J.N.L v. B.J.D.A., 2019 BCPC 74 (CanLII)
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2019 BCPC 74 |
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Date: |
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File No: |
F4030 |
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Registry: |
W. Communities |
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IN THE PROVINCIAL COURT OF BRITISH COLUMBIA
IN THE MATTER OF
THE FAMILY LAW ACT, S.B.C. 2011 c. 25
BETWEEN:
J.N.L.
APPLICANT
AND:
B.J.D.A.
RESPONDENT
REASONS FOR JUDGMENT
OF THE
HONOURABLE JUDGE GOUGE
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Counsel for the Applicant: |
J. Stamm |
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Counsel for the Respondent: |
M. Gorman |
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Place of Hearing: |
Colwood, B.C. |
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Date of Hearing: |
March 22, 2019 |
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Date of Judgment: |
April 8, 2019 |
1. The Issues
[1] Ms. L. seeks retroactive and prospective child support for three children. Mr. A. relies upon an agreement as to the quantum of child support, with which he says that he has substantially complied. The claim for retroactive child support requires consideration of the following question: If a retroactive increase in child support is appropriate: (i) must the court order retroactive support in the amount mandated by the tables annexed to the Federal Child Support Guidelines SOR/97-175 (“the Guidelines”); or (ii) is it permissible to order a retroactive variation in a lesser or greater amount? By way of abbreviation, I will refer to the amount mandated by the tables annexed to the Guidelines as the “Table Amount”.
[2] On an application for a retroactive adjustment of child support, it is necessary to determine the annual income of the payor parent throughout the relevant period. That task is complicated in this case by the fact that Mr. A. receives a “living out” allowance in addition to his hourly wage, to compensate him for the fact that his worksites are not within commuting distance of his home. Ms. L. says that the “living out” allowance should be included in his income for the purpose of applying the Guidelines.
[3] Mr. A. asks that I rescind a $2000 penalty imposed upon him as a result of his failure to attend an interlocutory hearing in this proceeding.
[4] Three issues are notably absent from this case:
a. Ms. L. makes no claim for spousal support. She recently completed her education and has returned to the work force. However, she is unable to work full-time because the parties’ eldest child suffers from severe arthritis and requires much of her attention.
b. Ms. L. makes no claim in relation to special and extraordinary expenses under section 7 of the Guidelines. In light of the eldest child’s needs, those are likely to be more substantial in this case than in many others. There is no evidence in respect of them.
c. Ms. L. does not seek support for her child from a previous relationship. The evidence would support a claim for support for that child: N.P. v. T.V., [2013] BCJ No. 1628; 2013 BCSC 1323 at paragraphs 43ff. However, Ms. L. has chosen not to pursue it.
The latter two items give rise to a difficulty. The right to child support belongs to the child, not to the custodial parent. I must decide whether I should countenance the decision of the custodial parent to refrain from enforcing the rights of the children.
[5] A similar question arises with respect to the claim for a retroactive adjustment of child support. As noted below, the evidence in support of that claim is deficient in several important respects. I must decide whether to adjudicate a claim for child support upon insufficient evidence.
2. The Evidence
[6] Ms. L. and Mr. A. met in 2005, married in 2009 and separated on February 23, 2015. They have not yet divorced. There are three children of the marriage, now ages 6, 8 and 10. The children have resided with Ms. L. since the separation.
[7] Ms. L. has another child, now age 14, from a previous relationship. During the period 2009 – 2015, when Ms. L. and Mr. A. cohabited, that child lived with them in the family home, Mr. A. was the breadwinner and Ms. L. did not work outside the home.
[8] Much of the problem in this case derives from the nature of Mr. A.’s employment and his limited financial-management skills. He works on an oil well drilling crew. The work is seasonal, and varies from year to year depending on the weather and the price of oil. He is paid well when he is working, and subsists on employment insurance benefits when he is not.
[9] Since the parties separated, Mr. A.’s primary residence has been a room in a friend’s house in Alberta, which he rents for $650 per month. However, that residence is not within commuting distance of his workplaces, the latter being widely dispersed over northern Canada. His only asset is an aging pickup truck. He has debts of approximately $30,000. He pays child support when he is working, but does not accumulate cash reserves to enable him to continue to pay child support when his drilling rig is shut down. Arrears of child support then accumulate, which he repays when he can.
[10] Mr. A.’s “total income”, as assessed by Canada Revenue Agency, in the years since separation is set out in the table below. For ease of reference, I have included in the third column the Table Amount for each year (using the Alberta version of the tables to the Guidelines):
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Year |
Income |
Monthly Child Support Obligation |
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2015 |
$91,163 |
$1750 |
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2016 |
$115,933 |
$2200 |
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2017 |
$115,961 |
$2200 |
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2018 |
$139,630 |
$2600 |
He also receives a “living-out allowance”, intended to compensate him for incremental living expenses which he incurs because his workplace is not within commuting distance of his home. The total “living out allowance” paid to him in 2018 was $32,340. Mr. A. does not keep records of the expenses which he incurs when “living out”. The evidence does not provide a basis for an estimate of those expenses.
[11] At the time of separation, Ms. L. and Mr. A. agreed that he would pay child support of $1500 per month. There is no suggestion in the evidence that either of them had any legal advice at that time, or that they were familiar with the Guidelines. As Mr. A. put it during his evidence in chief:
“We agreed on $1500 per month because it seemed fair - $500 per kid.”
[12] Ms. L. says that Mr. A. also agreed to make her monthly car payment in lieu of spousal support. Mr. A. denies any such agreement. Mr. A. stopped making the payments on the vehicle soon after the parties separated and the vehicle was repossessed by the secured creditor in the summer of 2015. Ms. L. took no action to enforce the agreement which she now alleges.
[13] The financial affairs of the couple were further complicated by the fact that Ms. L. moved out of the matrimonial home soon after separation and rented the home to tenants. The intention was to use the rent to pay the mortgage. Each of Ms. L. and Mr. A. accuses the other of diverting the rent to other purposes. No records of these transactions were tendered in evidence, and the evidence provides no reasonable basis to assess the allegations which each makes against the other. In the upshot, the home was foreclosed and sold. This court has no jurisdiction over issues of division of family assets: Family Law Act SBC 2011, c. 25, s.193. Those issues must be determined by a court of higher authority. However, the unresolved conflict over those issues makes it difficult to discern which payments were made on account of child support and which for other purposes.
[14] Ms. L. also alleges that she advanced loans to Mr. A., and that some of the payments which he made to her should be treated as payments on account of the loans, rather than payments on account of child support. Mr. A. disputes those allegations, and there is no extrinsic or documentary evidence to support one version or the other.
[15] In July 2018, Ms. L. asked Mr. A. to increase his child support obligation to $2201 per month, and Mr. A. agreed. They each understood $2,201 to be the Table Amount for three children at Mr. A.’s income level in 2018.
[16] The disputes over how much Mr. A. paid, when, and for what purpose, all relate to the period prior to July 2018. The parties agree that, since July 2018, Mr. A. has made the agreed payments of $2201 per month.
[17] On October 17, 2018, Mr. A. failed to attend as required on an interlocutory application in this proceeding. For that reason, my colleague, the Honourable Judge Lowe imposed a penalty of $2000 “… payable as child support to [Ms. L.] …”, pursuant to section 230 of the Family Law Act. That penalty has not been paid.
[18] If Mr. A.’s accounting is correct, he has paid since the parents separated, in total, $3148 less than he agreed to pay on account of child support, all of which accrued after August 1, 2016. If Ms. L.’s accounting is correct, the difference is a few thousand dollars higher. Much of the higher amount asserted by Ms. L. accrued prior to August 1, 2016. That matters because (as discussed below), claims arising prior to August 1, 2016 are barred by the Limitation Act SBC 2012, c. 13.
[19] During the period August 2016 to December 2017 (17 months), Mr. A. paid $1500 per month in child support, for a total of $25,500. The Table Amount for that period was $2202 per month, for a total of $37,434. For the period January, 2018 to March, 2019 (15 months), he has paid $2202 per month, for a total of $33,030. The Table Amount for that period was $2620 per month, for a total of $39,300. If the matter is to be determined by retroactive application of the Table Amount in each year, he underpaid by $11,934 in respect of the first period and $6270 in respect of the second period, for a total underpayment of $18,204.
[20] Mr. A. expressed a sense of grievance about the claim for retroactive child support, and says that, if Ms. L. had demanded the Table Amount from the outset, he would have paid that amount.
[21] There is very little evidence of the present circumstances or needs of the children. For example, there is no evidence of the children’s extracurricular activities or after-school care. I was told that the eldest child of the marriage suffers from arthritis, but I was given no particulars of his prognosis and there is no evidence of the cost of meeting his needs. Ms. L.’s financial statement provides figures for her routine household expenses. During her oral evidence, she was not asked to explain those figures or to relate them to the needs of the children. Her present expenses might be frugal, or extravagant, or somewhere in between. The evidence does not provide a rational basis for a conclusion on that question, nor as to the quantum of child support necessary to maintain her household.
3. The Limitation Act
[22] Section 3(1) of the Limitation Act provides that the limitation periods established by that statute do not apply to a child support obligation established by a judgment or by an agreement filed with the court under section 148 (2) or 163 (3) of the Family Law Act. In this case:
a. The only court order in relation to maintenance was one which I made on August 17, 2018, directing that Mr. A. make a single interim payment on account of child support, in the amount of $2200, no later than August 8, 2018. He made that payment.
b. No agreement has been filed with the court under section 148(2) or 163(3) of the Family Law Act.
The exemption established by section 3(1) of the Limitation Act therefore does not apply to Ms. L.’s claim.
[23] The applicable limitation period is 2 years: Limitation Act, section 6. This proceeding was initiated by an Application to Obtain an Order, filed on August 2, 2018. It follows that claims in respect of payments which ought to have been made prior to August 2, 2016 are barred by the expiry of the limitation period.
4. The “Living Out” Allowance
[24] Section 16 of the Guidelines provides that “… a spouse’s annual income is determined using the sources of income set out under the heading “Total Income” in the T1 General form issued by the Canada Revenue Agency …”. This figure is commonly referred to as the “line 150 income” of the payor spouse. Other receipts, which might be colloquially referred to as “income” are not to be included in “income” for the purpose of applying the Guidelines: S.E.W. v. S.C.W. [2016] BCJ No. 249; 2016 BCPC 32. For that reason, courts have generally declined to take into account payments like living-out allowances, which are not included in line 150 income: Calver v. Calver [2014] AJ No. 152; 2014 ABCA 63.
[25] However, an exception to the general rule was recognized in Webster v. Webster [2014] BCJ No. 757, 2014 BCSC 730. The following finding of fact was central to the Webster decision:
… Mr. Webster has not incurred any costs for maintaining a second residence while working away from home. He lives near his worksite. His monthly fuel, housing and food expenses are all modest.
(paragraph 43)
A living out allowance should not be included in income for the purposes of the Guidelines ”… in circumstances where it is expended for its intended purpose …”: D.A.C. v. D.J.C. [2015] BCJ No. 456; 2015 BCSC 372 at paragraph 13.
[26] I do not think that this case falls within the Webster exception. When he is working, Mr. A. does not live at home. Unlike Mr. Webster, he does not have a second home within driving distance of his workplace. It is clear that he incurs incremental living expenses when he is at work, and that they are material. I do not think it incumbent upon him to provide an accounting of those expenses. Rather, the onus lies upon Ms. L. to establish that the living out allowance is a pure windfall to Mr. A. That onus is undischarged.
5. Retroactive Adjustment of Child Support
[27] On this application, Ms. L. seeks:
a. to vary the oral agreement which the parties made in February, 2015 and varied in July, 2018, under which Mr. A. agreed to pay first $1500 per month and later $2201 per month in child support. Ms. L. says that the agreement should be varied retroactively to require Mr. A. to pay the Table Amount throughout the period since separation; and
b. to recover the arrears of child support owing at whatever level of child support the court may, retroactively, order.
[28] The applicable provisions of the Family Law Act are sections 148 and 150:
Section 148
(1) An agreement respecting child support is binding only if the agreement is made
(b) when the parties are about to separate, for the purpose of being effective on separation.
(2) A written agreement respecting child support that is filed in the court is enforceable under this Act and the Family Maintenance Enforcement Act as if it were an order of the court.
(3) On application by a party, the court may set aside or replace with an order made under this Division all or part of an agreement respecting child support if the court would make a different order on consideration of the matters set out in section 150 ….
* * *
(1) If a court makes an order respecting child support, the amount of child support must be determined in accordance with the child support guidelines.
(2) Despite subsection (1), a court may order child support in an amount different from that required by the child support guidelines if
(a) the parties consent under section 219 … or have an agreement respecting child support, and
(b) the court is satisfied that reasonable arrangements have been made for the support of the child.
(3) The court must consider the child support guidelines for the purposes of subsection (2), but must not consider arrangements made for the support of the child to be unreasonable only because the amount required under the child support guidelines differs from those arrangements.
(4) Despite subsection (1), a court may order child support in an amount different from that required by the child support guidelines if satisfied that
(a) an agreement or order respecting the financial duties of the parents or guardians or the division or transfer of property, other than an agreement respecting child support, benefits the child directly or indirectly, or that special provisions have otherwise been made for the benefit of the child, and
(b) applying the child support guidelines would be inequitable on consideration of the agreement, order or special provisions.
(5) If a court makes an order respecting child support in an amount different from that required under the child support guidelines, it must give reasons for doing so.
The “guidelines” referred to in the Family Law Act are the Federal Child Support Guidelines: Family Law Act Regulation BC Reg. 99/2018, section 7.
[29] A central question in relation to applications for retroactive adjustments to child support is the nature and extent of judicial discretion. There are two aspects to that question:
a. In what circumstances should a retroactive adjustment be ordered?
b. If a retroactive adjustment should be ordered, must it be ordered in the Table Amount, or may a greater or lesser adjustment be ordered?
[30] It is clear that the decision to order or refuse a retroactive adjustment to child support is discretionary.
In D.B.S., the Court described the factors affecting the appropriateness of a retroactive award as "myriad" …. It specifically enumerated four: whether there was a reasonable excuse for not having sought support earlier; the conduct of the payor parent; the circumstances of the child; and any hardship that would be caused by a retroactive award.
Reid v. Reid [2017] BCJ No. 275; 2017 BCCA 73
@ paragraph 108
a. Reasonable Excuse
This application was initiated on August 2, 2018, 41 months after the parties separated, and 36 months after the parties first agreed on the quantum of child support. I was not provided with any explanation for the delay in bringing the application.
b. Conduct of the Payor Parent
The phrase, “the conduct of the payor parent” is explained, at least in part, by the following passage from in D.B.S. v. S.R.G. 2006 SCC 37 (CanLII), [2006] 2 SCR 231 @ paragraph 108:
… a payor parent who does not increase support payments automatically is not necessarily engaging in blameworthy behaviour. Whether a payor parent is engaging in blameworthy conduct is a subjective question. But I would not deny that objective indicators remain helpful in determining whether a payor parent is blameworthy. For instance, the existence of a reasonably held belief that (s)he is meeting his/her support obligations may be a good indicator of whether or not the payor parent is engaging in blameworthy conduct. In this context, a court could compare how much the payor parent should have been paying and how much (s)he actually did pay; generally, the closer the two amounts, the more reasonable the payor parent's belief that his/her obligations were being met. Equally, where applicable, a court should consider the previous court order or agreement that the payor parent was following. Because the order (and, usually, the agreement) is presumed valid, a payor parent should be presumed to be acting reasonably by conforming to the order. However, this presumption may be rebutted where a change in circumstances is shown to be sufficiently pronounced that the payor parent was no longer reasonable in relying on the order and not disclosing a revised ability to pay.
I do not think that Mr. A. was guilty of blameworthy conduct in relation to child support. Until this proceeding was commenced, he simply paid what Ms. L. asked him to pay (although, as noted, he did not always pay on time and there are disputes about what he paid prior to August 2, 2016). There was a material increase in his income in 2016 and again in 2018, but the former led to the agreement to increase child support in 2018 and the latter is very recent.
c. Needs & Circumstances of the Children
At paragraphs 110 – 111 of D.B.S. v. S.R.G., Justice Bastarache said:
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.
As noted, I was provided with no information about the present needs or circumstances of the children. If I were to award retroactive child support in this case, I would be obliged to do so without considering the particular needs of these individual children.
d. Hardship
Mr. A. is a highly-skilled and hard-working employee. His income level and record of employment clearly demonstrate that. However, he is not a skilled financial manager. He lives paycheque to paycheque. Mr. A. needs clarity, simplicity and consistency in his financial obligations. Unlike those who are more skilled in financial matters, he has no savings to fall back on, and little flexibility in his financial affairs. A retroactive imposition of a financial obligation will bear more heavily on him than it would on others with greater financial skills. Mr. A. would be well-advised to seek out some continuing education in relation to financial matters.
[31] The difficulty in assessing the four factors specifically identified in D.B.S. v. S.R.G. is the absence of any useful information about the most important of those; i.e. the needs and circumstances of the children. More specifically, I was not told what use would be made of the money if a substantial award of retroactive child support were ordered.
[32] If a retroactive adjustment is to be ordered, there is a question as to the quantum of the adjustment. At paragraphs 128 – 130 of D.B.S. v. S.R.G., Justice Bastarache said (underlining added):
… 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.
6. Issues Not Pleaded
[33] Ms. L. has not made a claim for: (i) special and extraordinary expenses for the children of the marriage; or (ii) child support for her eldest child (Mr. A’s step-son). If this were a commercial case, I would confine myself to the issues raised by the pleadings. However, I think that different principles apply to claims for child support.
[34] In Willick v. Willick 1994 CanLII 28 (SCC), [1994] 3 SCR 670 at paragraph 88, Justice L’Heureux-Dube adopted the following statement of principle (underlining added):
Child support, like access, is a right of the child. Children are not parties to a spousal agreement and neither parent has the authority to waive or restrict the statutory support obligations that each parent owes to dependent children. The court is always free to intervene and determine the appropriate level of support for a child. Indeed, the court has a duty to scrutinize any agreement to ensure that the children are not prejudiced by it. In the words of Trussler J. of the Alberta Court of Queen's Bench in Bailly v. Bailly [1991] AJ No. 935: “it may be that an agreement between the parties makes adequate provision for the children of the marriage, but all information must be placed before the court so that any agreement can be reviewed."
I refer also to Reid v. Reid at paragraphs 86 - 88. In view of those authorities, I think that I have an affirmative duty to enquire into the two issues which I have mentioned, and to assess child support in accordance with the Guidelines.
7. The Penalty
[35] Mr. A. asks me to rescind the penalty imposed by Judge Lowe, but referred to no authority under which I could make such an order. It is possible that such authority is conferred by Rule 20(4) of the Provincial Court (Family) Rules BC Reg 417/98. However:
a. I observe that, although Mr. A. was not present at the hearing where the order was made, his counsel was present. It is therefore not clear that the order was made in Mr. A.’s absence.
b. No notice of an application under Rule 20(4) has been filed or served.
c. If such an application were to be made, it should be made to Judge Lowe: Gulf Islands Navigation Ltd. v. Seafarers’ International Union [1959] BCJ No. 119; 1959 CanLII 272 (BC CA), 18 DLR (2d) 625.
For that reason, I decline to set aside the penalty, without an adjudication of the merits of the issue, but simply because there is no proper application before me.
8. Conclusions
[36] I owe a duty to the children (including Ms. L.’s eldest child) to ensure that child support is paid in accordance with the principles set out in the Guidelines. In the circumstances of this case, retroactive child support should not be calculated arithmetically, but rather holistically, after consideration of the factors described above. The evidence now before the court is insufficient for that purpose. For that reason, I make the following directions:
a. Counsel are to speak with the Judicial Case Manager and schedule a further 2-hour hearing. The purpose of that hearing will be to assess the needs of the children, the costs of meeting those needs and how those costs are to be funded. No doubt: (i) some of them can be funded by public services available to Ms. L. at little or no cost; and (ii) others must be funded from the resources of the parties. Ms. L. should make enquiries on that subject before the hearing resumes, and come to the hearing prepared to give evidence on the point.
b. Each of Mr. A. and Ms. L. is to prepare a household budget, and to deliver a copy of it to opposing counsel no later than May 15, 2019. Ms. L.’s budget is to include particulars of special & extraordinary expenses for all four children, with particular attention to the special needs of the eldest child of the marriage.
c. Counsel should consider what other evidence may be helpful, having regard to the authorities referred to above. In particular, it would be helpful to have some information from an independent source about the needs of the eldest child of the marriage.
April 8, 2019
___________________
T. Gouge, PCJ