M.S. v. K.L., 2019 BCPC 305

Citation: M.S. v. K.L. 2019 BCPC 305 Date: 20191017 File No: 21906 Registry: Victoria IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: M.S. APPLICANT AND: K.L. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L. MROZINSKI Counsel for the Applicant: T. Summers Counsel for the Respondent: D. Salmon Place of Hearing: Victoria , B.C. Date of Hearing: August 19, 2019 Date of Judgment: October 17, 2019

I. Introduction [ 1 ] This is an application by K.L. for an order cancelling his child support arrears which total $24,786.96. By court Order dated March 6, 2014, K.L. was ordered to pay $868 each month in child support for one child, based on an imputed annual income of $100,000. K.L. submits that he has never had an annual income in that amount available for child support. He submits that when his child support obligations are adjusted to reflect his actual Line 150 income during the material time, and his actual support payments taken into account, he owes nothing in arrears.

On an ongoing basis, K.L. seeks an order that his child support payments continue to be based on his Line 150 income. [ 2 ] M.S. opposes this application. She seeks an order that K.L.’s child support payments be adjusted to comport with the income available to him from his corporate earnings, which are substantially higher than his Line 150 income. M.S. seeks an order requiring K.L. to pay child support based on his corporation’s pre-tax income commencing in 2014. On a strictly go-forward basis, M.S. seeks a contribution from K.L. toward their child’s special and extraordinary expenses.

She also seeks an order that K.L. be required to disclose his income on an ongoing basis, including any reassessments of his current income tax returns for the years 2015, 2016, 2017 and 2018. M.S. asks this Court to impose a penalty on K.L. in the event he fails to comply with such an order. II. The Issue [ 3 ] The first issue in this case is how to calculate K.L.’s income for the purposes of child support.

Should it be based, as K.L. submits, solely on his Line 150 income or, as M.S. submits, on his corporation’s pre-tax income pursuant to s. 18 of the Child Support Guidelines ? [ 4 ] As for M.S.’s other applications, there is little dispute regarding her claim for a contribution to their child’s daycare and medical expenses. K.L. opposes M.S.’s application for a contribution towards extracurricular activities on the ground that he simply does not have enough money to meet his current expenses, let alone expenses for extracurricular activities. III.

The Parties’ Background [ 5 ] K.L. and M.S. are the biological parents of the child, Child C.S. (nee L.), born [omitted for publication]. Prior to Child C.S.’s birth, K.L. and M.S. were involved in a brief relationship of slightly over one year’s duration. The parties lived together from time to time at K.L.’s residence in Castlegar, but were not residing with one another at Child C.S.’s birth, or at any time thereafter. K.L. testified to seeing Child C.S. sporadically in her first year, but ultimately felt compelled to remove himself from her life.

K.L. has never parented Child C.S. and, as I understand it, never intends to. [ 6 ] M.S. obtained her first order for child support for Child C.S. in Calgary Family Court by Order dated December 18, 2013. Pursuant to that Order, K.L. was ordered to pay child support at the rate of $868 per month, premised on an annual income of $100,000. His actual income was not determined at that time.

The question of K.L.’s liability for retroactive child support for the months of October and November 2013 was raised, but not resolved, in the December 18, 2013 hearing. [ 7 ] On that same date, but by way of a separate order, K.L. consented to an order granting M.S. guardianship and all parenting time and responsibility for Child C.S.

Apart from a brief skirmish in August 2015, in which K.L. expressed concern over M.S.’s parenting of Child C.S., there have been no further orders or applications concerning the parties’ parenting time. [ 8 ] By Order dated March 6, 2014 titled a “Final Child and Spousal Support Order”, Judge Shaw ordered K.L. to pay child support totalling $868 each month, commencing April 1, 2014.

K.L. was also ordered to pay a further sum of $100 per month towards arrears for the months of October and November 2013; and a further sum totalling $232 per month towards spousal support commencing April 1, 2014 and ending on March 1, 2015. Paragraph 5 of Judge Shaw’s Order required both parties to provide the other with copies of their income tax returns and notices of assessment and reassessment issued by Revenue Canada on an annual basis, on or before June 30 of each year.

Other than this reference to income information, it does not appear that K.L.’s actual income was examined at this hearing. [ 9 ] Paragraph 6 of Judge Shaw’s Order provides that the amount of child support owed by K.L. in paragraph 1 of the Order is subject to adjustment up or down depending on the parties income. This was, presumably, to account for income information M.S. expected to obtain.

Since March 2014, M.S. has sought proof of K.L.’s income in order to obtain child support exactly in accordance with the Child Support Guidelines . [ 10 ] In June 2017, K.L. applied in Family Court in Calgary for an order varying Judge Shaw’s Order with respect to his ongoing child support obligations. At this juncture, both parties lived in British Columbia with the result that the Court ordered the matter be permanently transferred to this Province. Paragraph 4 of the Order dated June 6, 2017 provides as follows: 4.

The respondent [K.L.] shall continue to pay the sum of $350.00 per month to MEP such payments to be made on the 1st day of each month and such payments to be interim payments pending the hearing of this matter. The payment amount of $350.00 to MEP does not vary paragraph 1 of Judge Shaw’s order of March 6, 2014. [ 11 ] The Order of Judge Shaw was effectively stayed pending the hearing of K.L.’s application to vary in this Court. As is apparent from this Order, for some time before June 2017, K.L. had ceased to pay child support in the amount of $868 each month.

He testified, as noted, that he had never had $100,000 annual income available for child support payments and, in any event, by 2014, his work in Alberta had dried up significantly. Moreover, he was by then in a relationship with his current spouse and parenting her two children and ultimately, albeit a few years later, a child of their own. [ 12 ] As a practical matter, the effect of K.L.’s unilateral variation of his child support obligations, coupled with the stay of Judge Shaw’s Order, has meant that K.L.’s arrears have been accruing for some time at the rate of $500 per month.

At the date of this hearing, the Family Maintenance Enforcement Program (“FMEP”) calculates that K.L.’s arrears total $24,768.96, including fees and interest. It is

not apparent from the materials exactly when K.L. ceased paying support in accordance with Judge Shaw’s Order. [13] In this hearing, as I have noted, K.L. seeks an order cancelling all of his arrears. He submits that if his child support obligationsare adjusted to account only for his Line 150 income for the years 2015 through to 2018, he will owe nothing in arrears. [14] M.S. submits that not only should K.L.’s application to cancel his arrears be denied, but that this Court should find he owesmore than the $24,786.96 arrears calculated by FMEP.

M.S. urges this Court to impute significant income to K.L. over the years 2014 to2018 based on his corporate income, rather than his Line 150 income, with the result that he would owe possibly as much as $16,193over and above the arrears FMEP has calculated based on Judge Shaw’s Order. [15] On an ongoing basis, K.L. seeks an order that his ongoing child support be based on his 2018 Line 150 income. M.S. seeks anorder that ongoing child support be based on an averaging of three years of K.L.’s corporate income available for child support.

Also onan ongoing basis, M.S. seeks an order that K.L. provide her with complete and updated income information in accordance with JudgeShaw’s Order in March 2014, on an annual basis. It is central to M.S.’s case that K.L.’s apparent reluctance to provide her with therequired financial information she has sought all these years, coupled with his admitted ignorance of his finances, renders his stated Line150 income a wholly unreliable indicator of income actually available for child support. IV.

The Law [16] The starting point to determining a parent’s child support obligations begins with the Child Support Guidelines. In applying theGuidelines however, a court must bear in mind the basic principles applicable in all child support applications, whether that be for asupport order, or a variation of an order or, as here, for a cancellation of arrears. [17] As Justice Martinson states in Earle v. Earle, 1999 BCJ No. 393 at paragraphs 15 to 17, in all such cases the court must bear inmind first that parents have a joint legal obligation to support their children.

At paragraph 17, Justice Martinson writes, “it is the child,not the parent with custody, who has the right to maintenance.” [18] In D.B.S. v. S.R.G., et al, 2006 SCC 37 , [2006] 2 S.C.R. 231, the Court reiterated that the child support is the right ofthe child, and that it is the child that is entitled to support commensurate with his or her parent’s income. Against that right, there is aconcomitant obligation to pay child support, again commensurate with one’s income.

The overarching purpose of any such award is tobenefit the child; that is the purpose of the child support regime in this Province and throughout the Country. [19] As a general rule, the determination of a parent’s child support obligations is based on the payor parent’s Line 150 income onhis or her income tax return. The rule is explained in M.A.M. v. D.L.L., [2018] B.C.J. No, 6777, at paragraph 73: 73 The legislative scheme for determining guideline income requires a consideration of ss. 16 to 20 of the Guidelines. This wassuccinctly described by Mr. Justice Groberman in Brown v.

Brown, 2014 BCCA 152 at para. 16: [16] The legislative scheme for determining Guideline income is fairly straightforward. A court begins, under s. 16 of the Guidelines,with the "total income" from the payor parent's tax return and then makes specified adjustments. Next, the court is entitled to take furtherspecific considerations into account under ss. 17-20 of the Guidelines to determine Guideline income. This Court outlined the steps inVincent v. Vincent, 2012 BCCA 186: [35] All determinations of child support begin with finding the spouse's Line 150 income, a relatively straight-forward step one.

Thesecond step is to make whatever adjustments to that amount are required by

Schedule III.

Once these two steps are completed, the courtmust look to sections 17 to 20, to determine whether any of the exceptions set down in those provisions applies, and, if so, what effectthey should be given on the facts of the case. [20] As the Court notes at paragraph 76 of M.A.M., again quoting from the Court in Brown, sections 17 to 20 of the Guidelines givescourts the flexibility to depart from the strict formula under s. 16 in instances where, for example, a payor parent is in a position tomanipulate their income so as to frustrate the purpose of the Guidelines and of child support generally. [21] In this instance, M.S. submits that s. 18(1) of the Guidelines should inform K.L.’s child support obligations rather than his Line150 income for this and other reasons.

Section 18(1) provides as follows: Shareholder, director or officer 18

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse'sannual income as determined under

section 16 does not fairly reflect all the money available to the spouse for the payment of childsupport, the court may consider the situations described in

section 17 and determine the spouse's annual income to include (

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recenttaxation year; or (

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed thecorporation's pre-tax income. V. Application of the Guidelines [22] K.L. is a welder by trade. He is also the owner/operator of Company S. Company S. is the sole source of K.L.’s income andM.S. submits he has utilized his position as a small business owner to minimize his Line 150 income so as to reduce his child supportobligations. In support, M.S. points to a dramatic decrease in K.L.’s Line 150 income from 2015 onward.

She submits this coincides withher efforts to obtain a variation of the 2014 child support order to bring it in line with K.L.’s Line 150 income for the year 2015. K.L.denies any manipulation of his income. His evidence is that basically he works and earns money, leaving it to his wife, his bookkeeper

and his accountant to take care of the financial end of things. He maintains he is hiding nothing and that his Line 150 income was arrived at by his bookkeeper, Ms. W., who confirmed that by testimony in this hearing. While K.L. is, at this juncture, finally up to date on the filing of his income tax returns, he is also currently the subject of an audit and his financial picture may yet change. [ 23 ] K.L. filed various income tax returns for the years 2015 to 2018 in this hearing as well as an assessment for the year 2014.

In this hearing, K.L. maintains his Line 150 income for these years is as follows: 2014: $129,800.00 (as reflected in his Assessment Notice) 2015: $20,133.33 2016: $33,500.05 2017: $58,500.00 2018: $75,400.00 [ 24 ] K.L. testified that the distinct drop in his income after 2014 occurred as a result of yet another recession in Alberta in or around 2015. He testified that whereas he once had the pick of jobs, he found himself constantly looking for work and being out of work in 2015 for a period of three months before picking up odd jobs. [ 25 ] More recently, K.L. finds himself working more.

This year, for example, K.L. has been as he described it “fairly busy” but is still engaged in an effort to find work, which takes away from the time he can engage in paid contract work. [ 26 ] Still, K.L. is a journeyman welder with a quarter century or more experience. He can expect to be employed and employable for some time. [ 27 ] As required by court Order, K.L. did provide M.S. with not only his Financial Statement but also with various corporate financial records and statements this enabling M.S. to examine K.L.’s financial health.

It bears noting in this regard that K.L.’s Financial Statement filed December 5, 2018, was incomplete and not entirely useful. With the production of additional information, including a completed statement of annual expenses, and more fulsome corporate financial disclosure, K.L.’s financial circumstances have become that much clearer. There is, for example, no question that K.L. has significant work related expenses: these are reflected in his corporate records. He has other of the normal expenses of any family, including a significant debt-load relative to his income earning ability.

What is also apparent is that despite the distinct decline in K.L.’s Line 150 income, Company S. has generated revenues over or close to $200,000 annually since 2014, with the exception of the year 2016 when Company S. reported revenues totalling $71,809.

Naturally, these numbers mean little without a consideration of expenses, but as M.S. has shown, a significant portion of the expenses claimed, whether or not they are proper deductions for the purposes of the CRA, qualify as income available for child support purposes. [ 28 ] K.L. has been in a position all these years to minimize his income as envisioned by s. 18(1) of the Guidelines .

I find that a determination of K.L.’s income available for child support is not, in these circumstances, fairly determined strictly by reference to s. 16 of the Guidelines . [ 29 ] That it is not fair to base K.L.’s child support obligations solely on this Line 150 income for the years 2015 to 2018 is bolstered by the following factors. First, K.L. was clearly reluctant, until very recently, to provide M.S. with the financial information she sought and which was court ordered. K.L.’s filed Financial Statement too evidences a reluctance to disclose the necessary information to M.S.

I accept that it does not necessarily follow from this alone that K.L.’s income tax returns cannot be trusted. K.L. and his family resent this intrusion - that much is clear. They are, no doubt, concerned about the impact of any order of this Court on their own financial situation, and the health and wellbeing of their three children, one of whom is Child C.S.’s halfsibling. [ 30 ] Still, the reluctance to disclose financial information, coupled with the steep drop in Line 150 income so soon after M.S. sought a variation of child support in and around 2015, suggests something is amiss.

I am not satisfied on balance that K.L.’s drop in income is attributable to a recession in the oil industry in Alberta, particularly in light of Company S.’s earnings over these years. [ 31 ] Other factors supporting the application of s. 18(1) of the Guidelines include the disarray of K.L.’s income tax returns, and the fact they were, as Mr.Summers put it, selectively disclosed. All of these raise doubt as to the reliability of most of the Income Tax returns relied on by K.L. in this application. I say most but not all.

In my view, there is insufficient evidence to suggest that by 2014, K.L. was manipulating his taxable income through his corporate account to avoid his child support payments.

However, in 2015 to 2018 the way in which at least some of the expenses are reported raises a question as to whether there was, if nothing else, a decision made to use monies that might otherwise be available for child support for purposes unrelated to the corporate operations of Company S. [ 32 ] In addition, it bears reiterating that K.L. is being audited at present. [ 33 ] For all of these reasons, I find that reference solely to K.L.’s Line 150 income at least for the years 2015 through to 2018 is not the fairest way to assess his Guideline income for the purposes of his child support obligations.

Pursuant to s. 18 of the Guidelines , I accept it is open to this Court to consider the inclusion of Company S.’s pre-tax corporate income as income for the purposes of child support. VI. Ascertaining Income Available for Child Support [ 34 ] As a shareholder of Company S., K.L. does, pursuant to s. 18 of the Guidelines , bear the onus of proving that his corporation’s pre-tax income was not available to him for child support. At paragraph 81 of M.A.M ., quoting from Chiasson J.A. in Chapman v.

Summer , 2010 BCCA 237 at paragraph 15 , the Court wrote: To determine whether “Total income” fairly reflects money available for child support, a court might ask what an objective well-

informed parent would make available for child support in the circumstances of a particular business over which the parent exercised control, having regard to the objectives of the Guidelines, the underlying parental obligation to support children in accordance with one’s means, and any applicable situation in s.17. [ 35 ] Following this quote, Justice Chiasson concludes that, “[f]airness guides the assessment, taking into account the legitimate needs of the business balanced against the support obligations of the shareholder.” [ 36 ] K.L. claims to know little about his corporate finances; he struggled to explain certain expenses claimed over the years, including, for example, a more than two-fold increase in office expenses in 2015 over the previous year.

When asked about the nature of this expense, K.L. could not proffer any explanation. I agree with M.S. that on balance, it is a matter he could be expected to have some familiarity with. [ 37 ] I have already determined that K.L.’s child support for 2014 should be based on his Line 150 income. [ 38 ] For 2015, it must be based on the pre-tax income of Company S. Additionally, based on Company S.’s income statement for the year, as well as the testimony of both K.L. and Ms.

W., I find I agree with M.S. that certain expenses claimed for that year by Company S. constitute, in the absence of any or any reasonable explanation, monies available for child support. This includes “management fees” in the amount of $38,200, which is essentially a wage paid to K.L. Company S. also claimed expenses for two vehicles, including for insurance, though K.L. was only able to justify one as being utilized for work: the other being on hand, at K.L.’s residence, in case of need.

The statement also includes a claim for expenses associated with two telephones, only one of which was used for business purposes and the other by K.L.’s wife. Finally, as noted, K.L. simply had no explanation for the dramatic increase in Company S.’s claim for office expenses.

M.S. submits that in addition to the pre-tax income, these, or a portion of these claimed expenses should be included as income available for K.L.’s child support payments in the year 2015. [ 39 ] I accept that the expenses claimed by Company S. for the year 2015 for vehicles payments and expenses should be reduced by half as K.L. was never able to justify both as business expenses. I agree also that the management fees should be included in K.L.’s income for that year. M.S. proposes that Company S.’s claim for office expenses in the amount of $10,183 should be reduced by approximately one half.

Bearing in mind that K.L. simply could not account for this expense at all, I find I agree. [ 40 ] As such, I find that for the year 2015, K.L. had income available for the purposes of child support in the amount of $121,691: that being Company S.’s pre-tax income in the amount of $59,508 and the expenses just discussed. At that rate, K.L.’s child maintenance payments for the year 2015 are $1,099 per month. [ 41 ] For the year 2016, Company S. paid K.L. management fees in the amount of $24,000. It also absorbed $15,276 in personal expenses having nothing to do with the business.

As in 2015, Company S. claimed for two vehicles, and two cell phones when only one of each was a proven business expenses. For the reasons outlined above, I accept that these expenses were monies available to K.L. for child support. [ 42 ] Unlike the case in 2015, in 2016, Company S. did not declare any pre-tax income in its income statement. This unaudited financial statement may yet be subject to change. For the present, I will accept that in the year 2016, K.L. had $52,312 available for child support payments. [ 43 ] For the year 2017, Company S. declared a pre-tax income totalling $13,709.

At the same time, Company S. paid K.L. $90,000 in salary and an additional $24,000 in management fees. As in past years, Company S. claimed expenses for two vehicles and two cell phones. These were, as in those past years, expenses that K.L. did not, on balance, demonstrate were related to the business. [ 44 ] In 2017, Company S. also claimed professional fees in the amount of $8,886. K.L. did explain in cross-examination that significant monies were paid to accountants during this time period.

I accept, in this regard, that this is an expense properly deducted from Company S.’s revenue for the year, and not money available to K.L. for child support. [ 45 ] Based on the foregoing, I find K.L. had available to him money for child support in the year 2017 totalling $132,137. This is comprised of Company S.’s pre-tax income, wages at the rate of $90,000, management wages totalling $24,000 and half of the truck, gas, insurance and phone expenses claimed. [ 46 ] At the time of hearing, K.L. had yet to provide M.S. with a copy of his income tax return for the year 2018.

It was, he testified, complicated given the state of his financial accounting to date. Ms. W. testified K.L.’s Line 150 income for the year 2018 was $75,400. As in other years, Company S.’s pre-tax income, coupled with monies received by K.L. through the company, was far greater. [ 47 ] Apart from wages in the amount of $65,000 and expenses claimed for two vehicles and two phones, which are, as in previous years, not appropriate business deductions, there was in Company S.’s 2018 income statement expenses allocated to a “suspense account”. This, as Ms.

W. testified, is an account used by bookkeepers to track expenses that yet need investigation. In this instance, the suspense account itemized payments to Revenue Canada ultimately totalling $11,500. Of this amount, I am satisfied that $6,789.72 was paid to GST on behalf of the company. The remainder, $4,710.72 was reallocated to Company S.’s corporate tax account for unpaid taxes. Ms.

W. agreed this expense could not properly be deducted from Company S.’s revenue account and, as such, must be added back in. [ 48 ] In the result, for the year 2018, I find that K.L.’s child maintenance obligations must be based on an income totalling $124,042.72. [ 49 ] Based on these reasons, the following table sets out K.L.’s Guideline support obligations for the years 2014 to 2018: Year Income (Source) Guideline Amount Judge Shaw’s Order Annual Judge Shaw’s Order Amount Annual Guideline Amount

2014 $129,800 (Line 150) $1,165 $868 $10,416 $13,980 2015 $121,691 (Company S.) $1,099 $868 $10,416 $13,188 2016 $52,312 (Company S.) $481 $868 $10,416 $5,772 2017 $132,137 (Company S.) $1,176 $868 $10,416 $14,112 2018 $124,042.72 (Company S.) $1,119 $868 $10,416 $13,428 [ 50 ] Except for the year 2016, K.L.’s support obligations exceed even that of the Order of Judge Shaw. K.L.’s arrears at the date of the hearing are based on Judge Shaw’s Order for the years 2015 to 2018, at the least.

It is not clear in the evidence before me whether the arrears are calculated for the year 2014, nor is it clear when K.L. stopped paying at the rate of $868 per month. If it was in the year 2016, or part of it, that fact would have implications for the total of arrears now owing pursuant to the order of this Court. [ 51 ] In the circumstances, rather than calculating K.L.’s actual arrears at this juncture, I would refer the matter back to FMEP for a recalculation of arrears, interest and fees owing based on the support obligations set out in the table at para 49 of these reasons. VII.

Ongoing Child Support [ 52 ] M.S. submits that rather than calculate K.L.’s child support payments for the year 2019 based on his Line 150 income, it would be more appropriate – at least until his audit completes and there is a track record of timely exchange of financial information – to impute an income based on an averaging of three years income.

While typically that would be based on the most recent three years of income, I accept that it would be more appropriate to calculate K.L.’s 2019 income based on an average of his income in the years that are more reflective of the years he clearly was working and which, in turn, are more reflective of his current situation. As such, I will base the calculations for 2019 based on K.L.’s income, as I have found it, for the years 2018, 2017 and 2015.

In my view, to include the much reduced income for the year 2016 would unreasonably skew K.L.’s child support obligations. [ 53 ] As such, for the year 2019, I would impute an income to K.L. in the amount of $125,956.90. Under the Guidelines , K.L. must pay child support totalling $1,135 each month. VIII. Special or Extraordinary Expenses [ 54 ] M.S. does not seek, nor has she received, any contribution toward Child C.S.’s special or extraordinary expenses to date.

On a go forward basis, M.S. seeks a contribution from K.L., based on their respective incomes, toward Child C.S.’s daycare expenses, the $400 annual cost of her asthma inhaler, and various extracurricular activities. [ 55 ] With respect to daycare expenses, M.S. acknowledges that she must provide K.L. with receipts for the same. Provided such receipts are available for K.L.’s review, I order that K.L. contribute to Child C.S.’s daycare expenses which M.S. testified total $400 each month on a prorated basis. [ 56 ] For the year 2019, M.S.’s income is approximately $42,000.

I have imputed an income of $125,956.90 to K.L. On a prorated basis, K.L. is obligated to pay 75% of the cost of Child C.S.’s daycare expenses in the amount of $300. Similarly, K.L. must pay $300 annually toward his share of the cost of Child C.S.’s asthma inhaler. Again, receipts must be provided. [ 57 ] Given K.L.’s child support payments, and the nature of the extracurricular activities described by M.S., I would not order that he contribute to those costs. IX.

Ongoing Disclosure [ 58 ] By Order of Judge Shaw, each party is required to provide the other with complete copies of income tax returns and notices of assessment and reassessment on an annual basis on or before June 30 of each year. That Order is still extant and I find it unnecessary to issue a similar order.

The parties are expected to comply. [ 59 ] However, given the time and effort it has taken M.S. to get this matter to Court, I find it would be appropriate to order, pursuant to s. 230 of the Family Law Act , a penalty of $1,000 for any instance that K.L. fails, without reasonable excuse, to comply with the disclosure Order of Judge Shaw. The penalty will be payable to M.S. for the benefit of the child Child C.S. X.

Summary [ 60 ] This is an application by K.L. for an order cancelling his child support arrears on the ground that the income imputed to him by court order in both 2013 and inferentially in 2014, was grossly overstated. K.L. introduced into evidence his Line 150 income for the years 2015 to 2018 and that evidence, if accepted, would support K.L.’s application, at least to some extent.

Though it is not necessary for me to decide given my reasons above, it is not apparent, particularly given K.L.’s Line 150 income in 2014, that even accepting his Line 150 income for all of the years noted, that an adjustment would have the effect of wiping out his arrears entirely. [ 61 ] In any event, I have accepted M.S.’s submission that K.L. has been in a position all these years, as the sole owner of Company S., to minimize his income so as to reduce his child support obligations.

The evidence shows a clear effort by K.L. to avoid providing M.S. with income information despite her request, and the terms of the Order of Judge Shaw. Both K.L.’s personal income tax information and Company S.’s income statements are, in his own words, in disarray. He is under audit for some of these years at least. These factors all undermine the reliability of his Line 150 income as an indicator of the income available to him for child support from 2014 onward. As such, I have determined that this is an appropriate case in which to apply s. 18(1) of the Child Support Guidelines .

[ 62 ] The effect of this is that K.L. bears the onus of showing, on balance, that monies were not available for child support. For various reasons discussed above, K.L. was unable to do this with the result that his child support obligations are determined to have been well above that ordered by Judge Shaw. It is for that reason that I would dismiss K.L.’s application for an order cancelling his arrears. [ 63 ] I have set out in the table at para 49 of these reasons, under the heading “Annual Guideline Amount”, K.L.’s child support obligations for the years 2014 to 2018.

In addition, I have imputed an income to K.L. for the year 2019 of $125,956.90. Under the Guidelines , K.L. must pay a total of $1,135.00 per month in child support. [ 64 ] Though I have determined K.L.’s Guideline support obligations for the years 2014 to the present, there is, I find, insufficient evidence on which I can fix K.L.’s arrears exactly. As such, I would remit that matter back to FMEP for that calculation. [ 65 ] Still, without knowing the exact figure, it is apparent that K.L.’s arrears will be substantial.

As I noted at the hearing of this matter, there was no undue hardship application before me, although it is clear given K.L.’s other children, his debts, expenses, and his income, that this Order will be problematic. Nothing in this Order precludes K.L. from bringing such an application. ________________________________ The Honourable Judge L. Mrozinski Provincial Court of British Columbia