L.S.R. v. C.A.R.

2025 BCSC 787 L.S.R. v. C.A.R.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: L.S.R. v. C.A.R., 2025 BCSC 787 Date: 20250428 Docket: E172766 Registry: Vancouver Between: L.S.R. Claimant And C.A.R. Respondent Corrected Judgment: The original judgment was edited on May 7, 2025 to anonymize the names and other information relating to the parties Before: The Honourable Justice Jones Reasons for Judgment The Claimant, appearing in person: L.S. R. Counsel for the Respondent: D.O.F. Cross Place and Date of Hearing: Abbotsford, B.C. August 18, 2024 Place and Date of Judgment: Abbotsford, B.C. April 28, 2025 Table of Contents Introduction.. 3 Background.. 3 Issues. 4 Issue. 5 Legal Framework.. 5 General Principles. 6 Averaging. 7 Corporate Income. 8 Imputation of Income. 8 Adverse Inference. 9 Business Expenses. 9 Analysis. 10 Respondent's Income. 11 Claimant's Income. 16 Child Support 22 Conclusion.. 23 Introduction [1] This is an application by the respondent for a number of orders relating to child support and a parenting schedule relating to three of the parties' four children. [2] The parties have reached agreement on some of the issues on the application, leaving an outstanding issue of determination of the parties' incomes for assessment of the quantum of child support to be paid from May 1, 2024 until the parties' children reach the age of majority. Background [3] The parties were married on February 8,

2003. [4] The parties separated on April 1, 2017. [5] The parties have the following children together, identified by their initials, as follows: a) N.R. born February 22, 2004; b) E.R. born September 3, 2005; c) R.R. born March 4, 2010; and d) G.R. born March 4, 2010 (collectively the "Children") (R.R. and G.R., collectively, are the "Twins"). [6] At the date of the hearing, August 8, 2024, N.R. was aged 20 (now 21); E.R. was 18 (now 19), and the Twins were 14 (now 15). [7] The parties signed minutes of settlement filed April 18, 2018 (the "Minutes"), in which the parties agreed that the respondent's annual income was $60,000 and the claimant's annual income was $18,000, both based on the previous year's income. [8] The Minutes purported to settle child and spousal support; however, ongoing issues led to further negotiations regarding child support and spousal support, culminating in a consent order dated May 15, 2024 which settled all issues regarding outstanding child and spousal support up to May 2024, including a termination of spousal support. [9] The relevant provision of the Minutes, clause 7, provides for the respondent to pay to the claimant $871 per month for child support of E.R., G.R and R.R., commencing on April 6, 2018 and continuing on the 6th day of each month for as long as the children are eligible for support under the Family Law Act, S.B.C. 2011, c. 25 (the

"FLA") or until further agreement of the parties or Court Order. Issues [10] The respondent's application seeks the following orders, some of which have been agreed - numbers 4, 5 and 6 - the only contentious orders remaining for the purpose of this application are orders numbered 2 and 3, as follows: 1. An order, by consent, to vary the child support in para. 7 of the Minutes filed April 18, 2018, retroactively to May 2024 and prospectively for ongoing child support, subject to the order #2 determination of the incomes of the parties; 2. A determination of the incomes of the claimant and the respondent for the purpose of determining retroactive and ongoing child support from May 2024 to present.

3. In the alternative, if the claimant has not provided her income information, an order imputing income to the claimant; 4. An order, by consent, regarding the primary residence of one of the child, E.R., and neither party has primary residence of the Twins.

5. An order, by consent, that pursuant to s. 44 of the FLA, an order that replaces paragraph 3 of the Minutes filed April 18, 2018, wherein the applicant, C.A.R. has primary residence of E.R., and that neither party has primary residence of the Twins.

6. An order, by consent, that pursuant to s. 45 of the FLA, the parenting schedule of the Twins will be as follows: a. Monday at 3:00 pm to Wednesday at 3:00 pm with L.S.R.; b. Wednesday at 3:00 pm to Friday at 3:00 pm with C.A.R; and c. The parties will alternate weekends with the Twins from Friday at 3:00 pm to Monday at 3:00 pm; and d. The parties are at liberty to vary the pick up and drop off times as agreed upon between both parties in writing, with at least 24 hours notice unless there is an emergency. [11] The parties agree that the amount of child support in the Minutes should be varied, but disagree on the quantum because they do not agree on their respective incomes for the purpose of assessing child support. Issue [12] The only issue is an assessment of the parties' incomes for the purpose of payment of child support from May 1, 2024 forward. Legal Framework [13] There is some complexity in the parties' recent employment history and income, which results in a number of different legal principles potentially applicable to an assessment of the parties' income for the purposes of child support. Some of these principles in the Guidelines include averaging; corporate income and business expenses; and imputation of income including consideration of the educational needs of a spouse. General Principles [14] CLEBC's Family Law Sourcebook for British Columbia, October 2024

update, summarizes the fundamental principles applicable to all child support applications, as follows, at 3-12: Parents have a joint and ongoing legal obligation to support their children. The obligation is so important that a divorce cannot be granted until parents make satisfactory arrangements for the care of their children (Divorce Act, s. 11(1)(b)). Support is the right of the child. The first objective of the Guidelines is to "establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation" (s. 1(a)). Support is based on earning capacity: not only what the parent earns, but also the parent's reasonable capacity to earn. [15] In Harras v. Lhotka, 2016 BCCA 246, the Court of Appeal summarized the principles of assessing income for the purpose of the payment of child support, as follows: [19] The purpose of the Guidelines is to permit the assessment of the money available to a spouse to pay child support: Kowalewich v. Kowalewich, 2001 BCCA 450 at para.

42. The objectives of the Guidelines, set out in s. 1, are: (a) to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spouses after separation; (b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective; (c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders and encouraging settlement; and (d) to ensure consistent treatment of spouses and children who are in similar circumstances. [20] Section 15 of the Guidelines stipulates that a spouse's annual income is to be determined in accordance with ss. 16-20. Accordingly, the starting point in the determination of income is s. 16, which reads as follows: Subject to sections 17 to 20, 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 and is adjusted in accordance with Schedule III. [16] Sections 17-20 of the Federal Child Support Guidelines SOR/97-175 [Guidelines] provide for options for determining income, including a three year average, consideration of corporate income, and imputation of income, as follows: Averaging [17] Section 17 of the Guidelines provides for averaging of income: 17 (1) If the court is of

the opinion that the determination of a spouse's annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse's income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. (2) Where a spouse has incurred a non-recurring capital or business investment loss, the court may, if it is of the opinion that the determination of the spouse's annual income under section 16 would not provide the fairest determination of the annual income, choose not to apply sections 6 and 7 of Schedule III, and adjust the amount of the loss, including related expenses and carrying charges and interest expenses, to arrive at such amount as the court considers appropriate. [Emphasis added.] [18] In Harras, s. 17 was explained, as follows: [21] The Guidelines provide courts with the discretion to adjust income based on the preceding three years, in the event that annual income under s. 16 does not represent the "fairest" determination of income. Section 17(1) reads as follows: If the court is of the opinion that the determination of a spouse's annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse's income over the last three years and

determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. [22] The test in s. 17(1) is what is "fair and reasonable", having regard to the payor's income in the preceding three years: Marquez v. Zapiola, 2013 BCCA 433 at para. 53. [24] While s. 17 allows the court to examine income over the previous three years, there is nothing in the language of the section that requires the use of averaging in setting income. This makes sense; accepting that one of the goals of the Guidelines is the fair determination of the amount available to pay child support, fairness is unlikely to be achieved by the mechanical application of averaging. The remarks of the Alberta Court of Appeal in Ewing v. Ewing, 2009 ABCA 227 at paras. 37-38 on this point are apposite: But we would point out, for future cases, that section 17 does not suggest that the way to establish fair income is to average. It merely directs the court to set a fair and reasonable amount taking into consideration the past three years' income and any patterns of income, fluctuations in income and non-recurring gains. The court has the discretion to elect the fairest method, and that could be done by averaging the three years prior to the gain, or a court could remove part, or all, of the non-recurring gains, or take whatever steps

it determines are appropriate to arrive at an income figure that is fair for the purposes of support. although setting a fair income is highly discretionary, there should be a logical basis for the method chosen and averaging will not always be appropriate. [Emphasis added.] Corporate Income [19] Section 18 of the Guidelines provides for consideration of corporate income, as follows: 18 (1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse's annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in section 17 and determine the spouse's annual income to include (a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or (b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation's pre-tax income. (2) In determining the pre-tax income of a corporation for the purposes of subsection (1), all amounts paid by the corporation as salaries, wages or management fees, or other payments or benefits, to or on behalf of persons with whom the corporation does not deal at arm's length must be added to

the pre-tax income, unless the spouse establishes that the payments were reasonable in the circumstances. [Emphasis added.] Imputation of Income [20] Section 19 of the Guidelines provides for imputation of income, as follows: 19 (1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, which circumstances include the following: (a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse; (b) the spouse is exempt from paying federal or provincial income tax; (c) the spouse lives in a country that has effective rates of income tax that are significantly lower than those in Canada; (d) it appears that income has been diverted which would affect the level of child support to be determined under these Guidelines; (e) the spouse's property is not reasonably utilized to generate income; (f) the spouse has failed to provide income information when under a legal obligation to do so; (g) the spouse unreasonably deducts expenses from income; (h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from

tax; and (i) the spouse is a beneficiary under a trust and is or will be in receipt of income or other benefits from the trust. [Emphasis added.] (2) For the purpose of paragraph (1)(g), the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act. 20 (1) where a spouse is a non-resident of Canada [21] In Harras, s. 19 was explained as follows: [23] Section 19(1) provides the wide discretion to impute income to a spouse as it considers appropriate. Section 19 is not subject to the restrictions set out in ss. 16, 17 and 18: Oulette v. Oulette, 2012 BCCA 145 at para.

66. Adverse Inference [22] Section 23 of the Guidelines provides that a court may draw an adverse inference against a spouse, and impute income to a spouse who fails to comply with the income information obligations under s. 21 of the Guidelines. Business Expenses [23] In M.T. v. J.S., 2023 BCCA 64, the respondent husband earned income through a company he controlled. The appellant wife appealed the lower court's assessment of whether certain business deductions for the respondent's meals and entertainment, cell phone, and vehicle expenses should be added back to his income for the purposes of child and spousal support under Guidelines. The Court of Appeal reviewed the principles regarding business expense deductions from income as follows: [8] First, where business expense deductions are in issue, the spouse claiming the deductions will bear the burden of establishing they are reasonable business deductions under either section. The spouse asserting that expenses should be added back to income must put that in issue in their pleadings by identifying the specific expenses being challenged, but it will then be for the other spouse to assume the burden of proving the reasonableness of deductions from business income, whether in the context of self-employment or within a wholly-owned corporation: Wiebe v. Treissman, 2017 BCSC 1523 at para.

94. See also Cunningham v. Seveny, 2017 ABCA 4 at para. 28. [9] Second, there is a long line of cases in this province recognizing that business expenses can be addressed under either s. 18(2) or s. 19(1)(g) [of the Guidelines] where a corporation is involved: Dornik v. Dornik, 1999 BCCA 627 at paras. 14 and 20-25; Hausmann v. Klukas, 2009 BCCA 32; Ursel v. Ursel, 2014 BCSC 1219. [10] Section 19 will be the only option available where a sole proprietorship or partnership is in issue, but there is no error in a judge using s. 19(1)(g) even when the payor meets the prerequisites in s. 18 of being a shareholder, director or officer of a corporation. Whether income is being imputed under s. 19(1)(g) or added back as an expense under s. 18(2), the same result obtains. In both cases, the concern of the court is to ensure that the spouse's Guidelines income reflects all of the money reasonably available for child support: Kowalewich v. Kowalewich, 2001 BCCA 450 at para. 43. [24] Here, the respondent admits that portions of some of the C.S. Company business expense deductions should be added back to his income for the purpose of child support, the details of which are discussed in the analysis section below. Analysis [25] The Minutes are a settlement agreement in which the relevant clause regarding child support, para. 7, provides for payment of child support as long as the Children

are eligible under the FLA, or further agreement of the parties or court order. [26] The parties agree that the child support in the Minutes should be varied. [27] As a result, the Minutes provide the legal basis for this application and it is not necessary for the applicant to prove a material change of circumstances as a basis for this review: see Harras at para. 17, citing Kopp v. Kopp, 2012 BCCA 140 at para. 39-44. [28] The hearing is a hearing de novo conducted as an initial application for support in accordance with the Guidelines: see Harras at para. 17. [29] The issue is the assessment of the parties' incomes for the purpose of the payment of child support. [30] The following table summarizing the parties' documented incomes for 2018 to 2023 represents a starting point for the assessment of each parties' income for the purposes of child support: Year Respondent 1 Claimant 2 2023 $56,175 $78,031 2022 $47,735 $52,631 2021 $51,822 $41,070 2020 $131,353 $35,202 2019 $65,857 $26,417 2018 $40,591 $31,307 Notes: 1. Respondent's line 150 total income + corporate pre-tax income + respondent's agreed personal component of corporate expenses, reviewed below (without gross-up).

2. Claimant's line 150 total income, reviewed below. Respondent's Income [31] The claimant submits that while the respondent claims to earn $60,000 annually as a subcontractor, he fails to report that he has been employed as a foreman with the F. Company for the last two years while also working cash jobs which he is not reporting. [32] The claimant also refers to the respondent's level of expenses on his financial statement, $102,469, as evidence that his income must be greater than the $60,000 declared income, or he is using his savings. The claimant submits that the difference could be for undeclared income the respondent receives for work he does for cash, the claimant pointing to work the respondent does for F. Company. [33] The claimant submits that $9,169.65 noted in the C. Company's financial documents, as Canada Revenue Agency ("CRA") penalties and interest, should be added to the respondent's income. The claimant submits that this is a late filing fee of the C. Company's 2024 income tax return, it is the respondent's fault, and if that had not been incurred the money would be available to the respondent as additional income. [34] The respondent submits that since he signed the Minutes in 2018, his income has remained fairly steady. He submits that as an independent self-employed contractor, each year's income can be unpredictable, but in recent years has been $60,000

plus or minus a bit. [35] The respondent owns the C. Company. The respondent is the proprietor, directing mind and sole shareholder of the C. Company. [36] Regarding the respondent's income, as a general comment on his income in the table, the respondent's evidence regarding his 2020 income at $131,353 is that he experienced an unusual surge of business when a general contractor offered him a large package of successive contracts over a ten month period, resulting in an extremely high amount of successive and constant work for him, which is unusual in his business as a self-employed independent contractor. That work was followed by another contract in 2020 for constant, steady and consistent work, again unusual. [37] In response to the claimant's allegations, the respondent submits that he has reported all his income to CRA, including cash received for some jobs. He submits he has disclosed documents with evidence of all of his income, including tax returns and C. Company's financial statements. [38] He states that the income he has earned from working for F. Company is documented by invoices he has produced which provide evidence of the work invoiced from the C. Company to F. Company. [39] The starting point is the respondent's 2023 personal tax return line 150 figure on the notice of assessment totalling $29,900. [40] The respondent admits that s. 18 of the Guidelines

applies, requiring the Court to review the C. Company's pre-tax income. [41] The respondent has produced the C. Company's corporate T2 tax summary, the C. Company's corporate financial statements, and his personal notice of assessment, all for 2023. The C. Company's documents are for year-end January 1, 2024, representing the C. Company's operations for most of 2023. [42] For 2023, the C. Company's total income was $60,177, and for 2022 was $71,862. The net pre-tax income for 2023 is $8,816, for 2022 it was a loss of $9,728. [43] The respondent's total T1 total income, $29,900, plus the C. Company's net income of $8,816 totals $38,716. [44] The respondent then adds to that figure a percentage of the C. Company's expenses for which he derived a personal benefit, for which he has provided an explanation for each category, the percentages and dollar amounts as follows: a) Telephone - 50 percent of $1,601.50; b) Vehicle - 25 percent of $11,414 = $2,853.50; c) Meals - 100 percent of $4,935 = $4,935; and d) Interest and bank charges - 50% of $16,137 = $8,068:50. e) Total: $17,458.50. [45] Other expenses considered by the respondent to be 100 percent corporate expenses are as follows: accounting fees; amortization; insurance; office; parking; waste disposal; repairs and maintenance; and supplies. [46] I note that amortization may include a personal component if the C. Company owns

real estate; however, in this case the C. Company's financial statements do not include a reference to real estate: see Williams v. Williams, 2020 BCSC 597 at paras. 124-142. [47] One additional issue relating to business expenses deducted from income is that because the amounts are non-taxable to the party, the amounts are grossed-up for the determination of the party's Guidelines income and child support, which takes into account the amount of gross employment income the party would have to earn at his or her current marginal income rate in order to have this additional non-taxable income. [48] This point is explained by Justice MacDonald in Goodhew v. Summers, 2022 BCSC 1080, as follows: [141] In terms of the actual income Mr. Goodhew had available for child support, I accept that Mr. Goodhew had more business expenses than Ms. Summers suggests. However, I also accept that he claimed a number of personal expenses through his business which need to be added back into his income. Where significant amounts of untaxed business income are used for payment of personal expenses, it is appropriate to "gross up" the business income to ensure Mr. Goodhew's real income is consistent with what it would have been had he been paid a straight salary. [Emphasis added.] [49] Here, the calculation for the gross up of the $17,458.50 expenses is $7,261, for a final total of $24,719.50. [50] The

respondent's T1 income of $29,900, plus the C. Company's net income of $8,816, plus the personal component of the C. Company's expenses of $17,458.50 totals $56,174.50, rounded to $56,175, plus the $7,261 gross up, results in annual Guidelines income for the respondent at $63,435. [51] Regarding the claimant's allegation that the $9,169.65 in CRA penalties and interest should be added to the respondent's income, it is not clear that that amount would correlate to an equal increase in the respondent's income, and I decline to increase the respondent's income by that amount. [52] The claimant alleges in her affidavit made July 29, 2024 that the respondent has failed to report that he is employed as a foreman with F. Company for the last two years. [53] The respondent's financial statement filed January 4, 2024 states his income at $60,000. [54] I note that in response to the claimant's submission about the respondent's expenses, the C. Company's invoices for work done for F. Company, while not explained in the evidence, refer to an enumerated "quantity" such as "68" at $32 equalling $2,176.00 for the period December 1 to 15, 2023. [55] The 21 invoices for two week periods dating from February to December 2023 range from a quantity as low as 37, to a high of 109, the average being 76.5. Assuming that the quantity is the number of hours, and $32 is the hourly rate, on an annual

basis of a 40 hour week for 50 weeks at $32 per hour, the gross income would be $64,000, which is very closely consistent with the respondent's reference to $60,000 in his financial statement, and the grossed up figure of $63,435 calculated above for the respondent's income. [56] Despite that calculation, it is not clear how the respondent could earn the 2020 income of $131,353, and, the respondent's annual expenses on his most recent financial statement filed January 4, 2024 are $102,469, bringing into question how he is able to afford that level of expenses on income of approximately $60,000. [57] In Motyka v. Motyka, 2001 BCCA 18 at para. 16, the Court of Appeal referred to the chambers judge imputing income of $60,000 per year to Mr. Motyka based on "his present lifestyle, his monthly living expense and the range of income that he was earning during the marriage." With $73,000 in household expenses, the judge "reasoned that he must have had more income than he disclosed in order to meet those expenses." In that case; however, the Court found that Mr. Motyka had not provided full financial disclosure as required by the Guidelines. [58] Here, although there are some questions about the respondent's income, and income related to his reported expenses, the respondent has made disclosure of C. Company records. On the evidence before the Court on this application, and considering

all of the above, it is my view that the determination of the respondent's annual income at $63,435 is a fair determination for an assessment of child support from May 1, 2024 forward. Claimant's Income [59] The respondent submits that the claimant's income has increased yearly since the date of the Minutes, as shown in the summary table of the parties' incomes above. [60] The respondent points to the claimant's affidavits in which she has stated her income has increased to at least, or approximately $70,000 per year, and her notice of assessment for 2023 showing her total income at $78,031. [61] Regarding the claimant's income, the claimant submits that her 2022 and 2023 income in the table above do not accurately reflect her present income because in May 2022 she started a job which was at a company located on the Sunshine Coast (the "G. Job"). She had to relocate from the Lower Mainland to the Sunshine Coast in September 2022 to work on site. She moved back to the Lower Mainland after August 2023 when she lost the G. Job due to company restructuring, and her evidence is that she is now earning near her salary she was earning prior to 2022. [62] She applied for employment insurance benefits when she returned to the Lower Mainland, receiving benefits from October 2023 to June 2024. Her evidence is that she unsuccessfully applied to numerous jobs as many prospective employers

wanted her to have her bachelor degree completed. She attended full-time studies to complete her degree, successfully doing so in May 2024. [63] From November 2023 to May 2024 she found work at a retail store, paying minimum wage. Needing more income she applied for and was hired as a weightroom attendant and fitness instructor in May 2024. She anticipates earning $2,400 per month by the Fall of 2024, for an annual income of $33,000 - $35,000. [64] I note that the claimant's increased income for 2022 and 2023 reflects in part her increased income from the G. Job, that increase for approximately six months in 2022, and seven to eight months in 2023. [65] Like the respondent's "outlier" year of 2020 where the respondent's evidence is that unexpected contracts resulted in an unusually higher income than in earlier and later years, it appears that for the claimant, the G. Job was also unusual relative to her previous employment, paying almost twice what she had earned before that, but it was not sustainable, and in 2024 she has returned to earning a lower level of income, in part because of lower paying jobs, but also as a result of her studies to complete her degree. [66] Given the claimant's evidence that the G. Job was an outlier and she has had less success at securing a higher paying job, I do not consider the $78,031 income figure for 2023 to be the fairest determination of

the claimant's income under s. 16 of the Guidelines; however, her earning capacity appears to have increased since she has completed her degree. According to her own evidence of her experience applying for jobs the degree will make her more competitive in the job market. [67] Before considering whether the Court should have regard to averaging pursuant to s. 17 of the Guidelines as a potentially fair and reasonable method of determining the claimant's income, the issue of the claimant's decision to attend university full time to finish her degree in late 2023 and early 2024 needs to be considered in the context of s. 19(1)(a) of the Guidelines - imputation of income in the circumstances of intentional underemployment, other than where the under-employment is required by the reasonable educational needs of the claimant. [68] In Shock v. Shock, 2019 BCSC 2179, the court reviewed the principles relating to imputation of income pursuant to s. 19(1)(a), as follows: [73] The respondent relies on s. 19(1)(a) of the Guidelines in asking the court to impute income to the claimant as a result of under-employment, and on Barker v. Barker, 2005 BCCA 177, for the authority that the claimant's continuation of higher education rather than full-time employment should not be at the expense of reasonable child support for the benefit of D.J.S. He also notes that the court does not need to make a

finding of bad faith in order to impute income; it only needs to find that the payor is not working at her maximum capacity: Van Gool v. Van Gool (1998), 1998 CanLII 5650 (BC CA), 59 B.C.L.R. (3d) 395, 44 R.F.L. (4th) 314. [74] The claimant's position is that she decided to pursue her Master of Arts degree in Special Education to increase her earning potential and job opportunities. During her full-time graduate studies, she always works part-time. As of August 2019, she was working Tuesday to Friday mornings and has applied for another job, which would mean she would be working slightly more than half-time. She expects to begin working full-time and to advance in the salary grid in 2020 upon completion of her thesis. Analysis [75] Section 19(1)(a) of the Guidelines was interpreted by the Ontario Court of Appeal in Drygala v. Pauli (2002), 2002 CanLII 41868 (ON CA), 61 O.R. (3d) 711. With respect to the meaning of "intentional", Justice Gillese wrote at 718-19: Read in context and given its ordinary meaning, "intentionally" means a voluntary act. The parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. That parent is intentionally unemployed when he or she chooses not to work when capable of earning an income. The word "intentionally" makes it clear that the section does not apply to situations in

which, through no fault or act of their own, spouses are laid off, terminated or given reduced hours of work. I note that there is no requirement of bad faith in the provision itself, nor is there language suggestive of such a requirement. A consideration of the scheme of the legislation and its objects reinforces the conclusion that bad faith is not required. Section 26.1(2) of the Divorce Act, R.S.C. 1985, 2nd Supp., c. 3, as amended, says that the Guidelines "shall be based on the principle that spouses have a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation". Section 1 of the Guidelines stipulates that one of its objectives is to establish a fair standard of support for children to ensure that they benefit from the financial means of both parents after separation. Imputing income is one method by which the court gives effect to the joint and ongoing obligation of parents to support their children. In order to meet this legal obligation, a parent must earn what he or she is capable of earning. [76] In accordance with these principles enunciated in the cases I find that the claimant was under-employed. However, the next consideration is whether it was as a result of reasonable educational needs. [77] Section 19(1)(a) of the Guidelines specifically contemplates

that a spouse may be under-employed as a result of reasonable educational needs. Justice Gillese in Drygala went on to consider what is necessary for establishing "reasonable educational needs", at 720-21: There is a duty to seek employment in a case where a parent is healthy. As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income. Thus, once it has been established that a spouse is intentionally unemployed or under-employed, the burden shifts to that spouse to establish what is required by virtue of his or her reasonable educational needs. There are two aspects to this stage of inquiry. The trial judge must first determine whether the educational needs are reasonable. This involves a consideration of the course of study. A spouse is not to be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations. But, s. 19(1)(a) speaks not only to the reasonableness of the spouse's educational needs. It also dictates that the trial judge determine what is required by virtue of those educational needs. The spouse has the burden of demonstrating that unemployment or under-employment is required by virtue of his or her reasonable educational needs. How many courses must be taken and when? How much time must be devoted in and out of the classroom to ensure continuation in the program?

Are the academic demands such that the spouse is excused from pursuing part-time work? Could the program be completed over a longer period with the spouse taking fewer courses so that the spouse could obtain part-time employment? If the rigours of the program preclude part-time employment during the regular academic school year, is summer employment reasonably expected? Can the spouse take co-operative courses as part of the program and earn some income in that way? These are the types of considerations that go into determining what level of under-employment is required by the reasonable educational needs of a spouse. The burden of proof is upon the spouse pursuing education as he or she is the person with access to the requisite information. The spouse is in the best position to know the particular requirements and demands of his or her educational program. He or she will have information about the hours of study necessary to fulfill such requirements, including the appropriate preparation time. He or she is in the best position to show whether part-time employment can be reasonably obtained in light of these educational requirements. [78] The respondent argues that the fact that the claimant is pursuing higher education rather than full-time employment should not be at the expense of child support, citing Barker, in support of this position. Although Barker was not a case in

which the parent was pursuing higher education, the Court of Appeal did provide the following guidance at para. 18: Under s. 19(1)(a) of the Guidelines, the important question is whether the payor spouse has demonstrated an intention to be underemployed, with the consequence that his children do not benefit from his potential earning capacity [This means] that a parent who chooses to work less than a regular work week must justify that choice by the needs of the children or suffer the loss personally. He cannot effectively transfer part of the cost of that choice to his children. [79] I do accept that the claimant was entitled to undertake a master's degree and as such was not required to work on a full-time basis. However, she has not explained why she was not able to reduce her course load so that she could work more than 0.3 time in order to earn income to support D.J.S. [Emphasis added.] See also Watts v. Willie, 2004 BCCA 600 at para. 16. [69] Here, the claimant's evidence is that she pursued completion of her degree because she had unsuccessfully applied for a number of jobs in which prospective employers had indicated they wanted her to have her degree completed. She also notes that her education was put on hold during and after the marriage on account of the time she spent raising the family. [70] The jobs she successfully applied for were the retail store paying

minimum wage, and the second job as a weightroom attendant and fitness instructor, paying less than the G. Job. [71] Given these circumstances, I consider it reasonable for the claimant to have pursued completion of her degree. Although the claimant does not provide a detailed review of the number of courses required to finish her degree, or whether those course could have been completed in a part-time program while working full-time, the claimant's evidence of her experience with prospective employers requiring a degree, and the discrepancy between the wage levels of the jobs available to her in Mission without a degree, as compared to a higher paying job such as the G. Job (which I note she obtained without a completed degree), provide support for the claimant's decision to purse full-time studies which allowed her to complete her degree in what appears to be relatively short order with full-time studies. [72] I make no decision regarding the reasonableness of any further studies beyond the completion of the bachelor degree. Any further studies would need to be considered on the basis of the factors in the Shock and Drygal cases concerning the claimant's reasonable education needs, and the claimant's obligation to support her children. [73] As a result, I do not impute income to the claimant on account of her intentional under-employment by taking full-time studies to

complete her degree. [74] The question remains - what is an amount of income that is fair and reasonable in light of the claimant's pattern of income as shown in the table above, and the claimant's circumstances? [75] Section 17 of the Guidelines provides that a court may have regard to a spouse's income over the last three years to determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years. [76] Here, while the claimant's income steadily increased over the years up to 2023, the loss of the G. Job has disrupted that steady increase of earned income. Her capacity to earn income may not have diminished; however, the loss of the G. Job, combined with her studies, has resulted in a fluctuation in her income. Presently she is working, but at a lower income level than in the years 2021 to 2023. [77] In my view, a determination of an amount that is fair and reasonable involves an averaging of the claimant's income. [78] Averaging the last three years of the claimant's income - $78,031, $52,631 and $41,070, results in an average of $57,244; however, like the respondent's outlier year in 2020, given the circumstances of the claimant's employment described above, I consider the claimant's 2023 year to be an outlier. As noted in Harras, there is nothing in the language of s. 17 that

requires the use of averaging in setting income. Harras quotes Ewing v. Ewing, 2009 ABCA 227, which states that the direction for the court is to set a fair and reasonable amount taking into account the past three years income and any pattern of income, fluctuations in income and non-recurring gains. [79] Referring again to the quote from Ewing in Harras at para. 24: The court has the discretion to elect the fairest method, and that could be done by averaging the three years prior to the [non-recurring] gain, or a court could remove part, or all, of the non-recurring gains, or take whatever steps it determines are appropriate to arrive at an income figure that is fair for the purposes of support. [80] Here, I consider that treating the 2023 income as a non-recurring gain, and averaging the three years before it, results in a determination of the claimant's income that is fair and reasonable in light of her income. Averaging the claimant's income for 2020 to 2022 results in annual Guidelines income of $42,968. Child Support [81] With the determination of the respondent's annual Guidelines income of $63,435, and the claimant's annual Guidelines income of $42,968, child support is based on two children with shared parenting time (G.R. and R.R.), and E.R. living with the respondent, from May 1, 2024 to September 3, 2024 ("Period 1") when E.R. turns 19, and thereafter two children

(G.R. and R.R.) continuing with shared parenting time ("Period 2"). [82] The Guidelines Table amounts for Period 1 are calculated as $985 payable by the respondent, and $898 payable by the claimant, the offset for child support of $87 per month is to be paid by the respondent to the claimant from May 1, 2024 to September 3, 2024 when E.R. turned 19. [83] The Guidelines Table amounts for Period 2 are calculated as $985 payable by the respondent and $678 payable by the claimant, the offset for child support of $307 per month to be paid by the respondent to the claimant from September 3, 2024 forward. Conclusion [84] The respondent's application requested an Order, by consent, to vary the child support in clause 7 of the Minutes of Settlement filed April 18, 2018, retroactively to May 2024 and prospectively for ongoing child support, subject to the determination of the incomes of the parties. [85] The question for the Court was a determination of the incomes of the claimant and the respondent for the purpose of determining retroactive and ongoing child support from May 2024 to present. [86] The incomes of the parties have been determined as set out above, including calculations of the amount of child support payable pursuant to the Guidelines Table. [87] The parties are directed to draft a form of Order to vary the child support in clause 7 of the Minutes of Settlement filed April

18, 2018, as contemplated by the order sought in this application, and these reasons. [88] The parties are granted leave to contact Court Scheduling to arrange for a hearing with Justice Jones between 9:00 and 10:00 a.m. on a date to be scheduled, in person or by MS Teams if the parties cannot agree on the form of Order, or if the parties wish to make submissions regarding settling or clarification of the Order(s), including, if the parties wish, additional Orders, for example to produce personal and corporate tax returns, and personal and corporate financial statements not later than June 30 each year, for as long as the children are eligible to receive child support. [89] The parties, or either party, are also granted leave to request a desk order divorce be referred to Justice Jones on an urgent basis if the required documents are in order according to the Court Registry. [90] Each party shall bear their own costs of this application. "Jones J."