2004 SKQB 374 D.I.V. A.D. 1996 No. 77 J.C. R. IN THE QUEEN’S BENCH (FAMILY LAW DIVISION) JUDICIAL CENTRE OF REGINA BETWEEN: MICHELLE DAWN LILLEY and CURTIS WILLIAM PILAT RESPONDENT R.B. Hunter for Michelle Dawn Lilley T.F. Huber for Curtis William Pilat FIAT WILSON J. September 16, 2004 [1] Michelle Lilley and Curtis Pilat are the parents of one child, Stephanie Brook Pilat, born April 9, 1992. By order of Archambault J., dated March 6, 1996, Mr. Pilat was ordered to pay the tax deductible/tax inclusive sum of $600.00 per month as support for Stephanie. Mr. Pilat applies to reduce his support obligation and rescind arrears which have accumulated under Archambault J.’s order. [2] The primary questions to be answered by the court on this application are as follows: 1. What is Mr. Pilat’s current income? 2. Is Mr. Pilat underemployed and, if yes, should income be imputed to him pursuant to s. 19(1)(a) of the Federal Child Support Guidelines [SOR/97-175, as am.] (the “Guidelines”)? [3] The secondary questions to be answered are as follows: 1. What are the appropriate s. Guideline expenses for Stephanie and how should these expenses be shared by Mr. Pilat and Ms. Lilley? 2. Should the child support variation in this matter be retroactive? and 3. Should costs of this application be granted to either Mr. Pilat or Ms. Lilley? [4] Before answering the above questions it is necessary to set out the history of this variation application and the factual context in which the questions above will be determined. HISTORY OF APPLICATION [5] Mr. Pilat commenced this application to vary in June of 2002. Mr. Pilat made this application after experiencing substantial decrease in his income when he was fired by his long-term employer, Ipsco, in June, 2001. [6] Mr. Pilat’s application proceeded before McIntyre J. on August 21, 2002. The application was adjourned sine die with direction to return the matter to court once the grievance filed by Mr. Pilat concerning his termination from Ipsco was determined by an arbitrator. Further, McIntyre J. was desirous of Mr. Pilat fully complying with the Notice to Disclose served on Mr. Pilat by Ms. Lilley in August, 2002, before making determination of the matter. McIntyre J. did, however, indicate that any support variation would be effective on September 1, 2002, or such date as the presiding judge may determine. [7] The arbitration decision was handed down September 30, 2002. The arbitrator, Mr. Semenchuk, upheld the termination of Mr. Pilat by his employer, Ipsco. After the arbitration decision was rendered this matter should have been returned to court but Mr. Pilat had not as yet completed his response to the Notice to Disclose. In fact, Mr. Pilat did not provide his Reply to the Notice to Disclose until August 11, 2003. [8] Upon receiving and reviewing Mr. Pilat’s Reply, Ms. Lilley was of the view that Mr. Pilat was required to provide additional financial disclosure. Mr. Pilat filed Supplemental Reply on September 3, 2003, but, again, it was not satisfactory. Ms. Lilley then brought motion to force Mr. Pilat to provide additional financial disclosure. [9] Ms. Lilley’s application for further disclosure was before me on September 10, 2003. made an order allowing Ms. Lilley to cross-examine Mr. Pilat on the affidavits and financial statements Mr. Pilat had filed in this matter and further order requiring Mr. Pilat to produce certain documents. Mr. Pilat was cross-examined by Ms. Lilley on October 15, 2003. During the examination Mr. Pilat gave numerous undertakings, most of which have been satisfied. In any event, the matter was brought back before me with the request that now make determination in this matter, based on all of the evidence filed. [10] Ms. Lilley and Mr. Pilat were married on October 20, 1990, and separated on January 28, 1996. The parties were divorced on June 7, 2000. The one child of their marriage, Stephanie, has been in the primary care of Ms. Lilley since the parties' separation. [11] Mr. Pilat is currently 38 years old. He has grade 12 education. Mr. Pilat commenced employment with Ipsco on February 1, 1993, where he worked until his employment was terminated in June, 2001. In his last full year with Ipsco, being the 2000 taxation year, Mr. Pilat’s gross annual income was the sum of $52,377.00. [12] In 1995, Mr. Pilat started business known as Great Plains Outfitters Ltd. This business offers hunting and fishing packages and operates on seasonal basis, that is, for approximately three months each fall. Although initially Mr. Pilat was the sole owner of Great Plains Outfitters, in February, 1999, Mr. Pilat sold two-thirds of his business to two other partners. Mr. Pilat remains one-third owner. [13] Mr. Pilat’s employment with Ipsco was terminated as result of an unexplained absence from work after Mr. Pilat received suspension for insubordination. Since his termination Mr. Pilat has not obtained full-time employment with another employer. Mr. Pilat has, however, continued to work seasonally as guide for Great Plains Outfitters and has received employment insurance benefits to supplement his income in the 2001, 2002 and 2003 taxation years. [14] review of Mr. Pilat’s tax returns discloses the following: Year Gross Annual Income 2001 Ipsco employment 16,726.00 EI 10,490.00 2002 Employment Income 16,800.00 Employment Insurance 2,478.00 Other Income 1,903.00 2003 Employment Income 10,000.00 Employment Insurance 5,782.00 [15] During the examination of Mr. Pilat held October 15, 2003, Mr. Pilat was aggressively questioned regarding his attempts to find full-time employment. Upon reviewing the transcript of the examination it is clear that Mr. Pilat has not vigorously pursued employment opportunities since his termination with Ipsco. During the year following his termination, Mr. Pilat only applied for positions with two companies, namely Elite Security and Degelman Industries. In addition, he had "discussions" with unions. Mr. Pilat did obtain temporary work with Elite Security, however, he was never hired full time. [16] Mr. Pilat's plan for the future, as stated in his examination, is to return to school to upgrade his highschool marks so that he can proceed into the College of Engineering. He stated that he intended to return to school in February 2004. have no evidence before me as to whether Mr. Pilat has in fact returned to school even though requested that Mr. Pilat produce confirmation of his school attendance. [17] Based on all the evidence it appears that Mr. Pilat intends to continue with his employment/ownership of Great Plains Outfitters and to only work three months of the year. Mr. Pilat's estimate of income, should he only work for Great Plains Outfitters, is that he would earn the gross annual sum of $21,000.00. Mr. Pilat argues that his income should be determined to be the sum of $21,000.00 and that he should pay child support for Stephanie based on the aforesaid income. [18] Ms. Lilley is employed as verification income security worker by the Department of Community Resources and Employment. The income information provided by Ms. Lilley shows gross annual income from employment in the sum of $37,203.00 as well as some additional rental income in the sum of $2,328.00. Ms. Lilley pays union dues in the sum of $504.00 per year which must be deducted from her income. Ms. Lilley's total gross income is, thus, the approximate sum of $39,000.00. The information respecting Ms. Lilley's income was obtained from review of the last sworn financial statement filed by Ms. Lilley which statement was sworn September 8, 2003. [19] As set out previously, Mr. Pilat argues that his child support obligation for Stephanie should be based on gross annual income in the sum of $21,000.00. Ms. Lilley takes the position that should impute income to Mr. Pilat in the range of $50,000.00 to $70,000.00 per year and base his child support obligation on the imputed income. [20] Section 19(1)(a) of the Guidelines allows court to impute income to payor upon conclusion that the payor is intentionally underemployed or unemployed. Based on the evidence before me and, more specifically, Mr. Pilat's employment history and the employment opportunities available, Mr. Pilat is underemployed and it is appropriate to impute income to him. [21] It appears that Mr. Pilat has made the decision to work only three months of each year. Although he made some attempt to locate full-time employment after his termination from Ipsco, he did not aggressively pursue employment and, within one year of his termination, appears to have "given up" on finding job. Mr. Pilat is not without qualifications and expertise and could, believe, find employment paying reasonable salary should he choose to do so. At minimum, Mr. Pilat could work minimum wage job for the nine months he is not working as hunting guide. [22] On all of the evidence I find it is Mr. Pilat\'s choice to work a minimum amount each year and, if he should return to school, it will be his choice to attend school and severely limit his earnings for a significant period of time. It has been said in number of cases that individuals who are subject to support obligations are entitled to make decisions in relation to their careers as long as the decisions are reasonable at the time having regard to all the circumstances. Those circumstances include the age, education, experience, skills, historical earning capacity and health of the payor; the standard of living experienced during marriage; the availability of work; the payor's freedom to relocate; the reasonableness of the career aspirations and the motives behind them, as well as any other obligations of the payor. Mr. Pilat\'s decision to work only three months of the year and/or return to school is not a reasonable decision when he has a continuing obligation to provide support for his child, Stephanie. [23] Having determined that Mr. Pilat is underemployed, must determine the amount of income to be imputed to the respondent. Although Ms. Lilley argues that should impute income to Mr. Pilat in the range of $50,000.00 to $70,000.00 per year, it is clear on the evidence that Mr. Pilat's top earnings from his employment with Ipsco were the sum of $52,000.00. Further, it has been held that court should not attribute income to payor based on former employment that is no longer available or practicable Magee v. Magee (1997), 1997 CanLII 11187 (SK QB), 159 Sask. R. 223 (Sask. Q.B.); Phillips v. Phillips (1995), 1995 ABCA 232 (CanLII), 14 R.F.L. 4th 113 (Alta. C.A.). [24] Mr. Pilat's former employment at Ipsco is no longer available but have no doubt that should Mr. Pilat choose to do so he could obtain employment with reasonable income during the nine months of the year he is currently not working. Accepting Mr. Pilat's own position that he will be able to earn the approximate sum of $21,000.00 per year from his employment/ownership with Great Plains Outfitters, it is my view that he should be able to find employment that would provide additional income of at least $19,000.00 per year. Mr. Pilat\'s income is, for the purpose of this application, imputed to be the sum of $40,000.00. Based on this income Mr. Pilat must pay the net sum of $328.00 per month as and for the support of Stephanie. [25] Ms. Lilley has submitted evidence respecting extracurricular activities and has requested an order for sharing of the expenses relating to those activities in proportion to the income of the parties. As set out previously, Ms. Lilley's income from her employment and rental income is the approximate sum of $39,000.00. Thus, any sharing of s. 7 special expenses should be based on Mr. Pilat\'s imputed income of $40,000.00 and Ms. Lilley\'s income of $39,000.00. [26] Stephanie is heavily involved in the Queen City Kinsman Gymnastics Club. According to the evidence before me Stephanie trains for six hours per week with the cost of her program being the annual sum of $1,416.00 and the further sum of $230.00 for commitment fees. Stephanie also attends summer camp training programs. have determined that the total annual expense that should be shared by Mr. Pilat and Ms. Lilley for Stephanie's gymnastics is the sum of $2,000.00. Utilizing the ChildView, Version 2004.2.0 program, Mr. Pilat must pay the sum of $84.00 per month as his contribution towards Stephanie's gymnastics. [27] The remaining two questions to be answered are the questions of retroactivity and costs. [28] As regards Mr. Pilat\'s request for a retroactive variation, I have determined that the same is warranted. Mr. Pilat commenced his application for variation in June, 2002, and McIntyre J. was clearly of the view that any variation of support should be retroactive to September 1, 2002. In light of the fact that Mr. Pilat\'s previous support obligation was tax deductible/tax inclusive, Ms. Lilley may in fact benefit from a retroactive variation as the child support she will receive pursuant to my order will be payable on a net of tax basis. [29] As regards the issues of costs, Rule 608(2) provides that successful party will be entitled to costs of family law proceeding unless, pursuant to Rule 608(3), the successful party has behaved unreasonably or has acted in bad faith during family law proceeding. The difficulty in the matter before me is determining whether or not Mr. Pilat has, indeed, been successful on this motion. Although Mr. Pilat's support obligation decreases from the monthly sum of $600.00 to the monthly sum of $412.00, his previous payment was tax deductible while his ongoing payment will be net of tax. It is very likely that Mr. Pilat’s financial position has not changed as result of my order for child support. Further, have grave concerns respecting the substantial delays in this proceeding, which delays were primarily the result of Mr. Pilat's unwillingness to provide adequate financial disclosure. [30] Ms. Lilley has requested that order costs as against Mr. Pilat for the additional legal expenses associated with having to submit motions to the court in order to force Mr. Pilat to disclose financial information. am willing to grant her some costs as it is clear that the discovery motion which heard in this matter would not have been necessary had Mr. Pilat provided appropriate financial disclosure. Costs are awarded to Ms. Lilley in the sum of $750.00 payable forthwith. (1) Mr. Pilat, having income imputed to him in the sum of $40,000.00, shall pay child support to Ms. Lilley, pursuant to s. 3(1)(a) of the Guidelines in the amount of $328.00 per month commencing September 1, 2002, and continuing on the first day of each and every month thereafter. (2) Ms. Lilley has gross annual income in the sum of $39,000.00. Based upon extraordinary extracurricular expenses in the annual sum of $2,000.00, Mr. Pilat will pay his proportionate share in the sum of $84.00 per month commencing September 1, 2002, and continuing on the first day of each and every month thereafter. (3) Each party shall provide to the other, on or before June of each year, copy of their income tax return as filed with Canada Customs and Revenue Agency. (4) Ms. Lilley shall have costs in this matter which are hereby set in the sum of $750.00 payable by Mr. Pilat forthwith.
FIAT: In 1996, the respondent was ordered to pay $600 per month as child support for his daughter. He now applies to reduce his support obligation and rescind the arrears which have accumulated. HELD: 1) In 1999, the respondent sold his ownership interest in a business and retained a one-third interest. In 2001, he was terminated from his full-time employment as a result of an unexplained absence from work after he received a suspension for insubordination. Since his termination, he has not obtained full-time employment. He has continued to work seasonally 3 months a year and earn the gross amount of $21,000. The Court found that it is the respondent's choice to work a minimum amount each year. It has been said that individuals, who are subject to support obligations, are entitled to make decisions in relation to their careers as long as the decisions are reasonable at the time having regard to the circumstances. The respondent's decision to work only three months a year and to possibly return to school is not reasonable. 2) For the purposes of this application, the respondent's income was imputed to be $40,000 and he was ordered to pay $328 per month as support for his daughter. 3) The sharing of the s. 7 special expenses should be based on the respondent's imputed income. 4) A retroactive variation of child support is warranted. The respondent commenced his application for variation in June 2002 and the chambers judge was of the view that any variation of support should be retroactive to September 2002.  In light of the fact the respondent's previous support obligation was tax deductible/tax inclusive, the petitioner may in fact benefit from a retroactive variation as the child support she will receive, pursuant to this order, will be payable on a net of tax basis.  5) Rule 608(2) provides that a successful party will be entitled to costs of a family law proceeding unless, pursuant to Rule 608(3), the successful party has behaved unreasonably or has acted in bad faith. The difficulty in the matter before me is determining whether or not the respondent has been successful. Although his support obligation decreases, his previous payment was tax deductible while his ongoing payment will be net of tax. It is very likely that the respondent's financial position has not changed as a result of the order. The Court also had grave concerns respecting the substantial delays in the proceedings caused by the respondent's unwillingness to provide financial disclosure. Costs were awarded to the petitioner in the sum of $750, as the discovery motion would not have been necessary had the respondent provided appropriate financial disclosure.