C.V.H. v. A.W.H. & T.[...] Ltd.

2003BCSC0213 Citation: C.V.H. v. A.W.H. & T.[ ] Ltd. Date: 20030207 2003 BCSC 213 Docket: E36478 Registry: Nanaimo IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: C.V.H. PLAINTIFF AND: A.W.H. and T.[ ] LTD. DEFENDANTS REASONS FOR JUDGMENT OF MASTER J.W. HORN Counsel for Plaintiff: B. Kirkhope Counsel for Defendant: P. Giovando Date and Place of Hearing: December 12, 2002 Nanaimo, BC [1] This was an application for child and spousal maintenance. [2] The parties began living together in January, 1997, and separated in March, 2002. C.V.H. had a child, K., by her now deceased husband, who was born in 1992, and the parties have a child, J., born in 1998. The parties lived together in M.[ ] until they separated. C.V.H. now lives in Nanaimo and A.W.H. lives temporarily in Vernon. [3] C.V.H. operated an unlicensed daycare facility on the L.[ ] from 1997 until March, 2002, and operates one in Nanaimo. [4] A.W.H. operated a trucking business which was incorporated in April, 1999, as T.[ ] Ltd. That company owns a garbage truck and performs contract work for M.[ ] Disposal, which is a garbage disposal company operating in the N.[ ] area. The couple both drew wages from the company, but C.V.H. did not work in the company and wages were allocated to her as a tax-avoidance measure. The couple declared as taxable employment income from the company a total of $55,947 in 2000 and $96,567 in 2001. [5] On April 9, 2002, A.W.H. was involved in three separate motor vehicle accidents while driving his truck and has not worked since the middle of April due to stress or illness. He moved to Vernon to live with his parents and to rehabilitate himself. He is under psychiatric care. [6] He presently employs a driver for the truck who performs the work required by the company's contract with M.[ ] Disposal. M.[ ] Disposal sends him monthly statements showing the gross sales earned by the company and the expenses for the month including the driver's wages. The statements for the months of April through October show little profit and sometimes a loss. A.W.H. has been borrowing money from his parents and cashing in RRSPs in order to live. [7] Before his accident he says that he was working sixteen hours per day and grossing about $18,000 per month. The company's income statement attached to its tax returns for 2000 and 2001 show gross sales of, respectively, $212,720 and $218,395. The driver who has taken his place is working fewer hours. His average gross sales for the months of August through October were $9,738 per month which extrapolated is $116,856 per year. The driver's wages are averaging $4,185 per month. [8] It is apparent that until he returns to work himself A.W.H. will not have the income to pay sufficient child or spousal support to meet the needs of C.V.H.. Monthly amounts have, however, been paid to C.V.H. out of funds held in trust upon sale of an asset. [9] I conclude that a determination under s.16 of the Guidelines would not be fair. [10] If the gross sales of the company continue as they have from August through October and average $5,552 per month after employees' wages, then the question, as framed by counsel, is what net profit can be expected after deduction of average operating expenses? [11] The financial statement of T.[ ] Ltd. for the year ended April 30, 2001, shows gross sales of $218,407 and total operating expenses of $187,983. But included in those operating expenses are employee salaries and benefits paid entirely to the couple and also amortization of tangible assets. These expenses total $84,424. If that amount is backed out of the operating expenses leaving a total of $103,559, then the net profit is $114,848, which is 52 percent of gross. The same exercise for 2002, produces a ratio of 42.5 percent. I shall assume an average ratio of 47 percent. [12] That results in the conclusion that, after employee's wages, the net profit on average gross sales of $5,552, should be $2,609 per month or $31,308 per year. [13] Under the Child Support Tables that produces a required monthly payment for two children of $460 per month. That leaves for A.W.H., after tax, about $1,600 per month. [14] C.V.H. declares that she has a monthly income from her daycare operation and from a widow's pension of about $1,000 per month. She says that her household expenses, including debt payments, are about $5,000 per month. There are clearly not funds sufficient at this time to meet these expenses. [15] An order of $500 per month for spousal maintenance will leave A.W.H. with about $1,200 per month after tax and will leave C.V.H. with a total of $1,800 after tax. That seems to me to be a fair division of the family income until such time as A.W.H. returns to work and the heavy expenses of employing a driver are eliminated. [16] This order may be reviewed after A.W.H. has returned to work. [17] I have no note of any agreement or submissions as to start date or costs. Counsel may speak to those questions or enter any order as to these or other matters that have been agreed to. [18] I am not seized of those questions. "Master J.W. Horn"