Boutin v Boutin, 2023 SKCA 41

Court of Appeal for Saskatchewan Docket: CACV3833 Citation: Boutin v Boutin , 2023 SKCA 41 Date: 2023-03-28 Between: Sallie Boutin Appellant (Respondent) And Allain Boutin Respondent (Petitioner) Before: Whitmore, Leurer and Barrington-Foote JJ.A. Disposition: Appeal allowed in part Written reasons by: The Honourable Mr. Justice Barrington-Foote In concurrence: The Honourable Mr. Justice Whitmore The Honourable Mr.

Justice Leurer On appeal from: DIV 612 of 2011 (Sask QB), Saskatoon Appeal heard: May 3, 2022 Counsel: Sherry Fitzsimmons, K.C., for the Appellant Patrick McKenna for the Respondent Barrington-Foote J.A. I. INTRODUCTION [ 1 ] Sallie and Allain Boutin were married in 1993. They separated in 2011 and were divorced by a consent judgment that was granted on January 14, 2020. They have four children, two of whom are no longer children of the marriage, and continue to share parenting of their two youngest children pursuant to a November 30, 2011, parenting order. [ 2 ] Mr. Boutin has had a higher income than Ms.

Boutin since they separated and, accordingly, has been a net payor of child support to her for those children. He paid net child support of $1,930.77 per month pursuant to a March 27, 2014, interim order for child support until October 23, 2019, when they entered into Minutes of Settlement [Minutes] at a pre-trial conference. The Minutes, which were not incorporated in a court order, provided that Mr. Boutin would pay $1,888.00 per month in child support on a set-off basis. It also contemplated annual adjustments to the amount payable. As the parties were unable to agree on the first such adjustment, Ms.

Boutin applied for an order that Mr. Boutin pay s. 3 child support based on their 2019 incomes, that they each pay their proportionate share of s. 7 expenses, and that Mr. Boutin make a lump sum payment in the amount of any shortfall between the amount ordered and the amount he had paid pursuant to the Minutes. [ 3 ] On April 14, 2021, a judge of the Court of Queen’s Bench [Chambers judge] issued a fiat dealing with child support [Fiat]. On April 15, 2021, he approved the final order [Order] relating to the Fiat. Ms.

Boutin has appealed from the Order, alleging that the Chambers judge committed several errors in calculating both her income and that of Mr. Boutin for the purpose of child support. The most significant of these alleged errors was the failure to include pension income received by Mr. Boutin when calculating his income for the purpose of child support. Ms. Boutin also submits that the Chambers judge erred by authorizing the issuance of an order that differed from the Fiat. [ 4 ] For the reasons that follow, I have concluded that Ms.

Boutin’s appeal must be dismissed, but for a very minor adjustment to correct a clerical error in the Order. II. BACKGROUND [ 5 ] Mr. Boutin was employed in the education system throughout the parties’ marriage, first as a teacher, then as an administrator with a local school board and, since August of 2018, as a senior administrative staff with the Saskatchewan Teachers’ Federation [STF]. His 2018 tax return lists $200,313.99 in employment income, $35,242.02 of pension income, $90.20 of other employment income, and taxable capital gains of $24,835.28, for total income of $260,481.49.

His notices of assessment and reassessment for the 2019 tax year confirm that he had employment income of $202,177.36 and pension income of $70,998.36, for total line 15000 income of $273,175.72. His notice of reassessment also state that he was entitled to deduct $11,199.00 for employment expenses incurred in the course of his employment with the STF. Those expenses had been claimed by Mr. Boutin in a T1 Adjustment Request filed in July of 2020. [ 6 ] Mr. Boutin receives his pension income from the pension he earned from his employment during the parties’ marriage.

That pension was divided in accordance with a June 26, 2018, agreement [2018 Agreement] between the parties, which also provided for the division of the proceeds from the sale of the family home and another house. That agreement stated that the commuted value of the portion of Mr. Boutin’s pension that was earned from the date of the marriage until the action for the division of matrimonial property was commenced on October 7, 2011, was $746,863.87. It provided that one-half of that amount, $373,431.94, would be rolled over to Ms. Boutin.

Indeed, it explained that the parties had agreed to divide it at that time because Mr. Boutin was on the eve of retiring from his job with Greater Saskatoon Catholic Schools, as follows: 1.02 The parties further acknowledge that [Mr. Boutin] will be retiring from his position as of June 30, 2018 and as such the parties

hereby agree that it is in their best interest to have his Saskatchewan Teachers’ Retirement Plan pension divided prior to the retirement date. [ 7 ] Ms. Boutin was employed in 2018 and 2019 as an administrative assistant by the Government of Canada and has a substantially lower income. Her 2019 notice of assessment listed $57,448.00 of employment income and $8,700.00 in taxable spousal support payments received, for total line 15000 income of $66,148.00. It specified that line 22100 “carrying charges and interest expenses” of $5,491.00 and union dues of $893.00 were deductions from her income.

The carrying charges amount had been identified in a February 27, 2020, letter from Ms.

Boutin’s previous lawyer to the Canada Revenue Agency [CRA], which stated as follows: This letter will confirm that I am legal counsel for Sallie Boutin with respect to her claims for spousal support and child support from her former spouse, Allain Boutin, with respect to the children: • [N.M.B.], born …2007 • [L.M.B.], born …2007 Sallie has incurred legal expenses in the amount of $5,491.00 in the 2019 tax year to collect late support payments, establish the amount of support payments from her current or former spouse or common-law partner, and/or to try to get an increase in support payments. [ 8 ] As a Federal Government employee, Ms.

Boutin also earned a pension. The division of that pension was not dealt with in the 2018 Agreement, but in the Minutes, which were a product of an October 23, 2019, judicial pre-trial conference that was held for the purpose of settling the outstanding issues between the parties. Those issues were spousal support, child support and the remaining aspects of family property. The Minutes provided for a rollover of a portion of Ms. Boutin’s pension to Mr. Boutin, as follows: Sallie will take all necessary steps to have ’Al’s portion of her pension rolled over to him, within 30 days.

Al is entitled to 1/2 of the value the pension from the date of marriage to the date of application, being October 7, 2011. From that amount, $35.000 will be held back, remaining in Sallies ’pension, representing the lump sum support payment referred to in paragraph 2. [ 9 ] Although Mr. Boutin had paid some spousal support prior to the pre-trial, there was no evidence of an agreement or order dealing with that issue before that date. The Minutes contained the following provisions relating to spousal support which, among other things, explained the reason for the $35,000 holdback from Ms.

Boutin’s pension: 1) Allain shall pay spousal support to Sallie in the amount of $1850 per month for 8 years, commencing November 1, 2019 and ending October 31, 2027. 2) Allain shall also pay a lump sum support to Salle in the amount of $35,000 by way of offset against his portion of Sallie’s ’pension, which Sallie will withhold in the rollover, as further outlined below. … 12) The parties agree that there are no amounts owing for retroactive child or spousal support as of today’s date. … [ 10 ] On March 9, 2020, and as contemplated by the Minutes, the parties entered into an agreement [2020 Agreement] to implement the rollover of Ms.

Boutin’s pension. That agreement contained the following mutual releases: 2. Except as otherwise herein provided, Allain releases and waives any claim or right that he may have to any pension plan of Sallie, now or in the future, or any other benefits that Sallie may receive as a result of any employment. Allain further releases and waives any claim or right that he may have, now or in the future, to any employment, retirement, termination or pension benefit Sallie may receive as a result of her employment and any future benefits that may accrue to Sallie as a result of any future employment.

Allain agrees that Sallie shall be solely entitled to receipt of any payments, benefits or pensions that she may receive upon termination of employment or retirement, free from any claim by him. 3. Except as otherwise herein provided, Sallie similarly releases and waives any claim or right that she may have to any pension plan of Allain, now or in the future, or any other benefits that Allain may receive as a result of any employment.

Sallie further releases and waives any claim or right that she may have, now or in the future, to any employment, retirement, termination or pension benefit Allain may receive as a result of his employment and any future benefits that may accrue to Allain as a result of any future employment. Sallie agrees that Allain shall be solely entitled to receipt of any payments, benefits or pensions that he may receive upon termination of employment or retirement, free from any claim by her. [ 11 ] The Minutes also disposed of the remaining issues relating to family property.

It addressed repairs to and the sale of the family home. It provided that a $1,010 monthly interest payment on a line of credit that had replaced a mortgage would be shared equally until August 30, 2020, after which it was to be paid by Ms. Boutin.

It confirmed that property division was complete, stating that “[t]he parties shall otherwise retain all of the property or assets in their possession, and debts in their sole names/possession” (at para 13). [ 12 ] Finally, while it did not specify the income of the parties for the purpose of calculating child support, the Minutes dealt comprehensively with all other issues relating to child support in the following provisions: 9) Al shall pay child support to Sallie on a set-off basis, in the amount of $1888, commencing November 1, 2019 and continuing on the 1st day of every month until the children are no longer children of the marriage, subject to adjustment pursuant to

section 10 herein. 10) The parties shall exchange income tax returns each year by the end of May. Child support shall be adjusted annually with reference to the parties’ employment incomes (and any deductions allowed under the Child Support Guidelines).

11)

Section 7 expenses shall include all expenses related to the children’s gymnastics and shall be shared on a 70/30 basis with Al paying 70% of such and Sallie paying 30%, commencing November 1, 2019 and continuing until the children are no longer children of the marriage. The aforesaid % shall be adjusted annually… [ 13 ] As previously noted, the Minutes were signed by the parties on October 23, 2019.

The 2020 Agreement was executed on March 9, 2020, approximately four months later, and less than three months before the date on which the parties were obliged to exchange their income tax returns for the purpose of adjusting child support. However, as events unfolded, that process would not begin until September, when the parties shared their tax returns, notices of assessment and related documents through an email exchange. Mr. Boutin explained and provided documents relating to the adjustment to his 2019 tax return to enable the deduction of his employment-related vehicle expenses. Ms.

Boutin took issue with the notion that this deduction should affect child support calculations. [ 14 ] As noted above, the parties were unable to agree, with the result that Ms. Boutin applied for an order for s. 3 and s. 7 child support commencing June 1, 2020. She took the position that Mr. Boutin, when calculating his income for purposes of child support, was not entitled to deduct some of the employment expenses that CRA had permitted as a tax deduction. She also claimed that his pension income should be included as income. Mr. Boutin disagreed. He also took the position that Ms.

Boutin was not entitled to an adjustment for carrying charges, as she too was a payor of child support. [ 15 ] The application was heard April 14, 2021. At the hearing, the Chambers judge asked the parties to provide brief written submissions as to their positions. Ms. Boutin’s written submission stated that three items should be deducted from her 2019 line 150 income of $66,148.00 for child support purposes, being $8,700.00 for spousal support she had received; $893.00 for union dues; and $5,491.00 for carrying charges.

She cited B.M. v P.M ., 2019 SKQB 36 [ B.M. ], as authority for the carrying charges deduction. As to Mr. Boutin’s income, she contended that his pension income should be included in accordance with s. 16 of the Federal Child Support Guidelines , SOR/97-175 [ Guidelines ], and because it was customary to do so. She asserted that doing so would not result in any “double dipping” or “double recovery” despite that Mr. Boutin’s pension had been divided equally, citing P.M. v S.M. , 2019 SKCA 111 , 34 RFL (8th) 34. [ 16 ] On this basis, Ms. Boutin contended that her income should be found to be $51,064.00, that Mr.

Boutin’s should be $266,548.61, and that he should accordingly pay $2,754.01 per month in s. 3 child support and in 83.9% of s. 7 expenses. For that reason, she also claimed retroactive child support of $9,526.11. As requested, she appended a draft order that contained these terms. [ 17 ] In his written submission, Mr. Boutin contended that his pension income should not be counted as income for child support purposes, as the Minutes constituted an agreement in writing as to the parties’ incomes within the meaning of s. 15(2) of the Guidelines .

Section 15 is as follows: 15

(1) Subject to subsection (2), a spouse’s annual income is determined by the court in accordance with sections 16 to 20.

(2) Where both spouses agree in writing on the annual income of a spouse, the court may consider that amount to be the spouse’s income for the purposes of these Guidelines if the court thinks that the amount is reasonable having regard to the income information provided under

section 21. [ 18 ] Mr. Boutin pointed to the provision in paragraph 10 of the Minutes that child support “shall be adjusted annually with reference to the parties’ employment incomes (and any deductions allowed under the Child Support Guidelines)”. As he put it, this constituted an agreement that “they would use employment income as opposed to Line 150 income as Pension income was not to be included due to the fact that [he] had already rolled over to [Ms. Boutin] one-half of his Pension”.

He contended that since he had started a new job which paid him a similar income, the parties’ agreement was reasonable and should be respected. [ 19 ] Mr. Boutin also contended that employment expenses of $11,997.87 and his union dues should be deducted for purposes of calculating child support. Further, it was his position that neither of the parties could deduct carrying charges, as both were payors as a result of their shared parenting arrangement. For these reasons, Mr. Boutin submitted that the parties’ incomes for child support purposes should be calculated as follows: Mr.

Boutin Employment income $202,177.36 less employment expenses $11,997.87 less union dues $169.35 Income for child support purposes $190,010.14 Ms. Boutin Employment income $57,448.00 less union dues $893.00 Income for child support purposes $56,555.00 [ 20 ] On that basis, Mr. Boutin calculated that he should be required to pay child support of $2,525.00 per month and that Ms. Boutin should pay $781.00 per month, resulting in a net amount owing by him to her of $1,744.00.

He noted that he had been paying $1,888.00 per month, resulting in an overpayment of $144.00 for the period from June 1, 2020, to April 1, 2021. A draft order based on these submissions was appended to Mr. Boutin’s brief. [ 21 ] The Chambers judge issued his very short Fiat on April 14, 2021, which was as follows: The Court does accept the argument of counsel for [Mr. Boutin] that his pension should not be included in calculation of child support obligations. He has already rolled over one half of his pension to [Ms. Boutin]. The Minutes of Settlement are with respect to employment income, not pension income.

In determining [Mr. Boutin’s] income for maintenance purposes his gross salary is 202,166.00 less allowable expenses of 11,997.87 and 169.65 leaving an income for calculation purposes of 190,040.14.

[Mr. Boutin] currently is paying $2519.27 whereas he should pay $1739.00 providing a credit for overpayment of $1490.00. The parties shall pay their proportionate share of sec 7 expenses on an on-going basis. There shall be no order for costs at this time. [ 22 ] On April 15, 2021, the Chambers judge directed that the draft order appended to Mr. Boutin’s brief should issue. That draft, which was in the form of the Order, was substantially more detailed than the Fiat, containing the following terms: …IT IS HEREBY ORDERED THAT: 1.

For the purposes of the calculation of child support, taking into consideration the Minutes of Settlement entered into between the parties on October 23, 2019, wherein it was agreed that the incomes for child support purposes would be made with reference to the parties’ employment incomes and any deductions allowed under The Child Support Guidelines, it is hereby determined that [Mr. Boutin’s] income is $190,010.00 and [Ms. Boutin’s] income is $56,555.00. 2. [Mr. Boutin’s] claim to deduct $11,997.87 in employment expenses is hereby allowed along with the deduction of $169.35 for Union Dues. 3. [Ms.

Boutin’s] claim to deduct Union Dues of $839.00 is hereby allowed. [Ms. Boutin’s] claim to deduct carrying charges is not allowed. 4. Based upon the aforesaid incomes, [Mr. Boutin] shall be required to pay to [Ms. Boutin] as and for the support of the children, namely, [N.M.B.], born …2007 and [L.M.B.], born …2007, the sum of $2,525.00 per month. [Ms. Boutin] shall be required to pay to [Mr. Boutin] as and for the support of the aforesaid children, the sum of $781.00 per month. 5.

The aforesaid payments shall commence retroactively to June 1, 2020 and shall continue on the 1st day of each and every month thereafter until otherwise varied by written agreement of the parties or Court Order. 6. The aforesaid payments result in [Mr. Boutin] having overpaid maintenance to [Ms. Boutin] in the sum of $1,440.00 for the period of June 1, 2020 to April 1, 2021. [Mr. Boutin] may deduct this amount from any maintenance owing by him to [Ms. Boutin] for the month of May 2021. 7. In terms of ongoing

section 7 expenses, based upon the aforesaid incomes, each party shall pay their proportionate share of

section 7 expenses as referred to in

Section 11 of their Minutes of Settlement dated October 23, 2019. 8. [Ms. Boutin] shall pay to [Mr. Boutin] costs in this application in the amount of $2,500.00. III. ANALYSIS [23] Ms. Boutin alleges that the Chambers judge committed a variety of errors in calculating the parties’ income for purposes of child support. She submits that he erred by excluding Mr. Boutin’s pension income and by allowing his deduction of $11,997.87 in employment-related vehicle expenses. She contends that he should have allowed her claimed deduction of $5,491.00 in carrying charges.

She alleges that he erred by authorizing the issuance of the Order that granted relief that was different from or in addition to that provided for in the Fiat. I will deal with each of these arguments in turn. A. Was there an agreement to exclude pension income when calculating child support? [24] Section 15(1) of the Guidelines provides that the annual income of a spouse is determined in accordance with ss. 16 –20 of the Guidelines .

Section 16 provides that, subject to ss. 17 –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…and is adjusted in accordance with

Schedule III”. Line 11500 of the 2019 T1 General form, the one at issue here, listed “[o]ther pensions and superannuation” as one of the sources of income set out under “Total income”. Section 21(1) of the Guidelines , which deals with the obligation of an applicant for child support to provide income information, specifies in s. 21(1)(

h) that a spouse must disclose information relating to income received from a pension. [25] As Ms. Boutin points out, courts have concluded that the pension income of a payor spouse who also earns employment income should be included when determining the payor’s income for purposes of child support. That, of course, is not only unsurprising, but necessarily follows from ss. 15 and 16 of the Guidelines , which require the inclusion of income from all the listed sources, absent provision in the Guidelines for its exclusion. Ms. Boutin referred, by way of example, to L.C.R. v I.J.E.R ., 2019 SKQB 229 .

There, the payor spouse had argued that he was not obliged even to disclose pension income, as the separation agreement provided that his pension was his property. The Court rejected that argument, and indeed, suggested that the failure to disclose pension income might have constituted blameworthy conduct. [26] There is nothing to suggest the Chambers judge did not understand that, as a rule, pension income must be counted as a matter of course. Rather, he excluded Mr. Boutin’s pension income because he concluded that the Minutes constituted an agreement as to Mr. Boutin’s income within the meaning of s. 15(2) .

Although he did not specifically refer to that section, that is the only reasonable

interpretation of the first paragraph of the Fiat. Ms. Boutin agrees. [27] However, Ms. Boutin alleges that by proceeding in this fashion, the Chambers judge nonetheless erred. She does not deny that the Minutes were an agreement between the parties or that it did not reflect the actual agreement reached at the pre-trial. Nor does she say that this was a case of unilateral mistake, in that Mr. Boutin was aware that she was mistaken as to the meaning of paragraph 10 when the

agreement was made, or mutual mistake. [28] Rather, she contends that, despite the language of paragraph 10, the parties did not agree on the allocation of pension income.Indeed, she submits that the Chambers judge did not have the evidence necessary to conclude that they did. She based this aspect of herargument primarily on the fact that there was conflicting evidence as to the negotiations at the pre-trial relating to this issue. Like Mr.Boutin, Ms. Boutin deposed that the issue of the inclusion of pension income was discussed. However, it was her evidence that theconversation related solely to her claim for spousal support, not child support. Her explanation was as follows: 4.

(5) During the Pre-Trial Conference, the conversations around pension income exclusion was not about child support but wasdiscussed regarding spousal support. A lump sum was negotiated for a set duration for spousal support so I would not have to revisitspousal support payments based on income every year. My lawyer at that time…explained to me that the pension income would not beincluded in spousal support if I was to revisit income every year because of the division of [Mr. Boutin’s] pension and it would beconsidered “double dipping” if it were to be included.

These discussions were not around child support. … [29] Similarly, it was Ms. Boutin’s evidence that the agreements relating to the $35,000 holdback and to the rollover of Mr.Boutin’s pension had nothing to do with child support and were negotiated solely with reference to the agreed spousal support. [30] Mr. Boutin gave very different evidence about these negotiations. Indeed, his evidence as to the context in which pensionincome was discussed were to exactly the opposite effect. He deposed as follows: 5. … The Minutes were worded this way as I had already rolled over half of my pension to [Ms.

Boutin] pursuant to the Agreement ofJune 26, 2018, a copy of which is attached hereto as Exhibit “A” to this my Affidavit. As such, [Ms. Boutin] and I both agreed at the Pre-Trial that it would not be equitable to include my pension income when [Ms. Boutin] had received half of my pension. As such, [Ms.Boutin] and I both agreed at the Pre-Trial Conference that the Pension income would not be included as [Ms.

Boutin] had already receivedhalf of my pension. … 12. … The October 23, 2019 Minutes of Settlement agreed to by the parties were specific and precise in dictating (paragraph 10) thatchild support payments were to be made utilizes the parties’ ‘employment income’. There is no ambiguity in this language. The partiesagreed to the language as a result of the fact that pursuant to an Agreement entered into between [Ms. Boutin] and I on June 26, 2018, Ihad already rolled over one half of my pension to [Ms. Boutin]. Pursuant to the Minutes of Settlement, [Ms.

Boutin] was then to roll overone half of her pension to me, less $35,000.00 which was held back in lieu of a lump sum spousal support payment.…In light of the factthat we were each to receive one half of the other’s pension, we agreed that it was not equitable that pension income be included whendetermining child support. [31] What, then, is the significance of this conflicting evidence relating to the negotiations? That question calls first forconsideration of the principles of contract

interpretation. The Minutes are a contract. For that reason, the ordinary law of contract generallyapplies, including that relating to contract

interpretation: Ruskin v Chutskoff Estate, 2004 SKCA 107 at para 22, 243 DLR (4th) 432;Neigum v Van Seggelen, 2022 SKCA 108 at para 46, 474 DLR (4th) 673 [Neigum]. [32] As this Court affirmed in its per curiam decision in Mosten Investments LP v The Manufacturers Life Insurance Company(Manulife Financial), 2021 SKCA 36 at para 66, [2021] 9 WWR 1 [Mosten], “[t]he goal of all contract

interpretation is to ascertainconsensus ad idem…[which]…arises when all parties understand and accept the contractual commitments each party has made to theothers”. As the Court also said, “the issue is not what the parties subjectively understood or intended, or later came to think the agreementwas” (at para 69). Rather, the correct approach is that described in the following statement in Geoff R. Hall, Canadian ContractualInterpretation Law, 3d ed (Toronto: LexisNexis, 2016) at 50–51, which was adopted in Mosten, at para 69: It is a fundamental precept of the law of contractual

interpretation that the exercise is objective rather than subjective. “The goal ininterpreting an agreement is to discover, objectively, the parties’ intention at the time the contract was made.” [Emphasis added.] Theobjective approach applies to both the words of the contract and their context.

Therefore, the exercise is not to determine what the partiessubjectively intended but what a reasonable person would objectively have understood from the words of the document read as a wholeand from the factual matrix. “Bearing in mind the relevant background, the purpose of the document, and considering the entirety of thedocument, what would the parties to the document reasonably have understood the contested words to mean?” [Emphasis added.] Putanother way, “[i]n interpreting a contract, what is relevant is the parties’ outward manifestations...”. [33] Further, “[t]he first principle of contract

interpretation is that the parties to a contract are presumed to have intended what thetext of the contract actually says…This is the cardinal presumption of contract

interpretation and it places the written agreement of theparties at the core of the interpretive process” (Mosten at para 73). While it is proper to take the surrounding circumstances in which thecontract was formed into account, they cannot be permitted to overwhelm the language chosen by the parties. In Sattva Capital Corp. vCreston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633 [Sattva], Rothstein J. summarized these fundamental precepts as follows: [57] … The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entirecontract (Hall, at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot usethem to deviate from the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel MobilityCellular Inc. (1997), (BC CA), 101 B.C.A.C. 62). [34] One other applicable principle must be mentioned – the limitations to what constitutes “surrounding circumstances” for thepurposes of interpreting a contract.

The following explanation was provided by Rothstein J. in Sattva: [58] The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from caseto case. It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the executionof the contract (King, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge of bothparties at or before the date of contracting.

Subject to these requirements and the parol evidence rule discussed below, this includes, in thewords of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document would have

been understood by a reasonable man” (Investors Compensation Scheme, at p. 114). Whether something was or reasonably ought to havebeen within the common knowledge of the parties at the time of execution of the contract is a question of fact. The reference to the parol evidence rule is significant.

The Supreme Court has since confirmed that “[e]vidence of one party’s subjectiveintention therefore ‘has no independent place’ when considering the circumstances surrounding the formation of a contract” (emphasis inoriginal, S.A. v Metro Vancouver Housing Corp., 2019 SCC 4 at para 30, [2019] 1 SCR 99, citing Eli Lilly & Co. v Novopharm Ltd., (SCC), [1998] 2 SCR 129 at para 54). [35] These principles determine the correct approach to evidence of negotiations that precede contract formation. It has often beensaid that such evidence is not admissible for the purpose of construing the agreement.

However, that overstates the matter; itsadmissibility depends on the purpose for which it is tendered. As I have emphasized, the subjective intentions of a party are not relevantfor the purpose of determining the consensus recorded in the final agreement. For that reason, evidence of pre-contract negotiations that istendered to prove those subjective intentions for that purpose is inadmissible.

These principles are reflected in the following commentadopted by MacKinnon A.C.J.O. in Craighampton Investments Ltd. v Ayerswood Developments Ltd. (1984), 4 OAC 124 (WL) (CA): …When equals negotiate at length and arrive at a written agreement which can be interpreted by itself or by reference to matters whichmust be taken to have been known to both of them and which show the sense or meaning that the words must be taken to have had whenthe agreement was made, it verges on idle activity for a court to rehash the negotiations, activities and conduct of the parties and hear theirnow professed expression of what their intentions were at an earlier time. [36] However, evidence of negotiations may be of a different kind and may be tendered for a different purpose.

It may be evidenceof the surrounding circumstances or factual matrix that is properly taken into account when determining the meaning of the writtenagreement. Such evidence may, for example, demonstrate the commercial objectives of the parties in forming the agreement (Langley Lo-Cost Builders Ltd. v 474835 B.C. Ltd., 2000 BCCA 365 , [2000] 7 WWR 46 (BCCA) at para 29, or may “establish that a factwhich may be relevant as background was known to the parties” (Chartbrook Limited v Persimmon Homes Limited, [2009] UKHL 38 atpara 42.

As Rothstein J. explained in Sattva, “[t]he goal of examining such evidence is to deepen a decision-maker’s understanding of themutual and objective intentions of the parties as expressed in the words of the contract” (emphasis added, at para 57). This Courtsummarized what is permitted in Mosten: [83] … (

g) The nature of the evidence upon which an interpreting court may rely consists “only of objective evidence of the background factsat the time of the execution of the contract” (Sattva at para 58, citing King v Operating Engineers Training Institute of Manitoba Inc. 2011MBCA 80 at paras 66 and 70, 270 Man R (2d) 63), namely, “knowledge that was or reasonably ought to have been within the knowledgeof both parties at or before the date of contracting” (Sattva at para 58). [Footnote omitted] [84] Aggregating this guidance in the most encompassing of terms, relevant extrinsic evidence will include anything that tends toestablish the facts known, or facts that reasonably ought to have been known, to all parties at or before the date of contracting and thatdeepens the interpreting court’s understanding of the mutual and objective intention of the parties as expressed by the words of thecontract (Sattva at paras 57, 58 and 60).

Broadly stated, the proper approach to contract

interpretation involves the determinationof consensus ad idem on the basis of the text of the contract as a whole together with a matrix of extrinsic evidence that objectivelymanifests what the parties understood the contested contract text to mean at the time of contract formation. [37] There is also authority for the proposition that direct evidence of the intentions of the parties may be admissible where there isambiguity, or at a minimum, where there is latent ambiguity; that is, ambiguity that becomes apparent only when the language of theagreement is viewed in light of the surrounding circumstances: John D.

McCamus, The Law of Contracts, 3d ed (Toronto: Irwin Law,2020) at 808. The question, then, is whether the Chambers judge erred in applying these legal principles to the facts. Justice Rothsteinconfirmed in Sattva that “[c]ontractual

interpretation involves issues of mixed fact and law as it is an exercise in which the principles ofcontractual

interpretation are applied to the words of the written contract, considered in light of the factual matrix” (at para 50). For thatreason, the applicable standard of review is the palpable and overriding standard: Neigum at para 46; Mosten at paras 28 and 33. The samestandard applies to alleged errors of fact, including where, as here, the factual determinations are made solely on the basis of affidavitevidence: Yorkton (City) v Mi-Sask Industries Ltd., 2021 SKCA 43 at paras 22–25, [2021] 6 WWR 18.

Alleged errors of law arereviewable on the correctness standard. [38] To begin, I would first note that paragraph 10 of the Minutes expressly provides, in straightforward language, that it is childsupport, not spousal support, that is to be adjusted “annually with reference to the parties’ employment incomes”. That paragraph is placedin a part of the Minutes titled “Child Support”. There is no reference anywhere in the Minutes to the calculation of income going forwardfor the purpose of determining spousal support.

Such a provision would have served no apparent purpose, as the Minutes included termsthat fully and finally resolved issues of spousal support by the payment of a fixed monthly amount for a term of eight years, together withthe $35,000 lump sum held back from Ms. Boutin’s pension rollover. [39] Ms. Boutin suggests that the fact the Minutes do not expressly state that pension income would not be counted is telling.However, the significance of an “omission” of this kind depends on context.

It was open to the Chambers judge – based on the nature ofthe alleged omission and the language of the Minutes, all considered in light of the surrounding circumstances – to conclude that it was ofno significance.

Put differently, it was reasonable to conclude that the provision that adjustments would be made “annually with referenceto the parties’ employment incomes” meant that the parties had agreed that employment income would be counted, and pension incomewould not. [40] Taking all of this into account, I conclude that the Chambers judge did not make a palpable and overriding error of mixed factand law in applying the principles of contract

interpretation to the facts. His

interpretation is squarely grounded in the text of the Minutes. [41] Ms. Boutin also submitted that the Chambers judge had erred in finding that there was an agreement at all, as there wasconflicting evidence as to what had occurred at the pre-trial. To the extent it is an argument that the Chambers judge should not havemade findings of fact as to what occurred in the negotiations, I note that she did not take that position in the court below. Nor did she ask

the Chambers judge to order cross-examinations on the affidavits or a trial of the issue before finding these or any other facts. Rather, bothparties led evidence relating to the negotiations at the pre-trial and asked the Chambers judge to make a decision based on that affidavitevidence. [42] Further, it must be kept in mind that the Chambers judge did not need to determine what the parties subjectively intended theMinutes to mean. That is so because, as I have explained, the parties’ subjective intentions were not relevant to their

interpretation. Thefact that he accepted Mr. Boutin’s evidence on this point is accordingly immaterial. [43] Ms. Boutin also contends that the Chambers judge erred in law by failing to consider evidence that Mr. Boutin did not believethat the parties had agreed that pension income would be excluded, and indeed, that he had admitted that they had agreed that it would beincluded. That evidence was the September 2020 email correspondence between the parties relating to the exchange of incomeinformation for the purpose of adjusting child support. Ms. Boutin notes that Mr.

Boutin initially referred only to the issue of deductibleemployment expenses and did not refer to the pension income issue until after he got legal advice. [44] Ms. Boutin also submits that if the Chambers judge had considered these emails, he could not have reached the conclusion thathe did. I take that as an alternative allegation of palpable and overriding error. [45] With respect, there are several fundamental flaws with these elements of Ms. Boutin’s argument. First, I am not prepared toconclude that the Chambers judge failed to consider this email correspondence, thereby committing an error of law.

It was not only beforehim but was directly addressed in Ms. Boutin’s post-hearing brief, which alleged that Mr. Boutin had acknowledged in his emails that itwas appropriate to order child support based on his total income. Ms. Boutin did not appeal on the ground that the Chambers judge erredin law by providing insufficient reasons. The fact that he did not specifically refer to the correspondence in the emails does not establishthat he did not consider it. [46] Second, it is by no means clear that the correspondence demonstrates that Mr.

Boutin believed the parties had agreed thatpension income would be included for this purpose. The most that can be said is that Mr. Boutin did not refer to the pension income in thecorrespondence at issue. However, that does not necessarily signal that he had agreed that it should be counted as income. The Chambersjudge was not obliged to draw such an inference. It may be, for example, that Mr. Boutin did not address the issue because he did not thinkit was necessary to address it. It had, after all, been dealt with by the unambiguous language of paragraph 10.

It would not constitutepalpable and overriding error to find that the emails did not mean what Ms. Boutin claims. Here, as in certain other respects, Ms. Boutineffectively asks that this Court intrude on the fact-finding functions that are the province of the Chambers judge. [47] In the result, I am not persuaded that there was either a failure to consider this evidence, or a palpable and overriding error. Itbears repeating that, just as the answer to the contract

interpretation question does not turn on what Ms. Boutin subjectively intended orcame to believe, it does not depend on what Mr. Boutin might have subjectively understood or came to believe it meant. The language atissue is not ambiguous. For that reason, even if the Chambers judge had erred by failing to find that Mr. Boutin believed they had agreedpension income would be counted, that error would not have been overriding in any event. [48] Ms. Boutin contends that there are other material errors that weigh in favour of her contract

interpretation argument. She assertsthat the Chambers judge appears to have adopted the

interpretation he did at least in part because he believed that the inclusion of Mr.Boutin’s pension income would constitute double dipping. As she puts it, double dipping was “likely on his mind”. That submission isbased on the reference by the Chambers judge to the fact that Mr. Boutin had already rolled over one half of his pension to Ms. Boutin. [49] I would agree that if the Chambers judge had decided that the pension income should be excluded to avoid double dipping, hewould have erred in law.

That is so because the principle reflected in Boston v Boston, 2001 SCC 43, [2001] 2 SCR 413 [Boston], isconcerned with spousal support, not child support: P.M. v S.M. at paras 87–88; Bone v Bone, 2020 ABCA 323 at paras 29–30, 451 DLR(4th) 337. In Boston, the particular question was whether income received from a pension that had already been divided should be takeninto account in calculating income for the purpose of determining spousal support.

Justice Major answered this question as follows: [64] To avoid double recovery, the court should, where practicable, focus on that portion of the payor’s income and assets that have notbeen part of the equalization or division of matrimonial assets when the payee spouse’s continuing need for support is shown (seeHutchison, supra, at para. 9).

In this appeal, that would include the portion of the pension that was earned following the date of separationand not included in the equalization of net family property. [50] Where, as here, the issue relates to income received from a defined benefit pension, this principle would generally preclude theinclusion of that pension income for the purpose of calculating spousal support. That is so despite that Boston affirms that double recoveryis permitted in some circumstances. However, the rule against double dipping or double recovery does not apply in determining incomefor the purposes of child support.

Child support is the right of the child. Parents have an obligation to support their children according totheir needs, based on their respective incomes and ability to pay: Willick v Willick, (SCC), [1994] 3 SCR 670; Richardsonv Richardson, (SCC), [1987] 1 SCR 857. The Guidelines are not optional, despite their name. They are mandatory. Theyprovide that pension income must be included when calculating spousal incomes, absent a basis in the Guidelines for its exclusion. [51] As I read the Fiat and the Order, the Chambers judge did not decide otherwise. I do not interpret his reference to the rollover ofMr.

Boutin’s pension in the manner suggested by Ms. Boutin. Rather, I would interpret that comment, read in the context of the record, asnothing more than confirmation that the Chambers judge accepted Mr. Boutin’s explanation as to why the parties made the agreementreflected in paragraph 10 of the Minutes. That finding of fact does not demonstrate the legal error alleged by Ms. Boutin – that being thatthe Chambers judge decided that the pension income should be excluded because the pension had been divided.

Rather, he decided that itshould be excluded because the Minutes constituted a s. 15(2) agreement between the parties to calculate their incomes for purposes ofchild support on the basis of employment income alone. [52] Ms. Boutin further argues that it would not make sense to conclude that she had agreed that child support would be basedsolely on employment income, as she received nothing more than the equal share of the family property to which she was entitled. Indeed,she also made a vague and unsupported allegation that Mr.

Boutin’s pension had not been properly valued and that she had accordinglyreceived less than half of it.

[53] Once again, this argument ignores the fundamental principle that contract

interpretation is objective, that it must always begrounded in the text, and that the surrounding circumstances cannot justify deviation from the text by the court so as to make a newagreement. Even if, as she appears to suggest, Ms. Boutin was misled in some fashion and made the wrong bargain, it would not changethe terms of that agreement. She did not assert that the agreement reflected in the Minutes should be set aside or varied because she hadbeen misled. [54] Further, to the extent this constitutes an allegation that the Chambers judge misapprehended the evidence as to the equaldivision of Mr.

Boutin’s pension – assuming that such an error would have been relevant in light of the rules of contract

interpretation –there is simply insufficient evidence to justify such a conclusion. The reason that is so is readily apparent; that is, Ms. Boutin advised atthe hearing of this appeal that the parties had agreed that the Chambers judge should not be asked to decide if the pension had beenequally divided. She must live with the consequences of that agreement. [55] In light of all of this, I am unable to conclude that the Chambers judge erred in deciding that the Minutes constituted anagreement that the annual variation of child support would be based solely on employment income. B.

Did the Chambers judge err in applying s. 15(2) of the Guidelines? [56] The issue that remains to be determined is whether the Chambers judge nonetheless erred by giving effect to the agreement toadjust child support based solely on the parties’ employment income pursuant to s. 15(2) of the Guidelines, and for that reason, to excludepension income from the calculation. Ms. Boutin concedes that an agreement as to how to calculate the income of a spouse, as opposed toan agreed dollar amount, could constitute a s. 15(2) agreement. I agree.

However, she contends that the Chambers judge erred by givingeffect to the Minutes. She argues that he was obliged to determine whether the agreement to look only to employment income wasreasonable in view of the s. 21 income information before doing so. She cites C.T.G. v R.R.G., 2016 SKQB 387 at para 52, 86 RFL (7th)312, and on MacEachern v Bell, 2019 ONSC 4720 at para 57, 33 RFL (8th) 68, in support of this proposition. She notes that the Fiat doesnot discuss this issue and argues that this means the Chambers judge did not consider it.

It is her position that the failure to undertake thenecessary analysis was an error of law. [57] Ms. Boutin also submits that there was no basis in the Guidelines to reduce Mr. Boutin’s obligation to support his children inany event. As I understand this aspect of her argument, it is her position that if the Chambers judge had considered this question, he couldnot have found that the agreement to exclude the pension income in the calculation of Mr.

Boutin’s income was reasonable, as it could notbe justified under any provision of the Guidelines. [58] I would first note that I agree that a judge deciding an application to approve child support based on a purported s. 15(2)agreement cannot conclude that the amount agreed by the parties is the income of a spouse for the purpose of calculating child supportunless they consider whether it is reasonable having regard to the s. 21 income information and having done so, determine that it is. Thatis the plain meaning of the section.

Here, the Chambers judge would have had to be satisfied that the agreement to calculate child supporton the basis of employment income only and thus to exclude pension income was reasonable. [59] I am not persuaded that the Chambers judge failed to address these issues. The pension income issue, and in particular, theeffect of the Minutes, was front and center when the Chambers judge heard Ms. Boutin’s application. It was by far the most importantquestion. Ms. Boutin’s brief emphasized that s. 16 of the Guidelines requires the inclusion of pension income. Mr.

Boutin’s brief expresslymade the point that “the parties’ agreement to not include pension income was a reasonable resolution of matters and this agreementshould not be interfered with by the Court”. The briefs confirmed the positions the parties had presented at the hearing. Those positionswere also clearly disclosed in the affidavits. [60] In these circumstances, I am satisfied that the Chambers judge turned his mind to this issue. The fact that the Fiat does notexplicitly make that point does not persuade me otherwise. The Fiat is primarily a list of conclusions.

It does not explicitly address each ofthe issues that had to be considered along the way. However, it does disclose that the Chambers judge did turn his mind to the meaning ofparagraph 10 of the Minutes and whether it should determine the outcome pursuant to s. 15(2) of the Guidelines. Further, the Fiat andOrder as a whole are comprehensible in light of the nature of the issues, the evidence, and the submissions of the parties. [61] As to the substance of the decision that the agreement was reasonable within the meaning of s. 15(2), Ms.

Boutin essentiallycontends that the question is whether the payor has, in some other fashion, prepaid an amount they would have been obliged to pay aschild support. Mr. Boutin, on the other hand, contends that in determining the answer to that question, a judge is entitled to take mattersother than money into consideration – including, in particular, the importance of settlements in the resolution of family law disputes.

Inthat context, he notes the following comments by the majority in Richardson v Richardson, 2019 ONCA 983, 35 RFL (8th) 265, where theOntario Court of Appeal denied an appeal of an order rejecting a mid-trial settlement of a custody and access dispute: [25] There is no dispute about the importance of settlements in family law. Settlements are to be promoted and encouraged, as ourcolleague Nordheimer J.A. explains. [26] Nevertheless, it is well established that judges have the authority to review settlements and to reject them if they are not in the bestinterests of the children: Martin v.

Martin, 1981 CarswellBC 773 (C.A.), at para. 7; C.T.G. v. R.R.G., 2016 SKQB 387, 86 R.F.L. (7th)312, at para. 11; and Harper v. Harper (1991), (ON SC), 78 D.L.R. (4th) 548 (Ont. Gen. Div.), at p. 553. This authoritymust be exercised with caution. Mere disagreement with the terms of a settlement affords no basis for courts to intervene: see e.g., F.J.V.v. W.K.S., 2019 BCCA 67, 18 R.F.L. (8th) 255, at paras. 26, 29. Further, whether a settlement is in the children’s best interests should takeinto account more than just the settlement terms.

It should also consider the general benefits to children that flow from parents resolvingtheir disputes through compromise rather than litigation. [62] The perspective reflected in these comments also applies where the issue relates to a s. 15(2) agreement.

The fact that s. 15(2)requires that the judge have regard to income information provided under s. 21 does not mean that they can consider only that information.In particular, it does not mean that a judge can only find the agreement to be reasonable if they are satisfied that the payor will be obligedto pay essentially the same amount of child support as if no agreement had been made. Put differently, the word “reasonable” does not

require the judge to ignore everything but the rules for inclusion or exclusion that would, but for a s. 15(2) agreement, determine spousal support. Nor need they turn a blind eye to everything but strictly financial considerations.

The question of whether an agreement is reasonable permits a more nuanced enquiry than that, in a manner that also takes proper account of factors such as threats and foot dragging to avoid rewarding such unacceptable behaviour. [63] Here, there are many factors that could properly be taken as weighing in favour of the conclusion that the paragraph 10 income agreement was reasonable and would not constitute an error.

The Minutes in general, and paragraph 10 in particular, were the product of give and take that occurred in a judicially supervised negotiation that was intended to and in fact resulted in the resolution of all outstanding matters. In that sense, the Minutes already had the stamp of judicial approval. Both parties were fully aware of the facts and were represented by counsel. Mr. Boutin explained, and the Chambers judge accepted, that the limitation to employment income was resulted from the parties’ discussion as to the effect of the division of Mr.

Boutin’s pension on the equities of the situation. [64] Further, this was the first of the annual variation events contemplated by the Minutes. There was no evidence of any material changes, whether as to Mr. Boutin’s income or otherwise, since the Minutes were signed. Ms. Boutin would – if paragraph 10 was given effect – receive, in addition to her continuing employment income, $1,850.00 a month in spousal support, together with $1,744.00 in child support.

There was no evidence that the children’s standard of living would suffer in any way if employment income alone was taken into account when determining the adjustment that would result in a change in child support effective June of 2020. [65] Taking all of this into account, I conclude that the decision to calculate the parties’ incomes in the manner specified in the Minutes – which constituted a decision that the conditions identified in s. 15(2) had been met – did not disclose an error of law or of mixed fact and law. [66] Before leaving the s. 15(2) issue, I would finally observe that at the hearing of this appeal, Ms.

Boutin stressed that a court is always entitled to ignore an agreement such as this if it is inconsistent with the obligations of the parents and the rights of the child in relation to support. She argued that the court’s authority to determine child support continues despite a s. 15(2) agreement, including an agreement that purports to establish a method for calculating parental incomes going forward, regardless of changes in circumstances.

She emphasized that s. 15.1(3) of the Divorce Act , RSC 1985, c 3 (2d Supp), provides that a court making a child support order “shall do so in accordance with the applicable guidelines”. [67] I agree with these observations. However, they do not mean that parties cannot make agreements relating to child support or that courts cannot take them into account if they provide for child support that differs from the table amount. The law strongly encourages parties to resolve family law disputes by agreement and is crafted in a manner that recognizes that one size does not fit all.

The Divorce Act reflects this essential feature of the architecture of family law, providing for the award of amounts that differ from the Guideline amount under certain conditions, as follows: 15.1

(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to pay for the support of any or all children of the marriage.

(2) Where an application is made under subsection (1), the court may, on application by either or both spouses, make an interim order requiring a spouse to pay for the support of any or all children of the marriage, pending the determination of the application under subsection (1).

(3) A court making an order under subsection (1) or an interim order under subsection (2) shall do so in accordance with the applicable guidelines. …

(5) Notwithstanding subsection (3), a court may award an amount that is different from the amount that would be determined in accordance with the applicable guidelines if the court is satisfied (

a) that special provisions in an order, a judgment or a written agreement respecting the financial obligations of the spouses, or the division or transfer of their property, directly or indirectly benefit a child, or that special provisions have otherwise been made for the benefit of a child; and (

b) that the application of the applicable guidelines would result in an amount of child support that is inequitable given those special provisions.

(6) Where the court awards, pursuant to subsection (5), an amount that is different from the amount that would be determined in accordance with the applicable guidelines, the court shall record its reasons for having done so.

(7) Notwithstanding subsection (3), a court may award an amount that is different from the amount that would be determined in accordance with the applicable guidelines on the consent of both spouses if it is satisfied that reasonable arrangements have been made for the support of the child to whom the order relates.

(8) For the purposes of subsection (7), in determining whether reasonable arrangements have been made for the support of a child, the court shall have regard to the applicable guidelines.

However, the court shall not consider the arrangements to be unreasonable solely because the amount of support agreed to is not the same as the amount that would otherwise have been determined in accordance with the applicable guidelines. [68] Further, an order that complies with s. 15(2) of the Guidelines is, of course, an order made pursuant to the Guidelines . [69] I must emphasize that the decision that the parties’ incomes should be determined in accordance with the Minutes on this occasion should not be taken as a decision that the parties’ incomes must always be calculated as provided in Minutes, regardless of changes in the circumstances of the parties and the children.

To be sure, the finding that the Minutes are an agreement in writing within the meaning of s. 15(2) means that paragraph 10 will have effect going forward. However, this judgment deals with its effect only in

relation to a single year. I would hope that the parties can agree as to their incomes in future years. If they fail to do so, the question of whether some or all of Mr. Boutin’s pension income should be taken into account for the purposes of calculating child support will be for the judge that is called upon to decide the issue in light of the evidence and submissions before them, despite that paragraph 10 provides that only employment income matters. Issues may also arise in relation to Ms.

Boutin’s income, or income from other sources. [70] For these reasons, I conclude that the Chambers judge did not err in applying s. 15(2) of the Guidelines . C. Did the Chambers judge err by failing to deduct carrying charges? [71]

Section 16 of the Guidelines provides that annual income is to be “adjusted in accordance with

Schedule III”.

Section 8 of

Schedule III provides as follows: 8 Deduct the spouse’s carrying charges and interest expenses that are paid by the spouse and that would be deductible under the Income Tax Act . [72] Although the Income Tax Act , RSC 1985, c 1 (5th Supp ) [ ITA ], does not specifically provide for the deduction of legal expenses incurred to determine child support obligations, those expenses have been found to be deductible by taxpayers in some circumstances. That is so even where, as here, the child support at issue is not income that would otherwise be taxable.

Justice Rennie explained the basis for this now well-established proposition in R v Grenon , 2016 FCA 4 , 482 NR 310, as follows: [3] There are three legislative provisions in issue. Paragraph 18(1) (

a) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp .)) ( ITA ) allows a taxpayer to deduct an expense if it “was made or incurred for the purpose of gaining or producing income from the business or property.” Subsection 248(1) defines property as including “a right of any kind whatever, a share or a chose in action.” To round out the legislation in issue,

section 60 prescribes certain expenses which, in addition to those that fall within the ambit of paragraph 18(1) (a), are also permissible deductions. [4] The combined effect of subsections 18(1) and 248(1) of the ITA , judicially interpreted, is to allow the deduction of legal fees and costs incurred by a taxpayer in obtaining, enforcing or varying child support payments, but to deny the deduction of the expenses incurred by taxpayers who pay child support payments. [73] The ITA jurisprudence relating to this issue has also confirmed that carrying charges of this kind are deductible only by the person receiving child support and not the person paying it.

As Noël J.A. (as he then was) explained in Nadeau v M.N.R. , 2003 FCA 400 at para 18 , [2004] 1 FCR 588, this distinction has been justified on the basis that “the expenses incurred by the payer of support (either to prevent it from being established or increased, or to decrease or terminate it) cannot be considered to have been incurred for the purpose of earning income …”. [74] Several questions arise in this case. First, does the fact that legal fees of this kind that are deductible under the ITA mean that they are deductible when adjusting the income of a spouse pursuant to s. 8 of

Schedule III of the Guidelines ? Second, are such legal fees deductible where the person who incurred the expense is both a payor and a payee of child support ? Third, is Ms. Boutin such a person? The second and third questions arise because Ms. And Mr. Boutin share parenting of the children. For that reason, the Chambers judge ordered that Mr. Boutin must pay $2,525.00 per month to Ms. Boutin, and that she must pay $781.00 to him. Mr. Boutin contends that Ms. Boutin should not be entitled to deduct her legal fees pursuant to s. 8 of the Guidelines , as she is both a payor and payee.

He takes that position despite the fact that he pays her $1,744.00 per month, effectively setting off her obligation to pay against his. [75] As to the first question, there is limited and inconsistent case law. In A.E. v A.E ., 2021 ONSC 8189 , Chappel J. helpfully summarized the authorities, including her own decision in McBennett v Danis , 2021 ONSC 3610 , 57 RFL (8th) 1 [ McBennett ], as follows: [251] The caselaw is inconsistent on how legal expenses paid to establish a right of spousal and child support should be dealt with pursuant to

section 8 of

Schedule III. Finlayson J. reviewed this caselaw in great detail in S.B. v. V.H. In some cases, the courts have held that such legal fees are not carrying charges envisaged by

Schedule III of the Guidelines (see Gillespie v. Gillespie , 2017 NBQB 149 (Q.B.) , aff’d on other grounds 2018 NBCA 22 (C.A.) ; L.(G.J.) v. L.(M.J.) , 2017 CarswellBC 1134 (S.C.) ). In S.B v. V.H. , the court concluded that legal fees to pursue support are not carrying charges within the meaning of

section 8,

Schedule III, since such fees were not part of the line on the Income Tax return where carrying charges were reported when

section 8 was initially enacted, and the deduction of such fees could result in unfairness in the Family Law context where the fees paid by the party defending the support claim would not be deductible. However, in B.M. v. P.M. , 2019 SKQB 36 (Q.B.), the court held that such legal fees are carrying charges contemplated by

section 8 of

Schedule III and are properly deducted from the support claimant’s Guidelines income on that basis. In that case, however, the court added the amount back into the party’s income, because it ordered a shared parenting arrangement and a set-off amount of child support.

The trial judge concluded that in these circumstances, both parties were support payors as a result of the judgment, and since no deduction is allowed for fees incurred to contest a support claim, allowing the amount to be deducted by one party only from their Guidelines income would be inappropriate. [252] In McBennett , I held that if the court is satisfied that legal fees are clearly incurred to obtain or increase support payments, they should be treated as falling within

section 8 of

Schedule III of the Guidelines . However, I concluded that the court could then determine whether all or some of the fees should be imputed back into the party’s Guidelines income pursuant to section 19(1) of the Guidelines based on the particular circumstances of the case under consideration.…I also emphasized in McBennett that if the fees claimed as a deduction are high, as in this case, it is incumbent upon the party to provide evidence in support of the deduction given the very significant impact that it can have on the analysis of support claims. [76] In S.B. v V.H. , 2019 ONCJ 694 [ S.B. ] , Finlayson J. concluded that legal fees are not carrying charges as contemplated by

Schedule III. As he there noted, the ITA cases explain why legal fees paid by a recipient of child support are tax-deductible while those paid by a payor are not. In his view, the fact that legal fees are deductible under the ITA “[does] not answer the question of whether the legal fees are also a

Schedule III deduction” (at para 360). Having reviewed ITA and

Schedule III jurisprudence on the point, he summarized his perspective as follows:

[368] While the aforementioned tax decisions do provide some common features between the legal fees and “carrying charges and interest expenses”, legal fees were not part of line 221 of the tax return when

section 8 of

Schedule III was initially enacted. Nevertheless, according to the aforementioned tax decisions that I have cited, such legal fees had been treated as tax deductible for some 40 years. In my view, had the legislature intended to include legal fees as a deductible expense under

Schedule III, it would have done so specifically. [369] I find that the numbers on the mother’s tax returns for “carrying charges and interest expenses” are legal fees and they are not proper

Schedule III deductions. [370] I would also add that I see an unfairness to the father were I to rule otherwise. The father too is incurring legal fees but as the child support payor he is not entitled to deduct them. While tax policy provides for that result, when turning to support, the Court should be alive to the financial realities in both household. If the mother’s legal fees are allowed as a

Schedule III deduction, not only would those fees reduce the mother’s income and consequently her obligation or share of the child’s daycare expenses, but her decreased income would consequently increase the spousal support ranges produced by SSAGs.

The father would potentially have to pay more daycare expenses and more spousal support, while also paying legal fees in relation to this case. [77] A.A.G. v J.L.G. , 2022 ABQB 119 , Dilts J. reviewed the inconsistent conclusions in McBennett and S.B. and found it unnecessary to decide whether legal fees are deductible or not, commenting as follows: [194] While I favour the view expressed in SB v VH , I need not resolve the legal issue of whether legal fees to pursue or increase support are carrying charges under s. 8 of

Schedule III as the outcome to these parties is unchanged. I am of the view that there would be material unfairness to AAG were I to permit JLG to deduct legal fees as carrying charges for the purposes of calculating support. One of the objectives of the Guidelines is to ensure that children benefit from the financial means of both parents.

Permitting JLG to deduct from her income the legal fees she has incurred to establish or enforce child support would result in a distorted picture of the means of both households, particularly where neither parent has had sufficient income to meet their monthly expenses and where both parents have incurred significant debt post-separation. [78] In my view, legal fees that would be deductible under the ITA are to be deducted pursuant to s. 8 of

Schedule III. I find the language of the Guidelines to be clear and unambiguous. I am not persuaded that the failure to deal expressly with the deduction of legal fees in the Guidelines justifies the opposite conclusion. When the Guidelines were passed in 1997, the deductibility of fees from the income of a recipient of child support was long established in the ITA jurisprudence. [79] I agree with Finlayson J. and Dilts J. that this has the potential to produce unfair and arbitrary results which pull against the objectives specified in s. 1 of the Guidelines , which provides as follows: 1 The objectives of these Guidelines are (

a) to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation; (

b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective; (

c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders and encouraging settlement; and (

d) to ensure consistent treatment of spouses and children who are in similar circumstances. [80] However, the Guidelines govern. The decision as to whether to change the Guidelines to address this issue, which has been clearly and repeatedly identified by the courts, rests with the Governor General in Council.

As matters now stand, Chappel J. identified one potentially useful and flexible tool to address unfairness in McBennett , concluding that a judge may impute some or all of the legal fees falling within s. 8 “back into the party’s Guidelines income pursuant to section 19(1) of the Guidelines …where the deduction from the party’s Guidelines income would yield unjust and distorted results” (at para 299).

She also held that where the fees claimed appear to be high, “it is incumbent upon the party to provide evidence in support of the deduction given the very significant impact that it can have on the analysis of support claims” (at para 299). [81] I agree that evidence beyond that provided by Ms. Boutin in this case may sometimes be necessary, to ensure that the fees in question are reasonable and were incurred solely for the purposes that would justify their deduction under the ITA . It is not necessary that I determine whether s. 19 can be utilized as discussed in McBennett .

That is so because I would answer the second question I have raised – that is, are legal fees deductible where the person who incurred the expense is both a payor and a payee of child support – in the negative, and in answer to the third question, conclude that Ms. Boutin is such a person. [82] A similar situation was addressed by McIntyre J. in B.M. In that case, there was a hybrid parenting arrangement in which two children were in the shared parenting arrangement, while a third resided primarily with the father.

Justice McIntyre ordered that each of the parties pay child support, as follows: [9] Commencing July 1, 2015: (

a) B.M. would pay P.M. $797.00 per month for the support of E.M.; (

b) P.M. would pay B.M. $1,940.00 per month for the support of E.E. and A.M.; and (

c) B.M. would pay P.M. $643.00 per month for the support of E.E. and A.M. [83] On these facts, he concluded that both parties were payors and that neither could deduct legal fees as carrying charges pursuant to

Schedule III. He explained that finding as follows:

[16] Aalbers v Aalbers , 2017 SKCA 43 at para 37 and Sobczak v Evraire , 2013 ONSC 1249 at para 33 , are clear that a payor may not deduct from income legal fees incurred in litigation involving support claims. [Emphasis added] [17] In the circumstances at hand, E.M. was in the primary care of the respondent while E.E. and A.M. were in a shared parenting arrangement. Orders were made that B.M. would pay child support for E.M., E.E. and A.M. and that P.M. would pay child support for E.E. and A.M. On a net basis, P.M. was to pay B.M. $500.00 per month in child support.

In my view, they are both payors and neither is entitled to deduct carrying charges in determining Guidelines income. [84] Ms. Boutin contends that B.M. is distinguishable, as the parties in that case exchanged support payments, while in this case the only payment is the set-off amount of $1,744.00 paid by Mr. Boutin. I must respectfully disagree. The Order provides that each of the parties shall pay child support to the other. The fact that these partially offsetting obligations may be discharged by way of a single payment made by Mr. Boutin does not affect the substance of the Order.

I would reach the same conclusion even if the Order had, like the Fiat, provided only for a single payment. I would do so because it is clear, based on the surrounding circumstances and submissions of the parties, that the amount of that payment was determined on the basis of the amount payable by each of the parties under the applicable table. It is the substance of the matter, rather than the form, that should govern. [85] Ms. Boutin also suggested that B.M. is distinguishable because it was a unique hybrid parenting arrangement rather than a simple shared parenting arrangement as here.

I am again of a different mind. The governing principle is that recipients may deduct carrying charges of this kind but a payor cannot. Both are payors and the legal fees at issue were incurred in the course of a dispute that was, both in form and in substance, as to the amount payable by each of them. I am aware of no Guidelines or, for that matter, ITA case law that holds that a person in the position of either Ms. Boutin or Mr.

Boutin can deduct legal fees as carrying charges in such circumstances. [86] In the result, I conclude that the Chambers judge did not err by failing to deduct the $5,491.00 in legal fees incurred by Ms. Boutin when calculating her income for child support purposes. D. Did the Chambers judge err by deducting Mr. Boutin’s vehicle-related employment expenses when calculating his income? [87]

Section 1 of

Schedule III of the Guidelines provides as follows: 1 Where the spouse is an employee, the spouse’s applicable employment expenses described in the following provisions of the Income Tax Act are deducted: … (f) paragraph 8(1)(

h) concerning travel expenses; (f.1) paragraph 8(1)(h.1) concerning motor vehicle travel expenses; … [88] Mr. Boutin provided evidence that he travelled extensively in fulfilling his duties with the STF, and that his employer provided him a vehicle and paid for all of his vehicle expenses. He was obliged to submit detailed expense statements relating to work-related travel to enable his employer to differentiate between personal and business use. He claimed that his total vehicle expenses for that year, for both business and personal use, were $22,522.71 and that his work-related vehicle expenses were $13,642.00.

He did not know why the CRA had permitted him to deduct only $11,199.00 of that amount, as it is his view that all of the work-related expenses were deductible. That is the amount he claimed should be deducted pursuant to

Schedule III. [89] Ms. Boutin nonetheless contends that Mr. Boutin should not have been entitled to deduct these vehicle expenses. She emphasizes, citing B.N.M. v P.J.M. , 2017 SKQB 331 , that only actual vehicle expenses that an employee is entitled to claim under the applicable provisions of the ITA are deducted pursuant to the

Schedule III. She submits that he would have had to pay expenses such as insurance, license, and lease payments regardless of whether he had to travel in the course of his employment. She notes that he paid for such expenses on his own account before he became an employee of the STF. [90] Ms. Boutin is correct in her assertion that employment expenses of this kind can only be deducted pursuant to

Schedule III if they reasonably reflect the expenses incurred in the performance of one’s duties. The following is a useful

summary of the principles relating to the deduction of vehicle expenses in Julien D. Payne & Marilyn A. Payne, Child Support Guidelines in Canada, 2022 (Toronto: Irwin Law, 2022) at 125: … If a parent seeks to claim that certain employment expenses should be deducted from his or her income pursuant to

Schedule III of the Federal Child Support Guidelines , the onus falls on the parent to provide the necessary evidence to establish that should occur. Taxable benefits relating to a parent’s use of a company vehicle are part of the parent’s income for the purposes of the Income Tax Act and

section 16 of the Federal Child Support Guidelines . There is nothing in

Schedule III of the Guidelines dealing with adjustments to income that call for taxable benefits to be deducted in determining a parent’s Guidelines income. Only motor vehicle travel expenses actually incurred and deductible in accordance with section 8(1) of the Income Tax Act are deductible from the parent’s Guidelines income pursuant to

section 1 of

Schedule III of the Guidelines. [Footnotes omitted] [91] It was for the Chambers judge to determine whether the vehicle expenses claimed by Mr. Boutin were expenses actually incurred and deductible in accordance with the ITA . There is no doubt but that there was sufficient evidence to justify the conclusion that they were. There was neither a palpable and overriding error of mixed fact and law nor inextricable error of law on the part of the Chambers judge in making this determination. With one minor exception, Ms. Boutin’s submissions in relation to this ground of appeal constitute an invitation to this Court to intervene in a manner that is not consistent with the standard of review.

[92] It is apparent, however, that the Chambers judge erred by deducting $11,997.87 on employment expenses, rather than the $11,199.00 provided for in the notice of reassessment. This was the result of a mistake in Mr. Boutin’s post-hearing brief, which erroneously stated that the notice of reassessment had permitted the deduction of $11,997.87. That error was duplicated in the draft order that was adopted by the Chambers judge. [93] In the result, while the Chambers judge did not err by deducting the vehicle expenses when calculating Mr.

Boutin’s income, paragraph 2 of the Order should be amended by substituting $11,199.00 for $11,997.87. As a consequence of that amendment, the following provisions of the Order must also be amended: (

a) Paragraph 1, by substituting $189,211.13 for $190,010.00; (

b) Paragraph 4, by substituting $2,515.00 for $2,525.00; and (

c) Paragraph 6, by substituting $1,340.00 for $1,440.00. E. Did the Chambers judge err by authorizing an Order that provided for different relief than the Fiat? [94] The Fiat is what is known in Saskatchewan as a “flyleaf”. It is very brief, consisting primarily of a listing of the relief granted. For ease of reference, I will repeat those portions that describe the relief granted: In determining [Mr. Boutin’s] income for maintenance purposes his gross salary is 202,166.00

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