Fougere v. Fougere, 2016 NSSC 202

SUPREME COURT OF Nova Scotia Citation: Fougere v. Fougere , 2016 NSSC 202 Date: 20160803 Docket: 1 208-002020 Registry: Yarmouth Between: Tobi Arletta-Marie Fougere Applicant v. Anthony Robert Fougere Respondent Judge: The Honourable Justice Margaret J. Stewart Heard: June 30, 2016, in Bridgewater, Nova Scotia Final Written Submissions: July 26, 2016 Written Decision: August 3, 2016 Counsel: A. Franceen Romney, for the applicant Ellen R.

Burke, for the respondent Stewart, J: Overview [ 1 ] The Applicant, Tobi Fougere applies to increase child support for the child Tomaz, retroactive to January 2014 based on income imputed to the Respondent, Anthony Fougere and calculated according the opinion of a certified accountant, Paul F. Belliveau. Ms. Fougere maintains that Mr. Fougere has underpaid child support since 2011.

Taking into account income splitting, she asks that he be ordered to pay retroactive child support for 2014 and 2015, based on an annual imputed income of $107,000, rather than $ 61,500, and $119,919.92 (sic $109,919.92), rather than $102,819.92, respectively. [ 2 ] Mr. Fougere denies that there has been a change of circumstances warranting a variation. He opposes any retroactive variation and insists that he and his spouse, Julianna Fougere, are equal working partners in their company, Downeast Pipeworks Ltd., which was incorporated in August 2008.

If retroactive support is due, he seeks fixed monthly payments. [ 3 ] Except for the table amount based on Mr. Fougere’s 2015 income, the parties agree on the methodology of go-forward child support for eighteen-year old Tomaz , who will attend University this September and who will turn 19 in December. Background [ 4 ] The parties divorced in December 2003. The Corollary Relief Judgment was last varied by consent on January 15, 2014. That order requires Mr. Fougere to pay $441 per month in child support as of February 1, 2013, based on his 2011 income of $52,402.

As of June 1, 2013, this transitions to child support of $442 per month based on his 2012 income of $52,609. Support is recalculated on June 1 of each year, in accordance with the amount on line 150 of his previous year’s income tax return. [ 5 ] The 2003 Corollary Relief Judgment (and Minutes of Settlement) required Mr. Fougere to open a Registered Education Savings Account (RESP) for each of the two children, with confirmation of deposits to be sent to Mrs. Fougere. The parties agreed that

ten percent of his bonus payments from his then-employer would be deposited into each RESP account. Mr. Fougere never opened the RESP accounts. He offered no explanation for failing to do so, nor did he suggest any form of additional payment towards Tomaz’s education costs. [ 6 ] In contrast to his affidavit of December 17, 2013, which indicated that he is president, fifty-percent shareholder, and employee of Downeast, Mr. Fougere testified that he never advised Mrs. Fougere that he had incorporated a company. This was consistent with Mrs. Fougere’s evidence. Mr.

Fougere filed no corporate financial information prior to 2015. His Statement of Income sworn on December 20, 2013, has no personal or corporate tax returns attached. Mrs. Fougere’s affidavit of August 1, 2014, explains how she came to appreciate the difference this could make in line 150 income. After obtaining the company particulars, she immediately commenced a variation application (representing herself) in August 2014. She retained counsel after requesting an adjournment to do so at the hearing on December 19, 2014. Counsels’ availability and Mr. Fougere’s out-of-province work affected subsequent scheduling.

Even with this delay, however, as late as June 20, 2016, some seven working days before this hearing, Mr. Fougere had not filed his personal and corporate financial information for 2014 and 2015. Financial circumstances of the parties [ 7 ] Mr. Fougere worked in the western oil fields for several years before starting his own business in August 2008 in order to satisfy his employer who wanted to hire contractors rather than employees. He and his spouse (they married in 2011), incorporated Downeast using her funds and her ability to access credit, as he had gone bankrupt in 2005.

In 2008, Julianna Fougere was pregnant and left her employment. They both hold corporate positions and are equal shareholders. They are the company’s only employees. They both receive wages. The company’s assets consist of a small barn built in 2008 to hold his tools which he values at $10,000, and a truck purchased in 2012. The truck and tools remain in Nova Scotia. The truck is not only used for Downeast matters. [ 8 ] After two years working in Nova Scotia, in 2010 Mr. Fougere resumed contract work in Alberta as both an employee and independent contractor (on behalf of his company) with his old employer.

Since 2011, Downeast has paid Julianna Fougere a salary equal to or greater than Mr. Fougere’s, aside from one year when she earned some $5,000 less than him. Her salary was $ 47,400 in 2011; $ 45,500 in 2012; $65,950 in 2013; $58,500 in 2014; and $20,100 in 2015. She works from home while caring for their son who has ADHD and is unable to attend school full time. In consideration of her salary, she provides all the administrative services to Downeast. She has bookkeeping experience.

Her work for the company includes keeping the business records, doing the banking and monitoring the account, paying the bills, dealing with the accountant, taking phone calls, monitoring Mr. Fougere’s work schedule, doing airport pickups and dropoffs, making travel arrangements, among other things. Although most of 2015 entailed employee work rather than contract work, Downeast paid Julianna Fougere $20,000, some $1,000 more than Mr. Fougere received. There is no evidence of her actual time worked. Mr.

Fougere acknowledges that when he is home as a result of a fourteen- or twenty-day-on, seven-day-off shift schedule, work is not a focus for her. [ 9 ] The applicant, Mrs. Fougere, is employed. In 2011 she earned $12,325; in 2012 she earned $22,751; in 2013 she earned $36,624; in 2014 she earned $43,722; and in 2015 she earned $42,772. Inputing Income What is the respondent’s income for the purpose of payment of child support? [ 10 ]

Section 19 of the Federal Child Support Guidelines , SOR/97-175, affords the court a discretion to impute income to a spouse in circumstances where the court is of the view that the income as stated in the tax returns does not truly represent the income available to pay child support. Subsection 19(1) provides, in part: 19

(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: … (

d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; … (

f) the spouse has failed to provide income information when under a legal obligation to do so… [ 11 ] Asked to review the financial information of Downeast covering the period between 2011 and 2015, Paul Belliveau, FCPA, FCA, expressed the opinion that in Nova Scotia an administrative staffer performing duties for companies like Downeast on a full-time basis – roughly 35 hours of work a week – would be paid in the approximate range of $13 to $25 per hour, translating to a range of $23,667-$45,500 annually.

His opinion, based on the information he had, was that Julianna Fougere’s work at Downeast should amount to a maximum of ten hours per week, or two hours per work day, at a maximum. At a minimum, he estimated four hours per week. The result would be pay in the range of $2,704 to $ 13,000, depending on time worked and pay rate. This is based on a rate of $13 per hour for 4 hours per week ($2,704) at the low end, and $25 per hour for ten hours per week ($13,000) at the high end. Mr.

Belliveau adjusted the amount of wages paid by the company to reflect Julianna Fougere’s wages at $13,000 and allocated the difference to Mr. Fougere. I accept this as reasonable. No evidence refuted his opinion. It assigns Ms. Fougere the highest hourly rate of $25 and provides more than two hours per day concentrated work, given her time off when Mr. Fougere is home. It also reflects the fact that she has the sole responsibility of a stay at home child with needs. [ 12 ] Mr.

Belliveau’s Supplemental Expert Report dated June 28, 2016, provides the following corporate and personal details and opinion for 2015 and 2014: Downeast Pipeworks:

We do not have the detailed general ledger to provide us with details in the various accounts. A

summary of key items is as follows: Corporate Income 2015 2014 Revenue $ 87,317 $202,882 Wages and benefits $ 83,980 $132,794 Fuels expense/vehicles $ 11,657 $ 9,264 Estimated amortization of vehicle/ Trailer $ 6,317 $ 9,198 Travel $ 14,209 $ 25,305 In our previous correspondence we did some calculations of what an administrative persons estimated cost and time would be. Those amounts would probably be within the same range except in 2015, income is down substantially, which probably means there is less call for these services.

Personal Income 2015 2014 Gross wages per T1 $102,819.92 $ 61,500.00 T4 from Downeast – Anthony $ 18,900.00 $ 58,500.00 Net Income Spouse $ 25,501.44 $ 59,700.00 T4 for spouse from Downeast $ 20,100.00 $ 58,500.00 Total Wages T4’d to Anthony and Spouse $ 39,000.00 $117,000.00 If $13,000 is allocated to Anthony’s spouse, then Anthony’s adjusted T4 would be ($26,000 ($39,000.00-$13,000) for 2015 and $104,000.00 ($117,000.00-$13,000.00) for 2014.

Anthony’s adjusted T1 for 2015 and 2014 including his income from other employment sources would be $119,919.92 ($102,819.92- $18,900.00+$26,000.00) and $107,000.00 ($61,500.00-$58,500.00+$104,000.00). [ 13 ] When a payor parent chooses to intermingle his personal, professional and corporate financial affairs, the obligation to disclose pursuant to

section 21 of the Federal Child Support Guidelines must be comprehensive and meaningful. Mr. Fougere’s line 150 income for 2014 and 2015 does not represent an appropriate assessment of income for child support purposes. I am satisfied that Julianna Fougere’s 2014 and 2015 remuneration for services from the company exceeds the level of reasonable remuneration for the work done, and is akin to income splitting. I conclude that this, along with a lack of financial disclosure requires income to be imputed in keeping with the expert’s opinion. [ 14 ] There appears to be a calculation error respecting Mr.

Fougere’s 2015 income in the supplemental expert’s report. His adjusted T1 amount for 2015 should read $109,919.92, not $119,919.92. In arriving at the adjusted line 150, the additional Employment Insurance income of $4,122; other employment income of $168.80; and CPP benefits of $1,186.76 (totaling $5,477.56) should be added, and union dues of $788 deducted, for a total adjusted 2015 line 150 amount of $114,609.48 ($109,919.92 + $5,477.56 - $788.). This figure results in child support payments of $963 per month. [ 15 ] For 2014, no adjustments for additional income or for union dues are needed.

The adjusted line 150 amount is $107,000.00, for monthly child support payments of $892. For the last four years, Mr. Fougere has paid monthly child support of between $520 and $530. As of June 2016, he increased his payment to $893, reflecting an income base of $107,100 according to the Nova Scotia tables. Retroactive variation of child support Should retroactive child support be ordered? [ 16 ] The Supreme Court of Canada addressed retroactive variation of child support in D.B.S. v. S.R.G ., 2006 SCC 37 , [2006] 2 S.C.R. 231.

The court is required to strive for a holistic approach, balancing competing principles of certainty, fairness to the child, and flexibility while respecting core principles, such as child support as the right of the child, the amount of child support varying based on the parent’s income, and the responsibility of each parent to ensure that the child receives appropriate support.

In reaching a conclusion as to whether retroactive award is appropriate, four factors are considered: (1) the reason for the delay in bringing the application; (2) the conduct of the payor parent; (3) the child’s past and present circumstances; and (4) whether a retroactive award would result in hardship. This, as the Supreme Court has noted, is an exercise which is very fact-dependent.

[ 17 ] Having regard to the factors and considerations set out above, this is a case in which a retroactive variation of child support to January 2014 is warranted. There is a positive obligation to make a variation application in a timely fashion. Mrs. Fougere met that obligation. Mr. Fougere did not disclose his corporate financial information to her in the course of variations in March 2011 and January 2014. He had an obligation to disclose pursuant to s. 21 of the Federal Child Support Guidelines .

Immediately upon obtaining corporate particulars and appreciating the importance of the company finances in calculating income, Mrs. Fougere filed the August 2014 application, seeking full disclosure, which was only completed a week ago. Neither of the children have had the financial support that was ordered, due to Mr. Fougere’s failure to fulfil his obligations and comply with the Corollary Relief Judgment. This is particularly serious in the case of Tomaz, who is about to enter post-secondary education and now faces an increased need for student loans. As for hardship, Mr.

Fougere has had the benefit of income splitting since 2011 and has made no RESP contributions since 2003. Conclusion [ 18 ] Accordingly, I impute an annual income of $ 107,000 to Mr. Fougere for 2014. Based on monthly Nova Scotia table support of $892, he owes retroactive child support for 2014 in the amount of $10,704, less support paid. [ 19 ] Subject to confirmation of the calculations, I impute to Mr. Fougere an annual income for child support purposes of $114,609.48 for 2015.

Based on $963 per month Nova Scotia table support, he owes retroactive child support for 2015 in the amount of $11,556, less support paid. The same calculation applies to the months in 2016 to date ($7,704 less support paid, plus costs of $500). Given the parties’ agreement for child support commencing in September 2016, when Tomaz attends university, I order the fixed retroactive total amount of child support for 2014, 2015 and 2016 be paid at the amount of $500 per month until paid in full, with an additional lump sum payment of $3,000 due no later than August 15, 2017.

In addition, the full amount of any income tax refunds received by Mr. Fougere shall be applied to the balance owing until it is paid in full. Furthermore, should Tomaz cease attending University, the monthly payments on the total still outstanding shall increase to $963 until paid in full, and the lump sum payment and tax refund payment remain due and owing. [ 20 ] The parties’ agreement concerning ongoing child support for Tomaz while at university will reflect Mr. Fougere’s imputed income for 2015 and any pro-rating between the parties at 73 to 27%.

The order will require complete personal and corporate financial disclosure annually, and set out the details thereof. [ 21 ] If the parties are unable to agree on the costs of this application, I will hear them on costs. Justice Margaret J. Stewart SUPREME COURT OF Nova Scotia Citation: Fougere v. Fougere , 2016 NSSC 202 Date: 20160803 Docket: Syd No. 1 208-002020 Registry: Sydney Between: Tobi Arletta-Marie Fougere Applicant v. Anthony Robert Fougere Respondent Judge: The Honourable Justice Margaret J. Stewart Heard: June 30, 2016, in Bridgewater, Nova Scotia

[ 22 ] Final Written Submissions: [ 23 ] July 26, 2016 Written Decision: Erratum Date: August 3, 2016 January 4, 2017 Counsel: A. Franceen Romney, for the applicant Ellen R. Burke, for the respondent Erratum: Registry Should be Yarmouth