Supreme Court

Date: 19971217
Docket:

 IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES

BETWEEN:

 KAREN GAIL BERGMAN-ILLNIK

 Petitioner

 - and -


 MARC MACK ILLNIK

 Respondent



Applications for interim child support and for partition and sale of former matrimonial home.




 REASONS FOR JUDGMENT OF THE HONOURABLE JUSTICE J.Z. VERTES


Heard at Yellowknife, Northwest Territories
on December 12, 1997

Reasons filed: December 17, 1997

Counsel for the Petitioner: Katherine R. Peterson, Q.C.

Counsel for the Respondent: Catherine Stark



 IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES

BETWEEN:


 KAREN GAIL BERGMAN-ILLNIK

 Petitioner

 - and -


 MARC MACK ILLNIK

 Respondent


 REASONS FOR JUDGMENT

The petitioner seeks two orders as interim relief in these divorce proceedings: (1) child support; and (2) partition and sale of the former matrimonial home.

Child Support:

The parties separated in 1993.  They have three children; two (a boy aged 15 and a girl aged 12) live with the petitioner in Yellowknife and another boy (aged 14) lives with the respondent in Iqaluit.  Since the separation the respondent has made support payments to the petitioner but none of these arrangements were put into a formal agreement or court order.  The respondent, however, has made no payments since March of this year.


The petitioner is employed and earns income in excess of $78,000.00 per year. She and the respondent also share the rental proceeds from the former matrimonial home located in Arviat.  With the rental income it is agreed that the petitioner=s total income is $83,628.00 per year.  The petitioner, however, for some reason has not recently been receiving her share of the rents from the tenants and so she has taken up the matter with the Rental Officer.  The first issue in dispute is whether the petitioner=s income, for support purposes, should include the rents she should be receiving.

In my opinion the income should include all sources of income including the rents.  If there is currently a problem with collecting the rent that is, hopefully, a short term administrative difficulty.  The petitioner is still entitled to that income.  I note that s.16 of the Federal Child Support Guidelines provides that income is to be determined by using the same sources of income as those identified by Revenue Canada on its tax returns.  Rental income is one of these.  Therefore the petitioner=s income will be designated as $83,628.00.

The calculation of the petitioner=s income, even though she will in the end be the recipient of the support payments, is necessary because of the split custody arrangement in this case.  The Guidelines provide that, where each spouse has custody of one or more of the children, the amount of the support order is the difference between what each spouse would otherwise pay to the other: s.8.

The respondent=s income is $63,300.00 per year.  The Guidelines stipulate a monthly support obligation, for the two children in the petitioner=s care, of $895.00. From that must be deducted what the petitioner would be obligated to pay for the support of the one child in the respondent=s care.  At her income level that amount would be $711.00.  The difference is $184.00.

The petitioner also claims a special or extraordinary expense item.  She has identified a total of $3,100.00 in annual expenses for sporting activities for the two children living with her.  The petitioner=s counsel calls these expenses Aextraordinary@ because they relate to organized, fee-imposed, activities that take place outside of regular school-related activities.  The respondent=s counsel takes the position that these expenses are not Aextraordinary@ and counsel reminds me of my ruling in Hoover v Hoover, [1997] N.W.T.J. No. 43.  In that case I held that the expenses claimed there, expenses relating by and large to school activities, were not Aextraordinary@.  They were the quite ordinary activities that most children would, or should, participate in during their school years.

The Child Support Guidelines provide an exhaustive list of what can be included as special or extraordinary expenses.  There is, however, a certain discretion left to the court to provide for all, any, or indeed none, of those expenses:

7. (1) In a child support order the court may, on either spouse=s request, provide for an amount to cover the following expenses, or any portion of those expenses, taking into account the necessity of the expense in relation to the child=s best interests and the reasonableness of the expense, having regard to the means of the spouses and those of the child and to the family=s spending pattern prior to the separation:

. . .

(f) extraordinary expenses for extracurricular activities.  (emphasis added)

The items listed as extraordinary expenses in this case include fee-paying activities that are outside of regular school-related extracurricular activities.  Gymnastics, soccer and hockey, on an organized basis, are not, in my opinion unusual for children whose parents can afford it (as these parents should be able to on a combined salary such as theirs).  And the more common they are means the less extraordinary they are.  It can be argued that since the basic Guidelines amounts increase with the income of the payor and thus reflect additional expenses assumed to occur as financial circumstances improve, some expenses which may be extraordinary at a lower income level are quite ordinary at a higher one.

I do not think one can draw such an automatic generalization.  I think it is reasonable to include some of these extracurricular expenses as extraordinary ones.  Each situation has to be assessed on its own merits.  These types of extracurricular activities may be more necessary in a relatively small urban environment such as Yellowknife where there are limited resources for teenagers.  That goes equally without saying for the child living with the respondent in the even smaller environment of Iqaluit.  In my opinion an Aextraordinary@ extracurricular expense is one that is (a) not related to regular school activities; (b) one in the child=s best interests; and (c) one that attracts expenditures higher than your average day-to-day activities.


These expenses are no doubt in the best interests of the children so therefore necessary as that term is used in s.7(1) quoted above.  Further, subject to the comments below, they are reasonable having regard to the means of the spouses.  I have no evidence as to the family=s spending pattern prior to the separation but I do not regard that as a fatal impediment to the claim.

Of the $3,100.00 total claimed under this item, $300.00 is identified as Avarious school sports@.  These are not Aextraordinary@.  Of the balance of $2,800.00, the respondent=s proportionate share based on his income would be $102.66 per month.  But there is a third child in this family, the one in the respondent=s care.  There is no evidence before me as to costs for that child=s extracurricular activities but I think it can reasonably be assumed that there are some.  In split custody situations it would be helpful to have these types of expenses detailed for each child.  After all, if the basic Guidelines amounts are subject to set-off in cases of split custody, logic suggests that some types of extraordinary expenses should similarly be apportioned on a split basis.

In the exercise of the court=s discretion, taking into account the reasonable assumption that the respondent is paying some similar type of expenses for the child in his care, I am going to reduce the respondent=s extraordinary expense payment to $64.00 (approximately 2/3 of the amount previously calculated).  This results in a total support obligation of $248.00 ($184.00 basic plus $64.00 extraordinary expense) per month.

The respondent, however, claims undue hardship.  The Guidelines allow a court to order some different amount than would otherwise be required if the spouse making the request would suffer undue hardship: s.10(1).  There are a number of circumstances listed in the Guidelines as examples of what may result in undue hardship.

The respondent here says that he has very little cash available to make support payments even though he has a relatively high income.  Revenue Canada has garnisheed his wages because he owes approximately $20,000 in back taxes.  The sum of $400.00 is being deducted from each of his pay cheques.  The tax liability arose because the respondent claimed as deductions the support payments he voluntarily made in the past.  Because there was no order or formal agreement for those payments they were not deductible.  Revenue Canada therefore reassessed him for the past taxes he should have paid.  The respondent says he did not know that those payments were not deductible; the petitioner says that she repeatedly warned him of that fact.


In my opinion this plea does not come within the intent of s.10 of the Guidelines.  One should not be able to rely on ignorance nor can one rely simply on cash flow problems.  The types of circumstances identified in s.10(2) as ones that could support a plea of undue hardship are ones that relate to financial obligations arising from some legal or moral basis with respect to the support of others.  They are not ones that arise from the application of the tax laws.  The respondent made a mistake.  Why should his children suffer because of that?  Furthermore, the mistake, if that is what it truly was, was purely within the control of the respondent.  His tax liability could have arisen from any number of causes so the fact that he has this debt to Revenue Canada is not sufficient cause to invoke the undue hardship provision.

I am also not inclined to entertain an undue hardship claim when the respondent, who has the burden to establish the grounds, has not made complete disclosure.  There is no financial statement from him listing his monthly income and expenses.  I note from the limited material he did provide that rent is being deducted from his pay cheque.  Is he in housing subsidized by his employer?  He does not say.  The petitioner=s counsel made a reference at the hearing to the respondent living in a new relationship with someone who is fully employed.  There is no evidence as to that before me but I would expect that, if someone wanted to complain about cash flow problems, they would put all relevant information as to their circumstances before me.

The respondent=s undue hardship claim is denied.  The interim child support to be paid by the respondent is set at $248.00 per month commencing on January 1, 1998, and continuing on the first day of each month thereafter until further order of this court.

Matrimonial Home:

The petitioner also seeks an order for the sale of the former matrimonial home so as to realize now her equity in it.  A claim for division of matrimonial property is joined with the divorce petition.

The home is located in Arviat.  It was financed and built by the parties through a government sponsored home ownership programme.  They own it free and clear.  There is no mortgage or other debt attached to the property.  A recent appraisal put the market value at $170,000.00.  The appraiser noted that it was in a good location, which should improve its marketability, but that the market was limited and that six to nine months of market exposure may be required.

The respondent has not lived in the home since 1995.  He is living and working in Iqaluit although, as he says, one never knows what will happen in the future.  He wants to hold on to the property for sentimental reasons.  It was built especially for the family and the children are attached to it.  The respondent did have the benefit of living in the home, without paying accommodation rent, after the parties= separation in 1993 up until his move out of Arviat.

The petitioner wishes to sell the home now so she can realize her financial interest in it.  There is no dispute that the property is jointly owned or that the equity should be equally divided.  There is no reason, in her submission, to wait until a trial of this action to dispose of this property.  The petitioner says that the proceeds from the sale will enable her to improve the living standard for herself and the children.  I am also told that the parties may be able to access a government buy-back programme.  To do this, however, the property must first be listed on the open market.

The respondent=s counsel refers me to the case of Clarke v Clarke, [1974] 5 W.W.R. 274 (Alta. C.A.), for the proposition that a court possesses a wide discretion as to whether a sale should be ordered.  That case dealt with an application for sale of a matrimonial home after a divorce.  The statutory basis for the application was the English Partition Act of 1868 which applied in Alberta (as it still does in the Northwest Territories).

I do not know why counsel referred me to the Partition Act.  The parties here are still married so the applicable statute is the Matrimonial Property Act, R.S.N.W.T. 1988, c. M-6.  That statute empowers a judge to make any order that the judge considers fair and equitable including the sale of the property and the division of the proceeds: s.27(2).  There is a wide discretion here as well.

In my opinion there would be no prejudice in listing the property for sale now.  That way the parties can ascertain if there is a market for it.  If they receive a good offer, the respondent may conclude that it is in his interest as well to sell the property.  If they receive any bona fide offer then at least the market is ascertained.  The respondent may then try to obtain financing so he can buy out the petitioner.  If the market is soft or non-existent then that may make the option of the government buy-back programme that much more viable and desirable.  But it seems to me that the respondent should not be able to impair the petitioner=s financial situation by doing nothing with this property.


I therefore direct that the property be listed for sale.  The terms of the listing should be agreed to by the parties.  The property shall be listed within 60 days for an initial period of no less than 3 months.  If the parties cannot agree on terms, they may seek further direction from any judge of this court.  Any further step, such as execution of an agreement for sale or a sale, shall be subject to further court order or the agreement of the parties.

Costs of this application shall be in the cause.





J.Z. Vertes
    J.S.C.

Dated at Yellowknife, Northwest Territories
this 17th day of December, 1997

Counsel for the Petitioner: Katherine R. Peterson, Q.C.

Counsel for the Respondent: Catherine Stark


 6101-02532


IN THE SUPREME COURT OF THE
NORTHWEST TERRITORIES



BETWEEN:


 KAREN GAIL BERGMAN-ILLNIK

 Petitioner

 - and -


 MARC MACK ILLNIK

 Respondent




 REASONS FOR JUDGMENT OF THE
 HONOURABLE JUSTICE J.Z. VERTES