D.P.W. v. B.J.W., 2020 BCPC 126

Citation: D.P.W. v. B.J.W. 2020 BCPC 126 Date: 20200428 File No: 1547232 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: D.P.W. APPLICANT AND: B.J.W. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE C. MALFAIR Counsel for the Applicant: S.E. Elson Appearing on their own behalf: B.J.W. Place of Hearing: Prince George , B.C. Dates of Hearing: December 12, 2019, January 22, 2020 Date of Judgment: April 28, 2020

[ 1 ] This is an application by Mr. W. filed May 3, 2019, to reduce or cancel arrears of child support arising under a Separation Agreement made between the parties on June 2, 2015, pursuant to which Mr. W. agreed to pay $1,216.80 per month for the support of their child, A.A.W., born [omitted for publication]. Ms. W. has filed a Counterclaim on September 26, 2019, seeking a variation of child support retroactive to January 1, 2017, commensurate with Mr. W.’s historical income to accord with the Federal Child Support Guidelines . Background [ 2 ] The parties married December 29, 2007, and separated July 14, 2014.

They resolved child support issues by way of a Separation Agreement which has been filed with the Court. The Agreement is therefore treated as an Order pursuant to s. 148(2), and may be set aside or varied as contemplated in

section 150 of the Family Law Act . [ 3 ] The parties initially shared parenting of A. Mr. W. enjoyed an income of $172,000 from working in the oil patch and Ms. W. earned around $30,000 as a nail technician. In the separation agreement, the child support obligation was calculated using an offset formula pursuant to s. 9 of the Guidelines , which resulted in Mr. W. agreeing to pay the net amount of $1,216.80 per month to Ms. W. for A.’s support. [ 4 ] As of December 2016, the shared parenting arrangement had changed and A. lived primarily with Ms. W. Mr.

W.’s annual income also significantly decreased from the prior year. As such, on April 7, 2017, the parties entered into an interim consent order, on a without prejudice basis, pursuant to which child support payable to Ms. W. was reduced to $504 per month based on Mr. W.’s prior year’s income of $54,730. [ 5 ] Mr. W. agrees his obligation to pay child support should be retroactively adjusted to be commensurate with his Guidelines income from January 1, 2017, to date. He consents to increasing the amount of child support payable going forward to $988 per month based on his 2019 income.

The main issue between the parties is whether amounts Mr. W. claims to have paid towards a car in Ms. W.’s possession post-separation can be offset against arrears of child support he has accumulated. The car, a Camaro, was in Mr. W.’s name and payments were automatically withdrawn from his bank account. Ms. W. used it to transport her and A. after separation. The Camaro was sold in September 2016. [ 6 ] Mr. W. says he has made many of Ms. W.’s car related payments since 2015. Some of these payments Ms. W. reimbursed to him in cash. In 2015 Mr. W. says Ms.

W. reimbursed him for three car payments in the amount of $1,147.65, and that he made all other payments, totalling a net expenditure of $8,798.65. [ 7 ] For 2016, Mr. W. says Ms. W. reimbursed him for approximately eight car payments in the amount of $3,060.40, and he made all other payments, totalling a net expenditure of $4,208.50. [ 8 ] Mr. W. admits he did not make any child support payments in 2015 or 2016 as contemplated in the separation agreement. He seeks a credit of $13,007.50 towards those arrears for the 2015 and 2016 car payments he made on Ms. W.’s behalf. [ 9 ] Ms.

W. says that because she took possession of the car she was expected to pay for it. The car payments and ICBC insurance payments were automatically deducted from Mr. W.’s bank account and she would reimburse him in cash or by e-transfer. Ms. W. admits she was not always able to pay Mr. W. back but asserts she made more reimbursement payments to Mr. W. than he claims. There were some times Ms. W. would say she could not reimburse him and Mr. W. would say it was “okay, and not to worry about it.” Ms. W. often paid Mr. W. in cash because that is how she was paid as a nail technician.

Given the passage of time and the use of cash, Ms. W. does not have a complete record of her reimbursement payments. [ 10 ] Mr. W.’s records of amounts Ms. W. reimbursed him for car and insurance payments were spotty. He relied on text messages and some e-transfers he was able to retrieve in that regard. He did not have all of them, as demonstrated in Ms. W.’s evidence. On the state of the evidence, I cannot ascertain how many car payments Ms. W. repaid to Mr. W., or how many repayments were waived by Mr. W. The car was the primary mode of transport for Ms. W. and the couple’s daughter, who was often in Ms.

W.’s care. There was a large discrepancy in the parties’ respective incomes. I find it believable that Mr. W. would waive reimbursement for car payments when Ms. W. was having trouble making ends meet to ensure his daughter had a safe mode of transportation while in her mother’s care. [ 11 ] Ms. W. further argues that it was fair for Mr. W. to assume some of the car payments given the division of family assets after separation. When the family home was sold in 2015, Mr. W. received around $25,000 in net sale proceeds of which he only transferred $2,100 to Ms. W. Mr.

W. says that was all that was left after paying out other family debt. Ms. W. asserts the $2,100 was to reimburse her for furniture the couple had recently bought before separation which Mr. W. intended to keep post-separation. She received nothing from the house sale. [ 12 ] Mr. W. says that after the parties signed their separation agreement in the family justice counsellor’s office, they were walking out and had a discussion in which Ms. W. agreed he did not have to pay her child support if he kept paying for the car. Ms.

W. denies there was any oral agreement immediately following the signing of the separation agreement that Mr. W. could make car payments in lieu of child support. She says the only conversation they had afterwards was that Mr. W. complained he thought the child support amount was too high. [ 13 ] I do not believe Mr. W.’s evidence that immediately after signing the separation agreement Ms. W. agreed he could pay for the car in lieu of child support, for the following reasons: • Given his high income, Mr. W. was required to pay $1,216 per month for A.’s support.

The car payments were only $382.55 bi-weekly, or $828.85 per month. There was no consideration for Ms. W. agreeing to receive almost $400 per month less child support, especially given she had a much lower income than Mr. W. Ms. W. could have paid for the car loan herself from the $1,216 child support payments and had $400 left-over to contribute to her household expenses. She gained nothing by waiving child support in

exchange for Mr. W. making the car payment; • Ms. W. made numerous cash and e-transfer payments to Mr. W. to reimburse him for car loan payments he made on her behalf. This is wholly inconsistent with an arrangement whereby Mr. W. would make the car payments in lieu of child support. Mr. W. did not pay child support to Ms. W. in those months where she reimbursed him for the car payments, which one would expect if indeed there was an agreement to offset child support and car payments against each other; • The car payments ceased September 15, 2016, when the car was sold, however, Mr.

W. did not make any child support payments after the date of sale. If child support was being offset against car payments, then he should have resumed making child support payments once the car payments were no longer necessary; and • When questioned about his actions in cross-examination about the family debt he paid out and how he calculated Ms. W.’s share of the family home, Mr. W. asserted that he tried to deal with these matters in a separation agreement but Ms. W. would not respond to his proposals. I inferred from his evidence that Mr.

W. was alive to the financial issues and obligations between the parties upon separation and that he felt it was important to resolve those issues in a written separation agreement. Given the importance he placed upon such an agreement, I find it unlikely he would fail to negotiate a term in the agreement addressing the issue of the car payment, which represented a substantial ongoing family liability. It seems unlikely in those circumstances, where Mr. W. was attempting to deal with all support issues in a written agreement, that he would make a different spontaneous verbal agreement with Ms.

W. in the immediate wake of having executed a formal agreement dealing with all financial issues. If such an agreement were made, I find it likely the parties would have reduced it to writing in some fashion, given it had the effect of contradicting the written agreement both parties had just signed before a family justice counsellor. [ 14 ] In short, I am not satisfied there was any agreement Mr. W. would make car payments in lieu of child support. Even if there were such an agreement, I cannot ascertain how much could be credited to Mr. W. I cannot tell on the evidence how much Ms. W. reimbursed Mr.

W. for car payments, and how many repayments he forgave her at the time. [ 15 ] Mr. W.’s application is not framed as an application to retroactively adjust child support commensurate with his income, but simply to reduce or cancel arrears. I understand the basis of his application is one of “credit” – that he effectively paid child support and should be credited with the car payments against his child support debt.

Section 174 empowers the Court to reduce or cancel arears, as follows: 174

(1) On application, a court may reduce or cancel arrears owing under an agreement or order respecting child support or spousal support if satisfied that it would be grossly unfair not to reduce or cancel the arrears.

(2) For the purposes of this section, the court may consider (

a) the efforts of the person responsible for paying support to comply with the agreement or order respecting support, (

b) the reasons why the person responsible for paying support cannot pay the arrears owing, and (

c) any circumstances that the court considers relevant.

(3) If a court reduces arrears under this section, the court may order that interest does not accrue on the reduced arrears if satisfied that it would be grossly unfair not to make such an order.

(4) If a court cancels arrears under this section, the court may cancel interest that has accrued, under

section 11.1 of the Family Maintenance Enforcement Act , on the cancelled arrears if satisfied that it would be grossly unfair not to cancel the accrued interest. [ 16 ] In order to reduce or cancel arrears, Mr. W. must show the Court it would be grossly unfair or disproportionate not to do so. The onus lies on him. As I have found, there was no agreement to make the car payment in lieu of child support and Mr. W. was reimbursed for many of the payments he made. Mr. W. retained all the proceeds of the house sale.

There is no evidence he assumed a substantial family debt after separation which was not otherwise offset by the proceeds of the house sale. He paid no child support to Ms. W. in 2015 at a time he was earning a substantial annual income, nor did he pay any support in 2016. He provided no compelling evidence as to why he made no support payments in those years other than he was making car payments. He did not make child support payments after the car was sold and there were no more car payments to make. He has not established a material change in circumstances since the separation agreement was made.

He has not established that he is unable to pay arrears now or cannot pay into the future. He does not suffer from any impediment to work. In 2019 he earned around $104,958.76. [ 17 ] Mr. W. has failed to meet the onus upon him, and his application to reduce or cancel arrears on the basis of offsetting car payments is dismissed. [ 18 ] That being said, Mr. W.’s income dropped to $55,467 in 2016. It is because of that drop in income the parties entered into a consent order in April 2017 reducing child support to $504.

As is often the case, the child support award was calculated based on the payor’s prior year’s income, being 2016. However, in 2017 Mr. W.’s income went back up to $90,214. Ms. W. proposes the 2017 child support amount now be retroactively adjusted based on Mr. W.’s actual 2017 income without any regard or adjustment to the child support amount payable based on his 2016 income upon which the 2017 order was made. This would potentially produce the absurd result that despite earning only $55,000 in 2016, Mr.

W.’s child support obligation would be based on his 2015 income of $170,000. [ 19 ] In short, by strategically shifting between “prior year’s income” and “actual income” for the purposes of calculating 2017 child support, Mr. W. is deprived of the ability to pay child support based on his reduced 2016 income. In my view, that could lead to the accumulation of arrears in 2016 which may give rise to gross unfairness as contemplated in s. 174 of the Family Law Act. [ 20 ] If the April 2017 child support order is to be varied to increase child support payable based on Mr.

W.’s actual 2017 income as opposed to his prior year’s income, then Mr. W. ought to be able to correspondingly seek to vary his 2016 child support obligation to

reflect his actual 2016 income. However, Mr. W. has not expressly applied to make that retroactive variation under s. 152 of the FLA , he only applied to reduce or cancel arrears under s. 174. I have no evidence of Ms. W.’s 2016 income or the parenting arrangements between the parties in 2016, which, at some point, changed from a shared parenting arrangement governed by s. 9 of the Guidelines to one where A. primarily lived with Ms. W. Such evidence would be necessary for the Court to calculate and retroactively adjust Mr.

W.’s 2016 child support obligation. [ 21 ] Given the Court is retroactively changing the April 2017 child support order from a calculation based on prior year’s income to actual year, fairness dictates Mr. W. ought to be at liberty to apply to vary the quantum of child support payable in 2016 so that it is equally commensurate with that actual year’s income, not the prior year’s (2015) income. Such an application ought not to be barred by the three year rule set out in D.B.S. as it is Ms. W.’s application to retroactively vary the 2017 child support amount which makes it necessary for Mr.

W. to correspondingly apply to vary the 2016 child support amount. I grant leave to Mr. W. to apply to retroactively vary the amount of child support payable in the year 2016 based on his 2016 income. If he makes that application, I am seized of it. [ 22 ] As I do not know how much Mr. W. has paid towards any arrears of maintenance, I have not fixed arrears in these Reasons and leave such calculations to FMEP. Conclusion [ 23 ] I make the following findings and orders: 1. Mr.

W.’s application to reduce or cancel arrears of child support on the basis of “payments in lieu” of child support for the purchase and insurance of the vehicle in Ms. W.’s possession in 2015 and 2016 is dismissed. 2. Mr. W. is at liberty to apply to retroactively vary the quantum of child support payable in the Separation Agreement file June 2, 2015, for the year 2016 to reflect his actual 2016 income, and to reduce or cancel arrears arising from any such reduction of child support accordingly. Judge Malfair is seized of any such application. 3.

The child support awards set out in the Separation Agreement filed June 2, 2015, and Order of April 7, 2017, are varied as follows: a. For the year 2017, Mr. W. is found to be a resident of British Columbia with an annual income of $90,214. b. For the year 2018, Mr. W. is found to be a resident of British Columbia with an annual income of $79.932. c. Mr. W.’s obligation to pay child support prospectively is based on an imputed annual income of $104,958.76 for 2019. At the time of this hearing Mr. W.’s 2019 tax returns were not filed. For the year 2019, Mr.

W. is found to be a resident of British Columbia with an imputed annual income of $104,958.76. 4. Mr. W. shall pay the following monthly amounts to Ms. W. for the support of the child, A.A.W. born [omitted for publication], payable on the first day of each and every month: For the year 2017: $802 per month; and For the year 2018: $764 per month. 5. Commencing January 1, 2019, and continuing on the first day of every month thereafter, Mr. W. shall pay to Ms.

W. the sum of $988 per month for the support of the child, A.A.W. born [omitted for publication], until she is no longer eligible for support or until further court order. 6. Mr. W.’s obligation to pay child support commencing January 1, 2019, is based on an imputed annual income of $104,958.76 for 2019. Either party is at liberty to apply to vary the quantum of child support payable in 2019 based on Mr. W.’s actual income as disclosed in his income tax filings and Notices of Assessment for 2019. 7.

The hearing of this matter preceded the current Covid-19 pandemic which has affected the income and employment of many Canadians. Either party is at liberty to apply to vary the quantum of child support payable in 2020 and prospectively based on any material change of circumstances relating to their income. 8. Mr. W. shall provide Ms. W. a copy of his annual income tax return by no later than June 30 of each taxation year, commencing June 30, 2020. He shall provide annual Notices of Assessment within two weeks of receipt of same each taxation year. 9. Ms. W.’s counsel is to draft the order. Mr.

W.’s signature is dispensed with. The Honourable Judge C. Malfair Provincial Court of British Columbia