King v MacDonald, 2022 ABKB 849

Court of King’s Bench of Alberta Citation: King v MacDonald, 2022 ABKB 849 Date: 20221216 Docket: 4810 027536 Registry: Red Deer Between: Kassie Carol Elsie King Applicant/Respondent by Cross-Application - and - Nolan James MacDonald Respondent/Applicant by Cross-Application _______________________________________________________ Endorsement on Costs of the Honourable Justice Eleanor J. Funk _______________________________________________________ Introduction [ 1 ] This matter came before me as a Special Chambers application on August 9, 2022, in which Ms. King sought interim child and spousal support from Mr.

MacDonald. In his cross-application, Mr. MacDonald sought interim child support from Ms. King and sought to have Ms. King’s claim for spousal support dismissed, arguing she was not entitled to spousal support. [ 2 ] On November 4, 2022, I released my decision, King v MacDonald , 2022 ABKB 736 , in which I found Mr. MacDonald failed to provide complete and reliable income information. Using the limited information before me, I imputed Mr. MacDonald’s income. At the time of filing her application, Ms. King was not employed. By the time these applications were heard in August, Ms.

King had secured work and I set her income based on the income information presented at that time.

[ 3 ] I also found Ms. King was entitled to spousal support. I awarded child and spousal support based on the incomes that I found, using the respective child and spousal support guidelines. Because the parties share parenting of their two children, both parties have a child support obligation pursuant to the Federal Child Support Guidelines . As Mr. MacDonald has a higher income than Ms. King, the net effect is that Ms. King receives child support from Mr. MacDonald. [ 4 ] The issue of costs is now before me. [ 5 ] Ms. King seeks triple

Schedule C costs in the amount of $19,700, plus GST, based on Mr. MacDonald’s “misconduct and settlement offers”. I was not presented with any submissions or information in relation to any settlement offers that Ms. King may have made. [ 6 ] Mr. MacDonald also seeks costs, characterizing the outcome as “wholly successful” on his part. Using

Schedule C, he seeks costs in the amount of $6,500. In the alternative, he argues that Ms. King is not entitled to enhanced costs. [ 7 ] For the reasons below, I find that Ms. King was the successful party and that she is entitled to costs. The greater issue is whether there has been misconduct of the litigation such that she is entitled to enhanced costs. Analysis Which party was successful in these applications? [ 8 ] Ms. King brought an application for interim child and spousal support. She sought child support in the amount of $2,929 per month.

This was based on her proposed guideline incomes of $2,000 for herself and an imputed income in excess of $200,000 for Mr. MacDonald. [ 9 ] Mr. MacDonald brought a cross-application in which he sought child support in the amount of $481 per month. This was based on his proposed guideline incomes of $0 for himself and approximately $30,000 imputed to Ms. King. [ 10 ] As stated in my reasons, the most challenging issue in these applications was the proper determination of Mr. MacDonald’s income.

He is employed through his corporation and, in his filed materials, claimed his corporation was operating at a loss, resulting in him having an income of $0. Ms. King questioned the reasonableness of several of Mr. MacDonald’s claimed business expenses. She sought to have many of these expenses added back as pre-tax income of the corporation and to have his income imputed at well over $200,000. [ 11 ] In my reasons, I found that Mr.

MacDonald had failed to provide complete, comprehensive, and reliable financial information from which I could determine his income using any of the mechanisms provided in ss 16-18 of the Guidelines . In the end, I imputed his income at $70,000 using the very limited information I had about the work that his company performs: King at paras 35-76. [ 12 ] In seeking to have Ms. King’s income imputed at approximately $30,000, Mr. MacDonald argued there was no reason that Ms. King had not worked since their 2020 separation.

He sought to have her income imputed as though she had worked full time, at minimum wage. [ 13 ] Ms. King was not employed when she filed her application. At the time of this hearing in August, her counsel advised that she is now employed, and had been since April of this year, and that she expects her yearly income to be just over $45,000. Using this income information, I set her pro-rated 2022 income at $30,500 and her 2023 income at $45,760: King at paras 79-80. [ 14 ] Using these incomes, and the Federal Child Support Guidelines on a shared parenting regime, I set Mr.

MacDonald’s child support obligation at $1,019 each month and Ms. King’s child support obligation at $469 for the balance of 2022 and $664 in 2023: King at para 85. [ 15 ] Ms. King also sought spousal support in the amount of $4,210 per month, again based on her having little-to-no income and Mr. MacDonald having an imputed income in excess of $200,000 a year. In his cross-application, Mr. MacDonald claimed that Ms. King was not entitled to spousal support. [ 16 ] I found that Ms. King was entitled to spousal support, on compensatory and non compensatory grounds.

Using the incomes that I found, and the Spousal Support Advisory Guidelines , I awarded interim spousal support of $150 monthly for the balance of 2022 and $100 per month in 2023: King paras 110-111. [ 17 ] On the issue of costs, Mr. MacDonald takes the position that because the dollar amount of the support I awarded is closer to the dollar amount of support he claimed, he is “wholly successful” in these applications and is accordingly entitled to costs. [ 18 ] In the alternative, he argues Ms.

King is not entitled to enhanced costs as he provided the financial information requested of him at questioning and a further 600 pages of financial disclosure before the Special Chambers hearing. He suggests enhanced costs would only be justified had he not provided any financial disclosure at all. I disagree with both positions advanced by Mr.

MacDonald. [ 19 ] The suggestion that success in this matter can, or should, be measured by comparing the respective dollar amounts of support claimed against the dollar amounts of support awarded would serve to overlook the substance of my reasons in arriving at these results. [ 20 ] Through his cross-application, Mr. MacDonald advanced positions that, if successful, would have resulted in him paying neither child nor spousal support. In my reasons, I ordered that he pay both. [ 21 ] In claiming child support, Mr. MacDonald sought to have his income set at $0.

I specifically rejected this argument, finding that he failed to provide sufficient and reliable evidence in support of this claim and failed to provide any explanation as to how he was surviving on a $0 income: King at para 59.

[22] Upon learning at the hearing that Ms. King is now employed and expects to make roughly $45,000 a year, Mr. MacDonaldquickly revised his position and suggested his income could also be set at $45,000, with child support “waived”. I specifically rejectedthis argument as well, finding it was curious that Mr. MacDonald so quicky revised his position to match Ms. King’s new income: Kingat para 62. [23] In imputing Mr.

MacDonald’s income, I again expressed my concerns in relation to the reliability of the information that heprovided about his income, and that he had failed to provide complete and comprehensive financial disclosure. From all of this, I drew anadverse inference that his income was higher than the $0 amount he initially claimed, and higher than the $45,000 he suggested duringthe hearing: King at para 69. [24] When I consider the dollar amount of support awarded against the dollar amount of support that Mr. MacDonald claimed, Icannot overlook the fact that Mr.

MacDonald advanced his claim for child support based on proposed incomes that I not only specificallyrejected, but that also led me to draw an adverse inference that his income was higher than what he proposed. [25] Viewed in this way, I am unable to agree that Mr. MacDonald was the successful party in these actions or that he is entitled tocosts. [26] In DBF v BF, 2018 ABCA 108 at paragraph 13, the Court of Appeal stated, “success in family matters mean substantialsuccess, not absolute success”.

More recently, in JWS v CJS, 2022 ABCA 63 at paragraph 26, the Court of Appeal stated, “in assessingsubstantial success, the court looks at overall results, based on what the litigant was actually claiming, and ‘a finding of success may bebased on a finding that a party was successful on the most important issue litigated’”: citing SLT v AKT, 2008 ABQB 450 at para 14 andAE v TE, 2017 ABQB 674 at para 7. [27] Here, Ms. King sought interim child and spousal support. That is what I granted. The fact that Ms.

King claimed support inamounts far greater than what I ordered is entirely reflective of the challenges in properly determining Mr. MacDonald’s income and inno way reflects any success on Mr. MacDonald’s part. [28] Ms. King is the successful party. As such, she is entitled to costs. The issue is whether she is entitled to enhanced costs. Are enhanced costs warranted? [29] Ms. King seeks triple

Schedule C costs, alleging litigation misconduct on Mr. MacDonald’s part. [30] Mr. MacDonald argues that enhanced costs are not appropriate here as he provided “all financial records requested of him athis questioning and provided the 600 pages prior to the Special Chambers application. If the Husband provided no financials whatsoeverthen enhanced costs may be warranted, but that is not the case here.” [31] For the reasons below, I am unable to agree with Mr. MacDonald’s statement in relation to the appropriateness of enhancedcosts. [32] The court has broad discretion when awarding costs.

The general rule is that the successful party is entitled to costs: Rules ofCourt, Rule 10.29. [33] In McAllister v Calgary (City), 2021 ABCA 25 at paragraphs 43-45, the Court of Appeal explained that the intention ofSchedule C to the Rules of Court was to compensate successful litigants for 40-50% of their actual costs.

The words “actual costs” are tobe viewed in the context of the costs provisions in the Rules which provide for an assessment of the reasonableness of costs. (See also,Barry v Industrial Alliance, 2022 ABQB 265 at para 102). [34] Enhanced costs may be awarded where there has been misconduct in the litigation: FIC Real Estate Fund Ltd v PhoenixLand Ventures, 2016 ABCA 303 at para 4; Young v Young, (SCC); and Secure 2013 Group Inc v Tiger CalciumServices Inc, 2018 ABCA 110 at para 12. [35] Where there has been reprehensible, scandalous, or outrageous conduct by a party, solicitor-client costs may be awarded.

Insuch cases, the court must engage in a careful analysis of the facts before making such an award.

Some of the circumstances that mayjustify an award of solicitor-client costs, as outlined in FIC Real Estate at paragraph 4, include: - Blameworthiness in the conduct of the litigation; - When justice can only be done by a complete indemnification for costs; - Where there was evidence that one party hindered, delayed, or confused the litigation, there was no serious issue of fact or law,when one party was “contemptuous” of the other in forcing the other to exhaust legal proceedings to obtain that which was obviouslyhers; - When there has been an attempt to delay, deceive and defeat justice, prolonging the trial, asking for unnecessary adjournments,concealing material documents and failing to produce material documents in a timely fashion; - Positive misconduct, where others should be deterred from like conduct and the party should be penalized beyond the ordinaryorder for costs; - Acting fraudulently or in breach of trust; - Advancing untrue or scandalous charges. [36] There are several factors here that could support an order for solicitor-client costs against Mr.

MacDonald. As I previously

stated, he failed to provide complete, comprehensive, or reliable financial information. Some of the expenses recorded in his company’s financial statements were inconsistent with his responses in Questioning. He provided no receipts in support of many of his claimed business expenses. His explanations for his claimed business expenses did not meet the requirements set out in Sweezey v Sweezey , 2016 ABQB 131 . His disclosure of more than 600 pages of additional financial disclosure a week before this Special Chambers hearing operated unfairly against Ms.

King: King at paras 44-58. [ 37 ] I specifically rejected Mr. MacDonald’s proposal that his income should be set at $0 and his revised position taken in the course of this hearing that his income should be set at $45,000. In imputing Mr. MacDonald’s income, I drew an adverse inference that his income was higher than the amounts he proposed: King at para 59-70. [ 38 ] At all levels, Courts in Canada continually state the importance of full and accurate financial disclosure in family litigation.

In Colucci v Colucci, 2021 SCC 4 , the Supreme Court of Canada stated that timely and complete financial disclosure is “the linchpin of a just and effective family law system”: at para 4. [ 39 ] This was once again reinforced by our Court of Appeal in Peters v Atchooay , 2022 ABCA 347 where, at paragraph 65, the Court stated “each parent is expected to make full disclosure and bring forward the best evidence supporting their position on the appropriate Guidelines income for themselves and the other parent.

The Guidelines require full disclosure throughout, while s 7.4 of the Divorce Act imposes a positive obligation on parties to ‘provide complete, accurate and up-to-date information’”. [ 40 ] Mr. MacDonald’s conduct undermined these foundational principles. [ 41 ] Mr. MacDonald also sought to deny Ms. King’s obvious entitlement to spousal support. This, combined with his attempt to have child support payable only to him, would have resulted in a disproportionate shifting of funds from Ms. King’s household to his, had he been successful. The outcome that Mr.

MacDonald sought would have operated against the best interests of the children. [ 42 ] This is all positive misconduct that calls for strong deterrence. If this were not family litigation, I would not hesitate to award solicitor-client costs on a full indemnity basis against Mr. MacDonald. [ 43 ] Our courts quite rightly treat costs in family matters differently from costs in other types of litigation.

In family matters, legal costs come out of the budget of the parents and out of the availability of funding for the wellbeing of the children: MYW v MYW, 2021 ABQB 713 at paras 10-11 , citing Jivraj v Jivraj , 2014 ABQB 307 at paras 16-17 . [ 44 ] When I consider the realities of ordering costs in family matters, together with the circumstances that may justify awards of solicitor-client costs as outlined in paragraph 35 above, I am left to conclude that full indemnification of Ms. King’s costs is not the only way by which justice can be done. [ 45 ] Here, the central issues were Ms.

King’s claims to child and spousal support. Justice can be achieved through awards of both heads of support, which I granted. [ 46 ] Mr. MacDonald’s conduct, through his deficient financial disclosure; his claim for child support only payable to him; and his denial of Ms. King’s obvious entitlement to spousal support, sought to both obfuscate and defeat the aims of justice. [ 47 ] Rather than resort to

Schedule C, or any multiplier of the amounts therein, I direct Ms. King’s counsel to prepare and provide to Mr. MacDonald’s counsel a Bill of Costs reflecting the actual costs incurred by Ms. King in these applications. I then order Mr. MacDonald to pay 75% of those actual costs. To my mind, this balances the need to penalize Mr. MacDonald’s misconduct in this litigation while remaining mindful that in family matters, there must also remain funds to provide for the wellbeing of the children. [ 48 ] To the extent Mr. MacDonald believes that the costs set out in Ms.

King’s Bill of Costs reflecting her actual costs incurred is unreasonable, and the parties cannot agree on quantum, the parties may provide me with written submissions, not exceeding three pages, within 60 days of release of this Endorsement. Heard on the 09 th day of August, 2022. Dated at the City of Red Deer, Alberta this 16 th day of December, 2022. Eleanor J. Funk J.C. K.B.A. Appearances: Julia R. Ibanescu for the Applicant/Respondent by Cross-Application

David M. Boris for the Respondent/Applicant by Cross-Application