends that she attend a support group to get back into the community. After that, she can see whether to start work. She has received CPP disability benefits in the amount of $867 per month since 2010. After the separation she remained residing in the family home. [ 4 ] Mr.

F. went bankrupt a few years ago and owes a substantial debt to Canada Revenue Agency accumulated during the relationship because appropriate tax withholdings were not remitted. Both parties benefited, presumably, from the fact that additional funds were available to them to support their lifestyle prior to the separation, but the burden of paying the government its due has fallen on Mr. F. alone. Ms. P. has contributed nothing towards the parties’ debt obligations remaining after the separation. [ 5 ] After the parties separated, by informal agreement, Mr. F. paid $1,000 per month to Ms.

P. for child and spousal support, and paid the mortgage and taxes on the family home (in the amount of $1,165 per month), which Ms. P. occupied. From mid-August 2013 until January 2015, Ms. P. agreed that Mr. F. paid $1,200 per month plus the mortgage and taxes, but also indicated that he missed some payments, resulting in the accumulation of arrears.

In any event, on December 18, 2014, the parties entered into an Interim Order, by consent, which provided among other things, that there were arrears of $3,200 in child support and $1,600 in spousal support, as at that date, to be paid off in two instalments of $2,400 each, payable in December 2014 and January 2015. The parties also agreed that Mr. F. would pay child support in the amount of $800 per month and spousal support of $400 per month commencing January 9, 2014. Mr. F. admits that he stopped making payments after January 9, 2015, which has caused Ms. P. to go into debt.

He has, however, carried on making the mortgage and taxes on the home in which Ms. P. and H.M.F. reside. ISSUES [ 6 ] Mr. F. does not dispute his obligation to pay Guideline child support and agrees to maintain H.M.F. on his extended benefits plan. Similarly, he does not dispute Ms. P.’s entitlement to spousal support. He is prepared to continue paying the mortgage on the family home until such time as it sells. [ 7 ] Mr. F. argues that any spousal support payable to Ms. P. should be time limited, as he believes that she is capable of employment and should be making efforts to be self-sufficient.

Both parties agree that it would be appropriate for the Court to review the spousal support issue when H.M.F. ceases being a child under the Family Law Act (“FLA”) or two years from now, whichever occurs earlier, and I make that order. [ 8 ] There are two matters that remain at issue; firstly, a determination of Mr. F.’s income for child and spousal support purposes, and secondly, what the amount of spousal support should be in consideration of the means and needs of the parties, including the obligations of the parties with respect to the mortgage on the family home and the other family debts. [ 9 ] Ms.

P. argues that his support obligations should be based on Mr. F.’s 2014 declared Line 150 income of $92,464, and argues that Mr. F.’s income is actually understated in his Tax Returns because some of his expenses are not properly deductible for child and spousal support purposes. Mr. F. admits that some of the business expenses noted on his Income Taxes should properly be allocated back into his net income for child and spousal support purposes, but anticipates that his 2015 income will not be as high as his 2014 income. DISCUSSION 1. What is Mr. F.’s income for child and spousal support purposes? [ 10 ]

Section 160 of the FLA provides that the amount of child support payable must be determined in accordance with the Federal Child Support Guidelines (“Guidelines”) , whereas

section 162 of the FLA provides that the amount and duration of spousal support must be determined upon consideration of the conditions, means, needs and other circumstances of the spouse, including the length of time they lived together, the functions they performed in the relationship, and any agreements between them about support.

The FLA does not provide guidance as to how to determine income levels from which to determine the size of any such obligation. [ 11 ] Sections 16 - 20 of the Guidelines provide guidance with respect to how to assess a spouse’s income for the purpose of arriving at an appropriate level of child support. Typically, Line 150 on the T1 Federal Income Tax Return is used to provide a ready answer to income levels. However, there are circumstances in which Line 150 income may not be a fair and accurate determination of actual

available income, such as when the individual in question is self-employed, as is Mr. F. In such cases,

Schedule 3 of the Guidelinesprovides assistance in determining income. I note that although some expenses may be properly deducted for income tax purposes, theymay be imputed back as income for child support purposes: Simpson v. Simpson 2013 BCSC 419. [12] Using the previous year’s income in order to calculate the amount of child support can be convenient, but

section 17 of theGuidelines provides that where such a method would not be the fairest method of determining annual income, the court may consider thespouse’s income over the past three years and arrive at an amount that is fair and reasonable in light of any pattern of income, fluctuationof income, or receipt of a non-recurring amount during those three years. The idea is to arrive at a fair determination of the currentyear’s income. [13] I have considered whether to average Mr. F.’s previous years’ incomes in order to arrive at a an estimation of Mr.

F.’s currentincome, but because of the variations in his income resulting from his bankruptcy, I am not confident that such an average would in factproduce a fair estimation of his 2015 income. Instead, it seems to me that his net income as declared at Line 150 of his Tax Returnshould be the starting point for the calculation of his income. [14] In 2014, Mr. F.’s Line 150 income was $92,464. Mr. F. estimated that his net income for 2015 would be $86,935, becausebusiness has been slower in 2015. [15] Mr.

F. has acknowledged that some of the expenses claimed as business expenses can properly be attributed back to him, suchas some amounts for meals, fuel for his vehicle, and rental expenses. He submitted that I should attribute one half of the meals andentertainment expenses and 90% of the fuel and rental expenses back to him as personal expenses. Having considered all of theevidence, I find that it is proper to do that. I therefore attribute back to him $11,999 as income based upon the expenses noted in his2014 Tax Return. I find his 2014 income for child support purposes is therefore $104,463. Mr.

F. anticipated that his 2015 incomewould be $85,000 - $86,000. Taking the same considerations with respect to his expenses into account, and assuming he makes similarexpense claims for tax purposes on his 2015 Income Tax Return, I attribute the same amount, $11,999 to his 2015 estimated income. Itherefore impute an income to him for child and spousal support purposes in 2015 of $97,999. 2. What is Ms. P.’s income for spousal support purposes? [16] Ms. P. has income derived from her disability pension, from child support, and from spousal support and social assistance.

Inote in her Financial Statement she does not declare any spousal support paid by Mr. F., but that is no doubt because he had not fulfilledhis spousal support obligations after early January 2015. Ms. P.’s 2014 Line 150 income for tax purposes was $13,894, which included$2,800 in spousal support payments. This Line 150 income was used during submissions in order to calculate the position of the partiesfor spousal and child support purposes. However, for the purpose of calculating the spousal support payable to Ms. P., I do not think it isappropriate to include as income the spousal support that she was paid.

I therefore find that Ms. P.’s 2014 income for spousal supportcalculation purposes is $11,094. 3. Spousal Support [17] According to s.161 of the FLA, spousal support is intended to recognize the economic advantages and disadvantages arising tothe spouses from their marriage and its breakdown, to apportion the financial consequences resulting from the care of their child, torelieve economic hardship caused to either spouse from the marriage breakdown and to promote the economic self-sufficiency of eachspouse within a reasonable period of time. [18] Ms.

P. was diagnosed, during the relationship, as suffering from Bi-polar Disorder. It was after her last hospitalization in early2013 that Ms. P. says she asked Mr. F. to leave the family home. Mr. F. indicated that as a result of her disorder, their life togetherbecame unbearable for him, which led to the breakdown of the relationship. [19] While I acknowledge that Ms.

P.’s Bi-Polar Disorder has had sufficient impact on her income earning ability to warrant thereceipt of a disability pension, I am aware of many persons who are able to work and contribute to their own support who have beendiagnosed with that condition. Ms. P. has presented no evidence, expert or otherwise, to suggest she is completely incapacitated fromperforming or seeking any work whatsoever. To the contrary, Ms. P. testified that she has performed volunteer work, as well asbookkeeping services for Mr. F. She said her doctor has suggested a graduated return to work plan.

However, in the eight years sinceher diagnosis, Ms. P. does not appear to have made any progress on that plan. [20] Ms. P. has provided no evidence to me of any particular needs and she has provided no evidence to me that she has made, or ismaking, any effort to become self-sufficient. Rather, she has remained entirely unemployed since shortly after H.M.F. was born. Thereis no evidence before me that H.M.F. was in any way a special needs child requiring Ms. P.’s full time care for the past 17 years. [21] Ms.

P. provided no evidence of any particular program or particular need which could be met by a higher level of spousalsupport than Mr. F. is currently obligated to pay under the Interim Consent Order (when the payment of the mortgage and taxes is takeninto account). Certainly there is no evidence before me that a “higher” level of support would enable her to achieve a goal of self-sufficiency within a reasonable time. Given her failure to take any steps in that direction, there is no reason for me to believe that ahigher level of support would help to achieve that end. To the contrary, it might encourage Ms.

P. to carry on in the same fashion, takingno responsibility to contribute towards her own support. The obligation of ex-spouses to support each other does not mean that one ex-partner is able to acquire from the other partner a lifetime pension: Messier v. Delage (SCC). [22] In opening submissions, Ms. P. acknowledged that the combined amount of $400 per month and the monthly mortgage andtaxes payments made thus far would be close to, while still below the amount of spousal support recommended by the SSAG at the lowerrange, but that she would be prepared to accept that amount of support.

However, she seeks to have the entire amount paid to her asspousal support from which she can make the payments of the mortgage and taxes. She argued that such an arrangement will providedher with the security of knowing that she is responsible for the payments on the home she lives in, as opposed to being subject to apossible failure to pay that mortgage by Mr. F. She acknowledges, however, that Mr. F. has never failed to make those payments.

[ 23 ] In final submissions however, Ms. P. argued that she should receive spousal support in the mid-range generated by the SSAG , because that will give her a net disposable income equal to Mr. F.’s net disposable income. [ 24 ] Mr. F. argues that he is in just as precarious a position as Ms. P. regarding the payment of the mortgage because if she failed to pay the mortgage from her spousal support income, he will still be obliged to pay it, as they are both signatories on the mortgage.

On the other hand, he acknowledges that he would receive a tax benefit if the amount of the mortgage payments were included as spousal support. [ 25 ] During the relationship, Mr. F. accumulated a debt of approximately $160,000 to Revenue Canada. As part of the arrangements made during the bankruptcy, the debt was reduced significantly. Mr. F. testified that he has paid approximately $18,000 and still owes approximately $13,000. He testified that he has been unable to pay off that debt because of payments towards Ms.

P. in child and spousal support and the mortgage, and he has already accumulated more debt to Revenue Canada because he is unable to service both his obligations to Revenue Canada as well as the levels of support he has been providing to his daughter and Ms. P. He cannot foresee being able to dig out of this hole. [ 26 ] The figures generated by the SSAG do not take into account extraordinary expenses of this sort that are borne by only one party to the marital relationship. I find that Mr.

F.’s payment of and continued obligation to pay the Revenue Canada debt incurred during the relationship between the parties is a factor that I can properly consider with respect to Mr. F.’s means and therefore with respect to the proper quantum of spousal support. [ 27 ] I also take into account that Mr. F. has been paying the mortgage payments on the family home. While it is true that Mr. F. reaps some benefit from his payment of a joint debt on a joint asset, by increasing the equity in the family home, Ms. P. is reaping that benefit as well, without making any contribution to it.

In addition, the payment of the mortgage and taxes on her residence she resides in has benefited Ms. P. substantially because unlike Mr. F., and many other spouses to whom the SSAG’ s apply, she has not been obliged to pay for her accommodation because Mr. F. is paying for it. Accommodation is an expense which Ms. P. agrees she would have had to pay and indeed, for which says she now wishes to take personal responsibility. The parties essentially treated the payment of the mortgage and taxes as if they were included as part of the spousal support. The only difference was that Mr.

F. was unable to deduct the payments from his taxable income, which he would have been able to do had the payments been made directly to Ms. P. as spousal support. 4. Amount of Child and Spousal Support [ 28 ] I see no reason to depart from the Guidelines amounts for table child support for H.M.F. Having found that Mr. F.’s income for 2015 is $97,999, I order that Mr.

F. pay child support for H.M.F. in the amount of $904 per month commencing January 9, 2015, and that any amounts of child support paid since then be credited to him, to continue until H.M.F. is no longer eligible for support under the FLA or until further court order. [ 29 ] With respect to spousal support, I will deal firstly with the period from January 9, 2015 onward. If Mr. F.’s payment of the mortgage and taxes is taken into account, then the effective spousal support that Mr. F. has been paying (until he stopped paying) is $1,565 per month. [ 30 ] For Mr.

F.’s income in 2015, the SSAG i ndicate the payment for spousal support in the amount of $1,912 per month for lower range, $2,163 for mid-range, and $2,420 for the upper range. A payment at the lower end of this range would place the parties at almost equal net disposable income, after the payment of child support is taken into account. However, Mr. F. opposes any increase from the amounts he currently pays on the basis that he simply cannot afford it, in part due to the debts he alone is paying that arose during the relationship. [ 31 ] For the reasons mentioned earlier, I see no reason to award Ms.

P. spousal support in the mid or high ranges because she has provided no evidence to support why that is appropriate. There is no evidence of any financial consequence to her resulting from the care of H.M.F., who is an only child. In any event, H.M.F. is now almost an adult who works part time. I find there is nothing about the care of H.M.F., currently or historically, that warrants additional spousal support over and above child support. [ 32 ] Similarly, there is no evidence that the financial consequences of the breakdown of the relationship have particularly disadvantaged Ms.

P.; in fact, her situation has not changed at all - she continues to live in the family home with all of the family furnishings and remains at home as she has done for many years. Mr. F. was obliged to make a new home and shoulder all of the family debts while Ms. P. retained the use of the primary family asset. [ 33 ] Further, Mr.

F. has been solely obliged to pay the Revenue Canada Debt which I find has reduced the means he would otherwise have to pay spousal support. [ 34 ] In consideration of all of the evidence before me, I find that the appropriate amount of spousal support for 2015 is $1,600 per month, commencing January 9, 2015. All funds paid by Mr.

F. in payment of the mortgage and taxes on the family home from that date forward will be credited to him as partial payments of the spousal support ordered hereunder. [ 35 ] I understand the concern expressed by both parties that they both wish to be assured that the mortgage and taxes on the family home will be paid. Ms. P. asserts that the Court and Mr. F. can be confident that she will pay the mortgage because it is in her interest to secure her residence, but that interest could easily change if she chose to move out of the family home.

On the other hand, if she moved out of the family home, it could presumably be rented out by the parties so that the mortgage debt could be satisfied, but that would require the cooperation of the parties. In order to ensure that both parties behave in a responsible fashion, I order, pursuant to s. 226 of the FLA , that Ms. P. make the payments of the mortgage and taxes on the family home for so long as she resides there. [ 36 ] With respect to spousal support for the period of time prior to January 9, 2015, Ms.

P. argued that there would be problems for the parties in reassessing the amounts to be paid in 2013 and 2014 beyond the requirement that Mr. F. pay the arrears. Presumably the problems are that re-characterizing the mortgage and property tax payments as spousal support retroactively would result in a

reassessment of taxable income for both parties. That reassessment would presumably result in taxes owed by Ms. P. and a tax refund to Mr. F. [ 37 ] On the other hand, a retroactive assessment would also require, in fairness, that I recalculate the 2013 and 2014 spousal support based on the incomes he had at that time. I note that the 2014 income I have attributed to Mr. F. which is higher than the 2015 income I have attributed to him, and would produce higher spousal support amounts even at the lower end of the SSAG , which would therefore result in the creation of unanticipated arrears for Mr.

F. [ 38 ] There are some situations in which it is best to let sleeping dogs lie, as the saying goes, and I find that this is one of them. I accept the suggestion by Ms. P. not to recalculate the support obligations of Mr. F. for 2013 and 2014 and I decline to retroactively change the arrangement arrived at by the parties, which was recognized by the Consent Order made December 18, 2014. [ 39 ] As I mentioned earlier, Ms. P. submitted, and Mr.

F. agreed, that there should be a review of spousal support on the earlier if H.M.F. ceasing to be a child eligible for support under the FLA , or two years from the date of this Order, whichever occurs first, and I find that is a sensible suggestion.

I therefore order a review to take place on those terms. [ 40 ] I also order that both parties exchange their Tax Returns by May 15 th of each year, commencing in 2017 and their Notices of Assessment immediately upon receipt. [ 41 ] As a housekeeping matter, the parties have both argued that paragraph 9 of the Interim Order, which required that neither party would remove H.M.F. from British Columbia without 2 weeks’ notice, be cancelled.

I find that it is not appropriate to fetter the ability to H.M.F., who is 18, to leave British Columbia with one or the other of her parents and I cancel that order. ______________________________ The Honourable Judge S.K. Keyes