T.B. v. R.B. Date:, 2015 BCPC 194

Citation: T.B. v. R.B. Date: 20150429 2015 BCPC 0194 File No: 6880 Registry: Vernon IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: T.B. APPLICANT AND: R.B. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L.D. WYATT Counsel for the Applicant: Carolyn Christiansen

Counsel for the Respondent: Respondent representing himself Place of Hearing: Vernon , B.C. Date of Hearing: April 1, 2015 Date of Judgment: April 29, 2015 [ 1 ] This matter came before me for hearing on April 1, 2015 and judgment was reserved to this date. The applicant filed an application on September 4, 2014 seeking an adjustment of child support for the parties’ three children, which review was pursuant to the parties’ separation agreement dated October 31, 2012 (“the Agreement”). The applicant also sought a determination of special and extraordinary expenses.

The respondent filed a reply on October 17, 2014 opposing an adjustment of child support, and he also filed a counterclaim seeking a reduction in the duration of spousal support in the Agreement. In his reply, the respondent stated that “there is no change in circumstances significant enough to change an agreement negotiated only two years ago”. In his counterclaim, he stated that the applicant had not sought year-round employment, and he stated he was unable to make his monthly payments and support his family at his home. [ 2 ] At the hearing of these applications, both parties testified and were cross examined.

Neither party called any other witnesses. BACKGROUND [ 3 ] The parties began living together in 1997 and were married on May 8, 1999. They have three children: B.D. and twins K.D. and M.D. Prior to the parties having children, the applicant worked as an executive assistant at Canaccord Capital, a brokerage firm in Vernon. The respondent has been a pilot since in or about 1990, and a commercial pilot since in or about 1999. Between 2000 and 2004 the parties lived in Manitoba and then overseas, as a result of the respondent’s employment.

They returned to Vernon in 2004, at which time the respondent began working as the pilot for Kal Tire. He has been in the full time employ of that company since. [ 4 ] The parties separated on January 1, 2011 according to the Agreement. Following their separation, they embarked upon a lengthy mediation process with the assistance of a lawyer mediator, Danica Djordevich. During the course of those mediation sessions, each party consulted legal counsel, which included legal advice in regards to a draft separation agreement.

Following their consultation with counsel, they reached the terms of a final agreement, and that is the document referred to above as “the Agreement”. Neither signed the final Agreement in the presence of a lawyer, but they each signed in the presence of a witness. RELEVANT PROVISIONS OF THE AGREEMENT [ 5 ] The Agreement was a comprehensive settlement of all issues between the parties.

It dealt with custody and guardianship of their three children, child support, spousal support, division of family assets and allocation of debt. [ 6 ] In regards to the arrangements for the children, the Agreement provided that the parties would share custody on a relatively equal basis. Because of the respondent’s work schedule, the actual parenting

schedule was not specified. [ 7 ] In regards to child support, the applicable provisions of the Agreement provided as follows: Paragraph 18: By reason that R.B. has a greater income than T.B., and by reason that the Children may be with R.B. for approximately half time, R.B. shall pay to T.B. monthly support for the Children based upon the Tables of the Federal Child Support Guidelines with a deduction of no less than $500 per month as the offset for T.B.’s child support obligation to R.B.

Paragraph 19: R.B. shall pay to T.B. as ongoing regular child support for the Children the sum of $2012 a month (being the Table rate of $2512 less an offset from T.B. of $500) commencing January 1, 2011 and continuing to be paid at that rate on the first of each subsequent month until otherwise agreed in writing or ordered by the Court. Paragraph 22: The child support shall be reviewable if there is a material change, including a material change to the income of either party, a change in the residency arrangement for the Children or a Child, and a Child reaching 19 years of age.

Paragraph 23: The parties shall each provide the other with a full copy of his or her respective income tax returns for the preceding year, by May 31 st of the year of filing and the parties shall by June 15 th of each year determine if an adjustment is required to the regular monthly child support having regard to each party’s line 150 total income. [ 8 ] In regards to spousal support, the relevant paragraphs of the Agreement are as follows: Paragraph 32: R.B. shall pay to T.B. as spousal support the sum of $1500 per month commencing January 1, 2011 and continuing to be so paid on the first day of each subsequent month for a ten year period or until the happening of the first of the following events:

a) T.B. re-marries;

b) T.B. resides in a common law union exceeding 180 days duration;

c) T.B. dies;

d) December 31, 2020.

Paragraph 34: If T.B. achieves an annual employment income of no less than $30,000 as verified by her T4 which is to be provided to R.B. annually by May 31 st of the tax filing year, the spousal support shall reduce to that amount consistent with the mid-point on the Spousal Support Advisory Guidelines, with R.B.’s income for the purposes of calculating the spousal support being reduced by the amount of his non-voluntary RRSP contributions and shall continue at that level until the happening of a spousal support terminating event described in paragraph 32 above. [ 9 ] The provisions of the Agreement that deal with the parties’ incomes are also relevant to the issues before the Court.

They are as follows: Recital F. R.B. is a pilot with Kal Air Vernon. R.B. is self-supporting. For the purposes of setting R.B.’s income and support obligations, the parties have agreed to set his income at present as $136,230. This includes some annual overtime and pay bonuses which do fluctuate from year to year. Recital G. T.B. is a clerical assistant with School District 22. T.B. does not have a permanent position with the School District. T.B. is not self-supporting. Each party is aware that T.B. enters this Agreement with a legal obligation to reasonably pursue self-sufficiency.

For the purposes of setting spousal support obligations, the parties have agreed to set T.B.’s present and foreseeable income as $12,000. [ 10 ] To give some context to those recitals having to do with the parties’ incomes, I heard evidence that the $136,230 that was used as the respondent’s income was his gross income less his non-voluntary RRSP deductions for the 2011 taxation year. I also heard evidence that at the time of the Agreement, the applicant did not, in fact, have an income.

CHANGE IN CIRCUMSTANCES [ 11 ] For the first year or thereabouts following execution of the Agreement, the parties shared custody of their three children on an alternating weekly basis. In the fall of 2013, that changed. The twins were no longer comfortable with the schedule, so they returned to live with the applicant on a full time basis, and to having day visits on alternating weekends with the respondent. At around the same time, B.B. went to live with the respondent for 10 of every 14 days, which later changed to 9 out of every 14 days.

That is the arrangement which continues to this day. [ 12 ] The result of the change in circumstances which occurred in September of 2013 is that the parties have a split custody arrangement and s. 8 of the Federal Child Support Guidelines applies when it comes to the process of calculation of child support. [ 13 ] Neither party sought in these proceedings to vary the current parenting arrangements. [ 14 ] Following the change to the parenting schedule, the applicant raised the issue of a review of child support, pursuant to paragraph 23 of the Agreement.

Despite attempts at mediation through the Family Justice Centre and through work with legal counsel, the parties have been unable to reach an agreement on the quantum of child support that the respondent ought to pay. In breach of paragraph 19 of the Agreement, the respondent unilaterally changed the quantum of child support he paid on approximately eight occasions, starting in June 2013, which was prior to the change in the residency situation of the children. That is evidenced by the record of payments from FMEP which was before the Court. The arrears of child support now exceed $7,000.

There are no arrears of spousal support. [ 15 ] In his October 2014 Reply, the respondent disputed that there had been a change significant enough to give rise to the adjustment of child support sought by the applicant. He made this statement, yet he himself was the party who had, since June of 2013, some 15 months prior to the date the applicant filed her application, been regularly adjusting the child support on a unilateral basis. [ 16 ] On the evidence before me, it was clear that in 2013 there was a change of residence of all of the children.

I find that this was a material change of circumstances, even one contemplated in the Agreement. Accordingly, a review of child support was appropriate. ISSUES IN DISPUTE [ 17 ] The issue between the parties in calculating child support is based on the following disagreement: the respondent says that in determining his Guideline income, his RRSP contributions ought to be deducted, as the contributions are non-voluntary through his employment, and the RRSP is locked in. The RRSP contributions are about $14,000-$15,000 per year.

This is the approach the parties took in 2012 when they first determined child support, but the child support review provision of the Agreement, paragraph 23 specifically, makes no reference to continuing with this approach as Guideline income is calculated going forward; in fact, the Agreement says that the parties’ line 150 incomes should be used. [ 18 ] The respondent also says that the applicant’s spousal support ought to be used in calculating her Guideline income, as it is part of her line 150 income. [ 19 ] The applicant’s position is that the respondent’s income for Guideline purposes should be his line 150 income, and not his net taxable income.

She says that RRSP contributions are not appropriate deductions under

Schedule III of the Federal Child Support Guidelines . She says her income for Guideline purposes should be her income from all sources except spousal support. [ 20 ] The issue in dispute in regards to spousal support is less complex. The respondent says the duration of spousal support should

be reduced from the 10 years set out in the Agreement to 5 years. He says that his circumstances have changed, in that he remarried in2014 and he and his wife have an infant son, just turned one, who has some medical issues that will require him to have treatment andpossible surgery over time at Children’s Hospital in Vancouver. He says that his wife is taking a year off from her job to care for theirson, and that this obviously means less income to his new family.

He acknowledges that his income has not suffered as a result of hisson’s condition; in fact, his income has gone up in the last year, and he just received a raise that will result in a further increase of$10,000 or thereabout to his income. [21] The other argument the respondent makes is that the applicant has not done enough to attempt to become self-sufficient. Theapplicant was employed part time at the time of the Agreement, and now that job is a permanent part time position with the SchoolDistrict.

She has made attempts to obtain full time work at the School District, but as of yet, she has not been successful. That hiringsystem is largely based upon seniority. She has supplemented her income by taking part time contract work doing data entry, and byrenting out the suite in her home. I do not find, on the evidence, that she is underemployed. She was a stay-a-home parent for 10 years,and cannot be expected to be self-sufficient a mere two years after the parties negotiated their Separation Agreement.

Further, she nowhas two of the children living with her full time, and one almost half time, so her childcare obligations have actually increased since thedate of the Agreement. THE LAW [22] In regards to the claim of the respondent to reduce the duration of spousal support from ten years to five years, I must turn to s.164 of the Family Law Act. The relevant portions of that

section provide as follows: 164(1) This

section applies if spouses have a written agreement respecting spousal support, with the signature of each spouse witnessedby at least one person. 164(3) On application by a spouse, the court may set aside or replace with an order made under this Division all or part of an agreementdescribed in subsection (1) only if satisfied that one or more of the following circumstances existed when the parties entered into theagreement: (

a) a spouse failed to disclose income, significant property or debts, or other information relevant to the negotiation of the agreement; (

b) a spouse took improper advantage of the other spouse’s vulnerability, including the other party’s ignorance, need or distress; (

c) a spouse did not understand the nature or consequences of the agreement; (

d) other circumstances that would under the common law cause all or part of a contract to be voidable. 164(4) The court may decline to act under subsection (3) if, on consideration of all of the evidence, the court would not replace theagreement with an order that is substantially different from that set out in the agreement. 164(5) Despite subsection (3), the court may set aside or replace with an order made under this Division all or part of an agreement ifsatisfied that none of the circumstances described in that subsection existed when the parties entered into the agreement but that theagreement is significantly unfair on consideration of the following:

a) the length of time that has passed since the agreement was made;

b) any changes, since the agreement was made, in the condition, means, needs or other circumstances of a spouse;

c) the intention of the spouses in making the agreement to achieve certainty;

d) the degree to which the spouses relied on the terms of the agreement;

e) the degree to which the agreement meets the objectives set out in

section 161 [objectives of spousal support]. [23] I note that there was no evidence before me of the existence of any of the circumstances that would give rise to the applicationof s. 164(3) of the Family Law Act. That leads to a review of whether s. 164(5) has application to the case at bar. [24] Counsel for the applicant has referred me to the case of Megson v. Megson [2014] BCSC 2467. On the

interpretation of thephrase “significantly unfair” in s.164(5) of the Family Law Act, the Court said that the type of change motivating judicial interventionunder that subsection is “where the change is so substantial that the agreement negotiated by the parties has, in light of that change,become significantly unfair. The threshold standard could not possibly be lower than a material change in circumstance.” A materialchange in circumstances was defined by the Supreme Court in Canada in Willick v.

Willick (SCC), [1994] 3 S.C.R. 670to be “a change such that, if known at the time, would likely have resulted in different terms.” Willick, supra, was a child support case. The Supreme Court of Canada held in L.G. v.

G.B. (SCC), [1995] 3 S.C.R. 370 that the test is the same where avariation is sought to a spousal support agreement. [25] In Megson, the court referred in paragraph 160 to various policy reasons for the threshold material change requirement,including the need for stability in spousal support orders, to promote certainty and predictability, and to enable the parties to plan theiraffairs in reliance on the order; discouraging re-litigation; and avoiding inconsistent exercises of the discretion by successive judgeshearing the same case.

ANALYSIS [26] The respondent in the case at bar bears the burden of proving that it would be significantly unfair not to vary the Agreement.

On all of the evidence before me, and in consideration of the factors set out in s. 164(5) of the Family Law Act , I am not convinced that it would be significantly unfair not to vary the Agreement and reduce the duration of spousal support. Nor do I think it would be significantly unfair not to reduce the quantum of spousal support on a declining basis over the existing duration, which was the respondent’s alternate submission to me at the conclusion of this trial.

The parties negotiated the Agreement in 2012 over a period of many months, using an experienced mediator, and with the benefit of legal counsel from time to time. Both confirmed they wanted to achieve certainty. The applicant made concessions in arriving at the quantum of spousal support, and she relies on the agreement to be enforced.

A brief review of a few of the recitals to the Agreement provides some further context to the Agreement between these parties. [ 27 ] Paragraph Q of the recitals to the Agreement states that each of the parties has been advised to consult with independent legal counsel, “knowing that rights and obligations are forever being affected by this Agreement”. [ 28 ] Paragraph R of the recitals states, in part, that the parties have reviewed the legislation with the mediator, and have reviewed the Divorcemate printouts, and have considered the net disposable income that each needs to operate his or her household and to provide for the Children, and that all of these factors have been considered in arriving at the child and spousal support provisions set forth in the Agreement. [ 29 ] Paragraph U of the recitals states that the parties have considered the actual and anticipated needs of each other, of the children and their actual and anticipated ability to contribute to the support of the other and the children. [ 30 ] Paragraph V of the recitals states, in part, as follows: The parties wish to confirm that each relies on the Agreement to be enforced according to its terms and neither would have entered this Agreement if it had been anticipated that the other would apply to vary the Agreement at some future date, and that the parties acknowledge that each is prepared to abide by the Agreement because each recognizes the importance to each of being able to rely on these terms without fear that the Agreement may in future be challenged and varied. [ 31 ] The applicant’s evidence is that she made concessions on the quantum of support in favour of a ten year duration.

When one examines the Spousal Support Advisory Guidelines using the parties’ agreed upon incomes at the time of the Agreement, it is clear the applicant did make concessions on quantum of spousal support. She also agreed to have an income of $12,000 per year imputed to her when, in fact, she was not earning that income. The duration of spousal support in this case, with a period of cohabitation of 14 years, would have been 7 to 14 years, if one adheres strictly to the Spousal Support Advisory Guidelines . Entitlement would not have been an issue based on this couple’s circumstances.

A five year duration is in no way reasonable on these facts. Accordingly, the respondent’s application to vary the agreement in respect of the duration of spousal support is dismissed. [ 32 ] Having determined the counterclaim, I now turn to an analysis of the child support issue. As stated earlier, this is a split custody scenario, and child support is governed by s. 8 of the Federal Child Support Guidelines . It is no longer a s. 9 shared custody scenario. In determining an appropriate quantum of child support in a shared custody situation, the court, and the parties during negotiations, have some flexibility.

Typically, the starting point in a shared custody situation is to use a “set-off formula”. Once that is done, parties may choose, or the court may choose, to make further adjustments to the quantum of child support, with those adjustments being done in order to account for the increased costs to the parties that shared custody often entails. [ 33 ] In the case at bar, the parties deducted the sum of $500 from the sum the respondent would have paid for full table child support, and called this $500 the applicant’s contribution towards child support.

The sum of $500 was not what the applicant’s table child support payment would have been, even had she had income of $12,000. The evidence before me was that the sum of $500 was deducted from the $2,512 in table child support in order to cap the respondent’s total child and spousal support obligation at $3,500 per month. Initially, he was going to pay the applicant $2,512 child support and $1,000 spousal support per month, but the applicant needed higher spousal support income to qualify to assume the mortgage on the home she was retaining.

Accordingly, the parties agreed to the sum of $2,012 child support and $1,500 spousal support. [ 34 ] It was clear on the evidence before me that the determination of these support numbers was done in order to accommodate a global payment of $3,500 by the respondent, and not with any balancing of s. 9 Guideline factors in mind. [ 35 ] When s. 8 of the Guidelines comes into play, as it does here, there is no balancing act. The table amounts are mandatory.

I determine child support by looking at what the respondent would pay the applicant for two children in her primary care based on his Guideline income, and subtract from that sum the amount of child support that the applicant would pay the respondent for the one child in his primary care. The only issue, then, is to determine the parties’ Guideline incomes. [ 36 ] The applicant’s income for Guideline purposes does not include her spousal support payments. That is clear from a review of the law, and from

Schedule III of the Guidelines . Her 2014 income net of spousal support included $16,841.15 in employment income, $483.35 in net rental income, and $1,503.41 in net contract income, for a total of $18,827.91. [ 37 ] I find it appropriate to impute back to her some of her rental income. I do so pursuant to s. 19 of the Guidelines . Her evidence was that she is able to write off 40% of her mortgage interest, utilities, yard maintenance, improvements, taxes and insurance, as the suite in her home represents 40% of the square footage of her home.

These write-offs result in her having very nominal rental income of $483.35. While some write-offs are undoubtedly appropriate, I find it appropriate that 50% of the applicant’s gross rental income each year be included in her Guideline income. Her gross rental income according to her 2014 return is $12,800, so $6,400.00 of this should be included in her Guideline income. For 2014, her net rental income was $483.35, so another $5,916.65 needs to be added to her 2014 Guideline income.

The result is that her 2014 Guideline income is imputed at $24,744.56. [ 38 ] That brings me to the issue of the respondent’s Guideline income. His line 150 income for 2014 is not yet known, as he has yet to file his tax return for that year. His T4 income for 2014 is $152,255.80. His evidence is that his RRSP contribution each year is between $14,000 and $15,000, that being a total of what both he and his employer contribute.

[ 39 ] For 2013, his line 150 income was $160,249.78, although $10,000 of that was RRSP income from his cashing in what I assume was a non-employment related RRSP so that he could use the money towards a down payment on a home. I understood from the discussion at the hearing that the applicant had conceded that the $10,000 in RRSP income that the respondent had in 2013 would not be included in his Guideline income for that year, as it was non-recurring. [ 40 ] The only issue for me to determine is whether his RRSP contributions each year ought to be deducted from his total income for the purposes of determining Guideline income. The Guidelines do not allow for RRSP or pension deductions.

Schedule III of the Guidelines sets out a variety of permissible employee deductions, but pension and RRSP deductions are not among those listed. The respondent argues that these contributions are mandatory, and that as he does not have access to the funds, they should not be included in his Guideline income. [ 41 ] The issue of mandatory pension deductions and whether they ought to be deducted from Guideline income is raised from time to time in cases, so the following comments are of assistance in the case at bar.

The authors of the Spousal Support Advisory Guidelines talked about adjusting income for these purposes at page 77 of those Guidelines : More contentious are deductions for mandatory pension contributions. We concluded that there should not be an automatic deduction for such pension contributions, but the size of these mandatory deductions may sometimes be used as a factor to justify fixing an amount towards the lower end of the spousal support range. We reached this conclusion after considerable discussion.

Like EI, CPP and other deductions, pension contributions are mandatory deductions, in that the employee has no control over, and no access to, that money. But, unlike other deductions, pension contributions are a form of forced saving that permit the pension member to accumulate an asset. Further, after separation, the spouse receiving support does not usually share in the further pension value being accumulated by post-separation contributions. Finally, there are serious problems of horizontal equity in allowing a deduction for mandatory pension contributions by employees.

What about payors with non- contributory pension plans or RRSPs or those without any pension scheme at all? And what about the recipient spouse—would we have to allow a notional or actual deduction for the recipient too, to reflect her or his saving for retirement? In the end, we decided it was fairer and simpler not to allow an automatic deduction for pension contributions. [ 42 ] I am bound by the provisions of the Federal Child Support Guidelines in regards to determination of income. The calculation of Guideline income in sections 16-20 and in

Schedule III does not allow for a deduction of RRSP contributions. Accordingly, I find that the respondents’ Guideline income for 2013 is $150,249, and that his Guideline income for 2014 is $152,255. [ 43 ] Neither party has sought a retroactive order in regards to the quantum of child support. I was asked to determine essentially the formula for calculating child support, which would then allow the parties and FMEP to calculate arrears and ongoing child support.

I will give liberty to the parties to bring this matter back before me in the event they are unable to determine the issue of retroactive child support. [ 44 ] In terms of ongoing child support, commencing June 1, 2015, and on the first of each month thereafter, the child support payment will be $1,920 per month, based on 2014 Guideline incomes of $152,255 for the respondent and $24,744 for the applicant. [ 45 ] The last issue is that of s. 7 expenses.

The applicant’s position during this trial was that if the duration spousal support is not changed, and if her spousal support is not included in her Guideline income, then she would agree to continue with the 50/50 sharing of extra expenses set forth in the Agreement. She does want it specified what activities constitute those expenses. The respondent’s position was that generally the sharing of the costs of these sports worked, but if funds were not available, then the activities ought not to continue.

Given that these parties have not been able to resolve the child support issue between them to date, despite one and one half years of attempting to do so, the issue of s. 7 expenses clearly needs to be spelled out by the court. [ 46 ] The parties will continue to share s. 7 expenses equally, pursuant to the Agreement. Those s. 7 expenses will include soccer and gymnastics registration, equipment and clothing/uniforms for the twins, and ski passes and ski equipment for all three children.

If the twins stop playing soccer or doing gymnastics, but wish to enrol in another activity, that activity will be a s. 7 expense, with the parties sharing the cost of registration and equipment equally. The parties shall reimburse each other for the cost of the activity or the equipment or uniform within ten days of that parent furnishing proof of the expenditure. [ 47 ] Of course, the parties can agree to enrol the children in other activities, and to share the costs equally or in any other manner agreed upon. I am not making an order that the applicant share in the costs of B.B.’s dirt bike or paintballing.

These activities appear to be more in the nature of hobbies. I heard evidence that B.B. is in the process of applying for summer jobs, as he is almost 15, so he may soon be able to contribute to the cost of his own paint ball supplies and gas for his dirt bike. _____________________________ The Honourable Judge L.D. Wyatt