IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           This is an application by Mr. M. to retroactively and prospectively vary the child support order of Judge R. Callan pronounced April 13, 2015 (the “Child Support Order”). Mr. M. attended a Family Case Conference on January 27, 2015, where an interim order for child support was made pending his provision of financial information in support of a final order. However, Mr. M.’s counsel subsequently got off the record and the Child Support Order was made in Mr. M.’s absence.

[2]           As Mr. M. had not provided any financial information at the time of the hearing, Judge Callan imputed to him guideline income of $33,100. It was submitted to Judge Callan that this was a fair imputation of income based on an assumption of full time employment at minimum wage plus income from a monthly annuity Mr. M. receives from a structured personal injury settlement.

[3]           Mr. M. brought this application to vary the Child Support Order on March 28, 2018. He argues the imputed income amount was unreasonable and the Judge erred by including a substantial portion of his annuity in the calculation of his income under the Federal Child Support Guidelines. He seeks to retroactively vary the order to reflect his actual income for the years 2015 to present, and vary the amount of child support payable going forward to reflect his current income. Ms. R. argues Mr. M. has been underemployed since the Child Support Order was made, due in large part to his substance abuse problems, and that the order should remain unchanged. Mr. M. also seeks an order for specified telephone contact time with his son.

[4]           Ms. R. claims she first became aware Mr. M. had addiction issues shortly after their son was born. During this time the couple did not live together and Mr. M. moved between [omitted for publication] and Alberta. Ms. R. believed Mr. M. was working on and off as a roofer from 2010 - 2014. She thought he would “go or not go” to work and have others give him a ride to worksites because he had no driver’s licence. Ms. R. assumed Mr. M.’s inconsistent employment as a roofer stemmed from his drug and alcohol addictions.

[5]           Ms. R. acknowledges Mr. M. bounced between different cities of residence between 2010 and 2014 with no real consistent presence in [omitted for publication] where she ordinarily resided with T. Ms. R. described Mr. M. as being “banned” from Vanderhoof for a while. Because they did not live together and Mr. M. did not consistently reside in Vanderhoof, Ms. R. did not know any more about Mr. M.’s employment other than what he told her. Ms. R. says she never really knew what Mr. M. earned. I find Ms. R.’s ability to observe Mr. M.’s employment, skills, income, and ability to work throughout their relationship and after the birth of their son to be very limited.

[6]           In 2014 Mr. M. appeared to be “doing better” and the couple moved in together. Mr. M. secured a job at a local hardware store for $15 per hour, a position he held for only few months. He lost that job around the same time the couple permanently separated due to acts of family violence perpetrated by Mr. M.

[7]           On July 4, 2014, Ms. R. applied for orders of guardianship, allocation of parental responsibilities and child support. Mr. M. filed a Reply on August 20, 2014, seeking an order for parenting time and allocation of parental responsibilities. The parties attended a family case conference on January 27, 2015, in which they entered into an interim without prejudice consent order whereby Mr. M. was afforded specified telephone and skype contact with T. Mr. M. was imputed an income of $21,300 and ordered to pay child support in the guideline amount of $184 per month. He was also ordered to file a Form 4 Financial Statement. The matter was adjourned to March 23, 2015, for review. On March 23, 2015, Mr. M.’s counsel attended and the review was further adjourned to April 13, 2015.

[8]           On April 13, 2015, Mr. M. did not attend Court and his counsel got off the record. Ms. R. was represented by her counsel, Ms. Reed. Counsel for the Ministry of Social Development also made submissions to the Court concerning child support as Ms. R. was on social assistance. At that time there was no application before the Court seeking to vary the interim January 27, 2015 child support order as the originating Application and Reply had only been scheduled for “Review” in anticipation of receiving Mr. M.’s financial information. The Court proceeded in Mr. M.’s absence as if it were a hearing on the merits of Ms. R.’s originating application for parenting time and allocation of responsibilities and child support.

[9]           Mr. M. had failed to comply with the January 27, 2015 order that he file a Form 4 Financial Statement. As such, his real financial information was not before the Court on April 13, 2015. Ms. R.’s counsel advised that Ms. R. was only seeking orders on the issues of guardianship, parental responsibilities and parenting time. The Court made those orders in favour of Ms. R. Counsel for the Ministry, however, asked the Court to impute a higher income to Mr. M. and order payment of an increased amount of child support. Counsel conceded that Mr. M.’s income was just a “guess”, but nonetheless invited the Court to impute a guideline income to Mr. M. of $33,100. The Ministry stated the $21,300 income imputed at the Family Case Conference was based on full time minimum wage employment, and that this amount should be increased to $33,100 to reflect Mr. M.’s receipt of a structured settlement annuity.

[10]        Counsel for the Ministry advised that it was relevant to determine how much of Mr. M.’s structured settlement was attributable to “wage loss,” but in the absence of any information from Mr. M. about the settlement the Ministry was left to guess at how much should be included as Guideline income. Ultimately the amount proposed by the Ministry and imputed by the court, being $11,800, represented 61% of Mr. M.’s annuity benefits at that time. It was suggested that if this number was too high Mr. M. could come back and seek to vary the order.

[11]        There was no evidence put before the Court as to Mr. M.’s employment history, skills, health, or ability to earn an income. In fact, Mr. M.’s 2015 income was $9,192 - less than half of the employment income imputed to him. The Court acceded to the Ministry’s submissions and ordered Mr. M. to pay child support in the amount of $300 per month based on an imputed annual Guideline income of $33,100. The Court had authority to impute income to Mr. M. pursuant to s. 19(1)(f) of the Guidelines on the basis he failed to file his financial information when ordered to do so.

[12]        Mr. M. says at the time the Child Support Order was made he was in Vernon working in a hospital. He could not really remember how he came to fall out of contact with his counsel and testified he was not really aware of what was happening with these Court proceedings. Mr. M. says that within two weeks of the Child Support Order being made in his absence he fell into deep addiction, unemployment and homelessness. During that time he slept on park benches or tents and was not employed. He continued in that lifestyle for 9 -10 months. In February 2017 he obtained some legal advice from advisors in the Kelowna Courthouse and filed an application to vary the April 2015 Child Support Order. That application was withdrawn and replaced with a new Application (prepared with the benefit of counsel) on March 28, 2018, which is the subject of this hearing.

[13]        Mr. M. is 39 years old. He has a grade 9 education. When he was 8 years old he was hit by a car while riding his bike. He was seriously injured to the extent of paralysis (which subsequently healed). Mr. M. says he also suffered a traumatic brain injury which has interfered with his ability to hold down a job due to memory impairments. In 2016 - 2017, he primarily worked through temporary employment agencies picking up intermittent work as a labourer. Due to prior driving offences and $12,000 in unpaid fines Mr. M. has no driver’s licence and cannot legally drive. He has not had a driver’s licence since before 2010, which he lost while living in Alberta. Mr. M.’s inability to drive limits his employment options given his skill set, as it is difficult for him to obtain transport to project sites, construction sites or resorts.

[14]        Mr. M. suffers from a longstanding addiction to crack cocaine and alcohol. Mr. M. says he has been a “screw-up” for most of his life. He claims he quit crack cocaine last summer “cold turkey”, and has voluntarily reduced his alcohol intake to sociable levels. Much of Mr. M.’s employment and relationship difficulties directly related his addictions. Mr. M.’s break-up with Ms. R. was violent and resulted in criminal charges against him.

[15]        In addition to his addictions, Mr. M. suffers lingering medical issues from his childhood accident which impede his ability to work. Mr. M. says he has difficulty remembering things, like instructions or recipes, which frustrates his employers who end up firing him. He had a cooking job at a resort this year which he lost after a few weeks due to this problem. He suffers stiffness and soreness in his legs which causes him increasing pain with age. He also suffers from painful swelling in one of his legs. These physical ailments hamper his ability to do physical labour such as roofing.

[16]        Ms. R. contests Mr. M.’s claim that he suffers from memory deficits, however, she agrees Mr. M. suffers painful swelling in one of his legs as she observed him seek medical attention and prescriptions for that condition during their relationship.

[17]        Mr. M.’s historical income as reported on line 150 of his annual tax returns, attached to his Financial Statements filed February 28, 2017, and June 3, 2019, is as follows:

[18]        Mr. M. attributes his improved 2018 income to his cessation of drug use and curtailment of alcohol consumption. He says he quit using drugs last year by force of will without going to treatment. His 2018 income included $2,201 for Worker’s Compensation benefits arising from a kitchen accident where he sliced his hand with a meat slicer. From 2015 - 2018, Mr. M.’s sources of income were primarily from casual day labour obtained through placement services or brief periods of employment with various companies in low-skilled positions. In 2018 - 2019, he was able to work as a cook for around $15 per hour. Mr. M. says the highest wage he ever earned was $18 per hour when he worked as a roofer.

[19]        In July 2018 Mr. M. got a job as a cook in a restaurant in [omitted for publication]. After a couple of months he cut his hand and was off for months on WCB. He says he was ultimately let go from that job. In January 2019 Mr. M. got a job as a cook in [omitted for publication] but quit after a few months because he did not like working in a bar given his addiction issues. He secured another job as a cook but the restaurant was larger, busier and he could not remember the recipes, so he was fired after a couple of weeks. In May 2019 Mr. M. got a job as a handyman at a resort for round $15 per hour, but quit his job after a few weeks because he was not getting paid. At the time of hearing he was unemployed and searching for work. I note that the $15 per hour Mr. M. was earning on average in 2018-2019, was around 20% above minimum wage.

[20]        The most lucrative employment years Mr. M. says he ever enjoyed was when he worked as a roofer in 1996, 1997, and 2000. During that time he could earn up to $2000 bi-weekly seasonally. Since then he says he worked as a roofer intermittently. He worked in Alberta from 2006 - 2007, but had to stop due to leg pain issues and transportation problems getting to work sites. The last time he worked as a roofer was in 2017 where he performed one 5 day job for $16 per hour. He does not have fall certification which is now required to be a roofer and says his leg swelling and ankle pain problems nonetheless preclude him from that occupation. He also continues to have difficulty getting to job sites because he has no driver’s license. He does have his Foodsafe certificate to work in restaurants and can manage working as a painter.

[21]        Under his structured settlement Mr. M. receives a monthly annuity which increases by 3% annually. The monthly amounts he received since 2015 are:

[22]        Mr. M. lives a meagre lifestyle. He resides in Kelowna, in part, because he has close relationships with friends and their children. In 2016 he secured a job earning $16 per hour doing lawn maintenance at a resort, but had to quit because the premises was a 90 minute drive from his residence and he had no reliable means of transportation. He did have the opportunity to get a labour job in Penticton but did not wish to move because his family and friends are in Kelowna.

[23]        Mr. M. received a lump sum payment of $72,000 from his structured settlement in 2012. He admits he could have used those funds to pay off his driving fines in an effort to regain his driver’s license, but did not. Mr. M. says he gave some of the payment to family and used the balance to support himself, Ms. R. and T., as they were together at that time. He says he purchased phones, vehicles and other items for family use. Ms. R. disputes this assertion. She recalls Mr. M. was living in Alberta at that time because he had been arrested there and was not permitted to leave that province, so he used the half of the lump sum money for his own living expenses. He gifted the other half to his stepfather. He did not use the funds for T.’s benefit.

[24]        Mr. M. says he has tried to be employed since dropping out of school in grade 9 but has not been successful in securing and maintaining a long term job. He says he doesn’t know why this is the case. He acknowledges there were times he was fired for missing work and periods where he relied on social assistance.

[25]        Ms. R. says that she and Mr. M. took a 3 month job skills course at the College of New Caledonia in 2013, which was offered to persons on social assistance. Neither she nor Mr. M. completed the course. Ms. R. felt the environmental work for which she was being trained was “not for her.” Ms. R. says that she observed Mr. M. to be capable of reading materials and making presentations to the class, and did not appear cognitively unable to deal with the course.

[26]        Mr. M. has almost no relationship with his son. Ms. R. says T. does not know who his father is and they don’t really talk about it. Mr. M. says he has made efforts to call his son but his calls go unanswered or he ends up arguing with Ms. R. Due to family violence perpetrated by Mr. M., there were periods where he was barred from living in Vanderhoof and/or communicating with Ms. R. which further contributed to Mr. M.’s separation from T. There was a lengthy period where the Ministry of Child and Family Development also put restrictions on Mr. M.’s contact with T. due to family violence. Mr. M. did not prioritize maintaining his relationship with his son during his intense periods of drug use.

[27]        Ms. R. says she has not tried to block Mr. M.’s contact with his son, rather, it is Mr. M. who is inconsistent or lacking in his efforts to talk to T. I find the real cause of Mr. M.’s poor relationship with T. is due to his historical drug use, family violence, and inaction, not any obstructive efforts by Ms. R. Mr. M. seeks further contact time with T. but Ms. R. is reticent because she worries T. would be negatively affected by expecting to speak to his father and Mr. M. not following through. Mr. M. admits that he chose to “back away from communicating with his son so as not to confuse him.” When asked if re-introducing T. to his father and arranging monthly phone contact would be disruptive to T., Ms. R. said she did not know.

[28]        Mr. M. is $1,847.29 in arrears of child support. The Family Maintenance Enforcement Program (“FMEP”) calculates that Mr. M. also owes $252.71 in interest on those arrears and attributes $600 in default fees to Mr. M., for a total of $2,700.01. Presently, FMEP holds $2,867.84 in trust as a result of garnishments it executed against Mr. M.’s sources of income pending the outcome of Mr. M.’s application.

[29]        The issues I must decide are:

[30]        Mr. M. applies to retroactively vary the amount of child support payable since the Child Support Order was made to reflect his actual historical income. As such it is properly characterized as being brought under s. 152 of the Family Law Act, SBC 2011, c 25 (“FLA”), which provides:

[31]        In an application for the retroactive reduction of child support based on a change of circumstances, it is necessary to consider the four factors set out by the Supreme Court of Canada in D.B.S. v. S.R.G., 2006 SCC 37 (see G.M.W. v. D.P.W., 2014 BCCA 282; C.A.O. v. P.A.O, 2017 BCPC 361, at par. 88; Sijercic v. Kazic, 2016 BCSC 186 at par. 63; and M.H. v. A.M., 2016 BCSC 1664 at par. 170). The four relevant factors are:

[32]        In order to succeed with an application to vary an order under s. 152 of the FLA, Mr. M. has to prove a material change of circumstances within the meaning of the Guidelines. This means a change such that, if known at the time the order was made, would likely have resulted in different terms (G.M.W. v. D.P.W., para. 32). Section 14 of the Guidelines also defines the kinds of changes in circumstance justifying the variation of a child support order:

[33]        The material change of circumstances Mr. M. asserts is his actual employment income is significantly less than the $21,300 per annum imputed to him for 2015 and each and every year thereafter. This change was significant and long-lasting, as he has never earned close to that amount of income until 2018. He also says the amount imputed to his income from the annuity, $11,800, exceeded what was legally permissible based on the character of the underlying settlement.

[34]        Because Mr. M. had failed to file his financial information as ordered, Judge Callan needed to impute income to him so a final child support order could be made. However, in order for the court to impute income to a payor there must be some evidence upon which that income can be ascertained. Mr. M. was not present when the Child Support Order was made and counsel for the Ministry of Social Development, who was acting on behalf of Ms. R. in the child support claim, invited the court to impute income based on full time employment at minimum wage plus part of his annuity. There was no evidence before the Court that Mr. M. ever worked regular, full time employment. Ms. R. claims she had “no idea” what Mr. M. was earning at the time the Child Support Order was made. However, she did know Mr. M. had addiction issues, that he had lost his job shortly before they permanently separated, and that there were times Mr. M. was collecting social assistance. Ms. R. knew Mr. M. did not maintain stable employment because he often failed to show up for work.

[35]        I find there was little or no evidence to support the inference that Mr. M. did or was capable of working regular, full time employment at the time the Child Support Order was made. Ms. R. was aware Mr. M. was addicted to crack cocaine and alcohol to the point he did not maintain steady employment, however, this fact was not communicated to Judge Callan. In saying this I do not suggest any improper conduct by Ms. R. The Child Support Order and imputation of income was not sought by Ms. R. or her counsel. It was sought by the Ministry of Social Development which was seeking child support to recoup social assistance funds expended to Ms. R. for T.’s support. The Ministry’s counsel may not have had much information about Mr. M.’s situation and was compelled to “guess” at an imputed income because of Mr. M.’s complete failure to file financial information.

[36]        I find the large disparity between Mr. M.’s actual income and his imputed income, which disparity continued to persist after the Child Support Order was made, constitutes a material change in circumstances. I also find there is a material change in circumstances on the basis that too much of Mr. M.’s annuity payments were imputed to his Guideline income as set out later in these Reasons. Information about Mr. M.’s actual income and structured settlement was not before Judge Callan at the time the Child Support Order was made, and I am satisfied that had the information been known to Judge Callan he would have made a different order.

[37]        Mr. M. was homeless and deeply addicted for almost a year after the Child Support Order was made. He did make an application to vary the Child Support Order on February 28, 2017, around 2 years after the order was made, saying “need support payments lowered retroactive to January 2014” on the basis “I was working at the time of the order now over the last couple years I have not.”

[38]        Mr. M.’s application failed to indicate a mailing address. There is a note in the Court file from Mr. M., filed March 27, 2017, asking the Court to send his mail to a new address in Kelowna. There is no record of a hearing date being set in connection with Mr. M.’s application. My review of the court file shows no proof of service of Mr. M.’s application on Ms. R., which likely precluded his application from proceeding further.

[39]        On November 3, 2017, Mr. M. filed a notice of change of address indicating Simon Walter as his counsel and requesting a copy of the Court records. On March 8, 2018, Ms. R. was served with Mr. M.’s application to vary child support and a further Application seeking parenting time filed April 19, 2017. Mr. M.’s 2017 Applications were withdrawn and replaced with the current application filed March 28, 2018, which was prepared by counsel.

[40]        As such, Mr. M. delayed a little less than two years in bringing his application to vary the Child Support Order. After February 2017 there was some delay in getting the matter to hearing as Mr. M.’s application was not served on Ms. R. until he retained counsel in late 2018. I accept Mr. M. was still dealing with an acute drug and alcohol addiction during those years. The evidence discloses he was not regularly employed and did not maintain regular contact with his son.

[41]        The amount of employment income imputed to Mr. M. in the 2015 Child Support Order far exceeded his actual employment income up to the time he applied to vary the Order. Mr. M. gained nothing from allowing the Order to continue in force as it stood. I accept that the reason he delayed in bringing the application was because he was so deep in his addictions or homelessness that he was not in a position to address the issue.

[42]        While Mr. M. delayed almost two years in bringing the application, I find the circumstances of that delay are not such that he should be precluded from retroactively varying the order. He was suffering from serious addictions and/or homelessness which impeded his ability to fully attend to his family court legal obligations and he initially tried to proceed without the benefit of counsel which contributed to the delay.

[43]        Blameworthy conduct on the part of the payor can militate against a retroactive reduction in child support payments. Ms. R. argues that Mr. M.’s choice to spend his income and annuity on alcohol and drugs, rather than his son, is blameworthy. She also complains that Mr. M. gave half of his $72,000 lump sum annuity payment to his stepfather and provides some financial support to daughters of his friends when his first priority should be supporting his own child.

[44]        For the reasons set out below with respect to the issue of underemployment. Mr. M.’s priority expenditures on substances to which he is addicted cannot be characterized as blameworthy conduct for the purposes of assessing whether he ought to be precluded from retroactively reducing child support under s.152 of the FLA.

[45]        As stated above, I find Mr. M.’s failure to attend court and file financial information was due in part to his addictions as opposed to a deliberate attempt to frustrate payment of his support obligations. He initially attended court hearings, retained counsel, and consented to a child support order based on a generously estimated income of $21,300 in January 2015. The matter was adjourned to April 15, 2018, for a “Review” in anticipation of receiving financial information from Mr. M. At the time Mr. M. had counsel. It would not necessarily have been obvious to Mr. M. that the child support order made only four months earlier might be substantially increased in his absence, as there was no filed application seeking that relief. Mr. M. was living and working in Vernon at the time, which is hundreds of kilometres from Prince George where the matter was heard.

[46]        Mr. M.’s participation in the Court proceedings waned commensurate with his increasing substance abuse and associated homelessness. The Child Support Order was made in his absence based on inaccurate information concerning his ability to earn an income. While his conduct was avoidant and less than optimal, it was not deliberate or calculated to prejudice Ms. R. or undermine the authority of the Court.

[47]        T. is a young child in grade 2 and will be financially dependent on his parents for many years to come. Ms. R. does not work and the family relies on social assistance, which enhances T.’s need for ongoing financial support from his father. It would harm T.’s financial security to retroactively adjust child support in a manner which would create a debt from his mother to Mr. M. for the reasons set out below.

[48]        I understand Mr. M. is not suggesting that any retroactive variation of child support should operate such that Ms. R. would suddenly be expected to re-pay an overpayment of child support arising from the retroactive adjustment. In my view such an order would create a hardship to the recipient, Ms. R., who relies on social assistance, was only receiving small sums of child support, and is the sole supporter for T. She has no realistic means of reimbursing Mr. M. for any overpayments of child support and would not have anticipated this expense given she had no notice of Mr. M.’s intention to retroactively reduce support until she was served in March 2018.

[49]        I also find it would create a hardship if the retroactive variation of the Child Support Order resulted in the creation of a debt from Ms. R. to Mr. M. which was resolved by way of crediting Mr. M. future child support payments to offset that debt. T. still needs support from his father. Mr. M. has the means to continue to make support payments for the benefit of his son and should do so even if, mathematically, a historical adjustment of his income would technically result in a credit or overpayment of child support.

[50]        Between his paid employment and annuity Mr. M. has a higher income than Ms. R. I find that provided any retroactive adjustment of the Child Support Order does not contemplate the creation of a debt from the recipient to the payor, a retroactive variation would not create a hardship to Ms. R. or T.

[51]        In all of the circumstances and applying the principles set out in D.B.S. and the Guidelines, I find the Child Support Order ought to be retroactively varied pursuant to s. 152 of the FLA to reflect Mr. M.’s adjusted imputed income as contemplated herein.

[52]        Ms. R. says the Court ought not to retroactively reduce Mr. M.’s historical child support obligations commensurate with his actual income because he has been underemployed since the Child Support Order was made. She argues the imputed income amount in the Child Support Order is fair and appropriate given Mr. M.’s underemployment. Ms. R. says that since 2015, Mr. M. has had the ability to work as a roofer or cook but has not reasonably pursued these occupations on a full time basis or maintained his employment. She submits BC roofers earn on average $25.61 an hour and line cooks earn $13.80 per hour.

[53]        I find that Mr. M.’s leg condition and lack of fall certification preclude him from working regularly as a roofer. I accept that Mr. M.’s memory and cognitive functions are somewhat diminished in a fashion which limits his ability to successfully work in more challenging and intellectually demanding work environments. These limitations were apparent to me during his testimony.

[54]        In my view Mr. M.’s physical and cognitive abilities, education and skill set really only qualify him to work modest wage level jobs such as a general labourer, painter, or entry level cook. The real issue is whether or not Mr. M. has been underemployed in those occupations for which he is suited because he has not pursued or maintained regular full time employment. Had he done so, his income would at least have been equivalent to full time minimum wages. When the Child Support Order was made, counsel for the Ministry of Social Development estimated such annual income to be $21,300, the amount imputed to Mr. M. in the January 2015 child support order.

[55]        The main impediment to Mr. M.’s regular gainful employment was his substance abuse. There are occupations available to Mr. M. despite his limited education and abilities, the real challenge has been Mr. M. retaining those jobs. I find as a result of his substance abuse problems Mr. M. was habitually fired, stopped showing up, or just quit the jobs available to him. His addictions also lead to multiple driving offences which resulted in the loss of his license. Being unable to drive can have a significant impact on someone whose skill set generally requires them to travel to work sites not accessible by public transportation.

[56]        The parties’ submissions raise the timely question: for the purposes of determining a payor’s ability to work and pay child support, is addiction considered a disability or a choice? The former might excuse a payor’s failure to pay, while the latter does not.

[57]        An analysis of this issue requires an examination of the legislative framework around child support as well as the relevant case law. Counsel have provided the Court with the following authorities: A.B.M.E. v. D.J.H., 2012 BCSC 483 (CanLII), M.K. v. R.A.S., 2004 BCSC 1798 (CanLII); Yeung v. Silva, 2016 BCSC 1682; L.F. v. C.G.C., 2014 BCSC 1069 (CanLII); JWK v. EK, 2014 BCSC 1635; Mason v Mason, 2013 ONSC 5974 and Brown v. Golaiy, 1985 CanLII 149 (BCSC).

[58]        Section 147 of the FLA imposes a duty on each parent and guardian to support a child under the age of 19 except in circumstances that are not present in this case. When making an order respecting child support, s. 150 of the FLA compels the Court to determine the amount in accordance with the Guidelines unless the parties have an agreement for some other amount and the court is satisfied that reasonable arrangements have been made for the support of the child. The principles on which child support is based, as espoused Earle v. Earle, 1999 BCSC 283, are as follows:

[59]        The Guidelines objectives are:

[60]        The amount of a child support order for a child under 19 years old is presumed to be that amount set out in the applicable Guidelines tables based on the payor’s income (Guidelines, s. 3). With some exceptions, a payor’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 and is adjusted in accordance with Schedule III of the Guidelines (Guidelines, S. 16).

[61]        Section 19 of the Guidelines permits the court to depart from the methodology set out in s. 16 and “impute such amount of income to a spouse as it considers appropriate in the circumstances.” Although there are nine statutorily defined situations, it is not an exhaustive list and the section gives the court significant discretion in imputing income. Section 19 states:

[62]        In Yeung v. Silva, Madam Justice Dardi canvassed the law on imputing income at paras. 43–47:

[63]        She continues at paras. 51-52:

[64]        Legal principles relating to an assessment of whether or not income ought to be imputed on the basis of underemployment were also summarized by the Court of Appeal in Beisner v. Matheusik, 2015 BCCA 308 at par. 44:

[65]        The Court’s approach to the issue of imputing income to a payor parent with a substance addiction problem is evolving. In Hutchison v. Gretzinger, 2007 CanLII 5708 (ONCJ), Justice Quinn rejected substance addiction as a justifiable excuse in the absence of cogent evidence. He states:

[66]        In Kalanuk v. Michelson, 2010 SKQB 394 (CanLII), Mr. Kalanuk sought a reduction in his arrears of child support which had accrued after he became addicted to drugs and incarcerated for fraud. The Queen’s Bench of Saskatchewan accepted Mr. Kalanuk had a serious drug addiction that impaired his ability to work. Justice Ball viewed Mr. Kalanuk’s alcoholism and drug addiction as illnesses requiring treatment rather than “unacceptable conduct based on individual choice” (par. 14). Justice Ball concluded Mr. Kalanuk was not intentionally underemployed during the period of time that he was in drug treatment facilities and his significant decrease in income was substantially connected to his addictions issues. However, the court also found Mr. Kalanuk squandered some of his income over the past four or five years on choices unrelated to his addictions. Although Mr. Kalanuk’s addiction did not absolve him of all responsibility for child support, the court reduced his child support arrears because of it.

[67]        In A.B.M.E. v. D.J.H., 2012 BCSC 483, the payor father, D.J.H. worked in construction earning around $50,000 per year when his children were born. After separation he was imputed an income of $55,000 and ordered to pay child support based on that amount following his failure to file financial information with the court. Later that year he became addicted to crack cocaine and alcohol for two years as a result of his depression. He brought an application to retroactively vary the original child support order on the basis that his actual income for the preceding three years ranged from $4,000 to $10,000, most of which was social assistance payments.

[68]        The payor possessed a breadth of construction skills and earned $46,000 - $53,000 in the years preceding separation. He attributed his subsequent period of unemployment to his addictions and argued his addictions should be treated as a non-culpable health issue. Master McDiarmid framed the issue before him as follows:

[69]        In his decision Master McDiarmid cited the decision of Judge Cowling in R.P. v. M.H.E., 2003 BCPC 407, who concluded at par. 7 that the “recent legal model for consideration of a party with a substance addiction is to treat that problem as a non-culpable health issue.” At the same time, Judge Cowling recognized there were competing policy reasons not to accept addiction as grounds for complete exemption from a support obligation, and expressed reluctance “to excuse the applicant entirely from his obligation to support his child in circumstances whether the problem causing the reduction in income is arguably a mixture of both a health issue and possibly a character issue” (at par. 9). He concluded it was appropriate to confirm some of the arrears to preserve that resource for the child should the payor ever become capable of paying.

[70]        Master McDiarmid stated that “addicts retain some power of choice about whether to consume drugs or not, but that ability to choose diminishes as a consequence of the psychological and physiological impact of addiction” (par. 26). He referenced the Supreme Court of Canada’s Insite decision, Canada (Attorney General) v. PHS Community Services Society, 2011 SCC 44, in which the Chief Justice affirmed the findings of the trial judge that addiction is a disease in which the central feature is impaired control over the use of the addictive substance (par. 101). However, Master McDiarmid cautioned at par. 40:

[71]        Master McDiarmid found the payor had only ever made two voluntary payments of child support over a five year period, and his evidence of how his addiction impaired his ability to work was insufficient in many respects. There was no evidence adduced detailing anything about the payor’s addiction. The Master adjourned the issue of cancelling arrears to allow the payor to adduce further evidence.

[72]        Following the Supreme Court of Canada’s Insite decision, the B.C. Court of Appeal in R. v. Hansen, 2012 BCCA 142, held in a criminal context that addiction is a disease and that the consumption of drugs is not a simple "choice" to be either made or not made, but an illness "characterized by a loss of control over the need to consume the substance to which the addiction relates" (at. par. 26).

[73]        The Supreme Court of Canada’s Insite decision and A.B.M.E. v. D.J.H. informed Judge McCarthy’s approach to addictions in the family law context in M.S.B. v. L.M.B., 2012 BCPC 520, in which he states:

[74]        Few other courts have considered the Insite decision in the family law context, perhaps because the focus of the inquiry has been on evidentiary issues. In Lindsay v. Jeffrey, 2014 ONCJ 1, the mother asked the court to impute income to the father at the level he was earning before he quit his job as a mechanic. The father claimed he was unemployed because of his drug addiction. The court endorsed the approach of Justice Ball in Kalanuk v. Michelson but only with proper evidence. Justice Sherr for the Ontario Court of Justice stated at para. 39:

[75]        Justice Sherr found the required evidence lacking in the case before him. The father adduced no corroborating evidence on the extent of his drug use, whether it justified quitting his mechanic’s job, how it adversely affected his ability to work, and for what period of time it stopped him from working to his full capacity. Justice Sherr stated at para. 40:

[76]        For child support purposes, the court imputed to the father income in an amount which slightly exceeded that which he earned at his mechanic’s job immediately before he quit.

[77]        In J.W.K. v. E.K., 2014 BCSC 1635, the parties were married for 13 years and had two children. They separated in 2010 when they started experimenting with drugs which ultimately led to the father’s addiction. He became unemployed for around three years. In 2013 he obtained employment which paid $40,000 annually. At trial the recipient mother sought child support based on an imputed income of $88,000, the amount the father earned before he succumbed to addiction. The trial judge found that it would not be reasonable to expect the payor to earn his full professional income while struggling with his addiction, and settled on $40,000 as an appropriate amount. The trial Judge found it may be that the payor’s initial use of drugs was voluntary and intentional, but thereafter his addiction spiralled out of his control and left him unable to work in his chosen profession.

[78]        On appeal Justice Punnett considered the issue of imputing income to a drug addicted payor parent. The recipient mother cited Hutchison v. Gretzinger for the proposition that it would be wrong at law and contrary to public policy for the court to exempt a parent from paying child support because of drug addiction. The Justice ultimately concluded he need not determine whether drug addiction is voluntary or a disability that can justify underemployment because the payor had nonetheless failed to meet the evidentiary burden on him to show his underemployment was the product of his addictions. Justice Punnett upheld the $40,000 imputed income amount determined by the last Judge.

[79]        In cases cited above where the Court found an addicted payor was underemployed, the payor had been regularly and gainfully employed before incurring a drug addiction. Those cases are distinguishable in the sense that the payor parent, aware of his or her obligations to support their child, chose to start consuming substances they reasonably foresaw could lead to addiction and corresponding loss of employment.

[80]        In this case Mr. M. says he has been a “screw-up” for most of his life and has historically relied heavily on his annuity as his primary means of support. He was already a drug addict and alcoholic when he met Ms. R. and had a child with her. He had a grade 9 education and limited employment skills. There is no evidence Mr. M. was regularly employed prior to T.’s birth. I do not believe Ms. R. was oblivious to Mr. M.’s problems until after their son was born. After T. was born Mr. M. simply continued his pre-existing addictive behaviours and inconsistent employment. Ms. R. was warned by MCFD when T. was born that Mr. M. was prohibited from living with her and the child because his conduct with his last partner gave rise to child protection concerns.

[81]        While Mr. M. had an obligation to support his child upon becoming a father, he did not have a corresponding obligation to dramatically transform into someone else. The law expects Mr. M. to earn an income and support his child at a level which realistically reflects his education, work history, skills, age and health conditions. To the extent addiction is a disease, Mr. M. was ill before he met Ms. R. He continued to be ill afterwards. Policy issues which militate against excusing an addicted parent from supporting their child are far less compelling in this case where the payor was already an active addict before their child was conceived. It is not the case that Mr. M., aware of his obligations to support his child, voluntarily consumed drugs he reasonably foresaw would lead to addiction. Rather, he was already at the stage of illness “characterized by a loss of control over the need to consume the substance to which the addiction relates”, as contemplated by the Supreme Court in the Insite decision.

[82]        Upon reviewing the authorities and the principles espoused therein, including the competing interests of recognizing addiction as an illness and the need for children to be financially supported, I find that a payor who is already actively addicted to drugs or alcohol at the time their child is conceived should be characterized as suffering from a health condition or disability for the purposes of imputing income under the Guidelines. They are in a different position than a payor who voluntarily commences or relapses into substance abuse knowing they have or will have a child to support. The extent to which income should be imputed to a payor who is already an active addict at the time of conception depends on the evidence linking that addiction to the payor’s ability to work and their potential for rehabilitation.

[83]        In E.K. v. J.W.K., Justice Punnett noted the fact of the payor’s drug problem was uncontested, however, the payor had adduced no expert evidence addressing the effects of his addiction and whether or not his regular relapses were involuntary. Given the dearth of evidence, Justice Punnett found no error in the trial judge’s determination that the payor’s lack of employment was voluntary. Justice Punnett considered Hutchison v. Gretzinger, Lindsay v. Jeffrey, and Kalanuk v. Michelson, and went on to state at par. 66:

[84]        An expert opinion is not always required to support a payor’s claim that their addictions negatively affect their ability to earn an income. In S.J.E. v. L.M.E., 2016 BCSC 2579, the mother professed to be a drug addict. Madam Justice Balance considered J.W.K. v. E.K and the divergent authorities on substance addiction as a reasonable health need of a parent justifying underemployment or unemployment, as well as the evidence needed to substantiate this assertion. She states at para. 34:

[85]        Upon imputing a minimal income to the payor, Justice Balance stated at para. 47:

[86]        Although no expert was adduced at trial, Madam Justice Balance did have the benefit of letters from the payor’s medical advisors which stated she was unable to work at that time due to her mental health issues. While the fact of his drug and alcohol addictions was not contested, no medical evidence of any kind has been adduced by Mr. M. concerning how his addictions and/or brain injury affect his ability to work.

[87]        There is tension between the evidentiary burden on Mr. M. to demonstrate how his addictions and/or injuries affect his ability to earn an income, and the evidentiary burden on Ms. R. to demonstrate he has been underemployed as contemplated in Yeung v. Silva. In Lindsay v. Jeffrey, the Court dealt with these competing burdens by characterizing them as progressive. The initial onus is on the party seeking to impute income to show the payor is intentionally unemployed or underemployed. Once established, the onus shifts to the payor to show their employment decisions were reasonable (at par. 35).

[88]        In this case both parties have been less than ideal in discharging their respective evidentiary burdens. Mr. M. attested to memory problems arising from his childhood brain injury but provided no corroborative medical evidence. He provided little to no evidence of how his substance abuse operated to interfere with his ability to work, other than to the extent I can infer that it would have been difficult to maintain regular employment during his 9-10 month period of homelessness in 2015 - 2016. For her part, Ms. R. adduced scant evidence that Mr. M. had ever consistently worked full time in regular employment before or after T. was born, or was even capable of doing so. She admits she did not really know much about Mr. M.’s employment other than what he told her from time to time.

[89]        It is difficult on the evidentiary record to identify to what degree Mr. M.’s poor employment record was due to his addictions or, as expressed in R.P. v. M.H.E., a function of his character. Mr. M. has continued to fail to maintain regular employment even after he allegedly quit abusing drugs and alcohol. Since the summer of 2018, Mr. M. has held several jobs. He started as a cook in a restaurant in [omitted for publication] in July 2018 and within two months sliced his hand on a meat slicer, causing him to be off work (on WCB benefits). Mr. M. says he was “let go” from that job. In January 2019 he worked at a restaurant in [omitted for publication] but quit after a couple of months because he wanted to “move on” from a small town and did not like being in an environment of heavy drinking given his addictions issues. He then got a job at a restaurant in [omitted for publication] but was fired after a couple of weeks because he had trouble remembering the recipes, a weakness he attributed to the lingering effects of his head injury. In May 2019 he worked as a handyman at a resort but quit after three weeks, ostensibly because they were not paying him.

[90]        To the extent Mr. M.’s poor employment record was a reflection of his personal attributes independent of his addictions, assessing blameworthiness is further complicated by Mr. M.’s alleged cognitive impairments arising from his childhood traumatic brain injury. It is difficult to distinguish whether he loses or fails to pursue jobs because of his injury or a poor attitude. While Mr. M. claims he has significant memory problems which impede his ability to perform many employment related tasks properly, he has adduced no expert evidence to that effect and those memory impairments were not observed by Ms. R. during their relationship. Ms. R. suggests Mr. M.’s work troubles are largely a function of his attitude, namely, he has little motivation to work because he can always resort to his annuity to support himself.

[91]        There is some evidence that back in the late 1990s to 2000 Mr. M. was able to earn a decent level of income working as a roofer. I accept Mr. M.’s evidence that since then he has only worked intermittently as a roofer with his last endeavour being a five day job in 2017. He currently does not possess the requisite certification to work as a roofer. I find that Mr. M.’s physical condition, namely his leg swelling and pain, precludes him from being regularly employed as a roofer. I decline to impute income to him on the basis that he should be working full time in that profession. I accept that he is capable, to some degree, of working modest paying jobs as a labourer, painter, or line cook.

[92]        As set out in the aforementioned authorities, typically speaking a payor parent who relies on their substance abuse as a “disability” justifying reduced employment would have to adduce “cogent evidence” demonstrating how their addictions impede their ability to work. Mr. M. has not adduced any evidence in that regard except his own uncorroborated testimony. However, in cases such as Lindsay v. Jefferson, Kalanauk v. Michelson, and J.W.K. v. E.K., there was evidence the payor had worked regularly earning a consistent income prior to succumbing to addiction. Conceptualizing the competing burdens within the framework adopted in Lindsay v. Jeffrey, there was evidence in those cases upon which the Court could be satisfied that the payor was capable of earning a regular income, which then shifted the burden to the payor to justify why he or she was no longer earning that income. Having found the payors in those cases had not met the evidentiary burden on them to show they were not capable of working, the Court imputed income to them by reference to their pre-addiction earnings. In this case, there was insufficient evidence that Mr. M. was capable of earning a regular and consistent income prior to the child’s birth. As such, I cannot simply resolve Mr. M.’s failure to discharge his evidentiary burden by resorting to his pre-addiction or pre-separation income.

[93]        The evidence discloses that Mr. M. was capable of performing some work during his period of addiction, and he had a number of jobs available to him which he quit for various reasons. I agree with Ms. R. that Mr. M. likely felt less motivated to maintain jobs that posed any degree of difficulty for him because he knew he had his annuity to fall back on for support.

[94]        Considering all of the evidence, I make the following findings:

[95]        Applying these findings, I conclude Mr. M.’s employment income for the period 2015-to present (before imputing any income from his annuity) should be imputed as follows:

[96]        I find Mr. M.’s income of January 1, 2019, for the purpose of setting 2019 child support, before imputing any income from his annuity, should be his Line 150 income from his 2018 income tax return, being $18,152.

[97]        A structured settlement is a manner of settling a claim for damages in a personal injury lawsuit on a periodic basis over a fixed period or for life. The casualty insurer purchases the structured settlement on behalf of the injured recipient and makes an irrevocable direction to the recipient. The recipient receives a guaranteed tax-free income (annuity) that is non-commutable, non-assignable, and non-transferable. No one can change or stop the annuity under any circumstances. Neither the recipient nor the insurer pay tax on the income produced by the structured settlement. In Hunks v. Hunks, 2017 ONCA 247, the Ontario Court of Appeal held that a structured settlement annuity was analogous to disability benefits.

[98]        The structured settlement provides for payment of compensatory damages owing to the recipient at the time of settlement. Those compensatory damages generally include, without limitation, non-pecuniary damages for pain and suffering, damages for financial loss such as diminished past and future earnings, and the cost of future care.

[99]        Mr. M. concedes that the portion of the structured settlement which was intended to compensate Mr. M. for loss of earning capacity can be imputed to his Guidelines income, as it was intended to act in the place of wages. The difficulty arises from the fact that the settlement award was made when Mr. M. was 8 years old and, obviously, not employed. How his injuries might affect his future employability was unknown. Mr. M. has filed a copy of the judgment on liability and structured settlement agreement relating to the accident, however, there is simply no information on how the settlement award was negotiated and how much of it, if any, was intended to compensate for loss of earning capacity. The settlement agreement makes no reference to different heads of damages.

[100]     In Brown v. Golaiy, 1985 CanLII 149 (BCSC), Mr. Justice Finch characterised the injured plaintiff’s loss of capacity to earn future income as equivalent to the loss of a capital asset. In considering the amount by which that loss should be assessed, he says at page 4:

[101]     In Dalton v. Craig, 2001 CanLII 28168 (ONSC), the father was seriously injured in a motor vehicle accident in 1986. He made a personal injury claim but the settlement was not made and received until 12 years later (1998). In the interim his income comprised of a CPP disability benefit and statutory $140 weekly payments from his insurer which were eventually cut off. The parties separated in 1992. In 1998 when the father’s settlement was awarded, the recipient mother made an application for ongoing and retroactive child support back to the date of separation, arguing his settlement funds should be retrospectively considered income for that 6 year time period.

[102]     The settlement amounts comprised of $305,000 from the defendant motorist and $122,000 from the father’s own insurer (for failure to pay statutory benefits). The $305,000 was equivalent to the limits of the defendant insured’s policy which was far below the father’s actual assessment of damages. As such, the settlement did not specify individual amounts attributable to particular heads of damage, such as non-pecuniary damages, costs of future care, or loss of earning capacity. The father lived on CPP disability payments and interest from the lump sum settlement as well as regular draws of $33,000 from the capital.

[103]     The recipient mother sought a retroactive award and increase of ongoing support to reflect additional income generated by the father’s capital draws on the settlement funds. The trial judge rejected the mother’s submission the father’s income should include the regular capital draws. He also declined to order retroactive support calculated on the basis of the 1998 settlement award income. The trial judge found the father’s income prior to receiving his settlement consisted of his CPP disability payments, and after the settlement, his income was limited to his disability benefits and interest income from his capital funds. With respect to ongoing child support, the trial judge calculated the father’s Guidelines income as equivalent to the amount of interest earned on his settlement, which at 5% per annum was calculated to be $24,208 per year.

[104]     The trial decision was reversed in part by the Court of Appeal (2002 CarswellOnt 42 (ONCA)), which found there was evidence that part of the $305,000 settlement award was intended to compensate the father for past and future income loss. As the settlement agreement did not differentiate between heads of damages, the proportion of the total settlement attributable to past or future income loss could not be determined on the evidence. The parties agreed the $122,000 amount from the father’s own insurer was for lost income. The court resolved the issue without determining income but selecting an amount payable for retroactive support that seemed “fair”, being $10,000, considering the circumstances of the parties and the fact that a substantial although unspecified amount of the settlement funds had been intended to compensate the father for loss of past and future income.

[105]     In M.K. v. R.A.S., 2004 BCSC 1798, prior to the parties’ relationship the payor father had suffered a catastrophic brain injury a motor vehicle accident. He received a structured settlement annuity of $59,625 per year for non-pecuniary damages, loss of income earning capacity and costs of care. His claim for loss of earning capacity was based on his earnings at the time of the accident which were around $30,000. He also received $10,121 per annum in CPP disability payments.

[106]     Five years later after the accident the parties commenced a brief relationship and produced one child for which the recipient mother sought child support. The trial judge imputed to the payor a Guideline income of $95,465 by treating his entire structured settlement annuity as income, then “grossing up” that amount because it was non-taxable. The trial judge also ordered that the level of child support payments be reviewed annually on the basis M.K.’s indexed annuity payment was subject to a 3% annual increase.

[107]     The father appealed the issue of whether, or to what extent, a damage award he received for the personal injury claim ought to be treated as “income” under the Guidelines. At the outset, the appeals judge, Justice Wedge, considered the definition of “income” under sections 15 to 20 of the Guidelines. She stated:

[108]     Justice Wedge considered Neufeld v. Neufeld, 2001 BCSC 1197, in which Mr. Justice Holmes held the father should use settlement funds he received as compensation for loss of earning capacity to supplement his income for child support purposes. Justice Holmes imputed Guidelines income based on the father’s pre-injury earnings. The issue of whether other components of the damages award ought to be considered as “income” under the Guidelines did not arise on the facts in Neufeld v. Neufeld.

[109]     Justice Wedge also addressed Parkes v. Mones, 2001 SKQB 572, where the trial judge imputed the entire annuity as income to the payor father who had received substantial damages due to a brain injury. His trustee invested them in an annuity that paid him approximately $25,000 per year. The question of whether it was appropriate to designate the whole amount as Guidelines income without regard to heads of damages was not raised by the father at the hearing and the issue was limited to whether or not annual lump sum capital payments ought to be imputed as income.

[110]     Justice Wedge also considered Drean v. Drean, 1997 CanLII 3152 (BCSC), in which Melvin, J. held that funds produced by an annuity bought from the proceeds of a personal injury claim are personal in nature and a court cannot treat them as a family asset. The fact that the settlement damages award was converted to an annuity for payment purposes did not change the character of the payment, which was compensation for personal injuries suffered. Justice Wedge concluded Drean did not apply to her case because it focussed on the division of family assets, not on whether the annuity payments were income within the meaning of the Guidelines.

[111]     Justice Wedge concluded that settlement awards for non-pecuniary losses and costs of future care are personal to the plaintiff and are not “income” within the meaning of the Guidelines. It makes no difference whether that award is paid as a lump sum or a structured settlement paid out over many years. Receipt of such payments in compensation for those losses is not captured by s. 19 of the Guidelines. Justice Wedge held that the part of the father’s settlement award attributable to compensation for loss of earning capacity, $30,000 per annum, was properly characterized as income for the purposes of the Guidelines in conjunction with his CPP disability payments.

[112]     Justice Wedge declined to gross up that amount as tax-free income because the evidence suggested the $30,000 compensation amount already reflected the father’s estimated gross pre-accident annual income. She also declined to impute any income from lump sum payments advanced to the father as there was no evidence these payments were intended to compensate him for loss of future earnings. Lastly, she reversed the trial judge’s order that child support increase by 3% annually in pace with the father’s annuity as there was no evidence of any direct correlation between the damages award relating to loss of capacity to earn an income and the annual increase.

[113]     In K.T. v. D.C.P., 2015 BCSC 1179, K.T. suffered serious injuries in a motor vehicle accident 13 years before the parties married. She entered into a settlement agreement with ICBC pursuant to which she received a monthly annuity. The settlement agreement did not differentiate heads of damage and there was no evidence of how the agreement was arrived at. The parties were self-represented at trial and proceeded on the understanding K.T.’s annuity was income for Guidelines purposes. The parties had a shared parenting arrangement. The father had no income and sought spousal support. Justice Ball stated:

[114]     The issue of imputing income from an annuity has been addressed in a number of Ontario decisions. In Zoldy v Zoldy, 2007 ONCJ 24, the Ontario Court of Justice considered whether the father’s monthly non-taxable annuity payments were income. Mr. Zoldy was the beneficiary of a global structured settlement under which he received $8,000 monthly tax-free. The settlement was not calculated with reference to any specific heads of damage for loss of income or cost of care. Before his accident, Mr. Zoldy negotiated a child support agreement based on an imputed level of income. The trial judge imputed the same level of income to Mr. Zoldy post-accident, and ordered support on that basis.

[115]     In Rivard v. Hankiewicz, 2007 ONCJ 180, the trial judge held a Court may treat a portion of insurance settlement as income, even where the settlement fails to distinguish between those amounts awarded for lost wages from those awarded for pain and suffering. She held the settlement recipient bears the onus of establishing amounts allocated to pain and suffering; however, the court should not make an arbitrary decision allocating settlement proceeds. After considering Dalton v. Craig, Parkes v. Mones, Zoldy, and Neufeld, she stated:

[116]     In determining how Mr. Hankiewicz’s annuity payments ought to be assessed in light of above factors, the trial judge held only that portion of receipts flowing from a structured settlement which relate to lost income falls within the definition of “income” for the purposes of support calculation. However, she drew an adverse inference from Mr. Hankiewicz’s failure to provide the court with the evidence about his annuity required to make a reasoned determination of whether the payments were income under the Guidelines in whole or in part. He asserted that approximately 50% of his annuity payment represented compensation for diminished earning capacity, but offered no evidence in support of that assertion. Unlike Mr. M., Mr. Hankiewicz was an adult at the time of his civil claim and would have had knowledge about the settlement negotiations.

[117]     The Court held it was the payor father’s responsibility to provide the court with evidence that would be helpful to him (such as, for example, evidence that significant costs for future care and treatment were a basis for his settlement negotiations with the insurer). The trial judge concluded, in the circumstances, the entire monthly annuity payment received by the father was for lost income and subject to a tax gross up.

[118]     In Mason v. Mason, 2013 ONSC 5974, the mother argued the payor father’s structured settlement of almost $1 million should be available for support. The settlement was not broken down into individual heads of damages. The mother argued the family relied on the whole of the father’s income from the structured settlement to support their lifestyle and therefore his income should not be reduced for purposes of calculating support. The father, relying on M.K. v. R.A.S., argued the annuity payments from a damages award are not caught by ss. 19(1)(b) or 19(1)(h) of the Child Support Guidelines.

[119]     Justice Pierce in Mason cited Fequet v. Fequet, 2008 CanLII 30284, for the proposition that the identifiable and reasonable general damages for loss of enjoyment of life and/or damages for future care costs should not be included for the purpose of spousal or child support calculations. Justice Pierce noted the court in Fequet also held the trial judge can examine how the funds received are being used by the recipient in determining income, and went on to deem the father’s compensation for loss of earning capacity represented one-third of his award. Justice Pierce fixed the father’s income for purposes of child support to one-third of his annuity grossed up by 18% to allow for tax.

[120]     In Tookenay v Laframboise, 2015 ONSC 2898, the father payor had only a Grade 10 education and worked predominantly at seasonal labouring jobs. When not working he collected employment insurance benefits. He also received a monthly annuity pursuant to a structured settlement from a personal injury action arising from a motor vehicle accident when he was two years old. The issue before the court was whether all of that monthly annuity should be imputed as income. The father’s claim had been for $2 million, but because it was an uninsured motorist claim the insurer paid out the $200,000 maximum limit of the insurance policy. As such the award was not apportioned between various heads of damages and was characterized only as "general damages” for the purposes of settlement.

[121]     The mother testified the annuity was a "big part" of the family income which was used to pay family expenses, including their mortgage. Mr. Justice Newton agreed with the approach in Rivard v. Hankiewicz which imposes an obligation on the recipient payor to provide evidence about his annuity necessary for the court to make a reasonable determination of whether the annuity payments are income for the purposes of the Guidelines, in whole or in part. Justice Newton observed that in cases where there was no allocation between various heads of damages, “courts have imputed income without reference to amounts paid in settlements” (at par. 66). He referenced the Fequet and Rivard cases which concluded it was appropriate to determine the use of the annuity funds in determining whether the annuity should be imputed as income. When the funds are not used for rehabilitation purposes or other medical expenses relating to the accident, but rather for ordinary living expenses, then it is appropriate to impute those funds as income (at par. 66).

[122]     Justice Newton found the payor father drew on the annuity funds to meet the family’s living expenses when the parties lived together. He also considered that the father’s original Statement of Claim contemplated a claim for loss of earning capacity, and concluded that some of the settlement was therefore made in contemplation of that loss. He concluded it was appropriate to impute one half of the annuity payments to the payor’s income exclusive of any lump sum payments.

[123]     These aforementioned Ontario decisions contemplate that where the Court cannot determine on the evidence how much of a settlement was intended to compensate the injured payor for loss of earning capacity, the Court may consider how the annuity payments are used to determine an appropriate amount to impute to income. In making that determination, these decisions make reference to how much of the annuity the payor uses for living expenses as opposed to medical care related expenses. I find this approach inconsistent with the principles espoused by B.C. Courts which do not consider how the payor uses his or her annuity funds for the purposes of determining Guidelines income.

[124]     These Ontario decisions, while persuasive, are not binding. In my view the Court cannot attempt to reconstruct the heads of damages intended in a settlement award negotiated on behalf of an infant plaintiff decades earlier by looking at how the payor uses his or her annuity now. In terms of amounts attributable to costs of future care, the Court cannot assume the parties to the settlement agreement, when contemplating the infant plaintiff’s entire lifespan, were only considering those costs arising around time frame of the application for child support. Further, the amount of settlement funds attributable to compensation for pain and suffering can never be ascertained by looking at the payor’s current spending habits. Just because the payor uses the annuity to pay living expenses does not mean those settlement payments were intended to compensate the payor for loss of earning capacity as opposed to loss of enjoyment of life. To the contrary, the purpose of such non-pecuniary awards is to allow the plaintiff to offset some of the misery occasioned by their injuries with the provision of funds to purchase material comforts. The money is intended to be spent in one fashion or another.

[125]     I cannot determine how much of Mr. M.’s annuity ought to be characterized as compensation for loss of earning capacity solely by reference to the use to which he puts his annuity payments.

[126]     The issue of settlements received for loss of amenities of life or pain and suffering has arisen frequently in relation to Veteran Affairs Canada disability pensions for military personnel. The characterization of VAC pension funds is rooted in the class action suit of Manuge v Canada, 2012 FC 499, challenging the Government’s policy of reducing long-term disability benefits under the Service Income Security Insurance Plan (SISIP) by the amounts payable to members under the Pension Act. Justice Barnes concluded that the allowable reductions of “income benefits” in the SISIP policy did not include pension benefits because the disability pension was not intended as income replacement. He states at para. 27:

[127]     Prior to Manuge, the VAC pension was generally included in the recipient’s income for the purpose of calculating child and spousal support. Since Manuge there have been disparities in the authorities as to whether or not these pensions can be included in a payor’s income for Guideline purposes. A number of courts in the western provinces have held the VAC disability pensions should not be treated as income under the Guidelines, while other courts continued to do so.

[128]     In L.F. v. C.G.C., 2014 BCSC 1069, Mr. Justice Brown affirmed Madam Justice Wedge’s reasoning in M.K. that payments for non-pecuniary losses and costs of care are not “income” for Guidelines purposes, regardless of whether such payments were made as a lump sum award or used to purchase an annuity. Justice Brown concluded that the father’s VAC disability pension was intended to compensate him for “loss of amenities of life and for the personal limitations and sacrifices that arise from disabling injuries” as contemplated in Manuge, and therefore not “income” for Guidelines purposes. L.F. was applied by Justice Armstrong in A.L.P. v. E.L.G, 2016 BCSC 2180.

[129]     In Rooker v. Rooker, the Chambers judge found on the evidence there was no basis to exclude VAC payments from the husband’s income for the purpose of calculating his income to establish spousal and child support. The husband appealed. In Rooker v. Rooker, 2017 ABCA 87 (leave to appeal to SCC dismissed 2017 CanLII 71233), the court considered whether the VAC disability pension formed “part of the means and ability to pay of the payor”. Upon invoking s. 19 of the Guidelines, the appellate court held that “VAC benefits seen through this lens are means from which support can be paid”, saying at paras. 9-10:

[130]     In Lozinski v. Lozinski, 2017 BCCA 280, the payor appealed the trial judge’s decision to take into consideration his VAC disability pension when determining child support in a shared parenting arrangement. There was no evidence the father used the VAC Pension to fund healthcare or other costs related to his injuries. The evidence disclosed he treated the pension payments as part of his generally available monthly funds and “income that he used.”

[131]     The trial judge did not add the pension to the father’s income to determine his Guidelines income, rather, used it to justify fixing increased set-off child support on the basis of the “means needs and circumstances of each spouse” test applicable under s. 9(c) of the Guidelines in a shared parenting arrangement. The trial judge also found receipt of the pension increased the discrepancy between the spouses’ respective standards of living which warranted a spousal support award on the higher end of the range. In short, while not including the VAC pension as Guidelines income, the trial judge took it into consideration in ordering increased child and spousal support.

[132]     The BC Court of Appeal found the judge did not err in considering the VAC pension with regards to s. 9(c) of the Guidelines as part of the “conditions, means, needs and other circumstances” to be taken into account in determining the quantum of child and spousal support. The issue of whether VAC disability pensions may be considered Guidelines income was not directly engaged because, given the shared parenting context, the judge was entitled to consider non-income resources. The Court held that because the mother did not seek inclusion of the VAC pension as income and the judge did not make an order on that basis, a comprehensive analysis of whether VAC disability pensions may be considered Guidelines income for support purposes would be “left to another day.” As such, the Court limited its decision to situations involving shared parenting arrangements or spousal support, which is not the case here.

[133]     In Hewett v. Rogers, 2018 ONSC 1384, the payor father had received a lump sum disability award of $343,459. The salient issue before the court was whether any of the father’s award under s. 45 of the New Veterans Charter should be included in his income for calculating child support. Justice Trousdale determined the appropriate process was to go through the calculation of the husband’s income utilizing the guidance and tools provided in the Guidelines in the circumstances of that case. On reviewing ss. 15 to 20 of the Guidelines, Justice Trousdale found the court has discretion to make adjustments to income where the court finds that “Total income” after Schedule III adjustments does not provide the fairest determination of the spouse’s income available for payment of child support. She found this was consistent with the objectives of the Guidelines set out in subparagraphs 1(a) and 1(d). She determined that some portion of the VAC disability award ought to be used to impute income to the father for the purposes of calculating his child support obligation.

[134]     The evidence disclosed that, even once sober, Mr. M. had a pattern of quitting or being let go from jobs after a short period. There is some merit to Ms. R.’s suggestion that Mr. M. is not very motivated to work because he can always fall back on his annuity to support him. Mr. M. uses his annuity to pay his living expenses in the same manner as if it were employment income and he does not use it for costs of care. There is some attraction to the submission that it is fair and reasonable to impute annuity payments to a payor’s Guidelines income in circumstances where the payor is not diligently earning employment income because they prefer to live off their annuity. However, my ability to impute any income from Mr. M.’s annuity must conform to the jurisprudence which is binding on me. I have dealt with Mr. M.’s over-reliance on his annuity by imputing income to him on the basis of underemployment.

[135]     I am bound by the decisions in M.K., L.F. and A.L.P. which hold that compensation for non-pecuniary losses and costs of care are not “income” for Guidelines purposes. M.K. in particular is directly on point as it deals with an annuity like the one at bar. The only case from our Court of Appeal, Lozinski, is distinguishable in that the court dealt with spousal support and a shared parenting arrangement which allows the court to make an increased support award on the basis of the increased “means” of the spouse without actually including the annuity in the payor’s Guidelines income.

[136]     This leads to the question of how much, if any, of Mr. M.’s annuity can be characterized as compensation for loss of earning capacity given there is no evidence available to ascertain how the settlement award was intended to be apportioned. Given Mr. M. was a child at the time the settlement was negotiated and has no personal knowledge of how it was calculated, I draw no adverse inference against him for failing to adduce evidence in that regard as contemplated in Rivard v. Hankiewicz. I am satisfied he has adduced all relevant records available to him relating to the settlement.

[137]     In my view it is unlikely that, at the time the settlement agreement was negotiated, there was no contemplation that Mr. M.’s significant injuries might effect in his future earning capacity. I find some of the settlement amount was intended to compensate for that loss. However, given his age and the absence of any obvious debilitating life-long injury (such as paralysis, blindness, deafness, significant cognitive impairment, etc.), loss of earning capacity would not have represented a substantial percentage of the award. In my view it is fair to impute 20% of Mr. M.’s monthly annuity payments to his income for Guidelines purposes as representing compensation for loss of earning capacity. For the years in question, that would be as follows:

[138]     Based on the reasoning of Madame Justice Wedge I decline to “gross up” these non-taxable amounts included in this order an automatic 3% increase to the imputed amounts to keep pace with the indexed annuity, however, that does not preclude Ms. R. from seeking an increase in any future application to vary child support based on a change of Mr. M.’s financial circumstances including an increase of annuity payments.

[139]     The Child Support Order of Judge Callan is varied to retroactively reduce Mr. M.’s Guideline income and corresponding child support payments as set out below.

[140]     All statutory interest on arrears and default fees are hereby cancelled. As I have not been provided a breakdown of what payments have been made or arrears that have accumulated in the time period since the Child Support Order was made I am not making an order fixing arrears. I leave it to the parties and/or Family Maintenance Enforcement Program to calculate if any arrears are outstanding after taking into account the varied payment obligation as provided in this order. The retroactively varied amounts for each calendar year are calculated as follows:

[141]     If a net credit or overpayment to the benefit of Mr. M. results after the amount of retroactive child support payments owed under this order is offset against the amount of child support actually paid during that period, then such credit is cancelled for the reasons set out under Hardship above. For greater clarity, Ms. R. is not required to reimburse Mr. M. for any overpayments of child support made since the Child Support Order was pronounced. Further, no credit shall be applied to relieve Mr. M. from payment of future child support obligations. Any credit arising from the retroactive adjustment contemplated herein may only operate to offset any arrears accumulated under the Child Support Order to date.

[142]     With respect to the monies currently held by FMEP in trust on account of arrears, interest and default fees, I find Mr. M. has a history of non-payment of support resulting in FMEP having to take enforcement action, such as garnishment, to secure payment. I also take into account Mr. M.’s history of drug and alcohol abuse which puts him at risk of again falling into a condition where he may lack the control to prioritize payment of his child support. Pursuant to s. 12 of the Guidelines the court may require in the child support order that the amount payable under the order be paid or secured, in the manner specified in the order. As such, I order that the $2,867.84 currently held in trust by FMEP continue to be held by FMEP as security for payment of future child support obligations for T. after applying those funds to payment of any arrears outstanding as of the date of this order.

[143]     While Mr. M.’s contact with his son in recent years has been sporadic to non-existent, he is not a stranger. I accept that Mr. M. did spend time with T. when he was younger and it would be in the best interests of T. to maintain a connection to his father. At the same time, there is merit to Ms. R.’s concerns about how Mr. M.’s inconsistent contact may be emotionally harmful to T. who must endure the disappointment of having anticipated contact with his father repeatedly and inexplicably cancelled. At this point Mr. M. is only seeking specified telephone contact.

[144]     Mr. M. shall have telephone or video chat contact time with T. at least once per month at a date and time to be agreed between the parties in writing, which includes by text, email, or social media messaging. If Mr. M. misses two agreed contact times in a 4 month period, Ms. R. may cease facilitating further contact time pending further order of the Court.