Pedersen v Jaeggle, 2022 ABKB 639

Court of King’s Bench of Alberta Citation: Pedersen v Jaeggle, 2022 ABKB 639 Date: 20220923 Docket: FL03 63545 Registry: Edmonton Between: Laura Lynn Pedersen Applicant - and - Bryan Joseph Jaeggle Respondent Corrected judgment: A corrigendum was issued on May 4, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Endorsement of the Honourable Justice M. J. Lema _______________________________________________________ A. Introduction [ 1 ] The issues in this family-law special application are:

a. whether the father must pay retroactive child support and, if so, for what periods and in what amounts, which turn in part on the father’s actual income and whether additional income should be imputed to him; b. the amount of ongoing child support, turning largely on the same factors; c. whether the father should be found in contempt of various orders for disclosure and concerning communication between the parties; and d. whether email service of further process on the father should be approved. B.

Child support [ 2 ] The mother seeks shared-parenting-level (straight set-off) child support for November and December 2020 and January and February 2021 i.e. from the date of separation to when (by order) the mother became the primary parent of the child here (currently 10 years old). [ 3 ] From that point to the present, she seeks primary-parenting-by-her child support from the father. [ 4 ] Going forward, she seeks the same kind of support from the father. [ 5 ] The initial problem (per her) is the father’s subpar disclosure, as detailed in her affidavits and as summarized in her concise letter. [ 6 ] In a nutshell (according to her), the father has failed to provide standard (items 1-9) disclosure of his income in 2018, 2019, 2020, 2021, and 2022 (year to date) e.g. no tax returns, notices of assessment, or pay stubs. [ 7 ] Instead, he provided the following pieces of information: • a May 11, 2021 letter from E.S.

Services Ltd. stating that “effective March 1, 2021, [the father] is employed as a contractor [by us]. This position is 35 hours in a week, $20.00 per hour”, which would translate to an annual income (assuming 50 weeks worked) of $35,000; • a T5018 (“Statement of Contract Payments”) form issued by that entity reflecting actual payments to the father in 2021, between March 1 and December 31, of $41,205 (compared to the presumed $29,400 he would have earned, at the working pace and hourly wage noted above, in that same period i.e. working all but two weeks of that period).

Annualized, $41,205 earned over ten months would translate to income for the year of $49,446; • a T4A (“Statement of Pension, Retirement, Annuity, and Other Income”) form for 2020, issued by the Government of Alberta, reflecting income of that character of $1,146; • a T4A form issued by the Government of Canada reflecting $12,000 of such income paid in 2020; • a T5007 (“Statement of Benefits”) form reflecting “social assistance payments or provincial or territorial supplements” paid by the Government of Alberta in 2020 of $7,561; • a T5007 form reflecting such payments by that Government in 2019 of $10,655; and • some kind of bank or credit-union statement reflecting deposits, apparently to his bank accounts (or one of his accounts), of $10,505 from Casper Maintenance Services between October 11, 2019 and April 3, 2020. [ 8 ] In April 2021, Loparco J. set the father’s income on an interim without-prejudice basis at $35,000, triggering an initial child support obligation (from that date onwards) of $290 monthly. [ 9 ] The father has not paid the ordered, or any, amount of child support. [ 10 ] At the application, for which he filed no materials of any kind, he acknowledged that he has not filed tax returns for any of the noted years.

He did say that he is in the process of filing all those returns; however, he did not provide any sworn evidence of that. [ 11 ] The mother asked that the father’s income be imputed at $55,000 per year, back to the month of separation (November 2020), based on two factors: (1) the noted CRA form for 2021 (showing independent-contractor income of $41,205 for ten months of work in 2021, which translates to an annual income of $49,446) and (2) statements by the father to the mother to the effect that he has worked additional “casual jobs for cash” i.e. in addition to the subcontracting work reflected in the CRA form. [ 12 ] The latter statements came from a March 1, 2022 email from the father to the mother’s counsel: … I went over the disclosure documents you re-sent [me].

Thank you for that, but I’m a little confused. The documents I sent you previously were the total claimed income. I have no assets, nothing owned, no savings. The only items I haven’t reported are my unsecured debts (which are quite a lot). I did provide you with no claimed income for 2019 in previous email and the government cannot send me a T4 for nothing. I can provide tax documents for 2020. That will be far less than anticipated by yourself. I have no records of previous bank accounts as they were all closed prior to March of 2021. So I apologize for the question, but what is it you are requesting from me?

I have no paper trail for anything. Casual- labour cash jobs including E.S. Services. No pay stubs or direct deposits for over 4 yrs. Please advise what information you are looking for and I will send it to you. [emphasis added]

[ 13 ] In other income-related communications with the mother’s counsel, the father advised that: 1. “… 2019 was a total income of $14,020, and 2018 is 0 dollars – no T4s or anything for that year” (fathers’ July 7, 2021 email); 2. “[Providing] [a]ll tax returns will be a little tricky as I don’t have the funds to pay for filing . I can get you all reported income though” (father’s March 1, 2022 email preceding his March 1, 2022 email noted above); 3. “… you haven’t explained what I’m missing in disclosure. The items [you’re] requesting besides debts do not exist . 2019 income seems to be the missing link.

I guarantee you that is under $15,000 . I’ll confirm tax slips for that year before court. …” (father’s March 4, 2022 email); and 4. “… There is no reported income for 2018 so I cannot provide that. Gross 2019 = $10,655 -- $13,146 plus the CMS payment, 2021= $54,853 . … once I get this disclosure formalized I will also send [it to MEP]. I’m giving you the numbers so we both know what we are looking at next week. … I currently have no assets and own nothing. My employment is subcontract.

I do not have a full time payroll and do not get paid by cheque or direct deposit. ….” (father’s March 9, 2022 email). [ 14 ] The mother did not point to any particular evidence as to the scale of the perceived-by-her side work by the father i.e. to explain or help explain why an additional $5,000 in annual income (versus some other amount) should be imputed to the father i.e. combined with the $41,205 earned over ten months (translating to an annual income of $49,446) i.e. why an overall amount of $55,000 should be imputed to him. [ 15 ] However: 1. the father expressly acknowledged performing “casual-labour cash jobs”; 2. he also expressly acknowledged that such jobs “ included” his work for E.S.

Services i.e. that he performed additional work, for other clients; 3. the father has not filed a tax return for any of 2018, 2019, 2020, or 2021 i.e. he did not perform his statutory obligation under ss 150(1) of the Income Tax Act to “[file] with the Minister [of National Revenue], without notice or demand for the return, for each taxation year of a taxpayer” “a return of income that is in prescribed form and that contains prescribed information.” I note that, in the case of an individual, the obligation to file is imposed where “tax is payable under [Part I i.e. income tax] by the individual for the year” i.e. no filing obligation exists where no tax is payable.

But the father did not argue that his income was so low that no tax was payable, at least not for 2020 and 2021; instead, per his one of his March 1, 2022 emails, “I don’t have the funds to pay for filing.” Per Dalphond v The Queen , 2008 TCC 427 (per Angers TCJ), the father had a duty both to file tax returns for tax-payable years (here, apparently including both 2020 and 2021) and, when so filing, to provide “information … [that] is accurate and complete and discloses all of [his] income” (para 30).

As noted in Wynter v The Queen , 2016 TCC 103 (Rowe J.) (affirmed 2017 FCA 95 ), the Canadian income tax form calls on the taxpayer to certify that “… the information given on this return and in any documents attached is correct, complete, and fully discloses all my income.” Taxpayers who fail or neglect to provide “correct, complete and [full disclosure]” are subject to a range of consequences ranging from reassessment, interest and penalties to prosecution. The father here did not put his income “on the line” in that way, raising legitimate concerns about his informal reporting.

Finally on this aspect, failure to file income tax returns is a factor supporting income imputation: Ruffolo v David , 2012 ONCA 698 at para 22 . 4. his via-email estimates of his income were unaccompanied by any financial reporting or banking information or any other independent means of verifying or supporting his estimates; 5. the income estimates were not even offered in sworn form by the father, precluding the mother from examining him on them; 6. even accepting at face value the income data reflected in the piecemeal disclosure offered by him (summarized above), none of that information confirms or suggests that it was exhaustive, leaving open the possibilities that the father received income, of whatever kind, from other sources, in a given tax year; and 7. turning from tax reporting to other elements of the required disclosure (discussed further below), the father confirmed carrying on business as an independent (self-employed) contractor i.e. was not an employee of any entity.

However, he did not provide any of the information required of self-employed persons under point #6 of standard-form disclosure: If you are self-employed in an unincorporated business :

a) particulars or copies of every cheque issued to you during the last 6 weeks from any business or corporation in which you have an interest, or to which you have rendered a service;

b) the financial statements of your business or professional practice for the 3 most recent taxation years; and

c) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom you do not deal at arm’s length, for the 3 most recent taxation years. [ 16 ] In the face of subpar income disclosure by the father (again, as discussed further below), I cannot simply pluck an incremental (“side work”) income figure out of the air: see Heuft v Bramwell , 2021 ABQB 642 at paras 47-55 . [ 17 ] However, in the circumstances here, with the father acknowledging an annualized income of close to $50,000 in 2021, coupled with his express admission of “casual-labour cash jobs” (including for other clients), the mother’s proposed imputation at $55,000 (all-included) is reasonable and proportionate i.e. representing a very modest (10 per cent) bump-up for apparent “side income.” [ 18 ] Again, it is the father’s subpar disclosure that effectively forces the Court to estimate his income from the available clues. [ 19 ] Accordingly, I vary the initial interim without-prejudice estimate of the father’s income from $35,000 to $55,000, applicable from the time of separation (November 2020) to the present (for the purpose of calculating any retroactive child support) and also serving as the baseline for ongoing child support. [ 20 ] For the initial four-month period of shared parenting, the father’s child-support payments shall be calculated on the basis of his now-imputed income of $55,000 and the mother’s tax-reported income for 2020 and 2021, with the straight set-off method applying.

C.

Section 7 Expenses [ 21 ] In her application and as reiterated in her concise letter, the mother asked to have

section 7 child-support expenses enumerated pursuant to the Alberta Child Support Guidelines and shared proportionate to the parties’ incomes moving forward. [ 22 ] Per my notes of the application, the father did not address this aspect. [ 23 ] I overlooked the mother’s

section 7 request when preparing this judgment i.e. I did not consider, and then dismiss, it. [ 24 ] The mother’s request on this front is reasonable and is hereby granted. For 2022, based on the father’s income having been set at $55,000 and the mother’s at her reported-at-line-15000 amount, the load sharing of the standard ACSG

section 7 expenses is 69.8 per cent and 30.2 per cent, respectively. D.

Contempt [ 25 ] The mother also seeks contempt findings against the father for his ongoing disclosure failures and asserted breaches of various communication-between-parties provisions of the spring 2021 order. [ 26 ] The father’s disclosure obligations were clearly defined by the mother’s initial notice to disclose, the disclosure provisions of the April 2021 court order, and reiterated disclosure provisions in the family-docket-court endorsement by Kendell J., all as explained and reiterated in many letters and other correspondence by the mother’s counsel to the father. [ 27 ] As noted, the father provided no evidence on any aspect, including contempt. [ 28 ] At the application, he stated effectively that he “provided what he could” and “gave what he had.” [ 29 ] Here are the nine disclosure items or categories sought by the mother in her notice to disclose (per the standard form): 1.

A copy of every personal income tax return you have filed for each of the 3 most recent taxation years. If you have not filed a tax return for the previous year , you must provide copies of your T4, T4A, and all other relevant tax slips and statements disclosing any and all sources of income for the previous year . 2. A copy of every notice of assessment and reassessment issued to you for each of the 3 most recent taxation years, or a copy of the Canada Revenue Agency printout of your last 3 years’ income tax returns. 3.

If you are an employee , a copy of each of your 3 most recent statements of earnings indicating your total earnings paid in the year to date, including overtime, or where such a statement is not provided by your employer, a letter from your employer setting out that information, including your rate of annual salary or remuneration. 4.

If you receive income from employment insurance, social assistance, a pension, workers’ compensation, disability payments, dividends or any other source , the most recent statement of income indicating the total amount of income from the applicable source during the current year or, if such a statement is not provided, a letter from the appropriate authority stating the required information. 5. If you are a student , a statement indicating the total amount of student funding you have received during the current academic year, including loans, grants, bursaries, scholarships and living allowances. 6.

If you are self-employed in an unincorporated business : (

a) particulars or copies of every cheque issued to you during the last 6 weeks from any business or corporation in which you have an interest, or to which you have rendered a service; (

b) the financial statements of your business or professional practice for the 3most recent taxation years; and

(

c) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom you do not deal at arm’s length, for the 3 most recent taxation years. 7. If you are a partner in a partnership , confirmation of your income and draws from, and capital in, the partnership for its 3 most recent taxation years. 8. If you have a 1% or more interest in a privately held corporation : (

a) the financial statements of the corporation and its subsidiaries for its 3 most recent taxation years; (

b) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length for the corporation’s 3 most recent taxation years; and (

c) a record showing your shareholder’s loan transactions for the past 12 months. 9. A detailed list of any special or extraordinary expenses claimed (where child support is an issue) as well as copies of receipts or other documentation providing the amount of those expenses, namely: (

a) child care costs; (

b) health care and extended medical and dental insurance premiums attributable to the child; (

c) uninsured health care and dental expenses; (

d) extraordinary educational expenses; (

e) post-secondary educational expenses; and (

f) extraordinary expenses for extracurricular activities. [ 30 ] The mother focused her contempt submissions in part on the non-filing by the father of his 2018-2021 tax returns.

However, the first item in the disclosure list above offers an alternative where such returns have not been filed i.e. providing information slips for the previous year. (This is separate from whether the Income Tax Act requires a return to be filed, as discussed above.) [ 31 ] Given no order actually directing the filing of such returns (assuming the existence of that jurisdiction i.e. to compel the filing of tax returns i.e. apart from any filing-enforcement steps by CRA itself) and the alternative-to-filing “option” provided in the first (tax returns) disclosure item, I cannot find that a disclosure-order breach occurred here i.e. on the non-filing of tax returns: see Buggins v Simpson , 2006 NWTSC 32 (Schuler J.) (paras 9-16 – from “Foisy J. also ordered …” to “ … order made by Foisy J. on March 31, 2006.”) [ 32 ] As for the information slips themselves, I cannot tell on the evidence here whether any additional slips were issued to the father i.e. whether he has any such slips that he failed to disclose. [ 33 ] Same for item #4 (social assistance, etc. income): I cannot tell on the evidence whether the father received additional such income and failed to disclose it. [ 34 ] The only other apparently applicable disclosure item is #6 (self-employment income, as discussed above). [ 35 ] The evidence shows such income and also the absence (at minimum) of the required financial statements. [ 36 ] Given the clear application of at least the financial-statement aspect of item #6, the many times (as reflected in the mother’s affidavits) the father was advised and reminded of his disclosure obligations (including (implicitly) item #6), back to spring 2021, and the clear implication in that item that financial statements both be prepared and filed (i.e. the obligation is not simply to disclose copies of any financial statements that have been prepared), I find the father in contempt for failing to prepare or at least provide the required financial-statement information to the mother. [ 37 ] I will give the father a chance to purge his contempt, by preparing (as necessary) and in any case submitting the item #6 information (including, at minimum, the described financial statements for his self-employment operation) by close of business on Friday, October 14, 2022. [ 38 ] If he fails to provide the described disclosure to the mother by that date, he must pay a fine of $1,000 and a further fine of $25 per day until his disclosure is complete. [ 39 ] The mother asked for a contempt fine of $5,000 and that it be made payable to her. [ 40 ] On the latter aspect, Makis v Alberta Health Services , 2020 ABCA 168 says that contempt penalties are necessarily payable to the Provincial Treasurer: The chambers judge found that Dr.

Makis was in contempt of court for having failed to attend questioning. In accordance with R. 10.53(1)(c), he imposed a penalty of $1,000: reasons at para. 94. The formal order provided that the penalty was to be paid to Alberta Health Services, but penalties under R. 10.49(1) or R. 10.53(1)(

c) are to be paid to the Government of Alberta : Susin v Susin , 2014 ONCA 733 at para. 39 , 379 DLR (4th) 308 . Sanctions for contempt of court are directed at the public interest in the due

administration of justice, not any private interest . Sanctions for contempt are as much to coerce compliance as they are to punish. A contempt sanction can be structured, for example, to make the sanction conditional upon remedial action being taken by the contemnor. However, if those efforts fail, any fine must be payable to the Provincial Treasurer. [para 66] [emphasis added] [ 41 ] If the father fails to pay either component of the penalty, the mother has leave to seek further contempt sanctions, including imprisonment, per Harris J.’s ruling in Olson v Olson , 2022 ABQB 356 (at para 50 ): ... given Mr.

Olson’s ongoing noncompliance and the ineffectiveness of the financial penalties levied against him to date, I have concluded that it would be appropriate for me to hear submissions from the parties as to why Mr. Olson ought not to be found by me to be in continued contempt of court and be imprisoned as a result pursuant to Rule 10.53, and submissions as to the length of imprisonment. Mr.

Olson’s ongoing failure to pay the per diem fine, as well as his ongoing failure to provide financial disclosure or pay the support ordered and other costs assessed against him should form the basis for a new contempt hearing before me. [ 42 ] Concerning contempt for asserted breaches of the communications-between-parents provisions of the April 2021 order, the mother did not point to particular case-law examples of the contempt power being used to police such provisions. [ 43 ] In any case, I see the remedy for such breaches as amended communication provisions, either narrowing or closing the direct (parent-to-parent) window of communications i.e. reducing or eliminating the opportunities for direct-communication conflict i.e. instead of making a contempt finding.

E.

Conclusion [ 44 ] Retroactive and ongoing child support is set as directed above. [ 45 ] If the father provides the directed disclosure and it reveals a materially higher level of income for any period from November 1, 2020 onwards (i.e. than the imputed $55,000), or the mother otherwise obtains evidence of a materially higher income for the father for any such period, she can seek increased child support for the applicable periods. [ 46 ] The father is found in contempt as described above, albeit with an opportunity to purge that contempt (also as defined above), with the noted penalties if he does not. [ 47 ] At the conclusion of the hearing, the father agreed that further process can be served on him by a particular email address. [ 48 ] As directed at the conclusion of the application, I invite costs submissions by the parties, with the mother’s, via maximum- 1.5-page letter, due by Friday, September 30, 2022 and the father’s (same form and page limit) by Friday, October 7, 2022.

Heard on the 19 th day of September, 2022. Dated at Edmonton, Alberta this 23rd day of September, 2022. M. J. Lema J.C.K.B.A. Appearances: Jaskiran Bajwa Demas Schaefer LLP (Family Lawyers) for the Applicant Bryan Joseph Jaeggle Self-represented Respondent

_______________________________________________________ Corrigendum of the Endorsement of The Honourable Justice M. J. Lema _______________________________________________________ Heading added -C.

Section 7 Expenses Paragraphs 21-24 are new Heading Contempt previously marked as C. now has been changed to reflect D. Heading Conclusion previously marked as D. now has been changed to reflect E.