Supreme Court

SUPREME COURT OF Nova Scotia

FAMILY DIVISION

Citation: Zeggelaar v Zeggelaar, 2024 NSSC 34

Date: 20240130

Docket: 1204-007305 SFKD-123796

Registry: Kentville

Between:

Jacob (Jack) Zeggelaar

Petitioner

v.

Patricia Zeggelaar

Respondent

 

Judge:	The Honourable Justice Jean M. Dewolfe
Heard:	November 20, 2023, in Kentville, Nova Scotia
Written Release:	January 30, 2024
Written Submissions:	Petitioner: December 21, 2023, and January 16, 2024 Respondent: December 12, 2023, and January 15, 2024
Counsel:	Lynn M. Connors, K.C. and Luke McCabe for the Petitioner Terrance G. Sheppard, K.C., Lauren Murphy and Justyne Leslie, for the Respondent

           

By the Court:

BACKGROUND

[1]             Jacob (Jack) Zeggelaar (“Mr. Zeggelaar”) and Patricia Zeggelaar (also known as Patricia Bower) (“Ms. Bower”) were married on December 21, 1990 and separated on February 23, 2021. They are currently 66 and 60 years of age respectively.

[2]             They are the parents of two children: Samuel, age 19 and Annika, age 18. The children have lived primarily with Ms. Bower since separation.

[3]             Both parties are self-employed. Mr. Zeggelaar is a farrier. Ms. Bower is a business coach.

[4]             The parties attended a Settlement Conference on January 27, 2022, and reached an Interim Without Prejudice Agreement on parenting, child support and spousal support (“January 2022 Order”).  Pursuant to the January 2022 Order, commencing February 1, 2022, Mr. Zeggelaar was to pay $2,000 a month child support and $2,000 a month spousal support on an interim without prejudice basis.

[5]             The parties fully resolved parenting and property division by consent. A Consent Order (Parenting and Property Division) was issued on November 16, 2023.

[6]             The matter came before the court for a full-day trial on November 20, 2023 on the issues of child and spousal support.

Evidence

[7]             Both parties filed extensive affidavit evidence and various exhibits.

Ms. Bower’s Evidence:

[8]             Ms.  Bower filed three affidavits and was cross-examined.

[9]             She also filed Responses to Interrogatories from ten of Mr. Zeggelaar's farrier clients, by consent.

[10]         Ms. Bower also filed copies of receipts from Atlantic Farrier & Blacksmith Supplies, Marechalerie Bromont and Source for Horse for 2020 to 2023 (Exhibit 2 – p 1070) . These receipts were disclosed by Mr. Zeggelaar and show horseshoes purchased for his farrier business in those years.

[11]         A copy of the Mr. Zeggelaar's 2019 daily calendar (the "2019 Diary") was exhibited to Ms. Bower's affidavit sworn on January 19, 2022. This calendar contains Mr. Zeggelaar's handwritten notes relating to his farrier business for 2019.

[12]         Mr. Zeggelaar’s 2019, 2020, 2021 and 2022 handwritten receipt books were also filed.

[13]         Ms. Bower’s latest Statements of Income and Expenses were filed on July 18, 2023.  Her updated Statement of Special and Extraordinary is dated November 20, 2023 and attaches all receipts for the children’s purported special expenses as defined by the Federal Child Support Guidelines (“CSG”) from the date of separation.

[14]         Albert Barry Gay, a friend of the parties,  filed an affidavit which was entered into evidence by consent.

[15]         Pauline Murray Bower, Ms. Bower’s step-mother, filed an affidavit and was cross-examined.

Mr. Zeggelaar’s Evidence

[16]         Mr. Zeggelaar filed four affidavits and was cross-examined.

[17]         Mr. Zeggelaar also filed three expert reports regarding his hip issues and ability to work, which reports were admitted by consent:

•        Transferrable Skills Assessment Report of Ashlee Baskey, MScOT, OT Reg., dated April 4, 2023;

•        Functional Capacity Evaluation Report of Bevan Sequeira, MScOT, OT Reg., dated March 6, 2023; and

•        Medical Report of Dr. E.B. Howatt, dated February 1, 2023 and updated Medical Report of Dr. E.B. Howatt, dated November 1, 2023. Mr. Zeggelaar also filed Answers to Interrogatories sworn by Dr. Howatt dated August 2, 2023.

[18]         Mr. Zeggelaar filed Answers to Interrogatories sworn by Ms. Bower dated July 25, 2023 (Tab 18 of Mr. Zeggelaar’s Exhibit Book), regarding her income and expenses.

[19]         Mr. Zeggelaar's most recent Statements of Income, Expenses and Special Expenses were filed on July 18, 2023.

[20]         Statements of Income, Expenses and Property for Mr. Zeggelaar’s partner, Sarah Amirault, were filed on August 11, 2023.

ISSUES

1.                      Divorce

2.                      Mr. Zeggalaar’s income for child and spousal support purposes

3.                      Ms. Bower’s income for child and spousal support purposes

4.                      Prospective and Retroactive Table and Section 7 Child Support

5.                      Prospective and Retroactive Spousal Support: Entitlement, Quantum and Duration

 

ISSUE 1: DIVORCE

[21]         The Court is satisfied that all jurisdictional elements have been proven and grants the divorce on the grounds of a one-year separation pursuant to the Divorce Act S.8(1)(2)(a).

ISSUE 2: MR. ZEGGALAAR’S INCOME FOR SUPPORT PURPOSES

Mr. Zeggelaar’s Reported Income

[22]         Mr. Zeggelaar’s reported gross business income and expenses set out in his annual Statements of Business and Professional Activities (“SOBA”), for the years 2018 to 2022, are as follows:

Year	Gross Business Income (Line 8519 of SOBA)	Total Expenses Deducted (Line 9368 of SOBA)	Net Income             (Line 9369 of SOBA)
2018	$151,800.65	$89,775.36	$62,025.29
2019	$155,573.91	$91,684.38	$63,889.53
2020	$158,073.03	$78, 350.63	$79,772.40
2021	$144, 921.00	$79,880.21	$65,040.79
2022	$134, 403.96	$114,527.51	$19,876.45

[23]         These figures do not include unreported cash income. Also, Mr. Zeggelaar earned a small amount of non-recurring employment income in 2020 ($249.17) and 2022 ($6,395.40), which is not included.

Parties’ Positions

Ms. Bower’s Position

[24]         Ms. Bower’s position is that Mr. Zeggelaar’s reported income does not accurately reflect his available income for support purposes. She seeks that income be imputed to him on the basis of:

(i)               his underemployment;

(ii)             his receipt of cash income that is not reported in his tax returns (and is consequently untaxed); and

(iii)          his deduction of unreasonable business expenses.

[25]         She seeks to impute income to him calculated as follows:

Year	Line 150 Income	Plus $130,000 Imputed Cash, grossed-up	Plus CCA”[1]	Total Income
2021	$65,040	$281,040	$79,998	$426,078
2022	$25,368	$281,040	$114,527	$420,935
2023 2024	No information provided; proposes using 2022 income

 

Mr. Zeggelaar’s Position

[26]         Mr. Zeggelaar admits that a portion of his revenue results from cash payments for services rendered. He agrees that CCA should be added back into his income(but not his other deducted expenses).

[27]         His position is that his income for retroactive and prospective child support should be calculated as follows:

Year	Gross Business Income (8519)	Less Total Expenses (9368)	Plus CCA  (9936)	Plus $30,000 Cash grossed up	Total Income for Support
2021	$144, 921.00	($79,880.21)	$7,804.12	$50,510.00	$123,354.91
2022	$134, 403.96	($114,527.51)	$50,930.95	$50,391.00	$121,198.40
2023, 2024	No information provided; proposes using 2022 income

 

Law: Imputing Income

[28]         Section 19 (1) of the CSG sets out a non-exhaustive list of circumstances which the court can impute income:

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;

…

(f) the spouse has failed to provide income information when under a legal obligation to do so;

(g) the spouse unreasonably deducts expenses from income;

(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax;

[29]         Parsons v. Parsons, 2012 NSSC 239 (para 32) summarizes the legal principles that apply to section 19:

[32]   Section 19 of the Guidelines provides the court with the discretion to impute income in specified circumstances. The following principles are distilled from case law:

a. The discretionary authority found in s.19 must be exercised judicially, and in accordance with rules of reasons and justice, not arbitrarily. A rational and solid evidentiary foundation, grounded in fairness and reasonableness, must be shown before a court can impute income: Coadic v. Coadic 2005 NSSC 291.

 b. The goal of imputation is to arrive at a fair estimate of income, not to arbitrarily punish the payor: Staples v. Callender, 2010 NSCA 49.

 c. The burden of establishing that income should be imputed rests upon the party making the claim, however, the evidentiary burden shifts if the payor asserts that his/her income has been reduced or his/her income earning capacity is compromised by ill health: MacDonald v. MacDonald, 2010 NSCA 34; MacGillivary v. Ross, 2008 NSSC 339.

d. The court is not restricted to actual income earned, but rather, may look to income earning capacity, having regard to subjective factors such as the payor's age, health, education, skills, employment history, and other relevant factors. The court must also look to objective factors in determining what is reasonable and fair in the circumstances: Smith v. Helppi 2011 NSCA 65; Van Gool v. Van Gool, (1998), 1998 CanLII 5650 (BC CA), 113 B.C.A.C. 200; Hanson v. Hanson, 1999 CanLII 6307 (BC SC), [1999] B.C.J. No. 2532 (S.C.); Saunders‑Roberts v. Roberts, 2002 NWTSC 11; and Duffy v. Duffy, 2009 NLCA 48.

i.  Underemployment

[30]         Mr. Zeggelaar’s 2020 reported income of $158,073.03 dropped to $144,921.00 in 2021 and to $134,403.96 in 2022. He attributes these reductions to health issues. He therefore has the burden of proof on the reasonableness of his reduction in income.

[31]         Ms. Bower’s position is that Mr. Zeggelaar’s health issues existed well before separation and that he voluntarily slowed down following separation.

[32]         Mr. Zeggelaar’s position is that his reduction in work is justified given his medical (hip) issues. He relies on the filed medical reports.

Medical  Reports

[33]         Mr. Zeggelaar had hip replacement surgery  in August 2023. The reports of both occupational therapists, the initial report of Dr. Howatt, and his Answers to Interrogatories, were all prepared prior to Mr. Zeggelaar’s surgery. Dr. Howatt provided an update letter dated November 1, 2023.

[34]         The parties agreed on the experts’ respective qualifications. Dr. Eric Howatt was qualified as an expert in orthopedic surgery; Ashlee Baskey and Bevan Sequeira were qualified as experts in Occupational Therapy.

[35]         Dr. Eric Howatt reported that Mr. Zeggelaar suffers from arthritis with gradual onset, first noted in X-rays in 2016 as “moderate”, and “substantially worse” in 2019. In 2021, it became “severe”.  Dr. Howatt’s evidence is that Mr. Zeggelaar’s ability to work is dependent on his pain threshold. In his November 2023 update, Dr. Howatt noted that Mr. Zeggelaar was recovering as expected from hip replacement surgery which occurred in August 2023, and that he had advised Mr. Zeggelaar to stay off work for three months. He noted that “at some point” Mr. Zeggelaar will likely need his other hip replaced, but that Mr. Zeggelaar feels “he may be able to cope for awhile” before this occurs. (Exhibit 4). Dr. Howatt expressed concern as to Mr. Zeggelaar’s risk of injury should he return to work after recovering from surgery (Exhibit 1 p. 968).

[36]         Ashlee Baskey provided a Transferrable Skills Assessment Report (April 4, 2023) and  Bevan Sequeira, provided a Functional Capacity Evaluation Report (March 6, 2023)

[37]         Ms. Baskey’s evidence (Exhibit 1 p. 812) is that while Mr. Zeggelaar possesses “a number of transferable skills”, he is “unlikely to find alternative competitive employment”. In her opinion, Mr. Zeggelaar was, at that time, “working beyond his safe functional tolerances”. She noted that Mr. Zeggelaar currently earns “an hourly wage of $210”, and that he intended to continue working as a farrier. She concluded that this was a reasonable option “as long as his symptoms and medical status remains stable” (Exhibit 1 p.813).

[38]         Ms. Sequeira’s evidence is that Mr. Zeggelaar’s pain was such that he could not work full time at that time. She deferred to Dr. Howatt’s opinion as to Mr. Zeggelaar’s work ability post-surgery.

Analysis and Court Findings

[39]         While Mr. Zeggelaar clearly has ongoing arthritis issues, it is unclear from the expert evidence as to whether this will result in his inability to work full time on a go forward basis. It appears he will need another hip replacement at some point in the future, and he will experience ongoing pain.

[40]         Mr. Zeggelaar testified that his surgery was successful, he was improving, and ready to do some work. Mr. Zeggelaar also testified that his clients had used other farriers during his sick leave, and he was unsure as to how this would affect his prospective revenue, especially with respect to his non-business clients, who frequently pay cash. He testified that he was not actively seeking work and did not intend to call his former clients to advise that he was working again.

[41]         Mr. Zeggelaar’s evidence is that Ms. Amirault pays for most of the household expenses as well as some of his expenses.  Although he testified that he intends to reduce his workload, he is prepared to pay prospective child support at this time based on his 2022 reported business revenue less non-CCA expenses.

[42]         The Court accepts that Mr. Zeggelaar’s ability to work was impacted by his hip issues in 2021, 2022,  and 2023. Therefore, the Court accepts Mr. Zeggelaar’s reported gross business income for those years.

[43]         The Court accepts Mr. Zeggelaar’s 2022 gross business income as the starting point for determining his income for 2023 and 2024(which is what both parties have also used). This is reasonable considering Mr. Zeggelaar is 66 years old and suffers from progressive arthritis.

ii.  S. 19(1)(f) and (h): Unreported “Cash” Income

[44]         While s. 19 does not specifically identify “unreported income” as a ground for imputing income, Courts have imputed income on this basis, having considered ss. 19(1)(f) and (h) and s. 23 of the CSG.

[45]         Section 19 (1) (f) and (h) of the CSG provide as follows:

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:

       …

(f) the spouse has failed to provide income information when under a legal obligation to do so;

     …

(h) the spouse derives a significant portion of income from dividends, capital gains or other sources that are taxed at a lower rate than employment or business income or that are exempt from tax;

[46]         S. 23 of the CSG provides that the Court may draw an adverse inference and impute income if a party fails to provide full disclosure.

Where the court proceeds to a hearing on the basis of an application under paragraph 22(1)(a), the court may draw an adverse inference against the spouse who failed to comply and impute income to that spouse in such amount as it considers appropriate.

[47]         The burden of proof is on the party seeking to impute, i.e. Ms. Bower: Ward v. Murphy, 2022 NSCA 20.

[48]         The Court cannot pull a figure “from the air”; but must have a sound evidentiary basis: Somers-Dilny v Dilny, 2019 NSSC 247.

[49]         Lifestyle can be used as evidence from which an inference may be drawn: see J.H. v. R.H., 2023 NSSC 237, which cites with approval Bak v Dobell, 2007 ONCA 304 (paras 40 to 43). In J.H. v. R.H., Justice Forgeron noted that the family lifestyle had been sustained in part by Mr. H.’s cash economy over the years, and found that Mr. H. had not accurately reported that portion of his gross business income he received in cash. As such she imputed income to Mr. H.

Parties’ Positions

[50]         Mr. Zeggelaar accepts a figure of $30,000 as unreported income for 2021, 2022 and 2023. He projects that he will earn a similar amount of cash in the future.

[51]         Ms. Bower argues that $130,000 is the more accurate amount of cash jobs both retroactively and prospectively. She uses 2019 as a “base” year due to the existence of the 2019 Diary.  

[52]         Ms. Bower’s position is that for 2019, Mr. Zeggelaar earned $155,573 reported income and an estimated $130,000 which was not invoiced (cash jobs) (i.e. 45% of the total revenue was cash).

[53]         Mr. Zeggelaar’s position is that in 2019, he earned approximately $185,573, of which $30,000 was estimated to be cash income (i.e. 16% of the total income was cash).

[54]         Both parties agree that Mr. Zeggelaar’s cash revenue should be grossed up for tax.

Evidence

Business Practices

[55]         Mr. Zeggelaar admits that some of his business was conducted in cash, for which he did not provide a receipt/invoice. He did not include this revenue in his income tax returns. He testified that, generally, non-business clients paid in cash and did not need a receipt. Ten of Mr. Zeggelaar's clients confirmed in their Answers to Interrogatories that they regularly paid him in cash and did not receive an invoice  or receipt.

[56]         Ms. Bower estimated that “half of the (Mr. Zeggelaar’s) clients paid cash” and that Mr. Zeggelaar offered a 15% discount to cash customers because he did not charge them HST (Exhibit 2, page 467, paras 46- 47).

[57]         Mr. Zeggelaar estimated he earned unreported cash of $20,000 to $30,000 in 2021 and prior years, approximately $10,000 in 2022 (Exhibit 1, page 371, para 69) and maybe a “bit more” in 2023.

Cash Payments – Cash in House

[58]         Ms. Bower attached receipts for various cash purchases for the period 2015-2020 (July 2023 Affidavit – Exhibit 2, page 467-468), including a cash payment for Samuel's tuition ($10,825), which Mr. Zeggelaar confirmed he paid in cash.

[59]         Mr. Zeggelaar confirmed that he had approximately $23,000 cash in a drawer in the matrimonial home on the day the parties separated (February 2021) and admits to providing $12,000 in cash to Ms. Bower between March and September 2021.

[60]         Ms. Murray Bower, Ms. Bower’s stepmother, testified as to large sums of cash that Mr. Zeggelaar received during the parties' marriage. [July 2023 Affidavit, Exhibit 2, page 586] However, on cross- examination it became apparent that her recollections did not necessarily support Ms. Bower’s cash estimate.

[61]         Mr. Gay’s evidence is that Mr. Zeggelaar regularly talked about his cash revenue, but Mr. Gay had no knowledge as to how much cash Mr. Zeggelaar received. 

Lifestyle

[62]         The parties lived a relatively affluent lifestyle which was supported by Mr. Zeggelaar’s cash earnings. The parties lived in a spacious property (which sold for over $900,000 after separation) and owned four to five horses. Mr. Zeggelaar attended numerous horse clinics as a hobby at considerable expense. Both children attended private school. The family took an annual southern holiday and owned a time share. The parties had significant debts at the time of separation.

Record Keeping – Lack of Disclosure

[63]         Mr. Zeggelaar’s record keeping raises questions. For example, in his November 2021 Affidavit, Mr. Zeggelaar attached a spreadsheet showing total receipted revenue he had received to date as $152,679. However, in his 2021 income tax return, his gross income was reported as $144,921. He was not able to explain this discrepancy on cross-examination.

[64]         Mr. Zeggelaar did not provide disclosure with respect to his unreported cash revenue. His evidence was that there was “no true way to accurately predict how many cash jobs” he performed a year. [November 2021 Affidavit, Exhibit 1, page 4, para 33]. However, Mr. Zeggelaar knew in 2021 that the amount of his cash income was an issue. He could/should have then implemented a process to record the cash income. 

Spreadsheets

[65]         Ms. Bower prepared two “spreadsheets” which were attached to her written submissions, “Spreadsheet A” and “Spreadsheet B”. 

[66]         Counsel for Mr. Zeggelaar argues that these spreadsheets should be excluded as they are “fresh evidence”. With respect, the Court disagrees.

[67]         Spreadsheets such as these show the pathway to a conclusion and are entirely permissible in argument if the figures used are part of the evidence before the Court. The Court must therefore be satisfied that there is an evidentiary basis for the figures used in these spreadsheets.

Spreadsheet “B”

[68]         Spreadsheet B lists the horseshoes purchased (per Mr. Zeggelaar’s receipts) in 2020, 2021 and 2022, which Ms. Bower then compared with horseshoes used (per Mr. Zeggelaar’s invoices). Ms. Bower’s conclusion is that that in 2020, 2021 and 2022, Mr. Zeggelaar purchased significantly more horseshoes than he invoiced and that these excess shoes were used for cash jobs that he did not invoice. From this Ms. Bower extrapolates that his “cash” jobs were approximately 50% of his revenues for those years.

[69]         However, Spreadsheet “B” does not take into account any amount for inventory. Mr. Zeggelaar testified that he holds $5,000 to $7,000 in shoe inventory at all times. This would significantly erode the gap described by Ms. Bower.

Spreadsheet “A”

[70]         Mr. Zeggelaar’s evidence is that he used the 2019 Diary to keep track of his appointments and services as well as a record of what tasks “were previously performed on each horse” for which he provided farrier services (November 2021 Affidavit, Exhibit 1, para. 24).

[71]         On cross examination, Mr. Zeggelaar testified as to the services which were represented by the abbreviations in the 2019 Diary, and the cost for these services.

[72]         In Spreadsheet “A”, Ms. Bower compared Mr. Zeggelaar’s 2019 Diary entries to his 2019 invoices. She then estimated values for the “cash” jobs and calculated the cash “gap” to be $132,348. In her January 2022 Affidavit, Ms. Bower had reached a similar conclusion, i.e. based on her review of the 2019 Diary she had concluded that in 2019 “the cash paying clients add up to $128,198” (Exhibit 2, page 16, para 51).

[73]         In his November 29, 2021 Affidavit (Exhibit 1, page 3-4, paras 24-26), Mr. Zeggelaar argues that this method is flawed in several respects:

24.       In response to the diary of 2019 that is included as an exhibit of the Respondent's affidavit, this diary is an inaccurate method to determine my income for 2019. I use this diary to keep track of my appointments, as well as a record of what task were previously performed on each horse that I provide farrier services for.

25.       I do not charge all of these clients the full price, and often I perform some services for free. An example is if I give a horse new shoes and then two weeks later one falls off, I do not charge the client for me to go back and replace the shoe. Another example is there are some clients that I trade services with, for example I did not charge our babysitter when I put new shoes on her horse.

26.       Some of the horses included in this diary belong to me, the Respondent, and our family. I do not receive payment when I shoe those horses.

[74]         On cross-examination Mr. Zeggelaar testified that the “free” services: “happened a fair amount”; “probably” every day; and “maybe not every day, on some days it would be two to three”. He also admitted that only one significant client, P.K., ran a tab and paid later for work.

[75]         Mr. Zeggelaar argues that Ms. Bower’s estimate of cash income is inaccurate because she does not deduct the cost of the shoes/supplies. However, on cross-examination, Mr. Zeggelaar testified that shoes and supplies are deducted as a business expense from his receipted revenue.

[76]         As of January 2022, Mr. Zeggelaar was made aware of Ms. Bower’s calculations, and her “cash work” totals. He had access to the 2019 Diary and his invoices. If he disagreed with her calculations, he could have performed his own calculations. He could also have started accurately reporting his cash work. Indeed, he had a duty to report all income available for child support purposes, which duty he did not fulfill.

What is the appropriate amount of cash income?

[77]         Mr. Zeggelaar has failed to provide full income disclosure. As a result, the Court draws a negative inference with respect to his 2021 and 2022 income.

[78]         Considering the evidence of the parties’ lifestyle pre-separation, the regular use of cash for significant expenses, and the 2019 Diary particulars, the Court is satisfied that the value of Mr. Zeggelaar’s cash work was higher than his $30,000 per year estimate.

[79]         Considering Mr. Zeggelaar's evidence as to his “free” work, his varying charges, and his reduced work due to his health, the Court is satisfied that Ms. Bower’s estimate of $130,000 per year is too high.

[80]         On the totality of the evidence, the Court finds that Mr. Zeggelaar’s cash income constituted at least 25% of his total income, calculated relative to his receipted income for the respective year.

[81]         The Court therefore calculates Mr. Zeggelaar’s total income for support purposes (prior to tax gross up for cash revenue) for the years 2021 and 2022 as follows:

[82]         In 2023, the Court accepts that Mr. Zeggelaar’s cash income decreased significantly due to his health issues and surgery. Therefore the Court accepts that his cash income is as estimated, i.e. $30,000.

[83]         For 2024 and prospectively, the Court accepts that Mr. Zeggelaar, at age 66, suffering from arthritis, and having given up cash clients during his 2023 sick leave, will have the cash income he estimates, i.e. $30,000.

Summary

[84]         The Court imputes income to Mr. Zeggelaar on account of cash earnings, grossed up, as follows:

 

iii.     s. 19(1)(g) Business Deductions

[85]         For the purposes of imputing income, the reasonableness of an expense deduction is not solely governed by whether the deduction is permitted under the Income Tax Act. (s. 19(2) CSG).

[86]         In J.H. v. R.H., supra, Justice Forgeron referenced the comments of the Alberta Court of Appeal’s decision in Cunningham v Seveny, 2017 ABCA 4 at para 26-27 regarding deduction of business expenses from gross income:

[26]           Furthermore, a parent challenging the reasonableness of the corporate or business expenses is not legally required to first establish a prima facie case that such expenses are unreasonable before disclosure becomes necessary. Simply put, in matters concerning child support, the required disclosure arises at the outset and continues to be the obligation of the disclosing parent throughout the duration of all child support proceedings.

[27]           The content of required disclosure must be sufficient to allow meaningful review by the recipient parent, and must be sufficiently complete and comprehensible that, if called upon, a court can readily discharge its duty to decide what amount of the disclosing parent’s annual income fairly reflects income for child support purposes. The issue is whether full deduction of an expense results in a fair representation of the actual disposable income of the party, and the court must balance the business necessity of an expense against the alternative of using that money for child support: Julien D Payne, “Some Notable Family Law Decisions from 2014 to 2015” (2015) 44:3 The Advocates’ Quarterly 271 at 295.

[87]         Business losses such as CCA deductions for vehicles, do not represent actual payments out of pocket and should be added back to income for support purposes. Somers-Dilny v Dilny, supra.  Therefore, Mr. Zeggelaar’s CCA deductions for each year will be added to his income for support purposes.

[88]         Mr. Zeggelaar testified that his seemingly high office stationary and supplies expense deduction includes his horseshoe inventory. Therefore, the Court will allow this business expense.

[89]         Deductions for a personal vehicle which are allowed for tax purposes, but which create a personal advantage, also unfairly reduce income for support purposes. Somers-Dilny v Dilny, supra.

[90]         Mr. Zegglelaar testified that he has one motor vehicle which he uses for both personal and business purposes. However, he does not isolate the business portion. In the absence of clear evidence from Mr. Zeggelaar, the court disallows 50% of his motor vehicle expenses.

Summary

[91]         Mr. Zeggelaar’s income for support is calculated as follows:

Year	Business Income (8519)	Less Expenses Deducted (9368)	Plus CCA (9936)	Plus 50% MVA	Plus Grossed up Cash	Total Adjusted Income (rounded)
2021	$144,921	($79,880)	$7,804.12	$11,464.48	$81,609	$165,918
2022	$134,403	($114,527)	$50,930.95	$11,369.05	$74,688	$156,865
2023 [3]	$134,403	($114,527)	$50,930.95	$11,369.05	$48,883	$131,059
2024[4]	$134,403	($114,527)	$50,930.95	$11,369.05	$48,883	$131,059

 

 

ISSUE 3: MS. BOWER’S INCOME FOR SECTION 7 CHILD SUPPORT AND SPOUSAL SUPPORT PURPOSES

[92]         Mr. Zeggelaar’s position is that in order to calculate Ms. Bower’s income for the purposes of Section 7 expense sharing and spousal support,  income should be imputed to her by adding back all of her business expenses.

[93]         Ms. Bower testified that the expenses she deducted for income tax purposes were reasonably incurred for her business.

[94]         Mr. Zeggelaar’s position is that Ms. Bower’s deductions for professional development are too high and are not linked to higher revenues. Ms. Bower’s position is that she needs to keep current by engaging in  professional development. The Court accepts Ms. Bower’s evidence in this regard and finds that these expenses are reasonable.

[95]         Ms. Bower deducts a small percentage of her total household expenses for a home office. The Court accepts her evidence that she needs and uses a home office and finds that the portion of household costs attributed to the office is reasonable. As such, the Court allows Ms. Zeggelaar’s deduction for her home office.

[96]         In certain years, Ms. Bower deducts her vehicle expense without reporting the personal portion. This practice is similar to that of Mr. Zeggelaar. In the absence of clear evidence from Ms. Bower, the court disallows 50% of her motor vehicle expenses.

[97]         Ms. Bower’s CCA deduction will also be added back to her income.

[98]         The Court finds that the remainder Ms. Bower’s expenses deducted for income tax purposes are reasonable.

Summary

[99]         Ms. Bower’s income for support purposes for 2021 and 2022 is calculated as follows:

Year	Gross Business Income (8519)	Less Expenses Deducted (9368)	Plus CCA (9936)	Plus 50%  MVA (9281)	Income (rounded)
2021	$111,103.26	($34,841.75)	$4,556.72	$2,071.14	$82,890
2022	$105,439	($35,770.60)	$3,189.49	$3,352.16	$76,210

[100]    Ms. Bower did not provide evidence of her 2023  income. Therefore, the Court relies on her 2022 income for 2023 and ongoing support purposes.

ISSUE 4: PROSPECTIVE AND RETROACTIVE CHILD SUPPORT

 

Parties’ Positions

[101]    The parties agree that both children continue to be children of the marriage who are entitled to child support. Samuel, while over the age of majority, has significant learning disabilities and still resides at home while attending university on a part-time basis. Annika is almost 18 and is finishing grade 12.

Section 7 Expenses

[102]    The Court accepts the Section 7 expenses as set out in Schedule “A” attached to this decision.

[103]    The Court is satisfied that all Kings Edgehill School (“KES”) and Landmark East School (“LME”) expenses paid after separation (February 2021) are Section 7 expenses. While some expenses may have been “optional”, there is no evidence as to which ones were mandatory and which ones were not.

[104]    The parties agree that various health expenses are Section 7 expenses.

[105]    The Court did not include the following claimed expenses as they were paid prior to the date of separation (February 23, 2021) and/or there is no evidence of the date of payment:

•        LME Spring 2021 Tuition, which Mr. Zeggelaar paid in December 2020

 

•        LME Student Expense February 10-11, 2021 of $50.00, no evidence of payment date

[106]    The Court accepts Ms. Bower’s calculations on Mr. Zeggelaar’s estimated tax savings for the LME Tuition paid in the 2021 and 2022 tax year. Ms. Bower argues that Mr. Zeggelaar’s tax savings should be added to the retroactive child support owing. This is not in accordance which Section 7 of the CSG which provides that the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense. In other words, the claimed expense must be net of any tax savings when determining each parties’ share.

[107]    The Court has applied the 2021 and 2022 tax savings to the 2021/2022 school year and 2022/2023 school year respectively.

[108]    The Court finds that Mr. Zeggelaar owes $37,078 in retroactive Section 7 expenses, calculated as follows:

Year	Total Expenses	Mr. Zeggelaar’s  Share	Total Owed by Mr. Zeggelaar	Less Paid by Mr. Zeggelaar	Retroactive Section 7 (rounded)
2021	$4,277.92	67%	$2,866.20	($0.00)	$2,866
2022	$33,919.22	67%	$22,725.88	($13,202)	$9,524
2023	$45,183.01	63%	$28,465.30	($16,664)	$11,801
2024	$20,455.00	63%	$12,886.65	($0.00)	$12,886
Total Retroactive Section 7 Child Support Owing by Mr. Zeggelaar					$37,078

 

Table Child Support

[109]    The applicable table child support for two children based on the court’s findings on income is as follows:

Year	Mr. Zeggelaar’s Income	Ms. Bower’s Income	Mr. Zeggelaar’s Total Table Child Support Owing Monthly  (Annual)
March 2021 to December 2021 (10 months)	$165,918	$82,890	$2,179 ($21,790)
2022	$156,865	$76,210	$2,070 ($24,840)
2023	$131,059	$76,210	$1,763 ($21,156)
2024 – January	$131,059	$76,210	$1,763
Total Child Support Owing March 2021 to January 31, 2024 inclusive (rounded)			$69,549

Adjustments

[110]    Mr. Zeggelaar’s position is that he should receive  credit for the following payments:

(i)               $38,000 in table child support (January 2022 Order) for the months February 2022 to August 2023 inclusive (19 payments x $2,000 per month). It is agreed that these payments shall be deducted from the retroactive child support owing.

(ii)             $14,634 paid via cheques from March 2021 to December 2021. Ms. Bower acknowledges that Mr. Zeggelaar made these payments.

(iii)          $920 paid via cheque on January 10, 2022 and cash payments totalling $12,000 between March 2021 to September 2021. Ms. Bower acknowledges that Mr. Zeggelaar made these payments. (Exhibit 2, page 468, July 2023 Affidavit para 56-57 and page 16, January 2022 Affidavit para 52) However, she argues that the $12,000 cash payments were for items such as property insurance, children’s laptops and household maintenance and should not be considered in retroactive calculations.  These type of expenses are exactly the kind of expenses for which support is used. The Court finds that Mr. Zeggelaar should receive credit for these payments.

(iv)           Mortgage and property tax payments of $2,108 per month from March 2021 to December 2021 (total $21,080) while Ms. Bower resided in the home. The Court accepts this figure and gives Mr. Zeggelaar credit for these payments.  The Court does not accept that this amount should be grossed up as submitted by Mr. Zeggelaar.

Summary

[111]    Mr. Zeggelaar should have paid child support to January 31, 2024 as follows:

Table Child Support:                                                                      $69,549 (Page 31)

Section 7 Child Support Owing (net of his payments):                 $37,078 (Page 30)

Less Table Child Support Paid (January 2022 Order):                ($38,000)

Less Credits:           Cheques                                                          ($14,634)

                               Cheque                                                            ($920)

                               Cash payments                                                ($12,000)

                               Mortgage                                                        ($21,080)

Adjusted Retroactive Table and Section 7 Child Support :        $19,993      

[112]    The Court finds that Mr. Zeggelaar owes retroactive table and Section 7 child support of $19,993 to Ms. Bower for the period March 1, 2021 to January 31, 2024.

[113]    The Court has considered the factors for a retroactive award of child support as outlined in D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry v. Henry; Hiemstra v. Hiemstra [2006] 2 S.C.R. 231. Ms. Zeggelaar has the financial means to pay retroactive child support. The children reside with Ms. Bower and will benefit from the payment.  

ISSUE 5 PROSPECTIVE AND RETROACTIVE SPOUSAL SUPPORT

Law

[114]    The Court may order spousal support pursuant to s. 15.2(1), (3), (4) (5) and (6) of the Divorce Act.

15.2 (1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

…

Terms and conditions

(3) The court may make an order under subsection (1) or an interim order under subsection (2) for a definite or indefinite period or until a specified event occurs, and may impose terms, conditions or restrictions in connection with the order as it thinks fit and just.

 

Factors

(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

(c) any order, agreement or arrangement relating to support of either spouse.

Spousal misconduct

(5) In making an order under subsection (1) or an interim order under subsection (2), the court shall not take into consideration any misconduct of a spouse in relation to the marriage.

Objectives of spousal support order

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[115]    S. 15.2 (6)(a) and (b) of the Divorce Act form the basis of a “compensatory” approach to spousal support. S. 15.2(6)(c) provides the basis for payment of spousal support based on a “non-compensatory”, needs based approach.

[116]    Assuming primary responsibilities for child rearing and its corresponding negative effect on that parent’s career can support a finding of compensatory justification for spousal support:  MacDonald v MacDonald, 2017 NSCA 34,

[117]    In Gates v Gates, 2016 NSSC 49, Justice Jesudason considered the circumstances in which an order for compensatory spousal support will be appropriate:

Examples of circumstances that may lead to an award of compensatory support could include, but are not limited to, where a spouse's education, career development or earning potential have been impeded as a result of the marriage, or the spouse has contributed financially either directly or indirectly to assist the other spouse in his or her education or career development (Shurson v. Shurson, 2008 NSSC 264, para. 13);

Often, the most significant economic consequence of marriage or marital breakdown arises from the birth of children. Traditionally, this would often result in the wife cutting back on participating in the workforce in order to care for the children potentially jeopardizing her ability to ensure her own income security and independent economic well-being. In such situations, compensatory support may be a way to compensate for such economic disadvantage (Moge, at para. 80); and

When considering entitlement to compensatory support, great disparities in the standard of living that would be experienced by spouses in the absence of support are often a revealing indication of the economic disadvantages inherent in the role assumed by one party. A marriage should be regarded as a joint endeavour, the longer the relationship endures, the closer the economic union, the greater will be the presumptive claim to equal standards of living upon its dissolution (Moge, para. 84).

[118]    Non-Compensatory spousal support is needs based and relates to the financial consequences suffered by a spouse on marriage breakdown. Bracklow v. Bracklow [1999] 1, S.C.R. 420.

Entitlement

Ms. Bower’s Position

[119]    Ms. Bower seeks prospective and retroactive spousal support on a compensatory and non-compensatory basis.

[120]    Ms. Bower’s position is that she is entitled to compensatory spousal support because she was primarily responsible for caring for the children and the parties' large property while Mr. Zeggelaar was the primary “breadwinner”. Ms. Bower argues that her work opportunities were limited, and continue to be limited, because she was primarily responsible for caring for the children, including their transportation to and from school, and taking them to appointments.

[121]    Ms. Bower is also seeking spousal support on a non-compensatory basis due to the difference in lifestyle between Mr. Zeggelaar and her, and her financial needs since separation. She submits that she has struggled financially to keep up with the bills and children's expenses, whereas Mr. Zeggelaar has shared his expenses with a wealthy new partner.

[122]    Ms. Bower’s reported gross business income, less deductions, based on her income tax returns for 2015 to 2022, is as follows:

 

Mr. Zeggelaar’s Position

[123]    Mr. Zeggelaar’s position is that Ms. Bower has no ongoing entitlement to spousal support on either a compensatory or non-compensatory basis. He points to the fact that Ms. Bower did, in certain years, earn a significant income, and he testified that he shared in the children’s care and transportation during the marriage.

[124]    In the alternative, he argues no spousal support is owing based on the parties’ current respective incomes.

[125]    With respect to retroactive spousal support, his position is that his voluntary payments made between March 2021 to January 2022 and the spousal support payments made pursuant to the January 2022 Order satisfy any entitlement Ms. Bower had to spousal support following separation.

Court Findings

[126]    The Court finds that Ms. Bower has proven entitlement to compensatory spousal support. The parties were married for almost 31 years and she was the primary caregiver of the parties’ two children. Ms. Bower worked during the marriage; however, the Court finds that her work was of secondary priority to her family responsibilities, and her earnings were supplemental to the family. Mr. Zeggelaar was always the primary income earner during their marriage and his career took priority.

[127]    The Court finds that Ms. Bower has proven entitlement to spousal support on a non-compensatory basis due to the fact that she cannot maintain a lifestyle close to that which she enjoyed during the marriage without spousal support. Mr. Zeggelaar’s lifestyle, on the other hand, has not been greatly disadvantaged by the breakdown of the marriage.

[128]    The Court finds that her income earning ability will continue to be somewhat constrained by Samuel’s needs in the foreseeable future. Therefore, she meets the requirements of s. 15.2(6)(b).

[129]    The Court also accepts Ms. Zeggelaar’s evidence that she suffered financially in relocating to another home after the sale of the matrimonial home and was therefore entitled to support. She was constrained geographically due to the children’s circumstances. Mr. Zeggelaar was able to move in with his new partner and suffered no financial implications from relocating.

What is the appropriate amount of spousal support ?

[130]    The Court has considered Spousal Support Advisory Guidelines calculations (“SSAG”^[5]) , and the parties’ respective Statements of Income and Statements of Expenses in reaching a quantum of spousal support.

[131]    In MacDonald v. MacDonald, 2017 NSCA 34,  the Court of Appeal recognized that while the SSAGs are not legally binding, they are a useful tool which can promote consistency among awards and accommodate the scheme for spousal support in s. 15.2 of the Divorce Act. See also Strecko v. Strecko, 2014 NSCA 66.

[132]    The SSAG calculations are as follows for the applicable years:

Year	Mr. Zeggelaar’s Income	Ms. Bower’s Income	SSAG Range
March 2021 to December 2021	$165,918	$82,890	$328 - $863 - $1,400
2022	$156,865	$76,210	$63 - $566- $1,053
2023	$131,059	$76,210	$0 - $0- $200
2024	$131,059	$76,210	$0-$75-$540

[133]    From February 2022 to August 2023, inclusive, Mr. Zeggelaar paid $2,000 a month spousal support pursuant to the January 2022 Order. This is higher than the SSAG levels.

[134]    The Court finds that the amount of spousal support that Mr. Zeggelaar paid  ($38,000) during that period is appropriate given that Ms. Bower had to “front end” many of the children’s Section 7 expenses and she had to relocate. Therefore, the Court will not adjust spousal support prior to August 31, 2023.

[135]    Mr. Zeggelaar has not paid any spousal support since the August 2023 payment. Mr. Zeggelaar did not work significantly due to health issues between August 2023 and January 2024.  The Court therefore waives spousal support payments under the January 2022 Order for September 2023 to January 2024 inclusive.

[136]    Ms. Bower’s Statement of Expenses, even if pared down, and adjusted for her imputed income,  is very tight. This is primarily due to her high housing costs. The Court accepts that on the sale of the matrimonial home, she had few housing options which were appropriate for her and the children. 

[137]    Mr. Zeggelaar will be paying significant child support and possibly a contribution to Section 7 expenses.  Child support is prioritized by the Divorce Act: s. 15.3. Having reviewed the factors and objectives of the Divorce Act, the parties’ respective budgets, the SSAG calculations, and all the evidence, the Court  finds that Ms. Bower is entitled to ongoing spousal support of $500 per month commencing February 1, 2024. This figure would have been higher had Mr. Zeggelaar not had a child support obligation.

Summary

[138]    The Court orders:

(i)               The divorce is granted.

(ii)             Commencing February 1, 2024, Mr. Zeggelaar shall pay table child support for two children in the amount of $1,763.00 per month, based on an income of $131,059.00.

(iii)          Commencing February 1, 2024, the parties shall share prospective Section 7 expenses proportionate to their respective  incomes: Mr. Zeggelaar shall pay 63% and Ms. Bower shall pay 37%.

(iv)           Mr. Zeggelaar shall pay retroactive table and Section 7 child support of $19,993.00 for the period of March 1, 2021 to January 31, 2024, which shall be payable on or before March 1, 2024.

(v)             The provisions of the January 2022 Order shall cease for child support and spousal support as of August 31, 2023.  

(vi)           Commencing on February 1, 2024, Mr. Zeggelaar shall pay spousal support of $500.00 per month to Ms. Bower.

[139]    Ms. Connors is to prepare the order.

Costs

[140]     If either party seeks costs, and the parties cannot agree, the parties shall file their cost submissions within one month of this decision.

 

Dewolfe, J

                                SCHEDULE “A” Section 7 Expenses

 

Expense (Net)	Ms. Bower	Mr. Zeggelaar	Evidence[6]
2021
LME 2020/2021 (Payments after February 2021) Morning Transportation Service	$495.00		Tab 3
KES: March 4, 2021 and April 2021 payments: Tuition and Expenses (to clear account balance owing at separation) (Annika)	$3,707.92		Tab 13
KES May 2021 Year Book (Annika)	$75.00		Tab 13
2021 Total Paid ($4,277.92)	$4,277.92
2022
LME Tuition 2021/2022 School Year (Samuel)		$13,202 ($16,200 less estimated tax savings $2,998)	p. 616 REB Receipt   Tab 1 (income tax calculations)
LME 2021-2022 School Year Morning Transportation Service (Samuel)	$1,269.00		Tab 3
LME Expenses 2021 (Samuel): Kingwood Camp Day Spring Field Day May	$35.00		Tab 4
KES Tuition 2021/2022: $19,950 less $2,000 Scholarship (Annika)	$17,950.00		Tab 14
KES Misc 2021/2022 (School Planner, ID Card, Tech Fee, T- Shirt, Oceans Trip, Tennis Club, Books, Martock) (Annika)	$1,003.29		Tab 14
Eye Exam March 2022(Annika)	$37.20		Tab 18
Glasses March 2022 (Annika)	$422.73		Tab 19
2022 Total Paid ($33,919.22)	$20,717.22	$13,202
2023
LME Tuition 2022/2023 School Year (Samuel)		$14,734 ($16,800 less tax savings estimated $2,066)	p. 617 REB Receipt   Tab 1 (Income Tax calculations)
LME 2022-2023 School Year Morning Transportation Service (Samuel)		$1,500	p. 274 PEB
LME Expenses 2022/2023 (Samuel): Camp Day, Grad Photo Sitting Fee, Ski Martock, Ski Martock, Field Trip + Grad Trip to White Point		$430.00	p. 273 of PEB
2023 Eye Exam (Samuel) (uninsured portion)	$100.80		Tab 6
2023 Glasses (Samuel)	$361.20		Tab 7
2023 Wisdom Teeth Consult (Samuel)	$90.00		Tab 8
2023 Wisdom Teeth Extract (Samuel)	$332.00		Tab 9
Counselling (Samuel) 2023	$495.00		Tab 10
KES Tuition 2022/2023: $20,950 less $2000 scholarship (Annika)	$18,950		Tab 15
KES Misc 2022/2023 (School Planner, ID Card, Tech Fee, School photo, Tennis Club, TI, Ski Martock, T-shirt, Fine Arts, Year Book) (Annika)	$870.05		Tab 15
Orthodontics) 2023 (Annika)[7]	$6,200.00		Tab 17
Contact Lens ($189.98) +   Fee ($80) March 24, 2023 (Annika)	$269.98		Tab 20
Contact Lens August 2, 2023(Annika)	$189.98		Tab 20
Counselling 2023 (Annika)	$660.00		Tab 21
Acadia University Deposit & Tuition (Samuel)	$0.00	$0.00	Tab 11 * paid by grant
2023 Total Expenses ($45,183.01)	$28,519.01	$16,664
2024
KES Tuition 2023/2024 $22,400 less $2,000 Scholarship (Annika)[8]	$20,400		Tab 16 (Invoice as of October 5, 2023)
KES 2023/2024 School Year Expenses (T. Fox T-shirt and Tennis Club)	$55.00		Tab 16 as of October 5, 2023
2024 Total Expenses (Paid or to be paid $20,455)	$20,455