2011 NBCA 61, 2011 NBCA 61

COURT OF APPEAL OF NEW BRUNSWICK 51-10-CA EDWARD ARNOLD TREVORS APPELLANT EDWARD ARNOLD TREVORS APPELANT - and - - et - PEARL A. JENKINS RESPONDENT PEARL A. JENKINS INTIMÉE Trevors v. Jenkins, 2011 NBCA 61 Trevors c.

Jenkins, 2011 NBCA 61 CORAM: The Honourable Justice Bell The Honourable Justice Quigg The Honourable Justice Green CORAM : L’honorable juge Bell L’honorable juge Quigg L’honorable juge Green Appeal from a decision of the Court of Queen’s Bench: April 1, 2010 (FDN 120-1994) Appel d’une décision de la Cour du Banc de la Reine : 1 er avril 2010 (FDN 120-1994) History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : Inédite Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : S.O.

Appeal heard: March 24, 2011 Appel entendu : Le 24 mars 2011 Judgment rendered: July 21, 2011 Jugement rendu : Le 21 juillet 2011

Reasons for judgment by: The Honourable Justice Quigg Motifs de jugement : L’honorable juge Quigg Concurred in by: The Honourable Justice Bell The Honourable Justice Green Souscrivent aux motifs : L’honorable juge Bell L’honorable juge Green Counsel at hearing: For the appellant: Edward Arnold Trevors appeared in person For the respondent: Pearl A. Jenkins appeared in person Avocats à l’audience : Pour l’appelant : Edward Arnold Trevors a comparu en personne Pour l’intimée : Pearl A. Jenkins a comparu en personne THE COURT The appeal is allowed without costs. LA COUR L’appel est accueilli sans dépens.

The judgment of the Court was delivered by QUIGG J.A. I. Introduction [ 1 ] This is an appeal of a decision of a judge of the Court of Queen’s Bench, Family Division, following a motion seeking variation of child support under the Federal Child Support Guidelines . II. Factual and Procedural Background [ 2 ] The parties were involved in a common law relationship from which there were two children. The oldest child is no longer a child of the marriage, but the younger child, born in 1992, is enrolled in school on a part-time basis, and resides with her mother. Mr.

Trevors had been ordered to pay child support for both children by an order dated July 12, 2002. In January, 2008, a show cause hearing was held as a result of the ongoing child support arrears. Mr. Trevors provided the Court with copies of his income tax returns and proof of income for the years 2002 to 2006. As a result of the show cause hearing, the child support for both children was varied retroactively to June 1, 2003, based on Mr. Trevors’ increase in income which constituted a change in circumstances. The judge set child support on the basis of Mr.

Trevors’ income for the period of May 2007 to June 2008, $55,568. This amount was an anomaly, as his income for the previous four years had been $ 25,070, $41,152, $14,697 and $36,944.

[3] Mr. Trevors was credited for the time the children had resided with him in 2007, as well as an additional threemonths when the older child resided with him. Future child support for the youngest child was set at $481 per month, applying theFederal Child Support Guidelines tables based on an annual income of $55,568. Orthodontic expenses were to be shared on an equalbasis by the parties, and special expenses consisting of recreational extra-curricular school activities, to a maximum of $400 per year perchild, were to be shared by the parties on an equal basis as well. Mr.

Trevors was ordered to file copies of his income tax return with the Court by May 31st of each year. From April 18, 2008, to April 1, 2010, Mr. Trevors appeared in Family Division on no less than tenoccasions. On January 6, 2009, a motion judge held a show cause hearing and ordered: If, on January 1, 2009, or on the first day of […] any month thereafter, the Respondent, Edward Arnold Trevors, does not make hisregular child support payments, as per the Order of Mr. Justice Michel A.

Robichaud dated April 18, 2008, the Administrator is orderedto prepare the necessary documents to have the respondent, Edward Arnold Trevors, incarcerated for a period of ten (10) days thatscenario being applicable for each and every month until further order of the Court. [4] On April 15, 2009, a further show cause hearing was held regarding child support payments. In the fall of2009, Mr. Trevors filed a motion seeking to have his child support payments varied retroactively. He had filed for bankruptcy inNovember 2009, and his income for 2009 was indicated as being $1,144.00 per month. Mr.

Trevors produced contradictory evidenceregarding his bankruptcy: at one hearing, he advised he had left his employment due to health reasons, and, at another hearing, he statedthe car dealership where he was employed had closed. The judge found Mr. Trevors had quit his job at the car dealership. At a furtherhearing, it was discovered that Mr. Trevors was employed by his new spouse who operates a business that does renovations andcleaning. [5] Further hearings were held on December 11, 2009, January 11, 2010, March 12, 2010, and April 1, 2010.

Atthe final hearing, the judge gave an oral decision wherein he determined the youngest of the children to be a child of the marriage, andthat Mr. Trevors’ obligation toward her support continued. As stated earlier, Mr. Trevors appeared in the Court of Queen’s Bench tentimes between April 18, 2008, and the April 1, 2010, hearing (after having been served with an order to attend or ordered to returnpursuant to show cause hearings). The judge determined the Court had received unreliable evidence regarding Mr. Trevors’ actualincome, and declined to vary the existing order (dated January 6, 2009).

The judge was of the opinion Mr. Trevors was underemployed,and did not wish to find employment that would remunerate him in the amount he had earned previously. For those reasons, the judgeimputed income of $55,568 to Mr. Trevors and dismissed his motion. The child support set out in the previous order remained the same,and Mr. Trevors was ordered to continue paying $200 per month toward the arrears. III. Issues on Appeal [6] Mr.

Trevors relies on three grounds of appeal: 1) The child support payments should be varied according to the Federal Child Support Guidelines, based on his actual income; 2) The arrears should be recalculated according to the financial documents that were provided indicating actual income; and 3) The order to incarcerate if payment is not made by the first of each month should be removed. IV. Standard of Review [7] In family matters, motion judges’ decisions are to be given considerable deference. In MacDonald v.MacDonald, 2011 NBCA 25, [2011] N.B.J.

No. 81 (QL), Larlee J.A. states: […] An appellate court is empowered to set aside or vary a decision or order where it is the product of an error of law, an error inprinciple, a significant misapprehension of the evidence or if it is clearly wrong (see Hickey v. Hickey, (SCC), [1999] 2S.C.R. 518, [1999] S.C.J. No. 9 (QL) para. 11; Van de Perre v. Edwards, 2001 SCC 60, [2001] 2 S.C.R. 1014; Savoie v. Levesque, 2009NBCA 47, [2009] N.B.J. No. 47 (QL); Ms. P.H. v. Mr. P.H., 2008 NBCA 17, [2008] N.B.J. No. 52 (QL); Milton v. Milton, 2008 NBCA87, 338, N.B.R. (2d) 300, para. 14.; J.E.J. v.

S.L.M., 2007 NBCA 33, [2007] N.B.J. No. 249 (QL), para. 35; S.H. v. V.B., 2007 NBCA 69,321 N.B.R. (2d) 314, para. 2). [para. 7]

Although I am mindful of the fact that appellate courts should be reticent to interfere with a motion judge’s exercise of discretion, I believe this is a case where the exercise of discretion must be reviewed on the basis of reasonableness. Our role remains one that requires a review of the record to ensure compliance with statutory law and common law principles. This Court will remain vigilant to ensure compliance with both. V. Analysis A. Variation of child support and retroactive variation of arrears [ 8 ] As the first two grounds of appeal are inextricably intertwined, I will deal with them together.

In order to vary a child support award, the court must be satisfied there has been a change in circumstances. Once a change has been found to have occurred, the court must rely on the best evidence it has to determine the amount of support payable. The Federal Child Support Guidelines set out how to determine the amount of child support payable. In Scott v.

Scott , 2004 NBCA 99 , 278 N.B.R. (2d) 61, Richard J.A. states: T he governing principles for the determination of income for the purposes of child support are set out in ss. 16-20 of the Federal Child Support Guidelines subject to the interpretive rule set out in s. 2(3) that “the most current information must be used.” [para. 35] [ 9 ] In this case, the judge did not undertake any analysis to determine whether a change in circumstances had occurred since the date of the last order. If one reviews Mr.

Trevors’ reported earning history, it is quite evident that whether or not he is intentionally under-employed, he had only once, in the past seven years earned $55,000. Mr. Trevors provided evidence of his bankruptcy in 2009, as well as proof of his earnings for 2009. The motion judge found Mr. Trevors had not provided the court with sufficient, reliable documentation for the calculation of child support. With respect, I disagree for the following reason. Mr.

Trevors’ income at the time of the last hearing was $16,500, this amount was comprised of $12,342, as indicated at line 150 of his Notice of Assessment (Exhibit P-6), plus employment insurance earnings (Exhibit P-1). In my view, this, combined with Mr. Trevors’ bankruptcy, clearly indicates a change of circumstances. [ 10 ] The next step is to determine the amount of support that should be paid. The Federal Child Support Guidelines allow for the imputation of income in certain circumstances.

Section 19.(1) provides:

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; (

b) the spouse is exempt from paying federal or provincial income tax; (

c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada; (

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

e) the spouse’s property is not reasonably utilized to generate income; (

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; (

h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; and (

i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust. Attribution de revenu 19.

(1) Le tribunal peut attribuer à l’époux le montant de revenu qu’il juge indiqué, notamment dans les cas suivants :

a) l’époux a choisi de ne pas travailler ou d’être sous-employé, sauf s’il a fait un tel choix lorsque l’exigent les besoins d’un enfant à charge ou de tout autre enfant mineur ou des circonstances raisonnables liées à sa santé ou la poursuite d’études par lui;

b) il est exempté de l’impôt fédéral ou provincial;

c) il vit dans un pays où les taux d’imposition effectifs sont considérablement inférieurs à ceux en vigueur au Canada;

d) des revenus semblent avoir été détournés, ce qui aurait pour effet d’influer sur le montant de l’ordonnance alimentaire à déterminer en application des présentes lignes directrices;

e) les biens de l’époux ne sont pas raisonnablement utilisés pour gagner un revenu;

f) il n’a pas fourni les renseignements sur le revenu qu’il est légalement tenu de fournir;

g) il déduit de façon déraisonnable des dépenses de son revenu;

h) il tire une portion considérable de son revenu de dividendes, de gains en capital ou d’autres sources qui sont imposés à un taux moindre que le revenu d’emploi ou d’entreprise ou qui sont exonérés d’impôt;

i) il reçoit ou recevra un revenu ou d’autres avantages à

titre de bénéficiaire d’une fiducie. [ 11 ] The motion judge determined Mr. Trevors is intentionally under-employed within the meaning of s. 19(1)(

a) and is hiding income under the guise of having his new spouse claim to be the owner of the business by which he is employed:

[…] He is pretty much involved in that business….that he is the one taking care of all the advertising, that he is doing some managerial work and so forth, is evidence that he is a lot more implicated in that business than he wish [ sic ] this Court to believe. If he was not part of that business he could have called his wife to that effect, as a witness and she would have been the one in the position to say that it was his. Otherwise the Court has reasons to believe that he is part of that business and we should have obtained from him the information that would have shown what his real income is.

To testify that, like he did this morning, that he was working for family and while working for family he was not getting paid, that he is working for neighbo[u]rs and he is not getting paid is not, I think, accurate information.” The motion judge concluded that Mr. Trevors was under-employed and declined to vary the existing order. [ 12 ] Section 19(1)(

a) of the Federal Child Support Guidelines provides that a court may impute income to a parent if he or she is intentionally under-employed or unemployed. As noted, the motion judge found there was intentional under-employment on the part of Mr. Trevors. I would not interfere with that finding. I do, however, have difficulty with the method utilized by the motion judge to determine the amount of support payable. The motion judge found that Mr. Trevors had not provided sufficient documentation for the calculation of child support. [ 13 ] In this case, the motion judge did not believe Mr.

Trevors’ 2009 Notice of Assessment and Employment Insurance stubs were sufficient to calculate income. However, the judge had evidence before him indicating Mr. Trevors was not earning anywhere near $55,000 and, that the income earned in 2008 was exceptional. [ 14 ] Section 17(1) of the Federal Child Support Guidelines states: Pattern of income 17.

(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. Tendance du revenu 17.

(1) S’il est d’avis que la détermination du revenu annuel de l’époux en application de l’article 16 ne correspond pas à la détermination la plus équitable, le tribunal peut, compte tenu du revenu de l’époux pour les trois dernières années, déterminer une somme équitable et raisonnable en fonction de toute tendance ou fluctuation du revenu au cours de cette période ou de toute somme non récurrente reçue au cours de celle-ci. [ 15 ] Therefore, in situations where a determination of an individual’s annual income under s. 16 of the Guidelines would not be fair, the court can utilize the individual’s income over the last three years, and determine an amount that is fair and reasonable.

Perhaps this is what should have been argued before the judge who rendered the April 18, 2008 order. In this case, it is inappropriate to resort to s. 17 to determine Mr. Trevors’ income, as the judge found that he was intentionally under-employed and imputed income of $55,000, the income earned in 2008. Under s.17 of the Guidelines , the amounts that would have been used to determine income are: 2009 – ($16,500), June 2007 to May 2008 ($55,568), June 2006 - May 2007 ($36,944), for an average of $36,337 . I do not believe this to be a fair reflection of Mr. Trevors’ annual income.

Since the record contains all the relevant information, I will undertake the calculations required to render the decision which should have been made at first instance. In order to determine an amount that is fair and reasonable, based on Mr. Trevors’ earning history, I would also include the amount he earned in the year June 2005 – May 2006 ( $14,697 ). This results in an average of $30,927.25 per year , and child support payable in the amount of $271 per month for one child. I would make this payment amount retroactive to October 29, 2009, the date at which Mr.

Trevors filed the Notice of Motion seeking to vary child support and a retroactive variation of arrears. B. Removal of the Order to Incarcerate [ 16 ] In his order dated January 6, 2009, the motion judge directed that if Mr. Trevors did not make his regular child support payments pursuant to the April 18, 2008 order, the Court Administrator was to prepare the necessary documentation to have Mr. Trevors incarcerated for a ten-day period. This was ordered to be in effect on an ongoing basis, until further order of the court.

[ 17 ] A review of the Support Enforcement Act , S.N.B. 2005, c. S-15.5 reveals that s. 35(1) allows for the imprisonment of a payor. Sections 35(1) , (2) and (3) provide : Imprisonment of payer 35

(1) If the court is satisfied that all other practicable means that are available under this Act for enforcing a support order have been considered, the court may (

a) order imprisonment of the payer until the default is remedied, or (

b) impose a fine on the payer of not more than $500. 35

(2) An order for imprisonment under paragraph (1)(a) (

a) may be made conditional upon default in the performance of a condition set out in the order, (

b) may be ordered to be served intermittently, and (

c) shall not be for a period longer than 90 days, notwithstanding that the default has not been remedied. 35

(3) Imprisonment of a payer under this

section does not discharge arrears owing under a support order. Emprisonnement du payeur 35

(1) Si la cour est convaincu que toutes les autres mesures utilisées qui sont disponibles en vertu de la présente loi pour exécuter une ordonnance de soutient ont été étudiées, elle peut, selon le cas :

a) ordonner l’emprisonnement du payeur jusqu’à ce qu’il soit remédié au défaut,

b) imposer une amende au payeur d’au plus 500 $. 35

(2) L’ordonnance d’emprisonnement en vertu de l’alinéa (1)a) :

a) peut être assujettie au défaut d’observation d’une condition prévue dans l’ordonnance;

b) peut prévoir une peine purgée de façon intermittente;

c) est d’une période d’au plus quatre-vingt dix jours, même s’il n’a pas été remédié au défaut. 35

(3) L’emprisonnement d’un payeur en vertu du présent

article ne le libère pas des arriérés sur le soutien versé en vertu de l’ordonnance de soutien. [ 18 ] Since s. 35(2)(

c) states an order for imprisonment shall not be for a period longer than 90 days, notwithstanding that the default has not been remedied, I am not convinced that this

section permits a continuation of the prospect of incarceration on an indefinite basis without first having a show cause hearing where the payor could explain his or her reason for non- payment. Regardless, this issue was not argued before us, and as we are allowing Mr. Trevors’ appeal, the order of April 1, 2010 is set aside, including the portion respecting future incarceration. Therefore, it is not necessary to address this issue which is best left for another day. V. Disposition [ 19 ] For these reasons, I would allow the appeal without costs and set aside the order of April 1, 2010.

I would order that the child support payments be set in the amount of $271 per month, retroactive to October 29, 2009. As the $200 per month

payment toward arrears was not an issue brought before us by Mr. Trevors, I would order that this payment continue. As the order of April 1, 2010 is set aside, the order concerning future incarceration is also set aside. _______________________________ KATHLEEN A. QUIGG, J.A. WE CONCUR: ________________________________ B. RICHARD BELL, J.A. ________________________________ BRADLEY V. GREEN, J.A.