M.H. v A.B., 2019 SKCA 135

Court of Appeal for Saskatchewan Docket: CACV3342 Citation: M.H. v A.B. , 2019 SKCA 135 Date: 2019-12-17 Between: M.H. Appellant (Respondent) And A.B. Respondent (Petitioner) Before: Caldwell, Schwann and Kalmakoff JJ.A. Disposition: Appeal allowed in part Written reasons by: The Honourable Mr. Justice Kalmakoff In concurrence: The Honourable Mr. Justice Caldwell The Honourable Madam Justice Schwann On Appeal From: 2018 SKQB 317 , Estevan Appeal Heard: October 24, 2019 Counsel: Jonathan Martin for the Appellant Brian Banilevic, Q.C. and Fashia Richards for the Respondent Kalmakoff J.A. I.

Introduction [ 1 ] The appellant, M.H., and the respondent, A.B., went to trial over issues of custody, parenting and child support. A Court of Queen’s Bench judge ordered that the parties have joint custody of their child but determined that the respondent would be the primary caregiver, have the greater share of parenting time, and exercise final decision-making authority with respect to extracurricular activities.

The trial judge also ordered the appellant to pay retroactive and ongoing child support based on a calculation of income that included the pre-tax value of dividends the appellant paid himself from a professional corporation: A.B. v M.H ., 2018 SKQB 317 [ Trial Decision ]). [ 2 ] The appellant appeals from the Trial Decision and applies to adduce fresh evidence regarding his income. [ 3 ] For the reasons that follow, I would dismiss the fresh evidence application and allow the appeal only to the extent of varying the calculation of the appellant’s income for child support purposes.

II. background [ 4 ] The appellant and respondent have one child, J.I. The respondent is a registered nurse. The appellant is a physician with a speciality in anaesthesiology. They worked at the same hospital. When they first met in 2012, the appellant was involved in a cohabiting relationship with another woman, H.S. At some point, while the appellant was separated from H.S., he began an intimate relationship with the respondent.

She became pregnant and gave birth to J.I. in March of 2014. [ 5 ] Although the appellant and the respondent were never married and never lived together, they were both involved in parenting J.I. from the outset. In the early months of J.I.’s life, the appellant would have J.I. at his home two nights each week, from 5:00 p.m. until 8:00 a.m. the next morning. The appellant would also spend time with J.I. at the respondent’s home. [ 6 ] In June of 2015, another anaesthesiologist began practicing at the hospital in where the appellant worked.

This resulted in a significant decrease in the appellant’s surgery time and, as a result, his income also decreased. Following this, the appellant changed the nature of his practice, splitting it between Saskatchewan and Ontario, working for three weeks at a time in Saskatchewan, and three weeks at a time in Ontario, on a rotating basis. The appellant tried to persuade the respondent to move to Ontario, so that he could relocate there full time, but she refused. [ 7 ] The change in the appellant’s work schedule, perhaps not surprisingly, placed a strain on the parties’ parenting arrangement.

An additional complicating factor was that the appellant had resumed his relationship with H.S. shortly after his relationship with the respondent ended. H.S. then became pregnant with the appellant’s child, K.A., who was born in December of 2014. [ 8 ] The appellant’s licence to practice medicine in Saskatchewan was suspended from June 16, 2017, to June 22, 2018. The College of Physicians and Surgeons in Saskatchewan issued the suspension because the appellant’s licence to practice in Ontario had been revoked as a result of disciplinary proceedings in that province.

Despite the revocation of his licence in Ontario, the appellant was able to continue practicing medicine in that province, as he appealed the revocation, which meant its effect was stayed pending the disposition of the appeal. During the period that his licence was suspended in Saskatchewan, the appellant continued to work for three weeks at a time in Ontario, returning to Saskatchewan for three weeks in between. [ 9 ] Eventually, the proceeding between the appellant and respondent went to trial before a judge of the Court of Queen’s Bench.

At issue was custody, parenting, and determination of both retroactive and ongoing child support. [ 10 ] With respect to the issues of custody and parenting, the trial judge determined that the parties would have joint custody of J.I.,

but that the respondent would be the primary resident parent and have final decision-making authority with respect to J.I.’s extracurricularactivities. The trial judge also set out a detailed parenting schedule, which operated on a two-week rotation. In week one of the schedule,the appellant would have J.I. in his care for four nights, and in week two, the appellant would have J.I. in his care for two nights. Theappellant would also get an extra day with J.I. on some long weekends.

Holidays would generally be evenly split. [11] The appellant was ordered to pay ongoing child support in accordance with the Federal Child Support Guidelines, SOR/97-175[Guidelines]. As to retroactive support, the trial judge determined that, although the appellant had been paying child support, he had notdone so in a manner that reflected his full obligation under the Guidelines. Accordingly, the trial judge ordered the appellant to pay childsupport in accordance with the Guidelines, retroactive to April 1, 2014, to make up the shortfall.

In determining the amounts payable underthe Guidelines, the trial judge calculated the appellant’s income by including dividends the appellant had paid himself from hisprofessional corporation, grossed up to reflect their pre-tax value, in addition to an attribution of corporate pre-tax income. III. The Grounds of Appeal [12] The appellant takes issue with the Trial Decision on both the custody/parenting and child support fronts. [13] With respect to custody and parenting, in his amended notice of appeal, the appellant contends that the trial judge erred inprinciple in his application of ss. 8(

a) and 9(1)(

a) of The Children’s Law Act, 1997, SS 1997, c C-8.2 [CLA], in five ways: (

a) by giving undue prominence to extracurricular activities in determining fitness; (

b) by showing a preference to the culture of the respondent over that of the appellant, particularly as it related to assessing whichactivities would be in J.I.’s best interests; (

c) by failing to apply the maximum contact principle; (

d) by failing to recognize the importance of maximum contact between siblings, in light of the fact that the appellant had equalshared parenting of his other son (J.I.’s half-brother); and (

e) by finding that it was in J.I.’s best interests that the respondent should have full and final decision-making authority withrespect to extracurricular activities. [14] With respect to the question of child support, the appellant contends that the trial judge erred in three ways: (

a) by calculating the appellant’s income for 2015, 2016 and 2017 based on the taxable amounts of dividends paid to the appellantby his professional corporation, instead of the actual dividend paid; (

b) by making “palpable and overriding errors” in the calculation of the amount of child support already paid by the appellant asof the date of trial, and also with regard to child support payable starting January 1, 2017; and (

c) by fixing an “arbitrary and non-revisable amount of ongoing support and by directing that retroactive support for 2017 and2018 would not be based on the Appellant’s actual incomes for those years”, in light of the evidence that the appellant was likely to suffera significant reduction in those years due to the suspension of his licence. [15] The appellant also applies to lead fresh evidence on the appeal. This fresh evidence consists of his personal income tax returnsand the unaudited financial statements of his professional corporation (Dr. M.H. Medical Practice Prof. Corp.) for 2017 and 2018. IV.

The Fresh evidence application [16] In order for fresh evidence to be admitted, it must satisfy the test for admission set out in R v Palmer, (SCC),[1980] 1 SCR 759 [Palmer]. Fresh evidence will only be admitted if: (

a) it could not, even with the exercise of due diligence, have been adduced at trial; (

b) it is relevant in the sense that it bears upon a decisive, or potentially decisive, issue in the action; (

c) it is credible, in the sense that it is reasonably capable of belief; and (

d) it is of such a nature that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected tohave affected the result. [17] The Palmer test for admission of fresh evidence has been consistently affirmed and applied by this Court, not only in criminalcases, but in the context of civil and family law litigation as well (see, for example, Aalbers v Aalbers, 2016 SKCA 1, 472 Sask R 195;Ackerman v Ackerman, 2014 SKCA 86, [2014] 10 WWR 429 [Ackerman]; Gritzfeld v Zuidema Farms Inc., 2009 SKCA 51, [2009] 6WWR 201; Onion Lake Cree Nation v Stick, 2018 SKCA 20, [2018] 5 WWR 111; Neilly v First Choice Outfitters Ltd., 2014 SKCA 55,438 Sask R 16; Pederson v Saskatchewan (Minister of Social Services), 2016 SKCA 142, 408 DLR (4th) 661). [18] The fresh evidence that the appellant seeks to admit in this case relates to his income for 2017 and 2018.

He argues that thisevidence is relevant because it demonstrates that he suffered a precipitous drop in income as a result of the fact that his licence to practicemedicine in Saskatchewan was suspended from June 16, 2017, to June 22, 2018. [19] The trial in this case began on December 11, 2017, and ended on December 15, 2017. As such, the appellant submits that he

was not in a position to lead this evidence at the time of trial because the tax returns and financial statements for 2017 and 2018 did not exist at that time.

He contends that the proposed fresh evidence is relevant, credible, could not reasonably have been adduced at trial and, had it been before the trial judge, it would have had a material impact on the Trial Decision as it related to the crucial issues of retroactive and ongoing child support. [ 20 ] In my view, the proposed fresh evidence fails to meet the Palmer test for admission at both the first and second stages. [ 21 ] First, the record is clear that the appellant was questioned extensively at trial about his expected income for 2017.

He also had the opportunity, by agreement of counsel, to place updated 2017 income information before the trial judge between the time the trial ended and when the Trial Decision was rendered on November 19, 2018. He chose to provide the trial judge with only his 2017 personal tax return and not the 2017 financial statements from his professional corporation.

As such, the appellant has failed to demonstrate that the 2017 income evidence could not, with due diligence, have been adduced at trial. [ 22 ] Second, since the trial took place in 2017, the appellant’s income information for 2018 was not relevant to an issue that the trial judge was required to decide and therefore could not have had a bearing on the outcome of the case. Moreover, the Trial Decision dealt, in a comprehensive way, with any issues that this proposed fresh evidence might address. In that regard, the Trial Decision set out the following, in paragraph 119: … (

q) Within 30 days M.H. shall provide to A.B. a complete copy of the 2017 tax return of Dr. M.H. Medical Practice Prof. Corp. and a copy of the corporation’s 2017 financial statement. (

r) Within 60 days the ongoing child support payable by M.H. shall be adjusted as of September 1, 2018, based on his 2017 personal and corporate tax returns. (

s) By July 1 of each year, commencing in 2019, M.H. shall provide to A.B. a copy of his complete personal tax return for the prior year together with a copy of any notice of assessment or reassessment within 30 days of receipt of the same. He shall also provide a complete copy of the tax return of Dr. M.H. Medical Practice Prof. Corp. and its financial statement, for the prior year. (

t) The child support payable shall be adjusted as of September 1 of each year. (

u) In the event the parties cannot agree on the amount of retroactive child support payable, or the support payable as of September 1, 2018, I shall remain seized of those issues. Either party may contact the Local Registrar to arrange a conference call, in the first instance. [ 23 ] As this passage demonstrates, the Trial Decision thoroughly addresses the method by which the appellant’s child support obligation would respond to changes in income.

The Trial Decision also provides a clear mechanism by which the parties could return the matter to the trial judge to determine the amount of retroactive support payable if they were unable to agree on what that amount should be as a result of, for instance, a significant change in the appellant’s income. [ 24 ] The Trial Decision fully accounts for, and provides an appropriate mechanism to deal with, any impact the proposed fresh evidence might have had in this case.

As such, although the proposed fresh evidence would be properly admissible on a variation application, the appellant has failed to demonstrate that it bears on an issue that would have affected the outcome at trial . That being the case, the proposed fresh evidence is not relevant under the Palmer standard and, thus, not properly admissible on appeal. [ 25 ] Accordingly, the application to adduce fresh evidence must be denied. V. custody and parenting [ 26 ] The scope of appellate review in custody and access cases is narrow and deferential.

An appellate court may only intervene where there is a material error, a serious misapprehension of the evidence, or an error in law. It is not entitled to intervene simply because it would have made a different decision or balanced the relevant factors differently than the trial judge: Van de Perre v Edwards , 2001 SCC 60 , [2001] 2 SCR 1014; Ackerman ; D.G. v C.R.H. , 2010 SKCA 127 , 362 Sask R 261; Olfert v Olfert , 2013 SKCA 89 , 417 Sask R 283; Dukart v Quantrill (Jones) , 2015 SKCA 138 , 472 Sask R 97. A.

The arguments [ 27 ] As set out in his amended notice of appeal, the appellant contends that the trial judge erred in principle in relation to the application of ss. 8 (

a) and 9(1) (

a) of the CLA . Those sections read as follows: Conditions for custody order 8 In making, varying or rescinding an order for custody of a child, the court shall: (

a) have regard only for the best interests of the child and for that purpose shall take into account: (

i) the quality of the relationship that the child has with the person who is seeking custody and any other person who may have a close connection with the child; (ii) the personality, character and emotional needs of the child; (iii) the physical, psychological, social and economic needs of the child;

(iv) the capacity of the person who is seeking custody to act as legal custodian of the child; (

v) the home environment proposed to be provided for the child; (vi) the plans that the person who is seeking custody has for the future of the child; and (vii) the wishes of the child, to the extent the court considers appropriate, having regard to the age and maturity of the child; … Conditions for access order 9

(1) In making, varying or rescinding an order for access to a child, the court shall: (

a) have regard only for the best interests of the child and for that purpose shall take into account: (

i) the quality of the relationship that the child has with the person who is seeking access; (ii) the personality, character and emotional needs of the child; (iii) the capacity of the person who is seeking access to care for the child during the times that the child is in his or her care; and (iv) the wishes of the child, to the extent the court considers appropriate, having regard to the age and maturity of the child[.] [ 28 ] The appellant argues that the trial judge gave undue prominence to the role of extracurricular activities in determining J.I.’s best interests.

He contends that this overemphasis on extracurricular activities led to the erroneous conclusion that the respondent’s relationship with J.I. was qualitatively different than that of the appellant. [ 29 ] In a related argument, the appellant contends that the trial judge was improperly persuaded by a preference for the culture of the respondent – who has lived in Canada all her life – over that of the appellant, who is originally from Iran and immigrated to Canada as an adult.

This cultural preference for more “Canadian” extracurricular activities such as hockey, says the appellant, led the trial judge to improperly conclude that the respondent’s view as to what activities were in J.I.’s best interests should govern.

This also led the trial judge to an additional error, in the appellant’s submission, namely determining that it was in J.I.’s best interests that the respondent have full and final decision-making authority with respect to extracurricular activities. [ 30 ] The appellant submits that the trial judge mischaracterized the fact that much of the time J.I. spent at the appellant’s home was in the company of the appellant’s mother as a factor that worked to the appellant’s detriment.

He says the trial judge should instead have viewed this as a positive – namely the opportunity to bond with a grandparent – as opposed to an abdication of parental responsibility by the appellant. [ 31 ] The appellant also asserts that, by making the respondent the primary caregiver and implementing a parenting order that placed J.I. in the appellant’s care for only approximately 35% of the time, the trial judge failed to properly apply the principle that maximum contact with both parents is in the child’s best interests. The “maximum contact” principle finds expression in s. 6(5) of the CLA : 6

(5) When making an order pursuant to subsection (1), the court shall: (

a) give effect to the principle that a child should have as much contact with each parent as is consistent with the best interests of the child and, for that purpose, shall take into consideration the willingness of the person seeking custody to facilitate that contact[.] [ 32 ] The appellant argues, in essence, that there was no principled reason for the trial judge to depart from an equal-time, shared- parenting arrangement. [ 33 ] The appellant also contends that the trial judge’s decision to grant the respondent final decision-making authority regarding J.I.’s extracurricular activities creates a power imbalance that effectively thwarts the maximum contact principle by permitting the respondent to

schedule those activities during times that would normally be the appellant’s time with J.I. [ 34 ] Finally, the appellant notes that he has an equal-time, shared-parenting arrangement with H.S. in relation to his other child, K.A.

He argues that, in making the parenting order set out in the Trial Decision , the trial judge failed to recognize the importance of maximum contact between siblings and the role it plays in a child’s best interests. [ 35 ] The respondent counters these arguments by emphasizing the deferential standard of review applicable to a trial judge’s determinations regarding custody and parenting. She points to the evidence supporting the trial judge’s conclusion that she better understands and meets J.I.’s physical, psychological and social needs.

The respondent also notes that the parenting order made by the trial judge ensures that the appellant has ample regular parenting time, even if it amounts to less than 50%, and that the parties have joint decision-making authority with respect to all but one aspect of J.I.’s life. The respondent submits that the custody and parenting order contained in the Trial Decision is entitled to deference because, in making that order, the trial judge made findings of fact that were supported by the evidence, gave proper consideration to the relevant sections of the CLA , and properly applied the governing jurisprudence.

As such, argues the respondent, the Trial Decision reveals no material error, serious misapprehension of the evidence, or error in law. B. Analysis [ 36 ] In the Trial Decision , the trial judge carefully considered the parties’ arguments, recounted relevant portions of the evidence, then turned to the applicable law. Beginning at paragraph 42, the trial judge cited the relevant portions of ss. 3 , 6 , 8 and 9 of the CLA . He then addressed the matters relevant to the determination of custody and access orders in turn.

[ 37 ] Dealing first with the question of whether the parties should have joint custody of J.I., the trial judge cited this Court’s decision in Schick v Woodrow , 2012 SKCA 1 , 385 Sask R 153 [ Schick ], noting the differences between “custody” and “parenting”, and also observing that a finding that joint custody is appropriate does not preclude a concurrent finding that one parent or the other ought to be designated as the parent of primary residence (see Schick at paras 22–25 ).

In the end, the trial judge concluded that it was in J.I.’s best interests that the appellant and respondent be joint legal custodians because both parties were involved and capable parents who wished to have an active role in J.I.’s life and, although there were communication difficulties, those difficulties were not insurmountable. [ 38 ] The trial judge then turned to consideration of the appropriate parenting plan for J.I. He contemplated the proposals put forward by both parties, and individually addressed each of the considerations set out in s. 8 (

a) of the CLA . While it is clear the trial judge was satisfied that both parties had much to offer as parents, he concluded that the respondent should be the primary caregiver.

In that regard, he wrote: [70] Given my observations and the qualitative difference I find in the personal commitment and understanding of the parents to the kind of activities and involvement that can enhance a child’s physical, psychological, social and emotional needs, I am satisfied that it is in J.I.’s best interests that A.B. should be his primary caregiver. [ 39 ] Having reviewed the entire record and the evidence that was before the trial judge, I am unable to find that either the trial judge’s conclusion that the respondent’s relationship with J.I. was qualitatively different than that of the appellant or his conclusion that J.I.’s best interests would be served by the parenting order ultimately made resulted from any material error, serious misapprehension of the evidence, or error in law that calls for appellate intervention. [ 40 ] While the trial judge mentioned the parties’ differing views on, and differing levels of commitment to, extracurricular activities as one aspect of the “qualitative difference” in their relationships with J.I., it is clear that their respective positions on extracurricular activities were not the only – or even the most important – factors in that determination.

This is apparent in the portions of the Trial Decision leading up to the conclusion that J.I.’s best interests would be served by the respondent being his primary caregiver. For example, the trial judge noted that “[e]nsuring that J.I.’s needs, both physical and emotional, are met is a priority” for the respondent (at para 56).

He also observed that, although the appellant was “clearly committed to his son” and “is both prepared and capable of parenting him on the basis of a shared parenting regime”, during much of the appellant’s parenting time someone other than the appellant was providing the direct care and supervision. The trial judge went on to say: [66] I reference my earlier observations and note there is a difference in the manner in which A.B. and M.H. have made an effort to be personally involved in meeting J.I.’s needs.

Insofar as the physical, psychological and social needs are concerned, it is clear A.B. understands the importance of involving J.I. in extracurricular activities, community and family functions. There was no evidence of the same understanding or commitment by M.H. … [68] Both parents can provide a more than adequate home environment.

However there remains a qualitative difference to the extent the home environment includes the physical, psychological and social needs of a child. [ 41 ] As is evident from these passages, the trial judge concluded that the respondent was more deeply involved in her role as a parent than the appellant. This conclusion, in my view, was well-supported by the evidence, which established that the respondent took a more direct and hands-on approach to almost every aspect of parenting, whereas the appellant delegated much of the parenting responsibility to others.

Perhaps this was, in part, a matter of personality or style, or simply due to the realities of their respective employment, but it was a factor the trial judge was properly entitled to consider. [ 42 ] I do not agree with the appellant’s contention that the trial judge improperly characterized the role of the appellant’s mother as a negative.

The Trial Decision reveals that the trial judge considered the beneficial impact of contact with extended family members but concluded that it was not a factor sufficient to tip the balance in favour of a different parenting arrangement. [ 43 ] I also find no error warranting intervention in the judge’s treatment of the maximum contact principle. He clearly gave consideration to it, saying: [71] … s. 6(5) of the CLA requires the court to ensure that J.I. has as much time with his father as is consistent with his best interests.

In doing so the court is to take into consideration the willingness of a person seeking custody to facilitate a relationship with the other parent. While A.B. will be the primary care giver so as to ensure J.I. will benefit from his mother’s commitment to his activities and needs, I am cautiously optimistic M.H. will come to understand the importance of J.I.’s involvement in various events and activities and will be supportive of A.B.’s efforts. I am satisfied that A.B. will facilitate and promote a relationship between J.I. and his father.

This is exemplified by the fact A.B. and her family have been prepared and have made an effort to involve [K.A.] and [M.H.’s mother] in family events involving J.I. [ 44 ] It is important to note that the maximum contact principle does not create a presumption in favour of shared parenting. Nor does maximum contact necessarily mean equal time for each parent. The maximum contact principle is subject to the overriding best interests requirement.

This means maximum contact between a child and each of his or her parents is desirable, but what that amounts to in each particular case depends on the best interests of the child: Ackerman at para 40 . This requires a child-centred analysis; it is not about parental “rights”: A.O. v T.E. , 2016 SKCA 148 at paras 75–77 , 88 RFL (7th) 34. [ 45 ] The trial judge concluded that, in the particular circumstances of this case, maximum contact did not require equal parenting time to serve J.I.’s best interests.

This conclusion was reached after a consideration of all the evidence and took into account the nature of the parties’ respective relationships with J.I., their respective parenting styles, and their respective commitment to the full range of J.I.’s developmental needs. The trial judge was keenly aware of the need for the appellant to have ample parenting time, even if that amounted to less than 50%. He wrote: [76] While A.B. will be the primary care giver, it is important to ensure the [ sic ] M.H. has regular and frequent parenting time with J.I.

In week one, of a two week rotation, M.H. will parent J.I. from 4:00 p.m. Tuesday to 8:00 a.m. Wednesday and 4:00 p.m. Friday to

8:00 a.m., Monday which will be extended to Tuesday morning in the event that the Monday is a statutory holiday. In week two, M.H. will parent J.I. from 4:00 p.m. Wednesday to 8:00 a.m. Friday. In a two week period, M.H. will parent J.I. 35% of the time. [ 46 ] When the Trial Decision is read as a whole, the trial judge’s conclusion with respect to parenting time dovetails with his conclusion that the respondent should be the primary resident parent.

I see no error requiring intervention. [ 47 ] As for the issue of granting final decision-making authority for extracurricular activities to the respondent, the trial judge cited Ackerman and noted that, where conflict exists between the parents, it may be appropriate to apportion decision making authority to some extent in order to ease that conflict. He then went on to say: [84] As the parties will be joint legal custodians, it will require joint decision making with respect to all major matters affecting J.I. This includes matters of his health, education and welfare.

The parties have been able to agree on such matters in the past and I am confident they can continue to do so going forward. [85] While M.H. proposed a parallel parenting regime, I am of the view it is not appropriate in this instance. As noted, the parties are capable of joint decision making on major issues. I am of the view, however, that I need to address decision making with respect to J.I.’s extracurricular and sports activities.

A.B. and M.H. do not seem to place the same emphasis on the importance of such activities to the development of J.I. as a well-rounded individual. [86] In the circumstances, while the parties are to consult each other with respect to the issue of extracurricular and sports activities A.B. shall have final decision making authority. In making such decisions I trust A.B. will give due consideration to any activity that M.H. might suggest.

Both parents shall be responsible to ensure that J.I. gets to any of his scheduled activities that happen to occur during one’s parenting time. [ 48 ] I see no error requiring intervention in the trial judge’s approach to this issue. The order for joint custody left the parties with joint decision-making authority with respect to all matters affecting J.I., except for those relating to extracurricular activities.

J.I.’s involvement in extracurricular activities appeared to be a key area of conflict and the trial judge was entitled to determine that granting final decision-making authority to one parent, in order to minimize that conflict, was in J.I.’s best interests.

The trial judge’s determination that it was appropriate to confer that authority upon the respondent is an exercise of discretion that is entitled to deference. [ 49 ] In the end, the decision in this case, as it related to custody and parenting, demonstrates that the trial judge carefully considered all of the evidence, made factual determinations supported by that evidence, and carefully reviewed and applied the relevant law.

While it is fair to say that the trial judge might have reached a different result if the various factors were weighed differently, that is not a basis upon which this Court can properly intervene, given the applicable standard of review. [ 50 ] As the Trial Decision relating to custody and parenting reveals no material error, no serious misapprehension of the evidence, and no error in law, it is entitled to deference. Accordingly, I would dismiss this portion of the appeal. VI. child support [ 51 ] At trial, the respondent sought ongoing child support calculated in accordance with the Guidelines .

She took the position that the appellant’s income for child support purposes should be determined by attributing to him the pre-tax income of the Dr. M.H. Medical Practice Prof Corp., which the appellant had incorporated in 2015. The respondent asserted that, based on such an attribution of income, the appellant had not been paying enough child support.

As a result, the respondent argued that, in addition to ongoing child support, the appellant should be ordered to pay retroactive child support dating back to J.I.’s birth to account for the shortfall. [ 52 ] The appellant’s position at trial was that his income for child support purposes should be determined on the basis of the income reported in line 150 of his personal income tax returns and should not include the attribution of any income from the corporation.

The appellant argued that, if his income were determined in that fashion, he had in fact paid too much child support and no retroactive support was warranted. He also said his income for 2017 was likely to decrease substantially as a result of the suspension of his licence to practice medicine in Saskatchewan, effective June 16, 2017.

He posited that the trial judge should adjust any child support order to account for this expected drop in income. [ 53 ] The trial judge ultimately determined that the appellant’s income for 2015 and 2016 child support purposes should be calculated by attributing to him the pre-tax income of his professional corporation, in addition to his reported line 150 income. [ 54 ] The trial judge noted that the appellant had paid child support “of $1,000 per month for the months of April to June 2014; $2,000 per month for the months of July 2014 to September 2015; $2,600 per month for the months of October 2015 to April 2016; and $2,100 per month as of May 2016” (at para 88).

The trial judge calculated that the total amount of child support paid by the appellant over that time period was $94,700. The trial judge found that the monthly amounts the appellant had been paying for much of that time frame were less than what the appellant should have been paying under the Guidelines in light of his income. As such, the trial judge concluded that a retroactive support order was appropriate. [ 55 ] In the end, the following order was made with respect to child support (at para 119): … (

l) As of April 1, 2014, I find M.H. to have a Guidelines income of $463,871 and he shall pay child support to A.B. commencing April 1, 2014 the sum of $3,568 per month payable on the first of each month. (

m) As of January 1, 2015, I find M.H. to have a Guidelines income of $331,670 and he shall pay child support to A.B. commencing January 1, 2015 the sum of $2,590 per month payable on the first of each month.

(

n) As of January 1, 2016, I find M.H. to have a Guidelines income of $332,751 and he shall pay child support to A.B. commencingJanuary 1, 2016 the sum of $2,598 per month payable on the first of each month. (

o) As of December 1, 2017, M.H. shall pay child support to A.B. of $2,696 per month payable on the first of each month thereafter. (

p) The retroactive child support payable pursuant to this order shall be payable at the rate of a minimum of $500 per month. M.H. shallreceive credit for child support paid from April 1, 2014 and going forward. (

q) Within 30 days M.H. shall provide to A.B. a complete copy of the 2017 tax return of Dr. M.H. Medical Practice Prof. Corp. and a copyof the corporation’s 2017 financial statement. (

r) Within 60 days the ongoing child support payable by M.H. shall be adjusted as of September 1, 2018, based on his 2017 personal andcorporate tax returns. (

s) By July 1 of each year, commencing in 2019, M.H. shall provide to A.B. a copy of his complete personal tax return for the prior yeartogether with a copy of any notice of assessment or reassessment within 30 days of receipt of the same. He shall also provide a completecopy of the tax return of Dr. M.H. Medical Practice Prof. Corp. and its financial statement, for the prior year. (

t) The child support payable shall be adjusted as of September 1 of each year. (

u) In the event the parties cannot agree on the amount of retroactive child support payable, or the support payable as of September 1,2018, I shall remain seized of those issues. Either party may contact the Local Registrar to arrange a conference call, in the first instance. [56] The appellant contends that the trial judge made errors in the calculation of both ongoing and retroactive child support. As isthe case with orders relating to custody and access, a deferential standard of review applies to support orders.

Appellate courts should notoverturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the awardis clearly wrong: Hickey v Hickey, (SCC), [1999] 2 SCR 518; P.M. v S.M., 2019 SKCA 111; Schimelfenig vSchimelfenig, 2014 SKCA 77, 442 Sask R 30; D.B.B. v D.M.B., 2017 SKCA 59; Bergquist v Bergquist, 2014 SKCA 20, 433 Sask R 173. A. The parties’ arguments [57] The appellant’s primary argument regarding child support relates to the calculation of his income for 2015, 2016 and 2017.

Heargues that the trial judge made a legal error by using the “grossed up” value of dividends that the appellant paid himself from hisprofessional corporation, rather than the actual value of those dividends, when calculating income for those years. The appellant contendsthat, in doing so, the trial judge contravened the provisions of s. 16, and

Schedule III, s. 5 of the Guidelines. The net effect of this error,says the appellant, is that he was ordered to pay child support for each of those years based on an income that was substantially higherthan ought to have been the case. [58] The respondent counters this argument on two fronts. First, she argues that the appellant did not raise the argument at trial.

Shesays at trial the appellant had argued that only the full line 150 income from his personal tax return (which included the “grossed up”taxable amount of dividends he received) in each of those years should be used for the purpose of determining his child support obligation,but that no income earned by his professional corporation should be attributed to him.

The respondent contends that because the appellantmade the strategic choice to take no issue with the inclusion of the taxable amount of dividends at trial, but instead argued unsuccessfullyagainst the imputation of any corporate income, he cannot change courses now and this Court should not consider this argument. [59] In the alternative, the respondent submits that, even if this Court entertains the appellant’s argument on this issue, the trialjudge had discretion under s. 18(1) of the Guidelines to attribute the pre-tax value of dividends as income available to the appellant forchild support purposes.

The respondent argues that the trial judge properly exercised his discretion in that regard, and thus there is nobasis for intervention on appeal. [60] The second error alleged by the appellant relates to a payment of $6,000 made to the respondent prior to J.I.’s birth. At trial, therespondent testified that this was money the appellant provided to her for the purpose of outfitting a room in her home for J.I. Sheacknowledged that she used the money to purchase a crib, dressers, a change table, clothing, diapers, and “everything” needed for J.I.’sroom.

The appellant argues that the trial judge erred by not including this amount as child support already paid when determining thequestion of retroactive support. [61] The respondent counters this argument by asserting that the appellant did not raise it at trial. Although the evidence regardingthe $6,000 payment was clearly before the trial judge, the respondent says the appellant did not argue at trial that this amount should beconsidered as child support.

As such, she contends, the trial judge made no error in not finding it to be. [62] The appellant also alleges a third error on the part of the trial judge relating to child support. He contends that the trial judgeerred by ordering an “arbitrary and non-revisable amount of ongoing support”, and by directing that retroactive support for 2017 and 2018“not be based on the Appellant’s actual incomes for those years”.

He says that, in light of the evidence relating to the suspension of hismedical licence, it ought to have been clear to the trial judge that his income would be significantly reduced for those years and the trialjudge should have requested more current income information or made provision for adjustment of the support amounts owing. [63] The respondent opposes this argument by pointing out that decisions relating to child support are often somewhat backward-looking because a person’s true income picture for a given year is never really known until a year later, when income tax information isfinalized.

Furthermore, the respondent notes that the Trial Decision makes very clear provision for adjustments to the amount of childsupport payable in response to annual changes in income and also provides a mechanism to return the matter to the trial judge to deal withthe calculation of the amount of retroactive support owing in the event that the parties are unable to agree. B. Analysis

“Gross-up” of dividends [ 64 ] In his 2014 personal tax return, the appellant reported a line 150 income of $463,871. This was comprised almost entirely of net business income. [ 65 ] In February of 2015, the appellant incorporated his medical practice into a professional corporation. His reported line 150 income for 2015 was $260,485, which included “[t]axable amount of dividends” income of $121,811.

The appellant’s professional corporation reported a net pre-tax income for 2015 of $174,415, out of which it paid an actual dividend of $103,230 to the appellant. [ 66 ] In 2016, the appellant’s reported line 150 income was $223,562, which included “[t]axable amount of dividends” income of $119,340.

The appellant’s professional corporation reported a net pre-tax income for 2016 of $211,189, out of which it paid an actual dividend of $102,000 to the appellant. [ 67 ] In deciding whether to attribute the pre-tax income of the professional corporation to the appellant, the trial judge considered s. 18 of the Guidelines . He also cited and relied upon this Court’s decision in Thompson v Bear , 2014 SKCA 111 , 378 DLR (4th) 649 [ Thompson ]. Ultimately, the trial judge concluded that it was appropriate to attribute pre-tax corporate income to the appellant for child support purposes.

In that regard, he wrote : [105] M.H. takes the position it is not appropriate to attribute any of the corporate pre-tax income to him as it is required for business purposes. His evidence was that during those periods in which he was practicing medicine in Ontario, he incurred significant travel expenses including flights and vehicle expenses. However, there was no evidence lead to quantify these expenses.

I note that in both 2015 and 2016 he reported significant travel expenses which were paid out of corporate income prior to coming to the corporation’s taxable income. [106] M.H. testified that while the corporate financial statement may refer to “retained earnings” there is “no cash in the bank”. However, by way of example, I note that in 2017, he testified that the corporation had paid out approximately $40,000 – $50,000 to purchase two vehicles for his use. One in Saskatchewan and one in Ontario.

Capital expenditures will affect cash on hand but there is no evidence of expenditures of significance in 2015 or 2016. [107] M.H.’s line 150 income in 2013 and 2014 was significantly greater than his line 150 income in 2015 and 2016.

While there was another anesthesiologist in [Saskatchewan] as of the end of 2014, and this may account for some reduction in M.H.’s income, I am of the view that the substantial difference in income levels pre and post incorporation and the fact there is pre-tax income left in the corporation in each year, that his line 150 income, as contemplated by s. 16 of the Guidelines , does not fairly reflect the money available to him for the payment of child support.

It is appropriate to consider the attribution of income pursuant to s. 18 . [108] I am satisfied that M.H.’s evidence does not rise to the level of satisfying the onus upon him of explaining why the pre-tax income of his professional corporation is not available to him for child support purposes. I am satisfied that it is appropriate to include all of the pre-tax income of the corporation into M.H.’s income for Guidelines purposes.

As the authors Marzban and Wood observed, corporated professionals are less likely than others to establish legitimate business calls on pre-tax corporate income. [ 68 ] Contrary to the position he took at trial, on appeal the appellant does not take issue with the trial judge’s decision to attribute to him the pre-tax income from his professional corporation for the purpose of determining his child support obligation under the Guidelines .

He alleges error only in respect of the trial judge’s decision to use the “grossed-up” or taxable amount of the dividend that he paid himself out of the corporation in that calculation, as opposed to the actual amount of dividend paid. [ 69 ] The appellant argues that this is a clear error because of the wording of s. 16 and

Schedule III, s. 5 of the Guidelines . Those provisions read as follows: Calculation of annual income 16 Subject to sections 17 to 20 , a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with

Schedule III. …

SCHEDULE III (

Section 16 ) Adjustments to Income … Dividends from taxable Canadian corporations 5 Replace the taxable amount of dividends from taxable Canadian corporations received by the spouse by the actual amount of those dividends received by the spouse. [ 70 ] In the Trial Decision , the trial judge referred to

Schedule III, s. 5 of the Guidelines when considering the question of how the dividend should be treated for the purpose of calculating the appellant’s income. He concluded that using the grossed-up value was necessary to fairly reflect the tax advantage the appellant obtained by receiving that income as a dividend, rather than as employment income. In that regard, the trial judge wrote: [103] Once M.H. incorporated his professional medical corporation his personal tax return includes taxable dividends from the professional corporation.

Schedule III of the Guidelines dealing with adjustments to income, provides in s. 5 that the taxable amount of

dividends from a taxable Canadian corporation are to be replaced by the actual amount of dividends received. However, as explained in Dand v Ady , 2014 SKQB 101 , at para 6 , 441 Sask R 251, where the spouse is a shareholder of a company and receives dividends in lieu of salary, that spouse’s income should be determined by using the taxable amount of the dividend.

This is necessary to ensure that a spouse who receives a dividend in lieu of salary does not attain any advantage over a spouse who receives the same amount simply as salary. [104] If the pre-tax income of M.H.’s professional corporation, net of the declared dividend (because the dividend is paid out of after tax income) is to be added to M.H.’s line 150 income, there would be an attribution in 2015 of $71,185 for a Guidelines income of $331,670.

In 2016 it would be $109,189 which would be attributed to him, for a Guidelines income of $332,751. [ 71 ] It is apparent from this passage that the trial judge calculated the appellant’s income for 2015 and 2016 using the following formula: line 150 income + pre-tax income of corporation – actual dividend paid to the appellant [ 72 ] Included in the appellant’s line 150 income for each of those years was the dividend paid to him by the professional corporation, grossed up to reflect its taxable value.

In 2015, the actual value of the dividend paid by the professional corporation was $103,230, which “grossed up” to $121,811 for the purposes of line 150 of his personal tax return. In 2016, the actual dividend paid to the appellant was $102,000, which grossed up to $119,340 in line 150. [ 73 ] The appellant says, by virtue of the wording of

Schedule III, s. 5 of the Guidelines , the trial judge was required to substitute the actual value of the dividend paid in each of those years in place of the taxable amount and adjust his line 150 income accordingly. Doing so would reduce the appellant’s 2015 income from $331,670 to $313,089, and his 2016 income from $332,751 to $315,411. [ 74 ] The appellant argues that the trial judge erred by following the decision in Dand v Ady , 2014 SKQB 101 , 441 Sask R 251 [ Dand ] .

He contends that the decision in Dand (which the trial judge also authored) and a number of other Saskatchewan decisions which endorse the approach employed in that case were wrongly decided because they rely on the erroneous proposition that, when calculating income for child support purposes, a court must use the taxable value of a dividend received from a closely-held corporation rather than the actual dividend in order to offset the tax benefit realized by the person receiving income in that way. The appellant asserts that this line of reasoning ignores the clear direction in

Schedule III, s. 5 of the Guidelines regarding the treatment of dividend income. [ 75 ] After the appeal was heard, the appellant applied for leave, pursuant to Rule 38 of The Court of Appeal Rules , to raise new arguments and submit new authorities in relation to this issue. In particular, he refers to the decision of the Ontario Superior Court in Austin v Austin (2008), 45 RFL (6th) 401 [ Austin ] , and seeks to make further arguments as to the proper

interpretation of that decision. [ 76 ] In the circumstances of this case, I find that it is not appropriate to grant leave to raise the new arguments or submit the additional authorities at this stage. I reach that conclusion for two reasons. [ 77 ] First, in my view, the appellant’s proposed new argument does not raise a new point of law. It relates to an issue what was thoroughly canvassed in his factum and in oral argument.

The proposed new material simply seeks to expand on that argument and put a new gloss on it. [ 78 ] Second, the additional authorities which appellant seeks to submit, namely Austin ; Gursky v Gursky , 2008 SKQB 253 , 317 Sask R 186 [ Gursky ]; and Rawluk-Harness v Harness , 2014 ONSC 2531 , 46 RFL (7th) 425 [ Rawluk-Harness ], are not new decisions.

They are all published decisions that existed at the time of the oral hearing and of which this Court was already aware. [ 79 ] Accordingly, I would deny the appellant’s application for leave under Rule 38 with costs to the respondent, fixed at $1,500. [ 80 ] I return now to the question of whether the trial judge erred in his treatment of the appellant’s dividend income for child support purposes. For reasons that I will develop, I find that this argument has merit, and reveals an error in the Trial Decision that requires this Court to intervene. [ 81 ] I begin with the relevant sections of the Guidelines .

The objectives of the Guidelines , listed in s. 1 , include: “(a) [establishing] a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation” and “(d) [ensuring] consistent treatment of spouses and children who are in similar circumstances”. [ 82 ]

Section 15 of the Guidelines provides that a spouse’s annual income, for child support purposes, is to be calculated in accordance with ss. 16 –20.

Section 16 (which is reproduced earlier in these reasons) requires income to be determined by the sources set out under the heading “Total income” in the Canada Revenue Agency’s T1 General form, adjusted in accordance with

Schedule III.

Section 16 also states that this determination is “[s]ubject to sections 17 to 20”. [ 83 ]

Section 17 permits deviation from the method of calculation set out in s. 16 by using a three-year average where, due to fluctuation of income or receipt of non-recurring amounts, calculation under s. 16 would not result in the fairest determination of income. [ 84 ] Sections 18 and 19 also permit deviation from the method of calculation set out in s.

Section 18 provides for attribution of corporate income, while s. 19 permits imputation of income in certain circumstances. Those sections read, in part, as follows: Shareholder, director or officer 18

(1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under

section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in

section 17 and determine the spouse’s annual income to include (

a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or

(

b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed thecorporation’s pre-tax income. Adjustment to corporation’s pre-tax income

(2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries,wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm’slength must be added to the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. Imputing income 19(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstancesinclude the following: … (

b) the spouse is exempt from paying federal or provincial income tax; (

c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada; (

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

g) the spouse unreasonably deducts expenses from income; (

h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate thanemployment or business income or that are exempt from tax[.] [85]

Section 20 makes allowance for departure from the strict application of s. 16 in order to achieve fairness in situations where oneparty is a non-resident of Canada or where there are significant tax differences between the jurisdictions in which the parties reside. [86] As this Court stated in Potzus v Potzus, 2017 SKCA 15 at para 76, [2017] 7 WWR 296, the overall objective of ss. 16–20 of theGuidelines is to find an amount that fully and fairly reflects the income available for child support purposes.

The text of those sectionsmakes it clear that the tax treatment of income earned by a party is a significant part of that consideration. [87] In Olchowecki v Olchowecki, 2005 SKQB 144, 267 Sask R 83 [Olchowecki], Wilkinson J. described the step-by-step approachthat is to be applied in determining income for child support purposes: [10] The basic approach in the determination of income is therefore: (1) to employ s. 16 to determine annual income for the year in which the application is heard, using the most current source(

s) of incomeinformation available; (2) the combined effect of ss. 16 and 17 dictates that if there is a material difference between the historical pattern of income and thedetermination under s. 16, the latter should be questioned for fairness; (3) the mere fact of difference does not make the s. 16 determination unfair. The degree of permanence associated with the difference, thequality of the change in income from historical levels, and the reasons giving rise to the change must all be considered: See Fuzi v. Fuzi, (BC SC), [1999] B.C.J. No. 2263 (B.C.

S.C.) (QL); (4) there is an additional test of fairness applied to a s. 16 determination of income if s. 18 is implicated. If the income earner is ashareholder, director or officer of a corporation, the determination of income may include: (

a) all or part of the pre-tax income of the corporation or any related corporation for the most recent taxation year; or, (

b) an amount not exceeding that pre-tax income which is commensurate with the services provided to the corporation.

Added to the pre-tax income are any amounts paid to or on behalf of persons who are not at “arm’s length” unless the payments areproved to be reasonable; (5) fairness in the application of s. 18 will depend on the nature of the relationship between the income earner and the corporation, thenature of the corporation’s business, the legitimate calls on the corporate income, and the corporation’s capitalization requirements, withthe court having the ability to consider the historical income pattern of the spouse and non-recurring gains or losses: See: Kowalewich v.Kowalewich, 2001 BCCA 450, (2001), 19 R.F.L. (5th) 330 (B.C.C.A.) and Boser v.

Boser, 2003 SKQB 477, (2003) 240 Sask. R. 55(Q.B.); (6) lastly, s. 19 operates to impute additional income in appropriate circumstances, including, but not limited to, the enumerated situationsin subparagraphs (

a) through (i). Furthermore, imputed income can be used for the purpose of determining a pattern of income over threeyears pursuant to s. 17 as well as current income: See: Schnell v. Schnell, 2001 SKCA 123, (2001), 213 Sask. R. 174 (C.A.). [88] Olchowecki was recently cited with approval by this Court in Walker v Walker, 2019 SKCA 96 at paras 28–31, whereWhitmore J.A. observed that s. 19 of the Guidelines confers judicial discretion to impute income to a payor spouse whose income as listedin a tax return does not truly represent the income available for child support purposes. In that respect, s. 19 is inextricably linked to, anddesigned to work in tandem with, s. 18.

[89] In Canadian Family Law, 6th ed (Toronto: Irwin Law, 2015) at 481, Julien D. Payne and Marilyn A. Payne wrote: The Federal Child Support Guidelines base support payments on the payor’s gross taxable income.

One of the objectives of theGuidelines is to ensure “consistent treatment” of those who are in “similar circumstances.” Thus, there are provisions to impute incomewhere a parent is exempt from paying tax, lives in a lower taxed jurisdiction, or derives income from sources that are taxed at a lower rate.Where a parent arranges his or her affairs to pay substantially less tax on income, the income must be grossed up before the table isapplied.

This is the only way to ensure the consistency mandated by the legislation. … (Footnote omitted) [90] From all of this, it is clear that the task of a judge in a proceeding where child support is in issue is to determine the incometruly available to the parties for that purpose. Such a determination must take into account the advantages or disadvantages created by thetax treatment applied to income from different sources. This, in my view, is why ss. 18 and 19(1)(b), (c), (d), (

g) and (h), in particular,provide judges with broad discretion to attribute or impute income based on tax considerations. [91] In this case, the trial judge attributed the full amount of the pre-tax income of the appellant’s corporation to him for childsupport purposes under s. 18(1) of the Guidelines. In addition, the trial judge also imputed the grossed-up value of dividends the appellantpaid himself from the corporation as income under s. 19(1)(h).

Even though the trial judge did not explicitly state that he was imputing thegrossed-up amount of the dividend to the appellant under s. 19(1)(h), the line of jurisprudence underlying his reasoning demonstrates hedid exactly that. This is evident from his reference, at paragraph 103 of the Trial Decision, to Dand. In Dand, the trial judge cited andfollowed his own decision in Gursky which, in turn, cited and followed Austin. [92] Austin was a case in which the payor parent was the sole shareholder of a corporation. The corporation paid him entirely individends, instead of salary.

The question before the Court was whether it should calculate the payor parent’s income using the actualamount of dividends received, pursuant to s. 16 and

Schedule III, s. 5 of the Guidelines, or impute the grossed-up value of the dividends asincome pursuant to s. 19(1)(h). Justice Smith considered both ss. 18(1) and 19(1)(h), and determined that it would be appropriate to imputethe grossed-up value of the dividend to the payor under s. 19(1)(h), stating: [24] If s. 5 of

Schedule III of the Guidelines was followed, the husband’s income for child support purposes would be much lower thanif the income was taken from the corporation as salary. I find that s. 5 of the

Schedule III of the Guidelines was intended to apply to asituation where investment income is received as dividends from corporations not controlled by either spouse. Applying s. 5 to thesituation before me would undermine the objective set out in s. 1(

d) of the Guidelines which states that parents and children in similarcircumstances should be treated alike for purposes of child support. Alternately, s. 5 of

Schedule III could be used as a first step in theanalysis and the amount of income increased under s. 19(1)(

h) as a second step to ensure that the amount of income attributed to theshareholder receiving dividend income from a company controlled by him or her, pays a similar amount of child support as the personearning a similar amount as salary. [25] In the circumstances of this case, I find that s. 18(1) or s. 19(1)(

h) of the Federal Child Support Guidelines should be applied andwould be a fairer method to determine child support where the corporation is solely controlled by the payor spouse. … [26] In the case of Riel v. Holland (2003), (ON CA), 42 R.F.L. (5th) 120, 67 O.R. (3d) 417 (Ont. C.A.), the Court ofAppeal agreed with the general approach adopted in Orser v. Grant, [2000] O.J. No. 1429 (Ont. S.C.J.) and a number of other cited casesand held that where a parent arranges his or her affairs to pay substantially less tax on income, the income must be grossed up before theTable amount is applied under the Guidelines.

The court found that this was the only way to ensure the consistency mandated by thelegislation. [27] In Riel, supra at para. 35, the Court of Appeal held that an

interpretation of ss. 18 and 19 of the Guidelines which would imputethe same income to two parents, one earning a salary and the other earning business income (through a corporation) should be followed toensure consistent treatment to child support payors. [93] The Court in Austin determined that, because the payor parent paid himself a dividend from the corporation for reasons relatedto tax savings – and no pre-tax corporate income was being attributed to him under s. 18(1) – the dividend should be grossed up byapplying s. 19(1)(

h) of the Guidelines to equalize it with the equivalent amount of salary. In that regard, Smith J. wrote: [30] In this case, the husband did not actually reduce the amount of taxes that he paid when the taxes, which are paid by hiscorporation, are included. Applying s. 19(1)(h), the husband’s dividend income will be grossed up to equalize it with the equivalentamount of salary, which the corporation could have paid out as salary, instead of having the corporation pay some income taxes and paythe husband a smaller income as dividends. However, as Lane J. observed in Manis v. Manis, [2000] O.J. No. 4539 (Ont.

S.C.J.), “Thefundamental principle is that the Court must estimate the actual means which the paying parent has available for child support. ...”Accordingly, attempting to achieve absolute consistency between salaried employees and the self employed is neither necessary norappropriate. [31] Section 19(1)(

h) allows the court to impute income to a party if he or she receives a substantial part of their income as dividends.On the facts of this case, I find that imputing an income to the husband for child support purposes under s. 19(1)(

h) or using s. 18(1)based on the amount available for distribution by the corporation by way of salary, after a reasonable amount is allowed for retainedearnings, produces a result that ensures consistency in child support between a parent earning salaried income and a parent receivingdividends from a corporation controlled by the payor. (Emphasis added) [94] The trial judge’s comments at paragraph 103 of the Trial Decision and his reference to Dand indicate that he interpreted Austinas standing for the proposition that imputation of the grossed-up value of dividends under s. 19(1)(

h) of the Guidelines is appropriatewhen those dividends are derived from a sole-shareholder corporation. [95] In addition to following his own decision in Dand on this point, the trial judge in this case has also authored a number of other

decisions that have followed that approach in similar circumstances (see, for example, Gursky ; Hannah v Warner , 2008 SKQB 28 , 308 Sask R 167; R.E.G. v T.W.J.G. , 2011 SKQB 269 , 376 Sask R 1; Larson v Larson , 2014 SKQB 258 ; Michel v Perrson , 2017 SKQB 244 ). These decisions can hardly be described as outliers.

In fact, the imputation approach set out Dand , and followed in the Trial Decision , has been employed in a number of other Saskatchewan decisions (see, for example, Babich v Babich , 2015 SKQB 22 , 466 Sask R 259; Podruchny v Evans , 2018 SKQB 262 ). [ 96 ] The Dand approach has also been endorsed and applied in a number of decisions from other provinces, including Megson v Megson , 2014 BCSC 2467 at para 166 , 56 RFL (7th) 369; A.M.W. v B.W. , 2018 ABQB 518 ; Shaw v Przybylski , 2014 ABQB 667 at paras 38–48 [ Shaw ]; D.E. v L.E. , 2014 NBCA 67 [ D.E. ]; Purdue v Purdue , 2014 NBQB 262 , 431 NBR (2d) 23 [ Purdue ]; Hamilton v Hamilton , 2010 NSSC 198 , 292 NSR (2d) 318; and Rawluk-Harness . [ 97 ] In Shaw , Graesser J. succinctly summed up the reason why it is permissible and, in some cases, appropriate to apply s. 19(1) (

h) of the Guidelines to impute the pre-tax value of a dividend as income in the hands of a payor parent (at paras 39–48): [39] Rhetorically, why would the children of an employed parent share less of the parent’s after-tax income than do the children of a parent who is in receipt of dividends? [40] There is no answer to that which is obvious to me. [41] In any event,

Schedule III says what it says, and the Courts are bound by that. [42] The answer to my concern is be found to some extent in s. 19 of the Guidelines . … [43]

Section 19(

h) permits the imputation of income where “the spouse derives a significant portion of income from dividends, capital against or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax”. [44] It is curious that

Schedule III recognizes that the tax exempt portion of a capital gain is to be added back into the payor’s income ( s. 6 ). That seems inconsistent with the treatment of dividends in

Schedule III, especially when s. 19 (g) [ sic ] is limited to circumstances where the spouse is getting a “significant portion” of his or her income from dividends or capital gains.

Schedule III deals with all such income. [45] In any event, there may be valid policy reasons for the differential in treatment and that is a matter left for the legislators. Judges are only able to interpret their legislation as best as we can. [46] In the absence of detailed tax calculations, I am prepared to assume that the total income tax paid by Mr.

Przybylski on $100,000 of employment income would be similar to the amount of the grossed-up amount of $100,000 of actual dividend income (38 percent for 2013, or $138,000). [47] In my view, children should be treated the same, whether income is derived from employment or from dividends, in whole or in part. [48] I thus conclude that Mr. Przybylski’s guideline incomes for 2012 and 2013 should be based on his line 150 income, which reflects the grossed-up amount of dividends.

He received the majority of his 2012 and 2013 income from dividends and s. 19 (g) [ sic ] is clearly and properly invoked. [ 98 ] In Henderson v Casson , 2014 ONSC 720 , 42 RFL (7th) 357, the Court was required to determine the parents’ income for child support purposes for the years 2008 through 2013. One parent received a significant amount of dividend income, from various corporations, in each of those years.

At paragraphs 140–174 of the decision, Trousdale J. applied the analysis from Austin and determined that parent’s income should include only the actual amount of some of the dividends but should include the grossed-up amounts of others. The determination with respect to the treatment of each individual dividend depended on a number of factors, including the portion of the payor’s total income the dividend represented, the reason for the payment of the dividend by the corporation, and whether the dividend was a regular occurrence or a non-recurring event. [ 99 ] All of this makes clear that

Schedule III, s. 5 of the Guidelines does not require a judge to reflexively substitute the actual amount of dividends for the taxable amount for the purpose of determining income for child support in all cases.

Schedule III adjustments fall within the scope of s. 16 of the Guidelines , and s. 16 is subject to the provisions of ss. 17 –20. [ 100 ] In situations where a parent derives a significant portion of his or her income from dividends or other sources taxed at a lower rate than employment or business income, or sources which are exempt from tax, s. 19(1) (

h) gives judges discretion to impute such income as is considered appropriate in the circumstances. Imputing income under s. 19(1) (

h) will often be appropriate where dividends are received from a corporation in which the recipient is the sole shareholder. As Larlee J.A., of the New Brunswick Court of Appeal noted in D.E. (citing Austin with approval) : [12] … s. 5 [of Sch III] applies where dividends are received from a Canadian corporation not controlled by either spouse (para. 24). That

section does not preclude a court from imputing additional income to a spouse who is the sole shareholder of a company and who elects to receive dividends from the company in lieu of salary. Smith J. points out in the circumstances of that case, “ s. 18(1) or s. 19(1) (

h) of the Federal Child Support Guidelines should be applied and would be a fairer method to determine child support where the corporation is solely controlled by the payor spouse” (para. 25). [ 101 ] Of course, while s. 19(1) (

h) confers a discretion to impute the grossed-up value of dividend income received from a closely-held corporation when calculating income for child support purposes, rather than substituting the actual amount of the dividend in accordance with

Schedule III, s. 5, it is not correct to say that a judge is always required to do so. In some cases, it will clearly be inappropriate to do so. Each case must be decided on its own circumstances and evidence. In Purdue , for instance, the Court endorsed the approach set out in Austin and Dand but held that, because the payor parent had little control over how much of a dividend he received from the corporation, it was appropriate to use the actual amount rather than the grossed-up amount in calculating his income.

[ 102 ] In Howe v Howe , 2013 SKQB 74 [ Howe ], Barrington-Foote J. (as he then was) cited Austin as a helpful analysis but determined that in the particular factual circumstances before him, where the mother earned the bulk of her income in the form of dividends from her own company and the father was a teacher who received all of his income as salary, it was not to appropriate to use the grossed-up value of the dividends when calculating the mother’s income for child support purposes.

This was because Barrington-Foote J. attributed the pre-tax income from the mother’s company to her under s. 18(1) of the Guidelines and, in light of that, the consistency of treatment required by the Guidelines was achieved by using the actual amount of the dividend paid, rather than imputing the grossed-up amount under s. 19(1) (h).

In that regard, he wrote: [11] The respondent is correct in noting that dividend income attracts different tax treatment than employment income, and that there are some occasions when it is necessary for the court to gross up dividend income in order to determine income for purposes of the Guidelines . That issue is dealt with in s. 19(1) (

h) of the Guidelines … … [12] It does not follow, however, that dividend income must be adjusted in this case. The issue in dealing with dividend income is to achieve the goal stated in s. 1 (

d) of the Guidelines , which is as follows: 1. The objectives of these Guidelines are ... (

d) to ensure consistent treatment of spouses and children who are in similar circumstances. … [14] In this case, the corporation had pre-tax income of $54,760.24 for the period ending December 31, 2012. There is no need for a reserve to be held in the company. Accordingly, the petitioner could have chosen to have the company pay her that entire amount as salary.

Section 18 of the Guidelines provides that the court can include all or part of the pre-tax income of a corporation in calculating income. I find that $54,760.24 should be included in the petitioner ’ s income for 2012 on this account. [15] The fact that this income will actually be paid as dividends does not mean that the respondent will ultimately bear the burden of significantly less tax.

That is so due to the fact that the scheme for taxation of dividends from taxable Canadian corporations is designed to result in the payment of tax by the corporation and the recipient of the dividend, taken together, in an amount equivalent to what the recipient would have paid on employment income equal the corporate profits used to pay the corporation’s tax and the dividends. The petitioner is the sole owner of the corporation.

She will effectively bear the burden of both the corporation’s taxes and those she pays on her dividend income. (Emphasis added) [ 103 ] In Howe , Barrington-Foote J. recognized, correctly in my view, that attribution of pre-tax income from the corporation alone will often achieve the goal of consistency in the treatment of income for child support purposes. This is entirely consistent with the thread running through the jurisprudence, namely that the discretion provided in s. 19(1) (

h) must be exercised in tandem with s. 18(1) to ensure that the income of the party receiving dividends from a corporation properly reflects all the money available for child support purposes, and achieves the consistency of treatment required by the Guidelines . [ 104 ] In some cases where a party receives dividend income from a closely-held corporation, achieving those goals will require the court to attribute corporate pre-tax income under s. 18(1) of the Guidelines . In others, it will be appropriate to impute the grossed-up value of dividends received from the corporation under s. 19(1) (

h) to achieve those goals. There may also be instances in which it is appropriate to do both, and yet others in which it is appropriate to do neither. It all depends on the particular circumstances of the case. [ 105 ] It is also trite to say that the decision to attribute corporate income under s. 18(1) , or to impute the grossed-up value of a dividend under s. 19(1) (

h) instead of using the actual amount of the dividend cannot be arbitrary. It must be based on evidence which supports the conclusion that doing so is appropriate and necessary to reflect the amount of money truly available for child support purposes, and to achieve the consistency of approach required by the Guidelines . [ 106 ] In this case, the trial judge did both; that is, he attributed the pre-tax income of the corporation to the appellant under s. 18(1) of the Guidelines , and he imputed the grossed-up value of the dividends under s. 19(1) (h).

While he gave detailed reasons as to why attributing corporate income under s. 18(1) was appropriate and necessary, the judge failed to conduct any analysis of the evidence with respect to imputation under s. 19(1) (h). He simply cited Dand and concluded that because the appellant received a substantial amount of his income in the form of dividends from his own corporation in 2015 and 2016, imputation of the grossed-up value of the dividends should occur.

He did not analyse whether the way in which the appellant structured his income actually resulted in tax benefits that made imputation of the grossed-up value of the dividends necessary to achieve consistency of treatment. Nor did he consider whether the requisite consistency had already been achieved through attributing pre-tax corporate income under s. 18(1) . The failure to conduct such an analysis was, in my view, an error in principle. [ 107 ] The trial judge also erred in principle, in my view, by finding that it was appropriate to impute the grossed-up value of the dividends as income under s. 19(1)(

h) rather than substituting the actual amount under s. 16 via

Schedule III, s. 5 in the absence of evidence supporting such a finding. In this case, there was simply no evidence from which to conclude that, by paying dividends to himself from the corporation in the amounts that he did, the appellant had received a tax advantage of such a nature as to make imputation of the grossed-up amount of the dividends under s. 19(1) (

h) of the Guidelines , in addition to attributing the pre-tax value of corporate income under s. 18(1) , appropriate. [ 108 ] It falls, then, to this Court to intervene. Based on the evidence that was before the trial judge, and considering the decision to attribute the full amount of the appellant’s pre-tax corporate income to him for the purpose of calculating child support, I see no basis upon which to impute the grossed-up value of the appellant’s dividend income rather than using the actual amount paid. The appellant had

already paid tax – at the corporate level – on the corporate income, before paying himself the dividend, and again – at the personal level – on the taxable amount of the dividend. Applying the reasoning set out in paragraph 15 of Howe , I see no basis in the evidence to conclude that any measure other than the attribution of pre-tax corporate income was necessary to reflect the full amount of income available to the appellant for child support purposes or achieve consistency of approach under the Guidelines . [ 109 ] Accordingly, I would allow this ground of appeal and vary the child support order made by the trial judge (as set out at paragraphs 119(m), (

n) and (

o) of the Trial Decision ) to the following extent: (

a) As of January 1, 2015, the appellant’s Guidelines income is found to be $313,089 and he shall pay child support to the respondent commencing January 1, 2015, in the sum of $2,452 per month payable on the first of each month. (

b) As of January 1, 2016, the appellant’s Guidelines income is found to be $315,411 and he shall pay child support to the respondent commencing January 1, 2016, in the sum of $2,470 per month payable on the first of each month with respect. (

c) As of December 1, 2017, the appellant shall pay child support to the respondent of $2,561 per month payable on the first of each month therea

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