J.B. v. T.C., 2015 BCPC 213 (CanLII)
Citation: J.B. v. T.C. Date: 20150721
2015 BCPC 0213 File No: F21892
Registry: Port Alberni
IN THE PROVINCIAL COURT OF BRITISH COLUMBIA
IN THE MATTER OF
THE FAMILY LAW ACT, S.B.C. 2011 c. 25
BETWEEN:
J.B.
APPLICANT
AND:
T.C.
RESPONDENT
REASONS FOR JUDGMENT
OF THE
HONOURABLE JUDGE GOUGE
Appearing in person: Ms. B
Appearing in person: Mr. C
Place of Hearing: Port Alberni, B.C.
Date of Hearing: July 14, 2015
Date of Judgment: July 21, 2015
Background
[1] Ms. B and Mr. C are the parents of two daughters, now age 8 and 10. Ms. B and Mr. C separated in October or November, 2010. The children have resided with Ms. B since that time.
[2] The first order for child support in this proceeding was made by His Honour Judge Gould on March 12, 2012. It was expressed to be an “… interim order … without prejudice for further claim for retroactive payment after a full hearing …” (sic). It ordered Mr. C to pay $500 per month, plus 50% of extraordinary expenses, as interim child support. The “full hearing” contemplated by Judge Gould’s order never occurred. As a consequence, Mr. C paid: (i) no child support in relation to the period from late 2010 to March, 2012; (ii) $500 per month, more or less regularly, from March, 2012 to November, 2014.
[3] On June 27, 2013, Ms. B filed and served a notice of application, seeking an increase in child support to $1200 per month. The notice of application did not seek an order that the increase be retroactive. Mr. C filed a reply on July 25, 2013, in which he asserted that he was unemployed and attending school.
[4] Ms. B’s application came on for hearing before His Honour Judge Dohm on November 12, 2014. Ms. B attended the hearing, but Mr. C did not. Ms. B informed Judge Dohm that Mr. C was employed as a truck driver in northern Alberta, and that her internet searches indicated to her that truck drivers in that work environment earn, on average, about $100,000 per year. On the strength of that information, Judge Dohm assessed Mr. C’s income (or income-earning capacity) at $100,000 per year, and ordered that Mr. C pay child support of $1478 per month, being the figure established by the Federal Child Support Guidelines SOR 97/175 for two children and an annual income of $100,000. Judge Dohm’s order was expressed to be retroactive to January 1, 2014.
Jurisdiction
[5] Mr. C now applies to set aside or vary Judge Dohm’s order. He does not assert that any of the circumstances enumerated in section 152(2) of the Family Law Act SBC 2011, c 25 pertain. Instead, he relies upon section 200(2) of the Family Law Act and Rule 20(4) of the Provincial Court (Family) Rules BC Reg 417/98. Under the terms of that rule, Mr. C must establish that he has a reasonable excuse for his omission to attend court on November 12, 2014, that he applied promptly upon learning of Judge Dohm’s order, and that the circumstances justify a variation in the terms of that order.
[6] Mr. C says that he omitted to attend on November 12, 2014 because he received no notice of that hearing date. Ms. B replies that: (i) she received notice of the hearing date from the court registry by mail, and assumes that the same notice was mailed to Mr. C; and (ii) she exchanged text messages with Mr. C in the few days preceding the hearing, in which the pending hearing was expressly referred to. She was unable to produce copies of the text messages, which she said had been inadvertently erased. Mr. C denies that such messages ever existed. In the circumstances, I am unable to conclude that Mr. C had actual notice of the November 12 hearing date. Mistakes are sometimes made, even by the excellent staff who work in the court registry. Documents are sometimes lost in the mail. Without the opportunity to read the text messages, I cannot conclude that they were sufficient to put Mr. C on notice of the hearing date.
[7] Mr. C learned of Judge Dohm’s order in early February, 2015, and filed his application to set aside or vary it on February 18, 2015. I conclude that he moved with appropriate diligence once he learned of the existence of the order.
Relevant Circumstances
[8] The remaining question before me is whether the circumstances justify a change to Judge Dohm’s order. Those circumstances are:
(a) In 2013, Mr. C was out of the workforce, and in school, for most of the year. In 2014, he was back at work full-time, and earned about $76,000.
(b) Mr. C expects to earn $60,000 to $65,000 in 2015.
(c) Mr. C spends $8000 to $9000 annually on expenses for travel between Port Alberni (where Ms. B and the children live) and his workplace in northern Alberta. His employer does not reimburse him for those expenses, and they are not deductible from his income for tax purposes.
(d) Ms. B earns about $25,000 per year.
(e) Ms. B and Mr. C agree that a reasonable budget for “special or extraordinary expenses” for the children, as defined by section 7 of the Guidelines, would be $250 per month.
(f) As at October 29, 2014, Mr. C owed arrears of child support (under the terms of Judge Gould’s order) of $4500. The figure comes from a statement of account provided on that date by the Family Maintenance Enforcement Program. Mr. C disputes the amount, and asserts that he made some payments not reflected in the statement of account, but provided no particulars or documentary evidence of any such additional payments. Ms. B said that the FMEP statement is accurate. In the circumstances, I accept the accuracy of the FMEP statement.
(g) Judge Dohm’s order is retroactive to January 1, 2014. As a consequence, Mr. C underpaid child support by $978 per month throughout 2014, and owes additional arrears, under the terms of that order, of $11,736.
(h) Since December 1, 2014, Mr. C has paid child support totalling $11,875.30, partly as a result of the diligence of FMEP in attaching his tax refund. Under the terms of Judge Dohm’s order, he ought to have paid $11,824.00 during that period, so he has overpaid by $51.30 for that period.
Basic Child Support
[9] The evidence before me does not support the proposition that Mr. C’s income-earning capacity is $100,000 annually. I think that, when the court adjudicates income-earning capacity, the best guide is actual earnings, as assessed by Canada Revenue Agency, in the year preceding the adjudication. Adjudication of income-earning capacity by reference to actual past earnings will result in a lag in adjustment of the basic child support obligation when the payor’s income is rising or falling, but that seems to me to a lesser evil than the unreliability of estimates of earnings in the current year. For example, I do not think that Mr. C’s estimate of $60,000 to $65,000 for his 2015 income is reliable. That is not his fault - it is simply a result of the inherent unpredictability of his work schedule. I acknowledge that there will be many cases in which it is appropriate to consider a pattern of earnings over several past years, and that there will be some cases in which it would be unfair to assess a current child support obligation by reference to the previous year’s income.
[10] I assess Mr. C’s income-earning capacity at $75,000 per year.
[11] Mr. C says that, in assessing his income for child support purposes, I should take into account the travel expenses which he must incur to visit his children. Because of the definition of “income” given in section 16 of the Guidelines, expenses which are not deductible for tax purposes should not be taken into account in assessing income. However, they may be taken into account when assessing “undue hardship” under sections 10(1) and 10(2)(b) of the Guidelines. A useful catalogue of previous court decisions considering similar circumstances is found in Deveau vs Groskopf 2000 SKQB 186; [2000] SJ No. 281; [2000] 7 WWR 757; 10 RFL (5th) 24 @ paragraphs 10 - 26. The governing principles were stated in L.A.R.A. vs D.S.B. 2009 YKSC 74; [2009] YJ No. 136 @ paragraphs 10 - 11:
The case law in this area is not particularly controversial. It is well summarized in Peterson v. Peterson, 2007 BCSC 497, at para. 7:
"In order to establish undue hardship, the payor parent must prove: first, that the table amount would cause undue hardship having regard to the criteria in s. 10(2); and second, that paying the table amount would result in a lower standard of living for the payor parent's household than the recipient parent's household (see Van Gool v. Van Gool (1998), 1998 CanLII 5650 (BC CA), 59 B.C.L.R. (3d) 395 (B.C.C.A.) at para. 45). According to Van Gool, supra at para. 51:
Hardship is not sufficient; the hardship must be "undue", that is, "exceptional", "excessive" or "disproportionate" in all of the circumstances. The onus is on the party applying under s. 10 to establish undue hardship; it will not be presumed simply because the applicant has the legal responsibility for another child or children and/or because the standard of living of the applicant's household is lower than that of the other spouse. The applicant must lead cogent evidence to establish why the table amount would cause undue hardship."
The case law acknowledges that, in dealing with access costs as grounds for undue hardship, the determinations are fact specific. Further, the courts have recognized that even the most ordinary access arrangements involve some basic expenditure for transportation and meals and that it is only amounts in excess of these basic expenditures that can be considered "unusually high". The cases have considered factors such whether the modes of transportation are reasonable given other alternatives, the overall distances travelled, the frequency of access, and the overall cost of exercising access in relation to the access parent's income. Many of the undue hardship claims have failed on the second branch of the test, that being despite high access costs, the access parent nevertheless maintains a higher standard of living than the other parent. See Deveau v. Groskopf, 2000 SKQB 186, at para. 10.
In light of that statement of principle, I should not take Mr. C’s travel costs into account in assessing his income for the purpose of determining his child support obligation unless an omission to take his travel expenses into account would provide Ms. B with a materially higher standard of living than Mr. C. If it would, I must then consider whether that would cause “undue hardship” to Mr. C.
[12] If I were to ignore Mr. C’s travel costs when assessing his income for child support purposes:
(a) Mr. C would have a pre-tax income of about $75,000, an after-tax income of about $50,000, and would pay basic child support of $13,632 per year (being the Guideline figure for two children and an income of $75,000). That would leave him, after tax and after paying basic child support, with annual income of about $36,000 to $37,000, from which to pay his personal expenses (including travel costs) and his share of extraordinary expenses for the children.
(b) Ms. B would have annual taxable income from employment of about $25,000 (pre-tax), and would receive $13,632 per year in non-taxable child support. She won’t pay very much income tax on $25,000 of employment income. As a result, she will have after-tax income of about $37,000 to pay her personal expenses, her share of the children’s extraordinary expenses, and the day-to-day expenses of a household which includes the two children. She will not incur travel costs of the kind incurred by Mr. C.
It seems to me that the objective of attaining roughly equivalent standards of living would be achieved in that scenario, because Mr. C’s travel costs will be comparable to Ms. B’s costs of maintaining a family home. For that reason, I do not think that Mr. C has made out a claim of hardship, and his travel costs should be left out of consideration in determining his basic child support obligation.
[13] It is likely that Ms. B will be eligible for child tax credits or grants, in addition to the sources of funds mentioned in paragraph 12(b). However:
(a) There was no evidence at the hearing before me from which I could determine Ms. B’s entitlement to such credits or grants, or of the amount to which she may be entitled, and I do not think that I should conduct my own research on the subject.
(b) It is at least doubtful that such credits or grants should be taken into account when considering the hardship issue under section 10 of the Guidelines. It has been held that such credits or grants should be ignored when apportioning special expenses between parents under section 7 of the Guidelines: Gold vs Romhanyi 2006 BCSC 443; [2006] BCJ No. 612; Krislock vs Krislock [1997] SJ No. 698; 1997 CanLII 11144 (SK KB), [1998] 4 WWR 230; 34 RFL (4th) 420. The decision in those cases was driven by the definition of “income” in section 16 of the Guidelines, which is not directly relevant to the question of “hardship” under section 10. However, consistency is a virtue in matters of statutory interpretation, and it would seem odd if receipts which are to be disregarded for the purpose of section 7 are to be taken into account for the purpose of section 10. Because there was no evidence of Ms. B’s entitlement to such payments, I need not decide that legal issue in this case.
[14] The Guideline figure for basic child support for two children and an income of $75,000 per year is $1136 per month. I direct that Judge Dohm’s order be varied to reduce Mr. C’s basic child support obligation from $1478 to $1136 per month.
[15] During the hearing, Mr. C pointed out that he has purchased many items for the children in the past, and intends to do so in the future. He seeks credit for those purchases against his child support obligation. He is not entitled to such credits against his future child support obligations (i.e. those which will become payable after the date of this judgment). The governing principle was stated in Haisman vs Haisman 1994 ABCA 249 (CanLII), [1994] AJ No. 553; 116 DLR (4th) 671; 7 RFL (4th) 1 @ paragraph 79:
When a mother has custody of a child and a court orders the father to make payments to the mother for the maintenance of that child, it is not open to him to make payments to the child instead. Nor is it open to him to buy things for the child and to claim that the amounts which he spends in this way should be deducted from the maintenance payments which he was ordered to make to the mother. In neither case has he complied with the order of the court. Further, the mother, as the custodial parent, is entitled to decide how maintenance payments for the child will be spent.
Different considerations may apply in relation to Mr. C’s past child support obligations: D.B.S. vs S.R.G. 2006 SCC 37 (CanLII), [2006] 2 SCR 231 @ paragraph 109. I discuss that subject below.
Retroactive Variation of Basic Child Support
[16] The next question is when the increase from $500 per month (ordered by Judge Gould) to $1136 per month (ordered by me) should take effect. In D.B.S. vs S.R.G., the court held that variations of existing support orders should, in most cases, be retroactive to the date on which the applicant spouse gave “effective notice” that application would be made for a variation. However, Justice Bastarache, who gave the majority judgment, also said @ paragraphs 128 - 130:
… courts ordering a retroactive award pursuant to the Divorce Act must still ensure that the quantum of the award fits the circumstances. Blind adherence to the amounts set out in the applicable Tables is not required - nor is it recommended. There are two ways that the federal regime allows courts to affect the quantum of retroactive awards.
The first involves exercising the discretion that the Guidelines allow. Thus, the presence of undue hardship can yield a lesser award: see s. 10. As stated above, it will generally be easier to show that a retroactive award causes undue hardship than to show that a prospective one does. Further, the categories of undue hardship listed in the Guidelines are not closed: see s. 10(2). And in addition to situations of undue hardship, courts may exercise their discretion with respect to quantum in a variety of other circumstances under the Guidelines: see ss. 3(2), 4 and 9.
A second way courts can affect the quantum of retroactive awards is by altering the time period that the retroactive award captures. While I stated above that the date of effective notice should be chosen as a general rule, this will not always yield a fair result. For instance, where a court finds that there has been an unreasonable delay after effective notice was given, it may be appropriate to exclude this period of unreasonable delay from the calculation of the award. Unless the statutory scheme clearly directs another outcome, a court should not order a retroactive award in an amount that it considers unfair, having regard to all the circumstances of the case.
[17] As noted in paragraph 15, past expenditures by Mr. C for the benefit of the children might be relevant to the question of retroactivity: D.B.S. vs S.R.G. 2006 SCC 37 (CanLII), [2006] 2 SCR 231 @ paragraph 109. The difficulty is that Mr. C tendered no evidence of those expenditures. There is no evidentiary basis on which I could conclude that they were sufficiently substantial, or necessary for the children’s well-being, to justify an order that the adjustment to his child support obligation not be retroactive, or to fix a date other than that of Ms. B’s application as the effective date.
[18] The difficulty in this case is one which commonly arises when both spouses are of limited means. From the point of view of Ms. B:
(a) She gave effective notice of her claim for increased maintenance when she served her notice of application in June, 2013. Mr. C ought to have been well aware throughout 2014 that he would be expected to pay child support for that year based on his actual earnings.
(b) Under the Guidelines, Mr. C ought to have been paying $1136 each month during 2014.
From the point of view of Mr. C, I doubt that he has the present ability to pay $7500, being the approximate difference between $500 and $1136 per month for 2014. It is a challenge for a person in his circumstances to put money aside in anticipation of a contingent liability.
[19] In considering this question, I think it important to remember that child support is the right of the child[ren], not of the recipient parent. In D.B.S. vs S.R.G., Justice Bastarache said @ paragraphs 110 - 111:
A retroactive award is a poor substitute for an obligation that was unfulfilled at an earlier time. Parents must endeavour to ensure that their children receive the support they deserve when they need it most. But because this will not always be the case with a retroactive award, courts should consider the present circumstances of the child -- as well as the past circumstances of the child -- in deciding whether such an award is justified.
A child who is currently enjoying a relatively high standard of living may benefit less from a retroactive award than a child who is currently in need. As I mentioned earlier, it is a core principle of child support that, after separation, a child's standard of living should approximate as much as possible the standard (s)he enjoyed while his/her parents were together. Yet, this kind of entitlement is impossible to bestow retroactively. Accordingly, it becomes necessary to consider other factors in order to assess the propriety of a retroactive award. Put differently, because the child must always be the focus of a child support analysis, I see no reason to abstract from his/her present situation in determining if a retroactive award is appropriate.
In this case, the children have lived in very modest circumstances because of their parents’ limited incomes. Subject to one concern, they will certainly benefit from a retroactive award. The concern is that the retroactive award must not inflame the existing conflict between the parents any more than is necessary in the circumstances.
[20] I think that the concerns about fairness as between the parents, discussed in paragraph 18, and benefit to the children, discussed in paragraph 19, can be best met by:
(a) an increase in the basic child support obligation, from $500 to $1136 per month, effective January 1, 2014; and
(b) an order that the resultant arrears be payable over time, in monthly instalments within the limits of Mr. C’s ability to pay.
Arrears of Child Support
[21] The difference between $6,000 per year (ordered by Judge Gould) and $13,632 per year (ordered by me) is $7,632. To that must be added the existing arrears of $4,500 under Judge Gould’s order (paragraph 8(f), above), for a subtotal of $12,132. As noted in paragraph 8(g), above, Mr. C has paid $11,875.30 under the terms of Judge Dohm’s order since December 1, 2014. Under the terms of that order, as varied by me, he ought to have paid $8,960 during that period, and so is entitled to a credit of $2,915.30 against the subtotal. In the result, the total arrears are $9,216.70. Given the very limited means of these parties, I think that the arrears should be payable at the rate of $100 per month, which would enable Mr. C to retire them over 7½ years.
[22] Mr. C did not file an application, under section 174 of the Family Law Act, to reduce or cancel arrears of child support. However, at the hearing, he asked me to make an order reducing or cancelling whatever arrears I might find to be owing. I am conscious of the strain which these proceedings have caused to both parents, and of the desirability of bringing closure to as many issues as possible, in the hope of reducing the number of future applications which will be necessary. I have heard the evidence necessary to adjudicate Mr. C’s request for reduction or cancellation of arrears, and think that I should do so.
[23] Reduction or cancellation may be ordered only if (i) there has been a material change in circumstances since the order was made: Carriere vs Carriere 2013 BCSC 2357; [2013] BCJ No. 2823 @ paragraph 20; and (ii) the change is such that it would be “grossly unfair” not to reduce or cancel the arrears: Family Law Act, s 174. In this case, there has been a material change in circumstances since Judge Gould’s order - that change justified Judge Dohm’s variation of Judge Gould’s order and my variation of Judge Dohm’s order. However, that change justified an increase in child support, not cancellation of the arrears which had accrued under Judge Gould’s order. There has been no material change of circumstance since Judge Dohm made his order, nor (obviously) since I made mine. It cannot be said that it would be unfair to order Mr. C to pay that which he ought to have paid under the existing orders, although, as I have indicated, fairness demands that he be permitted to pay the arrears over time.
Special or Extraordinary Expenses
[24] Ms. B and Mr. C agree that an appropriate budget for special or extraordinary expenses, as defined by section 7 of the Guidelines, would be $250 per month. Section 7(2) of the Guidelines articulates a “guiding principle”, to the effect that the parents are responsible to contribute to special expenses in proportion to their incomes. That is a guiding principle, not a formula, and the circumstances of an individual case may justify a different apportionment: Razavi-Brahimi vs Ershadi 2007 ONCJ 406; [2007] OJ No. 3736; 43 RFL (6th) 439 @ paragraphs 14 - 15. No circumstances justifying a different apportionment were identified in the evidence before me. Accordingly, I order that:
(a) Ms. B send an e-mail to Mr. C on the last day of each month, attaching receipts for special or extraordinary expenses incurred during that month.
(b) Mr. C reimburse Ms. B by the 15th day of the month following for 75% of each expense which he does not dispute, to a limit of $187.50 in each month.
(c) If Mr. C disputes any expense claimed by Ms. B, Mr. C must bring an application to the court to resolve the dispute before the end of the month following. If he fails to do so, the expense will be deemed to be appropriate and reimbursable.
Police Enforcement
[25] Ms. B complains that, on a number of occasions, Mr. C has failed to return the children to her at the agreed times. There is no police enforcement clause in any existing order, with the result that the police have declined to apprehend the children and return them to Ms. B. She asks that I amend the existing parenting-time order to include a police enforcement clause. I think that her request is premature.
[26] To be apprehended by a police officer is a profoundly disturbing experience for a child of any age. For that reason, a police enforcement clause should be a last resort.
[27] In this case, Mr. C’s parenting time should be agreed in advance by an exchange of e-mails between Ms. B and Mr. C. The e-mails should clearly state the start and end times for each period of parenting time. Each parent should retain copies of those e-mails so that the court will have clear evidence of the agreed times if disputes arise. Mr. C should be assiduous in conforming to the agreed schedule. If there emerges a pattern of non-compliance with the agreed schedule, some remedy may be appropriate. However, I hope and expect that Mr. C will comply strictly with the schedule. Of course, if the parties are unable to agree on a schedule, Mr. C may apply to the court to impose one.
July 21, 2015
_________________________
T. Gouge, PCJ