Wanchuk v Wanchuk, 2023 ABKB 121

Court of King’s Bench of Alberta Citation: Wanchuk v Wanchuk, 2023 ABKB 121 Date: 20230303 Docket: 4803 176536 Registry: Edmonton Between: Krista Jane Wanchuk Plaintiff - and - Joel Alexandre Wanchuk Defendant _______________________________________________________ Memorandum of Decision of the Honourable Justice L.K. Harris _______________________________________________________ [ 1 ] The parties are former spouses. Each brings an application regarding the determination of the father’s guideline income and retroactive and ongoing

section 3 and

section 7 child support, and the designation of certain expenses as

section 7 child support. I. Background [ 2 ] The parties were married in July 2012 and divorced in June 2017. There are two children of the marriage; the oldest daughter is currently 9, and the youngest daughter is currently 8. Pursuant to an order granted by Fraser J in April 2017 (the “Fraser

Order”), the parties have joint decision-making although since separation the children have lived primarily with the mother. The father had reasonable and generous parenting time as agreed to between the parties up until 2018 when Yungwirth J granted an order setting out specific parenting time for each. [ 3 ] The Fraser Order directed that the father pay to the mother

section 3 child support pursuant to the Federal Child Support Guidelines , SOR/97-175 (the “ FCSG ”) as well as his proportionate share of

section 7 expenses, which at that time consisted of day care expenses. [ 4 ] The Fraser Order determined that the father’s guideline income was $125,000 per year. Included in the

preamble is the following statement: “Provided the terms of the Husband’s Living Out Allowance do not change, it shall not form part of his income for support purposes.” [ 5 ] There is no indication within the Fraser Order what the terms of that Living Out Allowance (“LOA”) were. [ 6 ] The father’s income has fluctuated since the Fraser Order was granted. [ 7 ] In January 2018, the parties consented to a variation of child support downwards as the father’s income had fallen to $69,146.

The father had also fallen into arrears and was ordered to make payments towards those arrears. [ 8 ] The parties attended an EICC before Kiss J in December 2020. At that time, the father advised that his guideline income for 2019 was $115,000. Amongst other things, the parties were in dispute over the

section 7 expenses. Kiss J ordered that each child could be enrolled in one extracurricular activity for each of Fall/Winter and Spring/Summer. Kiss J ordered that the mother was to choose the activity from a list of activities which included hockey, skating, soccer, baseball, basketball, dance, gymnastics, cheer, softball. Brownies, Girl Guides, music lessons, ski/snowboard lessons, day camps, summer camp or overnight camp. The expenses for the activity chosen would include equipment, registration, and lesson fees.

In addition to the activities chosen from the list, the children were also permitted to be enrolled in two sessions of swimming lessons per year. If the mother decided to enroll the children in more activities than permitted by Kiss J, then she would be solely responsible for the costs of such enrollment (the “Kiss Order”). [ 9 ] The parties elected to participate in the Child Support Recalculation Program (“CSRP”).

The father says that in its recalculation decisions starting for the year 2019, CSRP set his annual guideline income including his LOA. [ 10 ] In May 2022, the father brought an application for an order “better defining my LOA not to be used as income purposes for

section 3 child support” and an order directing

section 7 expenses be paid through his

section 3 child support. The mother was given leave to bring a cross application for retroactive

section 3 and 7 child support, for an order including horseback riding in the list of permitted activities, and costs. Both parties filed multiple affidavits as well as concise letters in support of their positions. Both applications were heard by me in person in Special Chambers. II. Issues [ 11 ] These applications give rise to the following issues: i. What is the father’s guideline income for support purposes, having consideration to the direction that his LOA should be deducted from his total income? ii. Are the children’s gymnastics and horse-riding expenses appropriate s 7 expenses? iii.

Should the father be compelled to pay his proportionate share of s 7 expenses in addition to s 3 child support? III. The Father’s Guideline Income [ 12 ] The determination of the father’s income for support purposes is not straightforward.

This is partly due to piecemeal and incomplete disclosure over time, a lack of clarity regarding the amounts which comprised his LOA and how LOA is reported for tax purposes, and because he has been subject to reassessments by the CRA which has resulted in revised figures for the various deductions he has claimed. [ 13 ] The relevant amounts may be summarized as follows: YEAR TOTAL EARNINGS DECLARED TOTAL EXPENSES INCURRED LOA EXPENSES CLAIMED ON TAX RETURNS LOA EXPENSES ALLOWED 2019 $115,863 $918 0 0 2020 $173,954* $8901 $8901 0 2021 $185,274 $8556 $1583 $1583 *Includes $14,000 CERB

[ 14 ] It is evident that the father has made errors with respect to deductions claimed. For the years 2019 and 2020, he states he initially claimed as his LOA deduction the total amount he spent in a year for food and lodging while away for work purposes. CRA reassessed his 2019 and 2020 returns to disallow those amounts. [ 15 ] In 2021, he filed a form TL2, Claim for Meals and Lodging Expenses, attesting to having spent a total of $8,556 on meals and lodging while away for work purposes, giving rise to an allowable deduction of $1,583.

Whether the father’s change in the manner of reporting his meals and lodging expenses resulted from the 2019 and 2020 reassessments is unclear. [ 16 ] In addition, in 2020, the father claimed CERB totaling $14,000, which was included in his total income reported on his return. In 2022, the CRA deemed the father ineligible for that benefit and has required him to repay it. [ 17 ] The father’s position is that, despite the Fraser Order, CSRP has wrongly included his LOA in his total income for the purposes of assessing his guideline income.

He wants that corrected through a court order directing CSRP to deduct his LOA from his total income each year for the purposes of calculating child support, starting in 2019. [ 18 ] The father argues that the LOA to be deducted is the total amounts he incurred as expenses each year for meals and lodging while away for work purposes (2019 - $918, 2020 - $8,901, 2021 - $8,556). He says that those amounts should be deducted from the total income reported on line 150 of each year’s tax return to arrive at his guideline income.

Further, the father says that what CRA deems to be “claimable” as meals and lodging expenses for the purposes of income tax reporting is irrelevant. [ 19 ] The mother disagrees.

While she agrees that the father’s LOA should be deducted from his total income in principle, she states that the evidence is so unclear as to what is being claimed and what constitutes his LOA that the father has not met his burden of establishing that any of these expenses are an LOA and as such, they should not be deducted from the father’s total income. [ 20 ] I keep in mind that I am not being asked to determine if an LOA deduction is appropriate. Rather, I am asked to determine what the LOA and the father’s guideline income are.

Both parties seem to be in agreement that in principle, the LOA should be deducted from father’s total income. [ 21 ] Exactly what constitutes the father’s LOA is not determinable on the face of the Fraser Order. [ 22 ] The father’s affidavit evidence before Fraser J, included a statement by the father that his employer paid $50 per day as an LOA while the father works away from home.

The father also produced a letter from his then-employer confirming that he receives a “meal allowance” of $50 per day worked out of town when he is required to stay in a hotel. [ 23 ] In support of his application before me, the father provided some materials from the Employee Benefits handbook of his current employer, DFI, establishing that effective October 2020, DFI will pay a daily subsistence allowance to its employees while travelling for work purposes to cover the increased cost of meals and incidentals in the amount of $50/day. [ 24 ] The father argues that the daily rate for his LOA has recently increased to $65.00, but that is not in evidence before me. [ 25 ] From the evidence, I conclude that the father’s LOA consists of the $50 per day which he receives as a “meal allowance” or “subsistence” from his employer for working out of town.

Further, I conclude that the terms of his LOA have remained consistent since the Fraser Order (even though his employer has changed). I find that, in accordance with the Fraser Order, the LOA is the amount paid to the father by his employer each year, not what the father has paid for all of his meal and lodging expenses. [ 26 ] I do not agree with the father’s position that the total amount he personally spent on food and travel expenses each year is the figure that ought to be deducted. There is a significant difference between the expenses that the father paid and what his employer paid as an LOA.

This is emphasized in the DFI Employee Handbook where it is stated that the payment is meant to “offset the increased cost of meals and incidentals while traveling for work purposes…is only intended to offset additional costs incurred.” While an employee incurs daily expenses for meals and incidentals whether or not they are travelling, it is only the extra expenses caused by work-related travel that the LOA is intended to offset.

It is only that specific benefit paid by the employer that is to be deducted from the father’s total income each year. [ 27 ] I do agree with the father that how CRA treats an LOA and work-related expenses that the father actually incurs is irrelevant. [ 28 ] The amounts claimed by the father on his 2019 and 2020 income tax returns do not accurately represent the LOA received from his employer – those amounts are (according to the father) the total expenses he incurred in a particular year, including the LOA paid by his employer. [ 29 ] The appropriate amount to deduct from the father’s income is LOA actually paid by his employer pursuant to the subsistence benefit outlined in the DFI Employee Handbook.

Unfortunately, the father’s evidence on what those amounts are is difficult to decipher, but I make the following findings:

a) The father claims $918 for 2019 as set out in para 2 of his April 19, 2022 Affidavit. However, he has not provided any slips or printouts from his employer confirming that figure is the LOA paid for the year, and there is nothing on his 2019 income tax return which reflects this amount, or any other amount being claimed for such expenses;

b) The father claims $8,901 for 2020. This amount appears to have been claimed by the father as a Live Out Allowance deduction on line 256 of his 2020 income tax return. However, there are no slips or printouts produced from his employer confirming that. When reassessing the 2020 tax return, CRA reduced this claim to $1,575.50 and provided an explanation by way of a letter dated December 23, 2021 of what an employee may claim as an LOA deduction on his tax return: “According to the Form TL2, Claim for Meals and Lodging Expenses.”

129 Days 387 meals multiplied by $23.00 equals $8,901.00 Line 8523: $8,901.00 (line 1) Less $5,750.00 (Line 2) Total: $3,151.00 multiplied by 50% (line 3) Total line 22900: $1,575.50 (line 12) From this information, I conclude that the father’s employer paid him $5,750 as an LOA in 2020, not $8,901.00 as the father claims.

c) The father claims $8,556 for 2021. On his income tax return, however, he claims $1,583 as a Live Out Allowance. That amount appeared to have been accepted by CRA. This amount is very close to the amount allowed by CRA for 2020 and so I conclude that the father’s 2021 LOA was, for all intents and purposes the same as the year prior ($5,750.00). [ 30 ] To summarize, from the information produced by the father, it is not possible to determine what the father was actually paid by his employer as an LOA in 2019.

I therefore conclude that the evidence is not sufficient to allow me to determine what, if any, deductions should be made from the father’s total income for child support purposes pursuant to the Fraser Order for 2019. [ 31 ] It is only because of the CRA’s December 23, 2021, letter that I am able to determine that the father’s employer likely paid him $5,750.00 as an LOA in 2020. That amount shall be deducted from the father’s total income in 2020 for the purposes of establishing his guideline income. [ 32 ] The father has not provided any information showing what his employer paid him as an LOA in 2021.

However, his 2021 tax return advances a claim of $1,583 which is very close to what the proper claim was for 2020. I therefore conclude that $5,750 should be deducted from the father’s total income for 2021 for the purposes of establishing his guideline income. [ 33 ] At the hearing, the father produced a TL2 form for 2022. It was not attached to an Affidavit and therefore, I am unable to consider it in determining what if any deductions should be made to his 2022 total income because of receiving an LOA from his employer.

I accept, however, that some deduction should be made from the father’s total income in 2022 to reflect the actual LOA received from his employer.

The appropriate deduction shall be determined from the father’s form TL2 signed by his employer certifying the amount of LOA paid. [ 34 ] Insofar as the CERB that the father must repay, I direct that the amount of $14,000 should be deducted from the total income he reported for 2020 given his ineligibility for that benefit. [ 35 ] Finally, despite initially seeking an order “capping” his annual income at $150,000.00 regardless of the amount actually earned, the father confirmed he has abandoned that request during the hearing. [ 36 ] Accordingly, the father’s total guideline income for the years 2019 – 2021 is determined to be as follows, these figures to be used to recalculate child support owed by the father for these years: 2019: $115,863 (As reported, no LOA deduction) 2020: $154,204 (total income less $5,750 LOA and $14,000 CERB) 2021: $179,523 (total income less $5,750 LOA) [ 37 ] If the parties are unable to agree on the father’s 2022 guideline income considering my findings herein then they may return to me, having filed supporting evidence, for a determination. [ 38 ] Because I have determined that the father’s guideline income is slightly lower than the figures used by CSRP for 2020 and 2021, the father is entitled to a credit for any amount he has overpaid.

IV.

Section 7 Expenses [ 39 ]

Section 7 of the FCSG permits a court to order child support for special or extraordinary expenses in addition to child support pursuant to s 3. The Court is to consider the “necessity of the expense in relation to the child’s best interests and the reasonableness of the expense in relation to the means of spouses and those of the child and to the family’s spending pattern prior to separation.” In the case of extra-curricular activities, these expenses must satisfy further requirement of being extraordinary, as defined in s 7(1.1), by exceeding that which the requesting parent can reasonably cover considering that parent’s income and the amount that parent receives for s 3 child support.

Section 7 expenses are discretionary and are determined on a case-by-case basis: TA v ST , 2017 ABQB 414 at para 93 .

Section 7 expenses do not represent “double-dipping” when s 3 child support is also payable: Auer v Auer , 2021 ABQB 370 at paras 145 and 147 . [ 40 ] Relatively low-cost equipment and fees may be classified as being included in the s 3 payment. Some examples were set out in Hartley v Del , 2017 ABQB 14 at para 4 : In Krislock v. Krislock , 1997 CarswellSask 679 (Q.B.) , McIntyre J considered whether relatively low-cost sports equipment should be classified as s. 7 expenses, and concluded they should not. I agree with this assessment. Such items should reasonably be covered by the

s. 3 payment. I would put swimming lessons, with their relatively low cost, into the same category as well as fees for dance costumes, soccer try-out fees, hockey dry land training, dance summer camp costs, and community league soccer costs.

In general, at the incomes of these parties, as I have found them to be, any extra-curricular expense of less than $100 is not extraordinary and should reasonably be covered by the s. 3 payment . (emphasis added) [ 41 ] The mother has produced some income information, stating that her total income for 2021 was $78,136 and that she expects her total income for 2022 to be $79,682. [ 42 ] The mother has applied for an order adding horseback riding to the list of activities she is permitted to enroll the oldest child in and declaring that the gymnastics program attended by the youngest child is a permitted activity and the father should pay his proportionate share of those activities as a s 7 expense. [ 43 ] The mother argues that children’s interests change as they grow.

One child has recently tried horseback riding lessons and has benefitted greatly from the increase in confidence and friendships as a result. The lessons are organized in eight lessons per session, one lesson per week, with five sessions between September to June. The mother has been paying $420 per session on her own, as well as incurring costs for boots, clothing, and a helmet. The child attended her first horse show in December 2022 and was very successful. More importantly, she was thrilled with her accomplishment.

The mother is satisfied that horseback riding lessons are in the child’s best interests at this time. [ 44 ] One session of riding lessons was cancelled due to under-enrollment. Instead, the mother enrolled the child in “Sparklers”, an eight-week mentorship program. [ 45 ] The other child’s gymnastics fees change depending on what team she belongs to. This year she has been selected for a higher-level team which requires a registration fee of $1,684.43 paid over three installments. The mother works Bingos to contribute to the cost and has sourced a secondhand uniform.

The cost of competitions and travel are not included, and the mother has been paying for these costs herself. The mother’s evidence is that the child is very excited to be chosen for this team and would be badly disappointed if she were denied this opportunity. The mother is satisfied that this gymnastics team is in the child’s best interests. [ 46 ] The father argues that horseback riding lessons are extravagant. Neither household is wealthy, and the children ought to attend activities that are more in line with the parents’ standard of living.

The father argues that to include this activity in the permitted list of activities would inevitably lead to him being expected to pay for a horse and associated costs. [ 47 ] The father objects to the new level of gymnastics although the reason for that is unclear. From his materials, it appears as though he believes that the cost of this higher-level team is greater than what the child was involved in at the time of the Kiss Order. He argues that the mother over-enrolls the children in activities, and he can’t be expected to pay for it.

His argument seems to fly in the face of the direction given by Kiss J that gymnastics was a permitted activity that the father should contribute to and seems at odds with the fact that the child’s previous team cost almost $300 more per year, which cost was paid in part by the father. [ 48 ] The father has sent emails to the gymnastics club attempting to prohibit the club from accepting the child’s enrollment in the competitive gymnastics team, despite the Kiss Order expressly permitting the mother to choose which activity to enroll the children in. [ 49 ] Overall, the father argues that at a certain point, to order the payment of s 7 expenses in addition to s 3 child support amounts to a transfer of wealth.

He says that with his higher income, he will be paying a significant amount of s 3 child support and that the s 7 expenses should simply be included in that amount instead of being in addition to s 3 child support payments. He argues that he is now supporting his new partner, who is pregnant and not earning an income, and that the two children of the marriage are well looked after with their current level of s 3 support.

He argues that the mother has other sources of income aside from her T4 income earned as a teacher (child tax benefits, for example) that should be considered. [ 50 ] I will first deal with the father’s “transfer of wealth’ argument and submission that s 7 expenses ought to be subsumed into the s 3 support payments. [ 51 ] The FCSG does, in certain cases, provide authority for a court to order that no s 7 expenses be paid.

Section 4 states: Incomes over $150,000 4 Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is (

a) the amount determined under

section 3; or (

b) if the court considers that amount to be inappropriate, (

i) in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates; (ii) in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and (iii) the amount, if any, determined under

section 7. [ 52 ] In Moors v Moors , 2013 ABQB 740 , Hunt McDonald J provided a useful discussion on the Court’s discretion to depart from the FCSG in determining child support in circumstances involving high-income parents. In Moors , the court was asked to decide as to the father’s guideline income and the amount of retroactive child support, if any. The father’s guideline income was determined to be in the millions of dollars.

[53] Moors recites s 1(

a) of the FCSG: “One of the stated objectives of the FCSG is “to establish a fair standard of support forchildren that ensures that they continue to benefit from the financial means of both spouses after separation”. When the paying spouse’sincome exceeds $150,000 different considerations may come into play, however, there is a presumption that the table amounts apply.The payor has the onus of rebutting that presumption.

The court then looks at the condition, means, needs, and other circumstances ofthe children, the financial ability of each parent to contribute to their support, and determines if the Table amount is inappropriate. If so,the Court should use the Table amount for the first $150,000 and then set any further amount: Moors at para 137, citing Francis vBaker, (SCC). [54] In Ewing v.

Ewing, 2009 ABCA 227, a case in which the father was paying over $13,000 per month in child support, theCourt of Appeal noted in part that while standard of living can be considered in assessing need, at some point lower support paymentswill meet even a wealthy child's reasonable needs. [55] This is not a case where this is a functional wealth transfer. Bastarache J noted in Francis that sometimes, “the applicableGuideline figure is so in excess of the children’s reasonable needs that it may be considered to be a functional wealth transfer to a parentor de facto spousal support”. This case is not comparable.

Cases involving considerations of wealth transfer arise due to a parentalincome in excess of $1.0 million per year. The father’s income in this case is marginally over the $150,000 threshold. The father’sargument would only mean that the children’s situation would not reflect his increasing prosperity because the s 3 support that theywould be entitled to under the FCSG would be reduced by the amount of their s 7 expenses.

In effect, he argues for a deviationdownwards from the table amount they would otherwise be entitled to, and he has not satisfied the presumption that the table amountsare inappropriate in this case or that there should be a departure from the table amounts. [56] Although the father argues that the children are well looked after, it is readily apparent that they are not experiencing awealthy or luxurious lifestyle. Indeed, the father acknowledges this.

They are limited to one activity per school term and the mother’sfinances are stretched trying to meet those expenses. [57] This is a case where the children ought to benefit from the increasing financial means of their father. [58] I therefore conclude that the s 7 expenses should not be subsumed within the s 3 child support paid by the father. Instead, Iconclude that the father should continue to pay his proportionate share of s 7 expenses in addition to s 3 child support. [59] I will next examine whether the gymnastics and horse-riding lesson expenses are appropriate s 7 expenses.

To qualify as s 7expenses, the gymnastics and riding expenses must be extraordinary in the sense that they exceed an amount that the mother canreasonably cover, taking into account that spouse’s income and the amount that the spouse would receive under the applicable table (s7(1.1(a)) FCSG). [60] SJB v RDBB, 2019 ABQB 624 is an example of extraordinary expenses being granted. At para 158, a claim was advancedfor s 7 child support to pay for the high cost of one of the children’s dance lessons.

Because the Court accepted evidence that the dancelessons were beneficial for the child, it was determined that this cost was a valid s 7 expense. [61] I conclude that the gymnastics expense is an extraordinary expense and ought to be included in s 7 expenses.

Not only hasKiss J already considered gymnastics expenses to be s 7 expenses, but I am also satisfied that participating in the higher-level team isbeneficial to the child’s growth and development, and that the cost of gymnastics, while reasonable given the parties’ lifestyle andspending habits, is not something that the mother can reasonably cover through s 3 child support and her own income. Therefore, thefather must pay his proportionate share of this expense. [62] I also conclude that the horse-riding lessons are an appropriate s 7 expense.

The mother has provided evidence describing thetangible benefits that the parties’ child has experienced with riding. The lessons are not an extravagant cost and are comparable to thegymnastics lessons. There is no suggestion that the mother intends to escalate this to include the purchase of a horse for the child. Thenumber of programs and activities in which the child has been enrolled is in compliance with the Kiss Order and is an appropriateactivity for a child of her age and development. Therefore, I order that the Kiss Order be varied to include the horse-riding lessons.

Thefather must pay his proportionate share of this expense. V.

Summary [63] The father’s guideline incomes are set out in para 36 above. Those figures shall be the figures used by CSRP to recalculatethe s 3 and s 7 child support owed for the years 2019 – 2021. After considering the father’s 2022 income tax information, the partiesshall either present to me a proposed consent order setting out the father’s guideline income for 2022 for the purposes of the CSRPcalculations for that year, or, if they are not able to agree,

schedule a hearing before me to argue that issue. [64] The father shall also be responsible to pay his proportionate share of the gymnastics and horse-riding expenses as thoseexpenses are valid s 7 expenses. The Kiss Order shall be varied to include horse-riding as an option for the mother to chose for thechildren.

All other terms and conditions of the Kiss Order shall remain in force. [65] After considering my directions herein, the parties shall calculate the amounts owed by the father for support which shallinclude any set off arising as a result of my findings regarding the father’s guideline income if the father has overpaid support as a resultof the CSRP’s recalculation decisions. Those calculations shall be included in the form of order arising from my decision herein.

Ifeither party owes the other any amount as a result of my findings, the parties may agree on how that amount is to be paid and set out theterms of that agreement in the order or may return before me for a determination on that issue as well. VI. Costs

[ 66 ] The father has been somewhat successful on the LOA issue, but the mother has been entirely successful on the s 7 expense issue. Ordinarily, as there has been mixed success I would consider directing that the parties bear their own costs. [ 67 ] There are additional factors to consider in this case. Even though the father was somewhat successful in having his LOA deducted from his income, a determination of that issue was made more complex and time consuming because of the father’s piecemeal and incomplete disclosure and erroneous income tax filings.

To be clear, the court expects to see at the very least timely production of his complete income tax return, his T4 statement, the TL2 statement, and the employer’s slips confirming the total amount of LOA paid each year. The expenditure of a substantial amount of time, energy, and expense litigating over such small amounts should be discouraged. I also note that the father’s decision to email his daughter’s gymnastics club in an attempt to circumvent the Kiss Order is regrettable and should be reflected in the costs decision. I therefore conclude that the father ought to bear the costs of the applications.

The mother shall have costs calculated pursuant to Column 1 of

Schedule C of the Rules of Court . I decline to award the mother enhanced costs because of the father’s request for communications to be made through counsel. Heard on the 22 nd day of February, 2023. Dated at the City of Edmonton, Alberta this 3 rd day of March, 2023. L.K. Harris J.C.K.B.A. Appearances: James Carr CK Family Law for the Plaintiff Joel Alexander Wanchuk Self-Represented Litigant