Foster Richmond LLP Blog

Leskun v. Leskun, [2006] 1 S.C.R. 920,

http://www.canlii.org/en/ca/scc/doc/2006/2006scc25/2006scc25.html

In Leskun , the Supreme Court distinguished between reviewing spousal support and varying spousal support.

In the case that an order for spousal support allows the amount and/or entitlement of spousal support to be reviewed, unlike an application to vary spousal support, the Applicant payor is not required to prove that there has been a material change in circumstance.  The Supreme Court of Canada stressed that review orders under section 15.2 of the Act are to be used in instances where, at the time the order is made, “one or both parties…may not, as yet, have the economic wherewithal even to commence recovering from the disadvantages arising from the marriage and its breakdown” (para. 36).

Effectively, review orders, according to Leskun, are for situations where, at the time the order is made, there is some sort of uncertainty with respect to the ability of one or both parties to recover economically from the marriage breakdown, and thus there is uncertainty with respect to whether spousal maintenance should be continued after a certain period of time, and if so, in what amount.

Taylor v. Taylor 2009 ABCA 354

The parties were married for 18 years and had two children who the parties shared parenting. The husband worked for the wife’s father until the parties separated.  The father in law’s company gave the husband a one year severance package and also compensated the wife.  The husband started his own company and borrowed very heavily to purchase the new assets.  He began drawing $75,000.00 per annum from the company.  When the wife stopped receiving her severance from her father’s company, she made an application for spousal support of $2000 per month and child support based on an imputed income of $124,000.

The principles of imputing income follow from the Alberta case of Hunt v. Smolis-Hunt (2001) ABCA 229.  The test for imputing income is (1) the court should have regard to the overall purpose of the Guidelines, which is to establish fair levels of support for children from both parents in a consistent matter; (2) that section 19(1)(a) requires a specific intention to undermine or avoid support payments or proof of circumstances which permit the court to infer that a payor’s intention is to undermine or avoid support obligations; and (3) that people involved in divorce proceedings are permitted to change employment.

With Mr. Taylor, it was not the case that he wanted to or purposively tried to avoid his support obligations. Moreover, the court could accept why he no longer wanted to work at his father in law’s company and why he would want to start his own business.  The Court of Appeal did not, however, agree with the lower court’s use of employment law principles to determine that Mr. Taylor did not successfully negotiate better borrowing terms.  On the facts, it was held that Mr. Taylor did not intentionally become underemployed and did not try and evade support.

Child and spousal support were based on an income of $75,000.00.

Beninger v. Beninger 2009 BCCA 458

In 2002 the parties divorced after a 27 year traditional marriage.  The Husband, who was a tax lawyer in Calgary, had his income determined to be $330,650, and spousal support set at $9000 per month and child support based on the guidelines. The Order stated  that should the husband’s income changes or if the husband provided better or further financial information, the order could be reviewed for the spousal amount.

The Wife, upon learning that the husband had received a performance bonus in 2008, made an application to review support.  In the Court of Queen’s Bench, the husband was ordered to pay child support based on the guidelines of an income of $416,400 and spousal support of $10,000 per month. The wife appealed on the fact that she believed the Husband’s income to be $475,000 and that she wanted both parties’ net disposable incomes equalized.

The Court of appeal was not prepared to overturn the decision of the lower court based on the Hickey v. Hickey decision, that a higher court cannot interfere with a lower court’s finding just because they would had made a different decision, and on Housen v. Nikolaisen, which states that they can only interfere with a finding of fact if the finding is unsupported by evidence.

This case is important in that the British Columbia Court of Appeal does comment on the use of the Spousal Support Advisory Guidelines. Specifically, that while Guidelines are useful for analysis of support, unlike the Child Support Guidelines:

“Nowhere in the Divorce Act are there comparable provisions requiring compliance with the Spousal support Advisory Guidelines or reasons deviating from them. As their name indicates, they are advisory and without statutory effect.  That said, they provide helpful advice and this Court has been clear that their advice must be taken seriously and that best practice would include an explanation of any deviation from them.”

EWING v. EWING (2007) ABCA: (CHILD SUPPORT)

http://www.canlii.org/en/ab/abca/doc/2009/2009abca227/2009abca227.html

The parties married in 1978, separated in 1999 and were divorced in 2002. They have two children, one born in 1988 and the other in 1994.  Both have resided continuously with their mother since the date of separation.  In 2003, the parties entered into a consent variation order which increased the child support payable by the father from $1,500 per month to $6,000 per month for both children. The stated incomes of the father and mother at the time were $750,000 and $24,000 respectively. When it was subsequently disclosed that the father’s income from 2002 to 2006 exceeded $1,000,000, the mother applied for a retroactive variation of support.  The chambers judge calculated the arrears and set prospective child support at $13,776 per month, effective January 1, 2006.  The Court of Appeal cancelled the arrears prior to January 1, 2004, and reduced the retroactive support order of $365,787 to $197,620 and maintained the monthly support of $13,776.  In 2007, when it was disclosed that the father’s income was greater than had been estimated for 2005 and 2006, the mother brought another application for a retroactive variation of child support.  The father’s income for those two years was $3,343,927 in 2005 and $1,953,636 in 2006, whereas his income in previous years was closer to $1.1 million per year.  His income for 2007 was $671,974.  The father opposed the application on the basis that the increases in income for those years were a result of non‑recurring gains due, in part, to the sale of the assets of his business which had been source of his income in previous years.

November 23, 2007: Court of Queen’s Bench of Alberta (Mahoney J.)

The wife was awarded increased child support $22,546.49 for 2005 and $28,297.67 for 2006 based on recalculation of the husband’s income and arrears of support in excess of $200,000; prospective child support was reduced to $8,986 per month.

June 30, 2009:  Court of Appeal of Alberta (Calgary) (Conrad, Brooker and Erb JJ.A.)

Father’s child support payments for 2005 and 2006 were maintained at $13,677 per month.

Issue 1: Did the father engage in “blameworthy conduct” by not automatically increasing child support payments when his income increased as a result of the sale of business assets?

The court concluded that failure to pay child support based on non-recurring income was not “blameworthy.” In essence, a payor who did not intentionally conceal or withhold income, but rather who simply organized his business affairs in a way that may have made economic sense, is not acting in blameworthy way. In this judgment, the court is sensitive to the fact that payors who are organizing their business in accordance with sound management principles and in compliance with the Income Tax Act and without an intent to deprive their dependants cannot be said to be behaving badly simply because the Child Support Guidelines treats those same proper and sound business decisions differently. In this regard, the decision supports a very subjective view of “blameworthy”. The court looked to the father’s conduct to determine if, subjectively speaking, there was an element of “deceit” or “misconduct”. This decision suggests that for self-employed payors who have difficulty determining their obligation, an honestly held belief that the support they are paying is appropriate, even if subsequently found to be incorrect, may nonetheless be found not be “blameworthy”. Furthermore, the father’s exceptional income for years 2005 and 2006 was due primarily to the sale of business assets which had been the source of the father’s income in previous years. Therefore, these gains were not extra employment income and including proceeds of sale of prime assets in income would amount to “killing the goose that laid the golden egg”.

Issue 2: Was it appropriate to apply the guideline tables for child support?

An additional issue that was raised was whether to strictly apply the guidelines to the father’s income, which the chambers judge had done. The Court found that the chambers judge erred in law by setting the evidentiary burden of proving that the child support amount under the guidelines too high.  The Court found that the evidence need only be sufficient to raise a concern about whether table amount is appropriate. Further, the court found that the chambers judge erred by failing to examine the actual means, needs and circumstances of children, by focusing solely on father’s ability to pay.  Evidence indicated that despite an increase in child support to $13,776.00 per month, there had been no change in the condition, means, needs and circumstances of children.  Therefore, the totality of evidence suggested that the current level of support met the children’s reasonable needs and was perhaps even more than was required. There was a logical inference that the strict payment of the guideline table amount for 2005 and 2006 would be a functional transfer of wealth to the mother or de facto spousal support.  Accordingly, it would be difficult to order any increase in retroactive child support for years 2005 and 2006. Since father had not applied to vary child support downward, it was to be left, for two years in question, at $13,776 per month.

September 29, 2009: Supreme Court of Canada – Application for leave to appeal filed denied

H.(U.V.) v. H. (M.W) (2008) BCCA 177: (CHILD SUPPORT)

http://www.canlii.org/en/bc/bcca/doc/2008/2008bcca177/2008bcca177.html

This is the leading case on the obligations of stepparents.  The issue before the court was whether it is “appropriate” as the term is used in s. 5 of the Guidelines, for a stepfather, who now has no contact with the children, to bear the primary support obligation, leaving the natural father, whose income is greater than that of the stepfather, with only a secondary obligation.

In a careful analysis of the Guidelines, the British Columbia Court of Appeal concluded that the natural parent, the father in this case, cannot escape his obligation under the Guidelines to pay the table amount of support, thus the stepparent’s obligation is to top-up that amount of support to give the child a reasonable lifestyle, commensurate with that of the mother, the father and the stepfather. Along the way, the Court of Appeal sets out a roadmap for the determination of child support in these not uncommon situations.

There are two important factors to consider which may differentiate this case from others:

1. When the stepfather and mother moved in together, the stepfather was anxious to assume full responsibility as the child’s stepparent, and he actually insisted that the natural father pay no child support.
2. The mother and stepfather separated as a result of the mother discovering that the stepfather had sexually assaulted the stepdaughter. The stepfather pleaded guilty to sexual assault and to making child pornography.

The Court stated that pursuant to s. 3 of the Guidelines, there is no discretion to depart from the Guidelines amount where the payor is a parent, but for the case of undue hardship. On the other hand, where the payor is not a parent (i.e. a step-parent), pursuant to s. 5 of the Guidelines, the court does have discretion to order an amount less than that provided in the Guidelines by examining what is “appropriate” having regard to the Guidelines and any other parent’s legal duty to support the child. The Court stressed that a recipient parent should not receive double the base amount of child support from both the natural parent and the step-parent – it should not be a windfall.

In describing the obligations of natural parents, the Court of Appeal noted:

Whether or not the father was doing so, the chambers judge should then have ordered him to pay his table amount… She could not, however, choose to give the father a “pass” in favour of pursuing the stepfather for all the support the children required.

In the end, the father was ordered to pay table support of $1,581 a month and the stepfather was ordered to pay $360 a month, as top-up child support.

The steps therefore are as follows:

1. Natural parent obligation (no discretion unless there is an undue hardship claim):
2. Determine the S.3 base child support obligation of the natural parent
3. Step-parent obligation (discretion)

The Court of Appeal determined that primacy should be afforded to the children’s standard of living, thus the obligation of the step-parent would be to top-up the support of the natural parent to bring the child’s standard of living to the same level as the natural parents as well as the step-parents.

• Any parent/legal guardian of a child may apply for a passport for their children.  An application must include all documents (Orders, agreements, etc.) relating to custody, access, and mobility.
• Although either parent can apply for a passport, the consent of the non-applying parent is still required in the case of joint custody.
• If all other requirements are met, the consent of a non-custodial parent is not required, although Passport Canada suggests that in all cases, even where one parent is non-custodial, it is best if both parents sign the application.
• Passport Canada has a system called “Passport System Lookout”.  A parent can add the name of his or her child to the system, and if anyone applies for a passport for that child, the parent who added the name of the child to the system will be notified.  The information needed to add the child to the system is:
  • Name of the parents
  • Address
  • Name and date of birth of the child
  • Place of birth of the child
  • All documents pertaining to custody, access, and mobility of the child
• More information can be found at http://www.pptc.gc.ca/cdn/16-.aspx?lang=eng

Starting January 01,2010, Court Orders under the Family Law Act of Alberta can be registered with the Child Support Recalculation Program (RP).  The purpose of RP is to annually recalculate the amount of support payable on existing eligible Court Orders without the necessity of a new court application.  Instead, both those paying and receiving support can ‘opt in’ to have the RP review each party’s tax returns, notices of assessment/ reassessment or income questionnaire and determine the proper amount of section 3 and section 7 child support for the forthcoming year.

The RP will contact the payor and recipient approximately ninety days before the anniversary date of the court order and request that the parties submit their income information.  Once received, the program office will calculate the new support amounts and send a decision to the parties.  A party may object if they do not agree with the new amount. If there is no objection, the new amount will become the new child support amount payable 31 days following the decision.   If a payor chooses to not send his or her information upon request from RP, their income will be imputed subject to a ‘deemed’ income increase percentage. If there is no objection after 31 days, RP will file the decision with the court, allowing Maintenance Enforcement to collect on the new support amount.

RP charges each party $75.00 for the service of recalculating the child support amount; however, if the change in child support amount is less than 10% or $10.00 per month, RP will not recalculate the child support amount and no fee is charged. 

Eligibility for RP is as follows:

• The Order is under the Family Law Act (note: Orders under the Divorce Act are not yet eligible for registration)
• Both parties’ incomes were known at the time of the Order — neither party can have an imputed income.
• The Order is not ‘without prejudice’ or based on a ‘pre-disclosure amount’
•  The Order does not have a review date
• Section 7 expenses must be stated in a percentage or be proportionate to the parties’ known incomes
• The recalculation can be done by use of Income Tax Returns, Notices of Assessment, and the income questionnaire—people who are sole proprietors or use extensive corporate documents to determine their annual income cannot use the program, unless both parties consent to using only the tax return information.

A difficulty with the program is that the new recalculation statement will not include arrears for previous months where the payor underpaid support prior to the court order anniversary date.

Parties who have court orders currently eligible for RP can opt into the program as of January 01,2010, although Orders shall be entered into the system with preference given to older Orders first.  RP plans to have the system online within one year so that parties can submit their income information and access their accounts electronically.

More information on the Recalculation Program can be found online at www.recalculation.gov.ab.ca or by sending questions after December 01,2009 at recalculation@gov.ab.ca.