PC v SV, 2022 ABKB 644

Court of King’s Bench of Alberta Citation: PC v SV, 2022 ABKB 644 Date: 20221109 Docket: 4801 182798 and FL08 01517 Registry: Calgary Between: P.C. Plaintiff (Applicant/Cross-Respondent) - and - S.V. Defendant (Respondent/Cross-Applicant) Corrected judgment: A corrigendum was issued on November 9, 2022; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Reasons for Decision of the Honourable Justice N.E. Devlin _______________________________________________________

Background facts [ 1 ] This couple married in 1998 and separated in 2018. Their two children, A and F, are both now over 18 years of age. In November 2019, they signed a separation agreement (“the Agreement”) which was drafted by the mother. That Agreement sought to resolve all issues between the parties and contained a final property settlement, as well as agreements regarding child support based on the parties’ incomes at the time. [ 2 ] At the time when the time the Agreement was signed, both children lived with the mother.

The plan was that their daughter A would attend University in the fall of 2019, and thus remain a child of the marriage. Their son F was also expected to continue to live at home with the mother. The father worked for a carpet cleaning business and made a steady income upon which his child support obligations in the Agreement were based. [ 3 ] Life, however, is unpredictable. A did not continue to University in the fall of 2019. Rather, she worked part time and pursued and pursued a relationship which resulted in her becoming pregnant in January 2020.

In March 2020, the Covid-19 pandemic struck, resulting in the father losing his job the following month. In January 2021, F left his mother’s home and moved in with his father on a full-time basis. A’s pregnancy had complications which resulted in her being medically unable to work or attend school during the final five months. The parties’ grandchild was born in October with significant health challenges. [ 4 ] A ultimately return to University in the fall of 2021 and continues to attend as a full-time student. F turned 18 in June 2022 and is no longer a child of the marriage.

The applications [ 5 ] The father brought an application seeking child support from the mother in respect of F, from January 2021 through to June 2022. He also sought a refund of child support payments which he had made under the previous regime in January, February, and March of 2021. He also sought repayment for extracurricular activity registration fees he had paid for F, which were specified as a shared

section 7 expense in the Agreement. [ 6 ] The mother responded by arguing that A never ceased to be a child of the marriage by virtue of her “high-risk” pregnancy and the birth of her high-needs child. The mother also sought to attribute incomes well above the father’s declared earnings for 2020 and 2021, on the basis that the carpet cleaning company he started in response to being laid off had earned significant gross revenues.

A material change in circumstances has occurred [ 7 ] I am satisfied that there have been sufficient change in circumstances – being F’s move to his father’s care and the pandemic’s impact on the father’s earnings – to depart from the parties’ previous Agreement. Given that the subject matter of the dispute is child support, arguably no such change need be shown in any event: Colucci v Colucci , 2021 SCC 24 at para 57 “ Colucci ”; Banack v Johnson , 2016 ABQB 576 at para, 18.

The claims for retroactive variation in support were timely, though less so in respect of the mother’s requests that support continue for A as an adult. Issue #1 -

Section 3 child support payable to the father for F [ 8 ] F lived with his father for the full 18 months prior to him reaching the age of majority. While the mother initially resisted the notion that F had moved in with the father before April 2021, in argument it became clear that F had in fact unilaterally chosen to reside with the father in early January. The April date reflected the move of F’s possessions when the father relocated from his apartment to a larger rental home to accommodate his son. Therefore, the father did not owe child support for any period in 2021.

He made three ongoing payments to the mother while F was initially in his fulltime care, resulting in an overpayment of $1,763. [ 9 ] The mother earns T4 income and thus her income for child support purposes is not contentious. In 2021 she earned a guideline income of $135,654. This yields a monthly child support obligation of $1198.49. The mother’s total

section 3 obligation for this period is $21,572.82, subject to readjustment when her actual 2022 earnings are known. Issue #2 -

Section 7 sports expenses for F [ 10 ] Pursuant to paragraph 33 of the Agreement, the parties share

section 7 expenses on the basis of the mother paying 68% and the father 32%. The cost of F’s sporting activities are expressly enumerated as an agreed

section 7 expense under paragraph 33(d). The father produced receipts for $4,350, covering registration for three seasons. The mother does not dispute these or her obligation to pay a proportionate share, amounting to $2,958. Issue number #3 – Should additional income be attributed to the father [ 11 ] When the father was laid off due to Covid, he immediately began his own carpet cleaning business. Admirably, despite the pandemic, this start-up business managed gross revenue of over $49,000 in 2020 and over $83,000 in 2021.

[ 12 ] Applying the principles articulated by Yungwirth J in Sweezey v Sweezey , 2016 ABQB 131 , the mother argues that further funds from the father’s corporation should be attributed as available to him for child support purposes under

section 18 of the Guidelines . Respectfully, I cannot agree. [ 13 ] To begin with, I find that the expenses booked by the father’s business are reasonable on their face. There is nothing in the unaudited Statement of Income and Expenses that raises the slightest bit of concern or suspicion. The amounts are modest and proportionate. In 2020, the company, which was highly leveraged through the father’s personal borrowing to purchase equipment, had a net income of $22,345.

The father appears to have paid himself a modest amount of this which supplemented his other earnings, resulting in a net taxable income of $37,216 in 2020. [ 14 ] Given the newness of his business, I find that it was unreasonable for him to leave modest retained earnings in the company during the first year. The father’s disclosure shows large, and growing, personal debt, much of it subject to high rates of interest. I am satisfied that his is not inappropriately shielding available resources within the company, in part because it would be financially irrational for him to be doing so.

On the record, I find that he is a capable and hard-working individual who is struggling to make ends meet. [ 15 ] Therefore, the father has discharged his onus to show that no further income should be attributed to him beyond his declared Line 150 income. His monthly

section 3 obligation for 2020 was thus $303.34. He in fact paid $587.70 per month, as required by the Agreement. That number had been derived from his 2019 guideline income of $68,500. The father thus overpaid his

section 3 support obligation in respect of Franco by $3,416 in 2020. [ 16 ] In 2021, the father’s business realized a net income of $42,154. I find the enumerated expenses leading to this number to again be reasonable. That year, the father extracted $47,900 from the company by way of a dividend, which he duly declared as taxable income. In addition to the carpet cleaning business, the father began to supplement his income by working as a server at banquet events which recommenced at various hotels in 2021. This income appears on his tax return by way of T4.

The father’s total line 150 Guideline income for 2021 was thus $59,351. [ 17 ] The mother initially argued that the full $83,000 in corporate gross revenue for 2021 should be added on to the father’s earnings. That is not the manner in which support obligations are to be calculated under

section 18 of the Guidelines , as gross earnings are meaningless as a number indicative of available resources. [ 18 ] I also note that the father paid-out some of the company’s retained income from 2020 in the 2021 dividend. This is not indicative of someone attempting to shield their earnings inside a corporate vehicle.

Simply put, I find that the father’s treatment of his corporate financial activity has been fair and reasonable as regards both his declared taxable income and actual resources available. [ 19 ] I take into account that the father’s dividend income garners more favourable tax treatment than salary and that this could be a factor favouring a slightly higher attribution of available income for support purposes: Sweezey at para 56 . However, I also note as a countervailing factor that the company appears to be capitalized by the father’s personal debts.

Given his overall financial situation, I am of the opinion that his annual income as determined under

section 16 of the Guidelines fairly reflects the money available to him for the payment of child support. [ 20 ] Therefore, his

section 3 child support obligation for A in 2021, and 2022 until this year’s actual numbers are ascertained, exchanged, and reconciled, is to be calculated off his Line 150 income of $59,351, yielding a monthly payment of $499.23. Issue #4 – Agreed

section 3 child support for A payable to the mother [ 21 ] It is not contentious that A started University in September 2021 and remains a full-time student. She lives with, and is supported by, the mother. The father agrees that he thus owes support for September through December of 2021, amounting to $1996.92. For 2022, he owes nine months of support, being January through September, at the same rate, pending ultimate adjustment for actual incomes. This obligation totals $4,493.07.

He will continue paying $499.23per month going forward until circumstances change such that A ceases to be a child of the marriage. [ 22 ] Consistent with the obligations of an adult child receiving support while pursuing schooling, A will provide her father with confirmation of her registration at the beginning of each term and a copy of academic results at the completion of each term. The Agreement already governs their obligation regarding other education-related

section 7 expenses and the parties are expected to resolve those between themselves, consistent with the principles articulated in Olsen v Olsen , 2003 ABCA 56 at paras 16-18 “ Olsen ”. This includes consideration of whether A is dependent during summers out of school and what contribution she can be expected to make to her own living and educational expenses. This ruling does not decide those issues.

Issue #5 - Did A return to being a child of the marriage due to her pregnancy? [ 23 ] Part of the mother’s response to the father’s application for a sizable adjustment of child support was to cross-apply for retroactive support for A, on the basis that she remained a child of the marriage throughout her “high-risk” pregnancy and while at home with her newborn. The mother’s evidence supporting this contention consists of a one-page “Return To Work/School Form” from a family practitioner.

Signed on June 2, 2020, this document indicates that A is “unable to work (or attend school) illness/injury” from that date through to her due date in mid-October 2020.

[24] The fact that the mother’s claim for resumption of child support for A during her adult pregnancy and maternity appears tohave arisen as a result of the father’s application, together with his claim to have had no knowledge that his daughter was in medicaldistress, gave me pause. Ultimately, however, support is the right of the child, not the parent who asserts the demand: Henderson vMicetich, 2021 ABCA 103 at paras 32 and 60.

Applying the principles in Colucci, I find that her claim for retroactive support is notbarred and should be determined on its merits. [25] As a starting point, A clearly ceased to be a child of the marriage when she turned 18 in May 2019 and opted to work parttime rather than continue her education in the fall of 2019.

While she continued to live at home and enjoyed support from her motherduring this period, that does not assist the claim: KMR v IWR, 2020 ABQB 77 at para 24, citing Ethier v Skrudland, 2011 SKCA 17 atparas 16-17. [26] The question is whether A returned to being a child of the marriage at any point in her pregnancy and subsequent maternitytime, preceding her return to full-time education in the fall of 2021.

The onus on this issue rests on the mother who is advancing theclaim on behalf of the adult child: Olson, at para 13. [27] Answering this question requires the Court to consider the interaction between a child’s own pregnancy and the definition of“child of the marriage” contained in the Divorce Act, RSC 1985, c3, s 2. The term is defined as follows: child of the marriage means a child of two spouses or former spouses who, at the material time, (

a) is under the age of majority and who has not withdrawn from their charge, or (

b) is the age of majority or over and under their charge but unable, by reason of illness, disability or other cause, to withdraw from theircharge or to obtain the necessaries of life; (enfant à charge) [emphasis added] [28] The mother relied on Bragg v Bragg, (NL SC) at para 13, which found that a child who was herself anew mother continued to remain a child of the marriage, despite having deferred post-secondary education and taken a part-time jobwhile raising her own newborn child. [29] Respectfully, I am of the view that the law does not support an extension of support to adult children to this extent on ablanket basis.

Rather, I agree with the conclusion reached in Budden v Budden, 2001 BCSC 236, where the Court held at paragraph 16that: ...the voluntary assumption of other responsibilities by an adult child (such as having a baby of their own) does not appear at law torevive the obligation of the parent to provide financial support for that child. There was no case law presented supporting the revival ofthis obligation simply because an adult child has a baby and cannot work because they are caring for that baby.

Nor is such a principle inkeeping with the underlying policy of this section, namely, that children are expected to become financially self-sufficient once theyreach the age of majority.[1] [30] An adult deciding to have a child of their own is, in many ways, the antithesis of remaining a child themselves. Moreover,pregnancy is neither incompatible with working nor pursuing educational endeavours.

Therefore, pregnancy, and the subsequent burdenand expense of caring for a newborn, do not per se constitute an “other cause” upon which an adult would return to being a child of themarriage by virtue of the financial dependency as defined in

section 2 of the Divorce Act. [31] Rather, as stated in Budden at para 11: ...as was set out in Giorno v. Giorno (1992), (NS CA), 39 R.F.L.(3d) 345 (N.S.C.A.) reversing in part (1991), (NS SC), 103 N.S.R.(2d) 431(T.D.); Holmes v. Holmes (1991), (PE SCTD), 96 Nfld. & P.E.I.R. 281(P.E.I.T.D.); and Walsh v.

Walsh (1988), (NB CA), 16 R.F.L.(3d) 1 (N.B.C.A.), a child over the age of majority whois not in attendance at an educational institution is not a “child of the marriage” even if she continues to live with one of her parents andis financially dependent on that parent because she has a child. [emphasis added] [32] Therefore, for the first five months of her pregnancy, and subsequent to the birth of her child, A did not return to being a childmarriage. She was simply a young adult who relied on her mother’s help to raise her own child. [33] The period from June through October, requires closer consideration.

While pregnancy is not an illness or disability, it maycause or precipitate medical conditions that make the mother incapable of supporting herself. While the evidence of illness and disabilityin this case is scant, it is clear and uncontradicted. On the record before me, A was medically unable to support herself for the last fivemonths of her pregnancy. She was dependent on her mother for the necessities of life because she could not work for health reasons.

Thefact that the medical impediments to A supporting herself were related to a pregnancy makes no difference. [34] While the mother’s decision to actively support her adult child up to that point was a personal one which did not cause her tocontinue to be a child of the marriage, the circumstances for the last five months of her pregnancy support a finding that she reverted tothis status on the basis of medical need. Consequently, I find that the father was responsible for assisting in the support of A for that five-month period.

This conclusion is buttressed by an email sent from the father shortly before the daughter was found medically unfit towork,[2] in which he indicated that she could count on him to provide whatever she needed. [35] Applying the principles articulated by Trussler J in Gamache v Gamache, 1999 ABQB 313 at para 3, the father’s obligationfurther extended to assisting his daughter through “a reasonable transition” after this period of disability. While there is a paucity ofevidence about this period of time, there is a common sense inference on the overall facts that a further two months is reasonable. Thus, I

find that A was a child of the marriage for the seven months from June through December 2020. Based on his guideline income of $37,216, his obligation was $303.34 per month, amounting to $2,123.38 over this period.

Net result [ 36 ] The mother owes the father the following amounts: • 2020 overpayment due to pandemic-reduced income: $3,416 • overpayment by father for F, January-March 2021: $1,763 • support for F, January-June 2022: $21,572.82 • proportionate share of sports registrations for F: $2,958 Total $29,709.82 [ 37 ] The father owes the mother the following amounts: • support for A while unable to work, June-Dec, 2020: $2,123.38 • support for A while full-time student, Sep-Dec, 2021: $1.996.92 • support for A while full-time student, Jan-Sep, 2022: $4,493.07 Total $8,613.37 [ 38 ] In the result, the mother owes the father $21,096.45 .

Mode of repayment [ 39 ] The Court is sympathetic to both the mother’s and the father’s situations. They are obviously hard-working individuals going through a very difficult time.

In Colucci , the Supreme Court held that a payor will face hardship in paying down arrears due to their financial circumstances, a variety of “creative payment options” are available to mitigate the unfairness that might otherwise occur if full payment is immediately required: Colucci at para 140 . [ 40 ] While the Court is not privy to all the details, it is clear that the Agreement involved the apportionment of debt obligations, which saw the mother take on primary liability for matrimonial debts and the father agreeing to repay her $400 per month for an extended period of time.

He continues to owe approximately $16,000 under this arrangement. As a result, the mother asks that any amounts she owes him as a result of these proceedings be set off against that debt rather than her being required to immediately produce cash payment. [ 41 ] The father resists the suggestion. He is himself deeply in debt, in part because he had to borrow to make up for the absence of timely child support.

The precipitous decline in his earnings during the pandemic, coupled with the need to capitalize his new business and his sudden need for a larger home to accommodate F, have resulted in him owing very significant amounts both on high interest rate credit cards and a personal line of credit. He points out that since child support is a present entitlement, in contrast to his negotiated agreement to pay a marital debt over time. Finally, he notes that the debt repayment arrangement was a negotiated exchange for other concessions.

For these reasons, the father argues that a set off is unfair to him as it prioritizes paying off debt the mother agreed to carry over time. [ 42 ] In this case, I exercise my discretion to direct the following result to affect a fair and workable outcome in this case. A full payout would cause undue hardship to the mother. Equally, the father is entitled to some immediate financial relief. The Court here is effectively deciding how to most fairly allocate debt burdens between these parties.

To that end, $11,200 of the amount owed by the father t the mother will be paid by a reduction in his debt to the mother under the Agreement. This will take the form of his next 27 monthly payments towards that debt being deemed to be made. He will resume making the $400 monthly payments in January of 2025. [ 43 ] The remaining $9,980.45 will be paid to him by the mother by December 31, 2022. Ongoing obligations of disclosure and recalculation [ 44 ] The Agreement requires the parties to exchange full financial information by July 1 of each year and to recalculate and adjust their

section 3 and

section 7 obligations accordingly. They will continue to do so going forward, though now as part of this Court’s formal order in this application. Costs [ 45 ] The parties in this case were self-represented and presented their positions in an exemplary fashion. However, I see no reason to depart the normal practice that costs are not awarded as between self-represented litigants in this case: LaTrace v Warkentin Building

Movers Virden Inc , 2021 ABCA 377 . Heard on the 21 st day of September, 2022. Dated at the City of Calgary, Alberta this 27 th day of September, 2022. N.E. Devlin J.C.K.B.A. Appearances: P.C. for the Self-Represented Litigant S.V. for the Self-Represented Litigant _______________________________________________________ Corrigendum of the Reasons for Decision of The Honourable Justice N.E. Devlin _______________________________________________________ Corrected paragraph 43: The remaining $9,980.45 will be paid to him by the mother by December 31, 2020 2022.