SCHERMAN QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2013 SKQB 67 Date: 2013 02 26 Docket: DIV. 211/2012 Judicial Centre: Regina (Family Law Division) BETWEEN: DARCY CLEASBY and KRISTINA CLEASBY Counsel: Daniel S. Tapp for the petitioner Lindsay A. Wacholtz for the respondent JUDGMENT MCINTYRE J. February 26, 2013 [1] The issues include parenting, child support and spousal support. [2] The respondent filed a Notice of Objection to the petitioner’s affidavit of October 16, 2012, including Exhibit “A” which is captioned as Minutes of a Four-Way Meeting. The document says the parties agree that the meeting is without prejudice. have not reviewed the contents of the document and indicated would not do so until ruled on its admissibility. [3] The petitioner attended settlement meeting and they reached an agreement on seven issues. He says there was no agreement that any agreements reached at the meeting could not be used in evidence. The petitioner does not suggest that all outstanding issues were resolved at the settlement meeting. [4] In Tucker-Lester v. Lester, 2012 SKQB 443 (CanLII), [2012] S.J. No. 702 (QL), the court canvassed the principles which underly settlement privilege. The court noted that settlement privilege is jointly held privilege which cannot be waived by any one party acting alone. The court observed as follows: [7] First, the basics. The conditions that must be present for the privilege to be recognized are (John Sopinka, Sidney N. Lederman Alan W. Bryant, The Law of Evidence in Canada, 3rd ed. (Markham: LexisNexis Canada Inc., 2009) at para. 14.322): (1) litigious dispute must be in existence or within contemplation. (2) The communication must be made with the express or implied intention that it would not be disclosed to the court in the event negotiations failed. (3) The purpose of the communication must be to attempt to effect settlement. [8] Those are the formal conditions. More illuminating, suggest, is the policy reason for the privilege which, in turn, defines the scope of the privilege. Here is thumbnail sketch: (i) At the heart of settlement privilege is the overriding public interest in favour of settling legal disputes: “...[t]his policy promotes the interests of litigants generally by saving them the expense of trial...” (Kelvin Energy Ltd. v. Lee 1992 CanLII 38 (SCC), [1992] S.C.R. 235 at para. 48.) More than 100 years ago Cameron C.J. of the Ontario Court of Appeal wrote in Pirie v. Wyld (1886), 11 O.R. 422, [1886] O.J. No. 188 (QL) (Ont. HC.), at para. 18: “... letters written or communications made without prejudice, or offers made for the sake of buying peace, or to effect compromise, are inadmissible in evidence. It seemingly being considered against public policy as having tendency to promote litigation, and to prevent amicable settlements.” (ii) It is common sense that settlement is less likely if the parties do not engage in full and frank discussions; (iii) Few parties would initiate or participate in settlement negotiations at all if such could later be used to their detriment: “What sensible man would attempt settlement if it could be used against him at trial?” (William Allan Real Estate Co. v. Robichaud, [(1987), 37 B.LR. 286, [1987] O.J. No. 2167 (QL) (Ont. H.C.]). (iv) To provide the degree of comfort required to encourage parties to engage in frank discussions without fear of prejudice, the whole of the settlement process is protected: all communications in furtherance of settlement regardless of from which party the communication emanates from the first utterance or letter to the last. (v) In order to promote settlement, the privilege must be broadly construed such that the integrity of the settlement process is preserved: (a) settlement privilege can only be waived with the consent of both parties (Squires v. Corner Brook Pulp [(1999), 1999 CanLII 18967 (NL SC), 175 Nfld. P.E.I.R. 2002, [1999] N.J. No. 146 (QL) (Nfld. C.A.)]; Leonardis v. Leonardis, [2003 ABQB 577 (CanLII), 43 R.F.L. (5th) 144]). (b) the communication need not contain settlement offer any communication designed or intended to explore settlement, or from which the Court might infer there are settlement communications contemplated or in the works, is protected (White v. Woolworth Co., [(1996), 1996 CanLII 11076 (NL CA), 139 Nfld. P.E.I.R. 324, [1996] N.J. No. 113 (QL) (Nfld. C.A.)]. (c) the privilege is clearly an important one, and in cases of doubt as to whether the correspondence does relate to the negotiations, the Court should undoubtedly err on the side of protecting the privilege (Hansraj v. Ao [2002 ABQB 385 (CanLII), 314 A.R. 262]. [5] The petition in this matter was issued April 11, 2012. The four-way meeting occurred August 30, 2012. The petitioner describes the meeting as settlement meeting at which they reached agreement on number of the issues. The meeting is said to be without prejudice. am satisfied the conditions as identified in para. of the Tucker-Lester judgment exist in the present circumstance. note the observation of the court in Tucker-Lester at para. 8(iv) that the whole of the settlement process is protected, that is, all communications in furtherance of settlement from the first utterance or letter to the last. [6] I conclude from the material before me that while they may have reached an agreement on seven issues, they did not reach agreement on all issues. The circumstance at hand is to be distinguished from an application to enforce settlement agreement where it is alleged that all issues have been settled. While it may be that parties in a settlement meeting reach a consensus on a number of issues, I am satisfied that the policy considerations which underly settlement privilege and as identified in Tucker-Lester require that unless all of the issues have been resolved, privilege continues to extend to those issues where there may have been a consensus unless there is a clear understanding and agreement that once one of the issues is resolved it is off the table and considered to be settled irrespective of what may happen with respect to other issues that may exist as between the parties. As a result, the last three sentences of para. 4 and Exhibit “A” to the petitioner’s affidavit of October 16, 2012 is struck and the Local Registrar is directed to remove Exhibit “A” from the court file. [7] The petitioner brought motion returnable June 1, 2012 in which he sought an order for shared parenting and to fix his child support obligation. After separation in January, 2012, the petitioner was paying mortgage payments of $1,200.00 per month, child support of $1,300.00 per month, utilities of $419.00 per month, the respondent’s van payment of $87.00 per month, and life insurance premiums of $102.00 per month. [8] The respondent brought a motion returnable October 19, 2012 claiming child and spousal support together with exclusive possession of the family home. Prior to separation the respondent was primarily stay at home parent who worked casual shifts as an educational assistant and sold Pampered Chef products. As noted, following separation, the petitioner was making the mortgage and other payments associated with the family home. In May, 2012, he stopped paying the utilities and in September, 2012, he advised he would no longer contribute to the mortgage payment and would be reducing the child support payments to $926.00 monthly. [9] The petitioner says that when he was making the mortgage payment and paying utilities, the van payment, life insurance premiums and child support of $1,300.00 per month, he was left with about $250.00 per month for rent, groceries and household expenses. He has noted there is basement suite in the family home which the petitioner could rent out for $700.00 per month. He has estimated his one-half share of basic monthly expenses at $2,000.00 per month. He notes the respondent is receiving the full child tax benefit of $650.00 per month. [10] The respondent has identified her most basic of monthly expenses as $2,800.00. This does not include anything for property taxes, house insurance, general household expenses other than the groceries, health, personal or childrens’ expenses. The mortgage is line of credit. Just after separation, the petitioner withdrew $54,000.00 on the line of credit. The respondent appears to have withdrawn $12,500.00 from the line of credit. The respondent says there are s. expenses including child care of $3,200.00 per annum; pre-school expenses of $700.00 per annum; piano expenses of $800.00 per annum and various sports activities of $1,100.00 per annum. [11] The respondent has now obtained permanent full-time position as an educational assistant. She anticipates an income of $19,211.00 with union dues of $327.00. On the issue of parenting, the respondent acknowledges that since September 1, 2012, the parties have attempted to implement shared parenting arrangement and that child support as of that point is to be determined pursuant to s.9 of the Federal Child Support Guidelines (SOR/97-175)(the “Guidelines”). There will be an interim order that the parties shall have joint custody of their children. The parties will parent the children pursuant to shared parenting arrangement. The children are not to be left in the care of Debbie Ruckaber. If the parties are unable to agree upon the details of shared parenting arrangement, the matter may be referred back to chambers on 14 days notice. [12] The respondent seeks an order for interim exclusive possession of the family home. The petitioner does not oppose the respondent remaining in the home on a time limited basis and suggests it should terminate June 27, 2013. There will be an order granting the respondent interim exclusive possession of the family home. If the division of family property has not been settled by June 27, 2013, either party may seek to have the issue of continued possession of the family home reviewed upon 14 days notice. [13] With respect to spousal support, the petitioner takes the position the respondent is under employed and no support should be payable. During the relationship the respondent was largely stay at home parent who worked some casual shifts as an educational assistant and sold some Pampered Chef. In 2011, she had an income of $4,128.00. As of September, 2012, the respondent secured employment as full time educational assistant. She anticipates an income of $19,211.00 with union dues of $327.00. This employment involves six hours per day for 187 school days per year. [14] It is premature at this point to make any determination as to whether the respondent remains under employed. Whether the respondent should be employed at something which is 40 hours per week year round is an issue which will be left to the pre-trial conference. On an interim basis, am satisfied that there is need and ability to pay. [15] The parties have three children. They now have shared parenting arrangement. The petitioner cohabitates with woman who is employed full-time but assume for present purposes that she is not at this time common law partner for the purposes of the Income Tax Act, R.S.C. 1985, c. (5th Supp.), as they have not cohabitated in the conjugal relationship for twelve consecutive months. [16] Once entitlement is determined, Carol Rogerson’s and Rollie Thompson’s, Spousal Support Advisory Guidelines, ([Ottawa]: Department of Justice, 2008) (“SSAG”) are tool which the court may have regard to. Ultimately the court must be guided by the factors set out in the Divorce Act, R.S.C. 1985, c. (2nd Supp.) and the specific facts of the situation at hand. In such an analysis, having regard to the cashflow of the parties can be useful tool. The Canada Child Benefits Booklet T4114 published by the Canada Revenue Agency provides that in case of shared custody, each parent will receive 50% of the child tax benefit that he or she would have received if the child had lived with that parent all of the time. The Canada Revenue Agency General Income Tax and Benefit Package indicates that if parent does not have spouse or commonlaw partner and is supporting dependant, parent may claim an amount for an eligible dependant (AED) as tax credit. This used to be referred to the equivalent to spouse tax credit. However parent may not claim the AED for child for whom the parent is required to make child support payments. While the wording of an agreement or order can be an important factor in the case of shared parenting arrangement, if both parents are required to pay child support resulting in set-off, Canada Revenue Agency appears to take the position that no one is entitled to claim the AED or the federal child amount tax credit for such child unless the parents agree on who will be making the claim. Canada Revenue Agency takes the position that if the parents cannot agree, then neither of them may claim the AED or the federal child amount tax credit (FCTC). [17] In the circumstance at hand, counsel advises that the parties do not, at this point, agree on who may claim the AED. This appears to be an issue of some contention. It needs to be understood that in the context of spousal support proceeding the court cannot dictate to the Canada Revenue Agency how it is to apply the provisions of the Income Tax Act. While the respondent may at present receive the child tax benefit for all three children, it is assumed that will change once the Canada Revenue Agency becomes aware of the shared parenting arrangement and it may be that it is not possible for parents to “agree” on who will receive the child tax benefit. [18] In dealing with spousal support, when there are children in shared parenting arrangement, counsel ought to be aware of the economic consequences of the child tax credits and the child tax benefit. To touch upon the economic consequences, the chart below contemplates various scenarios. For the purposes of the chart have used an income for the petitioner of $87,178.00 and an income for the respondent of $19,211.00 with $327.00 in union dues. In each instance, each parent receives their entitlement to the child tax benefit. In all scenarios the children are in shared parenting arrangement and it assumes the petitioner’s child support obligation for three children as $1,547.00 per month and the respondent’s obligation is $358.00 per month. The calculations are done using ChildView for Judges, Version 2012.2.0. The monthly cashflow calculated by ChildView is after income tax, CPP and EI premiums. The figures for the SSAG are the bottom and top of the range (in monthly amounts) for the scenario in question along with the corresponding monthly cashflow. Scenario Parent claiming SSAG Monthly cashflow Petitioner Monthly cashflow Respondent 1,229 3,651 3,276 3,650 4,033 [19] In the chart above, each parent is assumed to receive their entitlement to the child tax benefit. By way of contrast, it is noted that in the circumstances at hand, so long as the respondent continued to receive the full child tax benefit, the SSAG calculation would range from low of $36.00 per month to high of $527.00 per month. While that may be the present scenario, it may change. Other factors in the future can change the economic consequences of the tax system. In the future should the party have common law partner for the purposes of The Income Tax Act, it could have bearing on the ability to claim the AED tax credit. [20] This is an application for interim relief. The parties need to proceed in timely manner to pre-trial conference where issues can be canvassed in more detail. Where appropriate, adjustments can be made to support orders made on an interim basis. Interim orders are often just to get the parties by until such time as they can address issues such as resolution of family property. [21] find the petitioner to have Guideline income of $87,178.00 and the respondent Guideline income of $18,884.00. The petitioner’s share of s. expenses would be 81.5%. Pursuant to s. 9(a) of the Guidelines, the petitioner shall pay child support to the respondent of $1,213.00 per month commencing September 1, 2012 and payable on the first of each month thereafter. On account of child care expenses of $3,200.00 per annum, the petitioner shall pay to the respondent his contribution of child care expenses of $186.00 per month commencing September 1, 2012 and payable on the first of each month thereafter. The petitioner shall pay his proportionate share of such other s. 7 expenses as the parties may agree upon. In the event they cannot agree, an application may be made in chambers. [22] The petitioner shall pay to the respondent by way of interim spousal support the sum of $500.00 per month commencing September 1, 2012 and payable on the first of each month thereafter. [23] The petitioner shall receive credit for monies which he has paid from September 1, 2012 onward. Should there be any dispute with respect to this or if it is appropriate to set monthly payment on account of any arrears which might exist as of the date of this order, the appropriate application may be made in chambers. [24] The respondent shall have costs fixed in the amount of $500.00, payable within 60 days. J. D.E.W. MCINTYRE
The petitioner and the respondent had separated and had held a settlement meeting regarding the resolution of various issues. The respondent filed a Notice of Objection to the petitioner's affidavit regarding the meeting and the appended exhibit that was entitled: 'Minutes of the Meeting'. The petitioner stated that there was no agreement that what had been agreed upon in the meeting could not be used in evidence, although he acknowledged that not all outstanding issues were resolved in the meeting. The other issues before the Court were the custody of the children, the parenting arrangements and whether the petitioner should pay interim spousal and child support and in what amount. The respondent remained in the family home and sought an order for exclusive possession. The 3 children of the marriage resided with her in it. She had recently obtained a position as an educational assistant and would be earning $19,000 per year and the petitioner's annual income was $87,000. The parties could not agree on who may claim the eligible dependant credit or AED for the children. HELD: The Court held that because the parties had not reached agreement on all of the issues, the settlement privilege extended to the agreement. Therefore, the exhibit and a number of sentences in the petitioner's affidavit were struck. The Court ordered a shared parenting arrangement and gave the respondent an order for exclusive possession of the family home until June 2013. The petitioner was ordered to pay $1,213 per month in child support and additional $186 per month to contribute to child care expenses and his proportional share of s. 7 expenses. The petitioner was ordered to pay interim spousal support in the amount of $500 per month. The Court reviewed the tax consequences to the parties, particularly in light of the shared parenting arrangement and noted that as the parties could not agree on who may claim the eligible dependant credit or AED for the children that that matter should be dealt with at the pre-trial conference.