Zenia Marie Birnie Appellant (Respondent) v. William Phillip Birnie, 2021 SKCA 107

Court of Appeal for Saskatchewan Docket: CACV3540 Citation: Birnie v Birnie , 2021 SKCA 107 Date: 2021-08-04 Between: Zenia Marie Birnie Appellant (Respondent) And William Phillip Birnie Respondent (Petitioner) Before: Ottenbreit, Schwann and Leurer JJ.A. Disposition: Appeal dismissed; overpayment of spousal support issue remitted for determination Written reasons by: The Honourable Mr. Justice Leurer In concurrence: The Honourable Mr.

Justice Ottenbreit The Honourable Madam Justice Schwann On appeal from: 2019 SKQB 303 , Regina Appeal heard: May 19, 2021 Counsel: David Couture for the Appellant Gerald Heinrichs for the Respondent Leurer J.A. I. INTRODUCTION [ 1 ] This appeal concerns the amount of child support to be paid to the appellant, Zenia Birnie, by the respondent, William Birnie. [ 2 ] Ms. Birnie appeals the trial decision of a judge of the Court of Queen’s Bench: Birnie v Birnie, 2019 SKQB 303 , 32 RFL (8th) 54 [ Trial Decision ].

Her appeal focuses on various findings made by the trial judge leading to his determination of the income Mr. Birnie had available from which to meet his child support obligations. [ 3 ] I would dismiss Ms. Birnie’s appeal but for one issue which I would remit to the Court of Queen’s Bench for determination. My reasons follow. II. BACKGROUND A. The litigation [ 4 ] The parties were married in 1991. They have two children, born in 2001 and 2003. They separated in 2008. A petition was issued by Mr. Birnie in 2009.

Judgment for divorce was granted in 2013. [ 5 ] The parties entered an interspousal agreement on April 27, 2011. It resolved issues relating to the division of family property and the payment of spousal support. The interspousal agreement further provided that: (

a) the primary residence of the children would be with Ms. Birnie; (

b) Mr. Birnie would pay child support to Ms. Birnie in the amount of $1,000 per month until that amount was varied by agreement or court order; (

c) Mr. Birnie would not apply to vary the amount of child support until after June 1, 2014; and (

d) after June 1, 2014, the parties would exchange income tax returns and other necessary documents required by the Federal Child Support Guidelines , SOR/97-175 [ Guidelines ] to properly assess their respective incomes and, from this, Mr. Birnie’s ongoing child support obligations. [ 6 ] The parties were unable to agree on the amount of child support Mr. Birnie should pay after June 1, 2014. Their disagreement centered on the calculation of Mr. Birnie’s income from his farming and ranching operations. The controversy was heightened because, as of January 1, 2015, Mr.

Birnie began to conduct his farming operations through a corporation, Mustang Land & Cattle Corp. [Mustang]. [ 7 ] On March 15, 2018, a Chambers judge made an interim child support order based on a determination that Mr. Birnie “has the potential to provide support based on an income of $129,377.75” ( Birnie v Birnie , 2018 SKQB 87 at para 75 , 7 RFL (8th) 188 [ Interim Decision ]). The Chambers judge was persuaded that Mr. Birnie “has access to considerably more than $38,621 [his 2016 line 150 income] with which to fund his child support” (at para 67).

Having said this, the Chambers judge also emphasized that there was “too much controverted material to make anything but an interim order at this time” (at para 72). He also stated that for “ interim purposes … [Mr. Birnie] has not disbursed [ sic ] the onus on him to establish that the pre-tax corporate income should not be utilized to ascertain the money available for support” (at para 73, emphasis added). B. The trial [ 8 ] The trial took place over four days in October 2019. Mr. Birnie and Ms.

Birnie each testified, as did Rob Rabichuk, a chartered professional accountant and chartered business valuator who was called by Mr. Birnie. Mr. Rabichuk was qualified by the trial judge as an

expert to give “professional accounting information and opinion, regarding tax returns and corporate finance matters and corporate tax returns” and to give “expert opinion on professional accounting methods of imputing income from a company to a person who controls a company”. [ 9 ] Mr. Birnie’s personal tax returns showed the following line 150 income: 2015 $131,845 2016 38,621 2017 117,831 2018 37,425 [ 10 ] Ms. Birnie contended that Mr. Birnie’s income for child support purposes should be determined to be an amount that exceeded his historic line 150 income.

Her position was summarized by the trial judge as follows: [52] The mother seeks to have the father’s income assessed as a combination of both his personal income and a considerable income determined for the corporation, and then assigned to the father. She seeks to add back to the father’s income, various items from the corporation, most notably the total of any cattle purchases made during the year. She seeks to add back to the father’s income, the entirety of the amortization deducted in the financial statements by the corporation.

And, she seeks to add in a percentage of certain expenses paid by the corporation, and for which the father receives a personal benefit. [53] The end result of her calculations would place the father’s income over the years as follows: 2014 $150,564.36 2015 787,229.36 2016 428,219.41 2017 530,275.00 2018 368,225.58 [ 11 ] Mr. Birnie took a different view. First, he noted that his 2015 income was significantly affected by his decision to transfer his farm and cattle operation assets (other than most of his land) to Mustang and to operate his farm through that corporation. Mr.

Birnie also took the position that there had been an error in the valuation of the assets that had been transferred to the corporation in 2015. His evidence in this regard was summarized in the Trial Decision as follows: [18] According to the father, at the time of the initial rollover of assets, an error was made by the accountants in valuing certain of the inventory cattle. The error was discovered after the corporation’s 2015 financial statement and income tax return was produced.

As a result, the corporation arrived at valuations, prepared the formal financial statements, and filed its inaugural income tax return. After all of that was done the error was discovered. [19] The father testified his accountant recognized the error which had been made. It appeared from his testimony he also was aware of a problem with the statements as the numbers did not accord with his lived experience on the farm. Upon each of them making this recognition, according to the father, they sat together to attempt to resolve the error.

As a result of their work, the father testified the error was corrected and the value of the inventory cattle was corrected. [ 12 ] Reflecting this mistake, prior to trial, Mustang’s 2015 financial statements had been restated and an amended corporate income tax return had been filed. As explained by the trial judge, the “effect of this correction was to significantly restate the corporate net income, such that it moved from a significant profit to a substantial loss” ( Trial Decision at para 20).

The trial judge further explained the evidence in relation to Mustang’s operations in subsequent years: [22] The corporation has continued to operate. It has had some years of loss and has also had a year of small profit. It appears the farm has essentially continued to operate as it did as the family farm. It may be the cattle operation has been growing over the years. There has been no growth in the land base. The father testified there was an exchange of two quarters with a neighbour for two quarters closer to the home quarter.

The equipment base has remained essentially the same with some relatively minor additions to the pool of machinery. [23] It can fairly be observed the farming operation, and the parties’ lifestyles, are relatively modest. In particular, it appears the father remains living in the old family home. [ 13 ] Mr. Rabichuk offered the opinion that when Mustang’s “undistributed corporate earnings were adjusted, it appears that no additional income would be available for support purposes”. However, Mr. Rabichuk supported making other adjustments to Mr. Birnie’s income for child support purposes.

These adjustments were summarized in the Trial Decision as follows: [59] Mr. Rabichuk removed the amortization on real property pursuant to the provisions of s. 18 of the Federal Child Support Guidelines , SOR/97-175 [ Guidelines ]. With respect to the father’s personal income, Mr. Rabichuk adjusted the income for a non-recurring amount (a capital gain in 2015). He also added back to the father’s income a personal benefit he received for fuel used by his wife, and the amount paid for the children’s cell phones.

These calculations allowed him to arrive at the following levels of income for the father: 2015 $40,712.00 2016 41,706.00 2017 114,423.00 2018 42,863.00 [ 14 ] Ms. Birnie did not call any evidence to rebut that given by Mr. Birnie and Mr. Rabichuk on these points. Instead, her positions were largely developed in argument by her counsel in reliance on the financial records of Mustang, answers given by Mr. Birnie and Mr. Rabichuk in cross-examinations, and adverse inferences she said should be drawn from the failure by Mr. Birnie to call Mustang’s bookkeeper and accountant as witnesses.

C. The Trial Decision [ 15 ] The trial judge identified two broad issues as requiring determination. The first was whether the eldest child continued to be a child of the marriage, thereby obligating Mr. Birnie to pay ongoing support. The trial judge concluded that Mr. Birnie’s support obligation for this child ended as of September 1, 2019. No appeal has been taken from this determination. [ 16 ] The second issue was the amount of Mr. Birnie’s income for child support purposes.

After quoting relevant sections of the Guidelines , the trial judge gave the following self-instruction: [62] The court is therefore directed to use the income as set forth for total income in the payor’s T1 general income tax return as the starting point. However, there is an overarching direction to determine annual income in the fairest way possible, based on the information placed before the court. This is the direction found in s. 17 (fairest determination), s. 18 (fairly reflect), s. 19 (appropriate in the circumstances). [ 17 ] The trial judge noted the efforts that had been taken by Ms.

Birnie’s counsel to delve into some of Mustang’s accounting records: [63] Here, counsel for the mother spent some time cross-examining both the expert, and the father, on certain of the accounting entries. Neither of these individuals were able to answer the specific questions asked. The expert did not have in depth familiarity with the financial operation of the corporation. He had been retained to provide an opinion on the income of the father. The father did not have in depth knowledge of the accounting entries as he relied upon his accountants for their expertise in this regard. [ 18 ] He rejected Ms.

Birnie’s suggestion that an adverse inference should be drawn from Mr. Birnie’s failure to call Mustang’s accountants to explain various individual accounting entries. The trial judge then noted that there was “ no evidence [Mr. Birnie] lives, in any way, an extravagant lifestyle, or that he is living a lifestyle which is suggestive of either a significant income, or an income significantly higher than that which is reported by him” (at para 71). He also found there to be no evidence that Mr.

Birnie was leaving unaccounted for profits in the corporation: [72] There is no evidence to suggest significant funds remain in the corporate coffers or that something untoward is being done in the corporation. There was no evidence tendered to show either the father’s, or the corporation’s, bank accounts are such as to suggest the availability of excess cash. Rather, again, the same, or similar farming operation is being conducted by the father. There is evidence he is working to expand his cattle herd.

There is no evidence to suggest this expansion is untoward or is significantly depleting available resources. [ 19 ] The trial judge rejected Ms. Birnie’s argument that Mustang’s earnings should be restated to account for cattle purchases: [73] The mother seeks to have the annual cattle purchases added back into income. I decline to do this for the following reasons. Firstly, there is no explanation provided for why such a determination would be made. There are purchases and sales of cattle throughout the year. Presumably, some of those purchased are also sold during the course of the year.

As a result, removing the purchases would then, potentially leave an incorrect picture of the revenues of the corporation. Moreover, there has been no basis provided to support a contention the accounting generally is other than what is usually done, nor that there is anything untoward in what the corporation is doing. [74] Secondly, there is no sufficient evidentiary basis provided to show why such a course of action would be appropriate here.

While the father bears the burden of establishing what his income is, he does not bear the burden of anticipating any and every potential argument that might be made on the accounting records. [ 20 ] The trial judge then turned to several specific arguments made by Ms. Birnie relating to deductions claimed by Mustang that had the effect of reducing its income. He noted that Mr. Rabichuk had “ added back in the amortization on real property as directed by the provisions of the Guidelines ” (at para 75). As a result, the trial judge concluded that no additional deductions were required on account of this.

On the other hand, the trial judge accepted Ms. Birnie’s submission that Mr. Rabichuk had failed to account for amortization expenses in relation to non-land-related items. Specifically, he found that the expert’s report had failed to deal with “the fact the value of the capital assets do not appear to be in accord with the limited values of the assets actually transferred in” (at para 83).

After canvassing relevant case law, the trial judge concluded that a restatement of Mustang’s earnings was required because depreciation had been overstated: [88] At this stage in the farming corporation’s operation, it appears a significant percentage of the amortization is, in reality, merely an accounting entry effectively reducing income. The father is not taking steps to replace the capital assets. At some stage, he will need to do that. But, in light of the reality of what is taking place on this farm, that has not been for the last few years, and does not appear to be on the immediate horizon.

In the result, I determine it is appropriate a percentage of this amortization should be considered in the corporation’s income picture, and therefore, perhaps available for the support of the children. [ 21 ] Ultimately, the trial judge found that, for child support purposes, Mustang’s income should be calculated taking into account only 50 per cent of the depreciation expenses it had claimed.

The result of all of this was that the trial judge determined that, for child support purposes, Mustang’s pre-tax income should be treated as being higher than as reported on its financial statements: [89] It is a vexing question then as to how much of the depreciation should be available. It is recognized the father is operating the farming corporation in a viable manner. It is further recognized the capital assets of the corporation, as received into the corporation, will need to be replaced as time goes on.

Amortization is a legitimate method by which the cost of replacement may be offset over the course of time by allowing for depreciation to be accounted for. [90] However, there is no evidence this will be done imminently. There is evidence the father is attempting to avoid any such major expenses. There is further evidence he has been successful at doing this.

[91] In all of the circumstances, I determine that to add back 50% of the amount of this depreciation, on an annual basis, to the corporate net income is a fair and reasonable approach here. As indicated by Wilkinson J., the children’s affairs must be attended to and they are entitled to support. [92] With this determination, the corporation’s income then looks like this: Year 50% Amortization Net Income 2015 55,419 (121,247) 2016 59,764 98,875 2017 59,923 43,891 2018 60,306 12,990 [ 22 ] The trial judge also agreed that Mr.

Birnie must account for the value of some personal expenses paid for by Mustang, but rejected the claim that others be included as income in his hands. Based on all of this, the trial judge concluded that, for the purposes of determining Mr. Birnie’s child support obligations, his income for the previous three years should be calculated as follows: [97] I determine to add one half of the corporate net income, in each of 2016 and 2017, to the father’s income to provide an accurate picture of what income is actually available to him.

I determine to add in the whole of the corporate net income for 2018 due to its minimal amount. This income was available to the father. The children required support. It is not available to the father to simply leave these funds in the corporation, to the detriment of the children. The father’s actual income is therefore determined to be as follows: Year T1 Corporate Expenses Total Income 2016 41,706 49,437.50 4,017.80 95,161.30 2017 114,423 21,945.50 4,250.40 140,621.90 2018 42,863.00 12,990.00 5,263.80 61,116.80 [ 23 ] The trial judge then calculated Mr.

Birnie’s child support obligations for 2016 and following based on the applicable tables: [98] It is on these incomes the father’s child support obligation ought properly to be based. I therefore determine the father’s child support obligation as follows: 2016 1,297.13 (using the 2011 tables) 2017 1,876.59 (using the 2011 tables) 2018 846.66 (using the 2017 tables) 2019 until August 31 846.66 2019 from September 1 506.10 [ 24 ] With respect to 2015, the trial judge held as follows: [99] With respect to 2015, the evidence regarding the restatement of the corporation’s income is unclear.

Was this a restatement of values which had no impact on the actual income of the corporation? Or, was it a restatement of an error in the reported income? Due to the lack of clarity in the evidence, I decline to weigh in to attempt to discover what might be an appropriate income. Rather, I determine the $1,000 which was agreed to in the separation agreement should have continued throughout 2015. [ 25 ] The trial judge determined that the amounts he found to be owing should be adjusted retroactively, as there did not “appear to be any hardship to [Mr.

Birnie] in this regard” (at para 111). [ 26 ] Finally, the trial judge dealt with s. 7 expenses, which are not at issue in this appeal. III. ISSUES [ 27 ] Ms. Birnie’s notice of appeal identifies 12 grounds of appeal. In her factum, Ms. Birnie converted these grounds into nine questions. In oral argument, one ground was abandoned. I accept Ms. Birnie’s remaining eight questions as providing a proper framework to decide her appeal, although I restate them slightly, as follows: (

a) Did the trial judge err in law by creating an obligation on Ms. Birnie to give advance notice of the questions her counsel intended to ask in cross-examination? (

b) Did the trial judge err in law by declining to draw an adverse inference from the failure by Mr. Birnie to call either Ms. Cooper or Ms. Wudrick-Mohrbutter? (

c) Did the trial judge err by failing to determine Mr. Birnie’s 2015 income? (

d) Did the trial judge err in relation to adjustments made to the depreciation on Mustang’s equipment and machinery? (

e) Did the trial judge err by failing to add back to Mustang’s pre-tax corporate income an additional amount for Mr. Birnie’s personal use of Mustang’s vehicle for 2016 and 2017? (

f) Did the trial judge err by failing to impute all of Mustang’s 2016 and 2017 pre-tax corporate profit to Mr. Birnie? (

g) Did the trial judge err by failing to consider Mr. Birnie’s treatment and stockpiling of inventory? (

h) Did the trial judge err in ordering Ms. Birnie to account for the overpayment of child support?

IV. ANALYSIS A. Did the trial judge err in law by creating an obligation on Ms. Birnie to giveadvance notice of the questions her counsel intended to ask in cross-examination? [28] Mustang’s general ledgers were kept by a third-party bookkeeper, Judy Cooper, and the 2015 restatement of financialstatements occurred under the direction of a chartered accountant, Corie Wudrick-Mohrbutter. During cross-examination, both Mr.Rabichuk and Mr. Birnie were asked a series of questions that they indicated could only be answered by Ms. Cooper andMs. Wudrick-Mohrbutter. In closing arguments, Ms.

Birnie submitted that the trial judge should draw an adverse inference from the factthat Mr. Birnie called neither of these two persons as a witness at the trial. [29] The trial judge rejected this argument. He identified Banford v Mitchelson, 2016 SKQB 328 [Banford] as containing a recentstatement of the law with respect to adverse inferences. Ms. Birnie correctly understands that, by referring to Banford, the trial judge wasindirectly orienting himself to the law as stated in the oft-cited decision of this Court, Murray v Saskatoon (City), (SKCA), [1952] 2 DLR 499 (Sask CA).

After invoking this law, the trial judge continued as follows: [66] In this case, the mother had available to her both questioning and putting written questions to the father. She took advantage of thisby putting written questions to the father. It appears he answered the questions he was asked. She, through her counsel, did not put theaccounting queries posed at trial to the father through [pre-trial] questioning. [67] In the circumstances here, I decline to draw an adverse inference from the father’s failure to call the accountant to explain amultitude of accounting entries.

There had been no specific notice given that these specific items were in issue, and they relate to specificaccounting entries. The mother ought to have put these requests to the father in advance of trial for an answer. Alternatively, the mothercould have called the accountant to obtain this information. There is no privilege in a witness and answers could have been obtained. [68] The accounting entries upon which both the father and the expert were cross examined were contained within hundreds, if notthousands, of entries contained in the corporation’s general ledger.

The general ledgers for the previous years were challenged. Themother then picked out some, or a very few, and challenged the father on those entries. [69] I determine this is not an appropriate way to approach this issue. It is not reasonable to suggest the father would have anyknowledge, much less detailed information, concerning individual accounting entries completed in the general ledger. [70] What the mother is attempting to do here is to raise concern, and therefore suspicion, over accounting entries without presentingany basis the entries, themselves, are concerning.

The numbers in the entries are questioned, but that does not assist in the inquiry.Whether they are correcting entries, entries made in error, entries that are usual or unusual in the world of accounting, was not presentedor canvassed. In the absence of some explanation, I determine an individual, who is not the accountant, cannot be expected to provide anintelligible answer in this regard. [30] Ms.

Birnie submits that, by this reasoning, the trial judge imposed an impermissible onus on her to give advance notice of thequestions that her counsel would ask in cross-examination when he said that there “had been no specific notice given that these specificitems were in issue” and that she “ought to have put these requests to [Mr. Birnie] in advance of trial for an answer” (at para 67). [31] I can agree with Ms. Birnie that, subject to some possible exceptions that have no application here, a party is under noobligation to give advance notice of questions that might be asked in cross-examination.

However, I cannot agree with her that this is whatthe trial judge did in this case. Rather, as I read paragraph 67 of the Trial Decision, the trial judge was simply explaining why he was notprepared to invoke an adverse inference because of the failure on the part of Mr. Birnie to call Ms. Wudrick-Mohrbutter and Ms. Cooper.Accordingly, it is my conclusion that the trial judge did not err in law by creating an obligation on Ms. Birnie to give advance notice of thequestions her counsel intended to ask in cross-examination. [32] This leads me to consider Ms. Birnie’s second argument. B.

Did the trial judge err in law by declining to draw an adverse inferencefrom the failure by Mr. Birnie to call either Ms. Cooper or Ms. Wudrick-Mohrbutter? [33] Ms. Birnie argues that the trial judge erred by failing to draw an adverse inference from the failure by Mr. Birnie to call Ms.Cooper and Ms. Wudrick-Mohrbutter as witnesses. [34] Sidney N. Lederman, Alan W. Bryant & Michelle K. Fuerst in The Law of Evidence in Canada, 5th ed (Toronto: LexisNexis,2018) [Law of Evidence] provide the following explanation of the principle that Ms.

Birnie invokes in aid of this ground of appeal: §6.471 In civil cases, an unfavourable inference can be drawn when, in the absence of an explanation, a party litigant does not testify, orfails to provide affidavit evidence on an application, or fails to call a witness who would have knowledge of the facts and would beassumed to be willing to assist that party. In the same vein, an adverse inference may be drawn against a party who does not call a materialwitness over whom he or she has exclusive control and does not explain it away.

The inference should only be drawn in circumstanceswhere the evidence of the person who was not called would have been superior to other similar evidence. The failure to call a materialwitness amounts to an implied admission that the evidence of the absent witness would be contrary to the party’s case, or at least wouldnot support it. (Footnotes omitted) [35] As this passage reveals, an adverse inference may be drawn when, “in the absence of an explanation”, a material witness is not

called. As I read the impugned passages from the Trial Decision , the trial judge was of the view that, absent having been alerted that the specific accounting entries were at issue, there was no reason for Mr. Birnie to have called Ms. Cooper and Ms. Wudrick-Mohrbutter to testify. They were not material to his case. I see no error in this reasoning. [ 36 ] Ms. Birnie’s submissions on this point rest on the idea that Mr.

Birnie was obligated to go behind his own income tax returns and Mustang’s financial statements and marshal evidence to disprove the allegation that there was some impropriety with them, when there was no evidentiary basis for the position taken by Ms. Birnie.

Her argument is said to build from the long-standing principle that “the onus rests with the parent who is the shareholder, director or officer of the corporation to establish that the pre-tax income of the corporation is not available to them for child support” ( R.E.G. v T.W.J.G. , 2011 SKQB 269 at para 184 , 376 Sask R 1, per Ryan-Froslie J. (as she then was); see also: Potzus v Potzus , 2017 SKCA 15 at para 13 , 91 RFL (7th) 290 [ Potzus ]; and Merrifield v Merrifield , 2021 SKCA 85 at para 35 ).

However, this principle of law is entirely different from the notion that a parent who is a shareholder, director or officer must disprove an allegation that the financial situation of a corporation is other than what is reported on its financial records. [ 37 ] In many contested actions, a party is obliged to adduce evidence as a matter of tactics or prudence or risk an adverse finding on the weight of the evidence.

The notion is that as “the strength of the proponent’s case increases and in the absence of an explanation or some exculpatory circumstances arising from the evidence, the risk of an adverse determination also increases” ( Law of Evidence at §3.54). The authors further explain as follows: §3.55 S ome authorities label the common sense or tactical decision to adduce evidence in such circumstances a “tactical burden” or a “tactical shifting” of the evidential burden.

However, the decision by a party to go forward with evidence because the risk of an adverse verdict is too great, is not a question of law but a matter of common sense. Since the defendant is not required by law to do anything, this tactical decision to adduce evidence is not an evidential burden (using the definition in this text) and thus there is no shifting of the evidential burden. (Footnotes omitted) [ 38 ] In this case, as the trial judge pointed out, Ms.

Birnie’s argument on this point constitutes an attempt “to raise concern, and therefore suspicion, over accounting entries without presenting any basis the entries, themselves, are concerning ” (at para 70, emphasis added). The trial judge did not disregard the onus that rested on Mr. Birnie to establish that Mustang’s income was not available to him to pay child support. Instead, what this passage reveals is that he was simply unprepared to rely on a mere allegation that the financial situation of the corporation was other than as disclosed on its financial statements. Ms.

Birnie presented no evidence on this point. This was the case, notwithstanding that she had had the opportunity to conduct pre-trial questioning and put written questions to Mr. Birnie (which she did, but then did not tender answers at the trial). The trial judge also took note of the fact that other evidence failed to support the idea that Mr. Birnie was hiding income. [ 39 ] The latter fact distinguishes this case from Koenig v Koenig , 2012 SKQB 340 , 403 Sask R 242 [ Koenig ], which is relied on by Ms. Birnie.

In Koenig , the evidence disclosed that the payor-father had, in one year, achieved a significant reduction in his income through various adjustments, including a claim to depreciation expenses because of income expenses. Ms.

Birnie points to the statement made by Wilkinson J. that there was “an onus on the father to persuade the Court that there are legitimate and persuasive reasons to divert income toward capital acquisitions” (at para 6). [ 40 ] In Koenig , prior to stating that there was an onus on the father to persuade the Court that there were reasons for him to divert income toward capital acquisitions, Wilkinson J. had noted that the payor-father’s income “ invariably settled in around the $29,000 to $33,000 range, regardless of whether his gross farm income happened to be $100,000 or $500,000” (at para 2).

She had also observed that, “while his comfortable standard of living might be partly explained by the inheritance from his Uncle Alex, it was disingenuous to suggest that the significant expansion in operations, and a favourable farm economy, had failed to improve his bottom line significantly since 2003” (at para 4). In the overall context, I would interpret the statement that Ms. Birnie relies on from Koenig as imposing a tactical burden of the type described in the Law of Evidence. I see Woodward v Woodward , 2016 SKQB 301 at para 26 , 86 RFL (7th) 357, the second case cited by Ms.

Birnie, in a similar way. [ 41 ] A decision whether to draw an adverse inference involves an element of discretion. In Singh v Reddy , 2019 BCCA 79 at para 9 , 23 BCLR (6th) 22 , Newbury J.A. emphasized that “it is now generally accepted that the court is not required as a matter of law to draw an adverse inference where a party fails to call a witness” (emphasis in original). Justice Newbury then continued: [9] … Thus in Witnesses (looseleaf), A.W. Mewett and P.J.

Sankoff write: A considerable number of cases now reinforce the view that there is no such thing as a “mandatory adverse inference” to be drawn where a party fails to call a witness.

Rather, the question of whether to make such an inference seems to depend upon the specific circumstances, in particular whether: • There is a legitimate explanation for the failure to call the witness; • The witness is within the “exclusive control” of the party, and is not “equally available to both parties”; and • The witness has material evidence to provide; and • The witness is the only person or the best person who can provide the evidence.

Essentially, the decision to draw an adverse inference is discretionary and premised on the likelihood that the witness would have given harmful testimony to the party who failed to call him or her.

In a case before a jury, where there are circumstances that support the drawing of such an inference, the trial judge should charge the jury that it is “appropriate for a jury to infer, although [jurors] are not obliged to do so, that the failure to call material evidence which was particularly and uniquely available to [a party] was an indication that such evidence would not have been favourable to [that party]. [At 2-23 to 2-24; …] [ 42 ] In this case, I can see no error in principle in the trial judge’s reasons for declining to draw an adverse inference from the failure

by Mr. Birnie to call either Ms. Cooper or Ms. Wudrick-Mohrbutter, or by declining to place an onus on Mr. Birnie to disprove theallegation that Mustang’s financial records were misstated. [43] Before leaving this issue, I would add that Ms. Birnie did not explain precisely what significance the trial judge should haveattached to the failure by Mr. Birnie to call these two witnesses. The trial judge found there was no evidence to support Ms. Birnie’sallegation that there was something suspicious about Mustang’s accounting practices. This was the case notwithstanding that she hadenjoyed rights of discovery.

My reasons should not be taken as commenting on the import of an adverse inference in the context of anevidentiary vacuum. I offer no comment on this subsidiary question. C. Did the trial judge err by failing to determine Mr. Birnie’s 2015 income? [44] Ms. Birnie argues that the trial judge erred by failing to determine Mr. Birnie’s 2015 income. Her argument originates from thefollowing statement in the Trial Decision: [99] With respect to 2015, the evidence regarding the restatement of the corporation’s income is unclear.

Was this a restatement ofvalues which had no impact on the actual income of the corporation? Or, was it a restatement of an error in the reported income? Due tothe lack of clarity in the evidence, I decline to weigh in to attempt to discover what might be an appropriate income.

Rather, I determinethe $1,000 which was agreed to in the separation agreement should have continued throughout 2015. [45] Although the trial judge does state that he was “declin[ing] to weigh in to attempt to discover what might be an appropriateincome”, this passage must be read in the context of the evidence and several specific findings he made elsewhere in the Trial Decision. [46] In this regard, the trial judge noted that Mr. Rabichuk’s evidence had been that, for Guidelines purposes, Mr.

Birnie’s incomefor 2015 was $40,712 (see para 59) and found that $3,797.50 “must be added back to the father’s income” for that year (at para 94). If thisadditional amount is added to the sum identified by Mr. Rabichuk, it would show his income to be $44,509.50. Section 18(1)(

a) of theGuidelines provides that a court may include in the calculation of income all or part of the pre-tax income of a corporation for the mostrecent tax year, but this presupposes that there is corporate income to be attributed to the payor. As reviewed earlier, Mustang’s 2015financial statements were restated and an amended corporate income tax return was filed.

As explained by the trial judge, the “effect ofthis correction was to significantly restate the corporate net income, such that it moved from a significant profit to a substantial loss” (TrialDecision at para 20). [47] In this overall context, I interpret paragraph 99 of the Trial Decision to mean that the trial judge was not satisfied that theevidence disclosed the existence of corporate income that was properly attributed to Mr. Birnie. I would therefore also agree with Mr.Birnie that, if the trial judge erred, his error inured to Ms.

Birnie’s benefit, since the $1,000 per month that the trial judge orderedexceeded what the Guidelines would provide for child support based on income of $44,509.50. Because Mr. Birnie did not appeal fromthis finding, no adjustment to the 2015 support order is required. D. Did the trial judge err in relation to adjustments made to the depreciationon Mustang’s equipment and machinery? [48] At trial, Ms. Birnie argued that Mustang had claimed, as an expense, excessive capital cost allowance on its equipment andmachinery with the result that its real income was understated.

The trial judge agreed with this submission. He found that the valueattributed by Mr. Birnie to assets transferred to Mustang “do not appear to bear any relationship to the actual value of the capital assetsavailable for depreciation” (at para 81). He also found that the equipment and machinery were not depreciating at the rate that would beimplied by the depreciation claimed by Mustang. In the latter regard, he made the point that Mr. Birnie “is not spending money, at thistime, on the regular, or scheduled, replacement of equipment and machinery” (at para 85).

Based on this, the trial judge concluded that “asignificant percentage of the amortization is, in reality, merely an accounting entry effectively reducing income”, that it was “appropriate[that] a percentage of this amortization should be considered in the corporation’s income picture, and therefore, perhaps available for thesupport of the children” (at para 88). He went on to calculate Mustang’s earnings as if one-half of the claimed depreciation expenses hadnot been incurred. [49] Ms.

Birnie argues that the trial judge erred by failing to bring back the entire amount of depreciation claimed by Mustang inthese years. [50] For the reasons I have already given, I cannot agree that Mr. Birnie bore the onus of disproving the allegation that thedepreciation expenses claimed by Mustang were illegitimate. In any event, the question of onus is very much beside the point. In this case,the trial judge had a clear focus on the need to determine what part of the depreciation expenses claimed by Mustang were proper.

Hisconclusion was that, “[i]n all of the circumstances,” it was “a fair and reasonable approach” to add back 50 per cent of the claimed amount(at para 91). There was no need for the trial judge to consider the question of onus in relation to this issue. In civil proceedings, once thereis evidence that allows the trier of fact to reach a determination, onus generally does not come into play. This point was made by Spence J.in Arnold v Teno, (SCC), [1978] 2 SCR 287 at 298, adopting as authority the judgment of Viscount Dunedin in Robins vNational Trust Co., (UK JCPC), [1927] 2 DLR 97 (PC) at 100–​101 [Robins].

I will expand slightly on the quote fromRobins adopted by Spence J.: Onus is always on a person who asserts a proposition or fact which is not self-evident. To assert that a man who is alive was born requiresno proof. The onus is not on the person making the assertion because it is self-evident that he had been born. But to assert that he was bornon a certain date if the date is material, requires proof; the onus is on the person making the assertion.

Now, in conducting any inquiry, thedetermining tribunal, be it Judge or jury, will often find that the onus is sometimes on the side of one contending party, sometimes on theside of the other, or, as it is often expressed, that in certain circumstances the onus shifts. But onus as a determining factor of the wholecase can only arise if the tribunal finds the evidence pro and con so evenly balanced that it can come to no sure conclusion. Then the onuswill determine the matter.

But if the tribunal, after hearing and weighing the evidence, comes to a determinate conclusion, the onus hasnothing to do with it, and need not be further considered. …

See also: Cop v Saskatchewan Government Insurance, 2019 SKCA 75 at para 53, [2019] 2 WWR 396; Holmes v Jastek Master Builder2004 Inc., 2019 SKCA 132 at para 155, [2020] 6 WWR 386; and Yorkton (City) v Mi-Sask Industries Ltd., 2021 SKCA 43 at paras 31–34,[2021] 6 WWR 18. [51] Ms. Birnie’s ability to succeed under this ground depends on her ability to successfully challenge the finding of fact made bythe trial judge that only 50 per cent of the capital cost allowance claimed by Mustang was a reasonable business expense.

As explained byWakeling J.A. in Sjogren v Pipchuk (1997), (SK CA), 34 RFL (4th) 280 (Sask CA), “[w]hat, if any, portion of thecapital cost allowance should be added to establish available income must be based on the facts of each case” (at para 4. See also: Krzak vErixon, 2008 SKQB 468 at para 38, 326 Sask R 265). As a challenge to a finding of fact, the decision is subject to review according thepalpable and overriding error standard. [52] I reject out of hand Ms. Birnie’s suggestion that Mr. Birnie should have been able to claim no depreciation expenses.

It alsocannot be said that the trial judge’s determination that only 50 per cent, as opposed to some other amount, of claimed depreciation was theproduct of palpable and overriding error. [53] The evidence disclosed that Mustang’s financial statements had been prepared on the basis that capital cost allowance wasclaimed at a rate that was less than what would have been allowable by the taxing authorities. As explained in the Trial Decision, “theactual depreciation claimed is less than the amount permitted by the Canada Revenue Agency” (at para 82). Even with this, Mr.

Rabichukhad added back some amount of the depreciation to corporate income. Although Mr. Birnie had been successful in deferring majorequipment purchases, the evidence disclosed what common sense would reveal; that is, that machinery and equipment wear out andeventually must be replaced. In this case, after having concluded that not all the claimed depreciation expenses were justified, the trialjudge described the “vexing question” to be “how much of the depreciation should be available” to pay support.

He recognized that Mr.Birnie was “operating the farming corporation in a viable manner”, that “the capital assets of the corporation, as received into thecorporation, will need to be replaced as time goes on” and, therefore, “[a]mortization is a legitimate method by which the cost ofreplacement may be offset over the course of time by allowing for depreciation to be accounted for” (at para 89). He then acknowledgedthat there was no evidence replacement would occur “imminently” and that the evidence was that Mr.

Birnie was “attempting to avoid anysuch major expenses” and had been “successful at doing this” (at para 90). [54] A palpable error is one that is obvious. An overriding error is one that goes to the core of the outcome of the issue to which itrelates. In Benhaim v St-Germain, 2016 SCC 48 at para 38, [2016] 2 SCR 352, Wagner J. (as he then was) adopted the colourfuldescription given by Stratas J.A. from R v South Yukon Forest Corporation, 2012 FCA 165 at para 46, 4 BLR (5th) 31, that when arguingpalpable and overriding error, “it is not enough to pull at leaves and branches and leave the tree standing.

The entire tree must fall”. In thiscase, Ms. Birnie’s challenge under this head reduces to the suggestion that this Court substitute its own best estimate of what additionaldepreciation should be added back to the corporation’s income. To take Stratas J.A.’s metaphor, Ms. Birnie has explained that she wantsthe tree to fall, but she has not identified even the particular leaf that we should pull. E. Did the trial judge err by failing to add back to Mustang’s pre-taxcorporate income an additional amount for Mr. Birnie’s personal use of Mustang’svehicle for 2016 and 2017? [55] The trial judge rejected Ms.

Birnie’s argument that an amount should be added back to Mr. Birnie’s income for his use of atruck paid for by Mustang: [95] The mother also sought to add in a percentage of the value of the truck purchased by the corporation. I decline to do this. Theevidence disclosed the truck was required for the farming operation and is used principally in that regard. There is no sufficientevidentiary base for me to carve off an amount from the value of the truck and add it into income. I do not determine this would result in afair and reasonable result.

In addition, it is noted an amount for depreciation has been added back to the corporate income. Thisdepreciation would, to some extent, account for some of the truck value. [56] Ms. Birnie argues that this finding was made in error. She relies on Tucker v Tucker, 2019 SKQB 317 at para 36, as confirmingthat the personal use of a corporate vehicle is properly attributed to the parent’s income. She points to admissions made by Mr. Birnie thathe was using the truck for personal reasons and, therefore says that this amount must be accounted for when determining his income forsupport purposes.

She proposes that 25 per cent of the truck costs be added back to his income. [57] I begin my consideration of this argument by noting the trial judge agreed with Ms. Birnie that he must bring into Mr. Birnie’sincome any personal expenses paid for by Mustang. Prior to rejecting Ms. Birnie’s argument relating to the truck, the trial judge held thatMr. Birnie must account for the value of personal expenses paid for by Mustang and he calculated what adjustment to Mr.

Birnie’sincome this called for: [93] In addition to this, the father also receives the benefit of having certain of his personal expenses paid by the corporation. To anextent, some of these expenses are accounted for by the accountants and not fully claimed on the corporation’s books. However, theexpense of fuel and telephone used by the father personally, and paid for by the corporation was not considered by the accountants. Themother proposes 10% of the fuel cost be added into the father’s income. I find this to be a reasonable suggestion.

The same applies to thetelephone. [94] This then means the following amounts must be added back to the father’s income directly: 2015 $3,797.502016 4,017.802017 4,250.402018 5,263.80

[58] It can be taken from this analysis that the trial judge was well aware of the legal principle that stands behind Ms. Birnie’sargument. As a result, her challenge under this ground of appeal reverts to a challenge to the trial judge’s factual finding that there was nomaterial personal benefit associated with Mr. Birnie’s use of the farm truck that was not otherwise accounted for by the trial judge. [59] Mr. Birnie’s farm is located approximately 220 kilometres from Regina. Under cross-examination, his testimony was that hehad used the truck “occasionally” to drive to Regina.

He admitted that he did this to pick up his children and to attend the trial. In relationto the latter use, he also stated that the truck would require refueling but he would not charge that expense to the company. He was askedwhether there were other occasions when he had used the truck for personal reasons. His answer was: “Occasional[ly], but I mean, not --not a lot. We don’t go a lot of places, so I mean, I come to Regina to see the kids or get the kids. Other than that, we don’t go too far”. Hesaid that the personal uses were “a rare occasion”.

When asked specifically whether the truck was used to go into town to pick upgroceries, he said that it was not, but instead his wife’s vehicle was used. I observe, as well, that Mr. Birnie had answered writtenquestions and could have been questioned on this issue. [60] It is also material to this issue that Mr. Birnie had, through the evidence of Mr. Rabichuk, agreed to allocate $3,080 per year tohis income for fuel consumed by his spouse. Although the trial judge determined that he did not have a sufficient evidentiary foundation toassign a further specific amount to Mr.

Birnie’s income for his personal use of the truck, he added an additional 10 per cent of thecorporate fuel costs to Mr. Birnie’s income (see para 93). He also further specifically noted that “an amount for depreciation has beenadded back to the corporate income. This depreciation would, to some extent, account for some of the truck value” (at para 95). Based onall of this, it is incorrect to interpret the Trial Decision as assigning no value to Mr.

Birnie for his personal use of Mustang’s vehicle. [61] For these reasons, I am not prepared to find that the trial judge erred by failing to add back to Mustang’s pre-tax corporateincome an additional amount for Mr. Birnie’s personal use of Mustang’s vehicle for 2016 and 2017. F. Did the trial judge err by failing to impute all of Mustang’s 2016 and 2017pre-tax corporate profit to Mr. Birnie? [62] At trial, Ms. Birnie argued that all of Mustang’s net income, in every year, should be treated as income in Mr. Birnie’s hands.The trial judge did not agree.

Instead, he ruled as follows: [97] I determine to add one half of the corporate net income, in each of 2016 and 2017, to the father’s income to provide an accuratepicture of what income is actually available to him. I determine to add in the whole of the corporate net income for 2018 due to its minimalamount. This income was available to the father. The children required support. It is not available to the father to simply leave these fundsin the corporation, to the detriment of the children.

The father’s actual income is therefore determined to be as follows: Year T1 Corporate Expenses Total Income2016 41,706 49,437.50 4,017.80 95,161.302017 114,423 21,945.50 4,250.40 140,621.902018 42,863.00 12,990.00 5,263.80 61,116.80 [63] Ms. Birnie argues that the trial judge erred by not assigning all of Mustang’s net income to Mr. Birnie in 2016 and 2017.

Herargument builds on the observation made by this Court in Potzus that, “[g]enerally speaking, the onus rests on the parent who is theshareholder, director or officer of the corporation to establish that pre-tax income of the corporation is not available for support purposes”(at para 64).

She also refers to other cases where a payor-parent has been assigned all of a corporation’s income. [64] The standard of review that is applicable in a circumstance such as this was described by Wilkinson J. (ad hoc) in Potzus: [30] The fact-based, discretionary nature of support awards means that significant deference is warranted on appeal. An appeal court isnot entitled to overturn a support order simply because it would have balanced the relevant factors differently or arrived at a differentdecision: Hickey v. Hickey, (SCC), [1999] 2 SCR 518 at paras 10-12 [Hickey].

Appellate courts should only intervene insupport awards where the trial judge’s reasons “disclose an error in principle, a significant misapprehension of the evidence, or unless theaward is clearly wrong” (Hickey at para 11). A trial judge’s decision to attribute income under s. 18 of the Guidelines is a decision aboutsupport and must be accorded comparable deference on appeal. [65] It is inherent in s. 18 of the Guidelines that there is no invariable rule that all a corporation’s pre-tax be assigned to a payor-parent.

In evaluating the trial judge’s exercise of discretion in this case, sight cannot be lost of his finding that, after making theadjustments he ordered, Mustang showed a loss of $121,247 in 2015. I appreciate that the trial judge did not make a specific finding as toMustang’s income in that year. However, for the reasons I have already given, I would interpret the Trial Decision as containing the trialjudge’s finding that he could not justify attributing income above that which would support the $1,000 per month in support paymentsmade in continuation of the regime established via the interspousal agreement.

For the remaining years, the trial judge found Mustang’snet income to be $98,875 (for 2016), $43,891 (for 2017) and $12,990 (for 2018). The evidence was, therefore, that Mr. Birnie’s incomewas uncertain and variable. This pattern also was reflected in the interspousal agreement, which expressly contemplated that Mr. Birnie “isself-employed as a farmer and rancher and his income is variable”. The introduction of a corporate structure to his operations did nothingto change this. [66] In this case, the reasons of the trial judge reveal that he was alive to the importance of attributing to Mr.

Birnie the incomeavailable to him through Mustang. Immediately after declaring his conclusion as to the amount of corporate income he would attribute foreach year, the trial judge emphasized that the “children required support” and it was “not available to the father to simply leave thesefunds in the corporation, to the detriment of the children” (at para 97). I understand from this that the amounts of net income fromMustang that the trial judge recognized as being in Mr. Birnie’s hands represented those funds that could be taken by him from thecorporation without jeopardizing its operations.

Elsewhere, the trial judge had noted that there was “no evidence to suggest significantfunds remain in the corporate coffers or that something untoward is being done in the corporation”. He added that there was “no evidencetendered to show either [Mr. Birnie’s], or the corporation’s, bank accounts are such as to suggest the availability of excess cash” (at para72).

[67] The trial judge could have provided more detailed reasons in connection with this issue, but I see no error in his bottom linedetermination of it. G. Did the trial judge err by failing to consider Mr. Birnie’s treatment andstockpiling of inventory? [68] Ms. Birnie advances several discrete arguments under this head. First, she submits that the trial judge “did not consider theresult of the manipulation of the financial statements and classification of the inventory on the pre-tax corporate income of Mustang”.

Thisargument centers around changes in the values of Mustang’s inventory and what she describes as an absence of evidence that the marketvalue of cattle recorded on Mustang’s books reflected market reality. [69] In addition to asserting that financial records were manipulated, Ms. Birnie asserts that Mustang’s income was artificiallydeflated by expenses used to grow inventory.

She relies on the case law regarding stockpiling inventory and pre-tax corporation incomethat was reviewed by the Chambers judge in the Interim Decision, as follows: [61] In Burton v Griffin, 2017 NLTD (F) 22 [Burton] Justice McGrath examined the stockpiling of inventory in the husband’scorporation which sold hoses and fittings to various enterprises, some involved in the oil and gas industry. Her conclusion was that it wasnot something to be overlooked.

The conversion of pre-tax corporate income to inventory, while a legitimate business practice for thehusband in that situation, removed a potentially significant amount of money that would otherwise be available for support from theequation (see paras. 121-126). [62] Poff v Fenell (1998), (SK KB), 173 Sask R 275 similarly points out the basis on which inventory ought not besimply deducted from income due to the cash method of accounting being employed, without enabling any questions to be raised inexamining the effect of that on money available for support. (See also S.K. v R.K., 2015 SKQB 235, 479 Sask R 94; Nahorniak vNahorniak, 2015 SKQB 317; and Koenig). [70] Mr.

Birnie does not take issue with the statements of law embedded in this

summary. Instead, he argues that the evidence doesnot support the idea that financial records were manipulated or that his income was deflated because Mustang was stockpiling inventory. [71] I begin by observing that the trial judge did not find any manipulation of financial records by Mr. Birnie. To the contrary, as Iread the Trial Decision, the trial judge rejected this idea. I would again quote from paragraph 70, where he wrote that “[w]hat [Ms.

Birnie]is attempting to do here is to raise concern, and therefore suspicion, over accounting entries without presenting any basis the entries,themselves, are concerning”. Although the trial judge agreed that the evidence showed that Mr. Birnie’s herd size was growing, hespecifically rejected both the contention that the financial records were being manipulated and that inappropriate inventory purchases weredepleting the income available to Mr. Birnie to pay support.

I reproduce paragraphs 72 and 73 of the Trial Decision that speak to bothissues: [72] There is no evidence to suggest significant funds remain in the corporate coffers or that something untoward is being done in thecorporation. There was no evidence tendered to show either the father’s, or the corporation’s, bank accounts are such as to suggest theavailability of excess cash. Rather, again, the same, or similar farming operation is being conducted by the father. There is evidence he isworking to expand his cattle herd.

There is no evidence to suggest this expansion is untoward or is significantly depleting availableresources. [73] The mother seeks to have the annual cattle purchases added back into income. I decline to do this for the following reasons.Firstly, there is no explanation provided for why such a determination would be made. There are purchases and sales of cattle throughoutthe year. Presumably, some of those purchased are also sold during the course of the year. As a result, removing the purchases wouldthen, potentially leave an incorrect picture of the revenues of the corporation.

Moreover, there has been no basis provided to support acontention the accounting generally is other than what is usually done, nor that there is anything untoward in what the corporation isdoing. (Emphasis added) [72] There was an ample evidentiary foundation to justify the trial judge’s findings of fact in this regard. Mr. Birnie and Mr.Rabichuk described the farming operation. Mr. Rabichuk’s report further explained that a “breeding herd can be considered different fromother inventory in that the herd’s not intended to be sold each year, and regrown -- regrown the next”.

The proper treatment of inventorywas a significant issue when the Interim Decision was rendered. However, at that time, Ms. Birnie’s position was supported by expertevidence that was not offered at trial. At trial, Ms. Birnie made the decision not to call any similar expert testimony. I can find no fault inthe trial judge’s overall assessment of the evidence led before him. [73] Ms. Birnie’s last argument under this head is that trial judge erred by failing to impute income to Mr. Birnie “for not reasonablyutilizing his property to generate income under Section 19(1)(

e) of the Guidelines”. This provision allows a court to impute income when a“spouse’s property is not reasonably utilized to generate income”. The trial judge rejected this argument, reasoning as follows: [102] The alternative approach to determining the father’s income proposed by the mother is to add back a putative amount to accountfor what an investment of the assets[’] values would bring by way of annual interest income.

I determine this approach is not appropriateon the facts of this case. [103] The father is similar to many other farmers on the prairies: he has assets but they are not giving back income commensurate withtheir value. Such, to a large degree is the lot of a farmer.

To then say he is obligated to turn all of those assets into cash for investmentpurposes, solely to allow for an increased child support payment, is not a reasonable suggestion. [104] In any event, there is no sufficient evidentiary basis provided to allow the court to determine an investment return, or the effects ofincome tax, on any sale of the farm assets to generate cash.

[105] The mother provided no authorities in support of this type of proposal. In the absence of evidence to suggest the father’s continued efforts at farming were both unreasonable, and were unreasonably diminishing the available capital, estimating income based on investment return is not an option available. [ 74 ] There is no need for me to pass judgment on whether it is the “lot of a farmer” to hold assets that are “not giving back income commensurate with their value” (at para 103) and, if so, what import this might have in the context of s. 19(1) (

e) of the Guidelines in other cases. It is sufficient for me to state my agreement with the trial judge that there was no evidence that Mr. Birnie’s continued efforts at farming were unreasonable or unreasonably diminished available capital. These, again, are findings of fact that may only be set aside if they are the product of palpable and overriding error. In the absence of evidence from Ms. Birnie to refute that called by Mr. Birnie on these points, I see neither. [ 75 ] For all these reasons, I would reject Ms. Birnie’s arguments that the trial judge erred by failing to consider Mr.

Birnie’s treatment and stockpiling of inventory. H. Did the trial judge err in ordering Ms. Birnie to account for the overpayment of child support? [ 76 ] The trial judge determined Mr. Birnie’s income to be different than that used to ground the Interim Decision , pursuant to which he had paid child support in the years leading to trial. The trial judge directed that Mr. Birnie’s child support obligations be adjusted from January 1, 2015, forward on the basis of these amounts. Based on the income as found by the trial judge, it could be said that, for a period, Mr.

Birnie had underpaid child support based on his actual income. However, the trial judge also found that Mr. Birnie had overpaid beginning in 2018, again based on Mr. Birnie’s income as he found it to have been. In total, Ms. Birnie was found to have been entitled to receive approximately $8,000 less than she had been paid pursuant to the Interim Decision . Ms. Birnie’s last argument is that the trial judge erred by directing that this amount be repaid. [ 77 ] Ms. Birnie submits that there should have been no adjustment to account for the overpayment of support by Mr.

Birnie because to order repayment would create a hardship to her. In aid of her position, she invokes cases that dealt with variation of maintenance orders: D.B.S. v S.R.G , 2006 SCC 37 , [2006] 2 SCR 231 [ D.B.S ] ; G.M.W. v D.P.W. , 2014 BCCA 282 , 49 RFL (7th) 267 [ G.M.W. ] ; Gray v Rizzi , 2016 ONCA 152 , 74 RFL (7th) 272 [ Gray ] ; and M.R. v J.R. , 2018 NBCA 12 , 13 RFL (8th) 253 [ M.R. ] . [ 78 ] The trial judge summarized the principles found in D.B.S . as follows: [107] In D.B.S. v S.R.G. […], the court set out the considerations when determining whether a retroactive support order is appropriate.

Those considerations are: (

a) Has there been a delay in seeking the support order; (

b) Has the payor parent engaged in any blameworthy conduct; (

c) Have the children suffered hardship as a result of the nonpayment of support; (

d) Would a retroactive award be a hardship on the payor parent. [ 79 ] He then turned his attention to whether it was appropriate for Mr. Birnie’s child support obligations to be adjusted, reasoning as follows: [108] Here, the mother has been diligently pursuing a variation in the support. While her calculation of income has not been accepted, there has been a review of the father’s income and a determination as to his obligations. [109] The mother suggests the father has engaged in blameworthy conduct by failing to properly disclose his income information.

There is no doubt but the father had to be compelled by court order to produce information. He ought to have done that more expeditiously. He can be faulted for these failures. [110] It can be presumed the children would have suffered from not receiving the appropriate child support amount. [111] It does not appear there will be a large retroactive amount to be paid.

Accordingly, there does not appear to be any hardship to the father in this regard. [112] As a result, the father’s child support obligations shall be adjusted from January 1, 2015, forward on the basis of the support amounts as determined in this judgment. [ 80 ] As is evident from this passage, the trial judge considered the question as to whether Mr. Birnie should account for the period that he had underpaid support (concluding that he must account for these arrears) but said nothing about whether Mr. Birnie should be able to hold Ms.

Birnie to account for his overpayment of support for those years where that occurred. [ 81 ] In this appeal, Mr. Birnie did not directly engage with Ms. Birnie’s argument that she should not be required to repay support because it would impose a hardship on her. Instead, he argues that he had overpaid child support under the interim order and that the trial judge had “jurisdiction to fix this”. He refers to Ford v Ford , 2015 SKCA 23 , 457 Sask R 19 [ Ford ] and other similar authorities in support of his position. [ 82 ] Ms.

Birnie does not argue that the trial judge was in any way bound by the Interim Decision or lacked jurisdiction to order support that differed from that directed by the interim order. Such a position would be untenable considering the Chambers judge had stated that he was making the order “pending fuller adjudication of the complex issues at play” ( Interim Decision at para 19 ). The Chambers judge had also later noted that there was “too much controverted material to make anything but an interim order at this time”

and therefore the order was to be “without prejudice to the parties advancing their respective positions on retroactive arrears” (at para 72). [83] Because of the nature of the Interim Decision, the following direction given by Herauf J.A. in Ford is applicable: [29] There is no justifiable basis for a trial judge’s authority to be restricted by an interim order for child or spousal support. As ZuberJ.A. held in Sypher v Sypher (1986), (ON CA), 2 RFL (3d) 413 (Ont CA), “interim orders are intended to cover a shortperiod of time between the making of the order and trial.

I further observe that interim orders are more susceptible to error than ordersmade later; but the purpose of the interim order is simply to provide a reasonably acceptable solution to a difficult problem until trial.”Indeed, “a full investigation of the facts” may show that “a substantially different order” from the interim order is necessary.

The purposeof interim orders, coupled with the fuller factual matrix in which a trial judge renders his or her decision, requires that the trial judge’sdiscretion to make a support order remain unfettered by a prior interim order. [30] In short, the trial judge is not bound by any existing interim child or spousal support order. He or she is instead required to conducta fresh analysis without regard for whether there has been a “material change in circumstances.” A fresh s. 15.1 or 15.2 analysis—ratherthan a variation analysis under s. 17—is appropriate.

This approach removes the burden on the support payor of proving a material changeof circumstances since the date of the interim order. The trial judge relies on the evidence before him or her to make a final order. Thefinal order must still be made in accordance with the Federal Child Support Guidelines and the law pertaining to spousal support. [84] This quote supports Mr. Birnie’s submission that the trial judge had the jurisdiction to adjust the amount of support when hemade the final order. However, it does not directly speak to the hardship argument made by Ms.

Birnie based on D.B.S., G.M.W., Gray andM.R. [85] Because the trial judge did not engage with this issue, either as a matter of fact or law, in my respectful view, it is appropriatethat it be returned to him for determination. V. CONCLUSION [86] I would refer to the trial judge for determination the question as to whether there should be an adjustment because of theoverpayment of child support made by Mr. Birnie. Subject only to this, I would dismiss Ms. Birnie’s appeal. Mr.

Birnie is entitled to hiscosts, taxed in the usual way. “Leurer J.A.” Leurer J.A.I concur. “Ottenbreit J.A.” Ottenbreit J.A.I concur. “Schwann J.A.” Schwann J.A.