N.D. v. J.D. Date:, 2017 BCPC 197

Citation: N.D. v. J.D. Date: 20170515 2017 BCPC 197 File No: 1628905 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: N.D. APPLICANT AND: J.D. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE J. CHALLENGER Appearing on her own behalf: N.D.

Counsel for the Respondent: J. Cudmore Place of Hearing: Vancouver , B.C. Dates of Hearing: Nov. 3 and 9, 2016; Feb. 27, March 13, 16, and April 6, 2017 Date of Judgment: May 15, 2017 [ 1 ] These reasons relate to a hearing on an application filed April 4, 2016 by Ms. D. asking that Mr. D. pay retroactive child support and s. 7 expenses from August 1, 2013 to date and to set ongoing amounts. There is one female child born in 2004. The parties married in 2003, separated in March of 2012, and divorced in May of 2015. Both are American citizens who relocated to British Columbia in 2011.

Since separation, the parties have shared parenting time equally on a week on/off basis. From the time of separation, they agreed not to pay a set off amount of child support and to share s. 7 expenses equally. [ 2 ] Ms. D. now seeks an order for the full amount of child support payable under the tables based on Mr. D.’s income. She says the disparity in their financial circumstance over the past three years justifies more than a set-off amount. Mr. D. argues that Ms.

D.’s income over the period in issues is much greater than she says, and at least equivalent to his income, and therefore neither retroactive nor ongoing support should be ordered. He says they should continue to share s. 7 expenses equally. Ms. D. is 38 and Mr. D. is 48. [ 3 ] Ms. D. and Mr. D. testified. The decision was reserved. Mr. D. then brought an application to call fresh evidence which was granted and Ms. D.’s former boyfriend, Mr. G., with whom she co-habited for a few months at the end of 2016 testified. Little evidence to which any weight could be attached resulted.

It is more likely than not certain comments made to Mr. D. after the break up were the result of misunderstanding on his part, were exaggerated or misconstrued. I do accept his evidence to the effect that Ms. D. was struggling financially at the end of 2016. [ 4 ] The first issue to be resolved is what Ms. D.’s income for Guideline purposes has been over the relevant period and what her current income should be found to be. The second issue is whether any retroactive amount should be ordered in all the circumstances. Mr.

D. has been and continues to be an employee and his income is not in dispute. [ 5 ] Following the birth of their child, Ms. D. operated a very successful and lucrative online business wholesaling a product for babies. In 2008 the company borrowed money to expand and was then caught up in the financial crisis. As a result, over time, the family lost all of their assets. The company has a $250,000 tax debt in the United States and there is some suggestion both are personally liable for that debt. [ 6 ] In 2011, Ms. D. and the child moved to Vancouver to allow her to pursue an online venture.

Soon thereafter, the venture failed to come to fruition. Since then she has been engaged in various entrepreneurial efforts trying to replicate her previous success. Unfortunately, this has not yet come to pass. She operates her businesses out of her home. [ 7 ] Mr. D. remained in the United States for a brief period before joining his wife and child. He works in construction and found a position in 2012 in a large construction company where he has been steadily employed and promoted. He says he is now earning near the maximum amount he can expect to achieve.

His income for the years 2013, 2014, 2015, and 2016 was $90,000, $94,000, $107,000, and $117,000 respectively. His 2017 income is expected to remain the same as in 2016. His net income for 2016 was approximately $80,861. Since 2014 he has been cohabiting with a new partner who has a child who resides with the couple part time. [ 8 ] Ms. D. says that since separation she has met most of their child’s financial needs, including the s. 7 expenses. Mr. D. says all the costs relating to the child have been shared equally.

The evidence of both parties on the issue of s. 7 expenses is consistent with the parties having shared these expenses on a more or less equal basis with Mr. D. paying for the child’s medical and extended health and covering some of the more expensive activities. This finding is supported by the Child Support Affidavit filed on April 24, 2015 in their divorce proceedings. [ 9 ] I find as a fact that Ms. D. made full disclosure of her financial records. She was cross-examined extensively on her circumstances. Mr. D. prepared spread sheets which set out all of Ms. D.’s income and expenses based on her disclosure.

Ms. D. did not dispute the accuracy of the spreadsheets. She did not agree with the suggestions put to her by counsel for Mr. D. to the effect that some of the deposits to her various accounts were unexplained, that she had unexplained or unjustified expenses or the inferences Mr. D. asks the court to draw from her financial disclosure. [ 10 ] The 2016 Profit and Loss (“P&L”) statement relating to her current business venture and her tax returns are difficult to reconcile with her actual finances as set out in the spread sheets. The P&L shows just under $35,000 income and $61,200 in expenses in 2016.

She testified to an income of $30,900. Her 2015 income tax return shows gross sales of $6515, expenses of $39,819 with a loss of $33,303. Her 2014 return shows gross sales of $46,479, expenses of $39,671 and a profit of $6,808 USD. Her 2013 return shows gross sales of $172,114, expenses of $112,479 and a profit of $59,635 USD. Many of these expenses are unexplained. In 2013 and 2014 she deducted what appears to be the entire amount of her rent and utilities of approximately $32,000 per year. I find Ms. D. is very aggressive with her deductions and most should be added back into her income.

I also find that some of the expenses are excessive in relation to sales and because her business is primarily conducted online and she works from home. [ 11 ] The deposits to her various accounts over the last four years total $378,942 and the last four years expenditures total $359,108 leaving $19,834 in expenditures unexplained given that she did not report any savings. This averages out to $413 per month. I find that these expenditures were more likely than not missed by Mr. D. in his accounting and were more likely than not for business expenses.

The only expenses on the spreadsheet which are directly attributable to her business are for accounting and online services. These total approximately $22,000 over the four years in issue. Although Ms. D. testified that she travels for her business, the 2016 P&L statement reflects only $306 in travel and $6,065 for vehicle expenses. She paid tax in the amount of $463 in 2013 and has not had to pay income tax since.

[12] Ms. D. testified that she has recently accumulated $125,000 in debts to friends and family in order to get by. She providedpromissory notes which total $92,000. She did reference a further loan to her company in the P&L statement for 2016 in the amount of$36,972 which would support the total debt as testified to. [13] $70,000 of the debt Ms. D. has accumulated was provided to her by an associate for her to write a book about emotionalintelligence in children as a means for her to contribute to a social cause. She did not expect to profit from this endeavor but does expectto be paid back. Ms.

D. has used this book to establish her current business which involves speaking engagements and coaching. Shehopes to profit from the sale of the book. She used the money for her support while writing the book and to develop her business. I findthis money to be a loan and not income. [14] Ms. D. has not made an effort to live more frugally as her financial situation has worsened. In 2016 she spent $2,155 on gymexpenses in the first nine months of the year.

She withdrew $325 per week on average in cash which was not apparently spent ongroceries as that is a separate line item indicating an average of $624 per month. She had approximately $200 per month in restaurantexpenses. She was otherwise able to meet her basic expenses. [15] Her evidence was consistent with her financial records, internally consistent and accorded with the preponderance ofprobability. I accept that she is now struggling financially.

However, she has only recently begun looking for a position as a contractoror employee with a company as her own efforts at self-employment have not proved to be sufficiently remunerative. I find she has beenunrealistic in her expectations concerning her ability to remain self-employed and has failed to accept that she needed to have a secureincome until such time as her entrepreneurial efforts were sufficiently successful to meet her financial needs. I find she should havemade efforts to seek a position as an employee or full-time sub-contractor as early as the end of 2013.

Except for six months over thepast winter, she has had a valid work Visa for Canada and she testified most of her business during that time was conducted in the UnitedStates. [16] Subtracting $125,000 as debt, approximately $28,000 in clear business expenses which should not be added back into herincome and the $20,000 unexplained expenditures which I have found to be business expenses, I come to an average annual net incomeof $51,485. I find this figure should be grossed up by 20 percent. I find Ms.

D.’s income for child support purposes should be imputedto be $62,000 annually over the relevant period of time. [17] In the affidavit respecting child support filed in their Divorce Act proceedings, Ms. D. attested to an income of $43,000. Mr. D.attested to an income of $70,000 when his actual income was $107,000. This affidavit contradicts the evidence in this matter. Nevertheless, the income attested to by Ms. D. supports the findings I have made above. The misstatement by Mr.

D. is relevant to theanalysis of his failure to disclose the increases to his income when considering the issue of retroactivity. [18] I also find that Ms. D. did not advise Mr. D. of her financial issues or need as of 2013. The only notice of any need for financialsupport took the form of occasional requests by her for Mr. D. to cover some of the child’s expenses and in particular to provide herparents with money to help them with expenses they would incur for the child while she was on a holiday with them at their farm.

Theserequests were sometimes accompanied by a statement that she could not afford the expense. At no time did Ms. D. suggest that Mr. D.should commence paying child support. In all the circumstances, I do not find the requests to pay for certain expenses could reasonablybe construed as effective notice. I find the effective date of notice was the date of the filing of Ms. D.’s application on April 4, 2016(see: D.B.S. v. S.R.G., 2006 SCC 37 , [2006] S.C.J. No. 37 at paras. 120 -123). [19] In all the circumstances, I cannot find that Mr. D. engaged in blameworthy conduct in not advising Ms.

D. of the increases tohis income. Neither party disclosed their financial circumstances to the other or requested this information at any time except for whatwas contained in the affidavit in their divorce proceedings. Given that they were represented by counsel at the time that affidavit wassworn, I find that as of that time they were each content to continue with the arrangements for child support and s. 7 expenses attested totherein and which had been in place since separation. [20] Child support is clearly the right of the child.

Section 9 of the Guidelines is engaged in this matter as a result of the partiessharing custody of the child. Ms. D. says s. 9(

c) should be considered and this should result in the full amount of Guideline supportbeing paid by Mr. D. This analysis should also result in Mr. D. paying for the child’s s. 7 expenses (see: Contino v. Contino, 2005 SCC63 , [2005] S.C.J. No. 65). [21] Up to the beginning of 2016, both households were enjoying a similar standard of living. Mr. D. provides the primary financialsupport in his household which is comprised of two adults and two children part time. Ms. D. supports herself and one child part time. However, I find Ms.

D.’s application in early 2016 resulted from her realization that her income was not going to increase and she wouldsoon be unable to maintain her standard of living. I find that as of the end of 2016 this had come to pass. Regardless of her lack offoresight, the child must not be made to suffer for this. [22] Based on my findings, I do not find retro-active child support should be ordered. However, as of the effective date of notice, Ifind there should be child support paid. Based on the incomes of the parties as I have found them to be, the set off amount would be$485 per month.

That amount is payable from April 1, 2016 to and including September 1, 2016. Commencing October 1, 2016, I amincreasing the amount of support payable by Mr. D. to Ms. D. to $650 on an interim basis. [23] The arrears of maintenance outstanding are fixed as of May 1, 2017 at $8,110 and are comprised of 6 months at $485 and 10 months at $650. These will be reduced by payments of $400 per month on the 15th of June 2017 and on the 15th of every monththereafter until paid in full. In effect, until Ms. D. finds stable employment, Mr.

D. will be paying the full Guideline amount. [24] I find that any s. 7 expenses for the child should be paid on a pro-rata basis with Ms. D. paying 35% and Mr. D. paying 65%. [25] For the duration of the interim order, Ms. D. shall provide to Mr. D. a full report of her job search activities on a monthly basis. She will also provide her banking information for all deposits or income and expenditures on a quarterly basis. [26] I will remain seized of the issue of ongoing child support and s. 7 expenses until such time as Ms. D. is able to maintain a

reasonable standard of living at which time the ongoing payments will revert to a set off amount. Either party may apply to the court fora review of this order by Notice of Motion. [27] Counsel for Mr. D. will be responsible for drafting the order. [28] Authorities considered: a. L.A.L. v. K.B.Z., [2014] B.C.J. No. 682 b. Ortynski v. Ortynski, [2014] B.C.J. No. 49 c. Contino v. Contino, 2005 SCC 63 , [2005] S.C.J. No. 65 d. Bradshaw v. Stenner, [2010] B.C.J. No. 1953 e. DBS v. SRG, 2006 SCC 37 , [2006] S.C.J. No. 37 f. Vincent v. Vincent, 2001 BCCA 186 g. Motyka v. Motyka, 2001 BCCA 18 h. Schmidt v.

Sucke, 2013 BCSC 1489 i. Donovan v. Donovan, 2000 MBCA 80 j. Snutch v. McMichael, 2008 BCSC 497 _______________________________ The Honourable Judge J. Challenger Provincial Court of British Columbia