IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           On March 31^st 2014 Mr. T.B. (father) brought an application to recalculate past and future child support based on an increase in his parenting time to over 40%, to reduce or cancel arrears and to change the parenting time regime in place.  Ms. B.F. (mother) filed her reply on April 11^th 2014 opposing all claims for relief on the basis that Mr. B. did not have the children in his care for more than 40% of the time, there had been no material change in circumstance respecting the parenting time regime and because Mr. B. had not provided full and proper disclosure of his income and financial circumstances and was underemployed.

[2]           These reasons also relate to an application by Ms. F. to for an Order under s.213(2)(d) of the Family Law Act requiring Mr. B. to pay the legal fees she incurred in defending his application on the basis of his failure to disclose information in accordance with the Provincial Court (Family) Rules and in accordance with an Order made during the proceedings and for providing information that is incomplete, false or misleading.

[3]           The parties entered into a comprehensive separation agreement on July 20^th 2009.  It is the terms of that agreement, now filed with the Court under s. 148(2) of the FLA, which Mr. B. seeks to vary. 

[4]           The agreement sets out that the couple began cohabitating in 1992 and married in 2001. They have two children together: K., born in 2003, and M., born in 2005.  They separated on or about March 1^st, 2009.

[5]           The parents were to share all parenting responsibilities (custody and guardianship).  The primary residence of the children was to be with mother and father’s parenting time was to occur when mother was working and was anticipated to be two days each week.  It provides that they would share all holiday time equally.

[6]           Ms. F. worked .67 of full time as a psychiatric nurse for (redacted).  She earned $40,000.00 in 2009. She also received dividends from a family business in the amount of $36,000.00 per year.  Those dividends were acknowledged to be exempt from Child Support Guideline calculations.  However, she did agree to cover all s.7 expenses for the children as long as she was receiving that dividend income.

[7]           Mr. B. worked as a web designer and programmer earning $48,000.00 per year.  The Guideline amount of support payable was $729.00 for the two children.

[8]           The application before the court is the second application for similar relief brought by Mr. B.; the first was filed on August 28^th, 2012.

[9]           The earlier application to vary child support was dismissed by Judge Merrick on January 21^st, 2013 as the applicant did not provide complete and accurate financial disclosure. Mr. B. was at that point prohibited from filing any further applications without the permission of the Court.  The application to vary parenting time set out in the earlier application was dismissed by Judge Gedye on July 3^rd, 2013 as the applicant did not attend the hearing.

[10]        On March 3^rd 2014, Mr. B. applied for leave to file a further application.  The original affidavit in support of the motion described that he was overwhelmed by the earlier process, in particular because the respondent was represented and he was not.  He also said he weaning off anti-depressant medication which resulted in his non-attendance for the parenting time hearing. Mr. B. referenced a “recent lay off” without further detail.  He stated that he now felt much more prepared to proceed.   The leave application was first heard by Judge Merrick who adjourned it and required Mr. B. to file a Financial Statement and to provide medical evidence.

[11]        On March 18^th, 2014 leave to file the March 31^st, 2014 application was granted by Judge Rodgers.  The materials relied upon were a Financial Statement filed March 5^th in which Mr. B. attests to having been unemployed since November of 2013.  He refers on the cover page to the potential for FMEP to garnish his Employment Insurance benefits.  The annual income page is blank save for “0.00” as total income and total benefits.  He sets out expenses of $30,424.00 annually.  He estimated that his additional expenses related to his parenting time with the children are $500.00 per month however no details were provided as to the basis for this estimate.

[12]        He did not attach his 2013 income tax return or any income information for that year or up to that date in 2014.  His 2012 Notice of Assessment was attached which reflected a line 150 income of $415.00 which was the net of business income of $11,000.00.  His 2011 Notice of Assessment showed a line 150 income of $27,474.00 which was comprised of $27,075.00 in employment income and $225.00 in other employment income.  His 2010 Notice of Assessment showed a line 150 income of $55,098.00.

[13]        Mr. B. provided also relied on an affidavit to address the “medical evidence to support the assertion that he was unable to attend court due to medical reasons” required by Judge Merrick.  He attached a print out from the internet of symptoms related to withdrawal from antidepressants to “give insight into the emotions he was experiencing”.  He also provided a prescription medication history.  He asserted that the medication history shows that he was weaning himself off his medication from July 2012 to January 2013.  The history shows that he was filling his antidepressant prescription regularly as of December 2012 except for mid-June to mid-July of 2013. 

[14]        At a Family Case Conference held September 17^th, 2014, Mr. B. was fined $500.00 by Judge Dyer pursuant to s. 213(2) (d)(ii) of the FLA as a result of Mr. B.’s failure to disclose financial documents. The fine was paid to Ms. F. by October 31^st, 2014.

[15]        Judge Dyer also made an order on that same date for disclosure of all relevant financial documents ahead of the hearing set for October 31^st, 2014.  On September 30^th Mr. B. filed an updated Financial Statement as required by that order. 

[16]        Mr. B. testified.  He did not call any witnesses.  Ms. F. did not testify as a motion for dismissal was granted at the end of Mr. B.’s case.

[17]        The specific relief sought at the hearing was a change to a 3 on / 3 off parenting schedule, cancellation of all arrears from January 1^st 2011 forward and an order that no future child support be payable.

[18]        The reason Mr. B. testified that he believed a 3 on / 3 off parenting time regime would be in the best interests of the children was because they were often confused about when they would be with each parent.  He believed that they would be less confused by such a schedule even though it would mean they would be with each parent different days each week as the schedule progressed.  This was the sole reason Mr. B. gave for seeking a change to the parenting regime. He provided no evidence of any change in circumstances.

[19]        The parenting time calendar has usually been set at least one month in advance and often as early as four months in advance over the years since separation.  The parents utilize a google calendar which they both have access to.  Mr. B. said that the children who are now age 9 and 11 do not have access to the google calendar.  They are both computer literate and each has their own computer.  He said there was no reason why they could not have access to it.

[20]        He also said that Ms. F. unilaterally dictates his parenting time and makes many changes without consultation.  He did not offer any instances of this occurring.  Instead he filed numerous calendar changes without being able to provide any context for those changes.

[21]        A 3 on / 3 off parenting regime would result in Ms. F. having to arrange for childcare to accommodate her employment schedule, resulting in a s. 7 expense she would be solely responsible for.  Mr. B. suggested that his 11 year old daughter would be able to provide care for herself and her younger brother while Ms. F. worked early morning and late night shifts.

[22]        In cross examination, Mr. B. conceded that on one occasion he refused to care for the children for a month claiming he did not have the funds to do so. He acknowledged that this was done in anger and was rectified shortly thereafter. On another occasion Mr. B. refused to take the children when Ms. F. had to work.  When Ms. F. became upset, he involved the police. The children were present.  Mr. B. had no reason for not taking the children on that occasion except that he had already cared for them that week.

[23]        Mr. B. continues to work in IT as a web designer.  He was employed full-time in this field and earned $54,000.00 in 2010.  In June 2011 Mr. B. left his full-time position to pursue “an opportunity” and when that fell through he determined to do freelance work. In cross examination he conceded that the “opportunity” was to do freelance work. There was no evidence he had any business plan in place before leaving his employment.  He did not report earning any income from any freelance work in 2011. His 2012 line 150 income was $415.00 from self-employment.

[24]        He obtained employment again in late April of 2013 and his line 150 income for that year was $46,771.40. He was laid off in November of 2013 but continued to be paid through to the end of February 2104 and has been receiving Employment Insurance benefits since.  He provided only one Benefit Statement and was unclear as to how many weeks he was entitled to receive EI. He has yet to obtain further employment.  He had his T4 slip for 2013 in his possession at the time he swore his March 2014 Financial Statement in which he swore he had no income.

[25]        He said he has used $72,000.00 in savings to meet his expenses when unemployed.

[26]        The Financial Statement filed September 30^th reflects a 2014 income to date of $13,662.75 comprised of approximately equal amounts of employment income and EI benefits.  He also included a letter that shows that as of February of 2014 he was working doing IT in exchange for shares.  The value of those shares at present and as of February was $9000.00 but his understanding is that they could be worth up to $30,000 to $45,000.00 or even as high as $75,000.00.   He claims expenses of $32,188.88. 

[27]        Mr. B. claims his standard rate of pay is $45.00 per hour and that he expects to earn up to $60,000.00 dollars per annum. He does not want to seek employment outside of his field. To date he has not been willing to pursue employment opportunities that require a commute outside of the north shore or Vancouver.

[28]        He did not disclose any financial documentation or information with respect to the companies he has operated or any freelance work done in his personal capacity for 2011 and 2012 either in these proceedings or in the course of his earlier application.  He uses a software accounting program for these purposes and did not disclose those records either. He did not disclose the statements for his savings account.  He was unable to account for $50,000.00 of the payout monies from the family home, an amount over and above the down payment and renovations done to his home and the $72,000.00 in savings he said he has used for living expenses.

[29]        Since June 2011 Mr. B. has largely failed to make his child support payments even when fully employed. He has occasionally purchased incidental items when the children are in his care and has made occasional voluntary partial payments towards his child support obligation.  He is now being garnished by the FMEP.  The arrears as of October 15^th 2014 are $4621.00.

[30]        Mr. B. increased his monthly child support payments in December of 2009 to $802.00 to reflect his income at that time.  Ms. F. did not enroll with FMEP until September of 2013.  She has forgiven over $18, 000.00 in arrears to this point.  

[31]        He agreed that Ms. F. covers all of the children’s expenses, including all extraordinary or s.7 expenses.

[32]        Mr. B. did not provide any financial documentation other than his tax returns for the years 2011, 2012 or 2013. 

[33]        An application to vary an order concerning parenting arrangements is governed by s. 47 of the Family Law Act:

[34]        The material change in circumstances test, established in Gordon v Goertz, 1996 CanLII 191 (SCC), [1996] 2 SCR 27 [Gordon], applies to variations in parenting time arrangements under s. 47 (DJS v JMD, 2013 BCSC 2302 at paras 5 and 14 [DJS]; Gilmour v Herrick, 2013 BCSC 1591 at para 13).

[35]        In DJS, Macaulay J. explained the material change in circumstances test established in Gordon as follows:

[36]        In the circumstances before the court, accepting that Mr. B. has the children 40% of the time or more, an application to vary an order for child support requires consideration of both ss. 148(3) and 150 of the FLA as well as s. 9 of  Federal Child Support Guidelines,.

[37]        In Young v Young, 2013 BCSC 1574, Mr. Justice Barrow held that the test for variation under s. 9 of the Guidelines, as enunciated by Mr. Justice Bastarache in Contino v Leonelli-Contino, 2005 SCC 63 [Contino] applies to child support variations under ss. 148 and 150 of the FLA where child care and parenting time is shared.

[38]        He noted that the Guidelines are incorporated into the FLA and held that a proposed variation of child support where shared access, care, and parenting time is concerned will have to satisfy s. 9 of the Guidelines and should be assessed using the methods established in Contino:

[39]        An application to cancel or reduce arrears falls under s.174 of the FLA:

[40]        In Holmstrom v Holmstrom, 2014 BCSC 545, Mr. Justice Romilly discussed the approach to be taken in applying this section.  At para 39 the court adopted the definition established by Judge Hamilton in LB v JK, 2012 BCPC 231 that gross unfairness is more than a “significant financial burden.” Additionally, the test of gross unfairness is a particularly onerous one given the fact that interests of children are at stake, and will be much more difficult than proving simple unfairness.

[41]        Citing Beavis v Beavis, 2014 BCSC 144, the court found at para 38 that the cancellation or reduction in arrears will be appropriate where there is a material change in circumstances that is grossly unfair. Mr. Justice Romilly also referred to Earle v Earle, 1999 BCSC 283 which clarified that the material change in circumstances relating to financial circumstances must be “significant and long lasting,” a real change and not one of choice, and that “every effort” must have been made to earn an income during the period in which arrears accumulated.  In Earle, supra at para 55, Madam Justice Martinson clarified that “[n]ot being able to pay now is not a valid legal reason to cancel or reduce arrears. They will only be cancelled if the person is unable to pay now and will be unable to pay in the future.”

[42]        Hamilton PCJ also held in LB, supra at para 57 that the “determination of gross unfairness is a factual determination.” This indicates the requirement of an evidentiary basis for an assessment of gross unfairness.

[43]        S. 19 of the Guidelines allows the court to exercise discretion to impute income when determining the proper amount of child support to be paid. The section includes a non-exhaustive list of circumstances in which it may be appropriate for the court to impute income.  Those relevant to this matter are whether the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse and the spouse has failed to provide income information when under a legal obligation to do so.  

[44]        The test to be applied when imputing income is enunciated in Marquez v Zapiola, 2013 BCCA 433 and was recently applied by Mr. Justice Wong  in PKC v JRR, 2014 BCSC 932  as follows:

[45]        A series of principles to be applied when imputing income were summarized in Marquez at para 60 and applied by Mr. Justice Wong in PKC, at para 98:

[46]        Additionally, Mr. Justice Wong confirms in PKC, that “it is established law that a payor spouse is required to work to full-capacity whether in the context of child or spousal support.” (para 99)

[47]        The relevant provisions of s. 21 are:

[48]        The relevant provisions of Rule 4 are:

[49]        This section of the FLA provides the court with broad discretion to impose penalties to respond to and remedy issues relating to failure to disclose information as required, or to the disclosure of incomplete or misleading information.

[50]        The decision of Mr. Justice Punnent in JDG v JJV, 2013 BCSC 1274 is the leading authority in assessing the appropriateness and nature of penalties available under s. 213(2).

[51]        In JDG the court was considering a case in which a father had failed to properly disclose financial information despite requests for the disclosure and a court order requiring the disclosure. Two days before the application was heard the father disclosed the financial information in issue. In imposing a fine of $500.00 pursuant to s. 213(2)(d)(ii), as well as costs thrown away assessed at $1500.00,  the following principles were enunciated:

[52]        This approach has been cited with approval and applied in a number of subsequent cases (see JCP v JV, 2013 BCPC 297; Doman v Cicozzi, 2014 BCSC 866; Cully v Cully, 2013 BCSC 2457; SN v EC, 2014 BCPC 82).

[53]        In JCP v JV, 2013 BCPC 297 Judge Merrick summarized the process of assessing s. 213(2) penalties as follows: “If a party is required to apply to the court for an order for financial disclosure, then the party making the application should be compensated. The greater the effort, the greater the compensation.” (para 54)

[54]        In Doman v Cicozzi, 2014 BCSC 866 Master Bouck elaborated on the purpose of s. 213(2) provisions as enunciated in JDG, stating that the use of the provisions to ensure timely and complete disclosure constituted a sort of general deterrence. (para 33)

[55]        Mr. B. has brought two applications requesting changes to the parenting time regime and child support arrangements outlined in the June 20^th, 2009 separation agreement and for the cancellation or reduction of arrears.

[56]        It should be noted that the court clarified with Mr. B. during the course of these proceedings that he was not suffering from any disability which affected his ability to provide disclosure or to understand the nature of the proceedings.  He is employed at a managerial or executive level when working.  He is computer literate and able to research on line.  At the end of the first day of proceedings he was referred by the Court to various on line resources to enable him to prepare properly for the continuation.  He did not do so. 

[57]        I find Mr. B.’s application relating to a change to the parenting time regime to have been completely unfounded to the extent that it can only be seen to be vexatious. I am led to this conclusion because it was premised solely on his unreasonable position to not allow the children access to the Google calendar if they wanted to know which parent they would be with at any given time.

[58]        If the Google calendar he entered is correct, and it was not admitted to be correct by Ms. F., he enjoys just over 40% of the children’s time which is significantly more than anticipated by the separation agreement. 

[59]        Accepting Mr. B.’s submissions respecting the 40% threshold, his application for a reduction in child support payments is subject to the s. 9 analysis established in Contino and Young as set out above. 

[60]        Mr. B. has provided little evidence upon which the court could determine an appropriate set off.  To the contrary, I find that on the evidence, Mr. B. is intentionally unemployed as he refuses to consider opportunities which would require him to commute a reasonable distance.  There is also no evidence that he has diligently pursued self-employment opportunities.  The Court must therefore impute his income.

[61]        Considering Mr. B.’s 2013 income of $46,000.00, his 2010 income of $54,000.00, the absence of a material change in circumstances, and Mr. B.’s testimony that he expects he has an earning capacity of up to $60,000.00 per annum, it is reasonable for the court to impute income of $55,000.00 per annum to Mr. B.

[62]        He also failed to produce any budgets or break down of expenses related to child care or information relating to the conditions, means, needs and other circumstances of each spouse and of their children.

[63]        The test for cancellation or reduction of arrears requires that there be a material change in circumstances that makes it grossly unfair not to cancel or reduce arrears.

[64]        Mr. B.’s circumstances do not amount to a material change in circumstances for the purposes of cancelling arrears. His change in circumstances in 2011 was brought on by his choice to leave full-time well remunerated employment. Since being laid off in late 2013 he has not made a sincere effort to obtain employment or pursue self-employment. As far as the potential duration of the change in circumstances is concerned, it cannot be found to be long lasting as Mr. B. could obtain employment and chooses not to.

[65]        I have also considered that Ms. F. has already forgiven $18,000.00 in arrears of child support, most of which would not likely have been cancelled or reduced by the Court in all the circumstances.  In addition, Mr. B. does not contribute anything toward the children’s expenses save for incidental costs for food and small amounts for clothing and hockey equipment on occasion during his parenting time. 

[66]        Given that the arrears in issue have arisen only since September of 2013, a year during which he was employed full time and paid no support, and during 2014, a year where he has received income for two months and EI for the balance at least up to the date of hearing, I do not find that it would be grossly unfair not to cancel or reduce the arrears owed by Mr. B.  In any event, the financial disclosure provided by Mr. B. is insufficient to form a factual foundation to support such a finding.

[67]        Mr. B. has continually provided the Court with incomplete and misleading disclosure. The disclosure required was not onerous or complex.

[68]        None of his Financial Statements have been complete or accurate.  The figures he reports in the Financial Statement filed in late September in respect to  the value of his property, his debts and a strata levy are irreconcilable with those in the Financial Statement filed in March and materially inconsistent with his evidence at the hearing.  His earlier Financial Statements also do not accord with his evidence.

[69]        As to Mr. B.’s credibility, he claims to be in dire financial circumstances; however the bank records attached to his latest statement reflect many discretionary expenses, particularly alcohol and tobacco. For example, in August he made purchases at liquor stores totaling over $482.00.  It is clear he also smokes and spends significant monies on cigarettes each month in addition to alcohol.

[70]        I find that the financial materials he filed in support of his motion to be permitted to file a further application were incomplete, inaccurate and mislead the Court.  This is a highly aggravating factor. In addition, the medical materials he provided were also misleading read in conjunction with his narrative.  He in fact provided no medical evidence to support that his decision to “wean himself off” his antidepressant medications prevented him from attending the previous hearing date.

[71]        He substantially failed to comply with the order for disclosure made by Judge Dyer by not providing all his bank records and by again failing to file a complete Financial Statement.

[72]        He has never made complete disclosure of the financial or banking documents related to his self-employment.

[73]        I find Mr. B.’s conduct has satisfied all of the grounds set out in s 213(1) of the FLA - failure to make timely disclosure when required to do so by a court order or as required by the Family Law Rules and the disclosure of incomplete, false, and misleading information.

[74]        In order to determine the severity of this penalty, the circumstances of the present case, the degree of non-disclosure, and any reasons for late disclosure must be considered as well as any reasons provided for late or non-disclosure which have an evidentiary basis.

[75]        In the circumstances of the present case there has been an ongoing lack of complete disclosure.  Some of the information that has been disclosed has been shown to be materially misleading. The incomplete and misleading disclosure provided by Mr. B. was particularly aggravating in that it resulted in the court falling into error in granting his motion to file this application.

[76]        As much of the information required for the proper hearing of this application was never disclosed and no attempts were made to disclose it, the Court cannot consider the issue of late disclosure or of any reasons provided for late disclosure.

[77]        With respect to reasons for non-disclosure, no legitimate reasons were ever provided by Mr. B. for his insufficient disclosure beyond his claim that he did not have the ability to fill out financial statements properly. I do not accept his evidence in this regard for the reasons stated above. 

[78]        I find that Mr. B. must be penalized for his abuse of the court process and wasting of court time and Ms. F.’s resources. The penalty imposed should also communicate to other litigants the consequences of impeding the court process or wasting valuable court resources by disclosing incomplete, false, and misleading information. The conduct of Mr. B. is something that needs to be denounced in order to prevent similar conduct on the part of other litigants and, as a result, facilitate access by those litigants who need court time for legitimate purposes.  A “robust application” of s. 213(2) is required to facilitate this goal.

[79]        Finally the Court must look to compensate Ms. F. in these circumstances.  Due to a proceeding wrongfully brought and improperly prosecuted by Mr. B. she has been required to engage a lawyer to represent her, for the second time, at great financial cost. For this proceeding alone she has incurred legal bills that amount to $13, 617.00.  In total she has incurred over $20,000.00 in fees for both proceedings.

[80]        I find that in order to sufficiently penalize Mr. B., discourage other litigants from providing incomplete, false, and misleading disclosure; and properly compensate Ms. F. for legal bills incurred as a direct result of Mr. B.’s incomplete disclosure, an order pursuant to FLA, s 213(d)(i) requiring Mr. B. to pay the legal fees incurred by Ms. F. is an appropriate penalty in the circumstances.

[81]        The application to vary parenting arrangements is dismissed.

[82]        The application to vary child support payments is dismissed. 

[83]        The application to reduce or cancel arrears is dismissed.

[84]        Mr. B.’s income is imputed at $55,000.00 per annum from May 2014 forward.  This results in a monthly child support payment of $834.00.

[85]        Mr. B. child support payments for 2013 and up to April 2014 are $802.00 monthly.

[86]        The arrears calculated from September 1^st 2013 to and including December 1^st 2014 are fixed at $13,088.00.

[87]        Mr. B. will be subject to a fine of $13,617.00 pursuant to FLA, s 213(2)(d)(i). This fine will be paid to Ms. F. to compensate her for legal expenses.

[88]        The arrears of child support and fine are payable forthwith and may be enforced under the Family Maintenance Enforcement Act.

[89]        Mr. B. must assign the P2Solar shares he owns to Ms. F. forthwith as security for any outstanding arrears of child support or fine.  Mr. B. must forthwith provide a release to P2Solar advising them of the assignment and permitting Ms. F. or her counsel to deal directly with P2Solar to have the shares issued forthwith.  Ms. F. will have the sole discretion to liquidate the shares in accordance with the terms of Mr. B.’s agreement with P2Solar, to satisfy any outstanding child support arrears or fine.  Any balance remaining shall be held in trust as security for any future arrears of child support and shall not be returned to Mr. B. until such time as the children are no longer entitled to support or further order of the Court.

[90]        Mr. B. is prohibited from bringing any further Applications without leave of the Court.

[91]        Judge Challenger remains seized of all matters pertaining to this file and any Motion for permission to file an Application shall be heard by her.