Child Support and Voluntary Withdrawal from Parental Control

Jodi Armstrong, Associate

Generally speaking, every parent has an obligation to provide support for his or her unmarried child who is under the age of 18.  There is, however, an exception for children aged 16 or 17 who have withdrawn from parental control.

A frequently referenced case with respect to the concept of the “withdrawal from parental control” is Haskell v. Letourneau.  It confirms that the concept means a voluntary withdrawal or the free choice of the child to:

 “cut the family bonds and strike out on a life of his own.  On taking on this personal freedom the child assumes the responsibility of maintaining or supporting himself.  It is his choice, freely made, to cut himself away from the family unit. Once this choice is freely made and the responsibility accepted by the child, the family unit has, in effect, been severed and the responsibility of the parents to support the child thus ceases.”

In other words, if the child was “kicked out” by the parents or if living conditions within the parents’ home were intolerable so the child was, essentially, forced to leave by circumstance, the withdrawal from parental control was not voluntary.  In that situation, the parents continue to have an obligation to financially support the minor child.

It should be noted that the onus is on the parents to prove that the child has voluntarily withdrawn from parental control and that it is a difficult onus to satisfy.  In another case called  Dolabaille v. Carrington, the judge stated that the defence is available “in the limited class of case in which a young person between the ages of 16 and 18 freely and voluntarily chooses the personal liberty and independence of a life of his own, over one fettered by reasonable parental control”.

In addition to establishing that the withdrawal was voluntary, it is also necessary to establish that the child has withdrawn from the control of both parents.  If a child decides to cut off ties with one of his parents, but remains financially dependent and within the control of the other parent, the obligation to pay child support apparently continues.  There is case law that suggests it makes no difference whether the child’s decision to cut ties is reasonable or unreasonable as long as he has not withdrawn from the control of one parent. 

Essentially, although extremely rare, it is possible for a rebellious teenager to forfeit his entitlement to support.  These matters are always difficult, for everyone involved.  Whether the obligation to pay support terminates will always turn on the particular facts of each individual case.

Child Support - Calculation of Income

Kim Kieller, Partner

In the mid-1990s there were serious concerns in regard to child support.  Firstly, child support was still taxable in the recipient’s hands and deductible by the payor.  This lead to a  great deal of controversy and a hearing at the Supreme Court of Canada in regard to the constitutionality of the Income Tax Act.  Secondly, child support was determined in both  negotiated agreements  and by the Courts  on a very ad hoc basis, using the “Paras” calculation.  The name/adjective, “Paras”, resulted from an early child support court decision.  The calculation for support was determined  by a party (usually the recipient) drafting a budget for the children and then the parties respective  incomes were ascertained.  The mother and father’s full incomes were added together and a percentage calculated  which was the amount the payor was  to pay of the budgeted amount.  In those days there really was not a lot of argument in regard to how a party’s income was calculated – it really was the budget that was usually the contentious issue.  Lawyers, academics and government officials were aware that the Paras calculation lead to disproportionate amounts being paid to children in different cases – even with the same family income.  After much consideration and debate, the Federal Child Support Guidelines (CSG) were legislated into law in 1997.  Child support was no longer taxable and the income of the paying party was the amount to consider in arriving with the charted guideline income.  The only issue on basic (“base” “section 3” or “table”) support was the payor’s income.

As a result of the Guidelines income became a focus in the determination of support.  It is a common misunderstanding that only one’s Line 150 (from a tax return, known as a T-1) is how support is to be paid.  In some cases this is true (i.e. for a person who only receives a T-4 and interest  (T-5), but not in all cases.  Some examples follow.

If there is a situation where there is an individual who earns commission, they will claim expenses from their commission income such as promotion, vehicle costs, gifts, association fees etc.  The Guidelines do speak to this and between the application of the CSG and the case law, reasonable – meaning usually not all – expenses are deductible.  Therefore, when one reviews the first page of the tax return, there will be a place where deductions are taken away from gross commission income.  One has to review the actual expense and add back  to the income expenses that are not reasonable.  The usual subjects are “home office”, “cell phone”, “vehicle”, “miscellaneous”, meals and entertainment, etc.  anything that is deemed  personal is added back to the income for support purposes.

In the event of a self-employed individual, there will be an income and expense statement filed with the return or as a part of the return.  Again, one starts with the net income in Line 150 of the tax return and then reviews the expenses deducted from the revenue of the business or professional practice.  The same items as above are added back and one also has to check if children are paid, spouses are paid, is there a rational explanation for soft expenses such as depreciation?  Of course, even before the expenses are checked the revenue is also reviewed and considered – is there bartering, cash sales that are not reported, etc.?

Corporations are also complicated.  The same calculations are done as in the previous two paragraphs, but in addition, one checks the retained earnings (profits kept in the corporation and not withdrawn by the shareholder).  The query then becomes what are the reasonable expenses and then if there is a profit, how much of the profit should be added back to the payor's line 150 income. There is no clear direction.  Corporate savings are essentially deferred income as the profit is taxed on a lower basis then personal income.  There is an argument that some retained earnings stay in the corporation for retirement purposes especially if the payor does not have an employment pension or significant RRSPs.  Each case is decided on its own facts and, as in any of the above situations it is important to have legal (and usually accounting) advice.

The last point is that the addition to the Line 150 income is the tax consequences.  If an individual has deducted an expense from his or her income and the amount deducted is added back to his or her income, one must equate the increased income to a taxable income. The courts call this process a “gross up”.  For example if one is a teacher, the cost of running a car is paid in after tax income.  If one has the ability through a business or corporation to deduct the vehicle expense from the business income then the resulting business income has taken into account a deduction that the above fictional teacher does not have.  Therefore in order to ensure that everyone pays support in the same amount on the same income, the court will add a notional tax to the self- employed person for the deduction when it is added back to his or her income for child support.  For example, for tax purposes a business owner may be able to deduct all of his vehicle expenses which are $10,000.  However for child support purposes if the court finds that there is a personal use of the vehicle for fifty percent of the time.  $5000 will be added to the payor’s income.  In addition as the payor never paid tax on the $5,000 (as he or she deducted the full amount from the revenue to determine his or her taxable income), the court will gross up the $5,000 by the notional tax rate – for example if that tax rate is 30% - $5,000 X 30% = $1,500 so $6,500 will be added to the line 150 income for that person.

The calculation of income is never an easy task.  Accountants and lawyers may be necessary to review income before the child support agreement is finalized

___________________________________________________________________________

Kim Kieller is a partner at Barriston and has practised family law for over 26 years.  She has been nominated by her peers as a “Best Lawyer in Canada” for the past four years.  Kim restricts her practice to family law matters involving complex property and income calculation cases and the division of business assets on a separation.

Post Secondary Education - When does support entitlement cease?

Barrie M. Hayes, Partner

There is a legal anomaly to the extent that there is, while a family unit is intact, no obligation at law for parents to support their adult children. Following separation, however, a legal obligation is triggered imposing support for adult children under provincial and federal legislation.

Most support legislation does not contain an absolute age limit where child support automatically terminates.

Under the Family Law Act an adult child is only entitled to support if he or she is in full time attendance at school. However, under the Divorce Act a child continues to be eligible for support if he or she is unable to withdraw from parental charge for a number of reasons, including health, education or the inability to provide necessaries for him or herself.

As a general rule, a child who is in full time attendance at high school or at a post secondary institution is a dependent and is entitled to receive support.

Courts generally take a liberal view of what constitutes pursuing post secondary education, however the courts expect adult children to pursue their education conscientiously and usually require an explanation if a child is not carrying a full course load or is struggling with his or her studies.

Historically, the courts were hesitate to extend support beyond a first degree or diploma, but with a recognition that a bachelor’s degree no longer assures self sufficiency the courts are increasingly approving a continuation of support for post graduate or an employment focused diploma after completion of a Bachelor of Arts.

The factors usually considered in assessing whether a second degree or diploma was eligible for a continuation of child support is:

  1. The reasonableness of the further degree or diploma in regards to the child obtaining employment after graduation;
  2. The family finances available to support the continued post secondary program;
  3. The child’s financial contribution and conscientiousness in pursuing the second post secondary program.

Why is the cost of a family law case so high?

Many people are surprised by the high cost of legal services when they go through separation and divorce.  It is not unusual to spend tens of thousands of dollars to have issues resolved even in an “amicable divorce”.  Here are some of the reasons.

First, in most cases, people have many issues to resolve:

1)    The children:

a)    What is the parenting plan going to look like? Is he or she entitled to see the children as often as they wish? Why?

b)    What about the fact that the children don’t want to see their mother/father?

c)    What about that new partner? How can the children be seeing him or her?

d)    What if things change over time?

e)    What happens if we don’t agree on the parenting plan and what it should look like?

2)    Child support:

a)    What is the income of the paying parent? 

b)    What is the income of the recipient parent?

c)    What are Section 7 expenses?

d)    What if we share the children 50% of the time? What how do I calculate 50% of the time?

3)    Property division:

a)    What do you mean I don’t get half?

b)    Equalization, how does that work?

c)    Why do I have to get assets like my pension or my small business valued?

d)    Do I need other experts to value by property?

4)    Spousal support:

a)    The Spousal Support Advisory Guidelines – how do they work?

b)    Income determination – same problem as in child support – what’s the income?

So even in relatively “simple cases”, figuring out what you are entitled to or are obligated to pay is not a simple task. Financial issues can take a lot of time to resolve.

Figuring out what to do with children is probably the toughest issue facing most people. In some cases, parents are able to come to a quick agreement. But if the emotions are running high due to the way in which the separation occurred, judgment is often clouded and it is very difficult for spouses to focus on the needs of their children, because their own needs are coming first.  Conflicts over the children are the most time intensive and therefore costly part of a lawyer’s job. Facts are always in conflict – each parent tries to paint the other as a “poor parent” who does not have the ability to address the needs of the children.  When facts are in conflict, it is always necessary to conduct lengthy interviews of third parties who are potentially neutral third party witnesses to historic events that need to be proven in court. It is also often necessary to retain an expert in child development to assist either by mediating or by assessing the family. Courts insist on neutral evidence like this in order to make a proper decision about the best interests of the children if a trial is necessary to resolve the parenting issues. Child custody cases typically cost well over $50,000 just in legal fees if they go to trial.  While this is perhaps more than the cost of your automobile (depending on the make), it is certainly a lot of money to spend which often the family coming out of  a separation simply does not have.

Determining income in this day and age is difficult. Many people are self employed “contractors” who earn their money through their own businesses. Income determines how much child and spousal support you need to pay or receive. Many people work over time or are entitled to bonuses. Figuring all of this out is never an easy cut and dried task, primarily because people are frightened  about their financial future and need to be careful about how much income they declare or how much money they can get from their spouse.  Often the trauma of the separation and the emotion make people behave in ways they would normally not – hiding their assets or understating their income. The lawyer's job is to figure out what the real numbers are and make recommendations on facts. Discovering the facts about income often takes a great deal of time. It also usually involves hiring another expert, like a chartered accountant who is skilled in family law issues. This necessarily adds to the cost of the case. But it is necessary in order to present the case properly and to arrive at a proper result.

Determining your property rights can also create a myriad of issues. Each side needs to establish their “net family property” (please see previous blogs for what that entails).  In general terms, married couples who separate are entitled to share all of the wealth that the couple generated themselves during the marriage.  Figuring out what that is takes time, and often involves valuation experts at additional cost.

Added to the complexity of the legal issues is the process itself. If you have ever been in Family Court, you know that there are The Family Law Rules which must be followed.  Just completing the paperwork is a time consuming and therefore expensive process. The financial statement which must be filed must be accurate and it must be supported by documents or valuation opinions. Properly completing this form so that it is satisfactory to the court and in compliance with the rules can all by itself cost several thousands of dollars, depending on the complexity of the property issues.

The rules require that procedure must be followed. For sound philosophical reasons, each case that is in court is supposed to be managed by one Judge. Nothing can happen in a case until you have had a case conference. You must also have a settlement conference and then a Trial Management Conference. The purpose of all these conferences is to encourage a settlement of the case without a trial. However, they all add to the cost of your case because the lawyer has to prepare paperwork for each and your financial statement has to be updated as well if it is more than 30 days old.  Nothing ‘substantive’ happens at these conferences unless the spouses come to an agreement. Often agreements are reached with the assistance of the presiding judge but these agreements are usually not a complete resolution of the entire case.  If the case has to go to a trial, it usually goes on a list with many other cases and you have to wait your turn as the case moves up the list.  You really can never be guaranteed a trial date in our court system.  But your lawyer has to be ready for trial just in case it does get reached when it’s on a list. Marshaling the evidence properly so it can be readily and easily presented to the trial Judge is a very time consuming and therefore expensive task. Most family law trials take at a minimum three days to try often taking much longer if there are many issues.  By the time all of the steps are taken to get through the family court system and by the time the trial is over, the cost is usually close to or exceeding $100,000 for the normal middle class family with children and the usual income and assets.  In other words, the ‘system’ adds to the cost but it is a ‘necessary system’.

If both parties can keep their emotions under control, retain a lawyer who is experienced in family law matters and then listen to their lawyer’s advice, use mediation or arbitration to resolve those difficult issues that can’t be agreed upon, or, in other words, if they can stay out of court, a much less expensive resolution can be obtained.  Both sides have to

a)    be honest with each other about their parenting roles and what’s best for their children,

b)    keep the focus on a resolution of the parenting issues, not a “win in court” at the expense of the children,

c)    fully disclose their financial information without having to be repeatedly asked,

d)    want to get their matter resolved in accordance with the law or accept financial responsibility for the breakdown of the relationship,

e)    be prepared to compromise, and

f)     be willing to do a lot of the work themselves.

There are no easy answers to the question of why legal fees are so high. There are many factors outlined above – the complexity of the law itself, the system in place to resolve the issues, the time it takes to organize and understand those issues and to prepare for a trial.

On the other hand, a lot has to do with the manner in which the parties themselves want to get their issues resolved. A lawyer has no choice but to follow their client’s proper instructions, and if the client wants to take a matter to trial that should be settled in some other manner, then the lawyer really has no choice but to take the matter to trial.  A good lawyer will make the client well aware of the potential outcome, the risks involved and the cost of taking that kind of approach to their case.  But even good lawyers have to take a case to trial when it is against their better judgment to do so.  The client has a lot to do with keeping his or her legal costs down.  A good lawyer will encourage this strategy and not encourage the client to take an adversarial approach.  A good lawyer only goes to trial when the other side presents no alternative.  Two good lawyers acting in the best interests of their clients only go to trial when there is some very honest difference of opinion on the potential outcome of the case. Most good family law lawyers settle their cases without a trial. 

Doctor Ordered to Pay Damages and Child Support for Wrongful Birth!

By Douglas J. Manning, Partner, Certified Specialist in Family Law

A recent decision from Spain regarding medical malpractice turned out to have unanticipated family law consequences!  A gynecologist was ordered to financially assist a 24 year old patient with raising her son.

A Spanish court in Majorca made the decision after the woman sued because her doctor had said that he had completed her abortion, when, apparently, he hadn’t.  Not only had the doctor botched the abortion, but he also failed to detect that the woman was still pregnant in her follow up appointments.

In 2010 a young woman went to the doctor’s clinic to have an abortion when she was 7 weeks pregnant.  Two weeks later she returned for a scan, and the doctor assured her she was no longer pregnant.  Several months later, she returned to the clinic suspecting that she was still pregnant, and it turned out the allegedly aborted fetus had been growing in utero.  At this point the woman was 22 weeks pregnant and could not abort as it is against the law in Spain after 14 weeks.

The clinic offered to reimburse her the $500 the woman had paid for the procedure and referred her to a Madrid clinic that might perform a late-term abortion. But it was too late.  She had no choice but to give birth which she did about 4 months later.

The court ordered the gynecologist and his clinic to pay the woman $189,000 for emotional suffering.  The doctor was also ordered to pay $1,300 per month in child support until the child is 26 years of age.

There is no word on whether the woman is going after the father of the child for child support as well.

How Does My Cancer Diagnosis Affect my Rights and Obligations? Child and Spousal Support

A Colleague of ours just came through a rough year of cancer treatment.  We are extremely grateful that this partner in our firm is healthy and back to work.  This colleague recently asked me to provide my comments to him for a presentation he is giving at our local Gilda’s Club regarding legal considerations when you are faced with a cancer diagnosis.  Below are things to be considered if you have been diagnosed with cancer and you now want to seek spousal or child support; if you have an obligation to pay support; or if you are a support recipient. 

Support Entitlement

  • If you have separated and have not dealt with issues pertaining to support and property division before your cancer diagnosis, get legal advice and start this ball rolling as soon as possible to preserve your rights and entitlements. 
  • If you have not pursued spousal support previously because you were working and able to support yourself, you may now be entitled to support.   
  • If you have a child in your care and you have not pursued support in the past, you should pursue support for that child, as that support may become very crucial if/when your income will be reduced while you are off work and undergoing treatment. 
  • Get legal advice from a Family Law Lawyer. 

Support Payors

  • If there is an Order or an Agreement for support then that Order or Agreement stands until varied. 
  • As the payor, find out how the diagnosis will affect your income stream (e.g. will you continue to be paid?  Will you be on Employment Insurance?  Get short-term or long-term disability payments?)  You need to consider and estimate what your income will be while you are off.  Your Human Resources contact at your workplace can help you to determine what your income will look like while you are off work.
  • Just because your income may be reduced due to your illness, does not necessarily mean that your support obligations will be suspended or reduced.  You cannot just decide unilaterally to stop paying and if you do, the recipient may seek to enforce the payment of support through the Family Responsibility Office. 
  • The Family Responsibility Office (FRO) will not suspend or change your support obligation and will enforce the recipient’s entitlements to support unless there is an Agreement or Court Order.  In some cases FRO may agree to refrain from enforcing your support Order or Agreement pending the outcome of a Court action. 
  • In regard to Child Support, you can determine your reduced obligation by referencing the Child Support Guidelines.  Determine what your monthly income will be while you are off work and look at the CSG Chart for your province to determine the corresponding child support obligation.  
  • In regard to spousal support, your illness may be considered a material change in circumstance which gives rise to a variation of your support obligation (it also may not be a material change if the change in your income is such that your income is not materially affected).
  • In any event, if you believe that you need to reduce or suspend child or spousal support payments due to illness, you should notify the recipient in writing, advise him or her of why you are requesting the reduction or suspension, and give him or her as much information as you have available in regard to how this diagnosis will impact you in respect to income.  The more open you are with this information the more likely the recipient will be amenable to agreeing to a suspension or reduction in support. 
  • If you believe you are able to properly calculate reduced child support, make the calculation, provide the recipient with your calculation, and request that the recipient enter into a written agreement to reduce the support based on the change in your circumstances.
  • If you are unable to pay at all as you are off work without an income or your income is drastically reduced, request that support be suspended and that the recipient agree to this suspension in writing.
  • If you are varying a Court Order you may need to file a motion to change on consent to ensure that the Court Order in place reflects any tempoarary agreement you may have around the reduction or suspension of support.
  • If the support recipient does not voluntarily agree to suspend or reduce the support payments, you should seek to obtain a Court Order in this regard.  Get legal advice. 
  • If you are paying support directly to a recipient and the support is to continue, you may wish to register your Order or Agreement (and any amended agreements) with the FRO.  FRO not only enforces Support Orders and Agreements, FRO acts as an accounting agent to keep payments flowing through electronic funds tranfers and they maintain the record of payments made and  received; taking this burden away for the supporrt payor and/or their family or friends helping them while they are undergoing treatment.
  • Check your Order or Agreement and see if there is a provision that deals with your incapacitation or death and see how support is dealt with.  You may need to advise your Power of Attorney for property regarding your support obligations and ensure that they have your Agreement or Court Order.
  • Check as to whether you have met the Life Insurance obligations under your Agreement or Court Order as they relate to the recipient(s) of support, ensure that you have fulfilled those requirements and that the support is secured or continues to flow to the recipient.
  • Get legal advice from a Family Law Lawyer. 

Support Recipients

  • If you are the recipient of child support, with children solely in your care with only access to the other parent and the children are remaining in your care while you are uindergoing treatment, there in should be no change in child support coming to you while you are off work.  A reduction in your income does not affect the amount of child support you receive as that amount is determined by the support payor’s income.
  • There may be a reduction in the amount of add-on or extra-ordinary expenses you are required to contribute to, if your income is reduced.
  • If you are in a shared parenting arrangement and support is coming to you, you may be entitled to more support if your income is reduced. 
  • If you are receiving child support and the children must be temporarily cared for by the support payor, you should agree in writing to the suspension of child support payments while they are in the payor’s care. 
  • If you are receiving spousal support or you waived an entitlement to spousal support in an Order or Agreement, your diagnosis may be a material change in circumstances which would trigger a review and variation of spousal support entitlements.
  • If you are receiving support directly from a payor, I recommend that you register your Support Order or Agreement for enforcement with the Family Responsibility Office as they keep accounting records for you as to payment s received.  Registration with FRO ensures that payments continue to flow to you from the payor without you having to cash cheques or have someone pick-up cheques from the payor on your behalf.
  • If you are receiving support check your Order or Agreement to determine what happens with that support in the event of your death. 

Before you decide how you need to proceed...get legal advice!  At the very least, attend a single consultation with a Family Law Lawyer to ensure you understand your rights and obligations.  Most Court Houses in Ontario have a Family Law Information Centre (FLIC) with staff available and with access to written information about your rights and obligations and the Family Court process.  FLIC may also have free advice lawyers available for a consultation for those who meet a means test.  If you are pursuing support, legal assistance may be available through your local Legal Aid office if you qualify.  This may be something you will want to tackle before treatment starts, as you may not be able to deal with these issues effectively once you are undergoing treatment. 

For more information check out the following links:

http://www.barristonlaw.com/

http://www.attorneygeneral.jus.gov.on.ca/english/family/

http://www.mcss.gov.on.ca/en/mcss/programs/familyResponsibility/index.aspx

http://www.legalaid.on.ca/en/

Legal Expenses - Tax Treatment

By Douglas J. Manning, Partner, Certified Specialist in Family Law

In an earlier blog post written by Lori Aylwin in January 2011 she discussed the tax treatment for legal fees and accounting fees incurred for the purposes of establishing or collecting child and/or spousal support. Lori's article succinctly pointed out what needs to be established in order for a support recipient to claim his or her legal expenses as a tax deduction.

A recent judgment from the Tax Court of Canada in October 2011 clarified some of the additional circumstances and considerations that The Canada Revenue Agency should take into account in determining whether a taxpayer can claim certain legal expenses against their otherwise taxable income.

The case is cited as Mercier v the Queen 2011 T.C.C. 427

The Court seemed to focus on the word  “establish” a child support amount in accordance with the child support guidelines. The court stated “that it is trite law that the legal costs incurred to obtain child support for the benefit of a child are deductible in computing taxable income”  and cited The Canada Revenue Agency Interpretation Bulletin IT-99R5 at paragraph 17 as support for this position.

Previous cases have stood for the principle that it is only the support recipient who is entitled to deduct his or her legal expenses.

However, in this case, both spouses claimed that they had custody of the children for part of the time and thus both claimed that they were entitled to child support from the other parent for a part of the time during the relevant tax years.  The Court recognized that this was somewhat of a unique case and that both parents had a claim to entitlement to custody and to child support and would have given both parties some deduction for their legal expenses in attempting to establish the child support amounts.

What was also interesting in this case, was that the Court carefully reviewed the actual court documentation in the custody and support legal proceeding and compared the documents prepared with the invoices for legal services submitted by the lawyer for the taxpayer to ensure that services provided actually dealt with establishing the support entitlement rather than other legal issues such as a divorce, non-removal of the children from the jurisdiction, etc.

Our Firm is often asked to provide a letter to be submitted by the taxpayer with their tax return to claim a deduction.  Be sure to ask your lawyer to provide a similar letter if you are in a position to claim a portion of your legal fees as a deduction for tax purposes.  Better still,  ask your lawyer, when preparing their invoices to you, to use the words “establishing” or “collecting” child or spousal support in their notations on the accounts.

For more information please consult your accountant, tax return preparer or the Canada Revenue Agency website at www.cra-arc.gc.ca

Shared Custody and Child Support

The Child Support Guidelines, which came into effect on May 1, 1997, set out four admirable objectives:

  1. to promote fairness to children;
  2. to ease tension and conflict between parents;
  3. to reduce litigation; and
  4. to ensure consistent treatment of parties.

When children reside primarily with one parent (more than 60% of the time), the Guidelines are pretty clear-cut and as a result those objectives are more easily met.  There are always some exceptions to the rule but, generally, the payor is required to pay child support in accordance with a legislated table based on his or her income and the number of children for whom support is payable. 

In a shared parenting situation (the children reside with each parent at least 40% of the time), the Guidelines provide for a three-step process for determining the monthly amount of a child support order.  The objectives remain the same but are not as easily met because the analysis is more complicated and the outcome, unfortunately, is much more difficult to predict.

The first step is to consult the tables but, in a shared parenting situation, we have to consider both parents’ obligation to pay “table support”.  We determine the set-off amount by subtracting the lower income earning parent’s table support obligation from the higher income earning parent’s table support obligation.  This, however, is NOT the end of the analysis.  There seems to be a common misconception out there that the set-off amount is the appropriate amount to be paid in all shared-parenting situations.

The second step is to consider the increased costs of shared parenting arrangements.  A proper analysis will require each parent to prepare budgets for child-related expenses in order to determine the total child-related budget for both households.  As an example of how one Superior Court judge recently considered this step of the analysis, he looked at each party’s budget and then determined what amount of support the recipient spouse would require, in addition to the recipient spouse’s proportionate share of the total budget, to be able to cover the child-related expenses.  For example, if the total child-related budget for the children was $4,000.00 per month and the recipient earned 35% of the parties’ combined income, the recipient should be responsible for 35% of the total budget or $1,400.00.  If, in reality, the recipient had a child-related budget of $2,000.00, he or she would require an additional $600.00 of support from the payor to cover those expenses.

The third and final step is to consider the conditions, means, needs and other circumstances of the parties and the children.  In other words, how does the lifestyle and net worth of the payor compare with the lifestyle and net worth of the recipient?   

It is important to remember that, in a shared parenting situation, all three steps must be taken into account when determining the appropriate amount of child support and that the weight of each step will vary according to the particular facts of each case.  This results in more uncertainty but acknowledges the overall situation of the parents as well as their respective ability to financially support their children. 

Support Paying Spouse is Hammered for Failing to Disclose Income

By Douglas J. Manning, Partner, Certified Specialist in Family Law

A recent Ontario Court of Appeal decision has re-affirmed the principle that if a support payor’s income increases and they fail to reveal this information to the support recipient then they are in jeopardy of having their support obligation increased retroactively so as to result in a significant lump sum payment.

The recently decided case of S.P. v R.P. [2011] O.J. No. 1968 (Ont. C.A.) is a textbook case of what not to do if you are a child or spousal support payor.  In this case the parties had a 1993 Separation Agreement that set the child support (and spousal support) obligation of the husband/father to the wife/mother after 18 years of marriage for herself and the 3 children.  The husband later sought to decrease his support obligation on the basis that he had lost his high paying job as a chartered accountant and partner with a large Toronto accounting firm.  He sought reductions on 2 occasions in the mid-1990’s and the wife must have agreed with the requests given that there had been no court proceedings until the wife’s application in 2007 seeking financial disclosure and an increase in support.

Since the introduction of the changes to the child support legislation in 1995 the courts have relied upon the mandatory income disclosure sections of the legislation to impose positive obligations to provide full and timely disclosure of changes in the incomes of the parties especially where child support is concerned.  In doing so, a theme running through many of the decisions is that child support is a right of the child and parents ought not to deprive their children of what they are entitled to  by way of the potential for improvements in their standard of living which would presumably be reflected by a higher child support obligation.

In this case, the support paying former husband not only had misrepresented his income at the times he sought to reduce his support and he failed to notify the support recipient former wife of when his income increased, he also refused to comply with requests for income information made by the former wife when she suspected the husband had resumed employment and she wished to re-visit the amount of child and spousal support being paid.

The income disparity between the parties was noteworthy.  In some years the husband’s income exceeded $400,000 while the wife’s income was never more than $66,000.  What was also of significance in this case was that the court made the adjustment in support retroactive to 1996 (the time when the husband first asked for a reduction) at a time when he could have exercised some stock options which would have constituted income and justified a continuing child support obligation at the original amount set out in the parties’ 1993 Separation Agreement.

The concept of the husband’s blameworthy conduct underlies much of the rationale for the decision which reaches back 11 years from the date of the judgment.

When advising clients about their support obligations and rights, I always remind them of the positive duty to keep the other parent up to date with changes in income in order to avoid being second guessed by a court at some point down the road.  No one looks forward to paying more, but is for the children’s well-being.

Financial Disclosure ...when is enough, enough?

Often in Family Law proceedings clients feel bogged down by requests to produce documents.  Clients have at times expressed to me a dissatisfaction with having to produce bank statements for past years, attachments from income tax returns,  documents that  are not easily obtainable or papers that may have existed in the past but may take some work to retrieve.  So what do you have to produce in your Family Law proceeding and why? 

The obligation to produce financial disclosure is imposed by the Family Law Rules and by the Child Support Guidelines (CSG).  The requirement to prove income is found in Rule 13 which deals with the production of Financial Statements and the requirement to “attach any documents to prove the party’s income that the Financial Statement requires”. Your Financial Statement will not be accepted for filing by the Court unless it is accompanied by proof of your current income,  a copy of your notices of assessment and any notices of reassessment for each of the past three taxation years.  Where the notices of assessment and reassessment are unavailable, an Income and Deductions printout from the Canada Revenue Agency for each of those years must be produced, whether or not an income tax return was filed.

If the other party believes that your income statement does not contain enough information for a full understanding of your financial circumstances, under Rule 13(11) the other party can ask you to give them “any necessary additional information”.  The other side has to ask you directly for that information and if it is not provided by you within seven days, they can seek a Court Order that you provide the information. 

Rule 19 deals with disclosure of documents and allows either party to view and / or copy any documents mentioned in the Application, Answer, Reply, Notice of Motion, Affidavit, Financial Statement or your Net Family Property statement.  Under this Rule you can  request an  affidavit of documents from the other party and they can request one from you. This Affidavit of Documents must list every document relevant to every issue in the case that is within the party’s control or available to the party upon request.  All documents that you  list must be made available to the other party for viewing and copying.  In some circumstances a court order may also be obtained compelling a third party (someone other than the spouses in most cases) to disclose documents and, if that third party is a corporation controlled by one of the parties,  the corporation may be required to file an affidavit of documents.

The Child Support Guidelines Section 21 also sets out an extensive list of documents that the parties must provide in determining child support  and this list is often used as a reference for required disclosure even when someone is seeking spousal support even where there are no children or grown children.

So the question is…when have you produced enough documentation to satisfy the Rules and the Guidelines? 

The goal in family law is to promote and obtain fair resolution of family matters; providing full and frank disclosure is seen as a primary means to that end.  Sometimes however, parties use the exercise of asking for production in attempts to extend , delay or frustrate the family law proceeding.  The Courts have held that the disclosure process cannot be used to cause delay or used in an attempt to reap tactical advantage. Courts must look at whether the burden of providing some particular documentation is too great in the circumstance and in relation to the value that particular document or documents will have in the resolving the dispute or determining entitlements.  Judges have also said that in looking at requests for disclosure there must be an element of proportionality, common sense and fairness.  It has even been opined that just as non-disclosure can be harmful to a fair trial, so can excessive disclosure be harmful. 

So where to draw the line?  It may be best to think about putting all your cards on the table in order to try to reach an agreement in your family, but if the requests keep coming and they don’t seem to make sense , you can say enough is enough. 

Marriage verses "Common-Law"

Let me introduce myself as the newest Barriston blogger.  I joined the firm, as a partner last month.  Prior to this I practiced, mostly as a sole practioner, for the past sixteen years.  I have practiced law for twenty five years, mostly in the family law area.  I practice in the courts, but prefer mediation and arbitration  - more about that in later blogs.  The rest of my “bio” is on the regular site.

Over the past twenty five years, the most misunderstood definition in law is the “common law” relationship.  The area with the least knowledge is each party’s rights in a “common law” or unmarried relationship.

In Ontario, the Family Law Act does not define a “common law” relationship.  It simply provides rights to support to parties who have cohabited together for three years, or less time if there is a child of the union.

Technically, the only right that a party has in an unmarried relationship is to support – not to property.  The support applies to child and spousal support, if there are facts supporting such an entitlement.  Support may sometimes apply for non-biological children (step children) in certain circumstances. 

Provincial law defines property rights in Canada.

In Ontario,  there are no statutory rights to property division from one party to the other, in an unmarried relationship, regardless as to how long the relationship has lasted.  Many people in this kind of relationship believe that after “x” years they are entitled to a property division – part of the home or the other person’s pension, just like married people – and the term I often hear on initial consultations is three or five years.  Not true.

However, this does not mean that at the end of a long unmarried cohabitation, there are no property rights or obligations.

First, joint property is divided as all joint property – so if the home is jointly owned, each party is entitled to his or her share and has the rights in law to deal with that property the same as a married couple (with some exceptions, such as exclusive possession orders) or commercial partners.

Secondly, the law has created a “fiction” to protect parties in regard to such claims.  This fiction is known as the “constructive trust”.  Essentially, the argument is that the person who owns the property holds a portion of the property in trust for the non-titled party/partner. The history of the development of the constructive trust is monumental and was a huge  shift in the law of Canada.  Originally a woman in the Prairies named Mrs. Murdoch separated from her husband after a lengthy relationship (in this case they were married, but this was before the law reform statutes of the nineteen seventies), and she was not “on title” to the family farm.  In dissent, Justice B. Laskin espoused that it was unfair for Mr. Murdoch to have sole title to the property so he imposed an old equitable remedy from the English law to impose a trust on Mr. Murdoch so that he held fifty percent of the property for Mrs. Murdoch.  It was fair process and provided relief to Mrs. Murdoch for the years she spent on the farm, working, caring for animals, fixing fences, raising the children, etc. Mr. Murdoch received an economic benefit from Mrs. Murdoch – and she did not get paid for it (in this case it was defined as a “deprivation”).  There was no real or legal reason for the deprivation.  So Mrs. Murdoch would have received half the farm, had Justice Laskin had his way!

Over the years the constructive trust remedy has evolved and had influence and a lack of influence.  Most recently, the Supreme Court of Canada released the most substantial case influencing non-married parties in years. The case decided has clarified and guided lawyers in regard to unmarried couples and their families.  In making property decisions for unmarried partners, (both heterosexual and same sex parties), the court introduced the term, “Joint Family Venture” or “JFV”  to the legal lexicon.  In deciding whether property division is a fair remedy for an unmarried couple, the test is defined by four leading facts to consider: mutual intent, economic integration, actual intent and the priority of the family.

So, how does this affect you?  The short answer is that if you are in a relationship outside of marriage for whatever reason you decide to do so, you have support rights.  You might also have a right to the other party’s property by having legal title or a right that party’s property over the years as a result of your “joint family venture”.   A party in a cohabitation may not have the same rights to property as one in a marriage, but the law has established fictions, goalposts and pillars to provide relief when and if it is right to do so.

Support Obligations from Beyond the Grave - Does a Responsibility to pay support survive the death of the support Payor?

Part 4 of the Succession Law Reform Act (“SLRA”) answers this question in the affirmative.

The SLRA provides that, in the event that a person dies, with or without a will, in circumstances where the deceased has not made adequate provision for the support of a dependent, the dependent may initiate a proceeding against the estate for an adequate provision for support.  The legislation does not contain a definition of what constitutes an adequate provision.

Persons entitled to claim this relief are all those who, at the time of the deceased’s death, the deceased had an obligation to pay support for.

A dependent can be a spouse, married or common law (cohabiting for at least three years or in a relationship of some permanence from which a child or children were born), a same sex partner, a parent, a child or a sibling.

The claim for support must be made within 6 months from the date of the issuance of a Certificate of Appointment of Estate Trustee, with or without a will.

The legislation requires the issue of support entitlement to be dealt with on a two step basis.

  1. The court must determine that the deceased did not make adequate provision for the proper support of the dependent.
  2. The court must determine what amount of support is adequate in the circumstances.

The legislation sets out a number of factors that the court should consider in determining the issue of dependency.

The main difference in calculating the amount of support between a claim for support when the support payor is living vs. support under the SCLRA is, in calculating support where the support payor is living the support payor’s income from all sources is the consideration examined. The amount of support under the SCLRA is based the value of the assets of the deceased’s estate.

The income and assets of the dependent claiming support are also examined in considering the adequateness of support.

The court has broad discretion in arranging for the provision of support. The court can fix an amount of support and suspend the distribution of assets in order that the estate assets continue to generate income for support purposes. The court can set aside certain assets to be held in trust for the benefit of the support claimant for so long as he or she lives. The court can transfer title to a portion or all of the estate assets.

The legislation, in determining the extent of the deceased’s estate for the purpose of payment of support directs that assets which would not normally fall into the deceased’s estate (ie: life insurance, joint property with right of survivorship, gifts mortis causa (death bed gifts)) form part of the deceased’s estate in determining the amount of support.

Do It Yourself Separation Agreements; Why Do Lawyers Ask So Many Questions?

On a regular basis I have clients come to me with a rough agreement in hand asking me to draft a Separation Agreement for them. These are the client’s who tell me they are “amicably” separating; they “just want out”, and/or they don’t want to spend a lot of money on legal fees.  Quite often they have:

  1. done some research on the internet,
  2. sat down with their spouse, and
  3. they  have worked out between themselves issues like where the children will live, how their family property and debts are to be split, and how much spousal and child support will be paid.

They come to me saying that they have “worked it all out” and they just want me to draft the Separation Agreement for them based on what they present to me and usually they want me to do it as quickly and inexpensively as possible.

When parties come to me in this fashion, they sometime baulk when I tell them I need more information and, when I ask them for back up documentation to support their “agreement”, they are often reluctant to gather the documentation.   I ask questions and look to documentation because I have minimum professional standards that I must meet as a lawyer which require me to ensure that I can properly advise my client regarding their entitlements and risks. To meet professional standards (even if the parties are amicable) a lawyer I must:

  1. Obtain sufficient reliable information to be able to ascertain what the client would likely receive or be required to pay for spousal support, child support and matrimonial property division should the matter be resolved at trial and so advise my client;
  2. Give the client a description of options to any proposed settlement, an opinion on whether any proposed settlement is reasonable, and a discussion of the pros and cons of that settlement in comparison to the other options so that any decision to settle is an informed decision; and
  3. Tell a client who takes the position that he or she wants to settle without having received full information from the other side that they may be accepting less or paying more than what would be required according to law. To provide to that client an assessment of the impact of the risk including estimates of the value of what might be lost or paid above what was necessary to the extent possible on the basis of the information then available.

You are entitled to give up legal entitlements in order to achieve a settlement, but that will never excuse your counsel from the requirement that he or she ask the questions and get the information needed to properly advise you and to help you make informed choices.  So if you are going to a lawyer with agreement in hand, be prepared for questions and bring along your paperwork.

Separated Single Parents Face Serious Burdens

A recent article in the Toronto Star, ‘The Political Becomes Personal’ - Tanya Talaga, Saturday March 12th, brought home to me the additional stress that single parent/working women face in our ‘liberated’ society.

NDP leader Andrea Horwath had recently ended her 25 year common-law relationship.  While the article did not deal with any of the details of breakup or what assets or financial assistance (if any) that she kept or is receiving, it was clear from the article that as a full-time working woman with an 18 year old son (who is supportive of her career) that there are incredible stresses to keep the family going and to stay ahead of the monthly bills.

As the leader of a provincial political party you might think that being able to pay the bills and juggle her various responsibilities would not be a huge problem for Ms. Horwath.  You might assume that she has someone to assist her with buying the groceries, cleaning the house, doing the laundry and making the meals.

However, from the reading the article it is apparent that Ms. Horwath faces many of the same stresses as any other single working parent (mother) in Ontario.  According to Ms Horwath: “The stress is there; it is there from the minute you wake up until the minute you go to bed… The best way to deal with it is to acknowledge it, realize it’s normal and that other folks are having similar stresses.”.

Common-law spouses in Ontario who have lived together for more than 3 years may be entitled to financial support from the other spouse much the same way as married spouses who separated are entitled to alimony.  In addition, if there are children of the relationship then the parent who has the primary care of the children is entitled to receive child support from the other parent. The amount of support is determined by 2 main factors – the income of the paying parent and the number of children for whom there is a child support obligation.

Also, separating common-law spouses may be entitled to some form of payment for their contributions to the purchase of property acquired during the relationship even though that property may be ‘owned’ by the other spouse.  This determination, however, is a very complicated one.

If you feel that you may have rights regarding child support, spousal support or division of property, you should obtain some legal advice. While this will not reduce all of the stress you experience in ending a long-time relationship, it may help ease the financial stress and adverse consequences of ending a common-law union.

Enforcing Child Support Payments

The Family Responsibility Office (FRO) is responsible for enforcing support payments in Ontario.  Once an Order is made in Court for child support or spousal support, it is filed with FRO for enforcement unless both parties sign a Notice of Withdrawal indicating that they do not wish to have the Order enforced by FRO.

If you and your spouse get along well and you have determined that providing post-dated cheques or monthly deposits to an account is acceptable, then perhaps you will agree not to involve FRO.  Your partner for whatever reason may not wish to have their wages garnisheed at their work.  If however there is any doubt at all about receiving payment in a timely fashion, then FRO is the best route for you. 

Initially there may be a delay in receiving the support payments.  There is a process which must be followed.  FRO must receive your Court Order.  They will then forward a package to you whether you are the support recipient or the support payor for completion. The package will include information regarding your case number and pin number.  Ensure that you keep this information in a safe place.  You will need it whenever you contact FRO to determine information concerning your case.

As the support payor, it is your responsibility to pay funds to FRO either through garnishment of your wages or cheques, automatic debits to FRO in advance of your payment so that the payments can then be sent to the recipient.

As the support recipient, it is your responsibility to advise FRO where you want the funds deposited and any information you have on the support payor which will assist them in obtaining payments.  If you do not receive a payment, it is necessary to complete a Statement of Arrears. 

The best source of information with respect to the Family Responsibility Office and how it works can be found on the website for the Family Responsibility Office.  Review:

It is important for you to be informed about FRO and how it works for you. Your lawyer is always able to assist you with questions you have regarding the process but you are your best advocate when it comes to dealing with FRO and the enforcement of your support payments.

Adultery: Finding the Proverbial Lipstick on His Collar

“He is a lying, cheating, blankity blank and I can prove it!”  I sometimes hear this type of statement (blanks usually filled in) with the client sitting across from me and looking at me expectantly … almost as if waiting for me to put my feet up on my desk and declare, “Well, that’s it then: case closed!!”.  While it would be strangely satisfying to be able to resolve a matter with that degree of simplicity, in reality, it just doesn’t work that way.

Before I say more, lest I become labeled as a sexist who likes making generalizations about the promiscuity of men everywhere, I should point out that the lying, cheating, blankity blank could just as easily be a “she” as opposed to a “he” .  There must be statistics on that somewhere but I’ll leave it to those who are interested to ferret that data out for themselves.

Adultery is one of the three grounds for getting a divorce in Canada; along with, cruelty and living separate and apart from one another for at least one year.  I think it’s pretty safe to say, however, that seeking a divorce on the grounds of either adultery or cruelty is the exception to the norm.  Most divorces are sought on the grounds of separation because you don’t have to prove anything and you can just wait it out for a year before filing the required paperwork.  The only plus from proceeding on the basis of your spouse’s adultery is that, if you can prove it, you may be able to get a divorce order more quickly.  The catch is that you actually have to prove, on a balance of probabilities, that your spouse has had an intimate sexual relationship with somebody outside of the marriage.  You also have to satisfy the court that there has been no collusion between you and your spouse regarding the infidelity: you and your spouse cannot just agree to fabricate evidence of adultery in order to get a quick divorce.   In most cases, it is simply easier to wait for a year and obtain your divorce based on the passage of time.

With respect to the issue of child support, a support payor will be required to pay support in accordance with his or her income and the Child Support Guidelines.  Whether that person has cheated on his spouse or not is irrelevant to the amount of child support he or she will be required to pay.

With respect to making an order for spousal support, according to both our federal and provincial legislation, the court is not supposed to take into consideration any misconduct of the spouse in relation to the marriage.   The Supreme Court of Canada confirmed in Leskun v. Leskun that “the attempt to get to the bottom of all the rights and wrongs that contributed to the break-up is likely impossible and in any event irrelevant to the task of sorting out the financial consequences”.  By the same token, you are not going to acquire a more significant property settlement based on your spouse’s infidelity.  The value of the property acquired during the marriage will, except in the rarest of circumstances, be equalized by the court in the event of a breakdown of the marriage.

Even when it comes to the issue of custody of or access to a child, the legislation specifically states that a person’s past conduct shall be considered only when the conduct has been violent or abusive or when the court is satisfied that the conduct is relevant to the person’s ability to act as a parent.  In the eyes of the court, committing adultery does not, in and of itself, prevent an individual from parenting a child.

The bottom line is that, while learning that your spouse has been unfaithful will almost inevitably cause a great deal of emotional trauma and while the thought of “making him or her pay” may seem very appealing,  the courts are not going to be particularly interested in the adultery unless it is somehow relevant to an issue at hand.  In most cases, adultery simply is not relevant.

Paying Support for Non-Biological Children

As a family law lawyer, I have had the opportunity to speak to many different people from many different types of families.  There are all sorts of familial relationships and connections out there and, as our own Catherine Hyde has pointed out, the modern family is no longer what one might once have thought of as typical.  In fact, it is relatively commonplace for the relationships within a household to include the relationship between a step-parent and a step-child.  When that family splits up, or more specifically, when the two spouses split up, there is often an issue about whether the step-parent has a child support obligation for his or her non-biological children.  I have found that it comes as a surprise, to some, that, in those circumstances, there may be an obligation to pay child support for children who are not biologically related.    

Whether a step-parent has an obligation to pay child support is not determined by the relationship between the two spouses.  It doesn’t really matter whether the spouses had a common law relationship or whether they chose to get married.  What the courts are going to be looking at is whether the potential support payor voluntarily assumed the role of a parent during the time that the family functioned together as a unit.  If he or she stood in the place of a parent, the children are entitled to rely on that “parent” as a continued source of financial security.  An adult who voluntarily assumes a parental role, will not be permitted to escape a child support obligation by unilaterally ending his or her relationship with the child. 

There are no hard-and-fast rules for determining whether a person has stood in the place of a parent and each case will depend on the facts that are specific to the particular family.  The following factors are, however, generally considered:

  • The child’s opinion about his or her relationship with the step-parent.  Did the child accept the person as a parent (for example, by referring to the person as “Mom” or “Dad”) or did the child refuse to consider the person as a parental figure? 
  • The way in which the step-parent represented his or her relationship with the child to others.  If the step-parent communicated, either through action or words, that he or she  was responsible for the child as a parent, that will be certainly suggest the intention to assume a parental role.
  • The extent, prior to the spouse’s separation, of the step-parent’s financial contribution towards the child.
  • The child’s involvement with the step-parent’s extended family.
  • The level of involvement and the degree to which the step-parent became involved in the child’s life.    Did he or she attend parent teacher interviews?  Participate in the child’s extracurricular activities?  Discipline the child as a parent?
  • The nature of the child’s relationship with the “other biological parent” (i.e. the parent with whom the step-parent did not have a relationship).

The above-listed factors are not determinative nor are they exhaustive but all are frequently considered when trying to ascertain whether there has been a voluntary assumption of a parental role. 

The next stage of the analysis, assuming the non-biological parent has stood in the place of a parent, is to determine what amount of child support must be paid. 

Generally speaking, a parent’s monthly child support obligation is the amount that is set out in the applicable table as well as the amount of that parent’s contribution towards any special or extraordinary expenses.  The Department of Justice has an online Child Support Lookup to help figure out basic child support amounts according to the number of children eligible for support and the payor’s gross annual income.  A non-biological parent’s basic monthly child support obligation may, however, differ from the tables.  The Court has the discretion to order an amount that is “appropriate” having regard to (a) the amount payable pursuant to the guidelines; and (b) any other parent’s duty to support the child.

Ultimately, a non-biological parent’s “appropriate” support amount will depend on the particular circumstances that are invariably unique to each family.  In some cases, a step-parent will be ordered to pay the full table amount of child support and, in other cases, the step-parent will be ordered to pay a lesser amount.  Although the amount of the support obligation is difficult to predict, once an individual stands in the place of a parent for a non-biological child, he or she will not be permitted to cast aside parental responsibility simply because the relationship with the child’s parent has come to an end and there will likely be some amount of support payable for that child post-separation.