T.A.Z. v. R.D.Z.

2013 BCSC 2334 T.A.Z. v. R.D.Z. IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: T.A.Z. v. R.D.Z., 2013 BCSC 2334 Date: 20131219 Docket: 19242 Registry: Penticton Between: T.A.Z. Claimant And R.D.Z. Respondent Before: The Honourable Mr. Justice Rogers Reasons for Judgment Counsel for the Claimant: C.A. Schneiderat Counsel for the Respondent: K.J. Robinson Place and Date of Trial/Hearing: Penticton, B.C. December 4, 2013 Place and Date of Judgment: Penticton, B.C. December 19, 2013 Introduction [1] These are competing applications for retroactive and prospective variation of the parties' child support obligations in a shared parenting regime. The main issues concern the time that the children have spent in each parent's care, the respondent's income from his closely-held corporation, and the amount of support for the eldest child while she attends post-secondary education. The Facts [2] The parties were married on February 5, 1993. They have two children: T, born July 23, 1993 and now 20 years old; and K, born January 15, 1996 and now 17 years old. The parties separated in May 1999. In February 2001, they negotiated a settlement of their family dispute. The parties were divorced on May 30, 2001. [3] The settlement agreement stipulated that Mr. Z's net annual income from his closely held plumbing business was $58,000 and that Ms. Z's annual income from her part-time business as a bookkeeper was $6,000. The agreement provided that the parties have joint custody of the children and that they live primarily with Ms. Z. Mr. Z agreed to pay to Ms. Z child support of $800 per month, reviewable annually upon an exchange of income tax returns by May 15th of each year. The parties agreed to share the children's Guideline s. 7 expenses in the proportion that their incomes bear to one another. They agreed that the s. 7 expenses comprised: · Non-insured medical and dental expenses; · All costs of education except customary and recurring expenses such as clothing, food, gym kit, and transportation to and from school; · Future expenses arising after the agreement was made and which qualify as s. 7 expenses. [4] The agreement provided that present or future s. 7 expense must not include: · School sponsored excursions costing less than $100; · Any athletic or recreational activity that is not school sponsored. [5] In 2004, Mr. Z made an application to vary his obligation to pay child support. On April 16, 2004, Metzger J. found that the children spent approximately 45 percent of the time with Mr. Z and 65 percent with Ms. Z. Metzger J. found that the parties' incomes were $58,000 for Mr. Z and $20,000 for Ms. Z. Based on those data, the order required Mr. Z to pay child support of $800 per month. [6] Mr. Z says that from 2004 to March 2011, the children lived approximately equally with their parents. Ms. Z disagrees: she says that the children lived primarily with her during this time. Neither party adduced evidence to corroborate their position on this issue. It is clear, however, that from 2004 to the end of 2012, Ms. Z was content to abide by the terms of the 2004 order. It is more likely than not that if the children were primarily living with her, she would have made an application at some point during that period to bring Mr. Z's child support obligation into accord with that situation. I find that it is more likely than not that the children spent approximately 45 percent of the time with Mr. Z during that period. [7] The parties agree that between March and September 2011, K lived primarily with Mr. Z. They also agree that from September 2011 to the present, K has spent alternating weeks with her parents. [8] The parties also agree that from February 2011 to September 2011, T lived primarily with Ms. Z. In September 2011, T moved to Vancouver to attend Simon Fraser University. Between May and August 2012, T returned to live primarily with Ms. Z. Mr. Z paid $800 to Ms. Z for child support for those four months. [9] T turned 19 in July 2012. In September 2012, T went back to the Lower Mainland and resumed her studies at SFU. T has elected to take four courses per term rather than the usual five. So that she may graduate in four years rather than five, T expects to take additional courses in the summer months. That decision has and will limit her opportunity to work and save for her education. [10] I accept as reasonably accurate Ms. Z's chart of T's university expenses attached to Ms. Z's November 2013 Form 8. I find that T's education costs have been: 2011 Admission Fee $ 190 Tuition (Sept. 2011 Term) 2,457 Service & Other Fees 492 Books & Supplies 400 Sub-Total 3,539 2012 Tuition (Jan. & Sept. 2012 Terms) 4,503 Service & Other Fees 586 Books & Supplies 800 Sub-Total 5,889 2013 Tuition (Jan., May & Sept. Terms) 6,376 Service & Other Fees 360 Books & Supplies 1,050 Sub-Total 7,786 [11] In addition to those costs, T has incurred expense as a result of living on her own. In her first two terms of university, her residence fees were on the order of $5,060 plus dining fees of $2,250. That works out to approximately $3,650 per term. She now lives in an apartment. Her expenses for rent, food, and personal spending per month are on the order of $600, $250, and $100 respectively. That works out to approximately $950 per month. [12] Based on those data, the hard costs of T's university education - for items such as tuition, mandatory student fees, transit pass, and books and supplies - is $3,000 (rounded) per term. Her rent and food costs are approximately $950 per month. The total is about $6,400 per term. [13] T has contributed to her education costs. In her first two terms, she contributed scholarships of $4,500. She also contributed approximately $4,200 from her own savings. T did not earn money in the summer of 2013 because she was attending summer classes. In 2013, T obtained a scholarship of $1,857 and a student loan $1,353. [14] In October 2011, Mr. Z transferred $3,907 to T directly for her use against her education expenses. Mr. Z transferred $4,000 to T in each of September 2012 and January 2013 for the same purpose. According to Ms. Z's November 2013 Form 8, Mr. Z transferred $3,600 to T for the 2013 fall semester. [15] Mr. Z paid child support as required until July 2011. Since then, he has transferred the sums noted above to T and has paid $800 for the four months of May to August 2012. [16] Mr. Z's financial statement shows that his incomes have been as follows: Year Line 150 Corporate Income Total Available Retained Earnings Pre-Tax Income 2009 $58,543 $77,101 $49,203 $27,898 2010 50,714 29,605 18,779 10,826 2011 54,255 40,952 8,233 32,719 2012 43,795 62,232 14,508 47,724 [17] Ms. Z's financial statement asserts that her income has been: Year Line 150 2008 $16,500 2009 14,800 2010 15,100 2011 18,900 2012 20,317 [18] According to her affidavit evidence, from January to October 2013, Ms. Z earned net income of $22,900. When extrapolated to an annual figure, that evidence suggests that Ms. Z's income for 2013 will be approximately $24,000. The Applications [19] By his application filed October 10, 2012, Mr. Z seeks the following orders: · Canceling his obligation to pay child support for T; · Varying his obligation to pay child support for K to $400 per month based upon shared parenting; · Canceling his obligation to pay child support for K in the event that K should live with him for more than one month (Mr. Z has abandoned this claim); · Requiring Ms. Z to pay child support for K in the event that K should live with Mr. Z for more than one month (Mr. Z has abandoned this claim); · That the parties contribute to K's Guideline s. 7 expenses in the proportion that their incomes bear to one another; · Cancelation of arrears of child support; · Mr. Z pay $8,000 and Ms. Z pay $4,000 directly to T for her post‑secondary education expenses; · An order that in the event that K reaches 19 years and is taking post‑secondary education, Mr. Z pay $8,000 and Ms. Z pay $4,000 directly to K for her post-secondary education expenses; and · Costs. [20] Ms. Z opposes all of those items of relief. [21] By her application filed January 24, 2013, Ms. Z seeks the following orders: · Mr. Z's income for 2009, 2010, and 2011 be imputed to be an amount greater than the amount reported by Mr. Z as his Line 150 income for those years; · Mr. Z pay retroactive child support in accord with his imputed income for the years 2009, 2010, and 2011; · Mr. Z's obligation to pay ongoing child support be varied in accord with his imputed 2012 income; · Mr. Z pay $17,123 to Ms. Z for past Guideline s. 7 expenses; · Mr. Z pay 75 percent and Ms. Z pay 25 percent of ongoing s. 7 expenses; · Mr. Z provide full financial disclosure, including business records of [DZP] Ltd.; and · Costs. [22] Mr. Z consents to an order for full financial disclosure of his company's business records, and he opposes the balance of the items of relief. [23] Ms. Z's demand for production of Mr. Z's financial records has been outstanding for many months. Ms. Z elected to press ahead with her application rather than wait until she has reviewed those records. Positions of the Parties Mr. Z [24] Mr. Z argues that his Line 150 incomes for 2010 to 2012 should be employed to determine his child support obligations for those years. He says that he is content to have his 2013 income fixed at $58,000 per year. [25] Mr. Z says that it is not reasonable to burden Ms. Z and him with all of T's education and living expenses. He says that T has an obligation to contribute to her university and living expenses, even if that requires her to extend her studies by a year in order to work during the summer months. That said, Mr. Z is prepared to contribute $4,000 per term to T's education. He says that Ms. Z should contribute in accord with her income. [26] Mr. Z acknowledges that he is liable for some retroactive child support. He asks that he be permitted to reduce those arrears by regular monthly payments without penalty or risk of FMEP enforcement process. Ms. Z [27] Ms. Z suspects that Mr. Z has deducted personal expenses from his corporate income, thus artificially reducing his income for the purposes of child support. She seeks production of the financial records for Mr. Z's company. [28] Ms. Z says that her income should be fixed at $20,000 per year. [29] Ms. Z says that Mr. Z is in arrears of child support from July 2011 to the present. Issues and Discussion Income for the Purpose of Child Support [30] The parties have provided some empirical data concerning their incomes. Those data suggest that Ms. Z's 2013 income will be about $24,000. Mr. Z's company has not completed its 2013 year end statements, but the company's financial statement for 2012 shows that its retained earnings and pre-tax income totaled about $62,000. If some working capital is left on the company's books, the corporate income available to Mr. Z in 2012 was probably closer to $60,000 than $58,000. [31] Notwithstanding those observations, I am persuaded to accept Mr. and Ms. Z's submissions that their current annual incomes are $58,000 and $20,000 respectively. I have come to that view for several reasons. The first reason is that the parties are both self-employed and their incomes naturally fluctuate somewhat. The figures that they have submitted fit within the rough parameters of the variations that their incomes have undergone in the past several years. A second reason for accepting the parties' submissions on their current incomes is that because neither party knows with any precision what their 2013 incomes will be. Any assessment of their current incomes cannot be based on a calculation but must necessarily be based instead on an estimate. Where calculation is not possible, the court must necessarily rely on estimation. I find that the estimates of $58,000 and $20,000 are within the bounds of reason for Mr. and Ms. Z. [32] Ms. Z eschewed a postponement of the application in order to complete a forensic examination of Mr. Z's records. In order to provide the parties with finality and certainty, I find as a fact that the income figures noted above are accurate. Any argument Ms. Z may wish to make that Mr. Z improperly expenses personal costs may be made in respect of future income but may not be raised to adjust my findings of past and current income. Retroactive Support [33] I note that my findings of the parties' current incomes are exactly coincident with the terms of the 2004 order. The financial data show that Mr. Z's income in 2009, 2010 and 2011 was less than the $58,000 stipulated in the 2004 order. Those data also show that Ms. Z's income was probably less than $20,000 during that period as well. Yet Mr. Z paid and Ms. Z accepted without complaint payment of child support of $800 per month from 2004 through to July 2011. It appears from those facts that Mr. Z probably over paid child support but that he did so voluntarily and in compliance with the 2004 order. It was not until T went to university that the parties were motivated to apply to adjust their respective child support obligations. General Section 7 Expenses [34] I find that for the purposes of retroactive and ongoing support, T's tuition and associated mandatory student fees and her books and supplies are Guideline s. 7 expenses. Those expenses are not exempted by the parties' separation agreement. I find that the parties were obliged to contribute to those expenses in the proportion that their incomes bear to one another. Given the parties' incomes, the ratio works out to 74 percent to Mr. Z and 26 percent to Ms. Z. [35] Ms. Z seeks contribution from Mr. Z for the girls' dance lessons since 2001. She adduced no evidence that dance lessons were something other than a fitness or recreation activity not sponsored by a school. By the terms of the parties' separation agreement, the dance lessons cannot be considered Guideline s. 7 expenses. Ms. Z's claim for contribution for those expenses must be dismissed. Basic Support July 1, 2011 - August 31, 2012 [36] I infer from the fact that there was a lengthy period of peace on the support front between the parties that they had tacitly agreed to the $800 per month payment notwithstanding that a close examination of their financial circumstances would likely have produced a different result. I find that between 2004 and 2011, the parties operated under the terms of an agreement that $800 per month was an adequate and proper amount of support to be paid by Mr. Z to Ms. Z. It was not unreasonable nor was it improper for the parties to have come to that agreement. I find that there is not sufficient cause to disturb it. [37] Further, K's decision to live with Mr. Z from March to August 2011 and T's decision to spend most of her time with Ms. Z from February to August 2011 were temporary adjustments in their schedules. They were not the kind of significant and continuing changes that would merit a variation of their parenting plan or the existing child support regime. For those reasons, I am not persuaded that a retroactive adjustment of the support regime should be made for the period before the beginning of September 2011. That is to say for the first eight months of 2011, Mr. Z was obliged to pay to Ms. Z child support of $800 per month. Mr. Z failed to pay support for the months of July and August of that year. [38] T went to university in September 2011. In my view, it was and is in T's best interests to learn to budget her money and to practice managing her finances. For that reason, I believe that it would be a good and useful thing for her to receive support funds directly from her parents. It would not, however, be in her best interests to make her responsible for collection of support payments. If an order were to go requiring Mr. Z to pay support to T directly, then only T could take enforcement proceedings. I think that would put an unfair and unreasonable burden on this young lady. For those reasons, I order that from September 2011 to the present, Mr. Z must continue to pay child support to Ms. Z for both K and T but that for the purposes of accounting and enforcement, a direct transfer of money from Mr. Z to T shall be deemed to be a payment to Ms. Z of support for T. [39] When T left for university in September 2011, she was still under the age of majority and had not withdrawn from her parents' support. As such, during that time T was still a child of the marriage. I find that Mr. Z's obligation to pay $800 to support T and K continued from September 2011 through to the end of July 2012 when T became 19 years old. [40] Based on the foregoing, I find that Mr. Z ought to have paid basic support of $800 per month for K and T from July 1, 2011 to August 31, 2012. The total amount of basic support that ought to have been paid in that 14-month period is $11,200. Section 7 Expenses July 1, 2011 - August 31, 2012 [41] For the period September 2011 to end of April 2012, T's s. 7 expenses for tuition, mandatory student fees, and books and supplies totaled $6,360. T's scholarships covered $4,500 of those expenses, leaving $1,860 to be paid by the parties. Mr. Z's share of that sum was $1,376. Basic Support September 1, 2012 - December 31, 2013 [42] From September 2012 through to the present, K was underage and living equally with her parents. K's support must still be determined by reference to s. 9 and the Tables. The set off of Table amounts for parents with the parties' incomes in a shared parenting regime for one child is $537 - $174 = $363. I find that is the proper amount to be paid by Mr. Z for K's support from September 2012 to the present. Mr. Z has not paid any support for K during that period. He is 16 months in arrears and so owes a total of $5,808. [43] T, on the other hand, was 19, was still in university, and was living away from home. Although T remained a child of the marriage, because she was living on her own and contributing somewhat to her own support, it is not appropriate to use the Guideline Tables to determine the proper level of child support for her. The authority for departing from the Table amount for a child who has reached the age of majority is found in s. 3(2)(b) of the Guidelines. [44] Ms. Z would have the parties indemnify T for all of her living expenses while she is at university. Mr. Z is prepared to contribute to T's living expenses, but says that it is unreasonable for her to go to school in the summers and thus forgo an opportunity to earn money for her own support. [45] I have found that the parties are obliged to contribute pro-rata to T's s. 7 expenses. I accept Ms. Z's estimates of T's per month living expenses at $600 for rent, $250 for food, and $100 for spending money. That works out to about $950 per month. In 2013, she contributed scholarships and a student loan totaling $3,210. [46] It would not be unreasonable to expect that as a child of parents of modest means, T should contribute to her education either by working and saving during the summer months or by working part-time during the school year. In my opinion, it would be reasonable for the parties to contribute a total of $500 per month for T's basic support. It is convenient to employ the s.7 ratio to determine the parties' respective contribution to T's basic support. I find that from September 2012 to December 31, 2013, Mr. Z's monthly obligation to support T was $370. Mr. Z's total obligation for this period was $5,920. Section 7 Expenses September 1, 2012 - December 31, 2013 [47] T's tuition, mandatory student fees, and books and supplies for the period September 1, 2012 to December 31, 2013, totaled $7,335. Mr. Z's share of those s. 7 expenses was $5,428. Support Paid by Parties [48] Mr. Z has paid $3,200 for May to August 2012 and has transferred to T a total of $15,507. The total support Mr. Z has paid from July 1, 2011 to December 31, 2013 is, therefore, $18,707. Summary: Mr. Z's Past Support Obligations Item Total Mr. Z's Obligation Basic Support for Both Children July 1, 2011 to August 31, 2012 $11,200 $11,200 Section 7 Expenses for T September 1, 2011 to April 30, 2012 1,860 1,376 Basic Support for K September 2012 to December 31, 2013 5,808 5,808 Basic Support for T September 2012 to December 31, 2013 9,600 5,920 Section 7 Expenses for T September 2012 to December 31, 2013 7,335 5,428 Sub-Total $35,803 $29,732 Paid by Mr. Z 18,707 Net Arrears of Support $11,025 [49] For the sake of simplicity, I would round the net arrears down to $11,000 and declare that to be the amount of arrears owed by Mr. Z to Ms. Z. Time to Pay [50] Mr. Z submitted that in the event he was found to be liable for arrears of support, he should be allowed to reduce the arrears by regular monthly payments. That is a reasonable request. Mr. Z may reduce the arrears by monthly payments to Ms. Z of $200 commencing February 1, 2014. For so long as Mr. Z makes those payments, he shall not be liable for interest or penalties on the arrears. Ongoing Support [51] I find that the parties' incomes for the purposes of ongoing support are $58,000 and $20,000 as noted earlier. [52] Based upon equal parenting of K, Mr. Z's obligation to pay basic support to Ms. Z for K shall be $363 per month commencing January 1, 2014, and on the first of every month thereafter for so long as K remains a child of the marriage. [53] For so long as T remains a child of the marriage, the parties will contribute to T's s. 7 expenses in the proportion that their incomes bear to one another. For the present, that ratio is 74 percent for Mr. Z and 26 percent for Ms. Z. While she attends university, T's s. 7 expenses shall be deemed to be comprised of her tuition, mandatory student fees, and books and supplies. While she attends university, Mr. Z's obligation to provide basic support for T will be $370 per month commencing January 1, 2014. The order flowing from these reasons shall stipulate that Mr. Z's support for T shall be paid to Ms. Z and that a direct transfer of funds from Mr. Z to T shall be deemed to be a payment made by him to Ms. Z. Costs [54] The parties are at liberty to make submissions as to costs of their applications. "P.J. Rogers, J." The Honourable Mr. Justice Rogers