Justice Briana Hardwick of the British Columbia Supreme Court, formerly highly respected family law counsel, released her Reasons in S.D.N. v. E.G.N.,2025 BCSC 1994 on Oct. 10, a treatise on the determination of income of a party who is a majority shareholder of multiple corporations, in the context of a child support application.
In yet another high-conflict family law proceeding, the parties separated in 2015 when their only child, a daughter, was just over 5 years old. The parties agreed to a shared parenting arrangement which operated smoothly until their daughter, in her early teen years, became estranged from the claimant mother.
The case was set for trial in October 2024, but shortly before the commencement of the trial the parties entered into a consent order, agreeing that a reconciliation/reunification therapeutic team be engaged, that Justice Hardwick case manage the process and the trial was adjourned.
Happily for the child and the claimant, the program was successful and the parties returned to a shared parenting schedule. A new trial had been booked which was to commence mid-November 2025 for three weeks, however, the claimant mother brought several interim applications, including one for financial document production and another for interim child support.
With the return to a shared parenting schedule, the respondent husband’s income became a central factor in the dispute regarding child support, which Justice Hardwick deemed urgent enough to proceed to hear, despite a trial in five weeks, observing that her Reasons following the trial may not be released for several months.
While the respondent did pay voluntary child support once shared parenting recommenced, he unilaterally determined that his income was $225,000 per annum based on his 2023 income tax return at line 150. He paid $1,701 a month. The claimant’s income was $80,000 and her portion of child support was set off against the respondent’s.
Justice Hardwick found that the respondent had ignored multiple overtures made by the claimant to obtain financial disclosure from him and was in breach of her August 2025 document production order.
To make matters worse for the respondent, he advised the court that he had retained an expert and had an income report prepared, acknowledging that he provided the expert with the required documents, but failed to provide them to the claimant. He delivered the report to the claimant in July 2025 and increased his child support payment to the sum of $4,124 monthly, declaring his income to be $603,000 annually.
In the result, the claimant was unable to properly challenge the income report because she did not have the supporting documents. The respondent was fined $2,500, a sum that apparently meant little to him, as by the time of the interim support application in mid-September 2025, documents had still not been disclosed.
Justice Hardwick found that the respondent had a majority interest, either directly or indirectly, in three related corporations in the freight courier industry, operating out of Alberta. In one other company, he had a minority interest of 40 per cent. With the benefit of the respondent’s income report, the claimant advanced the following arguments with respect to the respondent’s income, which she submitted was $2,615,646 per annum, requiring a monthly payment, after a set-off of her contribution, of $19,283 a month.
a) All the pre-tax income of two of the companies ought to be included in the respondent’s Guideline income;
b) All the amortization deducted from two of the companies ought to be added to the respondent’s pre-tax corporate income;
c) Forty percent of the pre-tax income for a third company ought to be included in the respondent’s Guideline income;
d) Forty percent of the amortization deducted by a third company ought to be added to the respondent’s pre-tax income;
e) Fifty percent of the pre-tax income for a fourth company ought to be included in the respondent’s Guideline income;
f) Fifty percent of the amortization deducted by the fourth company be added to the respondent’s pre-tax income; and
g) Add back personal expenses inappropriately claimed by the respondent and apply an appropriate gross up to add to his Guideline income.
Justice Hardwick began her income analysis by reviewing the expert income report, noting that she was not bound by it. Based on the assumptions in the report and on the respondent’s disclosure to the expert, the expert posited two scenarios, the first cited 2024 annual income of $963,000, and the second produced an annual income of $833,000 discounting the factors referred to by the claimant with respect to an adjustment for a non-recurring taxable capital gain; bank covenants that required funds to remain in the company; the respondent’s alleged status as a minority shareholder in two of the companies; and the retention of funds in one company to satisfy it’s capital lease principal repayments and long-term loan principal repayments.
The expert opined that personal expenses that were paid with corporate funds were as follows:
a) Fuel: 70 per cent of $5,820
b) Vehicle: 70 per cent of $12,798
c) Cell phone: 70 per cent of $953
d) Tutition for child: $6,574; and
e) Professional fees: $494,234 (grossed up)
Next, Justice Hardwick considered the principles relating to s. 18 of the Child Support Guidelines, citing the leading cases of Kowalewich v. Kowalewich, 2001 BCCA 450, Hausmann v. Klukas, 2009 BCCA 32, and Quinton v. Kehler, 2020 BCCA 254 where Justice Peter Willcock stated:
… the corporate income method is likely to be the fairer method of determining income of an individual who wholly controls a corporation. This method allows a court to include all income available for child support an intact family would utilize. Third, where that approach is appropriate, pre‑tax corporate earnings, not retained earnings or earnings after payment of taxes, are the starting point for an assessment of Guidelines income. Fourth, where a company is wholly owned by the payor, the onus is on the payor to provide evidence that his pre‑tax corporate earnings are not available to him.
The court also considered the claimant’s arguments regarding the adding back to income the amortization deductions from revenue, an amount of $603,000 in tax year 2024, citing S.C. v. D.A., 2012 BCSC 1061, which recognizes that s. 18 provides authority to add back amortization expenses in certain circumstances. She noted, however, that the law in this regard is “complicated” and was only raised by the claimant in her written submissions provided to the court at the hearing in September 2025.
Her original application materials did not raise the issue of amortization and relying on Ross v. Ross, 2017 BCSC 371, where the court declined to consider the argument where the opposing party had been ambushed, Justice Hardwick applied the same rationale to shut down the claimant’s request that amortization be added to the respondent’s income.
Finally, the court considered s. 19 of the Guidelines and the payment of personal expenses from corporate funds, holding that certain categories of payments were patently obvious and inappropriate, including the respondent’s legal fees for his family law case, particularly where there was not a reckoning for these funds in the respondent’s shareholder’s loan account, and his daughter’s tuition payments. Both were unacceptable.
Ultimately Justice Hardwick decided that given the dearth of evidence on many aspects of the relevant material, the best she could do on an interim basis was rough justice, noting the following amounts, totalling $1.5 million (rounded up) of income per annum:
a) The respondent’s 2024 line 150 income was $202,000;
b) Company 1: 100 per cent of corporate pre-tax income of $480,078;
c) Company 2: 40 per cent of corporate pre-tax income of $30,763;
d) Company 3: 50 per cent of corporate pre-tax income of $8,334;
e) Personal expenses grossed up of $494,234.
After implementing the set-off of the claimant’s share of child support based on her income of $80,000, the respondent was ordered to pay $11,121 a month, with retroactive support and s. 7 expenses to be left to the trial.
For counsel struggling with payors who are corporate shareholders, this judgment provides a solid grounding in the intricacies of ascertaining income with a clear analysis of the issues to be considered.
**This article was first published in LAW360, a publication of LexisNexis Canada.