H.E.D. v. B.W.P. Date:, 2017 BCPC 292

Citation: H.E.D. v. B.W.P. Date: 20170901 2017 BCPC 292 File No: F76476 Registry: Nanaimo IN THE PROVINCIAL COURT OF BRITISH COLUMBIA IN THE MATTER OF THE FAMILY LAW ACT , S.B.C. 2011 c. 25 BETWEEN: H.E.D. APPLICANT AND: B.W.P. RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE J.P. MacCARTHY Counsel for the Applicant: Laurel Dietz

Counsel for the Respondent: Glenn Sinclair Place of Hearing: Nanaimo , B.C. Dates of Hearing: February 3, April 13, May 3, June 27, 2016 Date of Submissions: July 14, 21, and 23, 2016 Date of Judgment: September 1, 2017 INTRODUCTION [ 1 ] This matter initially involved an application brought by the Father (as defined below) seeking a variation of two interim orders of this court, one made September 8, 2011 (the “September 2011 Order”) and another having been made by consent at a Family Case Conference on October 16, 2012 (the “October 2012 Order”).

Both orders varied the terms of a separation agreement referenced as having been made on April 23, 2007, apparently actually executed in August of 2007 and then filed with the Provincial Court on July 15, 2011 (the “Separation Agreement”). [ 2 ] In the Father’s Application Respecting Existing Orders or Agreements filed on March 19, 2014 (the “Father’s 2014 Application”) he specifically seeks to retroactively and prospectively vary the amended amount of his child support amount that he had been ordered to pay based on a lesser amount of income being earned.

The Mother (as defined below) filed a Reply on April 1, 2014 (the “Mother’s 2014 Reply”).

In it she took issue with and disagreed with the variation of the October 2012 Order on the basis she had only agreed to a change of child support “going forward” and citing a failure of the Father to comply in a timely fashion with requests for financial information, and as required by the October 2012 Order. [ 3 ] This matter also specifically involves an Application Respecting Existing Orders or Agreement filed by the Mother on September 11, 2014 (the “Mother’s 2014 Application”) for an order to review the Father’s 2012-2014 corporate and personal taxes to determine his “correct income” and to further require the Father to pay a proportionate share of extraordinary expense including activities and dental and orthodontics and to vary the Father’s child support both retroactively and prospectively on the basis of the Father’s “true income” and pursuant to the Federal Child Support Guidelines . [ 4 ] In his Reply to the Mother’s 2014 Application which Reply contains a counterclaim (the “Father’s 2014 Reply and Counterclaim”), the Father disagrees with the relief being sought by the Mother on the basis of having already provided his financial disclosure “as requested” and disputes the Mother having “unilateral control over incurring extraordinary expenses” and then billing the Father without any input from him.

In his counterclaim contained within the Father’s 2014 Reply and Counterclaim he seeks a variation of his parenting time established by the October 2012 Order made by consent, by seeking to increase that parenting time.

Issues Before the Court With Respect to the Mother’s 2014 Application and the Father’s 2014 Reply and Counterclaim [ 5 ] Therefore there is joinder of issues regarding the following: 1) any required adjustment of prospective child support, 2) any retroactive adjustment of child support, 3) a determination of any amounts of child support in arrears and the payment of any such amount or alternatively the determination of any overpayment of child support and the adjustment of that amount (if any) and the method repayment or set off that amount, 4) the obligation for paying and the sharing of extraordinary expenses. [ 6 ] In addition there is the issue raised in the Father’s 2014 Reply and Counterclaim as to whether the court should be varying the Father’s parenting time.

This issue received very little attention throughout the trial and virtually none in the written submissions of either the Mother or the Father. [ 7 ] All of the issues arise against a background of a significant conflict and a high level of mistrust in the Father and Mother’s own relationship.

This level of mistrust also permeates their interaction with each other as it relates to their children, “Child C”, (as defined below) who was 12 years old at the time of the hearing and “Child I” (as defined below) who was approaching 6 years at the time of the hearing. [ 8 ] As a result of these proceedings the issues upon which evidence has been heard and which will require a decision relate to the following: (

a) the variation of the amount, if any, of child support to paid by the Father for the support of the Children and the basis for both that variation and the quantum of that payment. If so, should it be on a retroactive basis or a prospective basis or both and if so what is the effective date for a retroactive or prospective variation. (

b) whether by their nature all of the expenses (if any) claimed by the Mother or alternatively the Father are to be properly regarded as special or extraordinary expenses. (

c) the amount of any special and extra-ordinary expenses, if any, owed by the Father or the Mother in connection with the Children, on an ongoing basis and whether any portion of that calculation is to be made on a retroactive basis, and if so, the effective date for making that calculation.

(

d) the determination of the Father’s income for the relevant periods including a determination of what portion of any of the income of the corporation [omitted for publication] owned by the Father and his common law spouse, should be added to the pre-tax income of the Father for the purposes of calculating or imputing his income for the purposes of the Child Support Guidelines during the various relevant periods. (

e) whether there should be any variation of the existing court orders as they relate to the Father’s parenting time with the Children. BACKGROUND Matters Giving Rise to the Separation Agreement [ 9 ] The parties to these proceedings and to the Separation Agreement are H.E.D. (the “Mother”) and B.W.P. (the “Father”). The Mother and the Father (collectively the “Parents”) are the parents of C.A.P. (“Child C”) whose date of birth is [omitted for publication], and I.E.P. (“Child I”) whose date of birth is [omitted for publication].

Child C and Child I are collectively referred to as the “Children”. [ 10 ] It is common ground that the Parents were married January 2, 2004 and thereafter cohabitated until they first separated May 1, 2007. They evidenced the terms of that first separation in the Separation Agreement which was referenced in its heading as being made the 23 day of April, 2007 but apparently was signed August 15, 2007. Child C was approximately 3 years of age at that time of separation. Child I was not born at that time. Thereafter the Parents had several periods of reconciliation and separation.

Child I was conceived during a period of reconciliation. The Parents then permanently commenced to live separate and apart from May of 2011, at which point Child C was approximately 7 years of age and Child I was approximately 8 months old. A Divorce Order was granted November 22, 2013. [ 11 ] The written Separation Agreement which was governed by the then operative Family Relations Act, RSBC 1996, ch. 128 as amended the (“ FRA ”). It was filed with the Provincial Court on July 15, 2011 as permitted by the Provincial Court (Family) Rules and as contemplated by

section 121 of the FRA. [ 12 ] The Separation Agreement under the heading “Background” specifically purports to be a final settlement of their respective rights to property and spousal support and a final settlement of custody, access guardianship and support but with a specific acknowledgement that “custody and child support issues in all provinces are governed by the Federal Child Support Guidelines .” There is a further acknowledgment that the agreement “may be amended or varied by a court order, or by written agreement” of the parties.

A specific provision states that the Separation Agreement “survives divorce”. [ 13 ] The Separation Agreement stipulated that the Parents were joint guardians of Child C and the Mother was to have “primary residency” of Child C.

It was agreed that the Father’s access (as it was then known) was to be “every second weekend commencing on the Friday at 8:00 AM and ending on Monday at 5:00 PM” with “additional access granted to support activities throughout the week when possible”. [ 14 ] Provisions were also made in the Separation Agreement for the Father to pay monthly child support expressed in the following terms: In accordance with the Child Support Guidelines, [the Father] shall pay to [the Mother] for child support the sum of $500 per month beginning on the 1 day of May, 2007 and continue on each month until the children of the marriage are no longer children of the marriage as defined by the Divorce Act .

Both parties agree that they are familiar with the Federal Child Support Guidelines .

In addition to the amount above described, [the Father] shall pay to [the Mother] for special expenses, the sum of $200 to be paid at the same time as the payment described above. [ 15 ] Notwithstanding the reference to the Child Support Guidelines, the Separation Agreement does not indicate what were the respective Guideline Incomes of either party at the date of the Separation Agreement nor is there any specific description of what was included or not included by the term “special expenses”. [ 16 ] I note parenthetically that the agreed monthly payment of $500 for one child under the Federal Child Support Guidelines would be based on a Guideline Income equal to the approximate amount of $54,300 per annum. [ 17 ] Ongoing financial disclosure between the Parents was provided for in the Separation Agreement on the following terms.

Each party shall provide the other party with a complete copy of his or her income tax return and any notices of assessment and reassessment issued to him or her by the Canada Customs and Revenue Agency on an annual basis on or before June 30 th of each year, as long as there is a child of the marriage as defined by the Divorce Act (Canada).

In the event that a party has not filed an income tax return for the previous year, he or she shall provide the other party with copies of his or her T4, T4 a and all other relevant tax slips and statements disclosing any and all sources of income, including self-employment income. [ 18 ] There is no provision in the Separation Agreement that indicates that the Separation Agreement became void or voidable or was permanently terminated or was permanently cancelled as a result of reconciliation or the resumption of cohabitation by the parties.

Furthermore, there is no indication whether or not the Separation Agreement was deemed to be suspended by a reconciliation of the parties, and if it was whether it was revived by the subsequent separation. Thus the Separation Agreement is silent on these points. [ 19 ] The Separation Agreement, having been made during the currency of the FRA legislation makes no mention of any division or allocation between the Parents of parental responsibilities as that term is used in

section 41 of the Family Law Act , [S.B.C. 2011, c 25] which came into force on November 28, 2013 (the “ FLA ”).

[ 20 ] The Transition Provisions of the FLA found in

Part 13 are apposite and in particular

section 251 that provide: 251

(1) If an agreement or order, made before the coming into force of this section, provides a party with (

a) custody or guardianship of a child, the party is a guardian of the child under this Act and has parental responsibilities and parenting time with respect to the child under this Act, or (

b) access to, but not custody or guardianship of, a child, the party has contact with the child under this Act.

(2) For the purposes of subsection (1), a party's parental responsibilities, parenting time or contact with a child under this Act are as described in the agreement or order respecting custody, guardianship and access. [ 21 ] I will have more to say about this below. Background of Court Proceedings Subsequent to the Separation Agreement the September 2011 Order [ 22 ] Following the filing of the Separation Agreement in the Provincial Court of British Columbia, an interim order, being the September 2011 Order was made by this court. It provided as follows: 1.

That the Separation Agreement filed July 15, 2011 paragraph 4 shall be amended to include [Child I] born [omitted for publication]. 2. That the child support

section of the Separation Agreement shall be amended to show [the Father’s] annual income of as $59,500 and [the Father] will pay commencing October 1, 2011 $900 per month child support and each month thereafter and [the Father] will pay a further $300 child support at such times as he is working outside of Victoria and unable to meet his scheduled visitation.

The Father’s April 2012 Application [ 23 ] On April 27, 2012 the Father filed an Application to Change or Cancel an Order with the Provincial Court (the “Father’s April 2012 Application”). [ 24 ] In the Father’s April 2012 Application he specifically sought to have the custody and access provisions of the Separation Agreement amended such : 1. to include reference to Child I, 2. that the Father would have reasonable and generous access to the Children every second weekend, and further amended such that if his future employment prevented him from exercising access to the Children every second weekend he would be permitted to make up missed time on additional weekends. 3. as part of his custody and access with the Children, the Father would have an allocation of 6 weeks during the summer not to be concurrent and to be arranged between the Parents, and one week over Christmas holiday and one week over Spring break and a with further provisions that other holidays such as Easter and Thanksgiving were to be shared by alternating years. 4. as part of the Father’s access he would have reasonable telephone access to the Children as well as online video contact (“such as Skype”) with the Children at agreed upon times “in order to maintain contact with the Children”. [ 25 ] In the Father’s 2012 Application the Father further sought to vary the child support payments such that commencing April 1, 2012 he was he would pay child support of $382 per month based on his “current annual guideline income of $24,336”. [ 26 ] The basis for the Father’s April 2012 Application was stated to be a change of circumstances since the making of the September 2012 Order described as follows: the Father’s “employment status and income have changed since the previous order was made.

He is now receiving employment insurance benefits.” The October 2012 Order [ 27 ] On October 16, 2012, the October 2012 Order, being a consent interim order arising out of a Family Case Conference, was made by this court, dealing with the issues raised in the Father’s April 2012 Application. It provided in part as follows: 1. The Parents were granted shared joint custody and joint guardianship of the Children with the Children’s primary residence being with the Mother. 2.

The Father’s access to the Children required 14 days’ notice to the Mother and permitted day visits with Child I, overnight access with Child C and access with Child C up to 10 days in duration during school spring break and other times as agreed to by the Parents, during which travel to Alberta was permitted. The Father was required to advise the Mother of the general itinerary and if and when he made travel plans with the Children. 3.

Commencing the summer of 2013, the months of July and August were to each be shared with the Children by each of the Mother and the Father, as they were to arrange after the Father provided a minimum of 2 months’ notice to the Mother as to the time he had available with respect to his work schedule. 4. The Mother was to facilitate liberal and generous telephone access between the Father and the Children and then at the end of 2012 set up Skype access to facilitate Skype communication between Child C and the Father.

5. Based upon a stated Guideline Income of $60,000 per year, the Father was ordered to continue to pay monthly child support to the Mother of $900 per month on the first day of each month for the support of the two Children. 6. The requirement of the Father to pay the Mother the additional amount of $300 pursuant to the September 2011 Order was deleted. 7. The Father was required to pay all travel expenses relating to his access with the Children. 8.

The Parents were ordered “to equally share the cost of any special or extraordinary expenses for the Children provided that those expenses are mutually agreed upon”. 9. The order regarding ongoing financial disclosure and adjustment of child support was expressed in the following terms: “The parties will exchange their respective Income Tax Returns and Notices of Assessment no later than June 1 st of each year commencing in 2013, with child support to be adjusted effective July 1 st of each year. If the parties cannot agree on the adjustment of child support, either party may apply to the court.” 10.

The final provision of the order stated that if the Parents were unable to agree or if problems arose from the implementation of the terms of the order, then the parties were at liberty to

schedule another Family Case Conference. The Father’s 2014 Application [ 28 ] The Father then filed the Father’s 2014 Application.

In it he sought to vary the child support provisions of the October 2012 Order by replacing his Guideline Income with the amount of $42,835 for the year 2012 and to retroactively vary his child support payments to an amount of $652 per month, payable on the first day of each month, commencing and effective as at July 1, 2013. [ 29 ] In addressing the reasons for claiming that relief, the Father’s 2014 Application asserts and relies upon the requirement in the October 2012 Order for the parties to exchange financial information by June 1 each year and to adjust the child support payments thereafter on July 1 of each year. [ 30 ] The Father further pleads in the Father’s 2014 Application that in May of 2013 he had informed the Mother and that she had acknowledged that he anticipated annual income of “around $45,000, but I didn’t have my Notice of Assessment.” The pleadings go on to say that he later provided his Notice of Assessment which “confirmed my income at $42,835” to the Mother but that the Mother, notwithstanding his efforts, had not agreed to sign an order to adjust the child support effective as at July 1, 2013.

The Mother’s 2014 Reply [ 31 ] In the Mother’s 2014 Reply she stated that she agreed to a change in the child support going forward (that is prospectively) but not retroactively. She opposed a retroactive adjustment alleging that the Father’s Notice of Assessment was not delivered until late August of 2013 rather than by the required date of June 1, 2013, as was his responsibility.

The Mother’s 2014 Application [ 32 ] At this juncture the Mother became concerned about the accuracy and completeness of the financial disclosure that she had received and the possibility that the Father had not disclosed that he was earning his income through a corporation. Thus, she filed the Mother’s 2014 Application in which, as noted above, she sought to obtain an order on the following terms: 1. A complete review of 2012 corporate and personal taxes to determine correct income; and 2.

That the [Father] be required to pay extraordinary expenses including activities, dental and orthodontics within 14 days upon being provided receipts. [ 33 ] The pleadings in the Mother’s 2014 Application further indicate that the child support payable for 2 children should be based on the Child Support Guidelines and that the special or extraordinary expenses should be paid on a basis proportionate to the respective incomes of the Mother and the Father. Furthermore, it is pled that the Mother sought retroactive child support, “to a date to be decided because the (Father’

s) true income is to be determined.” The Father’s 2014 Reply and Counterclaim [ 34 ] The Father’s 2014 Reply and Counterclaim, as described above, contended that the Father had already provided his financial disclosure for review as requested, further raised the issue of the Mother’s unilateral action with respect to incurring extraordinary expenses and in the counter claim portion sought increased parenting time for him with the Children.

The May 2015 Order [ 35 ] A consent order without a hearing was made by this court on May 11, 2015 pursuant to which the Mother and the Father were required to provide each other with current complete and filed Form 4 Financial Statements by February 20, 2015 (the “May 2015 Order”).

The August 2015 Order [ 36 ] For a number of reasons including some complications in obtaining and producing some important corporate and personal financial and tax information, work scheduling and because of a pending change in legal counsel from previous counsel to the Father’s current counsel, the Father sought and obtained an adjournment of the trial of this matter set for August 25, 2015 on the terms contained within an interim consent order made August 20, 2015 (the “August 2015 Order”) which provides in part as follows:

1. By consent and without prejudice, based on a Federal Child Support Guideline Income of $86,176 [the Father] will pay [the Mother] $1,293 in child support on the 1 st of each month commencing September 1, 2015 and continuing each month until varied by court order or written agreement. which monthly amounts of child support the Father continues to make as at the time of the hearing. Family Maintenance Enforcement Program [ 37 ] Following the filing of the Separation Agreement with the Provincial Court the Mother enrolled with the Family Maintenance Enforcement Program (“FMEP”).

The FMEP records presented to court to reflect amounts due and payments received since June 1, 2012 to January 29, 2016. I understand that the Mother continues to be enrolled in FMEP as at the date of the commencement of the trial of this matter on February 3, 2016. The May 2013 Negotiations [ 38 ] In May of 2013 the Parents engaged in negotiations with the assistance of their own respective lawyers commencing in or around May of 2013.

Those lawyers are different than the lawyers presently representing each of the parties. [ 39 ] In the course of those negotiations the Father was seeking a reduction in his child support obligations on the basis of his anticipated income being around $45,000 per annum rather than the guideline income utilized in the October 2012 Order.

As I understand it another topic of the negotiations was that the Father was seeking a refund from the Mother for an alleged overpayment of child support, such repayment to be on a negotiated scheduled plan. [ 40 ] Based on the evidence before me it is clear that the Mother was open to a prospective adjustment of the amount of the payments and was in agreement about a partial repayment of the overpayment but she was requiring more complete financial disclosure from the Father as required by the October 2012 Order.

She was not agreeable to a retroactive adjustment. [ 41 ] Those negotiations floundered when the Mother received the Father’s 2012 Notice of Assessment which disclosed dividend income from a corporation. As it turned out that corporation was [omitted for publication] (the “Corporation”) the existence of which, she testified, had never been disclosed to her by the Father. The Mother testified that she then rescinded any agreement that she may have reached with the Father. As noted above that also prompted the filing of the Mother’s April 2014 Application.

More is noted below about the Corporation and the Father’s income earned through it. Mediation [ 42 ] So far as I can determine from the evidence before me the Parents have not utilized any form of mediation in order to resolve their historical differences other than at the Family Case Conference that produced the October 2012 Order.

In particular, I understand that there has not been any use made of the Nanaimo Justice Access Centre nor a family justice counsellor to resolve their differences. [ 43 ] That is not to say that future issues covered by the Separation Agreement, any court orders, including those varying the terms of the Separation Agreement, and related matters parental responsibilities and other parental arrangements should not in fact be referred to mediation. I shall have more to say about that later.

Section 211 Reports [ 44 ] So far as I can determine from the evidence and the submissions neither party has sought nor obtained a

Section 211 report or a views of the child or any other similar type of report. The Witnesses at the Hearing [ 45 ] Four days of viva voce evidence were heard in this matter, over a span of 5 months and an extensive amount of documentation was entered as exhibit evidence. Thereafter written submissions were prepared and were filed with the court. [ 46 ] The Mother was the sole witness on her own behalf. She provided viva voce evidence. On March 5, 2015 the Mother filed a Form 4 Financial Statement sworn on March 3, 2015 (the “Mother’s 2015 Financial Statement”) which forms part of Exhibit 1.

The Mother also provided an updated Form 4 Financial Statement sworn on March 30, 2016 which was admitted into evidence as Exhibit 4 (the “Mother’s 2016 Financial Statement”). [ 47 ] The Father was the sole witness on his own behalf. He provided viva voce evidence.

On February 20, 2015 filed a Form 4 Financial Statement sworn on that date (the “Father’s 2015 Financial Statement”) which formed part of Exhibit 1. [ 48 ] At the commencement of the hearing on February 3, 2016 the Father filed an affidavit sworn on February 2, 2016 (the “Father’s February 2016 Affidavit”) containing further financial disclosure including Income Tax Notices of Assessment and draft corporate financial statements for the Corporation for its July 31, 2015 year end.

On April 8, 2016 the Father filed an updated sworn Form 4 Financial Statement sworn on April 7, 2016 (the “Father’s 2016 Financial Statement”). Both of these documents formed part of the contents of the Respondent’s Book of Documents entered as Exhibit 5. Personal Background of Child C [ 49 ] Based on the evidence of both the Mother and the Father Child C was 11 years of age at the commencement of the hearing and approaching 12 years of age. He has during the separations of the Mother and the Father and since their final separation lived with and has been cared for by the Mother.

Child C, Child I and the Mother all live together in a residence located on an acreage located 15 km. outside of Port Alberni, British Columbia, which was formerly operated by her parents as a dairy farm. The Mother and the Children occupy the lower half of the residence and the Mother’s own, somewhat elderly parents occupy the upper half.

[ 50 ] Child C no longer attends a local school in Port Alberni on a full-time basis but rather is home schooled by the Mother. He does attend at the local school for sessions with his teachers twice each week, once in the morning and once in the afternoon.

The Mother is responsible for transporting him to and from those school sessions because the school is located outside of their catchment area and no bus service is available. [ 51 ] The Mother testified that she made the decision to start home schooling Child C commencing at the start of his Grade 6 year, being the September 2015 school term, in consultation with the school administration and Child C’s teachers. She conceded that nobody actually recommended that Child C should be home schooled. She did not consult the Father as the joint guardian of Child C before making and implementing this decision.

Her plan is to continue to home school Child C for grades 7 and 8 and for him to resume public school in Grade 9. [ 52 ] The Mother has described Child C as “academically very bright”, as “incredibly bright, possibly gifted” and “not an average 11- year-old.” She further indicated that he does not fit in with others in his peer age group. She testified that Child C’s interests are “far apart” from those of his peers. [ 53 ] Historically he has had problems with social interaction and social regulation with other children, especially on the school playground.

The issues started in Grade 1, subsided somewhat between Grades 2 to 4 and again became quite pronounced in grade 5. I gather that part of this problem manifests itself in what the Mother referred to as an “explosive scene” on the part of Child C, which can be triggered by various things and also with Child C being picked upon by his peers. Child C was going to receive a “behaviour designation” which would have resulted in him having a full-time aide had he continued in full-time attendance at his public school.

He was seen by the school counsellor while in full-time school attendance. [ 54 ] He has just been referred to a new counsellor because of his behaviour issues and is apparently just starting to attend these community based counselling sessions. The goal is to find out why Child C has these significant interaction issues with his peers. [ 55 ] The Mother testified that Child C has not been designated as a “gifted child” nor has he been assessed to make that determination. He does not have any learning disabilities.

She described Child C as being a “high maintenance child”. [ 56 ] The Mother has asked the Child C’s paediatrician for a referral for an assessment and testing to determine if Child C is autistic. That request for a referral has not been granted. The cost of a private assessment may be in the range of between $500 and $2,000. The Mother says that she cannot afford the expense of a private assessment. I understand that a professional referral is required also for a private assessment. [ 57 ] Child C is extremely interested in dance and participates in various forms including ballet, modern, tap, jazz and hip-hop.

He started to pursue this interest more formally in September of 2014 when he started attending a dance class. Those classes have expanded in number. He now attends dance lessons in Port Alberni for approximately one hour in the afternoon of each weekday. That time commitment apparently can increase to between 2 and 3 hours each day when dance festival presentations are approaching. The Mother is responsible for transporting Child C and his sister, Child I to their respective dance lessons.

Child C has expressed an interest in enrolling in a performing arts program. [ 58 ] There are 5 other boys in his dance group with whom he gets along. However Child C does not have play dates with any of them outside of dance class. He has not established any lasting friendships other than one in grade 4 and one in grade 5. He does have some social interaction with some neighbourhood children and does play with his sister, Child I.

During the months of July and August he has swim lessons and attends summer day camps. [ 59 ] The Mother describes that Child C has an occasional stutter in his speech when he gets nervous but she was uncertain as to whether it exists or is or is not more pronounced while he is at school. [ 60 ] The Father testified that he was only aware of some of the Child C’s social issues at school, saying that Child C was strong academically in school but in grade 1 he was persistently pestered by one particular child. [ 61 ] However, the Father further stated that he was not made aware of several aspects of Child C’s problems by the Mother or by the school and only found out when he made direct contact with the school principal.

From these direct discussions with the school principal the Father understood that the problems for Child C only occurred on the school playground and not in the classroom. [ 62 ] In his evidence the Father further suggested that the school principal had expressed concerns to him as to whether or not removing Child C from regular attendance at school was an effective way of dealing with the problems, suggesting that Child C would receive assistance from the school if Child C were to remain in full-time attendance and could be encouraged to participate in team sports. [ 63 ] In her evidence the Mother denied that the school administration ever expressed opposition to the home schooling option for Child C. [ 64 ] The Father further testified that he personally had suffered similar issues as a child.

The Father suggested that some of Child C’s behavioural issues could be addressed by proper exercise and diet, expressing the view that this was an ongoing problem. The implication being that these concerns were not being properly addressed by the Mother. [ 65 ] As noted above, I have no

Section 211 Reports in front of me nor do I have any evidence of any third party’s assessment of Child C or of Child C’s views of his relationship with either of his Parents. [ 66 ] Given the historical care role and the very active role that the Mother takes in the lives of Child C and Child I, it is reasonable to infer that they all enjoy a strong and positive relationship. I do not understand that the Father disputes that inference. [ 67 ] The Father testified in his evidence that when he and Child C and Child I are together they “do everything together”. He stated

that he enjoys his time with his children and described some of their activities together.

The Father stated that “I try to maximize my time with [the Children] by giving them experiences.” Based upon the evidence, I do not understand that the Mother is seriously challenging that assertion. [ 68 ] From the Father’s own evidence and from the other evidence available to the court, it is also reasonable to infer that the Father’s work schedule, his employment pursuits off of Vancouver Island and outside the province, while in Alberta, have presented significant hurdles for a continuing and uninterrupted relationship between the Children and the Father. [ 69 ] Based on all of the evidence, Child C and his sister Child I appear to enjoy a strong relationship and enjoy each other’s company, notwithstanding their differences in ages. [ 70 ] As mentioned, Child C, his Mother and his sister Child I live on the former family farm of the maternal grandparents.

I also understand that paternal grandparents live in the Port Alberni area. There is not an extensive amount of evidence about Child C’s interaction with the maternal grandparents but my impression is that interaction does occur and there is nothing to suggest the relationship is not a positive in nature. Similarly, there is not an extensive amount of evidence about Child C’s interaction with the paternal grandparents, but again my impression is that it does occur and as between the grandchild and the grandparents there is nothing to suggest that the relationship is not of a positive nature.

There certainly is an indication that there have been significant strains between the Mother and the paternal grandparents on the issue of visits of the Father at their residence when the Children were present which was not specifically made known to the Mother in advance. Personal Background of Child I [ 71 ] Based on much more limited evidence from both the Mother and the Father about Child I, it is my understanding that she was 5 years of age at the commencement of the hearing.

She was attending full day kindergarten at a local elementary school in Port Alberni. [ 72 ] Apparently there are no behavioural issues at school for Child I. Due to transportation complications the Mother drives and picks up Child I from school and that is likely to continue if a possible change in schools occurs. Again, I do not understand that the Mother has consulted with the Father as a Guardian of Child I about school selections or school changes. [ 73 ] Child I too has always lived with the Mother and since the final separation of the Parents has lived with and has been cared for by the Mother.

Her present living arrangements are the same as described above for Child C. [ 74 ] I do not understand from any of the evidence that Child I has any learning disabilities or special needs. [ 75 ] Child I shares her brother, Child C’s, interest in dance and she also participates in various forms including ballet, tap, and hip- hop. She attends formal lessons lasting approximately one hour, twice per week in Port Alberni. More time is required for preparing for any upcoming dance festivals or special presentations.

The Mother is responsible for driving and picking up Child I from dance lessons which usually is in conjunction with those of her brother, but they attend separate classes. [ 76 ] My sense from the evidence is that Child I has a broader group of friends, than her brother, with whom she does socialize. [ 77 ] She apparently enjoys her relationship with and feels close to her brother Child C, and they spend time together playing. [ 78 ] As I understand it the same situation described above with respect to Child C exists for Child I when it comes to her maternal and paternal grandparents.

PERSONAL BACKGROUND AND FINANCIAL CIRCUMSTANCES OF THE MOTHER The Mother’s Career Profile [ 79 ] The Mother is approximately 45 years of age. At the time that the Mother and the Father first met she was a partner in a business that produced fleece clothing. When that business failed she obtained employment as a bookkeeper with a furniture business. [ 80 ] The Mother has completed her grade 12 and has taken a broad range of post-secondary courses, including accounting.

She also received book keeping training on some computerized bookkeeping programs and was able to set up and run a bookkeeping service as a sole proprietor. She does not hold a formal qualification in accounting. She maintained her bookkeeping business which consisted of a limited number of clients following the final separation from the Father. It was based in Victoria. She relocated to Port Alberni with the Children to live in her parents’ residence. [ 81 ] At the time of the hearing she continued to do bookkeeping for one of her Victoria clients.

I understand that time wise it requires about 1 hour per day on the weekdays. She works remotely from home and on occasion travels to Victoria as part of her occupational responsibilities.

She does some work for another client but that is only on an annual rather than an ongoing weekly or monthly basis. [ 82 ] Given her child care commitments and her responsibilities focused around the Children’s extra-curricular activities, the accompanying transportation requirements and her home schooling responsibilities with Child C, including “keeping him on task”, she is unable to take on extra bookkeeping work or new clients. In her evidence she outlined a typical day and the allocation of her time to complete the various household and child related matters.

Thus she only has approximately 1 to 1 ½ hours per day in order to devote to her existing bookkeeping clients. That amount of time does not permit her to take on new clients at present. When asked about her future employment plans she indicated that she “cannot think too far into the future” since the Children remain her focus. [ 83 ] The Mother is in a promising, exclusive romantic relationship that as at the date of the commencement of this hearing had been ongoing for approximately one year.

That gentleman, identified herein as B.W., has historically worked out of town a great deal but since the end of February or March of 2016, has found work as a mechanic in the Port Alberni area. They do not live together and

maintain separate residences. He has two adult children. They do not share any of their respective financial resources. He does not provide her with financial support or assistance nor does he provide any financial support for the Children. They generally only see each other on weekends because of his work schedule. [ 84 ] As previously noted the Mother continues to reside at her parents’ residence with the Children on the former dairy farm. Although it is not an active farm, the Mother does maintain a small garden.

She pays rent of $900 per month to her parents. [ 85 ] She testified that due to the declining health of her elderly parents she assists with some of her parents’ care but her parents are now receiving some outside home care assistance. The Mother did note that she does organize this outside assistance and she “manages their care”. Her parents are pensioners and their pension income includes a union pension receipt. She also assists her parents with some financial matters such as on line banking.

Therefore, she is apparently on a joint account with her parents but only for administrative convenience and she has no entitlement to the funds in that account nor does she pay any of her expenses out of that account. The Mother and her sister handle other financial matters for their parents with the use of a power of attorney. She provides all of this assistance without expectation or receipt of remuneration. She denies that she “lives off her parents”. Her parents do not pay the Mother any amounts to assist in the support of the Children.

Mother’s Financial Disclosure and her Financial Position [ 86 ] According to her viva voce evidence and the Mother’s 2015 Financial Statement and the Mother’s 2016 Financial Statement, the Mother’s Line 150 income for 2011, 2012, 2013, 2015 and 2015 was essentially equal to her gross business income from her home based accounting business proprietorship, for each of those taxation years.

Because she had none or little income tax to pay she did not claim any deductions for business expenses such as for equipment, supplies, advertising, and also not for rent, telephone, utilities and advertising, by way of a portion of her own residential expenses that have been attributed to her proprietorship business. [ 87 ] The Mother’s line 150 income and allowable employment expenses on line 212 of the T1 General Income Tax and Benefit Return and her imputed income based upon the adjustments thereto noted above are follows: Year Line 150 Income Allowable Employment Expenses Line 212 Child Support Guideline Amount 2011 $12,152.00 $0 $12,152.00 2012 $11,033.00 $0 $11,033.00 2013 $12, 247.00 $0 $12,247.00 2014 $11, 940.00 $0 $11,940.00 2015 $9,816.00.00 $0 $9,816.00 [ 88 ] The Mother’s 2016 Financial Statement discloses a 2004 vehicle with a market value of $4,000 and no other assets.

She has credit card indebtedness of $13,931 on three separate credit cards all of which debt was incurred to cover living expenses. She has two lines of credit. Line of Credit number 1 has a balance owing of $9,212 and Line of Credit number 2 has a balance owing of $4,246. She has an overdraft in her credit union banking account with a balance owing of approximately $2,508. Again, she states that the source of this indebtedness is for living expenses. The total outstanding on the two lines of credit and the credit union account overdraft is $15,966.

In her evidence and in the Mother’s 2015 Financial Statement there is disclosure of a further loan in the amount of $10,370 owed by her to the Father’s parents which was used to purchase a 2003 motor vehicle formerly owned by her. Payments have not been made on that vehicle loan for approximately 3 years, coinciding with the dispute between the Mother and the Father over retroactive child support. However, she has spoken with her former in-laws and told them that she intends to repay them when she can. [ 89 ] She lists her annual expenses at $50,686.00 in the Mother’s 2016 Financial Statement.

That includes annual payments toward her debts at $9,960 and an allocation for “pet care” expenses at $2,000 per annum. [ 90 ] The Mother does not have any dental plan or dental benefits, nor is it my understanding that the Children have the benefit of any such plans. [ 91 ] In addition to the amount of income disclosed in the Mother’s March 2016 Financial Statement she testified that she is also is in receipt of the child tax benefit of $800 per month for the Children totalling $9,600 per annum, and the child support amounts presently being paid by the Father which, pursuant to the August 2015 Order, are $1,293 per month equalling $15,516 per annum.

Thus her total receipts on a monthly basis from all sources, including her income, are approximately $3,000 per month or $36,000 per annum. [ 92 ] I am therefore given to understand that it is the difference between her total amounts received from all sources and her expenses as disclosed on the Mother’s March 2016 Financial Statement which she finances through her credit card debt and the two lines of credit. [ 93 ] The Mother has advanced a claim for special expenses relating to Child C’s annual dance expenses and swimming instruction at $2,500 and for Child I’s annual dance expenses and swimming expenses at $1,600. [ 94 ] The Mother seeks prospective contributions (and not retroactive contributions) to these Special and Extraordinary Expenses from the Father.

She says that to date the Father has made no such contribution nor has she sent him any bills or made any direct requests to him for contribution for the activities that she arranged for the Children. Also since about 2013 she had not provided him with up to date information concerning the activities of the Children. She did concede that he made payments for a sailing camp attended by the Children in the summer of 2015.

PERSONAL BACKGROUND AND FINANCIAL CIRCUMSTANCES OF THE FATHER The Father’s Career Profile [ 95 ] The Father is approximately 51 years of age. He graduated with his high school diploma, and has post-secondary training in computer science in 1984 and attended college courses in civil engineering technology in 1994-1995. He has had additional formal training since then. In particular, in late 2011 and from January to March of 2012 he received training that led him to qualify as an industrial safety officer. He has a very wide and varied employment background and describes himself as “multi skilled”.

He has maintained stable employment for a number of years in a variety of different fields. [ 96 ] Those different fields include between 1979 and 1990 working as a commercial fisher include specifically working a deckhand and deck boss before obtaining qualifications in 1989-1990 as a Fishing Master III and therefore became qualified to captain a fishing vessel.

Over a period of 6 years of sea time he fished for a number of different species as diverse as crabs and tuna. [ 97 ] From 1990 to 1996 he owned and operated a Victoria based cold storage and freight delivery company, which I understand had some 25 employees. [ 98 ] Between 1996 to 2006 he was employed intermittently at various times in residential and commercial demolition, construction and maintenance jobs. [ 99 ] When the Mother and the Father first met and started their relationship in 2002, he was a co-owner of a video production company.

By the time of the Mother and Father’s first separation he had started his own media production company which he continued to operate until such time as he sold it, after their first separation. Thereafter I take it he moved to Vancouver to manage a business for two other individuals between 2004 and 2008. That business was in the creative production field including corporate branding, websites, television commercials and media design. In 2008 he left that business because of a failure of the owners to pay various sub-contractors that he had hired for their benefit and for stress reasons.

In 2009 the Father had to declare bankruptcy because of his involvement with that business. [ 100 ] He remained in a management consulting role briefly around the time that the Mother and the Father first reconciled. He then went to Fort St. John, applied for a large number of jobs. According to evidence because of his “strong math skills”, he gained employment with a company involved in servicing the pipeline construction industry for a short period of time. He identified himself in his “Career Profile”, which was admitted as an exhibit, as an electrician’s apprentice and as an instrumentation technician.

That employment lasted from December of 2008 until April of 2009. [ 101 ] From January of 2008 to June of 2011 he also held various positions in the oil energy sector as a Health Safety Environment Adviser, Security Manager and Field Coordinator in three separate projects in northern British Columbia and Alberta. [ 102 ] During the period from June to August of 2011 he used his formal certification as a registered radiography assistant to complete weld and quality control and safety inspections in a job in which he was based out of Fort St. John, B.C.

From January of 2011 until January of 2012 he worked as a unionized apprentice electrician on large industrial and commercial projects in Victoria and Comox, B.C. [ 103 ] From the evidence, I understand that the Father from around 2011 onward increased his responsibilities as Health Safety Environment Officer and Advisor, starting as a junior officer and graduating to a senior officer’s role, with much more responsibility and supervisory duties. [ 104 ] From October to December of 2012 was the lead Safety Adviser at a hydroelectric project in Terrace, B.C. [ 105 ] While the dates of his various work assignments from his Career Profile and those from his viva voce evidence do not quite match, I do understand that in September of 2012 he moved to and became a resident of Alberta where he remained until April 30, 2015.

During that period of time he worked as both a Health Safety Environment Manager and a Health Safety Environment Advisor on at least four major projects in Northern Alberta and in particular out of Fort McMurray, Alberta. All of these projects related to the petroleum energy industry and are associated with the Alberta oil sands. [ 106 ] The work in Alberta continued until April of 2015 at which time the Father and his then common law spouse, S.R. relocated to Shawnigan Lake, B.C., due to the reduction in the size of the workforce at the Fort McMurray project where he was providing services.

After a two month hiatus in available work, he was recalled in June of 2015 to Fort McMurray for about two weeks with another gap occurring until August of 2015 when he returned to Fort McMurray and continued there until approximately November 10 of 2015 when the project finished. [ 107 ] Since that time up to and including the court hearing dates for this matter, no additional opportunities have arisen in the energy facilities and infrastructure construction sectors either within Alberta or British Columbia, apparently due to significant financial uncertainty in the energy sector as a whole and the “shelving of many projects” which would offer the Corporation contract opportunities and lead to employment of the Father. [ 108 ] The Father testified that he has continuously been looking for full-time work in the oil energy industry and has been keeping in touch with “key people” but no new work had been procured.

He described himself as “old school” finding work by talking with individuals with whom he has built relationships, rather than finding jobs “on line”. [ 109 ] During the course of the hearing the Father indicated that he was continuing to seek other employment and contract opportunities. He was contracting part time to a Vancouver based industrial business to update their safety manuals and procedures and health, safety and industrial programs. As well he is working on developing their website and assisting with the development of internal modules for payroll, time sheets and purchase orders.

The availability of that work has been developing very slowly with only a couple of small contracts at the time of the hearing. More contracts may entail him being in Vancouver a couple of days each week. He is hopeful he can perform some of his responsibilities remotely from his home on Vancouver Island. He also pursued possible

employment grading fish in a fish plant on the west coast of Vancouver Island but that job did not materialize. I also understand that he has a contract for corporate branding services with an economic development organization based in and around the Port Alberni area, to which community he had relocated towards the end of the hearing.

In all cases the income to be derived was significantly less than could be achieved in the oil sands or energy construction sector. [ 110 ] In his evidence provided on the last day of the hearing he detailed his continuing efforts to obtain full time employment both locally in British Columbia and in Alberta. THE CORPORATION: [omitted for publication] Background of the Creation and Operation of the Corporation [ 111 ] In August 2012 the Father incorporated the Corporation under the laws the Province of Alberta. The Father and his then common law spouse, S.R. were the officers and directors of the corporation.

The Father and S.R. were issued and at the time of the hearing each held 100 voting common shares in separate classes of shares. Each of those classes of shares rank equally in terms of participation. The Articles of Incorporation permit noncumulative dividends to be declared on each class of shares, at the discretion of the directors, without any requirement to declare dividends on the other classes of shares.

This share structure thus allows what is sometimes referred to as “dividend sprinkling” between the separate class of shares which itself can be utilized as part of an income splitting tax strategy. [ 112 ] According to the Father, he and S.R. consulted in the decision making for the Corporation but historically each have had different roles. He describes them as “both being equal” in the Corporation. There is no evidence that they have a formal written shareholders agreement.

He says there is no shareholders’ “tie breaking” mechanism in place. [ 113 ] The Father’s testimony indicated that the purpose of incorporating the Corporation was to permit it to enter into and obtain contracts with the large construction and energy companies for his services as a health safety and environment officer and advisor. Thus the Father was the service provider on behalf of the Corporation, which employed him, and provided liability insurance and Workers Compensation coverage.

It was the Father’s testimony than he understood that most people holding management roles, including and in particular health safety and environment officers and advisors in the energy sector, conduct their business through incorporated entities, rather than as direct employees of the large construction and energy companies. On a few occasions the Corporation would obtain the services of other incorporated subcontractors to assist handling the Corporation’s safety responsibilities that it had under its contract. [ 114 ] Based on his evidence, his common law spouse S.R. also was an employee of the Corporation.

It was his further evidence that the Corporation also earned some income from outside sources based on services that she provided to those third parties on behalf of the Corporation. I understand initially from his evidence that she provided services to a bison farming enterprise in Alberta during the period from February 2014 to April 2015. She was billed out by the Corporation starting at around $20 per hour increasing to $25 per hour for approximately 40 hours per week but with some interruptions. The contract apparently generated around $13,000 for the Corporation.

However, when pressed in cross examination he was less definitive and he conceded that he “believed” all that income went to the Corporation and that it was a “strong possibility”. No supporting documentation either way was adduced nor was S.R. called to provide any evidence. [ 115 ] He further testified that S.R. covered the initial cost of the incorporation of the Corporation, I take it by way of a shareholder’s advance to the Corporation. Also, she rolled over a motor vehicle, having a market value of some $17,000 from her personal name into the Corporation in exchange for a shareholder’s loan credit.

From time to time she made shareholder loan advances to the Corporation during “lean times” in order to permit him to take a “draw” out of the Corporation. This occurred when revenues were down because of a lack of contract work. I understand from the Father’s evidence that S.R. advanced some $15,000 to the Corporation. [ 116 ] The Father provided testimony as to the various functions that S.R. performed for the Corporation.

I understand that those duties were performed at the equipped home office that was maintained from time to time in the then current residence of the Father and S.R., including residences in Cochrane, Alberta, Grande Prairie, Alberta and Shawnigan Lake, B.C. [ 117 ] Those functions included bookkeeping, financial management, some invoicing, making travel arrangements for the Father, negotiating contracts for the Corporation, passing along communications to the Father about new contract opportunities from calls she had fielded, and acquisition of “specialized equipment” used by the Father in the performance of his duties, which I understand included the personal safety equipment and clothing that he was obliged to have and to wear. [ 118 ] The Father testified that he and S.R. made financial decisions for the Corporation in a collaborative fashion.

She was responsible for conducting the Corporation’s banking for a considerable period of time. She had the Corporation’s debit card and a credit card and was the signatory on the Corporation’s bank account. Apparently he was not a signatory on the Corporation’s bank account for a considerable period of time nor did he have a credit card in the name of the Corporation. That apparently only occurred when the Corporation changed banks.

Once he had access to the Corporation’s bank account neither of them had any specific means of control to prevent the other from withdrawing funds from the corporate bank account. [ 119 ] The Father further conceded with respect to obtaining outside contracts for the Corporation that in the present financial environment there is little to negotiate and specifically that S.R. was not the decision-maker in that regard.

Furthermore, he indicated that when it came to retaining the services of subcontractors that he made the determination of what the remuneration arrangement and the contract terms would be. [ 120 ] As I understand it, at the outset of the operations of the Corporation, the day to day and the year-end accounting was performed by an accounting service rather than by professional accountants. At that time, S.R. would collect receipts and other information which in turn was delivered to the accounting service on a quarterly basis for inputting into a computer program maintained by the accounting service.

The Father replaced that accounting service with a firm of Chartered Accountants in Alberta because of his unhappiness with several aspects of the service and advice received from the accounting service. As I understand it, when that occurred, S.R. took over the day-to-day accounting and liaised with the Chartered Accountants in terms of their review of her inputting of data and the expense

allocations. The Chartered Accountants were responsible for preparing the year-end financial statements and for filing the corporate income tax returns. [ 121 ] Some invoicing was generally completed by S.R. either on a weekly basis, at the end of a “shift”, which may have been for example, every 2 weeks or sometimes on a set time frame of a certain number of weeks.

However, my sense from the evidence is that there was not an extensive amount of invoicing or a multiple number parties at any given time and most of it was done by the Father because he had the hourly time sheets with him at some of the more remote work locations. [ 122 ] The Father testified that the Corporation was required to provide certain work-related items for him including in some situations a motor vehicle in order to discharge his duties or to provide him with transportation to and from the work site or around the work site; a computer for work-related matters and for communication purposes; and personal safety equipment including hard hats, boots, garments and gas monitors.

Depending on the location of the contract work, the Corporation was required to pay transportation expenses in order to get him to the site or to return to his residence. [ 123 ] As a result of unhappy differences that have arisen in the personal relationship between the Father and S.R., as discussed below, they have separated and from what I understand from the Father’s evidence, the Corporation has planned to cease active business effective in July of 2016 and some form of windup is required utilizing the services of the Corporation’s professional accountants.

On the last day of the hearing the Father also confirmed that S.R. was at that time, not generating any income for the Corporation nor was she providing any services to the Corporation. Similarly, I understand he was not generating any income for the Corporation at that time. In his May 3, 2016 testimony the Father had indicated that at that time S.R. was continuing to do bookkeeping and taking shareholder’s advances and was intending on producing income for the Corporation by way of services that she would be providing and for which the Corporation would be rendering invoices to a farm in the Cowichan Valley.

The Corporation’s Income and Revenues [ 124 ] As I understand all of the contracts between the Corporation and the major construction companies and head contractors were oral and therefore no written forms of contracts were available or introduced as exhibits. [ 125 ] Depending on the Father’s employment arrangement or the Corporation’s contractual arrangements and the nature of the work there has been significant variation in the remuneration derived from the Father’s efforts. [ 126 ] For example, when he was working in construction as a labourer in 2011 and 2012, I take it as an employee, he was earning approximately $17 per hour; when he obtained his junior safety officer’s qualifications in 2012 he was able to earn employment income initially of $45 per hour increasing up to between $56 per hour and $70.00 per hour as he gained more experience. [ 127 ] When his services were negotiated and billed out through the Corporation, acting as a subcontractor or a contractor, the rate of remuneration paid to the Corporation increased to a range of between $92 to $105 per hour.

On other occasions the billing was on a “day rate” basis of $700 to $950 per day. There were a number of other variables to the total compensation including rates received for living out allowance at amounts around $185 per day and payments for the use of the Corporation’s truck billed out and paid at $100 per day. Some of the “day rates” capped the number of the remunerated hours at 10 hour per day and 70 per week notwithstanding that more time was required to perform the duties.

In some situations, camp accommodation for the Father was provided as part of the contractual remuneration. [ 128 ] The evidence provided by the Father was that there were several periods of time when he was in Northern Alberta that he worked very extended hours and was on duty or on call 24 hours per day 7 days, a week for several weeks at a time, and thus with few breaks or holidays. [ 129 ] There was also evidence from the Father about some of his personal health issues that arose during the course of his time spent in Northern Alberta that he attributes to the demands of his work and the resulting lifestyle including sleep disruption issues, frequent attacks of kidney stones including at least one surgery, and more recently, during a portion of the hearing a lengthy bout of pneumonia.

No independent medical evidence was adduced. [ 130 ] Through a Chamber of Commerce the Corporation enrolled in a group benefits plan offered by a carrier that provided what I understand to be some medical, dental, extended health and disability benefits for the Father and S.R. So far as can be determined, that started in the 2013 to 2014 corporate financial year. There is an expense category entitled “Health Spending Account” recording the amount of $5,540 the nature of which was not canvassed in the evidence. I am reasonably presuming it was created for the benefit of the shareholders of the Corporation.

The Children were not part of any of this medical or extended coverage. [ 131 ] The Corporation commenced active operation in August of 2012 and established a July 31 year end commencing in 2013. The Corporation’s unaudited financial statements and bookkeeping records were presented in evidence for the 2013, 2014 and 2015 year ends.

Limited information was made available during the hearing for the Corporation’s 2016 fiscal year end period, consisting only of computerized bookkeeping records but mainly for the both the Father and S.R.’s “Owners Draw Accounts” setting out the amount of cash withdrawn by each of the two shareholders. [ 132 ] The following is a

summary compiled from those financial statements and the computerized bookkeeping records of the Corporation: Fiscal Year End Gross Revenue Expenses including sub- contractors expenses Income Before Income Taxes Net Income Dividends Paid Yr. End Retained Earnings

2012-2013 $179,871 $88,878 after a bonus amount of $30,000 paid to the shareholders- directors $90,993 after a bonus amount of $35,000 paid to the shareholders- directors $77,883 $30,000 $47,883 2013-2014 $211,823 $137,659 $74,232 $63,423 $88,151 $23,155 2014-2015 $153,842 $69,498 $84,344 $72,077 $104,500 -$9,268 Expenses of the Corporation [ 133 ] Considerable time was expended exhaustively examining and cross examining the Father about the financial information regarding the Corporation’s business expenses that appear within the financial statements.

In particular certain categories of expenses were the focus of Mother’s counsel.

These included but were not limited to “advertising & promotion” expenses; “amortization ” expenses which I understand to be related to the depreciation of Corporation’s motor vehicles and other equipment; “meals and entertainment expenses”; “telephone expenses”; “vehicle expenses” including leases, fuel, repairs, maintenance, insurance and miscellaneous items, “travel expenses; and “office use of home expenses” which was a proportionate share of the expenses of Father and S.R.’s residence attributed to business use. [ 134 ] While not necessarily conceding that many of the overall business expenses are legitimate business expense reasonably incurred when determining the Father’s income for child support purposes, the following table summarizes for illustration purposes only some but not all of those business expenses of the Corporation which the Mother suggests are excessive and in any event have a significant personal benefit component for the Father and/or S.R.

In these reasons under the heading below of “Mother’s Position” the amount of “impugned expenses” are set out in a

summary form.

It should be noted that the 2014-2015 Financial Statements were prepare by the Chartered Accountants and some expense categories are combined therein and hence are not entirely comparable with the previous years; where such is the case, it is noted by way of: (*); and the previous year’s comparable figures are then noted in [brackets]: Year Ends 2012-2013 2013-2014 2014-2015 Items Advertising and Promotion $480 $989 $0.00 Amortization $11,199 $6,373 $4,663 Meals & Entertainment $5,269 $3,046 $3,862 * [$4,882] Vehicle $11,609. $34,598 $28,544 Travel $7,498. $6,557 $5,876 Office use of Home $3,778. $4,251 $8,807* [$10,911] Telephone & Telecommunications $2,915 $2,865 $2,427 Total of Listed Expenses Above $42,748 $58,679 $54,179 Total of Business Expenses Actually Claimed $58,878 (net of $30,000 bonus expense) $102,659 (inclusive of sub- contractor expense of $19,390 but net of $35,000 bonus expense) $69,458 [ 135 ] The evidence suggests that the vehicle expenses and the telephone and telecommunication, the meals and entertainment expenses and some travel expenses were incurred for both the Father as well as S.R.

The allocation of a personal portion to the Father and S.R. rather than allocating the entire expense to the Corporation as a business expense is unclear on the evidence. The Father suggests such adjustments were made for personal use when completing the Corporation’s financial statements. Corporate Distributions to the Corporation’s Shareholders and Employees [ 136 ] Amounts were apparently withdrawn from the Corporation by each of the Father and S.R., from time to time throughout the fiscal year, and recorded in their respective “Owner’s Draw Accounts.

Then at the year end the accounting service during the first two years of operation and the Chartered Accountants starting in the 2015 year end would provide their advice as to how to characterize the funds that were withdrawn, as either employment income or as dividends or were charged against their shareholders’ loans. [ 137 ] In the first year of the operation of the Corporation, ending July 31 of 2013, the Father and S.R. were remunerated by the Corporation on a somewhat equal footing and apparently shared equally the $30,000 bonus and the dividends of $30,000.

I note parenthetically that the Father testified on the last day of evidence that of a $30,000 bonus amount for that 2013 year that he actually

received $15,000 and S.R. received $5,000. I understand that to be a net amount after taxes and other deductions. [ 138 ] The Father stated in his testimony that the approach used by the accounting service in the financial year ending 2013 was “maximizing a reduction in income tax”. I understand that to be through an income splitting of income between the Father and S.R. and what I take to be the apparent deferral of income by the use of dividends and bonuses. In his evidence, the Father further stated that it was not his intention to withhold income from the Children.

He stated the accounting service got “back on track” in the financial year ending 2014. [ 139 ] Getting “back on track” meant a reduction of the income amount allocated to S.R. However, it appears that in the July 31, 2014 year end from the Corporation’s financial documentation that a bonus of $35,000 was paid. There is no break down provided and financial information about S.R. has been redacted. The reasonable presumption is that each received $17,500 as a bonus. That amount matches employment income of that amount shown in the Father’s income tax return for 2014.

For that Corporation’s financial year end being July 2014, and as summarized in the table above at paragraph 132, dividends in the amount of $88,151 were declared by the Corporation. There has been no disclosure of the authorizing corporate resolutions. However, the 2014 income tax return for the Father shows receipt of a taxable dividend of $68,676. [ 140 ] Since then, effective as at July 31, 2015, and for that year ending on that date, the Father was the recipient of a $70,000 dividend and S.R. was the recipient of a $34,500 dividend.

The evidence is not entirely clear what the reduced amount paid to S.R. was in comparison to what the Father was remunerated for the financial year ending 2015. The Father’s T5 Slip shows the grossed up amount of the dividend as $82,600. The Father’s 2015 Income Tax Return was not provided.

Nothing was provided for S.R. [ 141 ] Extracts from the Corporation’s computerized bookkeeping records which I understand cover the period commencing August 1, 2015 until February 28, 2016 disclose that the Father had withdrawn the amount of $44,221.40 which was recorded through his “Owners Draw” account and S.R. had withdrawn $13,103.52. These amounts were withdrawn from the Corporation’s accounts with the Royal Bank or Island Savings Credit Union.

Father’s Financial Disclosure and his Financial Position [ 142 ] From the evidence before me, the Father’s lack of delivery of timely, transparent financial disclosure, including the production of full and complete T1 Income Tax and Benefit Returns and detailed financial information about the Corporation has been a historical issue.

It is noteworthy that even in the course of this lengthy hearing the court found it necessary to make an order for production of the Corporation’s detailed accounting records to supplement the balance sheets and statements of income and retained earnings (or a statement of operations and deficit) that had been provided. Father’s 2015 Financial Statement [ 143 ] The first comprehensive financial disclosure made by the Father was the Father’s 2015 Financial Statement”. The information that has been disclosed in the Father’s 2015 Financial Statement is based upon the Father’s 2014 taxation year. Under

Part 1 Annual Income discloses the Father’s earned employment income of $17,500 and received taxable dividends from Canadian corporations of $68,676 being a total income of $86,176.00. A calculation and deduction of the grossed up portion of the dividend being $13,735.20 is then deducted to reflect the actual received dividend being $54,940.80. This amount plus the $17,500 of earned income produces the “Annual income to be used for a child support table amount of $72,440.80”. [ 144 ] Attached to the Father’s 2015 Financial Statement are the Father’s: a. 2013 Tax Return

Summary, b. 2014 T4 Statement of Remuneration Paid, c. 2014 T5 Statement of Investment Income (for the dividend), d. 2012 Notice of Assessment, e. 2013 Notice of Assessment, and f. the Corporation’s financial statements for the financial year ending July 31, 2013, consisting of a balance sheet and Statement of Income and Retained earnings, the Corporation’s T2 Corporation Return for the year ending July 31, 2013, the Corporation’s financial statements for the financial year ending July 31, 2014, consisting of a balance sheet and Statement of Income and Retained earnings, and the Corporation’s T2 Corporation Income Tax Return for the year ending July 31, 2014.

Where Notices of Assessment alone are noted the complete income tax returns were not provided. Father’s 2016 Financial Statement [ 145 ] The last comprehensive financial disclosure made by the Father was the Father’s 2016 Financial Statement. The information that has been disclosed in the Father’s 2016 Financial Statement is based upon the Father’s 2015 taxation year. Under

Part 1 Annual Income discloses that the Father received a taxable dividend from Canadian corporations of $82,600, with the actual amount of the dividend received disclosed as $70,000 after the deduction of the grossed up amount of $12,600. [ 146 ] Attached to the Father’s 2016 Financial Statement is the Father’s: a. 2015 T5 Statement of Investment Income (for the dividend), b. T2013 Tax Return

Summary, c. 2012 Tax Return

Summary with schedules,

d. 2014 Income Tax Return Information - Regular (consisting of page 1 of 3 with pages 2 and 3 subsequently being disclosed), e. 2013 Notice of Assessment, f. 2012 Notice of Assessment, g. the Corporation’s July 31, 2015 Year End financial statements, prepared by the Chartered Accountants, consisting of a Balance Sheet and a Statement of Operations and Deficit with comparative figures for 2014; h. the Corporation’s July 31, 2014 Year End financial statement prepared by the accounting service consisting of a balance sheet and Statement of Income and Retained Earnings; and i. the Corporation’s July 31, 2013 Year End financial statement prepared by the accounting service consisting of a balance sheet and Statement of Income and Retained Earnings. [ 147 ] The Father’s affidavits sworn February 2, 2016 and filed February 3, 2016 has exhibited to it the Father’s 2011 Taxation Return

Summary, together with the Notices of Assessment for 2012, 2013 and the Income Tax Return Information for 2014. The Father’s Notices of Assessment for 2009, his 2010 Tax Return

Summary and his 2011 Tax Return

Summary are also before the court as exhibits.

Summary of Father’s Unadjusted Annual Income [ 148 ] On the basis of the information before the court the Father’s actual line 150 income, prior to any necessary or permitted adjustments (except as specifically noted) and without any inclusion of the Corporation’s income and based upon information available to the court can be summarized from 2009 to 2015 inclusive as follows: Year Line 150 Income Allowable Employment Expenses Line 212 Child Support Guideline Amount 2009 $24,656.00 0 $24,656.00 2010 $46,855.36 0 $46,855.36 2011 $46,798.79 0 $46,798.79 2012 $42,835.00 0 $42,835.00 2013 $33,750.00 0 $ 33,750.00 2014 $86,176.00 0 $86,176.00. 2014 [1] $72,440.80 0 $72,440.80 2015 $ 82,600.00 0 $82,600.00 2015 [2] $70,000$ 0 $70,000.00 [ 149 ] In his evidence on May 3, 2016, the Father testified that for 2016 he estimated that his income would be in the range of $55,000 to $70,000 but that will be dependent on his ability to obtain more stable and remunerative work.

Father’s Assets, Liabilities and Expenses [ 150 ] The Father’s 2015 Financial Statement in addition to the annual income amounts as shown above discloses expenses totalling $81,223.36. This amount includes annual support payments of $7,000 to his 2 daughters (ages 19 and 21) from a previous relationship, who reside in Mexico. This payment assists with their post-secondary education. He testified that the mother of those two children took the two daughters away from British Columbia and he had no contact with them for some 6 years while they lived in New York and then in Mexico.

Following resumption of contact in 2010 he agreed to start making some payments for their support and education without the necessity of a court order. Under

part 3 he discloses other property (household furnishings and personal belongings) of $5,000 and bank or other account-RSP account of $6,500.04 being total assets of $11,500. He discloses credit card indebtedness of $4,700. No disclosure is made of his interest in the Corporation which he had held for several years, nor the value of his shares and shareholders’ loans in the Corporation. No vehicle is disclosed as an asset but an expense entry appears for “public transit, taxis” of $1,000 and for “parking” of $900. An expense of $1,200 for extended health plan premiums and $600 for dental plan premiums appears.

Also recorded are: an “Education (Safety Training)” expense of $1,500; a “Vacation” amount of $3,500; and a “Reserve for income tax (estimate only)” of $14,650. It is noteworthy that the 2014 Year End financial statement for the Corporation also contains an entry for “training” of $3,079, for “employee benefits” of $3,046 and “group benefits” of $5,540 and “employer’s portion of employee benefits” of $1,732.

It is therefore very difficult to determine what was actually being paid or allocated to the Father personally for training and benefits and what was being paid by the Corporation and whether there was any dupli

[…]