Tataryn v. Kriese

2024 BCSC 75 Tataryn v. Kriese

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Tataryn v. Kriese, 2024 BCSC 75 Date: 20240116 Docket: S5467 Registry: Golden Between: Justin James Tataryn Claimant And Nicole Lee Kriese Respondent Before: The Honourable Justice Armstrong Reasons for Judgment Counsel for the Claimant: J.T. Van Allen Counsel for the Respondent: D.F. Collins Place and Date of Hearing: Cranbrook, B.C. August 22, 2023 Place and Date of Judgment: Golden, B.C. January 16, 2024 Introduction [1] The parties commenced cohabitation in 2006 and were married in June 2009. They separated on or about November 1, 2020. The claimant is 48 years of age and the respondent is 46 years of age. [2] There are two children of the marriage, D.T. born February 2007, and L.T. born June 2009. The parties currently share equal parenting of the children on a two-week-on, two-week-off basis. [3] This matter is set for trial in June 2024 and these reasons address the respondent's application for interim child support and interim spousal support. The respondent concedes that claims for support retroactive to January 1, 2021 will be decided at trial. [4] The claimant generates his income working for a corporation, 0830847 BC Ltd., doing business as Horizon Unlimited ("Horizon"). Horizon is a construction and sales business that sells prefabricated building packages for another entity, Winton Homes ("Winton"). The respondent

and claimant each own one half of the shares of Horizon and I have been provided with its financial statements up to and including 2022. [5] There is no indication in the materials whether both parties are directors of Horizon or if the claimant is the only director although there was some indication and submissions that the respondent ceased to be a director. It appears there have been no annual general meetings for Horizon and the claimant seems to direct Horizon's accountant in the preparation of financial statements for the company and its income tax returns. [6] It is clear from the material that the respondent has no role in the management of Horizon and is not involved in decisions concerning the declaration of dividends by it to the claimant. However, in 2016 and 2020 the respondent received dividends from Horizon of $11,700 and $21,850 respectively. [7] Horizon has had contracts with Winton through which it sells fabricated building packages and receives a 10% commission based on the value of each unit sold. The claimant contends 2022 was an exceptional year in which he made commissions of $37,395, $57,560, and $24,596 on three separate sales with overall 2022 commissions from Winton totaling $144,452. From January 2023 up to June/July 2023, the claimant's commissions with Winton were $38,892. [8] In the past, the respondent worked for Horizon and was paid by the

corporation for bookkeeping services. She also worked for the local school district following which she became a "full-time property manager" that included the claimant's development of a property on Upper Donald Road ("UDR") along with his brother. [9] By 2018, the respondent developed chronic back pain, fibromyalgia and chronic headaches. Post-separation, she did not receive support from the claimant and tried to return to work at the school district where she was offered a permanent position as an educational assistant. She contends her physician advised her not to continue employment and she is currently in receipt of disability insurance payments of $23,679 annually. [10] Notwithstanding the respondent's assertion that her doctor advised her to discontinue her employment, the doctor's November 14, 2022 letter suggests she should stop work for between six and twelve months after which she could be re-evaluated for some type of employment. In the respondent's last affidavit sworn August 16, 2023, the respondent did not address events after November 14, 2022 and whether her doctor's opinion has changed or remains the same. In her third affidavit she said only that "I no longer do any guiding" (the respondent's chosen occupation in the past was that of an outdoor guide). In the absence of evidence concerning her current level of disability, I cannot conclude whether or not she

is unable to work at some type of employment. This will be a question to be decided at trial. Properties [11] The parties listed six properties located in Golden, BC, owned entirely or in part by them as follows: a) a residence on Alexander Drive, with an appraised value of $513,000; b) a residence on 10th Street, with an appraised value of $412,000; c) a second residence on 10th Street, with an appraised value of $458,000; and d) three properties on UDR, with appraised values of $470,000, $151,000, and $789,000. [12] The total value of these properties is $2,793,000. There are mortgages outstanding in regard to these properties representing a total indebtedness of $525,115. [13] Until the parties separated, the respondent recorded the incomes from renting their various properties on her tax returns but the claimant did not report that income for tax purposes. After separation and for the year 2022, the claimant did not report any rental income, whereas the respondent continued to report income received from the two 10th Street properties and the Alexander Drive property. Although the claimant resided in one of the UDR properties, I could not discern what, if any, rental income was received for that residence in 2022. [14] Neither party explained what has become of the UDR properties other than the respondent's assertion that one lot has been transferred to the claimant's

brother. Neither party has explained whether these UDR properties are rented; I understood that the claimant resided in one of the properties but there is a dearth of information concerning them. In 2020, the respondent reported income from the UDR properties on her tax return but did not report that income in 2022. The claimant does not appear to have reported any income from those properties at all. [15] Given the lack of disclosure and clarity in the information provided, I will attribute income for these properties to the respondent because she has reported income from same on the 2022 tax returns. At trial, there may be more information to inform the court concerning the details related to these properties. [16] Each party has an excluded property claim and this interim application is not an appropriate time to delve into these issues. [17] Without taking into account the propriety of deductions from income stemming from the rental properties, I accept that the respondent's income from these properties is in the order of $26,713 per year. In the absence of evidence, I do not attribute any rental income to the claimant's income for support purposes. The Parties' Non-Rental Incomes The Respondent [18] The respondent's recent line 150 incomes were $57,014 for 2020; $50,339 for 2021; and $39,912 for 2022. [19] In addition to these sums, the respondent receives a BC bonus and

social assistance payment of nearly $12,500 per year (not subject to tax) and an amount in the order of $3,000 which is paid for assistance to one child. The respondent deposits this money into an RESP account but uses those funds for discretionary expenses required by their son. [20] On this application, there is too little information concerning the source of these funds and any restrictions that might be attached. Nonetheless, the respondent is able to use these funds to meet the child's needs. [21] It was apparent from submissions and the evidence that the respondent may be entitled to a Canada Pension Plan disability income payment. She has not applied for that payment and I was not informed if there was any estimate of that payment. Thus, I do not take that possibility into account, although the trial judge will certainly be better situated to assess that aspect of her finances. [22] The respondent contends she is unable to work or contribute at all to her own support. As noted above, I do not accept her assertion that she is incapable of earning any type of income at the present. The medical evidence she tendered on this application does not support her contention at this time. There is simply a paucity of evidence to assist the Court in determining whether the respondent has a residual capacity to work and earn income. [23] The claimant cites various activities reported

to him that indicate the respondent's physical capacity is greater than she claims. This claim was based, in part, on an affidavit #4 tendered by the respondent in part to demonstrate that she is more physically able than claimed. This affidavit was delivered well out of time and should not be accepted. In any event, even if admitted, it provided little assistance to the court. However, this is an interim application; there has been no cross-examination on affidavits and there is simply insufficient evidence to support an imputation of income greater than set out in the financial data available. [24] The claimant also contends that the respondent's income should be grossed up to reflect $12,500 in child benefits she receives from government without a tax burden. I was provided no detail on how a tax gross up on these funds would operate. This is a matter that can be appropriately addressed at trial. [25] In the respondent's February 2022 F8 statement, she discloses a series of financial assets reflecting an RRSP, savings, and an RESP totaling $121,000. The RESP is money set aside for education of the parties' children (most directly, their child with special needs). Although the respondent may be able to access that money, I cannot make a finding based on the information available at this stage to include that money as income for support purposes. [26] The claimant said that

the respondent owns an Elite high interest savings account valued at $41,901. Interestingly, the respondent failed to include that asset in her financial statement and did not address the claimant's assertion when she responded to his June 23, 2023 affidavit. Absent any other evidence on the point, I impute income to the respondent that she earns or is likely to earn at the rate of 5% per annum or $2,100 per year. [27] The respondent's other financial assets may be available for support purposes but the evidence is simply unclear at this time. Again, on an interim application the court is not expected to engage in a detailed examination of things such as interest rates on savings when the evidence is not before the court. [28] The respondent indicated she was not presently able to rent the Alexander Drive property because of electrical difficulties. There was no indication about the costs to remedy problems in that residence or her ability to locate a new tenant. In the past, the respondent has charged substantial repair and maintenance costs as deductions from her rental incomes. In my view, the best evidence concerning the respondent's income is reflected in her previous financial costs set out in income tax returns and includes all rental income that might be earned from the properties. [29] Claimant's counsel sought an imputation of income to the respondent at $59,851.

However based on the above, I impute income to the respondent for spousal and child support purposes as follows: a) disability income: $23,676 b) rental income: $26,713 c) government benefits for the children: $12,500 d) interest on the respondent's high-interest account: $2,100 Total: $64,989 [30] On the submissions made by claimant's counsel, they seek an imputation of income to the respondent at $59,851. The Claimant [31] The claimant's income for child and spousal support purposes is more complicated to assess. This issue turns on what funds are available to the claimant for the support of the parties' children and the respondent. [32] In this case, the parties advanced reciprocal claims for interests in family property. It is noteworthy that they each hold one half of the shares in Horizon and it is the shares that will comprise part of the family property to be divided at the trial. This is significant because the retained earnings at the end of 2021 were $129,216 and $275,309 at the end of 2022. In my view, the retained earnings in Horizon will be reflected in the share values that will likely be divided at trial based on the shareholdings of the parties. [33] This is significant to the extent that the amount the respondent seeks to impute as income to the claimant (between $200,000 and $275,000) will reduce the value of the shares in Horizon she would otherwise be

entitled to. All or substantially all of the pre-tax profits earned in Horizon's business reflected in the company's before tax income for 2022 may not be available for support purposes. However, at this juncture she contends these amounts could be available to the claimant to support the respondent and their children and should form the basis of child support calculations. [34] In assessing the history of the claimant's past income, in 2020 the claimant received dividend allocation of $ 21,850,and in 2021 Horizon declared dividends to him of $30,000 (grossed up $34,500) which were received and taxed in his name. Similarly, in 2022 Horizon paid a dividend of $100,000 to the claimant (grossed up amount of $115,000) which was taxed in his hands. In submissions on this application, the respondent did not address the question of her entitlement to retained earnings in Horizon; rather she claims the entire undistributed income in Horizon is available to pay support. [35] In 2021, the claimant received $72,000 as employment income and his line 150 income was $106,500, taking into account the dividends paid. There was a change in 2022 when he received no employment income; his line 150 income of $115,000 was composed of declared dividends. Retained earnings in Horizon increased in 2022 by $146,000. [36] The claimant also contends that Horizon needs to retain funds in the company to

pay for expenses including materials, equipment maintenance, project deficiencies, as well as callback and labour demands. Horizon has never paid out the entirety of its profits to the shareholders or to the claimant by way of salary. At year-end 2021, retained earnings stood at $129,000. The cash assets held by Horizon at the end of 2021 were $84,548 and $246,605 by year-end 2022. [37] At the end of 2019, Horizon held $90,968 in cash, and by year-end 2020, $65,491 in cash. Thus, for the purposes of calculating ongoing support, it is clear to me that Horizon has no historical need to retain more than $100,000 of its cash assets to assist in its needs for the upcoming year. [38] In determining the claimant's income for support purposes, the respondent asks the Court not to consider averaging his income over the prior three years. She contends that, if the Court is not prepared to find that the claimant's income is $276,690 there should be an imputation of income to the claimant of $200,000 for that year. [39] The claimant contends that his line 150 income was $95,798 for 2020; $106,500 for 2021, and $115,000 for 2022. He anticipates his 2023 income will be as little as $98,000. The claimant contends that the income set out in Horizon's financial statements does not fairly or accurately reflect the amount of income he has available to pay support. He contends that the income for

the company fluctuates annually and that the income for 2022 was an anomaly. He contends that one part of his business involves selling prefabricated homes for a single client, Winton, which in 2022 generated a substantially higher income than he earned in previous years. [40] The claimant said an exceptional year such as 2022 is not likely to be repeated. Payments received from Winton had been in the range of around $31,000 and $54,000 between 2018 and 2021. In 2022, payments from Winton were $144,452 and for the first six months of 2023, those payments were $38,892. [41] The claimant believed the 2023 income would more likely be in the range of $90,000 and, insofar as this represents the most recent financial information, that sum should be prorated and considered as the income available to pay support. [42] I have made some observations concerning the 2022 Horizon statements. Between 2018 and 2020, the cost of property, plant and equipment rose $5,000. In the same period, the accumulated amortization rose more than $30,000. In 2021 and 2022, depreciation expenses rose $26,900. It is clear to me Horizon is not in the habit of acquiring new plant and equipment at or near the amount of depreciation claimed. Thus, there is a component of depreciation which ought to be added back into the company's income to allow the claimant to pay support. Interestingly, the claimant said that

a new accountant had recommended that he take money from the company by way of dividends as opposed to salary, presumably due to the tax advantage in following that plan. [43] Overall, Horizon's income before taxes and dividends but after salaries paid to the respondent, for the years 2017 to 2022 were as follows: a) 2017: $4,292; b) 2018: $40,242; c) 2019: $34,476; d) 2020: ($450); e) 2021: $65,662; and f) 2022: $276,690. Legal Framework [44] These are interim applications for child support and spousal support. Interim applications are not intended to resolve all factual disputes or legal issues that are more properly dealt with at trial. The generally accepted principles were set out by Master Keighley in Robles v. Kuhn, 2009 BCSC 1163: [12] On interim support applications, the application of these provisions must be qualified by certain established considerations: 1. On applications for interim support the applicant's needs and the respondent's ability to pay assume greater significance: Gibb v. Gibb, [2005] B.C.J. No. 2730 (S.C.); 2. An interim support order should be sufficient to allow the applicant to continue living at the same standard of living enjoyed prior to separation if the payor's ability to pay warrants it: Grossi v. Grossi, [1993] B.C.J. No. 878 (S.C.); 3. On interim support applications the court does not embark on an in-depth analysis of the parties'

circumstances which is better left to trial. The court achieves rough justice at best: Randhawa v. Randhawa, [1999] B.C.J. No. 3299; Newson v. Newson, [1998] B.C.J. No. 2906, 65 B.C.L.R. (3d) 22 (C.A.); 4. The courts should not unduly emphasise any one of the statutory considerations above others; 5. On interim applications the need to achieve economic self-sufficiency is often of less significance; 6. Interim support should be ordered within the range suggested by the Spousal Support Advisory Guidelines unless exceptional circumstances indicate otherwise: Ladd v. Ladd, [2006] B.C.J. No. 1930, 2006 BCSC 1280 (S.C.); 7. Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out: LG.B. v. M.A.C.M., [2005] B.C.J. No. 2966, 2005 BCSC 1786 (S.C.); 8. Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support: L.G.B. [45] In many respects, interim applications are intended to provide "rough justice" and remedies that will address the short-term needs of the parties until trial: see Ducharme v. Rempel, 2016 BCCA 198 at para. 40. [46] Child support is determined in accordance with the Federal Child Support Guidelines, SOR/97-175 [Guidelines] including the establishment of support for children that ensures they

continue to benefit from the financial means of each parent: see Guidelines, s. 1. [47] The Guidelines set out the framework for determining a spouse's annual income for support purposes when there is an anomaly in the payor spouse's income. The relevant sections provide as follows: Calculation of annual income 16 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. 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. 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; [48] Section 16 of the Guidelines directs that the most current financial information be used in the analysis. The process begins with consideration of a spouse's Line 150 "total income", which appears on their T1 general tax return. [49] Vincent v. Vincent, 2012 BCCA 186, provides that the court must consider ss. 17-20 of the Guidelines, which inform the exercise of the court's discretion with regard to fluctuating incomes and nonrecurring incomes or losses that might otherwise determine a spouse's income under s. 16. [50] If annual income under s. 16 is not the fairest determination of income for support purposes, the court "may have regard to" the last three years of income in order to determine a fair and reasonable income for support purposes: see Guidelines, s. 17. [51] Generally, averaging is an appropriate mechanism to determine income of a payor spouse when there are annual fluctuations up and down. [52] However, s. 17 of the Guidelines does not require an averaging of incomes to arrive at the fair determination of an amount available to pay child support. In Harras v. Lhotka, 2016 BCCA 246, Justice Garson said: [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. [53] Section 18 of the Guidelines addresses circumstances in which a spouse is a shareholder, director or officer of a corporation from which they derive income. If income derived under s. 16 "does not fairly reflect all the money available to the spouse for the payment of child support", the court may

take into account situations referred to in s. 17 and determine that a spouse's annual income can include pre-tax income of a corporation or an amount commensurate with the services that a spouse provides to the corporation. [54] In Marquez v. Zapiola, 2013 BCCA 433, the Court addressed the question of imputing income as follows: [36] For the purposes of both child and spousal support, there is a broad judicial discretion to impute income to either or both spouses. However, the party seeking to have income imputed to the other spouse has the burden of establishing an evidentiary basis for such a finding. [37] The test for imputing income for intentional under-employment or unemployment is one of reasonableness, having regard to the parties' capacity to earn income in light of their age, education, health, work history and work availability. A spouse's capacity to earn income will include that person's ability to work or to be trained to work. See Van Gool v. Van Gool (1998), 113 B.C.A.C. 200, 44 R.F.L. (4th) 314 at paras. 28-31, Barker v. Barker, 2005 BCCA 177, 45 B.C.L.R. (4th) 43 at para. 19, and McCaffrey v. Paleolog, 2011 BCCA 378, 24 B.C.L.R. (5th) 62 at para. 46. [38] Although the legal foundation for awarding spousal support is different from that of child support (see Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 at para. 208), the test for imputing income for the

purpose of fixing the quantum of support is similar. Again, the test is one of reasonableness, having regard to the same factors to be considered in imputing income for child support. However, the concept of "needs" for non-compensatory support also includes a consideration of the marital standard of living: Myers v. Myers (1995), 65 B.C.A.C. 226, 17 R.F.L. (4th) 298 at para. 10, Moge at 870, Bracklow at para. 36. "Means" has been interpreted to include all capital and other sources of income (Leskun v. Leskun, [2006] 1 S.C.R. 920 at para. 29). Analysis [55] The issues in this case are largely concerned with measuring the parties' incomes for the purposes of establishing interim spousal and child support obligations. [56] The claimant did not oppose orders for child support and spousal support. The parties agree that they share equal parenting time of the children and the claimant concedes that after taking into account the setoffs between them, child support should be ordered at $1,372 per month. [57] The claimant contends that spousal support should be payable in the sum of $973 per month taking into account an imputation of income to him of $162,000 and an imputation of income to the respondent of $59,851 that includes $41,640 in employment income and $18,211 in non-taxable income for monies received for their special needs child. [58] In 2020, Horizon's statements indicate

that the claimant was paid a dividend of $38,000 although his tax return reflects a dividend for that year of $21,850. Relying on the financial statements, it is clear to me that the claimant received T4 income of $72,000 and a dividend of $38,000 before gross up, or $21,850 after gross up. I was not given any estimate of the tax saving resulting from $21,850 in dividends paid in 2020. [59] The unusual circumstances presented in this case creates something of a conflict regarding the respondent's entitlement to have her shares in Horizon valued after the claimant's income is deducted and in accordance with his Line 150 incomes by way of dividends in 2022 that include no T4 income. If income in Horizon is imputed to the claimant for support purposes, those amounts would diminish the respondent's entitlement to receive the value of one half of the retained earnings with the accompanying tax benefit of payment of dividends. This is an issue that must be resolved at trial. [60] This point was not addressed in submissions by counsel, most likely because they were looking for a "rough and ready" assessment of incomes and support obligations. [61] In the circumstances of this case, I accept the claimant's explanation for the unusual spike in his commission income from Winton. I also accept that Horizon is a construction company that may require some capital in order to undertake new

projects. Regrettably, there was little detail that could inform the analysis of what level of capital might be required. I have observed that in 2018 and 2019, the cash assets of the company were between $89,090 and $91,000. For 2020, Horizon held $65,491 in cash at the year end. In my view, the company might require something less than $100,000 to ensure it was able to accept new projects. [62] The shares and retained earnings of Horizon will likely be divided equally on the basis that the parties are equal shareholders and would receive one half of the equity in the company on separation. If the claimant had been the sole owner of the shares, he would have the ability to withdraw from the company all of the funds necessary to ensure he received a fair determination of income subject to holding a reserve for anticipated future operating needs of the company. [63] I find that s. 17 of the Guidelines provides discretion to the Court to apply an average to the claimant's income. Considering his patterns of income over many years, including fluctuations in income most importantly in 2022, I conclude that averaging is appropriate in this case: Phillips v. Saunders, 2020 BCCA 265 at paras. 23-25. [64] I am guided by the summary of considerations to be taken into account as set out in Robles and paying particular attention to the needs of the respondent and the claimant's ability.

The amount for spousal support should be sufficient to allow the claimant to maintain a standard of living enjoyed prior to separation without an in-depth analysis of the circumstances which is best left to the trial court. [65] In this case, I find that the respondent has overstated her monthly expenses and that her needs are more likely in the order of $50,000 per year. For example, debt repayments, $340 per month and winter boots of $207 per month are not explained and are not reasonable. Similarly, employee pension contributions, CPP and EI contributions are unreasonable in the face of the respondent's claim to be unemployable. [66] Recognizing that the answer to the respondent's request for support engages a "rough and ready" exercise to ensure the family is sufficiently financed until trial, I cannot make any further attempt to resolve contested issues. These questions must be left to the trial judge. In the circumstances, I consider the fairest way to measure the claimant's income is to average the 2021 and 2022 line 150 incomes. I exclude 2020, in part because that was a post-Covid year and the company's earnings were dramatically less than the previous years. [67] These conclusions will of course be revisited by the trial judge when there is a fulsome examination and cross-examination of witnesses. [68] Taking into account the close similarities between the claimant's

income for 2020, 2021 and 2022, I am satisfied that his income for support purposes will be $170, 000. [69] In my view, the respondent's income after adjusting for the claimant's concession and income imputed to her savings account is assessed at $61,850. [70] Based on these findings as to income and calculations derived from Divorce Mate, I conclude that child support payable by the claimant after the setoffs will be $1,445 per month. [71] I also conclude that the midrange of spousal support set out in the Spousal Support Advisory Guidelines is the appropriate some for calculation of the respondent's support entitlement. Based on the parties' historical incomes and ongoing needs, I am satisfied this will ensure a fair and reasonable standard of living similar to the parties' pretrial circumstances. The calculation for spousal support at the midrange is $1,143. [72] If there are arithmetical errors the parties wish to address, they have liberty to speak to this issue. [73] The parties may address cost of this application by way of written submissions. "Armstrong J."