2023 MBKB 108, 2023 MBKB 108

Date: 20230630 Docket: FD 05-01-78382 (Winnipeg Centre) Indexed as: T.D.W. v. S.I.M. Cited as: 2023 MBKB 108 COURT OF KING’S BENCH OF MANITOBA (FAMILY DIVISION) B E T W E E N: T.D.W. , ) On his own behalf petitioner, ) for the petitioner - and - ) ) S.I.M. , ) Andrea C. Dodgson respondent. ) for the respondent ) ) JUDGMENT DELIVERED: ) June 30, 2023 DOYLE J. I. INTRODUCTION [ 1 ] This case concerns principally the issues of entitlement and quantum of child support that is payable by a parent for two children.

The mother and the father each advance claims for ongoing and retroactive relief pursuant to the Divorce Act , R.S.C., 1985, c. 3 (2nd Supp .), (the “ Act ”) and the Child Support Guidelines Regulation, Man. Reg. 58/98 (the “ Guidelines ”). [ 2 ] The issues that relate to retroactive support are determined in the context of the principles established by the Supreme Court in S. (D.B.) v. G. (S.R.) , 2006 SCC 37 , [2006] 2 S.C.R. 231, (“ D.B.S. ”), Michel v. Graydon , 2020 SCC 24 , [2020] 2 S.C.R. 763 (“ Michel ”), and Colucci v.

Colucci , 2021 SCC 24 (“ Colucci ”). [ 3 ] Three motions to vary the Final Order pronounced by Aquila J. on December 23, 2010 (“Final Order”) pursuant to the Act are to be considered. The terms of the Final Order that are subject to these motions principally concern child support orders for a son and a daughter, who are currently 20 and 18 years of age. [ 4 ] The father filed two motions to vary the Final Order, one on January 3, 2017, and the other on April 26, 2018. The mother filed one motion to vary on December 12, 2017. There is a fourth motion to vary the Final Order.

This motion filed on January 31, 2022, is subject to the procedural framework established by the new model for scheduling case flow management and is not being considered in this proceeding. II.

SUMMARY OF FACTS

A) The Parties

[ 5 ] After a very high conflictual relationship, a Divorce Judgment and Final Order were pronounced on December 23, 2010. Following the pronouncement of the Final Order, both children remained in the primary care of the mother until September 1, 2019. At that time, the son moved to be in the primary care of the father while the daughter remained in the primary care of the mother. [ 6 ] The father is a practising lawyer and is also employed as an instructor at a private college. The mother is a clinical psychologist who is principally employed by a local school division.

Regrettably, the intense acrimony and the high conflict that existed both before and after their divorce continued during these proceedings. [ 7 ] The father and the mother were urged to retain counsel to assist in resolving the matters in issue. Unfortunately, this encouragement had limited success. The father, who has considerable experience in the area of family law, remained a self-represented litigant throughout these proceedings. The mother remained self-represented for most of the time, but eventually retained experienced counsel to act on her behalf as the proceedings were nearing conclusion.

B) Final Order [ 8 ] Three basic terms of the Final Order which are material to the three motions to vary are:

i) The annual income of the father was agreed by the parties to be $68,727.00; ii) The annual income of the mother was agreed to be $83,652.67; iii) The father and the mother shall provide one another with a copy of their respective income tax returns no later than June 15 of each year and a copy of their Notices of Assessment upon receipt, commencing in 2011 and continuing each and every year thereafter until the children are no longer children of the marriage within the meaning of the Act .

C) Motions to Vary [ 9 ] The motions to vary the Final Order contain the following requests for relief:

i) Motion to vary of the father filed January 3, 2017 [ 10 ] The requests of the father in his first motion to vary include:

a) An order crediting the father for overpayment of child support from January 1, 2014 – January 3, 2017;

b) An order crediting the father for overpayment of child support from January 3, 2017, to the pronouncement of a variation order of the Final Order; and

c) An order that ongoing child support be commensurate with the father’s current income and in accordance with the Guidelines . ii) Motion to vary of the mother filed December 12, 2017 [ 11 ] The mother requests in her motion to vary the following relief:

a) An order to increase the amount of child support that is payable by the father for the children retroactive to January 1, 2010; and

b) An order that the father pay the mother lump sum child support representing the total amount that although ordered, he has failed to contribute to a Registered Education Savings Plan (“RESP”) for his daughter. iii) Motion to vary of the father filed April 26, 2018 [ 12 ] The father requests, in his second motion to vary, a variation of the Final Order which includes:

a) An order deleting the obligation that he contribute annually $2,000 to a RESP for the benefit of the daughter with the annual contribution being made no later than December 31 of each year;

b) An order deleting the obligation that he maintains an insurance policy on his life in the amount of $500,000 for so long as either or both children remain dependent; and

c) An order to compensate the father that takes into account the time and expense that he has incurred to facilitate his periods of parenting time and takes into account the time and expense he has incurred in driving the children for extracurricular activities during the mother’s parenting time. [ 13 ] The father also requested in this motion an order specifying his periods of care of the children during Christmas, summer holidays and long weekends.

He further requested orders that the mother share equally in driving the children to facilitate his specified periods of care and that the mother be fully responsible for driving the children in regard to extracurricular activities during her periods of care. Taking into account the current ages of the children and their personal circumstances, there is no longer a need to determine these issues. iv) Motion to vary of the mother filed January 31, 2022

[ 14 ] On January 31, 2022, another motion to vary was filed on behalf of the mother. This motion, which will be considered in a subsequent proceeding, requests relief that includes:

a) An order retroactively adjusting child support and s. 7 expenses payable by the father to January 1, 2019;

b) An order imputing income to the father;

c) An order setting child support payable by the father for the daughter on an ongoing basis; and

d) An order requiring the father to contribute to s. 7 expenses payable for the daughter on an ongoing basis. [ 15 ] On February 14, 2022, the father filed a Notice of Opposition opposing this motion. [ 16 ] The relief claimed in this motion duplicates, in part, the relief which was claimed in the motions to vary that had been previously filed. To avoid a duplication of proceedings, these reasons focus on the payment of child support for the period January 1, 2010 to December 31, 2019.

The interim order which will be pronounced with respect to ongoing child support will be based upon the total incomes of the parties in 2019 and will be subject to any order pronounced pursuant to the mother’s pending motion to vary.

D) The Purported Settlement Agreement [ 17 ] The matters in issue, with the exception of the father’s obligation to contribute to s. 7 expenses for the children were purportedly settled on November 13, 2020. On that date, the father and the mother, as self-represented litigants, advised the Court that they had achieved a resolution of the issues raised in the three motions to vary, with the exception of the issue concerning s. 7 expenses.

They further advised that they had agreed to additional terms of agreement which would be included in minutes of settlement. [ 18 ] The expressions of good will and conciliation that were made on that day soon disappeared and were replaced with unwavering expressions of distrust, anger and frustration. Efforts were made to “see if the settlement could be rescued” ( Pandey v. Pandey , 2021 MBCA 3 at para. 4 ). However, these efforts were futile. On February 25, 2022, the purported settlement agreement was with the consent of the father and the mother, set aside in its entirety.

E) Non Compliance with terms of the Final Order [ 19 ] The father did not respect the terms of the Final Order that had been pronounced on December 23, 2010. He failed on an ongoing basis to provide his annual income tax return on or before June 15 of the following year. The father also failed to maintain an insurance policy on his life designating the children as irrevocable beneficiaries and the mother as trustee for the proceeds of the policy.

He further failed to make annual contributions of $2,000 to an RESP for his daughter as required by the order. [ 20 ] The mother also did not respect the terms of the Final Order. Like the father, the mother had an affirmative duty to disclose her annual income each year. However, the mother did not annually provide a copy of her income tax return on or before June 15 of the following year as had been ordered.

She stated in her affidavit affirmed on August 31, 2018, “mutual efforts to minimize contact with each other has resulted in the failure to exchange annual copies of tax returns since the Final Order.” [ 21 ] It was not possible to recalculate annually the proportionate contributions of the mother and the father for the children’s s. 7 expenses in the absence of disclosure. The mother further incurred extracurricular expenses concerning the children without obtaining the written consent of the father, as had been directed by the Final Order.

F) Financial Disclosure [ 22 ] The failure of the father and the mother to exchange annual financial information as required by the Final Order continued between 2011 and 2017. The required financial disclosure slowly began after these proceedings commenced in 2017. After the required disclosure finally occurred, it became apparent that from 2012 – 2019, the father had been earning salary income as an instructor at a private college and had been receiving annual dividend income from two taxable Canadian corporations that he controlled – T.D.W. Professional Corporation (“T.D.W. Professional”) and T.D.W.

Law Corporation (“T.D.W. Law”). In 2014 and 2015, the father had also earned salary income from one of his corporations. [ 23 ] Jim McIlroy, a chartered professional accountant, affirmed affidavit evidence that attempted to compile the father’s annual income and benefits from all sources beginning in 2012. In addition to the father’s yearly dividend and salary income, Mr. McIlroy identified corporate expenses which may have provided a personal benefit for the father.

Jim McIlroy was not cross-examined on his affidavit, nor was there any expert evidence presented to refute his findings. [ 24 ] When disclosed, it was apparent that the annual income received by the mother for the years 2011 – 2019 was principally salary income earned as a result of her employment by a local school division.

G) Special or Extraordinary Expenses [ 25 ] The Final Order contains specific terms concerning the father’s obligation to contribute to special or extraordinary expenses that included the following terms:

a) The father shall pay the mother a contribution for special or extraordinary expenses that relate to daycare, nanny, extracurricular activities, school expenses, medical expenses, and dental expenses for the children as specified in the order;

b) The amount of child support and special or extraordinary expenses payable by the father shall be recalculated based upon the parties’ agreed upon actual incomes for the prior calendar year effective July 1 of each year with the first recalculation to be effective July 1, 2011. If the parties are unable to agree upon the appropriate recalculation, either party may proceed to have this issue determined by this Court;

c) The mother shall provide the father with receipts for all special or extraordinary expenses for which she is claiming a contribution; and

d) Any further extracurricular expense shall not be incurred without prior written consent of the other party and shall be payable by the father in the amount of 44.14% of the expense.

This percentage shall be recalculated on an annual basis effective July 1 of each year, taking into account the annual incomes of the parties. [emphasis added] [ 26 ] The Final Order specifies that commencing January 1, 2011, the father shall pay $315.50 per month for each child, that is $631 per month, for “Day Care/Nanny/Extracurricular Activities (such as soccer, swimming, martial arts, skating lessons, gymnastics and music lessons)/School Expenses/Medical Expenses/Dental Expenses”.

The order also directed that the first recalculation would be effective July 1, 2011. [ 27 ] The mother claims in these proceedings that she has incurred special or extraordinary expenses between 2014 – 2019 in the following total amounts: Year Total 2014 $9,099 2015 $7,623 2016 $5,498 2017 $5,193 2018 $8,295 2019 $8,290 [ 28 ] The father claims that he has incurred special or extraordinary expenses between 2014 – 2019 in the following total amounts: Year Total Expenses 2014 $361.92 2015 $152.76 2016 $1,631.50 2017 $885.40 2018 $8,295 2019 $8,290

H) Child Support payments 2014 – 2019 [ 29 ] The Final Order provided that the father was to send payments of child support and arrears that were payable to the mother to the Maintenance Enforcement Program (“MEP”). Between January 1, 2014 and December 31, 2019, the father made payments to MEP in the total amount of $110,862. In reviewing the MEP Debtor Statement of Account, the following payments were received from the father from 2014 – 2019: Year Amount received 2014 $19,104 2015 $19,104 2016 $19,104 2017 $19,104 2018 $16,488 2019 $17,958 III.

ISSUES [ 30 ] The issues to be considered are: 1) What is the amount of the father’s obligation to pay Guideline child support and s. 7 expenses from January 1, 2010 to December 31, 2019? 2) Should the Final Order be varied to delete the obligation that the father maintain a life insurance policy in the amount of $500,000 naming either or both children as beneficiaries so long as either or both children remain dependent?

3) Should the father be required to pay lump sum child support as a result of his failure to contribute to the daughter’s RESP as ordered? 4) Should the Final Order be varied to delete the requirement that the father contribute $2,000 annually to an RESP for the benefit of the daughter? 5) Should the father receive compensation for driving the children to facilitate his periods of parenting time and extracurricular activities of the children during the mother’s parenting time?

Variation of a Child Support Order [ 31 ] The motions of the father and the mother to vary the Final Order must be considered in the context of the statutory framework created by the Act .

Section 17(1) of the Act provides broad powers to the court to vary a support order, retroactively and prospectively. [ 32 ] Section 17(4) of the Act states: Before the court makes a variation order in respect of a child support order, the court shall satisfy itself that a change of circumstances as provided for in the applicable guidelines has occurred since the making of the child support order or the last variation order made in respect of that order. [ 33 ]

Section 14 of the Guidelines identifies the circumstances that are required to vary a child support order. [ 34 ]

Section 14 of the Guidelines states: Circumstances for variation 14 For the purpose of subsection 17(4) of the Divorce Act , and

section 37.2(3) of The Family Maintenance Act , any one of the following constitutes a change in circumstances that gives rise to the making of a variation order in respect of a child support order: (

a) in the case where the amount of child support includes a determination made in accordance with the applicable table, any change in circumstances that would result in a different child support order or any provision thereof; . . . . . [ 35 ] The father and the mother agree that there have been changes in circumstances since the pronouncement of the Final Order on December 23, 2010, which would result in a different child support order being pronounced.

Determination of the Annual Income of the Father and the Mother [ 36 ] To determine the father’s obligation to pay monthly child support and to contribute to special or extraordinary expenses, the first issue to consider is his ability to pay support. This ability is measured by the application of sections 16 – 19 of the Guidelines . The Annual Income of the Father a) “Total Income” of the father [ 37 ]

Section 16 of the Guidelines states: Calculation of annual income 16 A parent's annual income is determined pursuant to sections 17 to 19 using the same sources of income set out under the heading "Total income" in the T1 General form issued by the Canada Revenue Agency, adjusted in accordance with

Schedule III. [ 38 ] For the years 2011 – 2019, the “total income” described in line 150 of the father’s annual Canada Revenue Agency (“CRA”) income tax returns was in the following amounts: Year “Total Income” 2011 $74,410 2012 $93,210 2013 $125,310 2014 $60,226 2015 $87,678

2016 $87,9162017 $81,6642018 $61,2312019 $108,296

b) Schedule III Adjustment – Dividend Income of the Father [39]

Section 5 of

Schedule III of the Federal Child Support Guidelines, SOR/97-175 (“Federal Guidelines”) states: Dividends from taxable Canadian corporations Replace the taxable amount of dividends from taxable Canadian corporations received by the spouse by the actual amount of thosedividends received by the spouse. [40] The income tax returns of the father and the affidavit evidence of Jim McIlroy, chartered professional accountant, describe thetaxable amount of dividends and usually the actual amount of dividends received by the father from T.D.W.

Professional and T.D.W.Law between 2012 and 2019 as follows: Year Taxable Amount of Dividends Actual Amount of Dividends 2011 2012 2013 2014 2015 2016 2017 2018 2019 -- $43,130.00 $77,437.00 $ 2,360.00 $30,680.00 $46,616.00 $41,398.06 $17,457.87 $63,176.40 -- $34,504 $67,400 $29,500 $26,000 $39,700 $35,824 [41] The taxable dividends and the actual dividends received each year by the father differ in that the taxable dividends are grossed upto take into account tax that the corporation issuing the dividend paid on the dividend income.

Section 5 of

Schedule III of the FederalGuidelines directs that in applying the Federal Guidelines to determine income for child support purposes, the taxable amount ofdividends received by a payor spouse should be replaced by the actual amount of the dividends received. [42]

Schedule III directs that in the calculation of annual income, the taxable amount of the corporate dividends should be replacedwith the actual amount of the dividends. However, where a parent is in the position of the father, who is a shareholder receivingdividends in lieu of salary from a corporation that he controls, it has been determined that it is more appropriate to determine his incomeusing the taxable amount of the dividends. [43] In Austin v. Austin, (ON SC), Smith J. stated at para. 24, “I find that s. 5 of the

Schedule III of theGuidelines was intended to apply to a situation where investment income is received as dividends from corporations not controlled byeither spouse.” [44] In Dand v. Ady, 2014 SKQB 101, 441 Sask. R. 251, McIntyre J. stated (at para. 6): [6]

Section 5 of

Schedule 3 to the Federal Child Support Guidelines (SOR/97-175) (“Guidelines”) speaks to replacing the taxableamount of dividends from taxable Canadian corporations received by a spouse by the actual amount of dividends received for thepurposes of determining income pursuant to s. 16 of the Guidelines. This is appropriate in circumstances such as where the spouse isreceiving investment income by way of dividends.

However, where the spouse is a shareholder of a company and receives dividendsfrom the company in lieu of salary, it is more appropriate for the spouse’s income to be determined by using the taxable amount of thedividend. See, for example, Gursky v. Gursky, 2008 SKQB 253, 317 Sask. R. 186. This approach puts the spouse who receives adividend in lieu of salary in the same position as a spouse who receives the same amount simply as salary. [emphasis added]

c) Imputing Income – s. 18(1) (

h) of the Guidelines [ 45 ] Section 18(1)(

h) states: Imputing Income 18(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: . . . . . (

h) the parent derives a significant portion of income from dividends , capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax; [emphasis added] [ 46 ] Section 18(1) (

h) of the Guidelines enables the court to impute income to a paying parent if that parent receives a significant portion of their income from dividends. Throughout the period between 2012 and 2019, the father received a significant portion of his annual income as dividends from T.D.W. Professional and T.D.W. Law. The actual amount of these dividends ranged between $26,000 – $67,400 per year. [ 47 ] Imputing income to the father in regard to his dividend income is consistent with the objective specified in s. 1 (

d) of the Guidelines : (

d) to ensure consistent treatment of parents and children who are in similar circumstances. [ 48 ] When determining the annual income of the father, it is necessary to impute income under s. 18(1) (

h) to ensure that there is consistency in the obligation to pay child support between a parent earning salaried employment income and a shareholder parent receiving dividend income from a corporation that he controls. The amount to be imputed is equal to the taxable amount of dividends received by the father each year described in his annual income tax returns.

d) Income of the father received as a sole shareholder and director of a company [ 49 ] In Leslie v. Leslie , 2017 MBQB 130 (“ Leslie ”), Dunlop J. noted (at para. 68):

Section 18 of the CSG [ Guidelines ] allows a court to “lift the corporate veil” to determine if all income received by the payor fairly reflects what is reasonably available for the purposes of assessing child support. ... [ 50 ] Section 18(3) of the Guidelines states: Shareholder, director or officer 18(3) Where a parent is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the parent's annual income for taxation purposes does not fairly reflect all the money available to the parent for the payment of child support, the court may determine the parent's annual income to include (

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or ... [emphasis added] [ 51 ] In Cunningham v. Seveny , 2017 ABCA 4 , 45 Alta. L.R. (6th) 226 (“ Cunningham ”), the Alberta Court of Appeal determined

that a parent who is a sole shareholder and director of a company has the onus to demonstrate that on a balance of probabilities claimed corporate expenses are reasonable business expenses and not personal expenses. [ 52 ] Schutz J.A., writing on behalf of the court, stated (at para. 28): [28] So as to leave no doubt about the correct principle: the evidential and persuasive onus under sections 18-21 of either the federal or provincial Guidelines [ Alberta Child Support Guidelines, Alta.

Reg. 147/2005 ] as to the reasonableness of expenses, rests with the self- employed or corporate parent throughout, and is the most effective means by which to serve the best interests of the child. .... [ 53 ] In Leslie , Dunlop J. followed Cunningham v. Seveny , 2017 ABCA 4 , 88 R.F.L. (7th) 1 stating (at para. 62 ): It is Mr. Leslie [who received income from his related companies through salary, bonuses and dividends] who bears the burden of proving that the deductions that he has taken to reduce his income for tax purposes are reasonable. .... [ 54 ] Jim McIlroy examined the corporate tax returns of T.D.W.

Professional and T.D.W. Law and identified corporate expenses where he believed the father may have received a personal benefit.

These expenses included vehicle expenses, office expenses, meals and entertainment, life insurance, cellphone, travel and rent for a home office. [ 55 ] From 2012 to 2019, these annual expenses were in the following total amounts: Year Total annual expenses 2012 $11,588 2013 $16,536 2014 $16,652 2015 $13,436 2016 $13,277 2017 $14,739 2018 $11,078 2019 $11,128 [ 56 ] I have concluded that the father’s “total income” set out at line 150 of his annual income tax returns does not fairly reflect all the money that was available to the father for the payment of child support between 2012 and 2019.

The father has the onus to prove on a balance of probabilities that the claimed corporate expenses were reasonable business expenses. He has all the information regarding these expenditures and accordingly, is in a better position than the mother to present evidence concerning the corporate expenses. To the extent that a portion of these expenses provided a personal benefit, the onus remains with the father to establish the proportion of the expenses which were for the benefit of T.D.W. Professional and T.D.W.

Law. [ 57 ] The father maintained that all the corporate expenses identified by Jim McIlroy were reasonable and, in fact, were quite low. He noted that they had all been accepted by CRA as reasonable expense deductions under the Income Tax Act , R.S.C. 1985 c. 1 (5 th Supp .) (“ ITA ”). However, these expenses are of a nature where they may have both a business and a personal benefit. [ 58 ] There is no evidence to rely upon to quantify the proportion of these annual corporate expenses having a personal benefit to the father. I have considerable concern in regard to some of the business expenses.

No log was provided with respect to vehicle expenses that identify personal and business mileage. Expenses claimed on mortgage payments, home insurance and utilities involve little extra expense above the normal cost of living in the home. No evidence of any additional expenses required to maintain a home for business purposes was provided by the father. [ 59 ] The mother generously proposed that 50 per cent of these expenses be characterized as providing a personal benefit to the father. In adopting this position, she references the decision of Yard J. in Wojtyla v.

Wojtyla , 2004 MBQB 170 , where the father had expensed certain items having a personal benefit though his company.

Yard J. surmised that 50 per cent of these claimed expenses had a personal benefit. [ 60 ] While appreciating that the corporate expenses identified by Jim McIlroy had a personal benefit to the father, without there being any evidence to quantify that benefit, I have concluded that the mother’s proposal to add 50 per cent of these annual expenses to the father’s income is generous and most reasonable. [ 61 ] In the circumstances, I conclude that it is fair to impute one-half of the claimed corporate expenses each year to the father’s income for child support purposes.

As a consequence, for the years 2012 – 2019, the following amounts shall be added to the father’s annual income: Year Imputed income

2012 $5,794 2013 $8,268 2014 $8.326 2015 $6,718 2016 $6,639 2017 $7,370 2018 $5,539 2019 $5,564

e) Imputing income – s. 18(4) of the Guidelines [ 62 ] Section 18(4) of the Guidelines states: Adjustment to corporation's pre-tax income 18(4) In determining the pre-tax income of a corporation for the purposes of subsection (3), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm's length must be added to the pre-tax income, unless the parent establishes that the payments were reasonable in the circumstances. [ 63 ] T.D.W.

Law paid to the father’s then spouse, T.G. the following amounts in 2013 and 2014: Year Taxable Amount of Dividends Employment Income 2013 $6,812.50 2014 $32,450.00 $3,500.00 [ 64 ] Adding back to a parent of non-arm’s length payments and benefits that are without value to the company is intended to ensure fairness in the allocation of pre-tax corporate income for the payment of child support.

The father did not present any evidence that the non-arm’s length dividend payment valued at $6,812.50 in 2013 and a total payment of $35,950 in 2014 were reasonable for services provided to the company. [ 65 ] The father’s spouse at the time, T.G., was paid the dividends as a result of income splitting with the father.

Where it is appropriate for the husband’s income to be determined using the taxable rather than the actual amount of dividends, it is appropriate that the taxable amount of the dividends paid to T.G. be added to the father’s income under s. 18(4) of the Guidelines . [ 66 ] In the circumstances, these dividend payments of $6,812.50 in 2013 and $32,450 in 2014 will be added to the father’s income for those years. Similarly, the employment income paid to T.G. in 2014 of $3,500 will also be added to the father’s income for that year.

f) Imputing Income – s. 18(1) [ 67 ] Section 18(1) of the Guidelines states: Imputing Income 18(1) The court may impute such amount of income to a parent as it considers appropriate in the circumstances .... [ 68 ] Jim McIlroy studied the father’s 2018 and 2019 income tax returns and determined that they did not include professional fees that had been paid to the father by T.D.W. Professional and T.D.W. Law for those two years. [ 69 ] In 2018, T.D.W. Professional paid the father employment income of $2,126. T.D.W. Law paid him employment income of $10,795.

These amounts designated as professional fees in the financial statements of the corporations are not disclosed in the father’s 2018 income tax return. The employment income from the two corporations in the total amount of $12,921 shall be added as imputed income to the father’s 2018 income under s. 18(1) of the Guidelines . [ 70 ] In 2019, T.D.W. Professional paid the father employment income of $1,298 and T.D.W. Law paid him $10,241. These amounts in the total amount of $11,502 were not disclosed in the father’s 2019 Income Tax Return.

This total amount of undisclosed employment income shall be imputed to the father and be added to the father’s 2019 annual income under s. 18(1) of the Guidelines . [ 71 ] The father’s annual income for child support purposes for the years 2011 – 2012 is:

Year Total Income T1 General Form Pre-Tax Corporate Income Guidelines s. 18(3)(

a) Non-Arm’s length payments Guidelines s. 18(4): - Taxable amount of dividends -Employment Income Undisclosed Income Guidelines s. 18(1) Total 2011 $74,440 -- $74,440 2012 $93,210 $5,794 $99,004 2013 $125,310 $8,268 $6,812 $140,390 2014 $60,226 $8,326 $32,450 $3500 $104,502 2015 $87,678 $6,718 $94,396 2016 $87,916 $6,639 $94,555 2017 $81,664 $7,370 $89,034 2018 $61,231 $5,539 $12,921 $79,691 2019 $108,296 $5,564 $11,502 $125,362 The Annual Income of the Mother [ 72 ] The mother’s annual income must be determined to assess the proportionate contributions of the father and the mother for special and extraordinary expenses and to calculate Guideline child support in 2019.

Taking into account the nature of her employment, the mother’s annual income can be determined by reviewing the “total income” described in line 150 of her annual CRA income tax returns. [ 73 ] The mother’s income tax returns describe the following amounts of “total income” for the years 2011 – 2019. Year “Total Income” 2011 $89,620 2012 $91,813 2013 $93,283 2014 $93,713 2015 $98,250 2016 $98,881 2017 $99,945 2018 $102,527 IV. ANALYSIS

A) What is the amount of the father’s obligation to pay Guideline child support and s. 7 expenses from January 1, 2010 to December 31, 2019?

i) Retroactive child support – January 1, 2010 – January 2, 2017

[ 74 ] The analytical framework established by the Supreme Court in D.B.S. , Michel and Colucci applies to the retroactive claim for child support between January 1, 2010 and January 2, 2017, the period prior to the father filing his motion to vary.

In D.B.S , the Supreme Court established that a holistic approach should be adopted when a court considers whether to exercise its discretion in making a retroactive child support order. [ 75 ] Bastarache J., writing for the majority, identified four factors frequently characterized as the D.B.S factors, for determining whether a retroactive child support order should be made. They are: 1) The reasons for the delay; 2) Conduct of the payor parent; 3) Circumstances of the child; and 4) Hardship caused by a retroactive award.

The Reasons for the Delay [ 76 ] Brown J. stated in Michel at para. 111 , “This factor requires the court to consider why a claimant waited to bring an application. ... In light of what the jurisprudence discloses, the focus should be on whether the reason provided is understandable.” He also noted at para. 113, “… an unreasonable basis for the delay does not negate the payor parent’s blameworthy conduct; indeed the blameworthy conduct may sometimes cause or contribute to the delay”.

Conduct of the Payor Parent [ 77 ] Bastarache J. stated in D.B.S. at para. 107 , “No level of blameworthy behaviour by payor parents should be encouraged. ... Put simply, a payor parent who knowingly avoids or diminishes his/her support obligation to his/her children should not be allowed to profit from such conduct.” [ 78 ] In Michel , Brown J. stated (at para. 33): [33] Failure to disclose material information is the cancer of family law litigation ….

The payor parent’s obligation to disclose changes in income protects the integrity and certainty afforded by an existing order or agreement respecting child support. Absent full and honest disclosure, the recipient parent – and the child – are vulnerable to the payor parent’s non-disclosure. Circumstances of the Child [ 79 ] In D.B.S. , Bastarache J. observed at para. 110, “A retroactive award is a poor substitute for an obligation that was unfulfilled at an earlier time”. In Michel , Brown J. added at para. 120 , “Although the Guidelines [ Child Support Guidelines , O.

Reg. 391/97 ] heralded a shift from the conception of need as the primary motivator for child support to an understanding of support as the child’s entitlement, a child’s needs may still be relevant in awarding and calculating retroactive child support”. Hardship Caused by a Retroactive Award [ 80 ] In D.B.S. , Bastarache J. stated at para. 116, “...

While hardship for the payor parent is much less of a concern where it is the product of his/her own blameworthy conduct, it remains a strong one where this is not the case”. [ 81 ] Martin J. considered the factor of hardship to the payor in Colucci and stated (at para. 107 ): [107] ... The payor must adduce evidence to “establish real facts” supporting a finding of hardship ... Bald assertions are not enough ... The payor must also provide a complete picture of their financial situation, including income, assets and debts.

For example, in this case, an assessment of hardship requires consideration of not only Mr. Colucci’s present income and future earning capacity, but also the funds he received from his mother’s estate and any other assets. Date of Retroactivity [ 82 ] The Supreme Court has provided direction for establishing the period of retroactivity in D.B.S. , Michel , and Colucci .

In D.B.S. , Bastarache J. described a presumptive date of retroactivity which is subject to change where there is blameworthy conduct (at paras. 123 – 124): 123 .... it will usually be inappropriate to make a support award retroactive to a date more than three years before formal notice was given to the payor parent.

124 .... Not disclosing a material change in circumstances – including an increase in income that one would expect to alter the amount of child support payable – is itself blameworthy conduct. The presence of such blameworthy conduct will move the presumptive date of retroactivity back to the time when circumstances changed materially.

A payor parent cannot use his/her informational advantage to justify his/her deficient child support payments. [ 83 ] In Michel , Brown J. asserted (at paras. 32 and 33): [32] Retroactive child support awards will commonly be appropriate where payor parents fail to disclose increases in their income. ... And where the strategy for avoiding child support obligations takes the form of inadequate or delayed disclosure of income, the effect on the child support regime is especially pernicious. .... [33] ....

Absent full and honest disclosure, the recipient parent — and the child — are vulnerable to the payor parent’s non-disclosure. [ 84 ] More recently, in Colucci , Martin J. summarized the applicable principles that apply in considering whether a court should pronounce a retroactive child support order. Martin J. declared (at para. 114): [114] It is also helpful to summarize the principles which now apply to cases in which the recipient applies under s. 17 to retroactively increase child support: . . . . .

d) The court retains discretion to depart from the presumptive date of retroactivity where the result would otherwise be unfair. The D.B.S. factors continue to guide this exercise of discretion, as described in Michel . If the payor has failed to disclose a material increase in income, that failure qualifies as blameworthy conduct and the date of retroactivity will generally be the date of the increase in income. [emphasis added] [ 85 ] The Final Order directs that there be a recalculation of child support and special or extraordinary expenses effective July 1, 2011.

The father and the mother did not appeal the direction that the first recalculation be effective on July 1, 2011. [ 86 ] The wife requests Guideline child support retroactive to January 1, 2011 and a contribution from the father of s. 7 expenses retroactive to January 1, 2014. [ 87 ] The father maintains that a variation of the Final Order be retroactive to no later than January 1, 2014. [ 88 ] On January 3, 2017, the father commenced these variation proceedings to terminate his obligation that to contribute to the cost of nanny and daycare expenses for the children that was required by the Final Order.

The son was, at that time, almost 14 years of age and the daughter was almost 12. They no longer required a nanny or daycare. On December 12, 2017, 11 months after the filing of the father’s motion, the mother filed her motion to vary child support. [ 89 ] The reasons for delay in commencing these variation proceedings must be considered. In D.B.S. , Bastarache J. noted at para. 103, “...

Recipient parents must act promptly and responsibly in monitoring the amount of child support paid.” Paragraph 3.20 of the Final Order contemplated that child support and special or extraordinary expenses would be recalculated based upon the 2010 incomes of the mother and the father with the first recalculation to be effective July 1, 2011.

The mother, like the father, has not provided an understandable reason for her lengthy failure to fulfil her mandatory obligation to disclose her annual income each year or for her delay in bringing an application to vary the Final Order. [ 90 ] The factor of blameworthy conduct is an important factor to consider. The father has been guilty of not disclosing material increases in his annual income for many years. Paragraph 3.14 ordered the father to provide the mother with a copy of his income tax return no later than June 15 of each year commencing in 2011. The father repeatedly failed to fulfil this obligation.

In so doing, he failed to disclose material increases in his annual income following the pronouncement of the Final Order. [ 91 ] The circumstances of the child is a factor to examine when considering whether to make a retroactive child support order. Child support is the entitlement of the child. Implicitly, children are prejudiced by a parent’s failure to pay monthly child support commensurate with their ability to pay.

While the father disregarded his duty to make annual financial disclosure and pay child support commensurate with his income, it must be noted that he did assume responsibility for payment of certain child related expenses and satisfied the transportation needs of the children as they arose. [ 92 ] The factor of hardship to the payor parent is to be considered in making a retroactive child support award. The father has had

extensive debts and has the current obligation to support a child in addition to the two children who are the focus of these proceedings. In considering the issue, it must be noted that in March 2019, the father’s mother sadly passed away. On her death, the father became the beneficiary of assets for his mother’s estate in the amount of approximately $210,000. He claims a significant portion of this entitlement was required to satisfy his creditors. However, he has not disclosed the balance of the remaining funds in his possession.

In the absence of disclosure, it can be inferred that a retroactive child support order will not cause hardship to the father. [ 93 ] The facts of this case are significantly different in one respect from the facts of the cases that came before the Supreme Court. In D.B.S. , Michel , and Colucci , there was one parent who had been guilty of blameworthy conduct. In this case, both parents have been guilty of blameworthy conduct on an ongoing basis. [ 94 ] Their blameworthy conduct centres on their mutual and ongoing failure to make financial disclosure as was ordered by the Final Order.

Paragraph 3.14 of the Final Order requires that the mother and the father make annual financial disclosure on June 15 of the following year. The Final Order was contemplated to be a short-term order. Paragraph 3.19 of the Order contemplated that child support and special and extraordinary expenses would be annually adjusted following the exchange of income tax information commencing with the first adjustment on July 1, 2011.

It was not contemplated that the terms of the Final Order would remain in effect for over 12 years. [ 95 ] Paragraph 3.12 of the Final Order requires the mother to provide the father receipts for all special and extraordinary expenses for which she wished to receive a contribution. The mother repeatedly refused for years to provide any receipts to the husband for s. 7 expenses. [ 96 ] Paragraph 3.13 of the Final Order requires that neither party incur any extracurricular expenses without the prior written consent of the other party.

The mother failed on an ongoing basis to obtain any consent, written or otherwise, from the husband for special and extraordinary expenses which she incurred. [ 97 ] The mother has not provided to the father any receipts for special and extraordinary expenses for the period between January 1, 2011 and December 31, 2013. During these three years, the father has paid $631 per month or $7,250 per year for special and extraordinary expenses. At this time, the son was 8 – 10 years of age.

The daughter was 6 – 8 years old. [ 98 ] The mother in not disclosing any receipts and has not disclosed when a nanny was no longer required for the care of the children. The children’s grandmother resided with the mother and the children. Her role in caring for the children has not been disclosed. The principal s. 7 expense during these years would have related to nanny and daycare expenses. [ 99 ] There has been no disclosure of the costs to the mother for daycare from 2011 – 2013. However, there has been disclosure of the daycare expense in this proceeding in 2014.

The net after tax cost of daycare in 2014 was $3,424.

If the net expense of daycare for two children between 2011 – 2013 was approximately the same as in 2014, there is a significant amount of monies that was paid by the father over a period of three years which the mother has made no effort to account for and remains unaccounted for. [ 100 ] Counsel who was then acting on behalf of the mother at the hearing on November 23, 2018, commented, “They both do not come with clean hands in terms of not disclosing income and so forth.” [ 101 ] It is important that a holistic approach be taken for the determination of retroactive child support.

It is not appropriate to make a retroactive Guideline child support order between 2011 and 2013 when it appears due to the void of financial disclosure created by the mother, the father has overpaid s. 7 child support during these years.

I conclude that it is appropriate to make a child support award retroactive to three years before the filing of the father’s first motion to vary, January 1, 2014. [ 102 ] The Manitoba Table of Guidelines, which came into force on May 1, 2006 applies to the calculation of retroactive child support for the period January 1, 2014 – November 30, 2017. [ 103 ] It’s application for the years 2014 – 2016 is as follows: Year Total Guideline Income Monthly Guideline Support Annual Child Support Owed 2014 $104,502 $1,401 $16,812 2015 $94,396 $1,278 $15,336 2016 $94,555 $1,280 $15,360 [ 104 ] The Manitoba Table of the Guidelines which came into force on November 22, 2017 (“The Manitoba Table”) applies to the calculation of child support for the period December 1, 2017 – December 31, 2019. ii) Child support – January 3, 2017 – December 31, 2019 [ 105 ] The father filed his first motion to vary child support on January 3, 2017.

The mother’s motion to vary requesting an increase in child support was subsequently filed on December 12, 2017. Professor Rollie Thompson discussed the concept of retroactive child support in “Retroactive Support After Colucci”, (2021) 40 CFLQ 61, noting that there is a “loose use” of the term “retroactive support”. He stated:

Where a parent files an application for an increase or decrease in child support, there is considerable law that the usual start date for the new “prospective” order will be the date of filing, assuming that any delay after filing reflects the slowness of the judicial system rather than delay by the applicant. [If] that is correct, then there is no need for an elaborate D.B.S. / Michel / Colucci analysis for that period of time between filing and order. On this view, to be truly “retroactive”, the support must be sought for a period prior to the filing of the application. ...

In my opinion, the application of the more complicated D.B.S. analysis should be limited to claims for retroactive changes to support before the date of filing. …. [emphasis added] [ 106 ] For our purposes, the relevant factors for pronouncing a prospective child support order apply to the period from January 3, 2017 – December 31, 2019. [ 107 ] Applying the more recent Manitoba Table, the father had the following obligation to pay child support for the years 2017 – 2019: Year Total Guideline Income Monthly Guideline Support Annual Child Support Owed 2017 $89,034 $1,212 (Jan - Nov) $1,251 (Dec) $14,583 2018 $79,691 $1,126 $13,512 2019 $125,362 (father) $102,571 (mother) $1,698 (Jan - Aug) $179 (Sept - Dec) ($1,051 - $872) $14,300 iii) Contribution to Special and extraordinary expenses [ 108 ] Section 7(1) of the Guidelines states: Special or extraordinary expenses 7(1) In a child support order, on the request of the parent who has or is granted sole custody or primary care and control of the child, or a person, other than a parent, who seeks a child support order on behalf of a child, the court may provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests, and the reasonableness of the expense in relation to the means of the parents and those of the child and, where the parents cohabited after the birth of the child, to the family's spending pattern prior to the separation: (

a) child care expenses incurred as a result of the custodial parent's employment, illness, disability or education or training for employment; . . . . . (

c) health-related expenses, or any portion of health related expenses, not covered by insurance that exceed $100 annually including

orthodontic treatment, professional counselling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and medications, hearing aids, glasses and contact lenses; (

d) extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child's particular needs; . . . . (

f) extraordinary expenses for extracurricular activities. [emphasis added] [ 109 ] “Extraordinary expenses” is statutorily defined in s. 7(1.1). The primary definition of extraordinary expenses in s. 7(1.1)(

a) states in part: (

a) expenses that exceed those that the parent requesting an amount for the extraordinary expenses can reasonably cover, taking into account that parent's income and the amount that the parent would receive under the applicable table .... [ 110 ] In Delichte v.

Rogers , 2013 MBCA 106 , 299 Man.R. (2d) 269, Steel J.A. stated at para. 26 that, “… the term “extraordinary expense” must be understood within the particular family’s means and circumstances.” [ 111 ] Steel J.A. commented (at para. 33): [33] What must be remembered is that the classification of the expenses as extraordinary is only the first step in determining the issue of whether to order the sharing of the expenses. ... the court must still be satisfied that the expenses are reasonable and necessary before ordering the sharing of the expenses. [ 112 ] She continued (at para. 38): [38] Furthermore, in many cases, it quickly becomes apparent that the “real” issue is whether the expense is reasonable in relation to the means of the spouses, and whether the expense is reasonable in light of the parties’ spending pattern pre-separation.

In that regard, it is necessary to focus on the means of the parties, not just their incomes. .... [emphasis in original] [ 113 ] Section 7(3) of the Guidelines states in part: Subsidies, tax deductions, etc. 7(3) … in determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense. [ 114 ] The mother requests that the father contribute to the following s. 7 expenses for the period between January 1, 2014 and December 31, 2019: Year Expense Total 2014 Daycare for children (net) $3,424 Tae Kwon Do $3,631 Music Lessons $1,409 Health expenses net of coverage $635 $9,099 2015 Daycare for children (net) $699 Sports and equipment $4,047 Music Lessons $1,220 Computer $1,244 Health expenses net of coverage $413

$7,623 2016 Lunch hour school supervision for the children $360 Camps and sports $2,771 Music lessons and equipment rental $421 Health expenses net of coverage $1,946 $5,498 2017 Lunch hour school supervision (daughter) $180 Camps and sports $2,596 Public transportation to school $260 Health expenses net of coverage $2,157 $5,193 2018 Tutoring for son $1,680 Public transportation to school for son $748 Guitar and music lessons $1,995 Sports $2,121 Health expenses for children (orthodontics, dental, prescription drugs and massage) $1,751 $8,295 2019 Mixed martial arts (daughter) $1,321 Guitar lessons for children $1,770 Tutoring for children $1,296 Cell phones for children $2,083 Health expenses for children (orthodontics, dental, and massage) $1,820 $8,290 [ 115 ] The Final Order pronounced in 2010 stated by consent that the father pay special or extraordinary expenses in accordance with s. 7(1) of the Guidelines that relate to daycare, nanny, extracurricular activities such as soccer, swimming, martial arts, skating lessons, music lessons and hockey, school expenses, medical expenses, dental expenses. [ 116 ] All of the expenses incurred by the mother satisfy the test of being “necessary” in that they assist and support the children in their development and health.

The issue is whether they are reasonable in relation to the means of the father and the mother.

It is decided in the context that there is no evidence of the spending pattern of the father and the mother prior to their separation in 2005. [ 117 ] The following s. 7 expenses are reasonable and appropriate Year Expense Total 2014 Daycare for children (net) $3,424 Tae Kwon Do $3,631 Music Lessons $1,409 Health expenses net of coverage $318 $8,782 2015 Daycare for children (net) $699 Sports and equipment $4,047 Music Lessons $1,220 Health expenses net of coverage $207 $6,173 2016 Lunch hour school supervision for the children $360 Camps and sports $2,771 Music lessons and equipment rental $421 Health expenses net of coverage $973

$4,525 2017 Lunch hour school supervision (daughter) $180 Camps and sports $2,596 Health expenses net of coverage $1,079 $3.855 2018 Tutoring for son $1,680 Guitar and music lessons $1,995 Sports $2,121 Health expenses for children (orthodontics, dental, prescription drugs and massage) $876 $6,672 2019 Mixed martial arts (daughter) $1,321 Guitar lessons for children $1,770 Tutoring for children $1,296 Health expenses for children (orthodontics, dental, and massage) $910 $5,297 [ 118 ] The expenses for public transportation for school and purchasing cellphones and a computer for the children are disallowed.

The cost of public transportation to school does not constitute a s. 7 expense. It is an expense covered by the Guideline Table amount. The cellphones are not among the enumerated expenses in s. 7(1) of the Guidelines . The computer was purchased without consultation and without the consent of the father as was contemplated by the Final Order. These omissions reflect negatively on the reasonableness of this expense. [ 119 ] The health expenses for the children have been reduced by 50%, taking into account the mother’s ongoing refusal to submit medical and dental claims for the children to the father’s insurer.

Both the father and the mother had health insurance. Section 7(3) of the Guidelines provides that in determining an amount of an expense, benefits and any eligibility to claim a benefit relating to the expense must be taken into account. [ 120 ] The father shall not receive a contribution pursuant to s. 7 of the Guidelines for the special or extraordinary expenses that he incurred for the children between 2014 – 2019.

Section 7(1) of the Guidelines limits requests for contribution to “… the parent who has or is granted sole custody or primary care and control of the child”. [ 121 ] Section 7(2) of the Guidelines provides that generally parents share expenses “in proportion to their respective incomes”.

Taking into account the annual incomes of the father and the mother as has been determined, the special or extraordinary expenses for the children that were incurred between 2014 – 2019 shall be shared as follows: Year Father’s Income Mother’s Income Father’s proportionate contribution 2014 $104,502 $93,713 53% 2015 $94,396 $98,250 49% 2016 $94,555 $98,881 49%

2017 $89,034 $99,945 47% 2018 $79,691 $102,527 44% 2019 $125,362 $102,571 55% [ 122 ] Taking into account his annual percentage contribution, the contribution of the father for special or extraordinary expenses between 2014 and 2019 is as follows: Year Total expenses Father’s percentage contribution Father’s annual contribution 2014 $8,782 53% $4,654 2015 $6,173 49% $3,025 2016 $4,525 49% $2,217 2017 $3,855 47% $1,812 2018 $6,672 44% $2,936 2019 $5,297 55% $2,913 Total $17,557

B) Should the Final Order be varied to delete the obligation that the father maintain a life insurance policy in the amount of $500,000 naming either or both children as beneficiaries so long as either or both children remain dependent? [ 123 ] The Final Order states by consent at para. 3.24: [The father] shall maintain, enforce and effect an insurance policy on his life in the sum of five hundred thousand ($500,000) dollars for so long as either or both of the children remain dependent children within the meaning of the Divorce Act and shall designate B.J. and B.R.B. as the irrevocable beneficiaries of such policy and [the mother] as trustee for the proceeds of such policy. [emphasis added] [ 124 ] The father requests an order deleting the requirement in paragraph 3.24 of the Final Order that he maintain a life insurance policy with the children as irrevocable beneficiaries.

He does not currently have nor has he had for many years, a life insurance policy on his life with a face value of $500,000 or any value at all naming the children as beneficiaries. While the father did initially obtain a life insurance policy following pronouncement of the Final Order, he subsequently cancelled it without informing the mother.

[125] In Willick v. Willick, [1994] 3 S.C.R. 670, (“Willick”), the Supreme Court of Canada examined the threshold forvarying a child support order. Sopinka J. stated on behalf of the court (at p. 688): In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. This means a change, such that, if known at the time, would likely have resulted in different terms.

The corollary to this is that if thematter which is relied on as constituting a change was known at the relevant time it cannot be relied on as the basis for variation. .... [126] More recently, in L.M.P. v.

L.S., 2011 SCC 64, [2011] 3 S.C.R. 775 (“L.M.P.”), Justices Abella and Rothstein followed Willickand stated (at paras. 32 – 33): [32] That “change of circumstances”, the majority of the Court concluded in Willick, had to be a “material” one, meaning a change that,“if known at the time, would likely have resulted in different terms” (p. 688) ... [33] The focus of the analysis is on the prior order and the circumstances in which it was made.

Willick clarifies that a court ought notto consider the correctness of that order, nor is it to be departed from lightly (p. 687). .... [127] There is no evidentiary basis to support the father’s request to delete the requirement that he acquire and maintain a life insurancepolicy on his life. There has been no material change of circumstances since the pronouncement of the Final Order. [128] There is no evidence of any health problem that causes the father to be uninsurable for a term or whole life policy of insurance onhis life.

The father maintains that he had to cancel the life insurance policy that he had initially acquired due to financial reasons, statingin his affidavit sworn September 17, 2020 at para. 18, “I simply did not have the income to do so”. [129] However, no evidence was provided describing the cost to the father of obtaining a whole life or term life insurance policy asdirected by the Final Order. The annual income of the father at the time of pronouncement of the Final Order was $68,727.

In the yearsthat have followed, his total income each year has been higher than that amount without taking into account the reasonable imputation ofadditional income. His CRA “Total Income” described in his income tax returns between 2011 and 2019 has ranged between $60,226and $125,310. [130] The father and the mother each had legal counsel acting on their behalf when the Final Order was pronounced. The obligation ofthe father to maintain a life insurance policy is linked to and is able to secure his obligation pursuant to the Act to pay support for eitheror both of the children in the event of his passing.

To accept the father’s position would result in the father’s child support obligationbeing unsecured in the event of his untimely passing. [131] The father continues to have a child support obligation to support his daughter. At the time of the pronouncement of the FinalOrder, it was contemplated that there would be a time when the father would have an obligation to pay child support for only one of thetwo children of the relationship.

Paragraph 3.24 of the Final Order addresses this issue and specifies that the father shall maintain a lifeinsurance policy with a face value of $500,000 “for so long as either or both of the children remain dependent children within themeaning of the Divorce Act”. [132] The father’s obligation to maintain a life insurance policy in the amount of $500,000 face value is not adjustable as the amount ofthe father’s outstanding child support obligation declines. Paragraph 3.24 of the Final Order provides two forms of protection for thebenefit of the children.

It provides insurance to secure the father’s child support obligation.

It also provides a death benefit that isenforceable upon the estate of the father in the event of the father’s passing when “either or both of the children remain dependentchildren within the meaning of the Divorce Act”. [133] In the circumstances, there has not been a material change of circumstances to support a variation of the Final Order to eliminatethe father’s obligation to maintain a life insurance policy to secure his obligation to pay child support and to provide a death benefit thatis enforceable upon the estate of the father. [134] Accordingly, the father shall obtain a whole life or term life insurance on his own life, the type of insurance being his choice, inthe amount of $500,000 face value and he shall continue to maintain the insurance policy for so long as either or both of the childrenremain dependent as a child of the marriage pursuant to the Act. [135] The father shall obtain the life insurance policy designating the children as irrevocable beneficiaries and provide proof that theinsurance has been obtained and the premium for the ensuing year has been paid within 60 days of this decision. [136] The father shall each year provide to the wife proof that the required premium for the ensuing year has been paid so long as theson or daughter are a “child of the marriage” as defined by the Act.

C) Should the father be required to pay lump sum child support as a result of his failure to contribute to the daughter’sRESP as ordered? [137] The Final Order states by consent (at para. 3.21): The [father] shall contribute annually the sum of $2,000 to a registered savings plan for B.R.B. commencing in the year 2012, suchcontribution to be made no later than December 31 of each year.

[ 138 ] The order also imposes at paragraph 3.22 the identical obligation upon the mother to contribute to a registered savings plan (“RESP”) for the son. [ 139 ] The father has failed on an ongoing basis to fulfil his obligation to contribute to an RESP as required by the Final Order. His arrears in contributions, which have accrued over a period of 11 years are currently in the amount of $22,000 . [ 140 ]

Section 146.1 of the ITA , establishes the statutory framework for an RESP. Contributions which are not tax deductible are made by subscribers for the post-secondary education of one or more beneficiaries. Under the program, federal government grants are available to supplement the RESP contributions of subscribers. A basic Canada Education Savings Grant amounting to 20 per cent on the first $2,500 of annual RESP contributions is paid into the RESP under the Canada Education Savings Act , S.C. 2004, c. 26 (“ CESA ”).

Each year, investment earnings accumulate on RESP contributions and on the amounts paid under the terms of CESA . Lump Sum Child Support [ 141 ] The mother claims that the daughter has suffered a financial loss as a result of the father’s failure to contribute to the daughter’s RESP as ordered in the total amount of $34,000 – missed contributions of $22,000 plus $12,000 for lost government grants and investment earnings.

As a consequence, the mother requests lump sum child support in the amount of $34,000. [ 142 ] The mother is opposed to the father’s contributions to a RESP for the daughter being under his sole control. She wishes the funds be placed under her control.

In the event that the father is allowed to control the funds in the daughter’s RESP the mother strongly requests that there be “... very tight legal protections ... to ensure that [the daughter] receives full benefit of the court ordered education savings”. [ 143 ] The father is opposed to paying the mother lump sum child support on account of his failure to make RESP contributions for the daughter as ordered. He objects that there are no statutory provisions that support the mother’s request for this relief.

Further, funds in an RESP do not constitute and are not equivalent to an award of child support. [ 144 ] The father’s failure to make annual contributions as ordered has prejudiced the value of the daughter’s RESP. Annual CESA grants were not paid to the RESP as a result of the father’s default. Investment income that would have been earned on contributions and grants was also not earned due to the father’s ongoing default.

In these circumstances, the mother made efforts to mitigate this loss of value by making contributions to an RESP for the daughter. [ 145 ] However, the mother’s proposal that the father pay her lump sum child support for the daughter as a remedy for the father’s misconduct is not supported by precedent or principle. An RESP and a child support award are created by statute. The terms of the ITA create the framework for an RESP. The terms of the Act and the Guidelines create the framework for a child support award in this proceeding.

However, an RESP and a child support award in identical amounts are not equivalent or interchangeable. [ 146 ] Establishing a lump sum child support award in lieu of an RESP as contemplated by the Final Order has the potential of providing the mother with a non-taxable windfall which is not possible in the administration of an RESP. It is uncertain whether the daughter will attend a post-secondary educational institution following high school.

If she attends, the length of her attendance is not known. [ 147 ] If the daughter does not pursue post-secondary education, an RESP will not be paid out to her and the plan will be closed. Her father will be entitled to recover his contributions and any investment income that has been earned on these contributions. [ 148 ] If the daughter does not pursue post-secondary education and a lump sum child support award is paid to the mother, she would be entitled to retain that award.

The result would be a windfall with no one having a claim against the mother for those funds. [ 149 ] In all of the circumstances, the father shall not be required to pay lump sum support to the mother as a result of his failure to contribute to an RESP for the daughter as was ordered by the Final Order. ITA , s. 146.1 [ 150 ] A number of cases have examined the statutory framework of s. 146.1 of the ITA for creating RESPs. [ 151 ] In Vetrici v.

Vetrici , 2015 BCCA 146 , Frankel J.A. observed on behalf of the British Columbia Court of Appeal (at para. 36): [36] ... a RESP is a way of “making provisions for an anticipated expense in the future”. However, contributions to a RESP and any accumulated investment income remain the property of the subscriber until the subscriber directs payment to the beneficiary. If for some reason the beneficiary does not attend an eligible post-secondary institution, the Income Tax Act provides several mechanisms to address the funds held in the RESP.

In some circumstances, the funds may be transferred to the subscriber’s RRSP, less any grants, or the beneficiary’s Registered Disability Savings Plan ... If one of those options is not available, then grant funds are returned to the government and the remaining funds are returned to the subscriber. … [emphasis added]

[152] Frankel J.A. continued (at para. 37 – 38): [37] Of particular note is that the subscriber may, at any time, withdraw from a RESP monies for which the subscriber is entitled to arefund of payments, i.e., monies that are not attributable to grants (s. 146.1(1)). .... [38] Also of note is that because a RESP belongs to a subscriber, it forms part of a deceased subscriber’s estate and, accordingly, shouldbe taken in account for estate planning purposes .... [emphasis added] [153] In Labatte v.

Labatte, 2022 ONSC 4787, Faieta J. recently noted (at para. 45): [45] Before briefly reviewing the case law, I will describe the features of an RESP: . . . . . • An RESP is a contract between an individual (“the subscriber”) and an organization (“the promoter”) designed to help parents,family, and friends to save towards a beneficiary’s post-secondary education .... • Under the contract, the subscriber names one or more beneficiaries and agrees to make contributions for them, and the promoteragrees to pay educational assistance payments to the beneficiaries. ... . . . . . • The subscriber of a plan can change the named beneficiary under an RESP if the terms of the plan allow ... • If a subscriber dies, their estate may continue the RESP or name another individual as an alternate subscriber.

The terms of theRESP and provincial law will dictate what happens to the RESP: CRA Circular, para. 8. . . . . . [154] Faieta J. stated (at para. 50): [50] Having regard to solely the statutory framework for an RESP, it is my view that the establishment of an RESP does not establish atrust for a beneficiary given that the ITA permits a subscriber to, at any time, obtain a refund of their contributions from the promoter. Asubscriber also has the right to change beneficiaries ... [emphasis added] Fiduciary Obligations [155] In Blanco v.

Canada Trust Co., 2003 MBCA 64, our Court examined the general characteristics of relationships where afiduciary obligation is imposed. Following the decisions of the Supreme Court of Canada in Frame v. Smith, (SCC),[1987] 2 S.C.R. 99 at paras. 39 – 42 and Lac Minerals Ltd. v. International Corona Resources Ltd., (SCC), [1989] 2S.C.R. 574 at para. 130, Freedman J.A. on behalf of the Court stated (at para. 42): 42 ... fiduciary obligations may be imposed where:

1) the fiduciary has scope for the exercise of some discretion or power; 2) the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests; and 3) the beneficiary is particularly vulnerable to or at the mercy of the fiduciary holding the discretion or power. [156] The father has a fiduciary obligation to the daughter in regard to the acquisition and the management of the RESP that he acquiresfor her benefit. He has the discretion and the power to obtain a refund of his contributions from the promoter of the RESP.

If the termsof the plan permit, he can change the beneficiary named under the RESP.

The daughter has no power and is unable to restrain or limitthe powers that the father has a subscriber pursuant to the ITA. [157] Taking into account the relationship between the father and the daughter, fiduciary obligations shall be imposed upon the father toensure that the daughter benefits from the RESP which has been ordered to be established for her benefit. [158] The following fiduciary obligations are imposed upon the father with respect to the RESP in the amount of $22,000 that heacquires and maintains for the daughter: [159] The father shall acquire an individual Registered Education Savings Plan (RESP) solely for the benefit of the daughter to paytuition for a post-secondary educational institution, books and supplies within 30 days of this decision. [160] The father shall instruct the promoter of the RESP in writing at the time of acquiring the RESP to provide to the mother annualconfirmation of the existing status of the RESP with the first confirmation being no later than December 31, 2023 and continuing so longas the RESP is in existence. [161] No other individual shall be designated as a beneficiary or alternate or contingent beneficiary under this RESP. [162] The father shall not change the daughter as the beneficiary under the RESP. [163] The father shall not make any withdrawals from the RESP that have not been requested in writing by the mother or the daughter. [164] The father shall within 10 days of receiving a written request with supporting documentation from the mother or the daughter,direct the promoter of the RESP to pay the requested educational assistance payment.

The Ongoing Obligation of the Father Pursuant to s. 7 of the Guidelines [165] Section 7(2) of the Guidelines provides the guiding principle that s. 7 expenses, which include expenses for post-secondaryeducation, be shared by the mother and the father, after any contribution by the child, in proportion to their respective incomes. However, this is not a fixed and inflexible principle. The court has discretion to not follow the guiding principle in determining thesharing of a s. 7 expense (see R. (E.K.) v.

W. (G.A.), (MB KB) at para. 16). [166] The purpose of the RESP is to create a capital asset that will make provision for the daughter in the event that she wishes toobtain the benefits of a post-secondary education. At the present time, a satisfactory evidentiary foundation does not exist to assess theloss, if any, to the daughter as a result of the father’s failure to comply with the Final Order. The loss arising out of the daughter notreceiving CESA grants was not quantified. The loss of investment income on contributions and CESA grants accruing since 2013 wasnot established.

Moreover, it is not known at this time whether the daughter intends to pursue post-secondary education or is entitled toreceive other subsidies or benefits grants for her education. If the daughter does not satisfy the conditions with respect to pursuing post-secondary education that are established by s. 146.1 of the ITA, she will not suffer any loss arising from her father’s default. Courtorders must be respected. They are fundamental to the rule of law.

However, it is not currently possible to assess whether the daughterhas suffered any loss arising from the father’s non-compliance with the Final Order. [167] If it becomes necessary in the future to fix the obligation of the father to contribute to the daughter’s post-secondary educationpursuant to s. 7 of the Guidelines, the father’s ongoing failure to contribute to an RESP investment as ordered in 2010 should be a factorfor the court to consider.

The obligation of the mother to contribute to the daughter’s post-secondary education ought not to be increaseddue to the father’s failure to comply with the Final Order.

D) Should the Final Order be varied to delete the requirement that the father contribute $2,000 annually to a RESP for thebenefit of the daughter? [168] The father requests a variation of the Final Order to delete the obligation that he contribute annually $2,000 to an RESP for the

benefit of the daughter. The Final Order imposed by consent an ongoing obligation upon the father commencing in 2012 to contribute $2,000 per year to an RESP for the benefit of the daughter. For a variation order to be pronounced, there must be a material change of circumstances since the pronouncement of the Final Order to support the variation. [ 169 ] The father’s capacity to contribute $2,000 per year to an RESP has not diminished since the pronouncement of the Final Order. During the past 12 years, the father has continued to have the ability to practise law and to teach. He has remained in good health.

The father has not been affected by any condition that has affected his capacity to earn income. For each year since the pronouncement of the Final Order, the father’s Total Income described in his annual income tax returns, which do not include imputed income for child support purposes, has been considerably higher than $68,727 which was agreed upon by the parties as the annual income of the father when the Final Order was pronounced. [ 170 ] The mother and the father do not disagree that it is in the best interests of the daughter to enrol in a post-secondary educational institution.

There is no evidence to suggest that following completion of high school, the daughter does not intend to enrol in a post- secondary educational institution. There is no evidence that she has informed others that she does not wish to further her studies. [ 171 ] In the circumstances, the request of the father to vary the Final Order to delete the requirement that he contribute $2,000 annually to an RESP for the daughter is dismissed.

E) Compensation for Facilitating Periods of Parenting Time and Extracurricular Activities [ 172 ] The father requests compensation for driving the children to facilitate his periods of parenting time and for driving the children to participate in extracurricular activities. He maintains that there is a time and an expense factor involved in providing transportation.

The father requests compensation in the amount of $7,000 for driving the children for these purposes. [ 173 ] The father stated in his affidavit sworn April 30, 2018, that there is a time and an expense factor in providing transportation that should be shared equally.

He maintained that he did approximately 99 per cent of the driving to ensure that he would see the children during his periods of parenting time. [ 174 ] Taking into account the mother’s refusal at that time to provide any transportation for the children, an Interim Order was pronounced on November 23, 2018, directing that the father and the mother share equally the driving of the children which was required to reasonably implement the father’s periods of parenting time. [ 175 ] The father maintains that the mother’s assistance in driving the children as required following the Interim Order was sporadic at best and declined in 2019.

The mother affirms, on the other hand, that she complied with the terms of the Interim Order. She states in her affidavit affirmed September 18, 2020, that she complied with 98.9 per cent of the driving requirements between November 23, 2018 and January 31, 2019. [ 176 ] The issue concerning driving the children and its associated turmo

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