Maurier v Maurier, 2022 ABKB 856

Court of King’s Bench of Alberta Citation: Maurier v Maurier, 2022 ABKB 856 Date: 20221220 Docket: 4803 169554 Registry: Edmonton Between: Raquel Adrienne Maurier Plaintiff - and - Ernie Maurier Defendant _______________________________________________________ Reasons for Decision of the Honourable Justice W.N. Renke _______________________________________________________ [ 1 ] In her order of May 19, 2022, Justice Leonard granted leave to the parties to

schedule a Special Chambers hearing to address the following issues: • the [Defendant’s] 2021 Guideline income • how the costs associated with the preparation of the 2021 Guideline income report by Mr. Cameron Brinkman, and any future Guideline income reports, will be apportioned between the parties • ongoing s. 3 and s. 7 child support • parenting. [ 2 ] The Plaintiff Raquel Maurier claimed 13 remedies in addition to costs.

The Defendant Ernie Maurier sought three substantive remedies in his cross-application and in his affidavits intimated the pursuit of retroactive recalculation of child support. [ 3 ] In my opinion, the main issues were: • whether Mr. Brinkman’s calculation of the Defendant’s 2021 income available for child support could be assessed and departed from in this application or whether the Defendant was bound by Mr. Brinkman’s assessment • whether the proceeds of a capital gain realized on a share sale by the Defendant should be included in his 2021 Guideline income

• whether a claim by the Defendant for a retroactive decrease in child support should be adjudicated • whether Mr. Brinkman should be replaced as author of the Guideline income reports for the parties • how the costs of Mr. Brinkman’s 2021 Guideline income report and future income reports will be apportioned between the parties. Additional child support and parenting issues required resolution. [ 4 ] Respecting the main issues, for the reasons that follow, I have decided that 1. Mr. Brinkman’s calculation of the Defendant’s 2021 Guideline income could be addressed in this application. 2.

The proceeds of the capital gain realized on the share sale by the Defendant should not be included in the Defendant’s 2021 Guideline income. 3. A claim by the Defendant for a retroactive decrease in child support paid should not be considered in this application. 4. Mr. Brinkman should continue to prepare the Guideline income reports for the parties. 5. The parties should bear the costs of Mr. Brinkman’s 2021 Guideline income report and future income reports proportionately to their incomes. [ 5 ] I will review the background to the application then address and assess the issues raised by the parties.

Table of Contents I. Background . 4 A. The Parties . 4 B. Court Orders . 4 C. Guideline Incomes . 4 1. The Defendant’s Guideline Income . 4 2. The Plaintiff’s Guideline Income . 5 D. The Proceedings . 6 II. The Defendant’s 2021 Guideline Income . 6 A. Justiciable Issue . 6 1. Initial Court Orders . 6 2. The Jerke Order 8 3. Leonard Order 10 B. 2021 Income and the Capital Gain . 10 1. The Guidelines . 10 2. The Jurisprudence . 12 3. The Evidence . 17 4. Conclusion . 19 C. Retroactive Decrease in Child Support 20 D. Preparation of Guideline Income Reports . 21 E.

Final Determinations on Cyclical Legal Arguments . 22 III. Costs of Guideline Income Reports . 22 A. Court Orders . 23 B. Evidence . 24 C. Assessment 24 IV. Further Child Support Issues . 25

A. Child Support Orders by June 30 . 25 1. Current Order 25 2. Acceptance of the Guideline Income Determination . 25 B.

Section 7 . 26 1. Rules Consistent between Parties . 26 2. Cap on s. 7 Expenses . 27 3. Vehicle Expenses . 27 4. RESPs . 28 V. Parenting Issues . 29 A. Work for the Father 29 1. Relief Sought 29 2. Principles . 29 3. Evidence . 30 4. Assessment 30 B. Clothing . 30 C. Personal Activities . 30 D. Parenting Coordinator 31 VI.

Summary . 31 VII. Suggestions Respecting Recurring Applications . 33 VIII. Costs . 35 I. Background A. The Parties [ 6 ] The parties were divorced in October 2015. There are two children of the marriage, Aaron, who is 18 but attending University full-time, and Janae, who is 13. [ 7 ] The parties share parenting on a week on/week off rotation. [ 8 ] The parties pay child support to each other under s. 9 of the Federal Child Support Guidelines on a set-off basis. [ 9 ] The Plaintiff is a public servant. [ 10 ] The Defendant is an engineer.

His income is derived from a corporation he controls, Arjae Design Solutions Ltd (ADSL). ADSL is in the business of designing and building equipment for independent oil and gas producers. In 2021, the Defendant incorporated 2378413 Alberta Ltd (237Co) to purchase the rental property occupied by ADSL in Nisku, Alberta. B.

Court Orders [ 11 ] The parties were brought to this juncture by a series of court orders including the following: • Divorce Judgment and Corollary Relief Order granted by Justice Lee on October 21, 2015 • Consent Child Support Variation Order granted by Justice Fraser on February 28, 2019 (the Fraser Order) • Consent Child Support Variation Order granted by Justice Neilson on October 4, 2019 (the Neilson Order) • Order granted by Justice Richardson on September 11, 2020 (the Richardson Order) • Order granted by Justice Jerke on June 30, 2021 (the Jerke Order)

• Order granted by Justice Leonard on May 19, 2022 (the Leonard Order). C. Guideline Incomes 1.

The Defendant’s Guideline Income [ 12 ] The Defendant’s employment by ADSL and the income and expenses of ADSL introduced some complexities into the determination of the Defendant’s annual income available to pay child support. [ 13 ] ADSL’s gross revenues and net income from 2018 to 2021 were as follows: year gross revenue net income 2018 2019 2020 2021 $481,929 $1,161,061 $2,112,226 $5,753,904 $74,558 $306,671 $88,892 $94,705 The need for expert assistance in assessing the Defendant’s income was understandable. [ 14 ] Clause 11 of the Fraser Order and clause 7 of the Neilson Order established recourse to an annual Guideline income report to be completed by a specified accounting firm.

Clauses 9 and 13 of the Richardson Order confirmed this process and confirmed the appointment of Pisko Brinkman Valuation Services Inc. to prepare the report. The

preamble to the Order recited that the Defendant agreed that Guideline income would be determined by Cameron Brinkman. The Jerke Order further confirmed this process, referring to Mr. Brinkman as the person providing the report. [ 15 ] Mr. Brinkman provided an expert report dealing with the Defendant’s Guideline income. This report was admissible in this application under rules 5.35 and 5.36.

Schedule D to Mr. Brinkman’s report was his June 1, 2022 calculation of the Defendant’s 2021 Guideline income (2021 Guideline income report). [ 16 ] Mr. Brinkman had added grossed-up personal benefit amounts and included undistributed pre-tax corporate income (UPTCI) in the determination of the Defendant’s Guideline income for each of 2018 to 2020. For 2021, Mr. Brinkman included grossed-up personal benefits in the Defendant’s Guideline income determination but no amount for UPTCI.

However, and this will be addressed shortly, he included in the Defendant’s income amounts realized by the Defendant as a capital gain on the sale of shares in ADSL. Mr. Brinkman’s Guideline income determinations for the Defendant for 2018 to 2021 were as follows: year total income income after additions (grossed-up personal benefits (pb), allocation of UPTCI, capital gains (cg)) 2018 2019 2020 2021 $150,614 $156,256 $139,553 $308,610 $212,741 (20,115(pb) + 42,600(UPTCI)) $343,465 (16,547 (pb) + 172,300(UPTCI)) $197,133 (10,005(pb) + 48,100(UPTCI)) $599,420 (26,920 (pb) + 263,890(cg)) 2.

The Plaintiff’s Guideline Income [ 17 ] The Plaintiff’s Guideline income was $105,296 in 2021. D. The Proceedings [ 18 ] The Defendant filed an update affidavit sworn November 25, 2022 and an expert report by Randy Popik, both late. Mr. Popik’s expert report, unlike Mr. Brinkman’s expert report, was not provided in accordance with rules 5.35 and 5.36. [ 19 ] The admissibility of these materials was considered at the outset of the application. The Plaintiff, essentially, took no position on admissibility, but reserved consideration of the late filing for costs purposes.

I found that the materials were admissible. [ 20 ] As will be seen, the Defendant’s update affidavit provided some helpful information respecting matters that have long been at issue. Mr. Popik’s report played no significant role in the disposition of issues. II. The Defendant’s 2021 Guideline Income

[ 21 ] I must address two questions respecting the Defendant’s 2021 income available for child support. In this application, may I depart from Mr. Brinkman’s calculation of the Defendant’s 2021 income? And if I may substitute my independent assessment for Mr. Brinkman’s, should the capital gain realized by the Defendant in 2021 be included in his 2021 Guideline income? A. Justiciable Issue [ 22 ] Is the Defendant bound by Mr. Brinkman’s 2021 income calculation or is he bound by that determination, short of a trial? [ 23 ] The answer lies in the court orders. 1. Initial Court Orders (

a) Fraser Order [ 24 ] The Fraser Order provided in clause 11 that: 11 In the event that the parties are unable to come to an agreement about the Husband’s future guideline income ... the parties shall equally share the costs of a “Guideline income” report ... to be completed by Pisko Miskiw .... Clause 11 did not address whether the determination of the Guideline income report would be binding on the parties or would be evidence for the court in making its own determination of Guideline income. (

b) Neilson Order [ 25 ] The Neilson Order provided as follows in clause 7: 7. In the event that the parties are unable to come to an agreement about the Father’s future yearly guideline income ... the parties shall proportionally share the costs of a “Guideline income” report to be completed by Pisko Miskiw .... Upon receipt of the Guideline Report, the parties shall enter into a Consent Variation Order (based on the Mother’s T4 income and the Father’s Guideline Income set out in the report ) to adjust

Section 9 child support and

Section 7 expenses effective June 1st of that year .... [emphasis added] [ 26 ] Clause 7 must be read with the

preamble to the Order. See McCarty v McCarty , 2016, ABQB 91 at para 22 ; Alberta Health Services v Alberta (Information and Privacy Commissioner) , 2020 ABQB 263 , Price J at para 29. The

preamble recited the following: AND UPON being advised that ... the parties had agreed that [the Father’s] Guideline income would be determined by Cameron Brinkman ... AND UPON it appearing that the Father has concerns about the accuracy of the expert opinion ... and is seeking a second expert opinion [in] that regard; AND UPON both parties being satisfied that the onus is therefore on the Father to show why, if at all[,] this Order should be varied regarding his Guideline Income ... AND UPON the parties confirming that [this] Order is per the above, consented to on a “without prejudice” basis in the result .... [ 27 ] Clause 7, on its own, might have supported the

interpretation that by court order the Guideline income report assessment of the Defendant’s income would be binding. However, the

preamble makes clear that the Guideline income report determination was presumptive only. The report determination was expressly subject to challenge. The Order did not specify whether the challenge could come in an application or at trial. (

c) Richardson Order [ 28 ] The

preamble to the Richardson Order recited that: AND UPON being advised that the Father’s Guideline Income is $343,465.00 as per the valuation report prepared by Pisko Brinkman. AND UPON being advised that ... the parties had agreed that [the Father’s] Guideline income would be determined by Cameron Brinkman ... with Mr. Brinkman having concluded that the Father’s Guideline Income should be set at $343,465.00 .... Clauses 6, 7, and 13 provided as follows: 6. Upon receipt of the [Guideline Income Report], both parties shall enter into a Consent Child Support Variation Order to retabulate Child Support and

Section 7 costs, effective June 1 st of that year (based on the Mother’s T4 income and the Father’s income as set out in the Guideline Income Report.) 7. It is hereby ordered, as per the Mother’s application, that the new form of Consent Child Support Variation Orders will be prepared and submitted to the court within one month of receipt of Pisko Brinkman’s final Guideline Income report each year to set out the Father’s Guideline Income. 13. The Respondent agrees to set his income as per the findings in the Guideline Income Report ... at $343,465.00. [ 29 ] Again, clauses 6 and 7, on their own, might have suggested that the Defendant was bound by the determination made by Mr.

Brinkman. However, clause 13 confirmed that the Defendant had agreed to that determination for that year. [ 30 ] Further, clause 9 referred to the “joint appointment of the firm of ‘Pisko Brinkman Valuation Services Inc.’ to assist in determining the Guideline income of the father ....” [emphasis added] The term “assist” is used. That leaves room for an independent judicial determination of guideline income. What was not said was that Pisko Brinkman “shall determine” the Guideline income of the Defendant. 2. The Jerke Order (

a) Challenge was Contemplated [ 31 ] Clause 4 of the Jerke Order provided as follows: 4. Once Mr. Brinkman has provided his updated or supplementary report, if one of the parties challenges that report, or is not prepared to accept the report, then the parties are at liberty to take steps to move litigation forward to have the question of the father’s income and the consequent support obligations determined by a trial. If either party chooses to do that, they must first arrange a one (1) hour case conference with Justice R. A. Jerke, through his assistant.

The case conference is not case management and the purpose is to set the terms of a Procedural Order so that the parties can move forward with their litigation to effect a final resolution of the income determination and of the setting of child support .... [ 32 ] Clause 4 clearly contemplated that the Brinkman report is not binding per se . [ 33 ] However, clause 4 contemplated challenge at trial, not in an application. [ 34 ] Does clause 4 of the Jerke Order preclude an independent evaluation of Mr. Brinkman’s assessment of guideline income in an application, such as the present Special Chambers application? (

b) Challenge Outside of Trial [ 35 ] In my opinion, I am not precluded by clause 4 of the Order from independently assessing Mr. Brinkman’s 2021 guideline income calculation, in the circumstances of this application. [ 36 ] First, the Jerke Order does not establish that the Defendant was bound by Mr. Brinkman’s opinion. [ 37 ] Second, clause 4 would properly cover a dispute that turned on differing expert evidence. For example, prior to the 2021 Guideline income report, the Defendant had registered disagreement with Mr. Brinkman’s assessments on the grounds that Mr. Brinkman improperly added UPTCI to his income.

The issue of whether UPTCI was required for corporate purposes or was available to the Defendant for child support purposes has been a point of contention between Mr. Brinkman and Mr. Popik, as conveyed to the Defendant. Trial, or at least viva voce evidence, so the merits of the differing expert opinion could be gauged by cross-examination, would doubtless be necessary to adjudicate this dispute.

See VOE v LLE , 2019 ABCA 201 at paras 8 and 10 : [8] Before us, the father raises a number of grounds of appeal, but argues most strenuously that the chambers judge erred in proceeding with the hearing based on affidavit evidence that disclosed fundamental disagreement regarding the

interpretation of the accountant’s report .... [10] As to the first point, while we applaud the chambers judge’s willingness to resolve the matter, we think that because the appellant was relying on the expert report which the respondent refuted, and in the absence of an agreement to be bound by the result, viva voce evidence was required to resolve this dispute. That is, the particular type of challenge the Defendant had raised to Mr. Brinkman’s assessment required a trial in response. Clause 4 was not speaking to other types of challenges. [ 38 ] Third, Mr.

Brinkman’s 2021 report itself recognized that the inclusion of some amounts (e.g. tax gross-ups) was discretionary, i.e., depended on the exercise of discretion by the court. When commenting on s. 19(1)(

h) of the Guidelines in his 2021 Guideline income report, Mr. Brinkman correctly noted at para 6.15 that “[t]his adjustment is discretionary, and the Court may decide not to impute this income to Mr. Maurier.” [ 39 ] But the inclusion of the capital gain amounts in the Defendant’s income is also a discretionary decision by the Court. Section 17(1) of the Guidelines provides that: 17(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairest determination of that income , the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. [emphasis added] Section 17(1) is through-and-through discretionary. [ 40 ] Hence, the inclusion of capital gains amounts through a literal or mechanical application of

Schedule III to the Guidelines might be accurate in itself, as a starting point, but does not and cannot preclude the exercise of judicial oversight to determine whether the inclusion is “fair and reasonable.” [ 41 ] Given the lack of agreement to be bound by Mr. Brinkman’s report, the jurisdiction of the Court to determine the fair and reasonable amount of income available for child support has not been ousted. I refer to Justice Kachur’s decision in White v White , 2022

ABQB 322 at para 27 : “I am at liberty to accept his report, at my discretion, should the parties agree that the Guideline Income Report go in on the truth of its content.” [ 42 ] I refer as well to the decision of Justice Antonio (as she then was) in VOE v LLE , 2018 ABQB 940 . This decision was reversed on appeal, but, as regards the issue in question, on the grounds that viva voce evidence was necessary. Justice Antonio wrote as follows at paras 41-43(QB): [41] Mr. E submits that this Court cannot set aside Mr.

Das’s report because that would amount to setting aside the process to which the parties consented in the judicial dispute resolution at the Court of Appeal. He suggests that all other aspects of the parties’ agreement will be vitiated if Mr. Das’s report is set aside. [42] I reject Mr. E’s submissions. In rejecting the Guideline Income figure calculated by Mr. Das, I am not rejecting the parties’ process. In fact, I affirm the process going forward, although I grant the parties permission to retain a different expert for the next two years if they choose, rather than continue with Mr.

Das’s three-year retainer. [43] I conclude that the parties’ agreement could only have been premised on a correct application of the law. Mr. Das has made numerous and significant errors in his

interpretation and application of the Guidelines. These are not accounting errors; they are legal errors. They do not deserve deference. While finality is important in litigation, this Court may depart from finality where it is necessary in the interests of justice to do so, as is the case here. Mr.

Das’s errors led to a result that is clearly not in the best interests of the parties’ child. [emphasis added] [ 43 ] If the issue to be determined on the record is a matter of law, not a matter requiring further expert evidence or the weighing of conflicting expert evidence, then judicial oversight of the expert’s determination is preserved and permitted. [ 44 ] In this case, on the record, the issue is legal rather than an issue requiring further expert evidence. [ 45 ] A trial, then, as contemplated by clause 4 of the Jerke Order, is neither required nor necessary.

The issue can be addressed in this application. [ 46 ] Clause 4 should not be interpreted to require the Defendant to take a matter to trial, with the expense and delay that would occasion, when the issue may be decided without a trial. 3. Leonard Order [ 47 ] Perhaps most simply, the Leonard Order expressly permitted the Defendant’s 2021 Guideline income to be litigated at this Special Chambers application. Clause 1(

a) provided as follows: 1. The parties are granted leave to

schedule a ½ day Family Special Chambers Hearing, without viva voce evidence, to address the following issues: a. The Respondent’s 2021 Guideline income .... B. 2021 Income and the Capital Gain [ 48 ] In 2021, the Defendant sold 10% of his shares in ADSL and realized a capital gain. [ 49 ] The Defendant claimed one-half of the capital gain in his 2021 income ($137,495). [ 50 ] Mr.

Brinkman included the following in the Defendant’s Guideline income: • the untaxed portion of the capital gain ($137,495) • a deduction for carrying charges (($525)) • a tax gross-up on the non-taxable portion of the capital gain ($126,920). Mr. Brinkman, then, added $263,890 to the Defendant’s income available to pay child support for 2021:

Schedule 1 to Mr. Brinkman’s report of June 1, 2022. [ 51 ] Should all or part of that capital gain be used to determine the Defendant’s income available to pay child support? 1. The Guidelines (

a) Section 16 and

Schedule III [ 52 ] Capital gains receive express treatment under s. 16 and

Schedule III to the Guidelines . [ 53 ]

Section 16 provides that: 16 Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. [ 54 ] Sections 6 and 8 of

Schedule III (Adjustments to Income) provide direction respecting the treatment of capital gains for child

support income determination purposes: 6 Replace the taxable capital gains realized in a year by the spouse by the actual amount of capital gains realized by the spouse in excessof the spouse’s actual capital losses in that year. 8 Deduct the spouse’s carrying charges and interest expenses that are paid by the spouse and that would be deductible under the IncomeTax Act. [55] Section 19(1)(

h) may apply respecting the gross-up of the non-taxed portion of the capital gain. (

b) Brinkman Report [56] Mr. Brinkman’s 2021 Guideline income report followed s. 16 and

Schedule III. Mr. Brinkman wrote at para 6.12 that“[p]ursuant to paragraph 6 of

Schedule III of the FCSG, taxable capital gains are adjusted to the actual capital gain realized.” [57] He continued at para 6.14: “Consistent with paragraph 19(1)(

h) of the FCSG, we have grossed-up the non-taxable portion ofthe reported capital gains to reflect the reduced income taxes compared to the income taxes that would have been incurred had Mr.Maurier earned the same amount of employment income ….” [58] Paragraph 19(1)(

h) of the Guidelines provides as follows: 19(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstancesinclude the following: .... (

h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate thanemployment or business income or that are exempt from tax .... [59] As indicated above, Mr. Brinkman correctly noted at para 6.15 that “[t]his adjustment is discretionary, and the Court maydecide not to impute this income to Mr. Maurier.” Subsection 19(1) expressly recognizes the discretionary nature of the imputationthrough the use of the term “may.” [60] A straightforward reading of s. 16 and ss. 6 and 8 of

Schedule III, coupled with s. 19(1)(

h) of the Guidelines leads to the Mr.Brinkman’s attribution of income to the Defendant for the capital gain. Mr. Brinkman, I note, did deduct “carrying charges.” [61] However, Mr. Brinkman stated in an e-mail to the parties of April 26, 2022 (Exhibit E to the Plaintiff’s affidavit of October14, 2022) that his role “is limited to determining Guideline Income pursuant to the FCSG. It is not [his] role to anticipate what the Courtmay or may not do, specifically whether or not the Court would conclude that a

Section 16 determination is not the fairest method ofdetermining income.” [62] I observe that Mr. Brinkman did not include any amount in the Defendant’s Guideline income available for child supportpurposes through an analysis of the shareholder loan balances (para 6.5). I also observe that the shareholder loan amount owing to theDefendant of $319,000 (referred to in para 10 of the Defendant’s October 4, 2022 affidavit) included amounts in excess of the amount ofthe capital gain at issue. Plaintiff’s counsel had referred to a missing $199,000.

In my opinion, that figure was derived from a set ofrelated but distinct transactions ($319,000 owing in shareholder loans at one point, end of year shareholder loans owing of $120,000(319,000 – 120,000 = 199,000)). Shareholder loans are relevant to the capital gain issue but the amount in question is the amount of thecapital gain realized in 2021. (

c) Section 17 [63] Again as indicated, s. 17(1) of the Guidelines introduces another level of discretion: 17(1) If the court is of the opinion that the determination of a spouse’s annual income under

section 16 would not be the fairestdetermination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that isfair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.[emphasis added] I note Justice Stayshyn’s observations in Koester v Koester, , 50 RFL (5th) 78 (ON SC) at para 35 respectingsimilar language in s. 18 of the Guidelines: [35] As I see it s. 18 of the Federal Child Support Guidelines is designed to address the unfairness which would result if a spouse wasto artificially manipulate his income through a corporate structure for the purpose of avoiding child support obligations.

The use of theword “may” makes it clear that this is a discretionary tool. The use of the word “fairly” denotes recognition that corporations andbusinesses must operate in the real world and that there may be valid and legitimate business reasons for maintaining retained earnings ina corporation and not making them available to shareholder owners, either by way of salary or dividend. The jurisprudence and literaturecited herein supports this submission. See also Bruzas v Bruzas, (ON SC), Campbell J at para 38. [64] In this case, the Defendant’s 2018, 2019, and 2020 incomes were, as determined by Mr.

Brinkman, $212,741, $343,465, and$197,133 respectively. But Mr. Brinkman would put the Defendant’s income at $599,420 for 2021. It is fair to observe that as set by Mr.Brinkman, the Defendant’s 2021 income would be high as compared to his previous years’ incomes. [65] The capital gain was a “non-recurring amount.” I acknowledge that ADSL is still young but there is no evidence of other

capital gain income earned by the Defendant and no evidence that the Defendant has plans to sell additional shares. [66] Is the s. 16 determination “the fairest determination” of the Defendant’s income or is another amount “fair and reasonable” for2021? 2. The Jurisprudence [67] Some cases include capital gains like the Defendant’s in income available for child support. Some do not. (

a) Inclusionary Authorities (

i) Schick v Schick [68] In Schick v Schick, 2008 ABCA 196, the Court of Appeal upheld a Chambers judge’s inclusion of a capital gain in a payor’sincome for child support purposes. As in the present case, the inclusion of the capital gain resulted in a spike in the payor’s income. Weread the following at para 20: [20] The chambers judge held that the father's line 150 income in 2002 was $270,356; in 2003 - $236,193; in 2004 - $186,000; in2005 - $1,744,000, and in 2006 - $255,018.

The father's total income in 2005 was over $3,000,000, representing actual capital gains onthe sale of shares in an oil and gas company he helped create and for which he provided consulting services. [emphasis added] At para 25, the Court of Appeal properly observed that s. 17 [25] .... does not require that non-recurring amounts be excluded.

Whether an amount is non-recurring is a factor that may beconsidered by the court in determining what is fair and reasonable, if a court considers a calculation under s. 16 to not be the fairestmethod of calculation. [69] The Court of Appeal extended deference to the Chambers judge’s finding that including all available income would be fair. [70] On the level of principle, at para 27 the Court of Appeal approved of the Chambers judge’s adoption of the view inMarinangeli v Marinangeli (2003), (ON CA), 66 OR (3d) 40 (CA) at para 30, where the Court stated “[w]hile thecourts have differed in their approach when dealing with non-recurring income the recurring theme is that the child of the marriageshould benefit from a sudden increase in lifestyle and money available to the family.” [emphasis added] [71] There were, though, some peculiar features to this case.

The Court of Appeal noted at para 25 that: [25] .... Moreover, that all the capital gain in question is of a non-recurring nature is arguable. The proceeds were reinvested and thefather admitted he owns additional shares. It is thus possible that he will dispose of them periodically in the future when opportune orrequired by circumstances to do so. [72] Further, the recipient’s household had strained financial circumstances and the child of the marriage had special needs andacademic challenges, all matters that the payor knew.

See para 32: [32] The chambers judge found that the father knew the financial difficulties in the mother’s household given her modest income. Shereviewed the means and circumstances of both parents, the needs and circumstances of the child, including his special needs andacademic challenges .... (ii) Shields v Shields [73] In Schick, the Court of Appeal approved of Justice Ross’s decision in Shields v Shields, 2006 ABQB 368. Justice Rossincluded the payor’s capital gain in his Guideline income in that case.

Justice Ross invoked Marinangeli and observed at para 24 that: While it would be unfair to base long-term support on a short-term increase, there is nothing unfair about requiring a parent to share ashort-term increase in income with his or her children for the period of the increase. She added at para 24 that “[i]ncluding such income may advance the objective stated in s. 1(

a) of the Guidelines, ‘to establish a fairstandard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation.’” (iii) Lessons of Inclusionary Authorities [74] Cases like Schick and Shields can be read as providing a tests for inclusion of non-recurring income in the nature of a capitalgain and a test for non-inclusion. [75] If, as suggested in Schick, a gain is in the nature of a recurring as opposed to a non-recurring gain, that would tend to showthat the gain should be included in income.

Similarly, in Ewing v Ewing, 2009 ABCA 227, the Court of Appeal referred at para 35 to thefollowing as matters that might be considered in determining whether an income calculation is fair: • Is the non-recurring gain or fluctuation actually in the nature of a bonus or other incentive payment akin to income forwork done for that year? • Is the payor in the business of buying and selling capital assets year after year such that those amounts, while the sale ofcapital, are in actuality more in the nature of income?

[76] On the inclusionary side, if an economic benefit from a capital gain would have been enjoyed by the family had it remainedtogether, the capital gain should be included in the payor’s income for child support purposes. [77] On the exclusionary side, if an economic benefit from a capital gain would not have been enjoyed by the family even had itremained together, the capital gain should not be included in the payor’s income for child support purposes. [78] When would a capital gain not operate for the benefit of the family (at least directly)?

When the funds realized were dedicatedto other purposes. [79] Justice Ross referred to this possibility at para 25 of Shields, a possibility not made out on the evidence before her: [25] There are no circumstances here that suggest that Mr. Shields’ 2004 capital gain does not reflect his actual ability to support hischildren. For example, he did not reinvest the sale proceeds in another business, as occurred in Andersen v. Andersen (1997), (BC SC), 32 R.F.L. (4th) 177 (B.C.S.C.). [emphasis added] [80] This leads to the exclusionary authorities. (

b) Exclusionary Authorities [81] If, for example, a capital gain were realized but reinvested in a business to keep it a going concern, the gain would not havebeen available for the family even if the parents had stayed together. The capital gain had a use other than directly improving thestandard of living of the family.

The capital gain had a use in preserving the business that would support the family, if the family weretogether, or that would support ongoing child support given that the parents were apart. [82] It is true that the capital gain, as opposed to undistributed corporate income, was realized by the payor. It was in the payor’shands. But if the mere fact of personal receipt made the capital gain part of income available for child support, the income would nolonger be available for investment in the business that generates the income that generates child support.

Including income in one yearcould have the invidious effect of reducing income in years to come. If capital gains that touched a payor’s hands were without moreincluded in income, self-financing of a business through (e.g.) share sales would be deterred, to the detriment of the business. [83] Thus we read the following at para 32 of Ewing v Ewing: [32] .... Courts should be alert to the nature of any non-recurring gain and whether it is derived from the sale of capital.

That isparticularly true when the sale involves capital which forms the basis of a payor’s income, and whenever capital is sold the court shouldconsider the effect of that sale on future income. In Kowalewich v. Kowalewich, 2001 BCCA 450, 155 B.C.A.C. 143, the BritishColumbia Court of Appeal noted that making money available for support purposes, when it may be needed to maintain a going concern,would be equivalent to killing the goose that laid the golden egg .... [emphasis added] [84] The Court of Appeal approved the reasoning of Justice Clarke in Edie v Edie, 2003 ABQB 70.

Justice Clarke wrote as followsat paras 32 and 33: [32] Mr. Popik took the position that you do not include capital gains for income calculation purposes because this was not profittaking but a reallocation of equity back into the Respondent’s company. Also, he was satisfied that there was a need for that reinvestmentbecause working capital was being eroded. It was the erosion of capital that was leading to the necessity for those sales. [33] I accept the opinion expressed by Mr. Popik.

In my judgment it would be wrong to simply include, for example, capital gains in apayor’s income without looking at what happened to those gains - were they for profit taking or for a reallocation of equity required bynecessity back into the company? .... [85] In JDL v TLGM, 2019 ABQB 572, Justice Kendell illustrated the logic of both inclusion and exclusion, depending on theuses of capital gains and undistributed corporate income. If the income is, on the evidence, needed for business purposes, it is notavailable for child support.

If the income is not, on the evidence, needed for business purposes, it is available for child support. At para38, Justice Kendell wrote that: [38] Mr. Popik was of the further opinion that it is important for the Court to look at what happened to the capital gain: were the gainsfor profit taking or for a reallocation of equity required by necessity back into the company? (See Edie v Edie ... at paras 32-33.)Although Mr. Popik testified that there was a need for reinvestment to purchase capital assets and for working capital, there was apaucity of objective evidence of the same.

The Father led very little evidence about SEI's financial needs and obligations, and in theabsence of that evidence, I am not satisfied that the capital gain needed to be reinvested back into the company by necessity. Therefore,the capital dividend will be included in determining the Father's Guideline Income. [emphasis added] In contrast, when considering the availability of undistributed corporate income for child support purposes, Justice Kendell wrote asfollows at para 65: [65] As SEI was a growing company, it did require funds to facilitate that growth.

While the Father did not provide the Court withspecific evidence of SEI's financial requirements for growth, I find that 50% strikes a balance between SEI's ability to grow and expand,the Father's obligation to financially support his children, and the Court's obligation to consider all money available to a spouse for thepayment of child support. [emphasis added] [86] In Ewing v Ewing at para 35 the Court of Appeal set out some additional factors relevant to whether a capital gain should beincluded in the payor’s income: • Is the non-recurring gain a sale of assets that formed the basis of the payor’s income?

• Will the capital generated from a sale provide a source of income for the future? • Did the non-recurring gain even generate cash, or was it merely the result of a restructuring of capital for tax or other legitimate business reasons? [ 87 ] Further factors relevant to the inclusion vs. exclusion determination can be drawn from Justice Chappel’s decision in Thompson v Thompson , 2013 ONSC 5500 at para 92 .

Justice Chappel developed the list of factors when considering s. 18 of the Guidelines and the issue of whether all or a portion of a corporation’s pre-tax income should be included in a payor’s income for child support purposes. Some of the factors, though, are relevant to the consideration of whether a capital gain realized by a shareholder/payor should be included in that payor’s income for child support purposes. These factors include the following:

b) The restrictions on the corporation’s business, including the amount and cost of capital equipment that the company requires.

c) The type of industry the corporation is involved in, and the environment in which it operates.

d) The potential for business growth or contraction.

e) Whether the company is still in its early development stage and needs to establish a capital structure to survive and growth.

f) Whether there are plans for expansion and growth, and whether the company has in the past funded such expansion by means of retained earnings or through financing.

g) The level of the company’s debt.

h) How the company obtains it financing and whether there are banking or financing restrictions ....

l) Whether there are legitimate business reasons for retaining earnings in the company. Monies which are required to maintain the value of the business as a going concern will not be considered available for support purposes. Examples of business reasons which the courts have accepted as legitimate include the following: (

i) The need to acquire or replace inventory; (ii) Debt-financing requirements; (iii) Carrying accounts receivable for a significant period of time; (iv) Cyclical peaks or valleys in cash flow; (

v) Allowances for bad debts; (vi) Allowances for anticipated business losses or extraordinary expenditures; and (vii) Capital acquisitions. [footnotes omitted] 3. The Evidence (

a) Affidavit Evidence [ 88 ] In his October 4, 2022 affidavit the Defendant referred to the need to reinvest in ADSL’s business. He claimed that Mr. Brinkman failed to account for or acknowledge the costs to set up and rapidly grow a cash intensive business (see paras 13 and 14). [ 89 ] In para 10 of his October 4, 2022 affidavit, the Defendant stated the following: my company has continued to grow quickly and did complete last year with a gross revenue of $5.75 million.

It should also be noted that to support the growth, I needed to sell 10% of the shares to fund operations with my investment through shareholder loans exceeding $319,000 for a significant portion of the year and ended the year with an outstanding shareholder loan of almost $120,000 . Another notable item from the financial statement is a net operating loss of nearly $86,000 before government subsidies. This resulted in a net income of $100,495 before taxes.

The reason for the low return is the high capital cost to expand and grow the business .... [emphasis added] [ 90 ] The financial statements for ADSL supported the Defendant’s contentions relating to corporate growth. As indicated above, corporate revenues went from $481,929 in 2018 to $5,753,904 in 2021. [ 91 ] The Defendant’s November 25, 2022 update affidavit provided further detail. The Defendant averred as follows at para 11 of the update affidavit: The money from those share sales was reinvested back into the business as well. The shareholder loan of $114,182 formed a large component of it.

The purchase of a building is necessary for the continued growth of the business and this money is earmarked for that …. the company has expanded to design and manufacturing and we now have 80 employees and growing.

Large expenditures have been required to manage the growth such as the need to have our own office and manufacturing facilities …. [emphasis added] [ 92 ] The Defendant attached summaries of capital expenses for 2021 and receipts for purchases, everything from furniture from IKEA to computers and software, to tools and accessories from Ritchie Bros Auctioneers, to a piece of heavy fabrication equipment costing about $100,000 from Irizar Heavy Industries Inc.

[ 93 ] The affidavit demonstrated the expenses mentioned in prior affidavits and supported the Defendant’s explanation that the capital gain was ploughed back into the business. [ 94 ] Further, income in the Defendant’s hands was reflected in shareholder loans, that is, as loans to the corporation by the Defendant. [ 95 ] The Defendant’s claim that ADSL required capital investment was corroborated by Mr. Brinkman. In 2021, ADSL had significant working capital requirements (para 6.25(a)). The corporation had no funds to spare. It was not able to distribute any additional income to the Defendant in 2021 (para 6.28). Mr. Brinkman wrote at para 6.25(

b) that: During the 2021 year, advances owing to the shareholder increased by $114,182, suggesting a need for working capital in excess of what is generated through the day-to-day operations. (

b) Other Financing? [ 96 ] Should the Defendant have obtained financing from third parties rather than using his own money to support the corporation? That is, should he have used his money for the family and not the corporation? [ 97 ] In his June 1, 2021 report at para 6.27, Mr. Brinkman said the following: As previously discussed with [the Defendant], and given ADSL’s relatively strong balance sheet, it is likely that ADSL would qualify for an operating line of credit from a financial institution which could be used to cover temporary cash flow shortfalls. The fact that Mr.

Maurier chooses to instead cover those shortfalls personally, thereby himself acting as ADSL’s bank, does not impact our assessment as to what portion, if any, of ADSL’s UPTCI should be allocated to [the Defendant’s] Guideline Income. Mr.

Brinkman did not revisit this opinion in the June 1, 2022 report, which disclosed financial ratios evidencing financial weakness “as compared to what is considered standard in the industry” (para 6.27). [ 98 ] We did not have evidence about the actual availability of financing or terms of financing based on ADSL’s current financial circumstances and whether, given the terms of financing, obtaining outside financing would have made economic sense for the Defendant and his business. [ 99 ] Further, the corporation has only recently gotten into design and manufacturing and its sales have only recently drastically increased.

While I cannot take judicial notice of the economic viability of corporations in the business of fabricating equipment for independent oil and gas producers, I can take judicial notice that most small businesses fail. On a purely statistical level, the Defendant’s business venture is risky. [ 100 ] He must contend, additionally, with federal regulatory impacts on the oil and gas industry, the international oil market, and international affairs as those affect oil and gas production. He must contend with major players in the oil and gas space.

He is contending with significant risk. [ 101 ] Even if ADSL could get financing, the Defendant would likely be required to guarantee loans personally. By self-financing, he can control his own exposure, instead of exposing himself to economic ruin if costs outpace revenues. [ 102 ] I do not find that the Defendant should have found alternative forms of financing rather than reinvesting the capital gain. (

c) If not All, then Some? [ 103 ] The Defendant and Mr. Brinkman referred to a shareholder loan balance of $114,182. Does that mean that even if $114,182 could be excused from inclusion in the Defendant’s income available for child support, the remainder of the capital gain should be included in his income? (Plus, perhaps, the tax gross-up on the portion that represents the untaxed portion of the capital gain.) [ 104 ] The Defendant did say in para 11 of his October 4, 2022 affidavit that “[t]he money from those share sales was reinvested back into the business as well.

The shareholder loan of $114,182 formed a large component of it.” In his update affidavit at para 11 he referred to “my investment through shareholder loans exceeding $319,000 for a significant portion of the year.” All of the money realized on the share sale went was used by ADSL. The Defendant’s loan to ADSL has been paid down. Nonetheless, the share sales proceeds are still required for business purposes. [ 105 ] In particular, the capital gain proceeds are “earmarked” for the purchase of a building. The building is necessary for the business.

The corporation itself would not have the money or all the money necessary for the building purchase, given its financial position. [ 106 ] At this point, on the record, the Defendant’s claims are not challenged. There is no evidence to the contrary. His claims are corroborated, in my opinion, by Mr. Brinkman’s comments about the current and working capital ratios for the corporation being below industry standards (para 6.25(c)) and by Mr. Brinkman’s view that no UPTCI should be imputed to the Defendant in 2021. Again, the corporation had no money to spare.

The corporation does not need money only at one point in time. It needs money on daily, weekly, monthly, and yearly bases. Self-financing was needed as evidenced by the shareholder loans. Further funds have been required. [ 107 ] In addition, the Defendant does not have only himself to worry about, but 80 employees. [ 108 ] The Defendant took a bigger wage in 2021 than in the previous year. There was no evidence that he needed yet more to elevate his lifestyle. There was no evidence of any spending that would suggest diversion of even part of the capital gain into personal pursuits.

[ 109 ] In my opinion, for the purposes of this application and on the record before me, the Defendant has established that the full amount of the capital gain has been dedicated to ADSL. It was not available for himself. It was not available for his family. It was not available to pay child support. Requiring the Defendant to pay increased child support based on this amount would remove funds necessary for the survival of the business. And without the business, he will have less capacity to pay any child support. 4.

Conclusion [ 110 ] Therefore, the amount of the capital gain and the tax gross-up added to this by Mr. Brickman are excluded from the Defendant’s Guideline 2021 income. [ 111 ] The Defendant’s 2021 Guideline income, then, is $198,035, being the sum of his employment income ($171,115) plus grossed- up personal benefits ($26,920 (personal benefit at an agreed amount of $14,000, grossed-up by $12,920)). [ 112 ] It follows that I have dismissed the Plaintiff’s claim for the following: 2.

The Guideline Income Report prepared by Pisko Brinkman to assess the Father’s 2021 Guideline Income will be accepted in its entirety, putting the Father’s income at $599,420 .... C. Retroactive Decrease in Child Support [ 113 ] Clause 13 of the Richardson Order stated that the Defendant “agrees to set his income as per the findings in the Guideline Income Report by Pisko Brinkman Valuation Services, at $343,465.00.” [ 114 ] Nonetheless, the Defendant has registered his disagreement with Mr. Brinkman’s determination of his Guideline income (see the Defendant’s October 4, 2022 affidavit at paras 13, 14).

The focus of the Defendant’s concern has been that Mr. Brinkman improperly included UPTCI in his income. The Defendant has claimed that Mr. Brinkman has failed to acknowledge the costs required to set up and rapidly grow ADSL’s cash-intensive business: see, e.g., the Defendant’s October 4, 2022 affidavit at paras 13 and 14. [ 115 ] The Defendant sought to rely on Mr. Popik’s assessment of ADSL’s working capital requirements to show that Mr.

Brinkman improperly included UPTCI in his income from 2019 to 2021, and to provide a fair calculation of the Defendant’s Guideline income for 2019 to 2021: November 25, 2022 affidavit at paras 10, 14. [ 116 ] Should I consider an application for a retroactive decrease in child support paid by the Defendant? [ 117 ] I decline to consider such an application. [ 118 ] First, a retroactive variation application by the Defendant was not set as an issue for this application by the Leonard Order. [ 119 ] Second, the cross-application of the Defendant did not clearly set out retroactive variation as a remedy claimed or sought.

The cross-application does include “[t]hat guideline incomes be assessed using the expert reports of Mr. Popik.” A report by Mr. Popik was not included with the cross-application. In the grounds for making the application, the Defendant said “I do not agree with Mr. Brinkman’s assessment and I would like another report done by Mr. Popik in rebuttal to Mr.

Brinkman’s reports.” The cross-application speaks of a future conflict in evidence to be resolved not a conflict to be resolved in the present application. [ 120 ] Third, counsel did not engage the framework for assessing payor applications for retroactive decreases in child support, and the evidence was not adequate to permit such an assessment. See Colucci v Colucci , 2021 SCC 24 , Martin J and Peters v Atchooay , 2022 ABCA 347 , Pentelechuk J; Bilodeau v Bilodeau , 2022 ABKB 799 .

Argument would be necessary to address whether the Defendant could retroactively resile from his own agreement to guideline income determinations, as in the Richardson Order. I recognize that, in contrast, the Neilson Order expressly referred to the Defendant’s disagreement with Mr. Brinkman’s evaluation. [ 121 ] Fourth, Mr.

Popik’s report and the Defendant’s update affidavit were provided only very shortly before the application date and the Plaintiff did not have a reasonable opportunity to respond to the information provided, going back several years. [ 122 ] Fifth, as indicated above, the Jerke Order set out a process for disputes about reports turning on the clash of expert evidence. Clause 4 states as follows: 4. Once Mr.

Brinkman has provided his updated or supplementary report, if one of the parties challenges that report, or is not prepared to accept the report, then the parties are at liberty to take steps to move litigation forward to have the question of the father’s income and the consequent support obligations determined by a trial. If either party chooses to do that, they must first arrange a one (1) hour case conference with Justice R. A. Jerke, through his assistant.

The case conference is not case management and the purpose is to set the terms of a Procedural Order so that the parties can move forward with their litigation to effect a final resolution of the income determination and of the setting of child support .... I cannot simply disregard a court order that has not been set aside on appeal. I discern no material change in the circumstances of the parties that would permit reconsideration of the process established by Justice Jerke.

Justice Jerke dealt precisely with the type of dispute that animating the Defendant’s bid for retroactive recalculation. [ 123 ] The Jerke Order requires that the retroactive recalculation issue be taken to trial. [ 124 ] And trial or a viva voce evidence procedure would be the only way to assess the conflicts between the experts’ opinions. D. Preparation of Guideline Income Reports

[ 125 ] The Defendant disagrees with Mr. Brinkman’s assessments (see his October 25, 2022 affidavit at paras 3 and 4). As stated in the Defendant’s concise letter, the Defendant has “lost confidence in Mr. Brinkman’s assessment.” The Defendant seeks to have his guideline income set by the expert reports of Mr. Popik. [ 126 ] To the extent that this is a bid to recalculate child support retroactively, that claim is rejected for the reasons previously set out. To the extent that this is a bid to have Mr.

Popik substituted as the Guideline income report writer, I decline to make the order sought by the Defendant. [ 127 ] In my opinion, Mr. Brinkman should remain the author of the Guideline income reports unless the parties agree otherwise. I acknowledge that clause 9 of the Richardson Order provides that the appointment of Pisko Brinkman “is confirmed and continued until the parties agree in writing to make any changes, or by an Order of the Court ....” [emphasis added] [ 128 ] I do not have a reason to change the report author. [ 129 ] Mr.

Brinkman has a position in this litigation similar to a court-appointed expert. He is to provide an objective assessment of the Defendant’s Guideline income, drawing on his expertise. [ 130 ] Mr. Brinkman, in my opinion, has fairly and fully set out the bases for his determinations. He has put the Court in the position it needs to be in to assess the Defendant’s income, as it stands in relation to the income of ADSL. Mr. Brinkman has done exactly what has been expected of him and what he should have done as an expert.

See, e.g., R v J-LJ , 2000 SCC 51 , Binnie J at para 56. [ 131 ] It would not be appropriate to substitute a report author who has been retained by the Defendant, whose opinions the Defendant accepts. That could not possibly be accepted as fair by the Plaintiff or as objective by the Court. [ 132 ] I have differed with Mr. Brinkman respecting the treatment of the capital gains inclusion in the Defendant’s 2021 Guideline income. However, Mr. Brinkman fairly set out why he included that income in the Defendant’s Guideline income.

Whether or not that income should have been included in the Defendant’s income was for me to decide as a matter of judicial discretion. I reached a different conclusion than Mr. Brinkman as a matter of law. That does not mean that Mr. Brinkman did not properly carry out his role or did not properly assess matters from an accounting standpoint. [ 133 ] Further, my determination was based on the Defendant’s update affidavit with its attachments. Mr. Brinkman did not have that affidavit. I do not know whether his assessment was based on all the information provided by that affidavit. E.

Final Determinations on Cyclical Legal Arguments [ 134 ] The Plaintiff sought the following order: 3. That final determinations be made on cyclical legal arguments that could be made/are being made by the Father to disagree with income reports each year. [ 135 ] I decline to grant such an order, for two reasons. [ 136 ] First, a “final” determination cannot be made in Chambers on the basis of affidavit evidence. An issue determined in Chambers may be revisited, for example, at trial.

See Kerslake v Kerslake , 2016 ABCA 150 at para 5 ; JLZ v CMZ , 2021 ABCA 131 at para 22 . [ 137 ] Second, the issue of whether income is available for the payment of child support turns on the circumstances. Circumstances may vary over time. The decision made at one time in the context of one set of circumstances may not be the decision made at another time in other materially different circumstances.

The Defendant cannot be foreclosed from making future legal arguments based on circumstances materially different from the circumstances before me. [ 138 ] Further, in this case, I was persuaded by the Defendant’s legal arguments. If his position was correct this year, it may be correct next year, and the year after that. I will not bar the Defendant from advancing legal arguments. III.

Costs of Guideline Income Reports [ 139 ] The Plaintiff sought an order having the following terms: 1. ... every year the Mother [shall] pay a proportionate share of the first yearly Guideline Income report only, as long as the ... initial report costs are no more than approximately $3,000 base/typical price. The Father would pay for 100% of the report fees ... that go over $3,000 for the first report. The Father would pay 100% of the report fees for any additional reports that are required for each additional business he creates. This new report payment structure would be retroactive to February 2021.

The Mother’s proportionate contribution to report costs would be based on a maximum cost of $3,000. Any amount above $3,000 (whatever the reason for that cost in excess of $3,000) would be the sole responsibility of the Defendant. [ 140 ] I decline to make the order sought by the Plaintiff. [ 141 ] First, proportionate sharing of report costs has been a consistent theme in the parties’ court orders. No material change has occurred that justifies deviating from that approach. [ 142 ] Second, proportionate sharing is fair to both parties and prevents unfair cost allocation to the Defendant.

[ 143 ] Before considering the Plaintiff’s position in greater detail, I should note elements of the Defendant’s position on the sharing of report costs. [ 144 ] The Defendant requested “a direction as to reasonable apportionment of payment towards Mr. Brinkman’s reports based on Mr.

Popik’s findings in his Expert Reports.” [ 145 ] To the extent that this direction seeks a redetermination of the Defendant’s contribution towards the costs of the Guideline income reports based on a retroactive reassessment of the Defendant’s guideline income, this direction is denied for the reasons denying retroactive reassessment of child support set out above. [ 146 ] The Defendant also stated as a ground for making his application that: If there is not agreement with Mr. Brinkman’s work, the Defendant should not be obligated to pay for it.

That is a conclusion – a bare assertion – rather than grounds for relief. The conclusion runs contrary to the orders granted to this point and to the Defendant’s failure to challenge those orders until this application. This contention is dismissed along with the claim for a retroactive decrease in child support and for reasons of elementary fairness. [ 147 ] Nothing more need be said respecting these aspects of the Defendant’s requested relief. I will address my reasons for declining the relief sought by the Plaintiff. A.

Court Orders [ 148 ] Clause 11 of the Fraser Order provided as follows: 11 In the event that the parties are unable to come to an agreement about the Husband’s future guideline income ... the parties shall equally share the costs of a “Guideline income” report ....

The Neilson Order provided in clause 7 that “the parties shall proportionally share the costs of a ‘Guideline income’ report ....” Clause 9 of the Richardson Order referred to the appointment of Prisko Brinkman “with the parties continuing to share the costs of the report on a proportionate basis as already laid out in the [Neilson] order.” Clause 5 of the Jerke Order provided that the Richardson Order “remains in effect with no changes.” [emphasis added] [ 149 ] Has there been a material change in circumstances warranting revisiting the proportionate contribution of the parties to the costs of the Guideline income report?

B. Evidence [ 150 ] The evidence does suggest that the cost of the 2020 Guideline income report bulged in 2020, coming in at around $14,000. [ 151 ] However, the Defendant attached e-mail correspondence from Mr. Brinkman to the Plaintiff dated January 24, 2022 to his October 4, 2022 affidavit (Exhibit B). Mr. Brinkman explained that the bulk of the report preparation fees, about $11,000, related to the review concerning personal benefits.

The other $3,000 was for the remainder of the preparation of the report. [ 152 ] The Defendant has also recently incorporated 237Co to purchase the premises currently leased by ADSL. [ 153 ] However, in e-mail correspondence from Mr. Brinkman to the parties of May 11, 2022, attached as Exhibit A to the Defendant’s October 4, 2022 affidavit, Mr. Brinkman advised that There will be an extra cost when two companies are involved, but it’s not usually double the cost. Of course, this depends on how complicated the corporate operations are, as well as the adequacy of the Cunningham Disclosure.

In my experience, a company whose operations consist of owing a building and renting it to a related party are quite simple, with few categories of expenses. Further, the significant majority (in terms of dollars) directly relate to the building, meaning there [tend] to be few personal benefits, if any. C. Assessment [ 154 ] In my opinion, the proportionate sharing established by the Fraser, Neilson, Richardson, and Jerke Orders should not be disturbed. [ 155 ] There has been no material change. [ 156 ] The report preparation cost relating to personal benefits was high. But Mr.

Brinkman stated in Exhibit B that “I’m sure you’ll recall that I advised both of you, on a number of occasions, that the costs of doing a detailed review of personal benefits often outweighs the benefit.” The parties’ dispute drove up the cost. The parties knew or should have known that expending the responsible professional’s time would add to his bill.

The cost was not high for unexpected reasons, reasons that could not be anticipated, or reasons beyond the control of the parties. [ 157 ] The incorporation and use of 237Co, on the evidence to this point, will not introduce significant complexities and will not significantly increase review expenses. The prospect that the Defendant’s business would entail the purchase of premises was within the parties’ and the various judges’ reasonable contemplation. On the evidence, the particular form of potential ownership, using a separate

entity as opposed to ADSL, will not itself occasion any new material expense. [ 158 ] Even if there were material change, I would not disturb proportionate sharing. Fixing the parties with the costs of dispute creates a disincentive to excessive use of the accounting professional’s time. The burden of payment encourages the parties to weigh costs and benefits and so assists in the rational management of disputes.

If one party had a cap on financial contribution and the other had to absorb costs in excess of that cap, the capped party would not be subject to financial discipline and the other party could (would likely) be required to pay for the capped party’s continued disagreements. That would not be fair to the “uncapped” party. [ 159 ] It is true that there is an income disparity between the parties. The leveling mechanism is the Guideline income report prepared by an independent professional. The income disparity is recognized by the proportional sharing of cost rather than by sharing cost equally. IV.

Further Child Support Issues [ 160 ] The Plaintiff sought additional orders relating to child support. A. Child Support Orders by June 30 [ 161 ] The Plaintiff sought an order that: 4. ... new child support orders be in place by June 30 th each calendar year. 1. Current Order [ 162 ] As the record now stands, this matter is addressed by clauses 6 and 7 of the Richardson Order: 6. Upon receipt of the [Guideline Income Report], both parties shall enter into a Consent Child Support Variation Order to retabulate Child Support and

Section 7 costs, effective June 1 st of that year (based on the Mother’s T4 income and the Father’s income as set out in the Guideline Income Report). 7. It is hereby ordered, as per the Mother’s application, that the new form of Consent Child Support Variation Orders will be prepared and submitted to the court within one month of receipt of Pisko Brinkman’s final Guideline Income report each year to set out the Father’s Guideline Income. [ 163 ] The Richardson Order approach is preferrable to an approach requiring orders to be in place by a specified date.

There could be delays in the provision of the Guideline income report, for example. Clause 7 would have orders submitted within a month of receipt of the Guideline income report. That properly manages timing. 2. Acceptance of the Guideline Income Determination [ 164 ] The Richardson Order approach is sufficient if the Defendant accepts the determination of his Guideline income in the Guideline income report. [ 165 ] The Defendant or the Plaintiff, though, may wish to challenge the determination of his income in the Guideline income report. Clauses 6 and 7 of the Richardson Order would continue to apply.

Child support would be payable under the new order, unless varied by a further court order. An additional clause is necessary to deal with the challenge. There are two possibilities. First, resolution of the challenge may require a trial or at least a procedure involving viva voce evidence. In that case, clause 4 of the Jerke Order would be engaged.

Second (as in this application), resolution of the challenge may not require a trial but may be decided on affidavit evidence. [ 166 ] The clauses needed to supplement the Richardson Order are as follows: The child support payable under clause 6 of the Richardson Order may be varied by court order arising from a process contemplated by the following clause. If a party challenges the determination of the Defendant’s guideline income in the Guideline income report, (

a) if resolution of the challenge will require trial or a procedure involving viva voce evidence, the process set out in clause 4 of the Jerke Order shall be followed, with the case conference being arranged within 30 days from the date of receipt of the Guideline income report. (

b) if resolution of the challenge will not require trial or a procedure involving viva voce evidence, the party shall file an application to set the Defendant’s Guideline income at an amount differing from the amount set in the Guideline income report within 30 days from the date of receipt of the Guideline income report. [ 167 ] I recognize that the parties may view the additional clauses as an invitation to litigate annually. I will return to that issue below. B.

Section 7 1. Rules Consistent between Parties [ 168 ] The Plaintiff seeks the following order:

8. That rules around allowable s. 7 expenses stop changing and are consistent – that the Mother and Father can be reimbursed for similar expenses as each other. [ 169 ] I decline to make such an order. No proposed form of order accomplishing the sought objectives was presented to me. Further, no material change in circumstances has occurred that would warrant revisiting the s. 7 arrangements established through prior court orders. I decline to make any order revising s. 7 obligations. [ 170 ]

Section 7 expenses were dealt with by the Fraser Order, clauses 4-7, amended by the Neilson Order, clauses 2-3, amended in turn by the Richardson Order, clauses 10, 15-17. For reasons unknown to me, the parties have deviated from the proportional share approach to a 50/50 approach for some expenses. Other expenses, such specified school fees, have been ordered to be 100% the Defendant’s responsibility. No inconsistencies within orders were identified.

Different s. 7 expenses are treated in different ways in the orders, but I was not pointed to a type of expense that (e.g.) the Defendant could seek reimbursement for but the Plaintiff could not or could not equally or proportionally. [ 171 ] The s. 7 clauses did evolve through the various orders. However, the Fraser Order and the Neilson Order, at least, were consent orders. Insofar as the concern is with changes to s. 7 expenses, change has been a function of the parties’ applications. [ 172 ] In terms of change, an unavoidable complication will arise once Janae embarks on post-secondary education.

It will probably be necessary to revisit the terms of ongoing support for her. For relevant considerations, see (e.g.) Bilodeau v Bilodeau at paras 204-226 . The form of child support that will be appropriate cannot be predicted and will have to be assessed in light of all the circumstances when the plans for Janae’s post-secondary education have become concrete. 2. Cap on s. 7 Expenses [ 173 ] The Plaintiff sought the following order: 5.

If child support is $600 or less each year per child, it is up to the Mother’s discretion whether she pays for all or any of the following extras, and at that point, the Father would assume 100% of the costs .... If not, the children could simply go without these extras:

a) children’s cell phone bills

b) RESP contributions for Janae

c) car insurance and gas. [ 174 ] I decline to make such an order. It is unnecessary. [ 175 ] I’ll address car insurance and gas expenses under the next heading. [ 176 ] Under clause 7 of the Fraser Order, cellphone expenses are shared 50/50 between the parties. See also clause 10(3) of the Richardson Order. [ 177 ] RESP expenses are not s. 7 expenses: Denman v Jamieson , 2013 ABQB 84 , Graesser J at para 70. I was not directed to a court order that requires RESP contributions. [ 178 ] The Richardson Order does provide that: 11.

The mother’s application to have their prior joint agreement to pay equally into Registered Education Savings Plans (RESPs) for the children to end as each child finishes his, or her, grade 10 is hereby, and on the consent of the father, allowed and so ordered. This order presupposes that the parties have an agreement to make RESP contributions. That agreement was not in evidence on the record before me. [ 179 ] If the amount of child support received by the Plaintiff diminished to $600 per child, the Defendant’s annual income would have declined significantly.

If there were only one child at the time, his income would be about $42,000 per year. If there were two children – assuming that the amount of child support should be regarded as being half for one child, half for the other – the Defendant’s income would have declined to about $83,000 per year. [ 180 ] If the Defendant suffered these diminutions of income a material change of circumstances would have occurred. The parties may make an application to readjust obligations if and when such a material change in circumstances occurs. 3. Vehicle Expenses [ 181 ] The Plaintiff seeks the following orders: 9.

In the event the Father seeks reimbursement for gas, insurance, and repairs for the children using a vehicle at both parents’ houses, the onus is on the Father to produce documentation detailing the costs of insurance, gas, repairs, etc. and receipts and documentation will be on an ongoing basis. Further, this matter should go through the parents and not the children of the marriage. 10.

The Father will immediately disclose the costs of insurance for Aaron’s car from 2021 until February 2022, and refunds will be issued for the Mother and her son immediately, if they were overpaying for insurance and gas over the stated months, or if the costs were fully covered by Father’s company ....

11. The Father will not punish the children by taking away the use of the car just because the Father is angry at the Mother.

The children will be able to use the vehicle at both houses as long as the Mother and the children pay the Father enough funds to cover 50% of the monthly gas and insurance, while the children are in high school, effective immediately .... [ 182 ] I decline to make an order respecting these matters. [ 183 ] Car insurance and gas expenses are not s. 7 expenses: FJN v JK , 2019 ABCA 305 at para 128 (“Ordinary transportation from place to place was facially within the scope of basic table expenses and within the capacity of FJN”). [ 184 ] I was not directed to a court order dealing with car insurance, gas expenses, or car repairs. [ 185 ] In my opinion, whether a parent provides a vehicle to a child and the terms on which the vehicle is provided are not matters for the Court.

These are matters that should be arranged between a parent and a child directly. If, for example, the Defendant wished to buy a car for Aaron, the Defendant and Aaron should work out the terms under which Aaron would be responsible for car expenses. That arrangement would not involve the input of the Plaintiff. [ 186 ] A tri-partite agreement could be worked out by Aaron and both parents.

If such an agreement were made, there could be terms around the sharing of costs not only by Aaron but by each parent. [ 187 ] In my opinion, the Court should not create a contract for a parent and Aaron or a contract involving both parents and Aaron. The parents and Aaron can work out what makes sense between themselves based on their own knowledge of the relevant circumstances. The parties have the information necessary to create a workable agreement. I do not.

Moreover, if one parent provided the funds to purchase the vehicle, that parent would have economic interests requiring protection not shared by the other parent. 4. RESPs [ 188 ] The Plaintiff sought the following order: 12. In regards to the children’s RESPs, the funds can be released to pay for any and all of the following, which is not an exhaustive list: books, tuition, student fees, transportation (bus, LRT, car repairs/gas/insurance, car), and neither parent will prevent funds from being withdrawn to pay for any of the above.

This means effective August 31, 2022, Aaron has full access to the Nissan Altima at both houses and Ernie can be reimbursed for funds he would charge for gas/insurance directly from Aaron’s RESPs. [ 189 ] It appears that the problem to be overcome is parental interference in the use of the RESPs to pay education-related expenses. [ 190 ] The RESP terms were not in evidence and the legal constraints on RESP withdrawals were not addressed in submissions. [ 191 ] The parties were content to allow Aaron to decide how RESP funds should be used. [ 192 ] My order is as follows: To the extent permitted by the terms of RESPs and by law, Aaron shall decide the purposes for which RESPs funds are to be withdrawn and the parties shall provide their consent and otherwise take all steps required to permit RESP funds to be used for those purposes.

V. Parenting Issues [ 193 ] The parenting issues all concern Janae. A. Work for the Father 1. Relief Sought [ 194 ] The Plaintiff sought the following relief: 6. I am asking that Janae not work for her Father during the summers or school breaks without abiding by all of the following (acknowledging that this is not an exhaustive list):

a) Janae’s preference given serious weight ([should she] prefer to work elsewhere)

b) consent from myself c) 30 days’ notice provided to myself of the location of the worksite

d) Janae’s intent or mother’s consent to work for the father can be rescinded if i. the worksite location changes less than 30 days prior to the start date ii. significant and costly transportation is needed to get Janae to/from work

e) Janae and the mother have a right to know the transportation requirements, if any, the type of work Janae will be doing, and her hours. [ 195 ] The Plaintiff confirmed that this sort of order would relate only to employment with the Defendant. The Plaintiff’s focus related

to events that occurred respecting Aaron’s employment with the Defendant, although because of conflicts on the affidavit evidence, I cannot and do not make any findings about what occurred (see the Plaintiff’s affidavit of October 14, 2022, Exhibit F). I must observe that the Plaintiff is right that the Defendant said “Did you want to help pay for him to use the Altima when at your house? Otherwise he said he could bike but it’s a pretty long ride.” 2. Principles [ 196 ] Until Janae turns 15, parental consent will be required for all work. Between ages 15-17, parental consent is required only for work during “restricted hours.” See the Employment Standards Code ,

Part 2, Division 9 and

Part 5 of the Employment Standards Regulation . I discerned no exemption for work for parents (e.g., no “farm and ranch” exemption under s. 2.1 of the Code was engaged). [ 197 ] The parties have shared parenting, week on/week off. Given that Janae is 13 and cannot drive herself, Janae’s employment obligations could have a practical effect on each parent’s time (e.g. to get her to work). 3. Evidence [ 198 ] The Defendant confirmed that if Janae works for him he will facilitate her transportation to work. 4.

Assessment [ 199 ] The order sought by the Plaintiff is rigid, complex, and over-broad (“acknowledging that this is not an exhaustive list”). [ 200 ] However, I do recognize, first, that a 13-year old might find it difficult to say No to working for a parent, and second, that if Janae worked regularly for the Defendant, that could be a practical imposition on the Plaintiff during her parenting time. [ 201 ] In my opinion, the appropriate order is as follows: The parties shall respect Janae’s wishes respecting her employment. If Janae works for the Defendant, he shall be responsible for her transportation to work.

If the Defendant cannot transport Janae personally, she may only be transported by third parties or in a manner agreed to by the Plaintiff. [ 202 ] Janae can advise her mother of her hours of work as she would if she were working for any other employer. B. Clothing [ 203 ] The Plaintiff sought the following order: 7. Janae’s clothing will follow Janae’s living arrangements. [ 204 ] The Defendant did not oppose this order (essentially, his view was that she is old enough to manage her clothes without court order). He had not realized there was an issue until the November

[…]