Janzen v. Janzen

2014 BCSC 1374 Janzen v. Janzen IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Janzen v. Janzen, 2014 BCSC 1374 Date: 20140722 Docket: 46919 Registry: Kamloops Between: Kimberly Louise Janzen Claimant And Michael Jacob Janzen Respondent Before: The Honourable Madam Justice Donegan in Chambers Reasons for Judgment Counsel for the Claimant: E.D. McBain Counsel for the Respondent: L. Ottem Place and Date of Hearing: Kamloops, B.C. June 16, 2014 Place and Date of Judgment: Kamloops, B.C. July 22, 2014 INTRODUCTION [1] The claimant, Kimberly Louise Janzen, seeks interim spousal support. The respondent, Michael Jacob Janzen, agrees she is entitled. Their difference revolves around the quantum of support, with particular disagreement on determination of Mr. Janzen's income for the purpose of calculating it. Mrs. Janzen seeks to have income imputed to him from several sources, while he seeks to rely upon his employment income. FACTS [2] The parties commenced cohabitation in July of 1997. They married on May 29, 1999 and separated on February 19, 2010. They have two children: Marcus Jacob Leonard Janzen, born March 24, 2000 and Katrina May Janzen, born June 8, 2001. [3] Although the parties had shared parenting arrangements equally in the past, the children have lived largely with Mr. Janzen since January of 2013. Mr. Janzen resides in the former family home with the children, along with his new partner, his mother and, at one point, a renter. [4] Mrs. Janzen has parenting time with Marcus Monday through Thursday every second week and with Katrina nearly every Friday through Sunday. [5] This litigation commenced in 2012. No interim orders of a substantive nature were made until April 28 of this year, when Mr. Janzen was ordered, on an interim, without prejudice basis, to pay Mrs. Janzen spousal support of $450.00 a month for May and June. [6] Mrs. Janzen's financial situation is one of poverty. In 2002, she was diagnosed with Multiple Sclerosis, a debilitating disease that renders her incapable of employment. She lives alone in a very small suite in Kamloops. She receives some government-funded homecare assistance for a small portion of her daily care. Despite her physical limitations, she is as actively engaged with the children as she is able. [7] In 2013, Mrs. Janzen received $9,273.60 in Canada Pension Plan ("CPP") disability benefits. She also received a small supplement of $1,532.00 from B.C. social assistance, for a total income of $10,805.60. Her income is expected to be the same this year. [8] Mrs. Janzen's expenses are extremely modest. Even so, her total annual expenses are double that of her annual income. She clearly is of such limited means that she is unable to pay child support to Mr. Janzen and is unable to afford many things the children require when they stay with her. [9] Mrs. Janzen did, however, consent to Mr. Janzen receiving the children's portion of her CPP disability benefits in the amount of $5,400.00 per year. She agreed to this arrangement on the understanding Mr. Janzen would pay all special and extraordinary expenses for the children. [10] Prior to their separation, the parties purchased their home on Hook Drive, together with Mr. Janzen's parents. Each couple holds a one-half interest in the property. Each person is a joint tenant. [11] Mr. Janzen was unemployed at the time of separation. The evidence does not disclose any information about previous employment. [12] In August of 2010, Mr. Janzen started working at Lake City Casino as a casual, on-call cashier. He continues to work there at an hourly rate of $11.69, plus tips. He generally works Saturdays and Sundays during the day and Mondays and Thursdays during the evening/night shift. He will occasionally trade shifts in order to spend time with his children or his shifts may vary due to holidays or illness. [13] In 2013, Mr. Janzen earned $25,349.00 in wages and $9,823.00 in tips. Based on his year-to-date earnings, he is on track to earn approximately $25,000.00 in wages and $7,000.00 in tips in 2014. He points out that part of his earnings include taxable benefits of $1,840.00. [14] In addition to his employment earnings, Mrs. Janzen seeks to have additional income imputed to him from four sources: 1. $1,000.00 per month ($12,000.00 per year) that his common-law spouse pays for her share of the household living expenses; 2. $850.00 per month ($10,200.00 per year) that Mr. Janzen's mother pays for her contribution to the household; 3. $500.00 per month ($6,000.00 per year) that Mr. Janzen receives from a tenant in the home; and 4. $5,400.00 per year that Mr. Janzen receives for the children's portion of Mrs. Janzen's CPP disability benefits. DETERMINING MR. JANZEN'S GUIDELINE INCOME [15] Before making any calculation for spousal support, it is necessary to determine the Federal Child Support Guidelines (the "Guidelines") income of the parties. [16] The Spousal Support Advisory Guidelines [SSAG] are to be utilized to determine quantum and duration of spousal support. The SSAG incorporates the methodology of the Guidelines for determining income of the parties. Such a determination is made in accordance with ss. 16 through 20 of the Guidelines. [17] Section 16 provides that the court must determine the parties' annual income using the sources of income set out under the heading "Total Income" in the federal tax return form (Line 150), subject to adjustments. [18] In so doing, a court should determine what the party is earning from each source of income at the time of the application, using the most current information available. The court may then use the information to predict what the parent will earn for the year from each source of income. The income from each source is then adjusted to determine what income is actually available: Murphy v. Murphy, 2000 BCSC 974. [19] Sections 17, 18 and 19 provide the court with some discretion to alter the Line 150 amount where that amount does not fairly reflect the money available to the party for the payment of support. [20] Section 17 deals with the situation where income fluctuates. It provides: Pattern 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. [21] Section 18 applies to a situation where the party is a director, shareholder or officer of a corporation. This section is not applicable to this case. [22] Section 19 allows the court to impute income to a party in a number of situations. It provides: Imputing income 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. (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. [23] The parties agree that Mrs. Janzen's Guideline income is $10,805.60, but I note a portion of this derives from social assistance. The SSAG makes it clear social assistance is not to be included. Her income is, therefore, set at $9,273.60. [24] Determination of Mr. Janzen's Guideline income is more complex. a) Employment Income [25] Mr. Janzen's income from employment earnings and tips this year, based on his year-to-date earnings, is predicted to be $31,830.00. This amount is slightly less than Mr. Janzen earned in 2013 and slightly higher than his earnings in 2011 and 2012. Given that the fluctuation in income is only slight, I find resort to s. 17 of the Guidelines is unnecessary. [26] Using the most current information available, I find his total employment income to be $31,830.00. He pays union dues from this amount of $820.00 per year. His total earnings also includes $1,840.00 in taxable benefits. b) Money Paid by Mr. Janzen's Mother [27] Mrs. Janzen submits that the $850.00 per month Mr. Janzen's mother pays him should be included as part of his Guideline income. [28] Mr. Janzen disagrees. He explains the circumstances behind these payments at paragraph 8 of his June 3, 2014 affidavit as follows: 8. When my parents and the claimant and I purchased our family residence, the intention was that my parents would pay 50% of the expenses to maintain the household and that the claimant and I would pay the other 50%. We purchased the home in December 2007 and my parents separated in April 2008 when my father moved out. After my father moved out my mother was unable to pay 50% of the expenses. Instead she has been giving me $850.00 per month to cover costs. [29] In my view, these payments should not be included in Mr. Janzen's income. His mother is a joint tenant in the residence. She, along with her ex-husband, agreed to assume 50 percent of the costs associated with the home. This agreement was made, along with Mrs. Janzen, prior to the parties' separation. Mr. Janzen's mother is no longer able to pay 50 percent in accordance with that agreement, but does pay $850.00 per month to assist in maintaining and upkeeping the home in which she is an owner. These funds benefit all of the joint tenants. These funds are not related to Mr. Janzen's employment, cannot be considered payment for any service provided by Mr. Janzen, and cannot be seen as rental income in these circumstances. c) Money Paid by Mr. Janzen's New Spouse [30] Mrs. Janzen submits that the $1,000.00 monthly contribution by Mr. Janzen's new partner ought to be included in his income. [31] Mr. Janzen disagrees. He explains the circumstances of these payments in his May 2012 and November 2013 financial statements. He explains that his new partner's monthly contributions are for her living expenses in the household. [32] There is no suggestion that his spouse's contribution to the household is rental income. Her contribution to household expenses can properly be taken into account when evaluating Mr. Janzen's expenses, but in my view, under these circumstances, cannot be considered income to Mr. Janzen. d) Rental Income [33] Mr. Janzen declared rental income of $6,000.00 per year in 2011, 2012 and 2013. He rented a room in the former family residence to another person during 2011 and 2012. His affidavit evidence discloses that he lost this renter in March of 2013. Despite his efforts, Mr. Janzen has been unable to find another renter since that time. However, Mr. Janzen's mother has made up for this loss by giving Mr. Janzen $500.00 a month since March of 2013. This amount is separate from the $850.00 she pays toward the household. Mr. Janzen did declare these payments on his 2013 tax return as rental income. [34] Mr. Janzen submits this $500.00 per month should not be included in determination of his Guideline income for the purposes of support because he has declared a net loss on that income each year. [35] A review of Mr. Janzen's tax information shows that he has deducted substantial expenses from this rental income each year. Common sense tells me that these deductions, at least for 2013, were not reasonable. No person was actually living in the home for most of 2013. The "rental income" was legitimate until the renter left. It now appears to be a fiction that permits Mr. Janzen to deduct significant expenses from his income. [36] I am mindful this is an interim application and the evidence is likely to be flushed out further at trial. On the basis of the affidavit evidence at this hearing, however, I am satisfied that $6,000.00 per year ought to be included in Mr. Janzen's Guideline income. e) Children's Portion of Mrs. Janzen's CPP Disability Benefits [37] I requested further written submissions from the parties on this issue, which have now been received. Both parties acknowledge there is no caselaw directly on point. [38] CPP children's benefits provide monthly payments to the dependent children of disabled or deceased CPP contributors. The benefits are paid to the custodial parent until the child reaches the age of 18. If, between the ages of 18 and 25, the child is in full-time attendance at a recognized school or university, the benefits continue to be paid, but they are paid directly to the child. [39] Pursuant to Mrs. Janzen's agreement, the children's portion of her CPP disability benefits has been paid to Mr. Janzen for some time now. These benefits are a set amount. Mrs. Janzen takes the position that these benefits should be included in a determination of his income for the purposes of calculating support. [40] In support of this position, she points to s. 6.3 of the SSAG which discusses the inclusion of various child-related government benefits and refundable credits in a party's income when using the "with child support formula". These various benefits and credits include the Canada Child Tax Benefit, the National Child Benefit Supplement, the GST credit (including any portion for the children), the refundable medical expense credit, the child disability benefit, and the various provincial benefit and credit schemes. She submits the benefits at issue are similar in nature to these and should be treated the same way. [41] Mr. Janzen submits that these payments are for the children and should, therefore, be excluded from his income calculation. Mr. Janzen points to two case authorities that he submits lend some support to his position. [42] In Sayong v. Aindow, [1999] N.W.T.J. No. 43, the court was called upon to determine interim child support. Both parties were self-represented. In this case, there were three children, one of whom lived with the mother and the other two lived with the father. In determining the parties' income, Mr. Justice Vertes specifically excluded CPP child disability benefits. He wrote at para. 10: [10] In calculating the respondent's income I have not included the amounts he receives as C.P.P. child disability benefits for Andrea. I have also not included any such benefits received by the applicant for Jelissa. Those payments are for the direct benefit of those children paid by the federal public pension programme. They are the child's so if the applicant is in receipt of a benefit for Jelissa then that should be turned over to the respondent since he is caring for that child. [Emphasis added] [43] In D.C.H.R. v. J.R., 2013 BCSC 1407, a disabled spouse sought spousal support. In determining the disabled spouse's income for the purposes of determining the amount of spousal support she would receive, Mr. Justice Melnick appears to exclude the children's portion of CPP disability benefits, when he wrote at para. 20: [20] At the present time, Ms. R.'s income consists of a Canada Pension Plan ("CPP") disability pension which is topped up by her long term disability for a total of $1,600 a month (for 10 months of the year). For July and August of each year, her income is reduced from $1,600 to $760. Thus her total yearly income is $17,520. She also receives a CPP benefit for each child of $220 a month which will continue until each boy is 18 years of age. [44] Two Ontario cases provide additional guidance. In Fraser v. Fraser (2004), 8 R.F.L. (6th) 125, [2004] O.J. No. 3408 (S.C.J.), Mr. Justice Pierce considered whether the disabled husband's CPP benefits for the children ought to be included in his income. The children were 19 at the time of trial. In excluding these benefits from income, he held at para. 75: [75] In addition, Mr. Fraser receives a further CPP benefit for the parties' children of approximately $400 monthly. This money was placed in an account for the boys' education and miscellaneous needs, such as clothing and spending money when they accompanied their father to Toronto on medical trips. The petitioner cannot withdraw these monies without the co-signature of the boys. Although the respondent does not agree with how it is spent, feeling it should be used exclusively for the children's education, the evidence is that it has been used for the children's benefit. It does not form part of the petitioner's income. [45] This decision is supported in another Ontario case - Ross v. Gedcke (2005), 25 R.F.L. (6th) 188, [2005] O.J. No. 5844 (S.C.J.). In discussing whether to include these benefits in calculating income for child support purposes, the court held at para. 48: [48] The case law is also clear that no "adjustment" in child support payable should or can be taken into account because Christopher and Carley (and Jonathan, before his death) received and still receive C.P.P. benefits directly. See Blain-Hughes v. Blain (1998), 39 R.F.L. (4th) 327, [1998] O.J. No. 3011, 66 O.T.C. 1, 1998 CarswellOnt 2965 (Ont. Gen. Div.); Vickers v. Vickers (2001), 194 N.S.R. (2d) 268, 2001 NSCA 96, 606 A.P.R. 268, 201 D.L.R. (4th) 65, 18 R.F.L. (5th) 431, [2001] N.S.J. No. 218, 2001 CarswellNS 194 (N.S.C.A.) and Fritschij v. Bazan (2004), 183 Man. R. (2d) 98, 2004 MBQB 81, 2 R.F.L. (6th) 35, [2004] M.J. No. 123, 2004 CarswellMan 139 (Man. Q.B., Fam. Div.). The purpose of C.P.P. child benefits is to directly assist the child to compensate for his or her parent's diminished ability to earn income. The payor may not take advantage of that separate or other support received by the child(ren) directly. [Emphasis added] [46] In this case, one of the children was under the age of 18. [47] In my view, the children's portion of Mrs. Janzen's CPP disability benefits should not be included in Mr. Janzen's income. [48] The SSAG provides three bases for including various child-related benefits in a spouse's income at s. 6.3: Under the with child support formula, included in each spouse's income are the amounts identified for various child-related government benefits and refundable credits: the Canadian Child Tax Benefit, the National Child Benefit Supplement, the GST credit (including any portion for the children), the refundable medical expense credit, the Child Disability Benefit, and the various provincial benefit and credit schemes. Under the Federal Child Support Guidelines, these benefits and credits are not treated as income for table amount purposes: see note 6 to Schedule I. There is some controversy about their consideration for section 7 purposes, or for the determination of undue hardship under section 10, with a number of judges now including them. For lower-income custodial parents, typically the support recipients, these amounts are significant. As for payors, only low-income spouses obtain any of these, basically the GST Credit, and most of these low-income spouses will not be paying spousal support. In some circumstances, the custodial parent and recipient of these benefits and credits will also be the payor of spousal support. We did consider backing out the child portion of these benefits, since the bulk of the benefits and credits are tied to the children of the marriage in the recipient spouse's care, e.g. the Child Tax Benefit, the child portion of the GST Credit, and the various provincial programs. The logic of doing so would be similar to that applied in respect of the spouses' child support obligations, i.e. to get at the remaining net disposable income available to the spouses as individuals. In the end, we decided to include these child-related benefits in income under the with child support formula, for three reasons. First, these benefits and credits reduce, sometimes dramatically, with increasing amounts of spousal support transferred to the recipient spouse, especially through the lower and middle income brackets. Including these benefits and credits in the recipient's income gives a much clearer picture of the impact of spousal support upon the recipient's actual net disposable income. Second, some fine lines would have to be drawn between child- and non-child related portions of these benefits and credits. A precise disentanglement would be complicated and for little practical gain. Third, for lower income recipient spouses, these amounts are sizeable, more than $7,000-$8,000 annually for two children. Their removal would produce significantly higher amounts of spousal support, which would cause significant hardship for payor spouses, especially those with lower incomes, unless the formula percentages were adjusted. [49] A close review of these considerations demonstrates how the pension benefits at issue are distinct from the enumerated benefits and credits. In this case, these three considerations are not at play. First, there is no impact on the amount of the benefits due to spousal support. The benefits remain the same. Second, it is clear which portion of the benefits is for the child, so no complex disentanglement is required. The third basis relates to the more typical case where exclusion of the benefits from the recipient's income would result in higher amounts of spousal support payable. This hardship on the payor is what the exclusion seeks to avoid. Here, including the benefits (rather than excluding them), will result in higher spousal support. Inclusion will create the hardship that is meant to be avoided. [50] Therefore, the total amount of Mr. Janzen's Guideline income for purposes of calculating spousal support is as follows: Employment earnings: $24,830.00 Other employment earnings (tips): $7,000.00 Rental income: $6,000.00 Total: $37,830.00 QUANTUM [51] Spousal support is governed by s. 15.2 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp). The factors to consider are set out at subsection (4) as follows: Factors (4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited; (b) the functions performed by each spouse during cohabitation; and (c) any order, agreement or arrangement relating to support of either spouse. [52] The objectives to be achieved in a spousal support order are set out in subsection (6): Objectives of spousal support order (6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown; (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage; (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time. [53] Entitlement was not disputed. Determining quantum is challenging. [54] Mr. and Mrs. Janzen had a marriage of some duration - approximately 13 years together. Mrs. Janzen's health does not permit her to work. But for their separation, she would have had the benefit of Mr. Janzen's support. As a result, she has suffered an economic disadvantage arising from their marriage breakdown. Her CPP dependent's benefit is of some assistance to the children, but otherwise, Mr. Janzen bears the cost of their care. [55] Spousal support is required to relieve Mrs. Janzen's obvious economic hardship. Her health prevents her from self-sufficiency and always will. To borrow the words of Pierce J. in Fraser, Mrs. Janzen is: entitled to live in dignity, and enjoy the same pleasures in life as [her husband]. These pleasures include spending time with the children and providing them with gifts of clothing and congenial experiences. A support order that keeps [her] in poverty could only compromise [her] health and well-being. [56] Assessing the amount of support here is difficult. Mr. Janzen bears most of the cost of caring for the children. There is clearly not enough money to go around. The SSAG calculation reflects a range of award between $289.00 and $385.00 per month. [57] In my view, an award of $385.00 per month balances the factors I have outlined in light of the objectives such an award must strive to achieve. [58] The order will commence on July 1, 2014, and continue on the first day of each and every month thereafter until further order of the court. [59] Costs will be in the cause. "S.A. Donegan J." DONEGAN J.