Angelova v Castellanos, 2023 ABKB 694

Court of King’s Bench of Alberta Citation: Angelova v Castellanos, 2023 ABKB 694 Date: 20231207 Docket: 4803 178806; FL03 62509 Registry: Edmonton Docket: 4803 178806 Between: Jordanka Angelova Plaintiff/Applicant/Cross-Respondent - and - Mauricio Castellanos Defendant/Respondent/Cross-Applicant Between: Docket: FL03 62509 Merlin Perez Plaintiff/Applicant - and - Mauricio Castellanos Defendant/Respondent/Cross-Applicant

_______________________________________________________ Reasons for Decision of the Honourable Justice B.H Aloneissi _______________________________________________________ Procedural History [ 1 ] Child support applications by both Dr. Jordanka Angelova and Ms. Merlin Perez, as well as a Cross-Application by Mr. Mauricio Castellanos for relief from same were consolidated into a Special Family Chambers hearing, which I heard on May 24, 2023. [ 2 ] After the hearing and prior to the finalization of these Reasons for Decision, I requested that counsel provide updated income information for their respective clients.

In response, Ms. Perez provided her pay stub for the pay period end date November 3, 2023. Mr. Castellanos and Dr. Angelova provided their respective 2022 Income Tax Returns and Notices of Assessment. As will become clear in my reasons, I am only able to provide an interim order due to conflicting evidence, therefore this further information will have to be more fully factored in later, during any final determination of child support. Background - The Children & Current Child Support [ 3 ] Mr. Castellanos has a total of 3 children.

Two children, S (born 2011, age 12) and N (born 2017, age 6) resulted from his relationship with first wife, Dr. Angelova. They were married on August 14, 2004, separated in 2016 and were divorced pursuant to the Divorce Judgment granted October 16, 2018. [ 4 ] S and N primarily reside with Dr. Angelova. Mr. Castellanos is entitled to a minimum of 25 days per year of parenting time with S and N, until February 2024, at the discretion of Dr. Angelova. Because at the relevant time Dr. Angelova earned a sizeable income as a medical doctor, the parties agreed that Mr.

Castellanos did not have to pay child support from the date of separation in 2016 until February 28, 2021. He has not paid any child support for S and N to date. [ 5 ] Additionally, Mr. Castellanos has a son, F (born 2017, age 6), with Ms. Perez. The parties cohabited between approximately June 2018 and April 3, 2020. Pursuant to an Interim Consent Order granted on February 9, 2021, Mr. Castellanos and Ms. Perez have a shared parenting arrangement with respect to F (Parenting Order). Mr. Castellanos was ordered on June 17, 2021, to pay Ms. Perez child support of $750 per month for F (Child Support Order).

However, that Child Support Order has been stayed pending the outcome of these Applications. [ 6 ] Mr. Castellanos has since re-partnered for a third time. He and his new partner were married in June 2021. Issue [ 7 ] The primary issue for determination is whether income should be imputed to Mr. Castellanos for child support purposes. The Evidence Dr. Angelova [ 8 ] Dr. Angelova is a medical doctor with her own practice located in Edmonton. [ 9 ] Since March 1, 2021, Dr. Angelova has been paying Mr.

Castellanos spousal support of $1,500 per month pursuant to the Consent Variation Order, granted on February 22, 2021 (Consent Variation Order). Her spousal support obligation is scheduled to cease effective February 1, 2026. In addition, the Consent Variation Order provides that Dr. Angelova is to pay Mr. Castellanos lump sum spousal support in the amount of $100,000. [ 10 ] The Minutes of Settlement Agreement Dr. Angelova and Mr. Castellanos entered into on February 21, 2021 (Agreement), provides that Dr. Angelova is to pay Mr.

Castellanos $370,000 in full and final satisfaction of all claims he may have to a division of matrimonial property. [ 11 ] In 2021, Dr. Angelova therefore paid Mr. Castellanos lump sum payments totalling $470,000. He used $310,000 of this money to purchase a house in St. Albert, which he describes as a fixer-upper, and which he claims was purchased to be closer to his children. The house is mortgage free.

Ms. Perez [ 12 ] Ms. Perez is originally from Venezuela. She practiced as a dentist in that country and owned her own dental practice. Ms. Perez attests in her Affidavit sworn February 18, 2022, that she sold her dental practice on January 5, 2022 for $9,000 USD. She is not providing dental services in Canada as she has not qualified to practice dentistry in this country. Mr. Castellanos [ 13 ] Mr. Castellanos, who is originally from El Salvador, is currently 51 years of age. He graduated from the University of Alberta in 2008.

He has a Commerce Degree with a concentration on strategic management and organizational analysis. Mr. Castellanos has been a licensed real estate agent since 2015. He is an agent with Royal LePage and primarily sells real estate in St. Albert and the Greater Edmonton area. He deposes, and the record shows, that he earned nominal real estate commission income between 2017 and 2021. [ 14 ] Mr.

Castellanos’ employment history also includes working as a corrections officer in 1999-2000, working in the automobile industry at a Toyota and a BMW dealership, including as a sales manager, and briefly as an administrator for Dr. Angelova’s professional corporation. [ 15 ] Mr. Castellanos claims to have been a stay-at-home parent during his marriage to Dr. Angelova, with her joint agreement, after their first child S was born. He deposes in his Affidavit sworn February 11, 2022, that he has not worked in a full-time capacity since 2001.

He says he was unemployed for years prior to the breakdown of their marriage. [ 16 ] Dr. Angelova disputes Mr. Castellanos’ assertion that he was a stay-at-home parent. She points to his penchant for travelling on his own, without her and the children, since 2012, including trips to Cuba, El Salvador, Vietnam, and Costa Rica. In addition, after their first child S was born, there were periods of time that she only worked a maximum of 16 hours per week. She says that when she was at work, S was at a day home. [ 17 ] Mr. Castellanos has continued to travel abroad since separating from Dr. Angelova.

The extent to which he has travelled since 2016 is relevant to the issue of whether income should be imputed to him for child support purposes and to his means for the purpose of ss 9 and 10 of the Guidelines. Mr. Castellanos’ Travels to South America in 2019 to 2022 [ 18 ] According to answers given to his undertakings, Mr.

Castellanos travelled to Bogota, Colombia on April 18, 2019, and November 28, 2019, although he claims to have only spent two to three nights in Bogota before returning to Edmonton. [ 19 ] The evidence also indicates that in the fall of 2020, he travelled to Colombia for over three weeks. [ 20 ] According to Mr. Castellanos’s Affidavit evidence, he arrived in Colombia on yet another trip on March 10, 2021.

After he crossed the border into Venezuela, he was detained in prison from March 13, 2021 until May 13, 2021, for a total of 62 days (not 55 days as indicated in his materials assuming his dates are correct) on an allegation that he engaged in illicit immigration and illegal human trafficking. [ 21 ] After he was released from custody, Mr. Castellanos spent time travelling in Colombia with his new partner. They were married by the ocean before he returned to Canada on or about June 6, 2021.

The following month, July 2021, he again travelled to Colombia. [ 22 ] In January to February, August, as well as November of 2022, Mr. Castellanos travelled to Colombia likely for the purpose of solidifying his relationship with his new partner. Positions of the Parties [ 23 ] Dr. Angelova submits that income of $75,000 should be imputed to Mr. Castellanos for child support purposes. She argues he appears to not be working full-time and he is earning less than what he is capable of earning given his business and educational credentials. She deposes that Mr.

Castellanos’ capacity to work and ability to earn a reasonable income has been deliberately compromised by his multiple trips to South America over the last few years. [ 24 ] Ms. Perez is seeking to have an income of $110,000 imputed to Mr. Castellanos retroactive to 2020 and ongoing. She argues Mr. Castellanos has significant financial resources available to him which permit him to not have to work full-time and to travel internationally extensively for pleasure. She complains Mr.

Castellanos has made little effort to obtain gainful employment that is commensurate with his education and abilities. [ 25 ] It is also Ms. Perez’s position that the conditions, means, needs, and other circumstances of each parent and their child F do not justify granting Mr. Castellanos a set-off of the child support amount otherwise payable under s 9 of the Guidelines. [ 26 ] Mr. Castellanos’ position is that his historical annual income should be used to determine his Guideline income. His total annual income since 2016 has not exceeded $35,000. As for Ms.

Perez’s Guideline income, he complains she has not disclosed all sources of her income, including the income she receives from the dental practice she owned in Venezuela. He seeks to have child support be based upon each party’s “actual income earnings.” [ 27 ] Mr. Castellanos further contends that if he were ordered to pay full s 3 child support to each of Dr. Angelova and Ms. Perez,

he would suffer undue hardship. Ms. Perez questions on what basis Mr. Castellanos would qualify for undue hardship under s 10 of the Guidelines. She argues his financial disclosure indicates that he is able to meet his monthly financial obligations without difficulty. [ 28 ] Further, Mr. Castellanos contends he suffers from trauma and PTSD because of the conditions he was forced to endure while detained in the prison compromising his ability to work.

Analysis Preliminary Issue [ 29 ] Before I can address the substantive issues, I must first address a preliminary issue: whether a determination of the substantive issues can be made based upon the paper record before me. [ 30 ] The parties’ respective affidavit evidence contains disputed facts and conflicts on some issues, including but not limited to the following: • Whether Mr. Castellanos rents out any part of his home in St. Albert. • Whether Mr.

Castellanos has had F in his care more than 40% of the time for the purpose of s 9 of the Guidelines since he returned from South America in June 2021. • The extent to which Ms. Perez has received revenue and profits from her dental practice located in Venezuela since moving to Canada, and whether Ms. Perez has sold her dental practice in Venezuela and for how much. [ 31 ] The Alberta Court of Appeal has repeatedly held that it is an error for a chambers justice to make credibility assessments and to determine material factual issues on the basis of conflicting affidavit evidence.

See for example: Nieuwesteeg v Barron , 2009 ABCA 235 at paras 9-11 [ Nieuwesteeg ] ; Hartley v Del Pero , 2010 ABCA 182 at paras 9 , 13-16 and 29 [ Hartley ]; Rensonnet v Uttl , 2014 ABCA 304 at para 10 ; Charles v Young , 2014 ABCA 200 at paras 3-5 [ Charles ] ; LRS v SSD , 2020 ABCA 206 at para 19 ; and Sochowski v Sochowski , 2020 ABCA 59 at para 15 [ Sochowski ]. [ 32 ] In Hartley , in allowing the appeal, the Alberta Court of Appeal said at para 14: Litigants, especially those in family disputes, are always aware of the cost of litigation. The cost of a full, formal trial is of particular concern.

It is therefore not surprising that family law litigants, and some chambers judges, attempt to achieve finality in special chambers applications whenever that is possible and fair. However, where the record is permeated with credibility issues and disputed facts that is often simply not possible.

A special chambers application should not be used as a substitute for a trial in those cases. [ 33 ] In Charles , the Court of Appeal cautioned at para 5: While we can understand the desire to bring closure to this long-standing matter, that cannot take precedence over conducting a hearing in a procedurally correct fashion which permits application of the required legal analysis. The affidavits and cross-examinations on affidavits do not resolve all of the conflicts.

There are serious questions of credibility that will require careful assessment of viva voce testimony by a trier of fact; therefore, the proper course would have been to direct an oral hearing to resolve the conflict. [ 34 ] The Court continued at para 8: It is the hearing judge’s responsibility to ensure proper process is followed, whether or not counsel raise it or consent to a different process.

To do otherwise may result in a disservice to litigants who then may face an appeal and ultimately further delay and expense in yet another hearing. [ 35 ] Conversely, the Alberta Court of Appeal has clarified that if a justice finds they can make a fair and just determination on the basis of the evidence filed, then the application can and should proceed without oral evidence.

Where a justice “can make the necessary fact findings based on affidavit evidence, and apply the law to those facts, the resulting process can be more proportionate, more expeditious and less expensive, and is to be encou raged” : Sandhu v Siri Guru Nanak Sikh Gurdwara of Alberta , 2015 ABCA 101 at paras 79-81 and Krauss v Krauss , 2019 ABQB 346 at paras 4-6 . [ 36 ] I note that neither party asked for leave to provide viva voce evidence, nor did they argue that oral evidence was necessary to determine the issues in dispute.

Nonetheless, I am concerned the parties are attempting to use Special Family Chambers as a substitute for a trial and are each essentially seeking final orders on their initial applications for child support which the Court of Appeal has cautioned against. [ 37 ] In Kerslake v Kerslake , 2016 ABCA 150 , the Court of Appeal overturned what purported to be a final order regarding retroactive child and spousal support. The Court of Appeal advised it is not open to the chambers justice to make final orders: at para 5. The Court opined that granting a final order was, in effect, granting

summary judgment, which is not a procedure allowed for in most family law matters under r 12.48 of the Alberta Rules of Court, AR 124/2010 ( Rules ): at para 5. See also: Linder v Botterill , 2018 ABCA 126 at para 24 and Kriaski v Kriaski , 2015 ABQB 730 at paras 2-3 . [ 38 ] There are credibility issues and disputed facts in the affidavit evidence and the paper record before me lacks some essential information, for example, with respect to the mental health issues Mr. Castellanos alleges he suffered as a result of being detained in a Venezuelan prison in 2021.

I am therefore prevented from fulsomely considering whether and what amount of income should be attributed to either Mr. Castellanos or Ms. Perez under s 19(1) of the Guidelines, retroactive to May 1, 2020. Viva voce evidence is required.

[39] I am, however, satisfied that I can make a further interim, without prejudice, determination with respect to child supportretroactive to January 1, 2022, based upon the imperfect paper record before me: Leontowicz v Leontowicz, 2020 ABCA 324 at para 9[Leontowicz]. There is sufficient evidence with respect to Mr. Castellanos’ earning capacity, his earnings from his real estate practice andhis recent travels to South America to enable me to determine whether additional income should be attributed to him under s 19(1)(

a) ofthe Guidelines and the test/framework articulated by the Alberta Court of Appeal in Peters v Atchooay, 2022 ABCA 347 [Peters]. [40] Regarding the issue of whether Mr. Castellanos and Ms. Perez have had a shared parenting arrangement since June 2021, vivavoce evidence is required to resolve this issue. It should be left for determination at trial. As well, the issue of the parenting arrangementsfor F was not included as an issue in the Applications before me. Having not been formally varied, the Parenting Order remains in fullforce, and I will therefore proceed on the basis that Ms. Perez and Mr.

Castellanos continue to share parenting of F in accordance withthat Order. [41] The trial judge can determine whether additional income should be imputed to a party, and how far back, as well as make anynecessary additional retroactive adjustments back to 2020 to the amounts of s 3 and s 7 child support payable. See for example:MacMinn v MacMinn (1995), (AB CA), 174 AR 261, 17 RFL (4th) 88 (Alta CA); Lapp v Lapp, 2008 ABCA 15 atpara 19; Hartley at para 9; Durocher v Klementovich, 2013 ABCA 115 at para 20; Davies v. Davies, 2015 ABCA 17 at paras 5 and 6;Leontowicz at para 9. Substantive Issues (

a) Should income be imputed to Mr. Castellanos for child support purposes? Obligation to Support Ones Children [42] Children have a fundamental right to child support and parents have an obligation to support their children financially: Petersat para 71 [Peters].

A parent is required to act in a manner reflective of their financial obligations to their children and cannot be excusedfrom these obligations: Mohamud v Abdullahi, 2023 ABKB 371 at para 39 [Mohamud]. [43] The Guidelines expressly set out that one of its objectives is “to establish a fair standard of support for children that ensuresthat they continue to benefit from the financial means of both spouses after separation” (emphasis added). [44] The fundamental obligation of a parent to support their children takes priority over the parent’s own interests and choices:Cowan v Cowan, 2018 ONSC 2495, at para 30 citing Duffy v Duffy, 2009 NLCA 48; Mohamud at para 13. “A parent’s personal goalsand life-style choices do not take priority over their obligation to financially support their children”: Peters at para 71. [45] Thus, while Mr.

Castellanos is free to make his own choices with respect to how he lives his life, his choices are constrainedby his legal obligations to his three children. [46] Moreover, the amount of s 3 child support payable is not determined based upon the financial needs of the child. The AlbertaCourt of Appeal clarified in Brear v Brear, 2019 ABCA 419 at para 18: The Guidelines regime is decidedly child-centered, recognizing that child support is the right of the child.

The Guidelines simplify childsupport awards by making the quantum of support dependent not on need, but on the income of the payor parent and the number ofchildren to support: DBS at para 44. Parents have an obligation to support their children in a fashion that is in direct proportion to theirincome, and this obligation exists independent of any statute or court order. See also: Henderson v Micetich, 2021 ABCA 103 at para 37 [Henderson] [47] Thus, regardless of whether Dr. Angelova earns substantially more than Mr. Castellanos, he still has an obligation to supportS and N.

Child support is a legal obligation on the part of both parents: Henderson at paras 44 and 62. Determination of Guideline Income [48] A party’s Guideline income is determined by the Court in accordance with ss 16 to 20 of the Guidelines.

Section 16 states: 16 Subject to s 17 to 20, a parent’s annual income is (

a) determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the CanadaRevenue Agency, and (

b) adjusted in accordance with

Schedule 3. Dr. Angelova’s Guideline Income [49] Dr. Angelova’s Guideline income was set at $300,000 in the Consent Variation Order. Based upon her Income Tax Return in2020, her actual income was $284,000 inclusive of the taxable amount of Canadian dividends in the amount of $115,000. In 2021, herLine 15000 income was $176,000, which includes the taxable amount of Canadian dividends in the amount of $23,000. Of note, theFinancial Statements for Dr.

Angelova’s Professional Corporation show greater revenue earned in 2021 than in 2020, yet her T4 incomewas much lower. [50] In her Affidavit sworn November 25, 2022, Dr. Angelova estimated that her 2022 income would be $150,000. Her 2022Income Tax Return was not produced prior to the Special Family Chambers hearing. At my request, on November 16, 2023, Dr.

Angelova provided a copy of her 2022 Income Tax Return and Notice of Assessment. It shows Line 15000 income of $166,334. [ 51 ] In a letter to my attention dated November 20, 2023, counsel for Mr. Castellanos noted that Dr. Angelova had not provided the Financial Statements for her professional corporation and that these Statements may be pertinent for s 7 expense purposes. [ 52 ] Financial Statements are part of the disclosure that should be provided by a parent who solely owns or holds shares in a corporation. The Financial Statements for her medical professional corporation should be produced by Dr.

Angelova, as recognized by her counsel in his letter to this Court dated November 20, 2023. However, as they may elicit the need for questioning, viva voce evidence, and Sweezey and/or Cunningham disclosure, and in order to avoid delaying the release of his decision any further, I will leave the issue of whether any pre-tax corporate income should be added to Dr. Angelova’s Guideline income to the trial judge. [ 53 ] For the purpose of this interim, without prejudice child support decision, I set Dr. Angelova’s Guideline income in 2022 at $166,334. Ms.

Perez’s Guideline Income [ 54 ] According to her Notices of Assessment, Ms. Perez’s Line 15000 income in each of the years 2020 to 2022 were as follows: $11,226 (2020), $42,901 (2021) and $51,406 (2022). The pay stubs from Strathcona Child Development Centre attached to her Affidavit sworn April 13, 2023, show Ms. Perez had total gross earnings of $14,698.03 as of March 24, 2023. Her most recently produced paystub shows total gross earnings of $44,788.02 as of November 3, 2023. Prorated over the course of the year, Ms. Perez’s projected income is approximately $53,000 in 2023. I therefore set Ms.

Perez’s income in 2023 at $53,000. Mr. Castellanos’ Guideline Income [ 55 ] For 2020, Mr. Castellanos’ Income Tax Return shows the receipt of spousal support payments totalling $27,504.42, other income totalling $15,146 (comprised of Emergency Isolation Support and presumably CERB), and a net commission income loss of $6,324.18, for total Line 15000 income of $36,326.24. I note he reported earning no commission income in 2020. His Notice of Assessment shows Line 15000 income of $36,326. [ 56 ] For 2021, Mr.

Castellanos’ Income Tax Return shows spousal support received of $19,000, $3,000 in CERB payments (other income) and $1,534.82 in net real estate commissions ($8,400 gross commission income according to his T4A), for total Line 15000 income of $23,534. [ 57 ] The Operating Account Statements from Royal LePage show Mr. Castellanos earned commissions on the purchase/sale of two properties in 2021. The largest gross commission ($6,650) was earned on the purchase of his own home in St. Albert. (See Exhibit “G” attached to Dr.

Angelova’s Affidavit sworn November 25, 2022). [ 58 ] At the time of the hearing of the Applications, the only evidence of Mr. Castellanos’ income in 2022 was the Operating Account Statement dated December 12, 2022 (Exhibit “I” attached to Mr. Castellanos’ Affidavit sworn January 31, 2023). It showed gross earnings of $42,606.25 and net pay of $40,912.00 after deduction of certain fees and addition of GST. In his Concise Letter, Mr. Castellanos’ submitted deductions for expenses would be “at least $6324 as per his 2020 year.” As a side note, Mr.

Castellanos’ 2020 Income Tax Return does not list commissions paid and a franchise fee as a business expense. [ 59 ] At my request, on November 15, 2023, Mr. Castellanos provided a copy of his 2022 Income Tax Return and Notice of Assessment. His Line 15000 income was $42,745. His Income Tax Return shows spousal support received of $18,234.20 and net commission income of $24,511.86. Mr. Castellanos claimed business expenses totalling $18,094.39, inclusive of commissions paid and a franchise fee. [ 60 ] In determining Mr.

Castellanos’ Guideline income in 2022, I have elected to use the franchise fee reflected in his December 12, 2022 Operating Account Statement instead of the fee reflected on his 2022 Income Tax Return as there is no explanation before this Court for the increase in the fee from $937.34 to $1,623 between December 12, 2022 and December 31, 2022. [ 61 ] I have decided to deduct from Mr. Castellanos’ gross real estate commission income earned in 2022 additional business expenses of $6,324, per his counsel’s Concise Letter, for the following reasons: (

a) Sweezey and/or Cunningham disclosure may be required to ascertain whether any of the business expenses claimed by Mr. Castellanos on his 2022 Income Tax Return (2022 business expenses) personally benefited him. (

b) Questioning and/or viva voce evidence may be required on the 2022 business expenses. (

c) The parties have not had the opportunity to make submissions on whether any of the 2022 business expenses personally benefited Mr. Castellanos. [ 62 ] Mr. Castellanos’s 2022 business expenses need to be explored more fully at trial. [ 63 ] For this interim, without prejudice decision, I set Mr. Castellanos’ real estate commission income at $33,041 in 2022, calculated as follows: $42,606.25 Gross commission -$2,394 Deal fee -$937.34 Franchise fee per Operating Account Statement $6,234 Additional business expenses

$33,041 Net commission [ 64 ] On November 20, 2023, Mr. Castellanos’ counsel provided a copy of an Operating Account Statement dated September 12, 2023, showing year to date commission earnings of $11,209.52. No evidence was provided as to his business expenses incurred in 2023, except for what is shown on the Statement. [ 65 ] In regard to the spousal support payments Mr. Castellanos receives, s 3 of

Schedule 3 of the Guidelines specifies: Spousal or adult interdependent partner support 3 To calculate income for the purpose of determining an amount under an applicable table, deduct (

a) the spousal or adult interdependent partner support received from the other parent, and (

b) any universal childcare benefit that is included to determine the other parent’s total income in the T1 General form issued by the Canada Revenue Agency. [ 66 ] Ms. Perez is not “the other parent” who is paying Mr. Castellanos spousal support. Based upon a plain reading of s 3 of

Schedule 3 of the Guidelines , the amount of spousal support Mr. Castellanos receives from Dr. Angelova can be included in the determination of his Guideline income in Action No FL03 62509. It should not be included in the calculation of his Guideline income in Action No 4803 178806. [ 67 ] Dr. Angelova is seeking to impute an income of $75,000 to Mr. Castellanos. [ 68 ] Ms. Perez’s Family Application indicates she is seeking to impute an income of $75,000 to Mr. Castellanos. However, her counsel’s Concise Letter dated April 27, 2023, proposes that an income of $110,000 should be imputed to him.

In the year 2020, this number is based upon the $54,000 he received from the sale of a Porsche in August 2020, imputed rental income, miscellaneous deposits into his Scotiabank account totalling $28,174.47, and the spousal support payments he received from Dr. Angelova, which totalled $29,281.93. [ 69 ] As for the year 2021, Ms. Perez notes Mr. Castellanos received a total of $470,000 as part of his property and spousal support settlement with Dr. Angelova. She contends he is not properly utilizing his property settlement to generate income.

He used $310,000 of the amount he received to purchase a mortgage-free house in St. Albert. Test for Imputation of Income [ 70 ]

Section 19 of the Guidelines lists the circumstances where a court may impute income to a party. The relevant subsections state as follows: s 19(1) The court may impute the amount of income to a parent that it considers appropriate in the circumstances, and those circumstances include the following: (

a) the parent is intentionally under-employed or unemployed, except where the under-employment or unemployment is required by the needs of a child of the parents or any child under the age of majority or by the reasonable educational or health needs of the parent; (

e) the parent’s property is not reasonably utilized to generate income; (

f) the parent has failed to provide income information when under a legal obligation to do so; [ 71 ] The law in Alberta in relation to the test for when income can be imputed to a party under s 19(1)(

a) changed with the Alberta Court of Appeal’s decision in Peters . A five-member panel overturned the previous authority in Hunt v Smolis-Hunt , 2001 ABCA 229 [ Hunt ]. In Hunt , the party seeking to have income imputed to the other had the onus of establishing deliberate evasion on the part of the payor parent.

Peters brought Alberta in line with other provincial authorities and replaced the “deliberate evasion test” with a “reasonableness” standard for determining imputation. [ 72 ] The framework for establishing whether income should be imputed to a party is laid out in para 60 of Peters : The following analysis will apply when the issue of under-employment or unemployment and possible imputation of income is raised under s 19(1)(a): 1. Is the parent in question intentionally under-employed or unemployed? Imputation of income is not available under s 19(1)(

a) where the under-employment or unemployment arises through circumstances truly beyond the control of the payor, and thus involuntary. Examples include lay-offs, reduced hours, or termination without cause. (At some point, however, the continued under-employment or unemployment may become unreasonable for purposes of s 19(1)(a), making imputation of income available). Moreover, even ostensibly “voluntary” decisions to make less money than in the past will not always amount to “under-employment” where factors like age mean that present and future earning capacity is being met but is less than past earning capacity. 2. Do the listed exceptions to imputation in s 19(1)(

a) apply? Is the under-employment or unemployment required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse? These exemptions are not intended to be automatic or permanent, and their availability will depend on the circumstances of the case: Spring v Spring , 2022 ABCA 19 at para 18 . The factors set out in Demers v Moar , 2004 ABCA 380 at para 21 provide a useful starting point for the consideration of the “needs of the child” exemption in the context of parental leaves and child-care requirements of young children. 3.

Should judicial discretion to impute income be exercised? If the under-employment or unemployment arises from voluntary choice

and the listed exceptions to imputation do not apply, the court may exercise its mandate to impute income under s 19(1)(a). However, because this is discretionary, the question of whether to impute income (and if so, how much) involves determining if the voluntary under-employment or unemployment was reasonable, having regard to all the circumstances. [ 73 ] The factors for assessing earning capacity include age, education, experience, skills, and health and other criteria, for example, the availability of work, choice to relocate, and other obligations.

The weight to be given to each factor is left to the trial judge having regard to the objectives of the Guidelines . [ 74 ] At para 63, the Court of Appeal explained: With initial applications, financial disclosure is often missing or incomplete, in which case the court will estimate income under s 19(1) (f). If financial disclosure is complete, a person seeking an imputation of income under s 19(1)(

a) has an initial onus to establish an evidentiary basis for the imputation sought. This acts as a preliminary screening mechanism and helps focus the court’s analysis. Where a prima facie case for imputation is made out, the onus shifts to the person opposing imputation to defend the actual income claimed: Julien D. Payne & Marilyn A.

Payne, Child Support Guidelines in Canada, 2022 (Toronto: Irwin Law, 2022) [Payne] at 185; Homsi v Zaya , 2009 ONCA 322 at para 28 ; Zapiola at para 36 ; Horbas at para 34 ; Drover v Drover , 2020 NLCA 9 at paras 12-27 . [ 75 ] Establishing a prima facie case may be more difficult where there is no income history, the allegation being instead that the prospective payor has been perpetually under-employed. It may require evidence of the payor’s capacity to earn income, including age, education, experience, skills, and availability of work.

See: Peters at para 64 . [ 76 ] The party opposing imputation must prove on a balance of probabilities that first, the under-employment or unemployment was not voluntary; or second, the under-employment or unemployment is because of one of the s 19(1)(

a) exceptions. If neither of those two factors apply, that party must establish on a balance of probabilities, that their under-employment or unemployment is reasonable having regard for all the existing circumstances: Shumate v Patrick , 2023 ABKB 98 at para 45 . [ 77 ] The Court of Appeal specified in para 67 of Peters , the evidence required on an application to impute income to a prospective payor: Each stage of the analytical framework outlined above requires credible and cogent evidence that is as objective as possible. Bare assertions will generally be inadequate.

For example, if the under-employment or unemployment is due to the payor’s health concerns, medical evidence will generally be required for the entire duration of time in question. If the payor argues the under-employment or unemployment results from circumstances beyond their control, they must provide evidence of efforts to find alternate employment. The evidence should be aimed at establishing the payor’s capacity to earn income at all points in the applicable timeframe: the date of the order in effect, the date of the variation application, and during the years in-between for which a variation is sought.

At minimum, establishing employment capacity includes evidence of the payor’s age, technical skills, education, health, and work history, and the realities of the labour market. [ 78 ] As noted in Mohamud , there are some post- Peters decisions from the Court of King’s Bench which discuss the evidence required to successfully resist imputation of income.

For example, in Shumate , at paras 46 – 48 , the Court states: The evidence should focus on the payor’s capacity to earn income at all points in the applicable timeframe: the date of the order in effect, the date of the variation application, and during the years in between for which a variation is sought. At a minimum, establishing employment capacity includes evidence of payor’s age, technical skills, education, health, work history, and realities of the labour market.

As the Court of Appeal stated at para 67 of Peters , under-employment, or unemployment due to the payor’s health concerns would generally require medical evidence for the entire duration of time in question. Furthermore, in considering circumstances beyond the payor’s control, the payor must provide evidence of efforts to find alternate employment.

An employment decision that results in a significant reduction of child support needs to be justified in a compelling way. [ 79 ] In Ma v Xu , 2023 ABKB 346 , the Court said at para 60 : Cogent, credible, and objective evidence is required, rather than bare assertions: Peters at para 67 . The evidence should focus on the payor’s earning capacity, such as age, technical skills, education, health, work history, and the realities of the labour market.

Evidence of efforts to find alternative employment for the entire duration in question is also required. [ 80 ] Peters summarizes at para 92 several principles intended to guide the determination of whether to impute income under s 19(1)(

a) of the Guidelines . The following principles are important in this case: 1. General Duty to Work. There is a duty to seek employment where a parent is healthy and can work. A parent’s limited work experience or job skills do not justify a failure to pursue lower skilled employment or employment in which the necessary skills can be learned on the job. While this may mean a job at the lower end of the wage scale, parents cannot refuse to take reasonable steps to support their children simply because they cannot obtain interesting or highly paid employment.

Nor can a high-earning or highly skilled parent refuse employment indefinitely by holding out for employment commensurate with their skills and previous level of earning, job title or seniority. 2. Earning Capacity Used to Assess Reasonableness. When determining whether to impute income on the basis of under-employment or unemployment, a court must consider what is reasonable in the circumstances. The starting point is the payor’s earning capacity, which is the objective measure by which the reasonableness of the parent’s decision or conduct is assessed.

Earning capacity is determined based on factors like age, education, experience, skills, and health of the payor, along with availability of work, the freedom to relocate, and other obligations.

3. Obligation to Support Children is the Overarching Goal. The reasons for under-employment or unemployment must be objectively scrutinized. A parent is required to act in a manner reflective of his or her obligations and cannot be excused from support obligations in furtherance of unrealistic, unproductive, or non-remunerative career aspirations. Persistence in unremunerative employment or repeated education initiatives may also entitle the court to impute income. Parental self-fulfillment is a consideration but does not trump child support requirements. 7.

The Ultimate Onus Rests on the Party Opposing Imputation. Assuming the financial disclosure requirements have been met, the onus is on the party opposing imputation to prove on a balance of probabilities: 1) that the under-employment or unemployment was not voluntary, that is, not due to their own decision or conduct; or, 2) that the under-employment or unemployment is as a result of one of the listed exceptions in s 19(1)(a).

If neither circumstance applies, that party must establish on a balance of probabilities that their under- employment or unemployment is reasonable, having regard to all the existing circumstances. However, where it is an initial application, the person seeking an imputation of income under s 19(1)(

a) has a preliminary onus to establish some basis for the imputation sought. Either way, each stage of the analysis requires evidence that is as objective as possible. Bare assertions will not suffice. Imputation Determination [ 81 ] To some extent, Mr. Castellanos has not provided full and complete financial disclosure, despite his ongoing statutory obligation to do so and the direction contained in the Endorsement dated November 10, 2021.

For example, he has not produced his full Income Tax Returns for the years 2020 and 2021 and, as previously indicated, this Court was not provided with a copy of his 2022 Income Tax Return and Notice of Assessment until November 15, 2022. [ 82 ] Mr. Castellanos also appears to be deficient with respect to answers to his undertakings given during his Cross-Examination. The undertakings would have provided information with respect to Mr. Castellanos’ past employment history, when he has travelled out of the country since 2018 and for how long, and his income in 2021 and 2022. [ 83 ] In addition, Mr.

Castellanos has failed to report on his Income Tax Returns the rental income he receives from renting out a condominium located in downtown Edmonton, which he has owned since 2017. By way of undertaking, Mr. Castellanos produced a Fixed Term Tenancy Agreement, signed on October 17, 2022, showing the monthly rent for his condominium is $1,250. Previous Tenancy Agreements were not provided. He deposes that after paying the mortgage payments, which I note are $248.09 bi-weekly, condominium fees, property taxes, repairs, insurance, and other miscellaneous expenses there is little rental income left over.

As well, he advises there were months where the condominium was vacant, and he still had to pay for the carrying costs. Even if his net rental income is negligible, Mr. Castellanos is still required to report both his gross rental income and the associated expenses on his Income Tax Return. [ 84 ] Both Dr. Angelova and Ms. Perez suspect the renters of his condominium are paying Mr. Castellanos cash “under the table.” Dr. Angelova further contends Mr. Castellanos is renting out the condominium for less than fair market value. [ 85 ] According to Dr. Angelova, Mr.

Castellanos may also have a tenant living in his house in St. Albert. She suspects the tenant pays his rent in cash. Mr. Castellanos denies that he is renting any part of his St. Albert house out. [ 86 ] Neither Dr. Angelova nor Ms. Perez have disclosed in their respective Affidavits, the basis for their belief that Mr. Castellanos is in receipt of cash rental payments. As well, Dr. Angelova has not submitted evidence to enable me to determine what an appropriate rental rate would be for either the condominium or Mr. Castellanos’ house.

Her suggestion in para 11 of her Affidavit sworn April 10, 2023, that “rents in the area just west of downtown are being commanded in the range of $2,000 plus a month” is a bare assertion. She has not provided any back-up support for this assertion, such as advertisements for the rent of similar condominiums in the same area or close-by. Viva voce and/or cogent and objective evidence is required. [ 87 ] Where financial disclosure is incomplete, I have authority to impute income to Mr. Castellanos under s 19(1)(

f) of the Guidelines. I also have the authority to impute income under s 19(1)(

e) when a party’s property is not reasonably being utilized to generate income. However, I am not prepared to impute rental income to Mr. Castellanos under either provision based upon the evidentiary record before the Court. I leave this issue to the determination of the trial judge. [ 88 ] I will next turn to the issue of whether income should be imputed to Mr. Castellanos under s 19(1)(

a) of the Guidelines. In determining whether there is a prima facie case for imputation of income under this subsection, I must consider Mr. Castellanos’ capacity to earn an income, including his age, education, experience, skills, and the availability of work. [ 89 ] Mr. Castellanos is currently 51 years of age. He has a Commerce Degree. He is a licensed real estate agent and apparently, sells real estate in St. Albert and the greater Edmonton area for Royal LePage.

He claims to have been trying to build a career as a realtor since he obtained his license in 2015. [ 90 ] His non-realtor experience includes correctional, sales, and administrative positions. It appears Mr. Castellanos has worked very little since his daughter S was born. He has sales skills and presumably speaks fluent Spanish. [ 91 ] While there is no evidence regarding the job market and the availability of work for persons with Mr. Castellanos’s education, experience, and skills, I am satisfied that Dr. Angelova and Ms. Perez have established a prima facie case for imputation of income on the basis that Mr.

Castellanos is under-employed and that his reported income is less than what he is capable of earning. [ 92 ] As Mr. Castellanos’ under-employment does not arise through circumstances truly beyond his control, I turn to a consideration of whether any of the listed s 19(1)(

a) exceptions apply. [ 93 ] Even assuming without accepting as true his evidence that he was a stay-at-home parent while married to Dr. Angelova, Mr. Castellanos’ Affidavit evidence insufficiently explains why his parental responsibilities have impeded him from finding full-time employment over the last seven years. S and N have been in Dr. Angelova’s primary care since these parties separated. Mr. Castellanos’

very limited parenting time with S and N does not prevent him from working full-time. See: Peters at para 86 . [ 94 ] While Mr. Castellanos has significantly more parenting time with F than he does with S and N, there is no reason why F cannot attend daycare, during Mr. Castellanos’ parenting time, while he is at work. F is enrolled in daycare during Ms. Perez’s parenting time. As well, F turned 6 years old in September 2023 and is likely attending school full-time now. Before and after school care can be arranged during Mr. Castellanos’ parenting time if necessary. [ 95 ] I am not satisfied that the needs of Mr.

Castellanos’ children justify his under-employment. [ 96 ] There is no evidence that Mr. Castellanos has pursued additional post-secondary studies or other educational training since separating from Dr. Angelova. [ 97 ] As to whether Mr. Castellanos’ health needs impede his ability to work full-time, the Court of Appeal stated at para 67 of Peters , establishing under-employment due to the payor’s health concerns generally requires medical evidence for the entire duration of time in question. [ 98 ] During his questioning under oath on April 28, 2022, Mr.

Castellanos stated he suffered from PTSD as a result of being falsely detained for almost two months in Venezuela. His counsel’s Concise Letter dated April 28, 2023, indicates his PTSD has been diagnosed, however, proof of his diagnosis was not submitted into the evidence or attached to the Concise Letter. [ 99 ] Mr. Castellanos’ Affidavit evidence also speaks to the trauma he experienced as a result of his detention, and the poor living conditions and treatment he endured while imprisoned, including being kept in solitary confinement. [ 100 ] Mr.

Castellanos received counselling at Riverside Edge Counselling Centre. A letter from Riverside, attached to his counsel’s Concise Letter, indicates that he attended 16 counselling therapy sessions between May 9, 2022 and April 16, 2023. I note a letter from Riverside was not attached to Mr. Castellanos’ Affidavit sworn January 31, 2023, even though he had been receiving counselling since May 9, 2022. The letter and receipt do not indicate what mental health concerns were being addressed during the counselling sessions. [ 101 ] There is also no evidence in the paper record before me that Mr.

Castellanos received counselling for mental health reasons between June 6, 2021, after he returned to Canada, and May 9, 2022, a period of over 11 months. [ 102 ] There is therefore no evidence to substantiate that the counselling Mr. Castellanos commenced in May of 2022 was related to the alleged PTSD and trauma he suffered as a result of his detention. [ 103 ] The Concise Letter also attached a document from Alberta Health Services confirming that Mr. Castellanos had an appointment with a psychologist at St. Albert Adult Community Services on April 26, 2023.

There are handwritten notes on the document stating: “Trauma based CBT, EMDR, and Other trauma-based therapies.” [ 104 ] In addition, counsel for Mr. Castellanos attached to her Concise Letter a letter dated February 21, 2023, from Dr. Ibrahim Al Jahash indicating that Mr. Castellanos was seen at the Hys Centre Medical Clinic on February 21, 2023, and advising Mr. Castellanos was unable to work for three months due to “medical reasons”. No other details are given in the letter as to why Mr. Castellanos was unable to work. As well, there is no indication whether Dr. Al Jahash is Mr.

Castellanos’ regular family doctor or just a doctor he saw at a walk-in clinic. Given the lack of information, I attach little weight to this letter. [ 105 ] There is a report attached to the Concise Letter indicating that Mr. Castellanos was tested for snoring and that the technician felt he might have severe obstructive sleep apnea. [ 106 ] Finally, the Endorsement dated October 20, 2022, suggests at para 26 that Mr. Castellanos may have been taking medication and hospitalized at some point of time in 2022. His counsel attached to her Concise Letter prescription receipts from Costco for Tinzaparin Sodium.

There is no explanation in the evidence or in the Concise Letter why he is taking this medication. [ 107 ] While I accept it was likely a traumatic experience for Mr. Castellanos, his detention in the prison occurred over two and half years ago. His PTSD diagnosis was not submitted in the form of an expert report, or even in the form of a letter from the diagnosing doctor. [ 108 ] Moreover, the effects of the trauma and PTSD Mr.

Castellanos experienced were not so severe that he could not travel after he was released in 2021 and in 2022 throughout South and Central America, as well as maintain the emotional reserve needed to pursue a new romantic relationship and re-marry. [ 109 ] Except for the letter from Dr. Al Jahash, which I have attached little weight to, the medical evidence in the paper record does not demonstrate how Mr. Castellanos’ medical and mental health issues impair his ability to work or restrict the jobs available to him. Mr.

Castellanos did not submit into evidence, for example, a vocational assessment/evaluation report opining on his ability to work in any position, whether on a part-time or a full-time basis. [ 110 ] Further evidence and a credibility assessment on the basis of viva voce evidence is required before this Court can make a final determination as to whether Mr. Castellanos suffered from mental health and other medical issues that affected his ability to work after he was released from the Venezuelan prison in May 2021 and for how long. [ 111 ] Mr.

Castellanos’ own evidence demonstrates that he was able to earn significantly more real estate commissions in 2022 than he was in 2021 (2021 = $8,400; 2022 = $42,606.25). I acknowledge that he would not have been able to earn any income during the 62 days he was detained in Venezuela in 2021. [ 112 ] Mr. Castellanos has not sufficiently explained how his mental health difficulties and his medical circumstances currently prevent him from finding employment other than as a casual real estate agent. I am therefore not satisfied that there are currently any

heath barriers which prevent Mr. Castellanos from working on a full-time basis. [113] As Mr. Castellanos’ “medical circumstances” were the only s 19(1)(

a) exception Mr. Castellanos raised, it is open to me as theSpecial Family Chambers Justice to impute income to Mr. Castellanos. See: Peters at para 96. [114] Mr. Castellanos has been a licensed real estate agent since 2015. While I appreciate that the COVID-19 pandemic may havetemporarily negatively affected the real estate market and that inflation and the current interest rates may currently be affecting the realestate market, Mr. Castellanos has not provided any cogent and objective evidence to substantiate his assertions. It is also possible, assuggested by Dr.

Angelova, that the COVID-19 pandemic caused the real estate market to blossom due to the number of people workingfrom home instead of in an office. Moreover, by his own evidence, Mr. Castellanos has earned a meager income from his real estatebusiness since 2016, well before the COVID-19 pandemic commenced, and he earned greater commission income during the pandemicin 2021, then he did in 2018 and 2019. [115] There is little to no evidence regarding the recent efforts Mr.

Castellanos has made to find more lucrative employment,employment that supplements his real estate commission income or to develop his real estate business more successfully. Certainly, hisOperating Account Statement dated September 12, 2023, shows Mr. Castellanos continues to earn a meagre income as a real estate agent.It is not reasonable for a person with child support obligations for three children to continue to pursue unlucrative employment year afteryear. [116] It appears that Mr.

Castellanos would prefer to spend his time and money travelling to South America than to work full-time.His desire to travel does not trump his child support obligations for his three children; his support obligations take priority: Henderson atpara 72; Mohamud at para 13. [117] I am not satisfied, on a balance of probabilities, that Mr. Castellanos’ under-employment is reasonable having regard for all theexisting circumstances. I am therefore satisfied that income should be imputed to Mr. Castellanos under s 19(1)(

a) of the Guidelines. AsI have already determined that on the paper record before me, I can only retroactively adjust child support back to January 1, 2022, I willimpute income to Mr. Castellanos effective that date. (

d) How Much Income Should be Imputed to Mr. Castellanos? [118] On the issue of the amount of income to impute to Mr. Castellanos, a court cannot choose an arbitrary number; “there must be arational basis underlying the selection of any such figure ... grounded in the evidence”: Drygala v Pauli (2002), (ONCA), 29 RFL (5th) 293, 61 OR (3d) 711 (Ont CA) at para 44.

However, if a reasonable figure can be determined in between earningcapacity and actual earnings that is grounded in the evidence, it may be the more appropriate amount to impute in circumstances wherethe payor’s actual income is unreasonable: Peters at para 93. [119] There is no evidence regarding the current job market in Alberta in terms of the availability of jobs for persons with aCommerce Degree and sales experience and skills. Neither Ms. Perez nor Dr.

Angelova submitted, for example, evidence as to howmuch a real estate agent or a person with a Commerce Degree working in a sales or management position in Alberta could generate asincome. [120] Counsel for Mr. Castellanos attached to her Concise Letter dated April 28, 2023, at Tab 24, computer printouts dated April 18,2023, from the website Glass Door. While submitted as part of the court record, the printouts are not attached to a sworn Affidavit andtherefore are not in evidence. [121] The printouts show the average salary for a real estate agent in Edmonton is $66,327.

A real estate agent working for RoyalLePage earns any where between $40,000 and $175,000 annually. [122] Given the large discrepancy in the income for a Royal LePage real estate agent, and the fact that the printout is not part of theevidentiary record, I am not able to determine whether $75,000 is an appropriate real estate commission income to impute to Mr.Castellanos. [123] I am prepared to impute additional income to Mr. Castellanos of $23,322 in the year 2022.

This is calculated based upon theminimum wage rates set out in the Employment Standards Regulation for salespersons, which is $598 per week, multiplied by 75%, toreflect a 30-hour work week (assuming 40 hours is the standard). It also assumes Mr. Castellanos would receive at least two weeks’ paidvacation. [124] Mr. Castellanos has worked in sales as a real estate agent since at least 2016. There is no reason, based upon the evidencebefore this Court, why Mr. Castellanos could not have worked at least 30 hours per week, in addition to casually providing real estateservices, in the year 2022. [125] Regarding Mr.

Castellanos’ projected real estate commission income in 2023, the Operating Account Statement only showscommission income earned to September 12, 2023. As he is not a T4 employee with an annual salary, it is impossible to project Mr.Castellanos’ total real estate commission income in 2023. He may earn additional commissions between September 12, 2023 andDecember 31, 2023. I also have no information with respect to his business expenses, other than those reflected on the Statement. [126] The fact that he earned so little commission income up to September 12, 2023, only reinforces my view that Mr.

Castellanos isunderemployed and should be supplementing his real estate commission with other forms of employment, perhaps even full-timeemployment. For the purpose of this interim, without prejudice, child support decision, I will calculate Mr. Castellanos’ child supportobligations for the year 2023 using the same income I am attributing to him for the year 2022. [127] In determining to impute income to Mr. Castellanos, I acknowledge the comments of the Court of Appeal in Peters at para 74that there may be no need to maintain a second job. However, in these particular circumstances where Mr.

Castellanos is claiming tohave been developing his real estate business for over 7 years, it is appropriate to expect Mr. Castellanos to supplement his real estate

commission income until he is achieving an income more akin to full-time employment for a person with a Commerce Degree and abackground in sales. [128] Ms. Perez is seeking to include in Mr. Castellanos’ Guideline income the sale of his Porsche in 2020 and certain deposits madeinto his bank accounts. She is also requesting that the settlement monies he received from Dr. Angelova be taken into consideration incalculating his Guideline income. [129] The sale of Mr.

Castellanos’ Porsche, and the deposits into his bank accounts, if the Porsche and the monies were acquired afterthe breakdown of his relationship with Ms. Perez, can be taken into consideration when determining his “means” for the purpose of s9(

c) of the Guidelines. In Strang v Strang, (SCC), [1992] 2 SCR 112, the Supreme Court of Canada stated that thetraditional understanding of the word “means” includes, “all pecuniary resources, capital assets, income from employment or earningcapacity, and other sources from which the person receives gains or benefits” (119). See also: Leskun v Leskun, 2006 SCC 25 at para29. I conduct an analysis under s 9(

c) of the Guidelines below. [130] Counsel raised the issue of the applicability of s 17 of the Guidelines regarding the property settlement Mr. Castellanos receivedfrom Dr. Angelova in the amount of $370,000. The heading for s 17 is “Pattern of Income.” The

section permits a court to take intoaccount a “pattern of income, fluctuation in income or receipt of a non-recurring amount during those years” when determining a fair andreasonable Guideline income to attribute to a party.

The words “of income” do not appear after the words “non-recurring amount.” [131] Given the wording of the heading of s 17 and the fact that a party’s Guideline income is determined in accordance with s 16 byusing the sources of income set out under the heading “Total income” in a party’s T1 General Income Tax Return, it is a reasonableconclusion that the non-recurring amount referred to in s 17 is a non-recurring amount of income, taxable gain or other benefit requiredto be reported in a party’s Income Tax Return.

This would include taxable capital gains from the sale of certain capital assets, such asshares or real property. When a person sells personal-use property, such as cars and boats, in most cases they do not end up with a taxablecapital gain as they generally do not increase in value. [132] Child support obligations are based on the payor parent’s income: Brear at para 18; Henderson at para 37. The propertysettlement funds received by Mr. Castellanos were not taxable. He was not required to report them on his Income Tax Return.

See:Ewing v Ewing, 2009 ABCA 227 at para 35; Uba v Uba, 2016 ABQB 19 at paras 3-5. [133] In any event, I do not need to conclude whether the property settlement Mr. Castellanos received is a “non-recurring amount”for the purpose of s 17 of the Guidelines as I have left the determination of the issue of what income should be attributed to Mr.Castellanos in the year 2021 to the trial judge. [134] As for the lump sum spousal support payment Mr. Castellanos received in the amount of $100,000, generally, only periodicspousal support payments are taxable to the recipient.

Therefore, only periodic spousal support payments are included in the calculationof the recipient’s Line 15000 income. There is no indication in the Agreement or the Consent Variation Order that the $100,000 wasintended to be a taxable lump sum payment satisfying arrears of spousal support. [135] I can impute income to a party pursuant to s 19(1)(

e) of the Guidelines on the basis that they have not reasonably utilized theirproperty to generate income. Here, had Mr. Castellanos invested the funds he received from Dr. Angelova with a financial institution, forexample, he would have earned interest on his investment, and the amount of the interest he earned would have been treated as incomefor the purpose of determining his Guideline income. [136] I do not consider Mr. Castellanos’ use of $310,000 to purchase a home for himself to be unreasonable or imprudent. I accept hisevidence that he was not able to qualify for a mortgage due to his limited income.

As one’s home is generally not an income producingasset, I will not impute any interest income to Mr. Castellanos on that amount. [137] In regard to the remaining $60,000 from the matrimonial property settlement and the $100,000 lump sum spousal supportpayment, the evidence does not clearly disclose how these funds were utilized by Mr. Castellanos. He deposes in his February 11, 2022Affidavit that he used the majority of the funds to pay out his outstanding debts. However, this statement is uncorroborated bydocumentary evidence. [138] I accept that had Mr.

Castellanos invested a portion of the remaining funds, they would have generated annual interest income.However, I do not have a sufficient evidentiary basis to conclude how much of the settlement funds should reasonably have beeninvested by Mr. Castellanos or what a reasonable interest rate would be. I therefore leave the determination of the issue of whetherincome should be imputed to Mr. Castellanos under s 19(1)(

e) of the Guidelines to the trial judge. (

e) What amount of s 3 and s 7 child support should Mr. Castellanos pay to Dr. Angelova for S and Nretroactively and ongoing? [139] Adding imputed employment income of $23,322 to Mr. Castellanos’s real estate commission income of $33,041 in 2022, I sethis Guideline income effective January 1, 2022 at $56,363. I note the Guideline income I have attributed to Mr. Castellanos is within therange estimated by Dr.

Angelova in paragraph 12 of her Affidavit sworn April 10, 2023, being “$50,000 plus at the very least.” TheTable amount of s 3 child support payable for two children on an income of $56,363 is $815 per month. [140] I leave the issues of Mr. Castellanos’ claimed business expenses and whether additional income should be attributed to Mr.Castellanos for the period March 1, 2021 to date, to the trial judge, based upon a more fulsome evidentiary record, viva voce evidenceand further submissions.

Section 3 Child Support for S and N [141] By my calculations, Mr. Castellanos owes Dr. Angelova the following amounts in retroactive child support:

Table Amount Total Retroactive Owing January 2022 to December 2022 $815 $9,780 January 2023 to November 2023 $815 $8,965 Grant Total $18,745 [ 142 ] I do not need to engage in an analysis of whether I should exercise my judicial discretion to award retroactive child support applying the factors laid out by the Supreme Court of Canada in DBS v SRG , 2006 SCC 37 . Dr. Angelova’s Family Cross-Application was filed on November 29, 2022.

The Alberta Court of Appeal explained in Henderson at para 35 : “When a court is determining support for the year in which the application is made, it is entitled to make a finding for that entire year.” Therefore, I am entitled to make a finding as to how much child support was payable by Mr. Castellanos to Dr. Angelova for the entirety of 2022. The same reasoning applies to Ms. Perez’s application for child support for the year

Section 7 Expenses for S and N [ 143 ] Turning to Dr. Angelova’s claim for retroactive s 7 expenses, Dr. Angelova attached as Exhibit “I” to her Affidavit sworn November 22, 2022 a spreadsheet listing the s 7 expenses she incurred for S and N since 2021, with the expenses totaling $25,672.33. These expenses include, but are not limited to, speech therapy for N, counselling for S, a lease on a horse, horse lessons and horse show registration, gymnastics, karate, swimming lessons for both N and S, and daycare and afterschool care for N. [ 144 ] Dr.

Angelova did not depose in her Affidavit or attach to her Affidavit any evidence of what efforts she made to obtain Mr. Castellanos’ consent to the incurring and sharing of these expenses prior to the expenses being incurred. [ 145 ] I accept that daycare and afterschool care for N was necessary for Dr. Angelova’s employment as a medical doctor. I will therefore order that Mr. Castellanos pay his proportionate share of childcare expenses incurred by Dr. Angelova in 2022 and 2023. [ 146 ] I leave the issue of Mr.

Castellanos’ proportionate share contribution to these childcare expenses in 2021 to the trial judge, noting that Dr.

Angelova can only claim childcare expenses incurred after March 1, 2021, in light of her waiver of child support up to February 28, 2021. [ 147 ] Although more information with respect to the necessity for these expenses would have been appreciated, I accept that the speech therapy, prescription, and counselling expenses should be shared in proportion to the parties’ respective incomes in the years 2022 and 2023. [ 148 ] As to the expenses for the children’s extracurricular activities, certainly, the horse related expenses appear to be outside of the financial means of Mr. Castellanos.

The gymnastic expenses at $380 per month are also quite high. I cannot tell the cost of the karate lessons in 2022 from Dr. Angelova’s chart. The swimming lessons were incurred in 2021. I leave the determination of whether Mr. Castellanos should contribute to the cost of S’s and N’s extracurricular activities in 2021 and 2022 to the trial judge on the basis of a more fulsome evidentiary record. [ 149 ] For the s 7 expenses I am allowing, I set the parties respective proportionate shares as 66.61% for Dr. Angelova and 33.39% for Mr. Castellanos for the period January 1, 2022 to date. (

f) What amount of s 9 and s 7 child support should Mr. Castellanos pay to Ms. Perez for F retroactively and ongoing? [ 150 ] Imputing additional employment income in the amount of $23,322 to Mr. Castellanos commencing January 1, 2022, inclusive of the spousal support he received from Dr. Angelova in 2022, I set his Guideline income effective January 1, 2022 at $74,597. [ 151 ] I leave the issues of Mr. Castellanos’ claimed business expenses and whether additional income should be attributed to Mr.

Castellanos form the period May 1, 2020 to date to the trial judge, based upon a more fulsome evidentiary record, viva voce evidence and further submissions. [ 152 ] Ms. Perez works at Strathcona Daycare as a childcare worker. Her Line 15000 income in 2022 was $51,406. Based upon her most recent pay stub, I have previously projected Ms. Perez’s income in 2023 to be $53,000. [ 153 ] As previously determined, I am not prepared to impute any additional income to Ms. Perez.

This issue requires viva voce evidence and should be remitted for determination at trial. [ 154 ] I also previously determined to base the amount of child support payable by Mr. Castellanos for F on the shared parenting arrangement provided for in the Parenting Order. In cases of shared parenting, child support is determined under s 9 of the Guidelines . The amount of child support the Court may order where the parties share parenting is discretionary.

Section 9 of the Guidelines sets out the considerations the Court is expected to take into account: 9 Where a parent exercises a right of parenting time, or a right of access to, or exercises physical care and control of a child for not less than 40% of the time over the course of a year, the amount of a child support order must be determined by taking into account (

a) the amounts set out in the applicable tables for each of the parents, (

b) the increased costs of shared parenting arrangements, and (

c) the condition, means, needs and other circumstances of each parent and of any child for whom support is sought.

[ 155 ] As pointed out by the Alberta Court of Appeal in MacDonald v Brodoff , 2020 ABCA 246 [ MacDonald ] at para 12 , “s 9 emphasizes fairness and flexibility and adopts a more holistic approach in assessing the economic circumstances of each parent and their ability to meet the needs of the children.” [ 156 ] The language of s 9 is imperative. Courts must determine child support in accordance with all three factors. The Court of Appeal noted at para 26 of MacDonald : There is no presumption that the Guidelines Table amount, or the set-off amount calculated under the Tables will be awarded.

Similarly, there is no presumption that something other than the set-off amount should be awarded; [ 157 ] The parties’ budgets and the actual expenses of both parents is critical to a Court’s analysis. [ 158 ] The Court of Appeal explained in MacDonald what the Court is expected to analyze under s 9(

b) and (

c) of the Guidelines at paras 14 and 15: [14]

Section 9(

b) examines the total cost of raising the children in a shared parenting arrangement (where many expenses are duplicated) as compared to one parent having primary care. This is achieved through examination of the budgets and actual expenditures of both parents toward care of the children. The intent is to identify all of each parent’s childcare expenses and compare that amount to that parent’s Guidelines Table amount of support. [15] The analysis then moves to consider the factors under s 9(c): the condition, means and needs of each parent and child for whom support is sought.

Courts are conferred broad discretion in considering these factors. The analysis is contextual and highly fact dependent. Courts are alive to the standard of living the child experiences in each household and “the ability of each parent to absor[b] the costs required to maintain the appropriate standard of living in the circumstances”: Contino at p ara 68 . [ 159 ] A simple set-off of each parent’s Guidelines Table amount of child support payable is an appropriate starting point.

However, a court, in taking the second two factors into consideration, retains the discretion to modify the set-off amount: Contino v Leonelli- Contino , 2005 SCC 63 [ Contino ] paras 41 , 49 and 51 and MacDonald at para 13 . [ 160 ] Beginning first with s 9(a), I find the following Table amounts are payable for the period January 1, 2022 to date based upon the Guideline incomes I have attributed to both parties in 2022 and 2023: Ms. Perez Mr. Castellanos January 2022 to December 2022 $425 $647 January 2023 to November 2023 $439 $647 [ 161 ] Calculated as a straight set-off, Mr. Castellanos would owe Ms.

Perez child support of $222 per month for the period January 1, 2022 to December 31, 2022; and $208 per month for the period January 1, 2023 to November 30, 2023. [ 162 ] Turning to the assessment of s 9(

b) and (c), Ms. Perez attached a Monthly Budget to her Affidavit sworn May 3, 2021. It shows expenses totalling $4,365.31.

Section 5 of the Budget lists “Children-Direct Expenses”. These include toys and books, school lunches, daycare, and sports. The Children-Direct Expenses total $896 per month. [ 163 ] Ms. Perez attached an updated Monthly Budget to her Affidavit sworn February 18, 2022. Her expenses total $5,732.48.

Section 5 (Children-Direct Expenses) total $982 and include the following expenses: toys and books, school lunches, daycare, educational expenses, prescriptions/medications, and sports. [ 164 ] F’s daycare and medical expenses should be shared in proportion to each party’s respective incomes. Given the parties’ shared parenting arrangement, educational expenses that are not extraordinary are often shared equally by the parties. Whether the sports activities should be shared as a s 7 expense depends on the cost and whether prior consent to the activity was obtained.

A reasonable amount for extracurricular activities is subsumed in the Table amount of s 3 child support payable. [ 165 ] As to the parties’ means, I am not prepared to take into account the $54,000 Mr. Castellanos received on August 5, 2020 from the sale of his Porsche as I am only addressing his income in 2022. I am also not prepared to analyze the miscellaneous deposits made into his Scotiabank account in 2020, although I note a number of the deposits, which Ms. Perez acknowledges, were on account of the spousal support he received from Dr. Angelova.

I leave these deposits to be assessed by the trial judge in conjunction with viva voce evidence. I do take into account the fact that Mr. Castellanos had the financial means to repeatedly travel to South America in 2022 and the fact that he would have had $160,000 left, after purchasing his house in St. Albert, from the lump sum spousal and property settlement payment he received from Dr. Angelova in 2021. [ 166 ] Without factoring in the additional sales income, I have attributed to Mr. Castellanos commencing January 1, 2022, the parties had similar means in 2022.

No income information has been provided with respect to Mr. Castellanos’ real estate commission income earned in 2023. Ms. Perez’s projected income of $53,000 for 2023, is only slightly greater than her income earned in 2022. [ 167 ] Having regard to a number of the Child-Direct Expenses listed in Ms. Perez’s monthly budget being properly s 7 expenses, I am not prepared to make an order requiring Mr. Castellanos to pay Ms. Perez the full Table amount of child support for F. However, taking into consideration the factors set out in s 9 of the Guidelines, I am prepared to order Mr. Castellanos to pay Ms.

Perez child support for F in the discretionary amount $300 per month commencing January 1, 2022. This is the same amount of child support ordered by this Court on August 31, 2020, which I feel was reasonable. [ 168 ] I will leave it to counsel for the parties, in consultation with the Maintenance Enforcement Program, to determine the amount of child support owing by Mr. Castellanos to Ms. Perez, if any, retroactive to January 1, 2022, as a result of my determination of the amount

of child support payable by him for F. (

g) Would Mr. Castellanos suffer undue hardship if this Court were to order him to pay full Table s 3 childsupport for all three children? [169] Mr. Castellanos complains he would suffer undue hardship if this Court were to order him to pay full Table s 3 child support forall three of his children. [170]

Section 10 of the Guidelines establishes clear requirements for applications made under that provision for relief from paying theGuideline amount. The relevant provisions state: Undue hardship 10

(1) On either spouse’s application, a court may award an amount of child support that is different from the amount determined underany of s 3 to 5, 8 or 9 if the court finds that the spouse making the request, or a child in respect of whom the request is made, wouldotherwise suffer undue hardship. Circumstances that may cause undue hardship

(2) Circumstances that may cause a spouse or child to suffer undue hardship include the following: (

c) the parent has a legal duty under a judgment, order, or written separation agreement to support any person; (

d) the spouse has a legal duty to support a child, other than a child of the marriage, who is (

i) under the age of majority, or (ii) the age of majority or over but is unable, by reason of illness, disability, or other cause, to obtain the necessaries of life; and Standards of living must be considered

(3) Despite a determination of undue hardship under subsection (1), an application under that subsection must be denied by the court if itis of the opinion that the household of the spouse who claims undue hardship would, after determining the amount of child support underany of s 3 to 5, 8 or 9, have a higher standard of living than the household of the other spouse. Standards of living test

(4) In comparing standards of living for the purpose of subsection (3), the court may use the comparison of household standards of livingtest set out in

Schedule II. [171] The Alberta Court of Appeal in Hanmore v Hanmore, 2000 ABCA 57 [Hanmore] considered the concept of hardship under s10 of the Guidelines and what is necessary for a claim of undue hardship to succeed at paras 9 to 19. In regards to financial obligationstowards second families, the Court of Appeal quoted Wright J in Messier v Baines, (SK KB), [1997] SJ No 627(UFC) [Messier] at para 10: These objectives [of the Guidelines] will be defeated if courts too readily deviate from the presumptive rule set out in s 3 of theGuidelines absent compelling reasons for doing so.

Second families, and the associated legal duty to support a child of that family, arenot uncommon. The assumption of such new obligations may by necessity create a certain degree of economic hardship. That hardship isnot however necessarily “undue”.

Similarly, the mere fact that an applicant’s household standard of living is lower than that of the otherspouse, due in part to the applicant’s legal duty to another child, does not automatically create circumstances of undue hardship. [172] At para 17 of Hanmore, the Court of Appeal elucidated: It is evident from these authorities that the burden of establishing a claim of undue hardship is a heavy one. We agree with the commentof Wright J. that the objectives of the Guidelines will be defeated if Courts deviate from the established guidelines without compellingreasons.

The hardship must be more than awkward or inconvenient. It must be exceptional, excessive, or disproportionate in thecircumstances. Further, it is not sufficient that the payor spouse has obligations to a new family or has a lower household standard ofliving than the payee spouse. The applicant must specifically identify the hardship which is said to be undue. A general claim regardingan inability to pay or a generic reference to the overall expense of a new household will not suffice.

We adopt the words of Prowse, J.A.in Van Gool: [51] The onus is on the party applying under s 10 to establish undue hardship; it will not be presumed simply because the applicant hasthe legal responsibility for another child or children and/or because the standard of living of the applicant’s household is lower than thatof the other spouse.

The applicant must lead cogent evidence to establish why the table amount would cause undue hardship. [173] More recently, the Alberta Court of Appeal in Henderson explained at para 78: … A claim of undue hardship should be included in the pleadings and any finding of hardship requires a series of steps as a precursor,including the provision of comparative household incomes. The Guidelines create a narrow judicial discretion in this regard, and thethreshold must be very difficult to meet. It requires that the hardship be severe and unreasonable.

Any other approach diminishes theoverriding certainty and predictability the Guidelines promote. [174] Here, a claim for undue hardship was not included in Mr. Castellanos’ Statement of Defence and Counterclaim for Divorce andD

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