Brennan v Brennan, 2024 ABCA 50

In the Court of Appeal of Alberta Citation: Brennan v Brennan, 2024 ABCA 50 Date: 20240220 Docket: 2303-0108AC Registry: Edmonton Between: Justin Micheal Brennan Appellant (Plaintiff) - and - Stacy Margaret Brennan, aka Stacy Margaret Poff Respondent (Defendant) _______________________________________________________ The Court: The Honourable Justice Peter Martin The Honourable Justice Thomas W. Wakeling The Honourable Justice Dawn Pentelechuk _______________________________________________________ Memorandum of Judgment Appeal from the Decision by The Honourable Justice D.A. Sulyma

Filed on the 17th day of May, 2023 ( Docket: 4803 180020) _______________________________________________________ Memorandum of Judgment _______________________________________________________ The Court: [ 1 ] Since separating in 2016, the parties have shared parenting time of their three children on a week-on, week-off basis. In their March 2019 Divorce Judgment, child support was determined on a straight set-off approach with the father paying $1,500 per month plus his proportionate share of s 7 expenses. The father applied before a chambers judge to reduce his child support obligation for the years 2019-2022.

The father argued that income should be imputed to the mother because she was intentionally under-employed. The father claimed a further reduction of $250 per month in child support payable to the mother, to equalize the standard of living between the households. [ 2 ] After finding the necessary material change in circumstances existed, the chambers judge dismissed the father’s application. [ 3 ] The father appeals arguing the chambers judge erred in failing to impute income pursuant to ss 19(1)(a), (

f) and (

g) of the Federal Child Support Guidelines, SOR/97-175 [ Guidelines ] and in failing to consider ss 9(

b) and (

c) of the Guidelines , to further reduce his child support obligation. [ 4 ] Two issues arise in this appeal. First, whether the chambers judge erred in applying the analytical framework for imputation of income outlined in this Court’s decision in Peters v Atchooay , 2022 ABCA 347 [ Peters ] and specifically, whether she erred in placing the evidentiary burden on the father. Second, whether the chambers judge erred in her application of s 9 of the Guidelines , which governs child support in shared parenting arrangements. [ 5 ] Child support orders are afforded deference on appeal.

An appellate court will intervene only if there has been an error in principle, a misapprehension of the evidence, or if the award is clearly wrong: Goett v Goett , 2013 ABCA 216 at para 9 ; Cunningham v Seveny , 2017 ABCA 4 [ Cunningham ] at para 14 ; Henderson v Micetich , 2021 ABCA 103 at para 28 ; Peters at para 27 . [ 6 ] For the reasons that follow, the appeal is dismissed. I. Background [ 7 ] The parties were married in 2009, separated in 2016, and divorced in 2019. They share three children who are now 13, 12 and 10.

As noted, the parties share parenting of their children on a week-on, week-off basis, although the mother’s evidence, disputed by the father, was that the oldest child had been residing primarily with her for some time before the chambers hearing. [ 8 ] The parties entered into a matrimonial property agreement in November 2018, setting the husband’s income at $115,108.12 and the wife’s income at $30,000 for the period July 1, 2018 through to June 30, 2019.

Child support was calculated on a straight set-off basis ($2,186 payable by the father and $627 payable by the mother) resulting in the father paying the mother $1,500 per month plus 79% of s 7 expenses. The parties agreed to recalculate “offset support” based on their 2018 line 150 incomes, with the new amount payable effective July 1, 2019. [ 9 ] The March 17, 2019 Divorce Judgment reflects this agreement. [ 10 ] The father is a police officer and his income has remained stable: 2019 2020 2021 2022 $118,503 $118,984 $124,087 $121,124

[ 11 ] The mother’s income has been inconsistent between 2019 and 2022. Specifically, her line 150 income dropped in 2020 and 2021: 2019 2020 2021 2022 $35,116 $13,211 $20,357 $32,000 [ 12 ] At the hearing and again on appeal, the father argues that the mother failed to provide the necessary evidence to rebut the presumption that she has been intentionally under-employed. Based on her earning capacity, he argues the following incomes should be imputed to her under s 19(1)(

a) of the Guidelines : 2019 2020 2021 2022 $40,000 $42,000 $45,000 $50,000 [ 13 ] The father further argues that it was open to the chambers judge to alternatively impute income under ss 19(1)(

f) and (

g) of the Guidelines , as the mother failed to provide complete financial disclosure and particulars about her business expenses. II. The Decision Below [ 14 ] Following a lengthy hearing in special chambers, the chambers judge reserved her decision, later providing oral reasons. The chambers judge found a material change in circumstances based on the mother’s drop in income from $30,000 as reflected in the 2019 Divorce Judgment.

She then considered whether the mother was intentionally under-employed and earning less than she was capable of earning, citing Peters . [ 15 ] The father argued that the mother had worked as a heavy equipment operator during the course of the marriage. He provided various postings suggesting an hourly rate of $35 or annual earnings of $72,800.

The mother pursued dog grooming courses during the marriage, and as she had worked in that field both during the marriage and after separation, the father argued she should be earning significantly more. [ 16 ] The mother deposed that prior to the birth of their first child, she worked as an equipment operator for TransAlta Reclamation earning $23 per hour but was not qualified as a heavy equipment operator.

After her first one-year maternity leave, she continued working for that company until her second maternity leave in approximately November 2011. [ 17 ] During her second maternity leave, the parties discussed and agreed that the mother would pursue dog grooming courses, which she initiated during her second maternity leave. [ 18 ] The mother found employment as a groomer at a kennel in Stony Plain but worked part-time hours in order to avoid childcare expenses and to accommodate the father’s shifts.

She worked at this kennel until 2015. [ 19 ] The mother then worked at the Alberta School of Dog Grooming from 2015 to 2017 earning $15 per hour. She planned to obtain her master groomer certification, but failed to do so because of the parties’ separation and the resulting turmoil. [ 20 ] In 2017, the mother worked full-time at The Pooch & Pony until January 2019. She was paid 50% commission on every groom.

She groomed only one month in 2019 before obtaining full-time employment at a call centre with Go Honda earning $19 per hour. [ 21 ] In December 2019, the mother enrolled in CDI College in the Business Management and Digital Marketing Program which she completed in November 2020. The mother deposed she was unable to obtain part-time employment while attending school but did do some dog grooming out of her house. [ 22 ] While in school, she also did a practicum with Soul of Canada working in an administrative position earning $20 per hour.

She continued her employment with Soul of Canada for some time after completion of her studies. At the end of 2021, the mother decided to launch her own grooming business. Her gross earnings were projected to be $32,000 in 2022. [ 23 ] The chambers judge found that the mother had never made the incomes the father sought to attribute to her.

She found that the 2019 Divorce Judgment realistically set the mother’s income at $30,000, noting that the father did “a fanciful recalculation of actual sums [the mother] has earned” by assuming, for example, that the mother could have been paid more than she was actually paid per hour. In another instance, the father capitalized on the mother’s evidence that she currently worked 40-45 hours per week at her dog grooming business, arguing that each one of those hours should be producing grooming income for annual gross earnings in the range of $100,000.

In the chambers judge’s view, this made no allowance for the fact the mother runs a small business. [ 24 ] Notwithstanding the mother did not document her job searches, the chambers judge was satisfied with the mother’s evidence on her efforts to obtain employment and noted that her evidence was uncontradicted. The chambers judge concluded that the father’s evidence did not establish real facts to support imputation of income for under-employment. III. Discussion

Material Change in Circumstances [25] Before a court can vary a final child support order, the applicant seeking the variation (in this case the father) has the onus ofshowing a material change in circumstances. The chambers judge found a material change in circumstances based on the mother’sreduced income in 2020 and 2021, a finding not appealed by the mother. However, we question whether the father, on these facts, metthis threshold requirement.

A material change in circumstances is “a change, such that, if known at the time, would likely have resultedin different terms”: Willick v Willick, (SCC), [1994] 3 SCR 670 at 688; see also Colucci v Colucci, 2021 SCC24 [Colucci] at para 59. It must also be “significant, long lasting, and not one of choice”: Colucci at para 62. [26] The Divorce Judgment set the mother’s income at $30,000. Had the parties divorced in 2020 or 2021, any difference in theorder would have likely been in the mother’s favour.

Secondly, the mother’s drop in income, in the context of s 9 child support payableby the father, is arguably not sufficiently significant or long lasting. [27] Nonetheless, we will consider whether the chambers judge erred in declining to impute income to the mother. Imputation of Income - Section 19(1)(a) [28] Section 19(1)(

a) of the Guidelines permits the court to impute such amount of income to a spouse as it considers appropriatewhere “the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment isrequired 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 ofthe spouse”. In shared parenting arrangements, as here, any question of imputation of income should be addressed as part of thecalculation of Table amounts under s 9(

a) of the Guidelines: MacDonald v Brodoff, 2020 ABCA 246 [MacDonald] at para 46; Peters atpara 61. [29] In Peters, this Court adopted a new framework for imputation of income under s 19(1)(a). The analytical framework, outlinedin para 60, consists of three questions: 1. Is the parent in question intentionally under-employed or unemployed? Imputation of income is not available under s 19(1)(a)where the under-employment or unemployment arises through circumstances truly beyond the control of the payor, and thus involuntary.Examples include lay-offs, reduced hours, or termination without cause... 2. Do the listed exceptions to imputation in s 19(1)(

a) apply? Is the under-employment or unemployment required by the needs ofa child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse? ... 3. Should judicial discretion to impute income be exercised?

If the under-employment or unemployment arises from voluntarychoice and the listed exceptions to imputation do not apply, the court may exercise its mandate to impute income under s 19(1)(a).However, because this is discretionary, the question of whether to impute income (and if so, how much) involves determining if thevoluntary under-employment or unemployment was reasonable, having regard to all the circumstances. [30] While the chambers judge did not specifically reference these questions, the record supports the conclusion that for the years2020 and 2021, the mother’s reduced earnings were largely unintentional and further, her reduced earnings were answered by themother’s reasonable educational needs. [31] While the father’s employment remained secure throughout the COVID-19 pandemic, many industries were decimated.

Themother’s evidence attests to the difficulties she had in securing part-time employment while she was attending school, and later insecuring full-time employment.

It was open to the chambers judge to find that the mother’s drop in income was not voluntary at all, butprimarily due to the employment challenges occasioned by the pandemic and her (reasonable) decision to pursue further education. [32] The father argues that the chambers judge erred by placing the evidentiary burden on him to show imputation was warranted,as opposed to placing the onus on the mother to establish that her under-employment was reasonable. [33] As explained in Peters at para 66, the onus remains throughout on the party seeking the variation: On a variation application where imputation of income is raised, the onus remains throughout on the party seeking thevariation: Donovan at paras 31-32, 37; Steele v Koppanyi, 2002 MBCA 60 at paras 38-39.

The party applying for a variation order isgenerally a payor who has experienced job loss or a drop in income and seeks a reduction in child support payments on that basis. Theapplicant has the onus of establishing the threshold requirement of a “material change in circumstances” before the court can entertain avariation order. As I later explain when addressing the Colucci framework, the ability to demonstrate a change of circumstances isinextricably tied to the applicant having provided adequate and timely financial disclosure.

Assuming this hurdle is met, the onusremains on the party opposing imputation to prove on a balance of probabilities: 1) that the under-employment or unemployment was notvoluntary, that is, not due to their own decision or conduct; or, 2) that the under-employment or unemployment is as a result of one of thelisted exceptions in s 19(1)(a).

If neither circumstance applies, that party must establish on a balance of probabilities that their under-employment or unemployment is reasonable, having regard to all the existing circumstances. [34] The party applying for a variation order is usually a payor seeking a reduction in child support because of their own drop in

income. That is not the situation here. The father seeks to shift more of the financial burden to the mother and reduce his child support obligation, not because of his own change in income, but based on the mother’s drop in income. On these facts, the question of onus, and whether that onus has been met, is more nuanced.

Regardless, “each parent is expected to make full disclosure and bring forward the best available evidence supporting their position on the appropriate Guidelines income for themselves and the other parent”: Peters at para 65 . [ 35 ] The chambers judge was actively engaged with the parties during the hearing and was clearly familiar with the affidavit evidence before her. She was troubled with the premise of the father’s application, in part because of the disparity in incomes, but also because she found the father’s evidence and argument to be entirely unpersuasive.

The corollary of this is that she was satisfied with the mother’s explanations for her drop in income and declined to impute income to her. There was no reversal of onus. [ 36 ] This appeal essentially challenges the chambers judge’s weighing of the evidence, suggesting a much higher evidentiary standard should have been employed in determining whether the mother’s drop in income was reasonable.

Peters provides guidance on the factors to consider in assessing whether it is appropriate to impute income and the type of evidence generally required when imputation of income is sought; it does not set inviolable rules. The chambers judge properly assessed the whole of the evidence to determine the ultimate questions: 1) whether the reduced earnings were truly voluntary, 2) whether any of the s 19(1)(

a) exceptions existed, and 3) to the extent the reduced earnings were voluntary and the listed exceptions did not apply, whether the reduction in earnings was reasonable in all of the circumstances . [ 37 ] No reviewable error has been demonstrated. This ground of appeal is dismissed. Imputation under Sections 19(1)(

f) and (g) [ 38 ] The court may also impute income to a spouse as it considers appropriate, if the spouse has failed to provide income information when under a legal obligation to do so, or where the spouse unreasonably deducts expenses from income: Guidelines , ss 19(1)(

f) and (g). [ 39 ] The father argues that the mother’s financial disclosure was inadequate: she did not provide any tax returns for years prior to 2018 - only affidavit evidence as to her income - and she failed to provide adequate disclosure of her deductible expenses from self- employment in the years 2020, 2021 and 2022. [ 40 ] On the issue of disclosure, the chambers judge noted that the parties had followed the disclosure provisions in the Divorce Judgment. While there was one instance of late disclosure, the mother remedied it quickly and it did not impact the father’s application.

The chambers judge concluded that the mother was not guilty of any blameworthy conduct in failing to provide adequate financial disclosure. This finding is entitled to deference. [ 41 ] As has been stated repeatedly, full financial disclosure is “the lynchpin of our family law system”: Ferguson v Ferguson , 2022 ONCA 543 at para 28 . This Court has sent a clear message that it will not countenance failure or refusal to provide the necessary financial disclosure to accurately and fairly assess child support obligations.

Financial disclosure obligations are not boundless, however, and must remain relevant and proportionate to financial matters in issue. The caution in Cunningham at para 35 is worth repeating: Simply put, parties ought not to be put to time-wasting, money-draining line-by-line justifications of every dollar that has been spent. In keeping with the foundational rules, pre-trial disclosure must not become a process that wholly consumes the very parental resources that otherwise would be available for child support.

And, parties must bear in mind that supervising courts will continue to take a very dim view of litigation antics or abuses that detract from, or thwart, the overarching objectives of child support legislation, the foundational rules and disclosure obligations. [emphasis added] [ 42 ] Simply put, the father’s approach to the mother’s financial disclosure was picayune and disproportionate to the claim advanced. Written Interrogatories were served on the mother asking 27 financial questions or requests for financial information.

The mother provided tax returns for 2020 and 2021 containing a Statement of Business Activities. In 2020, she claimed $2,397.39 in business expenses ($597.39 for office stationery and supplies and $1,800 for business-use-of-home). In 2021, she claimed total expense of $4,023.24 ($323.24 for office stationery and supplies, $100 for professional fees and $3,600 for business-use-of-home). No expense information was provided for 2022, but that worked to the father’s advantage as the chambers judge appeared to accept the mother’s estimated $32,000 in earnings. [ 43 ] This ground of appeal is dismissed. Application of

Section 9 Factors [ 44 ] Despite the income disparity, the parties determined child support by way of a simple set-off in the March 2019 Divorce Judgment and did not engage consideration of ss 9(

b) and (

c) of the Guidelines . The father now seeks to employ an analysis of the factors under ss 9(

b) and (

c) to further reduce his child support obligations by $250 per month. As explained in MacDonald at paras 14-15, s 9(

b) examines each parent’s actual child care expenses and s 9(

c) considers the condition, means and needs of each parent and child: [14]

Section 9(

b) examines the total cost of raising the children in a shared parenting arrangement (where many expenses are duplicated) as compared to one parent having primary care. This is achieved through examination of the budgets and actual expenditures of both parents toward care of the children. The intent is to identify all of each parent’s child care expenses and compare that amount to that parent’s Guidelines Table amount of support. [15] The analysis then moves to consider the factors under s 9(c): the condition, means and needs of each parent and child for whom support is sought.

Courts are conferred broad discretion in considering these factors. The analysis is contextual and highly fact- dependent. Courts are alive to the standard of living the child experiences in each household and “the ability of each parent to absor[b]

the costs required to maintain the appropriate standard of living in the circumstances”: Contino at para 68. [ 45 ] This ground of appeal can be summarily addressed. Facially, the income disparity between the parties belies the assertion that the mother enjoys a superior lifestyle. Further, while the father’s monthly budget is higher than the mother’s, there are obvious differences in approach. For example, the mother currently rents premises from her parents but cannot be expected to do so indefinitely.

The father has included $500 per month for legal fees and sums for recreation and holidays where the mother has not. Most notably, the father’s new partner is also a police officer. While she apparently remained home with their two-year-old child because of child care costs, it is unclear whether she has since returned. Their combined potential earnings grossly exceed that of the mother on any measure. IV. Conclusion [ 46 ] We find no reviewable error in the chambers judge’s decision not to impute income to the mother under ss 19(1)(a)(

f) and (

g) of the Guidelines or to reduce the father’s child support obligations through consideration of ss 9(

b) and (c). The appeal is dismissed. [ 47 ] The panel was advised that there is confusion as to whether or not the chambers judge determined the mother’s Guideline income for the applicable years. For clarity and for the purpose of calculating off-set child support owing, we find the mother’s Guideline income to be as outlined in paragraph 11 of this judgment. [ 48 ] We make this final point. Reasonableness is not fixed in time. “What is reasonable (or unreasonable) is determined at one point in time and will not necessarily remain static for the entire time the children are owed support”: Peters at para 92 .

It follows that the mother is not immune from possible imputation of income should her income remain at the current level. Appeal heard on February 5, 2024 Memorandum filed at Edmonton, Alberta this 20th day of February, 2024 Authorized to sign for: Martin J.A. Authorized to sign for: Wakeling J.A. Pentelechuk J.A. Appearances: A. Lowther for the Appellant S. Armstrong for the Respondent