L.M.M. and T.R.M., 2022 BCPC 95

Citation: L.M.M. and T.R.M. 2022 BCPC 95 Date: 20220526 File No: 3596 Registry: Western Communities IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: L.M.M. APPLICANT AND: T.R.M. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE J.P. MACCARTHY Appearing on their own behalf: L.M.M. Appearing on their own behalf: T.R.M. Place of Hearing: Western Communities , B.C. Date of Hearing: June 3, August 23, and October 13, 2021 Date of Further Written Submissions: March 16, 2022 Date of Judgment: May 26, 2022

Introduction [ 1 ] This Family Law Act matter raises an interesting child support issue about whether participation in a Department of National Defence “Leave with Income Averaging Program” may amount to intentional underemployment. [ 2 ] It also raises the interesting child support issue about whether and how payments received by a caregiver under a British Columbia Government’s Independent Living Program are to be treated for the purposes of calculating child support Guideline Income amounts under the Federal Child Support Guidelines , SOR/97-175 (the “ Guidelines ”) or otherwise.

Circumstances [ 3 ] T.R.M. (the “Father”) and L.M.M. (the “Mother”) are the parents of T.M. date of birth [omitted for publication] (“Child T”), now approaching [omitted for publication] years of age and G.M. date of birth [omitted for publication]. (“Child G”), now approaching [omitted for publication] years of age. Child T and Child G are collectively referred to as the “Children.” [ 4 ] The Father and the Mother (collectively the “Parents”) have a shared parenting arrangement with a week on and week off arrangement pursuant to a May 7, 2018, final consent order (the “May 2018 Consent Order”).

It is a very comprehensive order. [ 5 ] Unfortunately this court has been required to make further orders to deal with various disagreements between the Parents about their summer parenting time arrangements.

Furthermore the court has been required to make a Conduct Order on November 26, 2020, to ensure that Parents engaged in communication only through text and email, that all communication is to be child focused and respectful, that neither is to disparage the other in front of the Children and neither is to approach the other in person unless there was an emergency (the “November 2020 Conduct Order”). [ 6 ] The Father has full time employment as a civilian employee with Department of National Defence (“DND”). It provides him with 6 weeks vacation each year. He is a union member.

He anticipates that he will be retiring with a full pension in 2026 when he is aged 55. [ 7 ] The Mother has full time employment as kindergarten assistant with a local School District (the “School District”) but her employment does not extend into the summer vacation months. Therefore, she qualifies for and receives Employment Insurance during the summer months. She is a union member. She has been employed with the School District full time for 3 years and prior to that did part time work. She is presently approximately 42 years of age.

She contributes to a pension plan. [ 8 ] At the time of the making of May 2018 Consent Order, both parties were independently represented by legal counsel. Pursuant to the May 2018 Consent Order the annual Father’s Guideline Income was set at $71,153 and his child support payments for the two Children were determined to be $1,104 per month.

The Mother’s annual Guideline Income was set at $31,000 and her child support payments were determined to be $499 per month. [ 9 ] Pursuant to the May 2018 Consent Order on a set off basis the Father was ordered to pay the Mother $705 per month for child support for the two Children. In addition, on a proportionate basis the Father was required to pay 70% of the

section 7 special and extraordinary expenses and the Mother was required to pay 30%. [ 10 ] The parties were back before the court in May of 2019 and this time each was represented by duty counsel. By way a final consent order made May 13, 2019, (the “May 2019 Consent Order”) the Father’s annual Guideline Income was set at $71,064 and his child support payments were determined to be $1,103 per month. The Mother’s annual Guideline Income was set at $ 28,554 with child support payments set at $463 per month.

Pursuant to the May 2019 Consent Order and on a set off basis the Father was required to pay the Mother $643 per month for the child support of the two Children. The May 2019 Consent Order makes no changes to the proportionate sharing of Special or Extraordinary Expenses. [ 11 ] The parties have been self-represented in this new hearing before this court, initiated by way of an Application Respecting Existing Orders or Agreements filed by the Father on January 6, 2021. The Father is now seeking to further reduce his child support obligations and the Mother is opposing it.

The Father’s Alleged Material Changes in Circumstances [ 12 ] The Father alleges that there has been a material change in his financial circumstances for child support purposes.

The Father has voluntarily availed himself of a DND program called “Leave with Income Averaging” (“LIA”) whereby he can take leave without pay of a period of between a minimum of 5 weeks and a maximum of 3 months during the calendar year. [ 13 ] Written materials produced by the DND and entered as an exhibit in this hearing describe the LIA program in the following terms: Leave with income averaging is an arrangement whereby eligible persons reduce the number of weeks worked in a specific 12- month period by taking leave without pay for a period of between a minimum of 5 weeks and a maximum of 3 months.

Pay for the participating person is reduced and averaged out over the 12 month period to reflect the reduced time at work; however, your pension and benefits coverage, as well as premiums and contributions, continued at the pre-arrangement levels. [ 14 ] The Father went on the LIA for each of the 2020 and 2021 calendar years. He makes his annual election in the fall preceding the next calendar year. [ 15 ] For both years, the Father elected to take 10 weeks of LIA each summer. In addition to that he receives his usual annual vacation

time of 6 weeks. [ 16 ] At the time of the hearing of the present application, it was the Father’s intention to take LIA in 2022 and to continue do so in future years. [ 17 ] It does not appear as if the Father told the Mother in or around the time of the making of the May 2019 Consent Order that he was either considering or intending on going on LIA in 2020. [ 18 ] As described above, under LIA, the Father’s pay is reduced and that reduced pay is then averaged out over a 12 month period.

Therefore, he gets paid every month but at a reduced level to reflect his time on LIA. [ 19 ] The Father testified that his reason for going on the LIA is to allow him to have more time with the Children during the summer months so that they can do more things together and also because, in his opinion, his sons need a strong male image in their lives. [ 20 ] Under the May 2018 Consent Order each parent is entitled to a two week vacation block over the summer. [ 21 ] It is common ground that the Children also attend summer day camp activities in the summer such that the Children are not with the Father during all of the Father’s time off of work during the summer months, including the periods that coincide with the Father’s parenting time.

The Mother’s Alleged Material Changes in Circumstances [ 22 ] The Father also alleges a material change in the Mother’s circumstances for child support purposes. The basis for this allegation is that the Mother’s Guideline Income is understated because she does not declare on her income tax return monies that she receives as a contractor under a Home Sharing Service Agreement (the “HSSA”), whereby she has a person with disabilities (the “Individual”) living in her home.

This is apparently part of the BC Government’s Independent Living Program. [ 23 ] The Mother testified that as part of her obligations under the HSSA she provides supervision and care for the Individual, as well as room and board on a 24 hour, 7 day per week basis. Given the high functioning level of the Individuals for whom she seeks contracts, the Mother is able to maintain her School District employment during the day.

If she were to contract for an Individual with greater needs she would receive more compensation under HSSA but would be required to quit her full time employment with the School District. [ 24 ] Under the HSSA she receives “General funding” of $1,585 per month being $19,020 per annum and she also receives payment for the Individual’s accommodation of $716.13 per month, being $8,593.56 per annum.

The total she receives under her HSSA is $27,613.56 per annum, which works out to $2,301.13 per month. [ 25 ] From this amount she pays all expenses for the Individual including all her “overhead expenses” such as percentage portions of her insurance and her mortgage, utilities and the like, any damage done to her residence and all supervisions amounts at $100 per night for any respite she requires and obtains. For the purpose of these proceedings she has prepared a breakdown of her various expenses (the “Breakdown”). [ 26 ] She has being receiving these HSSA monies for the past couple of years.

Her first client was “Individual D” whom I believe she had under her care for about a year and who left June 30, 2019, when Individual D became pregnant and the Mother was unable to assume the additional responsibilities associated with a new born child. [ 27 ] That pending departure of Individual D was likely known in or around the time of the making of the May 2019 Consent Order. [ 28 ] Her second client is “Individual R” who started living with her March 1, 2020 and remains with her at present time but who can depart on 30 days’ notice, notwithstanding that the term of each HSSA is stated to be 2 years and that each September a new form of HSSA is signed. [ 29 ] The Father was aware that some monies were being received by the Mother from the HSSA but he says he was not aware of the amounts and was not aware of when the Mother was without an Individual in her home. [ 30 ] The Mother indicated that she was or was about to be “between clients” at the time of the making of the May 2019 Consent Order.

I understand that term to mean, it was a time when one Individual was leaving and she was in the process of starting arrangements to obtain a new Individual. [ 31 ] As it turned out, from the time Individual D moved out around June or July of 2019, the Mother was left without a client, and hence no HSSA payments.

She did not obtain a new client until Individual R arrived around March of 2020. [ 32 ] Both parties suggest that their respective lawyers worked out the final numbers for child support for the May 2019 Consent Order and that some consideration was made for the Mother’s receipt or potential lack of receipt of payments under a HSSA. [ 33 ] Neither party was able to explain what amounts were used in the child support calculations. The Mother was under the impression that the lawyers had agreed that something in the nature of $500 per month of net income was to be attributed to the Mother.

Neither party has been able to produce any background or supporting documentation for the calculations, other than the entered copy of the May 2019 Consent Order. Parents’ Income Amounts In Accordance with their Income T 1 Income Tax Return Filings The Father [ 34 ] The Father’s Guideline Income based upon his 2017, 2018, 2019, and 2020 Income Tax returns using his Line 150 (or Line15000) amounts and with an allowed deduction for Guideline

Schedule III amounts for union dues under Employment Expenses

(see s. 1 (

g) dues and other expenses of performing duties) is set out in Table 1. Table 1 Year Line 15000 Employment Expense Deduction Guideline Income Amount 2017 $78,052 $942 $77,110 2018 $71,984 $920 $71,064 2019 $71,851 $941 $70,910 2020 $58,705 $822 $57,883 The Mother [ 35 ] The Mother’s Guideline Income based upon her 2017, 2018, 2019 and 2020 Income Tax returns using her Line 150 (or Line 15000) amounts and with an allowable deduction for Guideline

Schedule III amounts for union dues under Employment Expenses (see s. 1 (

g) dues and other expenses of performing duties) is set out in Table 2. Table 2 Year Line 15000 Employment Expense Deduction Guideline Income Amount 2017 $25,871 $365 (estimated) $25,506 2018 $31,499 $503 (estimated) $30,996 2019 $34,569 $503 (estimated) $34,066 2020 $36,019 $503 $35,516 [ 36 ] Table 2 does not reflect any adjustment for any amounts received by the Mother for HSSA payments.

Additional Evidence About the Parents’ Income [ 37 ] By way of a Judicial Memorandum dated March 7, 2022, sent to the parties by me through the Western Communities Registry I required that both the Father and the Mother were to each prepare and affirm an affidavit and attach to it the following documents as exhibits:

a) A copy of their 2021 year end payroll statement that shows all earnings and deductions to the 2021 year end date; and

b) A copy of their 2021 T slips for all income earned in 2021. [ 38 ] I directed that both of these affidavits would form part of the evidentiary record in the hearing of this matter because each of the parties provided some evidence about their respective 2021 employment incomes but the required information set out above, of course, was not available at the time of the hearing.

I set a March 24, 2022, deadline. [ 39 ] Both parties materially complied with this order but both indicated that they did not have a 2021 year end payroll statement and therefore relied upon their respective 2021 T 4 statements of remuneration paid. [ 40 ] That information produced some interesting results and a relevant context for this court’s required analysis. The Father’s Affidavit: Additional Information About His Income [ 41 ] In the Father’s Affidavit affirmed and filed on March 16, 2022, the Father provided his 2021 T4 Statement which showed his employment income at $84,141.17.

His total union dues were $1,026.64. The net amount is $83,114.53. That of course is a very significant increase over and above his 2017, 2018, 2019, and 2020 employment income amounts. [ 42 ] Attached to the Father’s Affidavit was other relevant information.

The 2021 employment income amounts apparently includes compensation for amounts negotiated by his union with the Federal Government or its agencies as “General damages compensation” and “Damages for the 2014 late collective agreement implementation” and other “top-up amounts.” As I understand it from the additional attached information the General damages compensation was paid in the Spring of 2021 and the “top-up payments” were paid on September 2021. [ 43 ] In addition, there is written confirmation that the Father’s base pay annually from the DND is $75,733, paid bi-weekly in the gross amount of $2,902.98.

That is before any reduction adjustment for his participation in the LIA program. The reduced amount on the LIA program puts his annual income at approximately $62,415. [ 44 ] In rough terms, it appears that the Father has enjoyed a wage increase from 2019 to 2022 which in rough terms is approximately 5.45%. [ 45 ] It is concerning that none of this important financial information was disclosed to the court by the Father during the hearing of this matter.

It is particularly concerning because this information must have been known to the Father during and in the course of the hearing of this matter which occurred in 2021 and in particular at the time of the continuation on October 12, 2021. It is also concerning that in the Father’s viva voce evidence of June 3, 2021, he was very vague (and it would now seem intentionally vague) about when he would receive retroactive pay.

The Mother’s Affidavit: Additional Information About Her Income [ 46 ] In the Mother’s Affidavit affirmed and filed on March 16, 2022, are attached her 2021 T4 statement issued by the School District

which shows her employment income as $31,515.43. Her union dues are shown as $517.50 for a net amount of $30,997.93. [ 47 ] In addition her 2021 the Mother’s filed Affidavit includes her T4E statement which shows that she received employment insurance benefits of $5,232.00 during 2021. [ 48 ] In gross terms, the Mother’s 2021 income was $36,747.43. This is an increase of some $728 over and above 2020 and some $2,178 over and above 2019. [ 49 ] None of these amounts include any proceeds she received from the HSSA.

Positions of the Parties The Father [ 50 ] The Father seeks to further reduce his child support obligations under the May 2019 Consent Order both retroactively and prospectively on the basis:

a) of his lower annual income and therefore his lower Guideline Income while on LIA and;

b) the Mother’s alleged change of circumstances that her annual income has increased and more so when the HSSA payments are taken into account. [ 51 ] The Father says that the Mother should be including all of these HSSA receipts of $27,613.56 in her Guideline Income for child support purposes. [ 52 ] He does not cite any references to the Income Tax Act , the Guidelines or any case authorities in support of either of these propositions. The Mother [ 53 ] The Mother opposes the Father’s application.

The Mother says that her receipts under the Home Sharing Service Agreement are non-taxable “in much the same way as those of a foster parent” and further says that those receipts should not be included in her income for child support purposes on that same basis. She does not cite any specific references to the Income Tax Act , the Guidelines nor any case authorities in support of either of this proposition.

The Issues to be Considered and Decided [ 54 ] Because the self-represented Parents have not provided this court with any case authorities to assist in its analysis, that task has been left to the court. [ 55 ] The first issue that must be examined and decided can be stated as follows:

a) Are there any case authorities that explicitly consider how courts should consider the income of a parent who has voluntarily availed themselves of a “Leave with Income Averaging” (“LIA”) program for the purposes of calculating child support?

b) If so, do these cases support the Father’s argument that his child support payments should be lowered because of his reduced income under the LIA? [ 56 ] The second issue that must be examined and decided can be stated as follows:

a) Should the funds received by the Mother under the Home Sharing Service Agreement (“HSSA”), or any portions of them, be included in the Mother’s income for child support purposes under sections 16 to 20 of the Guidelines or otherwise? Brief

Summary of Conclusions [ 57 ] The Father’s child support payments should not be lowered. A reduction of income under an LIA program will only be warranted where the unpaid leave is required by the needs of a child of the marriage or by the spouse’s reasonable educational or health needs. That is not the situation in this case. [ 58 ] The Mother’s net profits from the HSSA should be imputed as income and grossed up to account for their tax-exempt status.

The Mother’s income from the HSSA is likely understated in her Breakdown and should be imputed to be between $1,047.01 and $1,157.47 per month (i.e., $12,564.17 and $13,889.64 per annum), then grossed up to account for its tax-exempt status. LEGAL FRAMEWORK [ 59 ] The following provisions of the Guidelines are applicable to the required analysis that must be undertaken. [ 60 ]

Section 12 of the Guidelines mandates that: 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. [ 61 ] Section 19(1) of the Guidelines allows the court to impute income where (

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; […] (

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

g) the spouse unreasonably deducts expenses from income ANALYSIS OF LAW Assessing effects of LIA on Child Support Payments Legal Framework [62] Under the LIA program, the Father can take up to two periods of leave without pay during a specific 12-month period whilecontinuing to receive a salary. As previously noted, the salary that the Father would have received during the period, minus the leavewithout pay, is spread out over the entire 12-month period. [63] Where a parent reduces their income through participation in an LIA program, they shall be found to be intentionallyunderemployed as per section 19(1)(

a) of the Guidelines unless they can prove that the unpaid leave was necessitated by the needs of achild of the marriage or the spouse’s own reasonable educational and/or health needs: Terracol v Terracol, 2010 ONSC 6442(“Terracol”) at paras 26–27; P.D.H. v D.J.H. 2000 MBQB 86 (“PDH”) at paras 6–10. [64] Generally speaking, bad faith is not required to prove intentional unemployment for the purposes of section 19(1)(

a) of theGuidelines: see PDH at para 5, citing Hanson v Hanson, (BC SC), [1999] BCJ No 2532 (QL) at paras 10–13. [65] Alberta is the sole exception to this rule, whose legal test for intentional underemployment “differs significantly from the test thatis applied in the rest of Canada”: Lorenson v Lorenson, 2021 ABQB 273 (“Lorenson”) at para 23. In Alberta, income may only beimputed where there is “intentional under-employment or unemployment ‘akin to bad faith’”: Lorenson at para 31, citing MacDonald vBrodoff, 2020 ABCA 246 at para 68. Analysis and Application of the Case Authorities A

Summary of Terracol v. Terracol [66] In Terracol, the court considered whether the court should impute income for a period where the respondent had reduced theirincome through an LIA program. The LIA plan—approved March 2008—allowed the respondent to take 55 days of unpaid leave in2009 (para 19). The respondent stated that they had taken this unpaid leave to spend more time with a child born into his newrelationship in December 2007 (para 3). The court imputed income equal to the respondent’s regular pre-LIA salary for the duration ofthe LIA salary reduction (para 28). A

Summary of PDH v. DJH [67] In PDH, the court considered a petition by a husband to reduce his child support payments due to an income reduction caused byhis participation in an LIA program. The court ultimately held that, while his choice may be supportable, his failure to provide swornevidence as to why he took unpaid leave and therefore imputed income equal to the husband’s regular pre-LIA salary (para 10). Application to the Present Case [68] In the present case before this court there is some sworn evidence adduced by the Father as to his reasons for participation in theLIA program.

It has some merit, namely more family time with his Children. However, it is a voluntary choice that he has made forhimself with some potential incidental benefits for the Children by providing an opportunity to participate together in more familyoriented events. In my view, the Father has not established that this choice was necessitated by the needs of a child of the marriage. [69] It is noteworthy that the Father already has a substantial amount of vacation in order to devote to those ends.

The Father’sadditional time off in the summer will not be entirely available to pursue those family purposes, since the Children will spend part of thetime at local summer day camp. [70] On one hand, the prospect of additional time together must be weighed against the right of a child, on the other hand, to receivechild support, and the primary obligation and duty of a parent under section 147(1) of the Family Law Act to pay child support.Therefore, parents have a joint and ongoing obligation to support their children.

The amount of child support is based not only on theparents’ earnings, but also on what they can earn. [71] Thus, the British Columbia case authorities at all levels have made it clear that in situations and circumstances similar to those ofthe Father’s, where a payor parent has intentionally become underemployed by reducing their hours of employment or going onto planslike LIA, they should not be able to reduce their child support obligations. [See for example Watts v. Willie 2004 BCCA 600; Barker v.Barker 2005 BCCA 177 and Llwellyn v.

Llewellyn 2002 BCCA 182, being a case that I previously considered in S.M.K. v. S.T.K. 2019BCPC 4]. [72] Therefore, given all of the above the Father’s child support payments should not be lowered because he has voluntarily gone ontothe LIA. What Amount Should Be Used to Calculate the Father’s Child Support Obligations?

[73] Having determined that the Father’s child support payments should not be lowered but given that based upon the Father’sAffidavit filed March 16, 2022, which shows the significant increase in his employment income from 2019, I must now determine whatshould be the ongoing basis for determining the Father’s child support obligations. [74] It is unclear on the evidence as to what that basis should be, given that there has been a substantial increase in the unadjustedamount of the Father’s income for the period from 2019 to 2021. That increase reflected in 2021 is explained above.

However, I alsonote parenthetically that payments received in 2021 may cover unidentified past years. By way of example, the retroactive paymentsreceived in 2021 may go back and cover 2019 or even earlier and hence the figures used in the May 2019 Consent Order may not beaccurate if the retroactive amounts are factored in. [75] Under

section 17 of the Guidelines, the court may have regard for a payor spouse’s income over the last three years anddetermine an amount that is fair and reasonable in light of a pattern of income, fluctuation in income or receipt of a non-reoccurringamount during those years. Such discretion may be exercised if the determination of income under

section 16 would not be the fairestdetermination of that spouse’s income. The court may impute income under sections 16 to 21 of the Guidelines. Specifically undersection 23, income can be imputed in the situation where there has been a failure to comply with a parent’s obligation set out undersection 21 to provide income information as detailed therein. [76] If I were to use the amounts of $70,910 for both 2019 and 2020 and the amount of $83,114 for 2021 and then average those threeamounts it would equal $74,978.

The additional evidence in the Father’s Affidavit filed March 16, 2022, shows that on an unadjustedbasis for LIA his regular income that is available for child support starting in 2022 equals $75,733. [77] Therefore, on this basis I impute the Father’s Guideline income commencing in January 2021 at $74, 978 and commencing inJanuary of 2022, I impute it at $75,733.

What Amount of HSSA Income Should Be Included in Child Support Calculations for the Mother? [78] I now turn to consideration of the Mother’s tax-exempt status of her HSSA income and its inclusion in the calculations of theMother’s Guideline income. [79] In that regard I have concluded that the income tax-exempt status of HSSA income is irrelevant. [80] The Income Tax Act, RSC 1985, c 1 (5th Supp) (“ITA”), section 81(1)(h) (“headed social assistance [and foster care])” excludessocial assistance payments made to an individual caregiver for the benefit of a cared-for individual, such that they are not included incomputing income of the individual caregiver under the ITA.

This would include monies received under the HSSA. [81] The umbrella organization for the HSSA programs, being the Community Living British Columbia, publishes a handbook forhome sharing providers that appears to confirm the relevance of Income Tax Act, section 85(1)(h): see, Community Living BritishColumbia, Handbook for Home Sharing Providers (2018), online: Community Living British Columbia<https://www.communitylivingbc.ca/wp-content/uploads/HSP-Handbook-with-cover-pages.pdf> at 12 (the “Community LivingHandbook”). [82] I take judicial notice of this information contained in the Community Living Handbook based upon the parameters outlined in R.v.

Spence, 2005 SCC 71 , [2005] 3 SCR 458 and because this fact is either (1) so notorious or generally accepted as not to be thesubject of debate among reasonable persons, or (2) capable of immediate and accurate demonstration by resort to readily accessiblesources of indisputable accuracy. In that regard, I am relying on the second condition. [83] However, the fact that the Mother’s HSSA income is tax-exempt on this basis is irrelevant, as

section 19(

b) of the Guidelinesallows tax-exempt income to be included in the total income used in calculating child support payments. [84] When calculating the Guideline income for a spouse who derives income from an HSSA, the court will impute income equal totheir net profit after deducting their expenses, grossed up for income tax only: Sonne v Wurzer, 2013 BCSC 288 at paras 29–30. [85] The present situation is analogous to that in Cole v Cole, 2010 BCSC 1330 (“Cole No. 1”), as foster allowances and HSSApayments are both tax-exempt through the operation of ITA, section 81(1)(

h) and provide an income to the caregivers above the expensesincurred in providing for the cared-for individual. [86] These facts eliminate the two grounds upon which Cole No. 1 was distinguished by me in J.R. v. C.R. 2015 BCPC 54 at paras103–107, thus allowing this court to conclude that the present case is factually analogous to Cole No. 1. Thus some portion of the home-sharing provider’s profits should be imputed as income for child support purposes: see Cole No. 1 at para 20. In J.R. v.

C.R. atparagraphs 108 and 109 I concluded that reimbursement for surrogacy-related expenditures going exclusively to the reimbursement ofsuch expenses should not be included as income under the Guidelines nor should they be considered under the Spousal Support AdvisoryGuidelines or when considering the quantum of spousal support.

Judicial Consideration of Legitimate Business Expenses [87] In recognition of how the legal framework described above incentivizes spouses to minimize their income, courts can imputeincome where they find that a spouse is unreasonably deducting expenses from their income: Guidelines, section 19(1)(g). [88] Where a court suspects a spouse is underreporting their income by overstating their expenses, they can use the spouse’scalculations as a starting point and attempt to infer the amount by which the net profits should be increased, even if the increase is“somewhat arbitrary”: Cole v Cole, 2011 BCSC 208 (“Cole No. 2”) at para 65. [89] Where a party fails to provide full financial disclosure, this will “likely lead to an adverse inference being drawn against [them]and the risk of [their] income being set at a higher level”: KM v CZ, 2012 BCPC 105 (“KM”) at para 28.

[ 90 ] In the absence of a professionally-prepared accounting of business expenses, the deduction of expenses including automotive costs, utility costs (including hydro, telephone, and cable), miscellaneous office costs, or home insurance may be indicative of an attempt to understate income, as these expenses categories are frequently used by small businesses to cover mixed personal and business expenses: Cole No. 2 at para 63; K.M. at paras 30–31. [ 91 ] Similarly, an attempt to include pro-rated rent as an expense should be treated with caution, as the caregiver would be paying rent regardless of their work as a foster parent (or, in this case, a home service provider): K.M. at para 31. [ 92 ] Regarding what represents a reasonable profit margin absent conclusive financial evidence, the court in Sonne considered the financial information of a home service provider who claimed they had an income of $29,765.88 on total revenue of $73,434.40, representing a net profit margin of 35.7%: Sonne at para 29 .

The court found that the home service provider was overstating their expenses by including 40% of all housing and utilities costs to the tenants and therefore imputed a non-taxable income of $38,000, representing a net profit margin of 45.5%: Sonne at para 30 . [ 93 ] An income that is closer to 23–25% of overall revenue is not reasonable as “common sense and experience [dictate] that businesses which are run successfully, do not operate at a 77% overhead”: C.Z. v K.M. , 2008 BCPC 298 at para 27 , cited in Cole 2 at para 60.

Application to Present Case Monthly Expenses [ 94 ] In the present case, the Mother’s home-sharing income is $2,301.13 per month. In her submissions, the Mother claimed monthly expenses of $1,630, detailed as follows:

a) Mortgage portion (essentially pro-rated rent): $500

b) Additional car insurance: $25

c) Gas: $70

d) Additional home insurance: $40

e) Groceries/toiletries: $600

f) Hydro: $90

g) Garbage: $35

h) Cable/internet: $80

i) Heat/electricity: $60

j) Water: $30

k) Respite average: $100 [ 95 ] In light of the above noted legal framework, there are indications that the Mother is understating her income because of her claim for these amounts of expenses. As per Cole 2 and K.M. , the mortgage, gas, hydro, garbage, cable/internet, heat/electricity, and water are all expenses that she would be paying whether or not she was subject to the HSSA and should not be deducted.

Similarly, the money spent on respite care so the Mother can have time away from her duties is for her benefit and not that of the Individual. [ 96 ] While it is reasonable to believe that some portion of her costs relating to home insurance, car insurance, groceries, and toiletries are legitimately deductible, a lack of supporting documentation makes it difficult to determine whether her estimates are accurate. [ 97 ] A consideration of the Mother’s net profit margin is, in my view, helpful in determining how much income to impute to the Mother.

Based on the Mother’s Breakdown of submitted expense, her profit is 30.5% of her total revenue. [ 98 ] This percentage can be calculated on the following basis: (Expenses of $1,650) ÷ (Income of $2,301.13) × 100% = 69.5% overhead.

Thus, the Mother has a net profit margin of 30.5%. [ 99 ] Importantly, this amount is lower than the 35.7% profit margin of the home-sharing provider in Sonne , which was held to be too low due to overstated expenses, suggesting that the Mother’s self-reported income is also understating her actual profit margin. [ 100 ] If one were to remove the expenses that I believe have been incorrectly deducted (the mortgage, gas, hydro, garbage, cable/internet, heat/electricity, water, and respite care), her net profit margin increases to 70.1%. [ 101 ] This percentage can be calculated on the following basis: (Expenses of $665) ÷ (Income of $2,301.13) × 100% = 28.9% overhead.

Thus, the Mother has a net profit margin of 70.1%. [ 102 ] This latter number is much higher than the 45.5% net profit margin imputed in Sonne , which suggests that likely it is not an accurate estimate of her actual profit margin. [ 103 ] The midpoint between the Mother’s self-reported profit margin and my estimate is 50.3%, which is reasonably close to the 45.5% number in Sonne . Thus, it seems proper to impute a net income in the 45.5–50.3% range, resulting in a monthly tax-exempt income of

between $1,047.01 and $1,157.47 (or between $12,564.17 and $13,889.64 per annum) that would then be grossed up and added to the Mother’s employment Guideline income from the School District and her Employment Insurance benefits. One-time Expenses [ 104 ] The Mother claims she has paid $1,250 for repairs due to damage which she testified was caused by her home sharing client.

The repairs were for new glass sliding doors, plumbing issues, and carpet cleaning. [ 105 ] As per the logic from Cole No. 2 and K.M ., the repairs to the home represent housing expenses that should not be included in the calculation of net profits. This money has been spent on improving and maintaining an asset owned and enjoyed by the Mother.

Further, there is little evidence regarding how this damage occurred other than a bare assertion that it is attributable to the home-sharing client and that Individual’s temper. [ 106 ] The Mother claims pecuniary losses due to missing work at her other job with the School District to care for her home-sharing client. [ 107 ] The pecuniary losses arising from the Mother missing work appears to represent a foreseeable consequence of the Mother’s obligations under HSSA. The HSSA,

Schedule B at page 15 makes it clear that the Mother is responsible to her home-sharing client “24 hours per day, 7 days per week for the entire term.” The fact that the Mother may have to leave her other work with the School District on some days can hardly be considered a properly deductible business expense. CONCLUSION S The Father’s Imputed Child Support Guideline Amounts [ 108 ] The Father’s child support obligations should not be lowered.

A reduction of income for child support purposes under an LIA program will only be warranted where the unpaid leave is required by the needs of a child of the marriage or the spouse’s reasonable educational or health needs. [ 109 ] In fact the Father’s child support obligations should be increased as part of the set-off calculation.

The Father’s Imputed Income Effective 2021 and Resulting Child Support [ 110 ] The basis for the calculation effective January 1, 2021, will be the Father’s imputed Guideline income of $74, 978 and his Guideline child support obligation for the two Children is $1,163 per month before calculating and applying the set off. The Father’s Imputed Income Effective 2022 and Resulting Child Support [ 111 ] Effective January 1, 2022, the Father’s imputed Guideline income will be $75,733 and his Guideline child support obligation for the two Children is $1,175 per month before calculating and applying the set off.

The Mother’s Imputed Child Support Guideline Amounts [ 112 ] The Mother’s net profits from the HSSA should be imputed as income and grossed up to account for their tax-exempt status . The Mother’s income from the HSSA is likely understated in her Breakdown.

It should be imputed to be between $1,047.01 and $1,157.47 per month (i.e., $12,564.17 and $13,889.64 per annum), then grossed up to account for its tax-exempt status. [ 113 ] Having regard to all of the circumstances in this case, I will impute that HSSA income to be $1,050 per month or $12,600 per annum effective from January 1, 2021, but subject to being grossed up to account for its tax exempt status. [ 114 ] The combination of her 2021 employment income of $35,516 plus the HSSA amount of $12,600 equals $48,116, which on a grossed up basis equals $53,196. [ 115 ] Therefore the Mother’s HSSA income amount on a grossed up basis equals $17,680 per annum being $1,473 per month (the “Mother’s Grossed up HSSA Income”).

The Mother’s Imputed Income Effective 2021 and Resulting Child Support [ 116 ] The Mother’s Guideline Income effective January 1, 2021, is therefore imputed to be $35,516 plus the Mother’s Grossed up HSSA Income of $ 17,680. [ 117 ] Therefore, effective January 1, 2021, the Mother’s Guideline Income is imputed to be the sum of those two amounts which equals $53,196 per annum and her Guideline child support obligation for the two Children is $827 per month before calculating and applying the set off.

The Mother’s Imputed Income Effective 2022 and Resulting Child Support [ 118 ] The Mother’s Guideline Income effective January 2, 2022, is imputed on the same basis, being her employment income of $36,747 plus the Mother’s Grossed up HSSA Income of $ 17,680. [ 119 ] Therefore, effective January 1, 2022, the Mother’s Guideline Income is imputed to be the sum of those two amounts which equals $54,309 per annum and her Guideline child support obligation for the two Children is $844 per month before calculating and applying the set off. The Revised Set Off Calculations of Child Support Effective from January 1, 2021

[120] I have utilized DivorceMate calculations to assist me in completing the revised calculation for child support in this matterincluding determining the grossed up amount of the Mother’s HSSA proceeds.

In my view is open for this Court to use a DivorceMatecalculation, since it is public and readily available and is accepted by courts as being accurate. [121] Using the calculations set out above and the imputation of income for both the Mother and the Father, effective as at January 1,2021, on a set-off basis the Father will pay to the Mother monthly child support in the amount of $336 per month for the support of thetwo Children commencing on January 1, 2021, and continuing on the first day of each month thereafter to and including December 1,2021.

The Revised Set Off Calculations of Child Support Effective from January 1, 2022 [122] Using the calculations set out above and the imputation of income for both the Mother and the Father, effective as at January 1,2022, on a set-off basis the Father will pay to the Mother monthly child support in the amount of $331 per month for the support of thetwo Children commencing on January 1, 2022, and continuing on the first day of each month thereafter for so long as the Children areeligible for support under the Family Law Act, or until further court order or a written agreement of the Parents. [123] There will be orders accordingly.

Application of the Father for Retroactive Adjustment [124] I am not prepared to retroactively adjust the Mother and the Father’s Guideline income for any periods prior to January 1, 2021,as sought by the Father.

I note that the child support amounts contained in the May 2019 Consent Order were arrived at by agreement ofboth the Mother and the Father and with the help of duty counsel. [125] In addition, both the Mother and the Father were aware that some amount of HSSA income was being received or was about to bereceived by the Mother and the importance of it for her. [126] In fact, according to an unsworn written statement of the Father which was admitted as Exhibit 6 and adopted by him in his vivavoce evidence, the Father says he was aware of the Mother’s HSSA income at the time of the making of the May 2018 Consent Orderwhich he put at $21,600 per annum.

On that basis he says that he “reluctantly agreed” to the inclusion of $500 per month (being $6,000per annum) into the Mother’s Guideline Income for the purposes of that order. [127] At the time of the making of the May 2019 Consent Order, both the Mother and the Father would also have been aware of theMother’s HSSA income and its importance to her.

Apparently the two duty counsel who assisted the parties were also aware of it.However, it is unclear as to what adjustment, if any, was made to reflect it in the child support calculations for the May 2019 ConsentOrder. [128] In my view, the evidence does not support the suggestion that the Mother was intentionally withholding details about thisimportant financial information. She presumed correctly on the basis of some materials available to her including from CommunityLiving British Columbia that the proceeds of the HSSA were tax free money.

She then wrongly presumed that those funds had limitedapplication to the issue of her child support obligations. [129] It appears that both the Mother and the Father, and possibly duty counsel, simply were unaware of how to treat the HSSA incomefor child support purposes based upon Sonne v. Wurzer. That is not a criticism but rather an observation and is explainable in partbecause it is a somewhat unique situation and with a limited number of case authorities which have dealt directly with the issue.

It alsoacknowledges the difficult role of duty counsel who are often not fully or accurately informed by their clients and who face significanttime constraints when attempting to deal with a high volume of cases in family remand court. [130] In my view, in the absence of any other evidence, as contemplated in D.B.S. v.

S.R.G., 2006 SCC 37 effective notice that the issueof a change in the parties incomes for child support purposes, necessitating a renegotiation was provided by the Father to the Motherwith the filing of his Application Respecting Existing Orders or Agreements on January 6, 2021 (see D.B.S at paragraph 121). [131] As previously noted the Father did not voluntarily disclose his actual known and increased 2021 income during the trial. Thattype of conduct should not be rewarded either directly or indirectly by looking back and beyond January 2021 for a retroactiveadjustment of the Mother’s child support obligations.

I say that, ever mindful that child support is the right of the child. Special or Extraordinary Expenses [132] As the parties are aware from the previous orders, the amount of the Guideline income for each of the Parents that is determinedby the court is relevant in determining the sharing of special and extraordinary expenses. Under

section 7 of the Guidelines they are to beshared by the parents in proportion to their incomes, after deducting the child’s contribution, if any (see section 7 (2)). [133] There is some evidence before this court that there has been some disagreement about the nature of certain things, and the costs ofcertain things which one party seeks to be included and shared as a

section 7 expense. [134] The May 2018 Consent Order contains the following provision: 19. Unless a court otherwise order, for extracurricular activities, sports and lessons to qualify as a Special or Extraordinary Expense, theparties must agree in advance in writing to this Expense being incurred. [135] As noted by Baird J. in Clarke v. Clarke, 2014 BCSC 824; [2014] B.C.J. No 926 , to qualify as a special or extraordinaryexpense it must fit within one of the categories of expenses listed in

section 7 of the Guidelines. That list is exhaustive and accordingly ifthe claimed expense does not fit into any of those categories it cannot be a special or extraordinary expense (see: paragraphs 50 and 51).

[ 136 ] It is established law that the court retains discretion to divide the parents’ obligations other than in proportion to their incomes taking into account certain factors (see: for example A. v. B ., 2013 BCSC 60 ). [ 137 ] I am prepared to make an adjustment to the proportionate sharing of these expenses on a prospective basis but not so on a retroactive basis predating January 1, 2021.

Therefore, effective from January 1, 2021, and until further order of the court or written agreement of the parties, each Parent will pay their respective proportionate shares of the special or extraordinary expenses, which for the Father is 58.5% and which for the Mother is 41.5%. [ 138 ] To assist the Parents on the issue of

section 7 expenses, I have made a more detailed order as set out below. Future Communication [ 139 ] The communication between the parties remains very strained and has for many years. I note parenthetically that it will be in their respective interests and in the best interests of the Children to communicate more openly, effectively and respectfully on the issue of child support,

section 7 expenses and other matters relating to the Children. Resulting Orders [ 140 ] Based upon all of the foregoing the following is a

summary of the final orders that relate to the two Children who are the subject matter of the shared parenting time arrangement set out in

section 9 of the Guidelines and which will serve as basis for the Western Communities Registry to prepare the form of the orders: 1) The Father and the Mother are both found to be a resident of British Columbia; 2) Effective January 1, 2021, the Father’s Guideline income is imputed to be $74,978 and his Guideline child support obligation for the two Children is $1,163 per month before calculating and applying the set off; 3) Effective January 1, 2021, the Mother’s Guideline Income is imputed to be $53,196 per annum and her Guideline child support obligation for the two Children is $827 per month before calculating and applying the set off; 4) Effective as at January 1, 2021, on a set-off basis and in order to satisfy the Parents’ child support obligations, the Father will pay to the Mother monthly child support in the amount of $336 per month for the support of the two Children commencing on January 1, 2021, and continuing such payments on the first day of each month to and including December 1, 2021; 5) Effective January 1, 2022, the Father’s imputed Guideline income will be $75,733 and his Guideline child support obligation for the two Children is $1,175 per month before calculating and applying the set off; 6) Effective January 1, 2022, the Mother’s Guideline Income is imputed to be $54,309 per annum and her Guideline child support obligation for the two Children is $844 per month before calculating and applying the set off; 7) Effective as at January 1, 2022, on a set-off basis and in order to satisfy the Parents’ child support obligations, the Father will pay to the Mother monthly child support in the amount of $331 per month for the support of the two Children commencing on January 1, 2022, and continuing on the first day of each month thereafter for so long as the Children are eligible for support under the Family Law Act, or until further court order or a written agreement of the Parents; 8) The foregoing provisions of this order will vary and replace paragraphs 14, 15, and 16 of the order of the Honourable Judge Rogers made May 7, 2018, relating to child support and will also vary the child support provisions contained within the order of the Honourable Judge Mrozinski made May 13, 2019; 9) Effective from January 1, 2021, and until further order of the court or written agreement of the parties, each Parent will pay their respective proportionate shares of the special or extraordinary expenses, which proportion for the Father is 58.5% and which proportion for the Mother is 41.5% 10) Except as may otherwise be agreed to by the Parents in writing, the following will be special or extraordinary expenses:

a) In accordance with section 7 (1) (

a) of the Guidelines child care expenses incurred for the Children by either Parent being as a result of the employment, illness, disability or education or training for employment of either Parent and provided that the other Parent is unable to provide child care for that period that child care expenses are incurred;

b) As set out in section 7 (1) (

b) of the Guidelines , that portion of the medical and dental insurance premiums attributable to the Children;

c) As set out in section 7(1) (

c) of the Guidelines Health related expenses for the Children that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;

d) As set out in section 7 (1) (

d) of the Guidelines , and extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child’s particular needs;

e) As set out in section 7 (1) (

e) of the Guidelines expenses for postsecondary education;

f) As contemplated by

section 7 (

f) of the Guidelines , extra ordinary expenses for extracurricular activities. Unless a court otherwise orders, for extracurricular activities, sports and lessons to qualify as a Special or Extraordinary Expense, the Parents must agree in advance in writing to this expense being incurred; and

g) Other extraordinary expenses agreed to by the Parents in writing. 11) Each Parent incurring a special or extraordinary expense will provide the other Parent with a copy of the receipt or proof of payment for any special or extraordinary expense that has been incurred and the other Parent will pay his /her proportionate share of the expense to the Parent who has incurred the expense within 14 days.

All amounts payable will be net of any available subsidies; 12) The provisions of the orders contained in paragraphs 9 and 10 above relating to special and extraordinary expenses will replace paragraphs 18 and 19 of the order of the Honourable Judge Rogers made May 7, 2018; 13) The Parents with the assistance of either the Victoria Justice Access Centre or the Family Maintenance Enforcement Program will jointly complete a written reconciliation of any underpayments or overpayments of child support required by the terms of this order and any underpayments or overpayments of

section 7 special and extraordinary expenses for the period ending May 30, 2022, (the “Reconciliation”). The Reconciliation will be completed no later than July 15, 2022, and then filed with the Western Communities Court Registry. If the parties are unable to settle and agree upon the form and contents of the Reconciliation in the aforesaid manner and to thereby determine the net amount due by one Parent to the other Parent (the “Reconciliation Amount”) then either Parent will be at liberty to arrange with the Judicial Case Manager to have the matter placed before the Honourable Judge J.P.

MacCarthy for a 30 minute in person hearing for determination of any outstanding issues.

The Reconciliation Amount will be paid by the Parent who owes the Reconciliation Amount in six equal instalments to be made on October 15, 2022, January 15, 2023, April 15, 2023, July 15, 2023, October 15, 2023, and January 15, 2024, or as the Parents may otherwise agree in writing but subject always to further order of the court; 14) Commencing on May 31, 2023, and continuing on May 31 in each year thereafter for so long as the Children or either of them is eligible for support under the Family Law Act, or until further court order or a written agreement of the Parents, the Parents will continue to exchange full copies of their T-1 General Return filed income tax returns complete with all schedules and attachments and CRA Notices of Assessment and Reassessment for the immediately completed prior taxation year.

The Father will also provide the Mother with copies of all relevant documents from the Department of National Defence to confirm his continued participation in the Leave with Income Averaging Program and confirmation of the unadjusted amount of his annual, full time compensation.

The Mother will provide the Father with copies of all relevant documents and written confirmation of her total compensation received from her Home Sharing Service Agreement and written confirmation of the time frames when she has a client under a Home Sharing Service Agreement. 15) The Parents will be required commencing May 31, 2023, and annually thereafter to communicate any material changes in circumstances which would warrant a change in the amount of child support payable or the sharing of s. 7 special or extra-ordinary expenses pursuant to the terms of this order.

If despite their best efforts, the parties are unable to agree on whether the amount of child support payable should be changed, then the Parents must attempt to mediate the dispute with a qualified independent family mediator or with the assistance of a Family Justice Counsellor, at the Victoria Justice Access Centre, before making an application to the Court to change the child support obligations under this order; 16) In the event that the Parents have any future disagreement on any issue relating to any parenting time order or about the Children’s extracurricular activities or child care arrangements and cannot reach an agreement on any matter in disagreement, despite their best efforts, they must attempt to mediate the dispute with a qualified independent family mediator or with the assistance of a Family Justice Counsellor, at the Victoria Justice Access Centre, before making an application to the court, or for directions under s. 49 of the Family Law Act on any issue in disagreement or a decision they consider contrary to the best interests of the Children; and 17) The Western Communities Court Registry will be responsible for preparing the form of the order.

The signatures of the Parents approving the form of the order are hereby waived. The form of the order will be submitted to the Honourable Judge J.P. MacCarthy for approval and his signature. [ 141 ] I note parenthetically that I have not seized myself of this case except for the purposes of settling the Reconciliation. I do not anticipated that there will be a need for future applications, hearings or family management conferences especially in light of the dispute resolution provisions contained within the various orders that I have made. The Honourable Judge J.P. MacCarthy Provincial Court of British Columbia