J.H.S. v. S.R.M. Date:, 2016 BCPC 58

Citation: J.H.S. v. S.R.M. Date: 20160225 2016 BCPC 0058 File No: 15521 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: J.H.S. APPLICANT AND: S.R.M., also known as S.R.A. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L.S. MARCHAND Counsel for the Applicant: Ms. Gillian Oliver

Counsel for the Respondent: Ms. Lorianna Bennett Place of Hearing: Kamloops , B.C. Date of Hearing: January 13 and January 15, 2016 Date of Judgment: February 25, 2016 INTRODUCTION [ 1 ] S.R.A. and J.H.S. lived together in a common law relationship in Coquitlam from approximately January 2010 to January 2012. They have one child together, A.I.S., who was born on [omitted for publication]. [ 2 ] S.R.A. married S.M. in August 2014 and is now known as S.R.M.

In the balance of these reasons, I will identify S.R.A./M. as S.R.M. even when referring to her at times before she was married to S.M. [ 3 ] S.R.M. and S.M. now live in Kamloops with their daughter, A.M., who was born on [omitted for publication], and A.I.S. S.R.M. has been unemployed since 2013 but plans to finish her biology degree and return to work afterwards. [ 4 ] J.H.S. now lives in Port Coquitlam with his girlfriend, A.S. J.H.S. is self-employed installing high-end home automation, home theatre and home audio-visual systems.

J.H.S. spends parenting time with A.I.S. in Kamloops one or two weekends per month. [ 5 ] In this application, S.R.M. seeks child support and special expenses dating back to the parties’ separation. J.H.S. disputes that he is liable for any retroactive child support and seeks a reduction in the $300 per month he is currently paying in child support.

J.H.S. acknowledges that he must pay his share of medical premiums, day care expenses and reasonable extra-curricular activities. [ 6 ] The parties’ dispute centres on how much J.H.S. has earned and how much J.H.S. has paid in child support since the parties separated. [ 7 ] J.H.S. says he has paid S.R.M. between $150 and $300 per month in child support since the parties separated.

From the date of separation until the parties saw a Family Justice Counsellor regarding parenting issues in June or July of 2013, J.H.S. says he paid S.R.M. in cash at her request so as not to affect income assistance benefits she was receiving during that time. Since the meeting with the Family Justice Counsellor, J.H.S. says the parties agreed that he pay $300 per month based on table child support of $450 less $150 to take into account the travel costs he was incurring to exercise his parenting time.

If true, this means that J.H.S. and S.R.M. based J.H.S.’s child support payments on an annual income of $49,100. J.H.S. says that he currently earns less than $20,000 per year. [ 8 ] S.R.M. says that J.H.S. paid no child support until after the meeting with the Family Justice Counsellor. S.R.M. believes that J.H.S. has earned much more than disclosed in his tax returns and the general ledger kept by his accountant for his business. S.R.M. says J.H.S. worked under the table for cash when they were together and he was employed in the same field.

S.R.M. suspects that J.H.S. continues to earn unreported income. [ 9 ] S.R.M. says J.H.S.’s lifestyle is not consistent with a person earning so little and does not accept that J.H.S. would give up employment income of over $50,000 per year to earn so little within his own business. S.R.M. submits that the court should impute an income of $70,000 to J.H.S. on the basis that he has not disclosed his true income, is intentionally under-employed, has diverted income and/or has made unreasonable deductions from his income. ISSUES [ 10 ] The issues are: 1.

What is the appropriate start date for child support and special expenses? 2. What are the parties’ incomes since that date? 3. What amounts has J.H.S. paid towards child support and special expenses? 4. What amounts should J.H.S. have paid in the past for child support and special expenses? 5. What amount, if any, is appropriate for J.H.S. to pay for retroactive child support and special expenses? 6. What amounts should J.H.S. pay in the future for child support and special expenses?

ANALYSIS Credibility and Reliability [ 11 ] Before turning to the substantive issues, I will provide some comments regarding the credibility and reliability of the testimony of S.R.M. and J.H.S. [ 12 ] The testimony of both S.R.M. and J.H.S. had many markers of credibility and reliability. Both S.R.M. and J.H.S. are bright and articulate, testified with apparent sincerity and showed emotion at times that was consistent with the topics being discussed. S.R.M.’s and J.H.S.’s testimony was mostly internally consistent and detailed.

Both S.R.M. and J.H.S. acknowledged information that was contrary to their interests and avoided several opportunities to speculate or embellish their testimony. S.R.M. impressed me with the care

she took in her record-keeping and J.H.S. with his explanation of the operation of his business and of his business’ general ledger. [ 13 ] Despite these positive aspects of their testimony, I had some concerns with the credibility and reliability of S.R.M.’s testimony and greater concerns with J.H.S.’s. [ 14 ] With respect to S.R.M., my concerns arise out of her dealings with the Ministry of Social Development and Social Innovation (the “Ministry”). When the parties separated in 2012, S.R.M. received income assistance.

In cross-examination, she testified that the Ministry told her she needed a Legal Aid lawyer to pursue child support which could be enforced through the Family Maintenance Enforcement Program.

She also testified in cross-examination that she did not know whether she signed over her rights to child support to the Ministry. [ 15 ] I have concerns about S.R.M.’s testimony for several reasons. [ 16 ] First of all, I am certain that the Ministry always asks income assistance recipients who have children for information about the other parent - because parents, not the Province, are primarily responsible for financially supporting their children.

I am also certain that the Ministry provides income assistance recipients with information about how they can assign their right to child support to the Province to pursue child support on their behalf. Given how bright she is, I am confident that S.R.M. understood all of the information provided to her. [ 17 ] Secondly, S.R.M. acknowledged contemplating defrauding the Province during a brief separation from J.H.S. in May 2011. At that time, S.R.M. emailed a proposal to J.H.S. by which she would receive income assistance from the Province and cash from J.H.S. to support herself and A.I.S.

In the email, she specifically indicated that the Ministry asked her about the father but she proposed to J.H.S. that she would “pretend” she did not know who the father was so the Ministry would not take $1,000 per month from him.

In cross- examination, S.R.M. acknowledged considering this course of action so that she could receive child support from J.H.S. without suffering a corresponding reduction in her income assistance benefits. (The Province’s policy of deducting child support payments from income assistance benefits changed in 2015 but was in place throughout the time that S.R.M. was on income assistance.) [ 18 ] Finally, unlike she had done in her direct testimony, in cross-examination, S.R.M. did not mention fear as her reason for not formally pursuing J.H.S. for child support much earlier. [ 19 ] Given S.R.M.’s apparent familiarity with the interaction between income assistance and child support payments, it is simply not believable that S.R.M. did not understand the importance of disclosing information about J.H.S. to the Ministry nor know whether she had assigned her right to child support to the Ministry.

On all of the evidence, it is clear that S.R.M. knew she had a choice to share information with the Ministry about J.H.S. and that she must have actively and intentionally chosen not to assign her rights to or otherwise seek the assistance of the Ministry in pursuing J.H.S. for child support. [ 20 ] With respect to J.H.S., my concerns centre on the utter implausibility of J.H.S.’s claimed expenses in relation to his claimed income. At this stage in my analysis, it is not necessary for me to detail all of my concerns.

To illustrate my concerns, I will simply make a few comments about J.H.S.’s claimed income and expenses in 2014 and 2015. [ 21 ] J.H.S.’s 2014 income tax return discloses line 150 total income of $17,580, which is slightly less than $1,500 per month. Against this very modest income, J.H.S. claims to have paid $300 per month in child support and spent $600 per month to travel to Kamloops to exercise his parenting time. J.H.S.’s 2014 income tax return also indicates that he contributed $2,363 (or almost $200 per month) to his RRSP and paid $697 (or almost $60 per month) into the Canada Pension Plan.

J.H.S. also claims to have paid $25 to $50 per month into an RESP for A.I.S. These expenses amount to approximately $1,200 per month without considering such basic living expenses as rent, food and utilities. [ 22 ] The situation in 2015 is even more telling. J.H.S. claims to have done a little better, perhaps 10% better, in his business. With the exception of his RRSP contributions and his rent, J.H.S. claims that his other expenses have largely remained the same. With respect to RRSPs, J.H.S. says he has reduced his contributions to between $25 and $50 per month.

With respect to rent, J.H.S. and A.S. purchased a town home together in Port Coquitlam in the spring of 2015 for $399,900.

J.H.S. says that the mortgage, strata fees and property taxes exceed $2,000 per month and that he is responsible for paying half. [ 23 ] This means that on estimated annual earnings in 2015 of just over $19,300 (or just over $1,600 per month), J.H.S. claims to have paid $300 per month in child support, $600 per month to exercise his parenting time, $50 to $100 per month in RRSP and RESP contributions, what must now be more than $60 per month to the Canada Pension Plan and over $1,000 per month towards his mortgage, strata fees and property taxes.

This would have left J.H.S. at least $400 per month short before taking into account his food, utilities and other basic living expenses. [ 24 ] J.H.S.’s explanation that he is going into debt every month and that A.S. helps him meet his financial obligations is simply not believable. J.H.S. is a fairly recently discharged bankrupt who is not likely able to borrow money to cover his expenses and, in any event, J.H.S. has not provided any objective evidence about where the money comes from to cover his ever mounting debt.

With respect to A.S., by all accounts she has a good career and is on very sound financial footing. That being the case, I simply do not believe J.H.S.’s testimony that he and A.S. do not share any financial information with each other but she regularly covers his very substantial monthly shortfall.

For these reasons, I also do not believe that J.H.S. has accurately disclosed his true earnings in these proceedings. [ 25 ] All of this leaves me in the unenviable position of not knowing what to believe whenever there is a conflict in the testimony of S.R.M. and J.H.S. and no objective evidence to assist me in determining who is telling the truth. This is a case where I must rely heavily on objective evidence. Start Date for Child Support and Special Expenses [ 26 ]

Section 150 of the Family Law Act empowers courts in British Columbia to make child support orders and requires that child support be determined in accordance with the Child Support Guidelines (the “ Guidelines ”).

Section 150 does not restrict the start date

for original child support orders and courts are implicitly empowered to make such orders retroactive. ( See Brown v. Kucher , 2015 BCSC 1258 at paragraph 23 .) [ 27 ] D.B.S. v. S.R.G. , 2006 SCC 37 remains the leading case on retroactive child support. ( See Brown at paragraph 24 .) In D.B.S. , the Supreme Court of Canada emphasizes the obligation on both parents to ensure their children are receiving an appropriate amount of child support and directs courts to take a holistic view to decide each case on its particular facts.

The Court identifies four factors to assist trial courts in balancing the payor parent’s interest in certainty and predictability with the need for flexibility and fairness to children.

The four factors are: 1. the reason for any delay in the recipient parent seeking child support; 2. the conduct of the payor parent; 3. the past and present needs of the child, including the child’s needs at the time support should have been paid; and 4. whether an award of retroactive child support may entail undue hardship. ( See D.B.S. at paragraphs 94 to 116 .) [ 28 ] After weighing these and any other relevant factors, if the court determines that a retroactive award of child support is warranted, the start date will generally be the date the recipient parent gave effective notice to the payor parent.

All this requires is that the recipient parent broach the topic of child support with the payor parent. Choosing the date of effective notice is fair to the payor (who knows the recipient will be looking to him or her for child support) and does not penalize a recipient parent who attempts to resolve child support informally (thus avoiding litigation that could be hostile, costly and, therefore, adverse to the child’s interests). In cases of payor misconduct, the start date may be earlier so as not to permit the payor to profit from his or her misconduct.

In cases of unreasonable delay by the recipient, the period of unreasonable delay may be excluded from an award. ( See D.B.S . at paragraphs 118 to 125 and 130 .) [ 29 ] I will next analyse the four factors set out in D.B.S. before reaching a conclusion on an appropriate start date for child support and then special expenses. Factor 1: the reason for any delay in the recipient parent seeking child support [ 30 ] After the parties separated, S.R.M. moved to Grand Forks to live with her mother and step-father. S.R.M. stayed in Grand Forks until approximately March of 2013 when she moved to Kamloops to be with S.M.

Based on income assistance benefits of $950 per month, S.R.M.’s income tax returns show that she collected income assistance from January 2012 until the end of July 2013. S.R.M. says that she asked J.H.S. to pay child support essentially immediately after they separated but that J.H.S. began paying child support only after the two of them saw the Family Justice Counsellor in June or July of 2013. S.R.M. says the Family Justice Counsellor informed J.H.S. that he needed to start paying child support immediately.

S.R.M. acknowledges receiving child support almost every month beginning in August 2013, initially in the amount of $150 per month but fairly quickly increasing to $300 per month. [ 31 ] S.R.M. says that J.H.S. did not provide any financial disclosure to her until he filed his first Financial Statement in January 2015. S.R.M. says that J.H.S. set his child support payments unilaterally and that she did not agree to the amounts he chose to pay. [ 32 ] S.R.M. did not formally pursue child support until she filed her Reply to J.H.S.’s application for guardianship, parental responsibilities and parenting time.

J.H.S. filed his application on July 31, 2014 and S.R.M. filed her Reply on September 25, 2014. In direct-examination, S.R.M. testified that she did not pursue child support sooner because she was fearful of J.H.S. S.R.M. testified that, at the time they separated, J.H.S. assaulted her and subsequently threatened that he would take A.I.S. away from her if she pursued him for child support.

S.R.M. testified that, as she was on income assistance, she did not know how she could hire a lawyer and she believed J.H.S. would follow through on his threats. [ 33 ] S.R.M.’s direct testimony on this point does not sit comfortably with the email she sent J.H.S. in May 2011 and the fact that, during her cross-examination, she did not identify fear as the reason she did not pursue J.H.S. for child support while she was on income assistance. Her direct testimony was also not consistent with her testimony in cross-examination that the Ministry had told her to get a Legal Aid lawyer to pursue child support.

In other words, contrary to her direct testimony, because she was on income assistance, S.R.M. was made aware that she did, in fact, have a means of hiring a lawyer. Further, S.R.M.’s asserted fearfulness of J.H.S. is not supported by any objective evidence and is not consistent with her voluntary attendance at the Family Justice Centre with J.H.S. in June or July of 2013. [ 34 ] J.H.S. denies assaulting or threatening S.R.M. and says that he paid S.R.M. varying amounts of child support in cash from the time the couple separated until August 2013.

J.H.S. did not keep records of these payments but says he paid cash at S.R.M.’s request so that no income would be deducted from her income assistance benefits, consistent with the proposal S.R.M. had made in May 2011. [ 35 ] It is hard for me to know whether J.H.S. did or did not pay child support to S.R.M. in cash from the date they separated until August 2013. It is also hard for me to know whether J.H.S. and S.R.M. agreed on child support of $300 per month following the meeting with the Family Justice Counsellor.

What is indisputable, however, is that S.R.M.: 1. was aware of her right to pursue J.H.S. for child support as soon as they separated; 2. was made aware that she had access to a Legal Aid lawyer; 3. was living with her parents or S.M. a good distance away from J.H.S.; 4. did not provide any objective evidence in support of her asserted fearfulness of J.H.S.; and

5. ultimately attended the Family Justice Centre with J.H.S. [ 36 ] For these reasons, I conclude that S.R.M. did not have a good reason for failing to pursue child support from J.H.S. much sooner. Factor 2: the conduct of the payor parent [ 37 ] In D.B.S. at paragraphs 105 to 109 , the Supreme Court of Canada emphasizes the need for courts to take an “expansive view” of what amounts to blameworthy conduct in the context of determining whether to make an award of retroactive child support.

In the Court’s view, blameworthy conduct includes payor parents putting their interests ahead of their children’s, hiding increases in their income so as to avoid higher child support payments, intimidating recipient parents from pursuing child support and misleading recipient parents into believing child support obligations are being met. [ 38 ] The proper functioning of the child support system in Canada is based on full, frank and timely disclosure of financial information. In this case, J.H.S. has been highly secretive about his earnings.

He did not provide any financial disclosure to S.R.M. until January 2015 and did not provide his general ledger for 2014 until the day the hearing commenced. Further, as set out above, I do not believe that he has accurately disclosed his true earnings.

All of this being the case, I have no hesitation in saying that J.H.S. has engaged in blameworthy conduct through his lack of full, frank and timely financial disclosure to S.R.M. [ 39 ] In addition, if true that he paid cash to S.R.M. while she was on income assistance, J.H.S. has participated in defrauding British Columbia’s income assistance program, which is also based on honesty and integrity.

Any “cheating” to secure an inappropriate benefit is a very serious matter as each dollar paid out to a “cheater” is one less dollar available for a needy person or important program or one more dollar of debt for the Province to carry. [ 40 ] As I have said, I really do not know whether J.H.S. paid cash to S.R.M. while she was on income assistance. Either way, he engaged in blameworthy conduct. If he paid cash to S.R.M. while she was on income assistance, he participated in a fraud on the Province. If he did not, he did not meet his parental obligation to financially support his child.

Factor 3: the past and present needs of the child [ 41 ] In D.B.S. at paragraphs 110 to 113 , the Supreme Court of Canada holds that trial courts should consider both the past and the present circumstances of the child in determining whether to make a retroactive award of child support.

In this way courts can compensate children who experienced hardship as a result of a past failure to pay child support while recognizing that the argument for a retroactive award will be “less convincing” for a child who has enjoyed the same standard of living as when the parents were together or who is otherwise enjoying a relatively high standard of living. [ 42 ] The parties did not spend much time testifying about A.I.S.’s past and present needs but the evidence satisfies me that she is very active in a wide range of activities.

I have no reason to think A.I.S. is anything but a happy, healthy and well-adjusted child with no special needs of any kind. [ 43 ] S.R.M. testified with emotion when describing the period of time when she was receiving income assistance. I have no doubt that it was very hard for S.R.M. to support herself and A.I.S. during this time, whether she was or was not receiving child support from J.H.S. I also have no doubt that, with the support of her family and, later, S.M., S.R.M. has done a very good job of meeting A.I.S.’s needs.

I also conclude that whatever child support J.H.S. has paid since the parties separated has been helpful. [ 44 ] Again, I do not know whether J.H.S. did or did not pay child support to S.R.M. while she was on income assistance. If he did not, he did not meet his obligations as a parent but, in the circumstances of this case, such a failure would not have made any difference to A.I.S. During the time that S.R.M. was receiving income assistance, any “above board” child support paid by J.H.S. would have been deducted from the income assistance benefits S.R.M. was receiving.

Factor 4: undue hardship [ 45 ] Even in cases such as this where J.H.S. is not attempting to reduce his child support obligations by claiming undue hardship under s. 10 of the Guidelines , at paragraphs 114 to 116 of D.B.S. , the Supreme Court of Canada holds that a “broad consideration of hardship” is still appropriate in determining whether to make an award of retroactive child support.

The Court goes on to hold that retroactive awards should be crafted to minimize hardship while noting that hardship is less of a concern when the hardship is the product of the payor parent’s blameworthy conduct. [ 46 ] At the time of separation, S.R.M. and J.H.S. were renting a basement suite together. Since that time, both have entered new relationships and, together with their partners, have taken on significant financial obligations through the purchase of homes.

Any award of retroactive child support would be helpful to S.R.M. but would make it difficult for J.H.S. to meet his increased financial obligations. Conclusion on Start Date for Child Support [ 47 ] Several factors weigh against the making of a retroactive child support order: 1.

S.R.M. does not have a good reason to explain her delay in formally pursuing child support from J.H.S.; 2. during the time S.R.M. was on income assistance any “above board” child support paid by J.H.S. to S.R.M. would have made no difference to S.R.M.’s ability to meet A.I.S.’s needs; and 3. a retroactive award will be difficult for J.H.S. [ 48 ] All of that said, J.H.S.’s failure to make full, frank and timely disclosure of his true financial situation amounts to very serious

misconduct. He put his interests ahead of A.I.S.’s and is the person primarily responsible for any hardship which may arise for him by the making of a retroactive award of child support. [ 49 ] In all of the circumstances, in my view it is appropriate to make a retroactive award of child support. As directed by the Supreme Court of Canada, the usual start date is the date that S.R.M. gave effective notice to J.H.S. There is no real dispute in this case that this is the date of separation. In my view, however, fairness dictates a different start date.

Taking into account S.R.M.’s unreasonable delay, the fact that any “above board” child support would not have made any difference to A.I.S. during the time S.R.M. was on income assistance and the difficulty J.H.S. will undoubtedly experience with any award of retroactive child support, in my view, the appropriate start date is August 1, 2013. This is the date when S.R.M. was no longer receiving income assistance and when J.H.S. and S.R.M. began dealing with child support with some level of transparency.

Start Date for Special Expenses [ 50 ] In my view, and for the same reasons, the same start date should be used for S.R.M.’s claim for retroactive special expenses, namely August 1, 2013. [ 51 ] This start date will have a minimal effect on S.R.M.’s overall claim as S.R.M. has only advanced one special expense claim which pre-dates August 1, 2013. This $276.88 special expense claim relates to emergency hospital medical services A.I.S. received on September 6, 2012 in Washington State.

This claim should be excluded in any event because S.R.M. is the person who decided to take A.I.S. to Washington State without having appropriate medical coverage in place and, in my view, J.H.S. should not be held responsible for the expense. The Parties’ Incomes Since August 1, 2013 Calculation of Annual Income Under the Guidelines [ 52 ]

Section 15 of the Guidelines dictates that the parties’ annual incomes are to be determined in accordance with sections 16 to 20 of the Guidelines . Of relevance to this case, these sections provide, in part, as follows: Calculation of annual income 16. Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. … Imputing income 19

(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: (

a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse; … (

d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; … (

f) the spouse has failed to provide income information when under a legal obligation to do so; (

g) the spouse unreasonably deducts expenses from income; … Reasonableness of expenses

(2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act . [ 53 ] Counsel for both parties referred to a number of authorities on the imputation of income which I found to be quite helpful. [ 54 ] In Marquez v. Zapiola , 2013 BCCA 433 , our Court of Appeal dealt with the court’s discretion to impute income and the onus of proving that income ought to be imputed.

At paragraph 36, the Court held: For the purposes of both child and spousal support, there is a broad judicial discretion to impute income to either or both spouses.

However, the party seeking to have income imputed to the other spouse has the burden of establishing an evidentiary basis for such a finding. [ 55 ] Though the party seeking to have income imputed has the onus of proving that ought to be done, self-employed parties also bear certain burdens, including the burden to make full, frank and timely financial disclosure, the burden to fully explain business income and expenses and the burden to explain lifestyles which do not match the self-employed parties’ financial disclosure. In Bodine-Shah v.

Shah , 2014 BCCA 191 , our Court of Appeal found that the trial judge had an evidentiary basis for imputing income to the self-employed father. At paragraphs 61 and 62, the Court explained: [61] … I am satisfied there was an evidentiary basis upon which the judge could impute an income to the appellant in an amount that was substantially higher than that contended by the appellant at trial.

This evidentiary basis includes the lack of financial disclosure, the inadequacy and unreliability of the appellant’s explanation for the significant difference between his pre- and post-separation return on gross revenue, the inability of the accountant to explain the appellant’s business expenses, and the appellant’s post-separation lifestyle and payment of expenses of his girlfriend’s company. [62] This Court has forewarned litigants of the potential, for those who fail or refuse to make full and frank disclosure of their financial circumstances, of having adverse or negative inferences drawn against them with attendant consequences that may include the imputation of income (see: … Moytka v.

Moytka , 2001 BCCA 18 at para. 16 , 83 B.C.L.R. (3d) 339, in which the payor’s failure to make full financial disclosure resulted in imputation of income based on his lifestyle, monthly expenses, and income during the marriage). [ 56 ] In this case, the primary issue is how much income J.H.S. has earned over the years. S.R.M. bears the onus of establishing an evidentiary basis for me to impute income to J.H.S. while J.H.S. bears the onus of explaining his business expenses and how he meets his claimed expenses on the marginal income he has disclosed.

S.R.M.’s Income [ 57 ] S.R.M.’s income is relevant to my apportionment of special expenses, including retroactive special expenses. As her earnings history is not complicated, I will make income findings for S.R.M. before turning to the more challenging income findings I must make regarding J.H.S. [ 58 ] Since the parties separated, S.R.M. has earned very limited income. In 2013, S.R.M.’s income tax return discloses that she earned total income of $11,020, comprised of $4,401 in employment income and $6,619 in income assistance benefits. In 2014, S.R.M. only worked one day earning $53.

S.R.M. has not worked since. [ 59 ] The parties did not spend much trial time on S.R.M.’s earnings. From the evidence, it is clear that S.R.M. worked as an early childhood educator at a day care for several months in 2013 and one day in 2014. It is also clear that S.R.M. took one 32 week on-line course through the Open Learning Agency (”OLA”) in 2014 and 2015 which was directed towards helping her complete her biology degree. S.R.M.’s long term plan is to complete her degree and obtain work in her field of study.

In the shorter term, she testified that she would be enrolling in further courses through the OLA starting after the trial in January 2016. She also testified that, even though A.M. is exclusively breast-feeding right now, she has applied for a part time visual merchandising position. I took from S.R.M.’s testimony that she intends to look for more full-time work in about a year once A.M. is older. [ 60 ] In this case, S.R.M. offered essentially no explanation for why she worked only one day in 2014. There is no evidence she was unable to work to meet A.I.S.’s needs.

In terms of S.R.M.’s educational needs, all I know is that for an undefined part of 2014, she took an on-line course and chose to do her course work on Tuesday and Thursday mornings. Given her obvious talents, I can think of no reason that S.R.M. could not have worked close to full-time hours in 2014 in a job paying somewhat more than minimum wage. In 2014, I find that S.R.M. chose to be unemployed for personal reasons and, under s. 19(1)(

a) of the Guidelines , I impute income to S.R.M. in the amount of $24,000. [ 61 ] In 2015, S.R.M. explained that, although she was able to complete her on-line course, she had a difficult pregnancy with A.M., was on bed rest and was, therefore, unable to work. The details of S.R.M.’s struggles in 2015 were not explored by counsel for either party which I take to indicate that S.R.M.’s testimony was not controversial. I, therefore, impute no income to S.R.M. in 2015. [ 62 ] Looking forward, it is perfectly reasonable for S.R.M. not to return to work until A.M. turns one.

While S.R.M. may prefer to have additional time at home with both A.I.S. and A.M., there is no evidence before me suggesting that either child has any special needs which would warrant S.R.M. taking additional time off work. As well, S.R.M.’s educational plans appear to involve continued very part-time on-line studies. Commencing August 1, 2016, I am confident that S.R.M. can earn $24,000 per year working a little less than full-time hours at somewhat more than minimum wage.

In 2016, this would translate to full year income of approximately $10,000 and that is the income I impute to S.R.M. in 2016. [ 63 ] I realize that if S.R.M. had chosen to work in 2014, she would have had much higher child support costs. I will take this into account when dealing with S.R.M.’s claim for retroactive special expenses.

J.H.S.’s Income [ 64 ] Given my finding that J.H.S. has not accurately disclosed his true income and S.R.M.’s submissions on how I should impute income to J.H.S., I must look back at J.H.S.’s reported income prior to August 2013. [ 65 ] J.H.S.’s 2011 income tax return (“ITR”) indicates that J.H.S.’s line 150 total income that year was $25,722. This total was comprised mostly of $9,557 in net business income and $16,089 in worker’s compensation benefits. J.H.S.’s net business income was reported to have been earned on gross business income of $42,429. S.R.M. and J.H.S. lived together during most of 2011.

By all accounts, they lived modestly. [ 66 ] In 2012, J.H.S.’s ITR indicates that he earned line 150 total income of $51,724 comprised almost entirely of employment income. Throughout 2012, J.H.S. worked for [omitted for publication] doing the same type of work he does now. [ 67 ] In 2013, J.H.S.’s ITR indicates that he earned line 150 total income of $59,654 which was comprised of $30,425 in employment income from [omitted for publication] and $29,330 in worker’s compensation benefits.

J.H.S.’s ITR also discloses that he earned no net income on gross business income of $12,059 and had an “other employment expense” deduction of $5,300. J.H.S. explained that he was injured in a motor vehicle accident on his way back from a job site in Whistler and that he received worker’s compensation benefits and

also worked off and on for [omitted for publication] during his recovery. Ultimately, J.H.S. says that [omitted for publication] required him to do work contrary to his doctor’s orders which set him back. This caused him to leave [omitted for publication]’s employment and start the business which he continues to operate. [ 68 ] In 2014, J.H.S.’s ITR indicates that he earned line 150 total income of $17,580 on gross business income of $84,249. This reported income was well supported by a general ledger prepared by J.H.S.’s accountant.

The general ledger lists J.H.S.’s business expenses which include $57,202 for materials, $4,838 for auto and truck expense, $4,503 for repairs and maintenance, $1,982 for work van insurance, $426 for home insurance, $782 for BC Hydro, $480 for Fortis and $10,200 for rental of “office and shop at home”. Also recorded are credits for the personal portion of some of the recorded expenses, including $9,824 regarding J.H.S.’s home office which appears to represent an apportionment of over 82% of the utility, home insurance and “office and shop at home” rental expenses.

The Schedules supporting J.H.S.’s 2014 ITR show that not all of the motor vehicle-related business expenses recorded on his business ledger were deductible for income tax purposes. [ 69 ] I turn now to S.R.M.’s submissions that I should impute income to J.H.S. on the basis that he is intentionally under-employed, has diverted income, has not disclosed his true income, and/or has made unreasonable deductions from his income as contemplated by sections 19(1)(a), (d), (

f) and (

g) of the Guidelines respectively. I will deal with each of these submissions in turn. [ 70 ] S.R.M.’s submission that J.H.S. is intentionally under-employed is straightforward. Her submission is that no person with reported income of over $50,000 in 2012 and 2013 would give that up to earn less than $20,000 per year through self-employment. [ 71 ] In response, J.H.S. relies on S.M.K. v. R.K. , 2014 BCSC 2216 in support of his submission that his current employment situation is reasonable. In that case, at paragraph 73, Mr. Justice G.P.

Weatherill held as follows: In order to determine the reasonableness of respondent’s current unemployment, I must consider his realistic capacity to earn income and his present income earning situation (cite omitted). It must be remembered that there are two aspects to a person’s capacity to earn income - firstly, his age, education, experience, skills and health; and secondly, the realistic job opportunities that are available to him. [ 72 ] J.H.S. is 36.

He says he had to leave his employment because of his employer’s unwillingness to modify his work duties to accommodate his workplace injuries and that he is building his business with hopes to earn more in the future. J.H.S. also says that he does not have any meaningful post-secondary education. J.H.S. did not testify regarding work opportunities that are available to him in his specialized field. [ 73 ] In answering questions I posed to him, J.H.S. testified that he works between three and five days per week and up to ten hours per day discharging the same duties as when he was employed in the same field.

J.H.S. testified that his work

schedule depends on the number of jobs he has. He did not mention his workplace injuries as a factor that limits his work. That said, J.H.S. also testified about an upcoming medical assessment that could result in surgery or cortisone injections to alleviate ongoing symptoms related to his workplace injuries. [ 74 ] Given his history of receiving worker’s compensation benefits, including a lump sum payment for a permanent partial disability, I accept J.H.S.’s testimony that his workplace injuries have diminished his capacity to earn income to some extent.

Nevertheless, on his own testimony, J.H.S. appears able to work full-time or close to full-time hours in his field. [ 75 ] In terms of building his business, J.H.S. estimates that his income will be approximately ten per cent higher in 2015 and again in 2016. At this rate it would take over ten years for J.H.S. to get back to earning over $50,000 per year. [ 76 ] Though J.H.S. did not testify regarding work opportunities that are available to him, I have no reason to think that his specialized skill set is not in demand.

J.H.S. has an obvious passion for his work, has found quite a bit of work starting out on his own and operates in one of the hottest housing markets in Canada. [ 77 ] With his ability to work full-time or close to full-time hours, the demand for his specialized skill set and the length of time it would take him to return to making over $50,000, I conclude that, if J.H.S. is truly earning less than $20,000 per year, he is intentionally under-employed. [ 78 ] Turning next to S.R.M.’s submission that J.H.S. is diverting income, no evidence was led on this topic.

S.R.M. has not discharged her burden of establishing an evidentiary basis for me to impute income to J.H.S. on this basis. [ 79 ] For the reasons set out in my analysis of J.H.S.’s credibility and reliability, S.R.M.’s submission that J.H.S. has substantially understated his true income has significant merit. As was the case regarding the payor parents in the Bodine-Shaw and Motyka cases, J.H.S.’s lifestyle and expenses simply do not match his reported income.

I will look more closely at J.H.S.’s lifestyle and expenses when I turn to calculating an imputed income for J.H.S. [ 80 ] Finally, with respect to S.R.M.’s submission that J.H.S. has unreasonably deducted expenses from his income, this may be true but is not the heart of the case. By far, J.H.S.’s greatest deduction from his 2014 reported business income is the $57,202 expense for materials. These expenses were well explained by J.H.S. and do not raise serious suspicions.

Deducting the materials expense from J.H.S.’s gross income of $84,249, leaves a little over $27,000 which is only $9,500 or so more than his claimed income. Given that S.R.M. did not dispute the validity of J.H.S.’s claimed business expenses for income tax purposes, only a small fraction of his business expenses might be of personal benefit to J.H.S. - certainly not enough to explain his expenses and lifestyle in relation to his claimed income. [ 81 ] At the end of the day, there are two factors in s. 19 of the Guidelines that drive the outcome.

Either J.H.S. is intentionally under-employed or he has not disclosed his true income. [ 82 ] There are several ways for me to consider imputing income to J.H.S. I can consider his past earnings, his usual hours worked at his usual hourly rate less some deductions or his expenses and lifestyle.

[ 83 ] Regarding his past earnings, as stated above, J.H.S.’s line 150 total income in 2012 was $51,724 and in 2013 was $59,654. On top of this, S.R.M. believes J.H.S. earned unreported income. In support of her belief, S.R.M. says that, when they were together, J.H.S. kept cash in a brown box in their bedroom which he used to pay for groceries, gas, restaurant meals and other day to day expenses. S.R.M. believes this cash was unreported income.

S.R.M. offered no details regarding how much cash J.H.S. earned that was unreported when they were together and could only speculate regarding any unreported income J.H.S. has earned since they separated. [ 84 ] My own view is that it would have been hard for J.H.S. to earn much unreported income while working full-time or injured. This conclusion is supported by S.R.M.’s acknowledgement that the parties lived modestly when they were together. [ 85 ] That being the case, in my view, J.H.S.’s reported total earnings in 2013 and 2014 can be used to reasonably estimate what he could and should be earning now.

Given his somewhat diminished work capacity, J.H.S.’s past earnings support imputing income to J.H.S. in the range of $50,000. [ 86 ] Next, I will look at J.H.S.’s own estimate of his usual hours worked at his usual hourly rate less some expenses to impute income to him. [ 87 ] J.H.S. testified that he works three to five days per week, from four to ten hours per day at rate of between $25 and $50 per hour. He estimated that he averages between three and three and a half days of work per week at eight hours per day.

Taking an average of 3.25 hours per day, at an average rate of $37.50 per hour for 49 weeks per year results in annual earnings of $47,775. Though some legitimate business expenses would have to be deducted, J.H.S.’s earnings net of expenses would then have to be grossed-up to arrive at an equivalent pre-tax amount for purposes of applying the Guidelines . Though I did not have the benefit of expert evidence on the point, in my view, I would be in the ballpark by considering the expenses and tax gross-up to offset each other.

In other words, looking at J.H.S.’s own estimate of his annual earnings results in an imputed income of approximately $48,000. [ 88 ] Finally, I will look at J.H.S.’s lifestyle and expenses. [ 89 ] In the Financial Statement that J.H.S. filed on January 13, 2016, he claims total annual expenses of $26,916, excluding child support and most of the costs associated with the exercise of parenting time. (J.H.S.’s claimed expenses include $1,200 for children’s entertainment and recreation which he also included in his estimate of the $600 per month cost of exercising his parenting time.

In fairness, these costs should only be counted once. This means that $100 per month must be deducted from J.H.S.’s claimed costs of exercising his parenting time which brings his parenting time cost to $500 per month or $6,000 per year.) [ 90 ] In addition, in recent years, J.H.S. has vacationed in Africa (2014), Cuba (2015), Tofino (every other year) and the interior of British Columbia at Shuswap Lake. J.H.S. also attends two or three concerts each year.

J.H.S. says that the cost of his Africa trip was borne by A.S.’s employer, that A.S.’s air miles were used to pay for the all-inclusive trip to Cuba, that the trips to Tofino involve camping and that his Shuswap Lake holiday was taken at a time-share owned by his family.

Given my overall concerns with J.H.S.’s credibility and reliability, it is hard for me to reconcile J.H.S.’s recent vacations and other entertainment experiences with his claimed annual expense of $1,200 for entertainment and recreation. [ 91 ] Adding all of this up, J.H.S. claims to have annual living expenses of approximately $27,000, annual child support expenses of $3,600 and additional annual parenting time expenses of $6,000 for a total of $36,600. To this, I would add an additional amount for entertainment and recreation. J.H.S. carries these expenses while paying essentially no income tax.

Grossing his living expenses up to determine an appropriate amount for Guidelines purposes would, in my view, result in an imputed income of plus-or-minus $45,000. If I accept that A.S. helps J.H.S. make ends meet, this method of imputing income to J.H.S. would result in an annual income of no less than $40,000. Given my concerns regarding the credibility and reliability of J.H.S.’s claimed earnings, I consider this number to mark the very bottom of the range for imputing income to J.H.S. [ 92 ] Based on all of the above, I am comfortable imputing an annual income of $48,000 to J.H.S. starting in 2014.

For what it is worth, this is essentially the annual income of $49,100 that J.H.S. says he and S.R.M. agreed to in August 2013. J.H.S.’s Payments Towards Child Support and Special Expenses [ 93 ] J.H.S.’s payments of child support and special expenses since August 1, 2013 are not controversial. S.R.M.’s records show that J.H.S. paid child support of $1,000 in 2013, $3,300 in 2014 and $3,300 in 2015 for a total of $7,600 since August 1, 2013. S.R.M.’s records also show that J.H.S. has contributed $30 towards the cost of one EpiPen for A.I.S. during this time.

Assessment of Retroactive Child Support and Special Expenses [ 94 ] I will now assess J.H.S.’s liability to pay retroactive child support and special expenses to December 31, 2015. I will deal with child support first and then special expenses.

Retroactive Child Support [ 95 ] If J.H.S. paid child support based on his actual income in 2013 ($59,654) and on the income I have imputed to him in 2014 and 2015 ($48,000), he would have paid child support of $553 per month in 2013 and $439 per month in 2014 and 2015. [ 96 ] Commencing on August 1, 2013, this means that J.H.S. would have paid $2,765 in 2013 and $5,268 in each of 2014 and 2015 for a total of $13,301. Given his actual payments of $7,600, the shortfall is $5,701.

Having already taken the “hardship” of an award of retroactive child support on J.H.S. into account in setting the start date for child support, I see no reason to exercise my discretion to further reduce the arrears of retroactive child support that have accumulated since August 1, 2013. Retroactive Special Expenses [ 97 ] Of relevance to S.R.M.’s claim for retroactive special expenses, s. 7 of the Guidelines provides, in part, as follows:

Special or extraordinary expenses 7

(1) In a child support order the court may, on either spouse’s request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, 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: (

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

c) health-related expenses that exceed insurance reimbursement by at least $100 annually… … (

f) extraordinary expenses for extracurricular activities. Definition of “extraordinary expenses”

(1.1) For the purposes of paragraphs (1) … (f), the term extraordinary expenses means (

a) expenses that exceed those that the spouse requesting an amount for the extraordinary expenses can reasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable table … ; or (

b) where paragraph (

a) is not applicable, expenses that the court considers are extraordinary taking into account (

i) the amount of the expense in relation to the income of the spouse requesting the amount, including the amount that the spouse would receive under the applicable table … , (ii) the nature and number of the educational programs and extracurricular activities, (iii) any special needs and talents of the child or children, (iv) the overall cost of the programs and activities, and (

v) any other similar factor that the court considers relevant. Sharing of expense

(2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.

Subsidies, tax deductions, etc. (3) … [I]n determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense. [ 98 ] Based on my earlier income findings and applying the “guiding principle” of sharing special expenses in proportion to the parties’ incomes, J.H.S. is responsible for 84% of any eligible special expenses in 2013, 67% of any eligible special expenses in 2014 and 100% of any eligible special expenses in 2015. [ 99 ] The claimed special expenses in 2013 are $82.80 for soccer and swimming fees and $552.50 for day care. [ 100 ] Dealing first with the extracurricular activities, it appears that the soccer expense and most of the swimming expense predates the start date I have determined for retroactive expenses.

Given the very modest amounts at issue and the fact that they mostly relate to the time period prior to the start date I have determined for retroactive expenses, I make no award for retroactive extracurricular activities in 2013. [ 101 ] Regarding the day care expenses, these were very clearly incurred to allow S.R.M. to work outside the home and are the amount she actually paid net of any subsidies.

At his 84% share, J.H.S.’s portion of the 2013 day care expense is $464.10. [ 102 ] I will deal with the claim for retroactive special expenses in 2014 and 2015 together. [ 103 ] The claimed special expenses in 2014 are $1,127.95 for swimming, art lessons, gymnastics and ballet and $1,000 for day care. The claimed special expenses in 2015 are $1,887.78 for soccer, t-ball, swimming, skating, art lessons, gymnastics and ballet and $1,565 for day care.

I accept S.R.M.’s testimony that she was not eligible for any day care subsidies in 2014 and 2015. [ 104 ] Dealing first with the extracurricular activities, I accept that S.R.M. generally informed J.H.S. of A.I.S.’s extracurricular activities and asked him to contribute. I also accept that J.H.S. generally responded that he could not afford to contribute. Finally, I accept that S.R.M. then unilaterally decided to proceed without any contribution from J.H.S. [ 105 ] A.I.S. only turned four on October 23, 2014 and five on October 23, 2015.

While I am sure these activities were very good for A.I.S., I cannot conclude that they were all “necessary” nor that they were tailored to any special talents displayed by A.I.S. Given the

retroactive child support I have awarded, I also cannot conclude that J.H.S. should pay two thirds of these costs in 2014 and all of these costs in 2015. J.H.S. has submitted that he ought to pay $40 per month for extracurricular activities going forward. This seems like a reasonable amount for 2014 and 2015 as well.

I, therefore, award S.R.M. $480 for retroactive extracurricular activities in each of 2014 and 2015. [ 106 ] Regarding the 2015 health-related expenses, these do not exceed $100 and I am, therefore, unable to order that J.H.S. contribute to these expenses. [ 107 ] Turning to the day care expenses, the receipts indicate that these run from August 18 to December 31 in 2014 and from January 1 to June 30 in 2015 at a rate of $225 per month. J.H.S. correctly points out that in 2014 and 2015, S.R.M. completed her OLA course in 32 weeks and submits that S.R.M.’s studies were not linked to any clear employment plan.

I accept that S.R.M.’s pursuit of a degree in science is ultimately “for employment” but agree that her day care claim must be limited to the 32 weeks during which she was actually taking her on-line course. Without knowing the exact dates that S.R.M. was taking her on-line course, I can only do my best to award what I think is a fair amount for retroactive day care expenses in 2014 and 2015. I set this amount at $1,500 collectively for these two years.

Given that day care expenses would have been much higher if S.R.M. had been working, there is no reason to further reduce the retroactive award for these day care expenses. [ 108 ] To summarize, I award S.R.M. retroactive special expenses of $464.10 for 2013 day care, $1,500 collectively for 2014 and 2015 day care and $480 for retroactive extracurricular activities in each of 2014 and 2015 for a total of $2,924.10. Future Child Support and Special Expenses [ 109 ] I have imputed J.H.S.’s annual income to be $48,000 for 2016 which translates to child support of $439 per month.

Given this level of child support, the fact that A.I.S. is too young to have any identified special talents and J.H.S.’s financial situation, I consider J.H.S.’s submission that he pay $40 per month towards extracurricular activities to be reasonable and I award S.R.M. this amount.

Based on my income findings for 2016, I order that J.H.S. pay 83% of any other special expenses, including day care and any medical and dental premiums attributable to A.I.S. [ 110 ] Though I will not make this part of my order, if there is no material change in the parties’ circumstances, starting January 1, 2017, S.R.M. will have a full year imputed income of $24,000 and J.H.S. will have to pay 67% of A.I.S.’s other special expenses (meaning other than his $40 per month contribution to her extracurricular activities).

SUMMARY AND ORDER [ 111 ] To summarize, I make the following order: 1. I find J.H.S. to be a resident of British Columbia and find him to have a gross annual income of $59,654 in 2013 and, effective January 1, 2014, impute a gross annual income to him of $48,000. 2. I find S.R.M. to be a resident of British Columbia and find her to have a gross annual income of $11,020 in 2013, an imputed gross annual income of $24,000 in 2014, no gross annual income in 2015 and an imputed gross annual income of $10,000 in 2016. 3.

As of January 1, 2016, J.H.S. shall pay to S.R.M. arrears of $5,701 in retroactive child support and $2,924.10 in retroactive special expenses. 4. J.H.S. shall pay to S.R.M. $439 per month for child support commencing on January 1, 2016 and continuing on the 1 st day of each subsequent month for as long as A.I.S. is eligible for support under the Family Law Act or until further court order. 5.

J.H.S. shall pay to S.R.M. $40 per month for extracurricular activities commencing on January 1, 2016 and continuing on the 1st day of each subsequent month for as long as A.I.S. is eligible for support under the Family Law Act or until further court order. 6. Commencing January 1, 2016, J.H.S. shall pay to S.R.M. 83% for any special expenses incurred by S.R.M., including day care and medical and dental premiums but excluding extracurricular activities. 7. For as long as A.I.S. is eligible for support under the Family Law Act , J.H.S. and S.R.M. shall exchange: (

a) copies of their respective income tax returns for the previous year, including all attachments by June 1 each year; and (

b) copies of any Notice of Assessment or Reassessment provided to them by Canada Revenue Agency, immediately upon receipt. 8. If the parties cannot agree on an appropriate payment plan for retroactive child support and special expenses, I seize myself of that issue. [ 112 ] I thank counsel for their very capable assistance and wish the parties and A.I.S. well. _____________________________ L.S. Marchand Provincial Court Judge