Vancouver Spousal Support Advisory Guidelines, Maintenance and Alimony Lawyers
The BC spousal support and alimony lawyers at the MacLean Family Law Group want divorcing BC spouses to be aware of the most recent maintenance law in British Columbia concerning spousal support and spousal alimony cases and we look forward to meeting you at any of our four spousal support law office locations in Vancouver, Surrey, Kelowna, or Fort St. John British Columbia. Call us toll free 1-877-602-9900 as delay may prejudice your case. You cannot afford to ignore the issue or be in the dark about your spousal support rights.
As you may or may not be aware, the Spousal Support Advisory Guidelines (SSAG), although advisory only, and as such are not binding on B.C. courts have come to be routinely applied by our Courts. (This is in contrast to the child support guidelines which have been legislated.) B.C. Courts are applying SSAG more and more regularly when deciding the duration and quantum appropriate for spousal support. Recently in Domirti v. Domirti 2010 BCCA 472, the Court of Appeal adhered strictly to the guidelines, overturning a chamber judge’s award of indefinite support following a 16 year marriage, finding that, according to the guidelines a duration of between 8 and 16 years would be appropriate. The Court of Appeal found the chambers judge had erred in applying the guidelines, and stated that “to maintain spousal support within the range for the amount of support but ignore the range for the duration of the award is effectively to make an award contrary to SSAG.”
Under SSAG, the “Rule of 65” indicates that if the age of the spouse entitled to receive support, when added to the length of the marriage, is equal or greater than 65, the appropriate duration of the support payments may be “indefinite.” The Court of Appeal in Domirti cautions that it must be the age of the spouse at the date of separation, and not the age at the date of review, and notes this calculation mistake was made by the chambers judge resulting in an inappropriate award. Although under the Rule of 65, as well as for marriages of 20 years or more, the guidelines indicate that “indefinite” awards may be appropriate, it is important to be aware that indefinite does not mean permanent! While there will be situations where life-long maintenance of a former spouse is appropriate, there will also be situations where it is not.
Despite being applied with increasing frequency, there remain times when strict compliance with the guidelines is not appropriate, as was the case in Munro v. Munro, 2006 BCSC 1758. Although the marriage in this case lasted for 18 years, it was not found to be a traditional marriage, as both parties worked throughout the majority of the marriage. Brine J. found that “that it is not, in the circumstance of this case, appropriate to apply the Advisory Guidelines.” After taking into consideration factors such as “the limited or no economic disadvantage to the defendant from the marriage, the defendant’s delay in pursuing her obligation to become economically self-sufficient, and the reapportionment of debt and assets in the defendant’s favor,” Brine J. found it appropriate to award an amount outside of the guideline recommendations.
In conclusion, at this point the Spousal Support Advisory Guidelines are more than just suggestions but less than strict law. The key point being that the guidelines are not awarded unless entitlement can be shown, however the guidelines themselves that use a “Robin Hood” type formula that uses income differentials to create a range of monthly payment sums can in themselves cause a finding of entitlement that may not at law truly be justified. They are used regularly by courts, and as demonstrated in Domirti, can be confusing to apply. If you are receiving or paying spousal support, and have not already done so, it is in your best interest to speak with a lawyer well versed in applying the guidelines, who will also be equipped to recognize when and where exceptions to the general guidelines are appropriate.
BC SPOUSAL AND CHILD SUPPORT ARREARS VARIATION LAWYER MACLEAN
I disagree with the current and proposed Family Relations Act child or spousal payment arrears (unpaid support) test that establishes there will be no cancellation of support arrears unless it would be “grossly unfair” not to do so. The Act arguably treats common law and married couples differently and applies a one-sided and unfair test that departs from the proper application of the Child Support Guidelines and Spousal Support Advisory Guidelines.
If the income used to set the amount was wrong, or the paying spouse’s income truly declined through no fault of the payor then the arrears should be corrected applying the two guidelines fairly. Changes to our Family Relations Act are needed but under the White Paper of family Relations Act reform no change to this draconian test is proposed.
At present the Child Support Guidelines are applied in virtually every case by analyzing the paying spouses income and mandating a set payment if a payor’s income goes up annually the support goes up and if the paying spouse applies to lower the payment because of a bona fide decrease in income the payment will likely decrease. The Spousal Support Guidelines use the same income test and these guidelines are also routinely applied. The problem arises for paying spouse’s who lose their jobs or suffer huge income cutbacks and who then cannot hire a lawyer to promptly come back to court to correct the problem. “Phantom” support arrears unavoidably build up and when the situation reaches a crisis point where enforcement action is taken -such as seizure and sale of assets, denial of passport and driver’s license renewal or garnishment of the payor’s wages -the payor is faced with a test that is far different than simply applying the Child Support and Spousal Support Advisory Guidelines.
The White Paper on Family Relations Act reform states “The policy question in relation to the cancellation or reduction of arrears of spousal support is whether these are to be characterized as a retroactive variation and analyzed in a similar way to other variation applications or whether they should continue to be subject to a tougher standard: the current Act says that arrears may be cancelled or reduced only if it would be “grossly unfair” not to do so.”
The new proposed section which perpetuates what I say to be an injustice that treats innocent paying spouses who are in arrears because it applies a different test to that facing paying spouses on initial applications and those who promptly apply to reduce support, reads as follows:
Reducing or cancelling arrears
141 (1) The court may, on application reduce or cancel arrears under a support order if satisfied that it would be grossly unfair not to do so.
(2) For the purposes of this section, the court may take into consideration
(a) the efforts the person having the support obligation has made to comply with the support order,
(b) the explanation of the person having the support obligation for any delay in applying for an order to vary, suspend or terminate the support order, and
(c) any special circumstances that the court considers relevant.
(3) If the court reduces arrears under a support order, the court may order that interest does not accrue on the reduced amount of arrears if the court is satisfied it would be grossly unfair not to make that order.
(4) If the court cancels arrears under a support order, the court may cancel interest that has accrued on the arrears under section 11.1 of the Family Maintenance Enforcement Act if the court is satisfied it would be grossly unfair not to make that order.
To be clear, I say the test is unfair to those support paying spouses who cannot pay support at the original court ordered level not those who simply refuse to pay and persist in ignoring their court ordered obligations.
If you have an issue wioh support arrears call m, Lorne MacLean at any of our three offices or toll free at 1-877-602-9900.
MacLean Law Group’s Ethnic diversity expands to allow us provide family law, criminal law, personal injury ICBC and immigration legal services in Punjabi, Hindi and Farsi as well as in English!
Lorne MacLean, BC Divorce and family lawyer is proud to announce the location of the MacLean Family Law Group’s new Surrey British Columbia office located at the corner of Number 10 Highway and 152nd Street in Surrey, BC where clients from Langley, Surrey, White Rock and Delta BC as well as the Fraser Valley who speak Punjabi, Hindi as well as English will be helped. Mr. MacLean is delighted to have hired a new law associate who will start work in April 2011, namely Sumit Ahuja a lawyer, vakeel who speaks fluent Punjabi and Hindi as well as support staff who will also be able to help Punjabi speaking clients who need help in the areas of Divorce and Family law matters involving child custody and support, spousal support, property division and common law relationship issues. Sumit Ahuja will also assist with immigration law matters.
We have also hired two new associates who will handle Surrey family law, divorce and criminal law matters in all three of our offices namely Mike Jakeman and Ari Wormeli (May 22, 2011) and who look forward to assisting our clients in the Fraser Valley, Vancouver and in Fort St John BC.
Finally, we will soon add Ronak Yousefi a Farsi speaking Persian articling student who will become a lawyer in July 2011 working at our downtown Coal Harbour, Vancouver office who will help us with Persian and Farsi family law and immigration law clients who are more comfortable speaking Farsi when they seek our legal assistance.
The British Columbia courts award British Columbia spousal support guideline support under either of the Divorce Act or BC Family Relations Act and both Acts also rely in part on BC spousal support legislation called SSAG-Spousal Support Advisory Guidelines advisory calculations that are designed to help spouses and courts come to the right amount of spousal support and the right amount for how long BC spousal support is paid. In longer marriages the support paid might well equalize incomes but we also want to ensure we equalize efforts of both spouses by ensuring each spouse is working to their capacity. When I was in the Supreme Court of Canada on the Leskun v Leskun case I argued Canada as a nation required paying spouses to work to their full capacity and not try to pay less than their fair share of support while at the same time making sure that the receiving spouses did not try to work less to get more than their fair share of support.
Many lawyers and parties forget the SSAG has a number factors that push the amount up or down in the range and this makes a huge difference to what you pay or receive. Here are factors for you to consider and get proper legal advice from a lawyer. Too many people try to be heroes and waive support only to become destitute later!
Location within the Ranges:
The SSAG discuss many factors to be considered in determining the appropriate placement of
support within the range generated by the formulas.
The following factors may favour a support award at the higher end of the range:
a. The recipient has a strong compensatory claim (eg. recipient moved/gave up employment for
payor’s benefit; recipient funded payor’s education/training; recipient sacrificed
employment opportunities because of child care).
b. The recipient has limited income.
c. The recipient has limited earning capacity.
d. The recipient has compelling needs and standard of living.
e. The recipient is older.
f. The recipient will be undertaking retraining or education in the immediate future which is
aimed at promoting self-sufficiency.
g. The recipient has primary care of very young children, several children and/or special needs
children (ie. age, number and needs of the children can restrict the custodial parent’s ability
to work).
h. The marriage is long term.
i. The marriage is short with young children and a stay-at-home custodial parent.
j. There is no property to be divided.
k. The recipient is carrying significant family debts (but not severe enough to fall within debt
payment exception).
l. There are local or regional differences (eg. parts of Ontario, especially 416 and 905 area
codes).
The following factors may support an award at the lower end of the range:
a. The recipient has a weak compensatory claim.
b. The payor has limited income.
c. The payor has limited earning capacity/ability to pay.
d. The recipient does not have significant needs (eg. recipient has solid employment/income;
recipient has reduced living expenses (ie. subsidized housing; mortgage free matrimonial
home; shared housing costs)).
e. The recipient has remarried/repartnered.
f. The payor has significant needs.
g. The recipient is younger.
h. There is an unequal division of property in favour of the recipient.
i. The recipient holds sizeable exempt or excluded assets after division of property.
j. The payor is carrying significant family debts (but not severe enough to fall within debt
payment exception).
k. In the case of a traditional marriage, the payor has costs associated with going to work, in
contrast to the non-working recipient.
l. An incentive for the recipient to make greater efforts towards self-sufficiency is needed
(although imputing income can also address this factor).
m. There are local and regional differences (eg. Atlantic provinces).
n. The payor has significant direct access costs (especially important when the payor is at the
lower end of the income spectrum).
o. The payor makes mandatory deductions for pension contributions (especially important
when the payor is at the lower end of the income spectrum).
Lorne MacLean Vancouver BC spousal support guideline award and SSAG spousal support guidelines lawyer
Lorne MacLean BC SSAG support and spousal support guidelines lawyer, using the with child support spousal support advisory guideline formula, recently succeeded in obtaining a lucrative BC Spousal Support Advisory guideline ” SSAG” and BC child support guidelines award on behalf of his client, the wife, in a complex and high net worth BC spousal support guidelines and BC child support guidelines proceeding where a BC child support award of $8771 retroactive for 13 months (plus private school and extracurricular fess of roughly $3000 monthly) and a BC spousal support advisory guidelines award of $17714 was ordered meaning the combined monthly payments of spousal support advisory guidelines support and child support approached $30,000 per month. The award ranks as one of the highest court BC spousal support awards in BC since the SSAG spousal support calculations came into effect. Mr. MacLean succeeded in having the court use all of the companies pre-tax profits for the SSAG calculation based on BCCA law from the cases of Klukas and Teja, defeating the husband’s spousal support claim that double dipping applied to BC spousal support and a lower BC spousal and BC child support payment should thus be paid, blocking any $350,000 cap argument where BC spousal support is not increased on high salaries above $350,000 per year and finally in having the child support portion of the order made retroactive so a large lump sum payment was received for the children’s benefit. We were delighted to have achieved such a generous BC spousal support and BC child support result for our BC family law client.
For privacy reasons the case is referred to as A.R.J. v. Z.S.J. [2009] B.C.J. No. 2393, B.C.S.C. The brief facts are:
-Married for 16 years.
-Two children.
-Husband, a surgeon, was sole director and equal shareholder in his professional services corporation.
-A personal services corporation unlike a company involved in a riskier or more capital intensive maunufacturing business, generally speaking, does not require significant injections of capital in order to operate.
-Citing our Appellate case authority Mr Justice Savage determined that in the absence of legitimate calls on the pre-tax corporate income of a company, children and a spouse are entitled to support based on the full income available to the payor spouse.
-The double-dipping argument was rejected as it was the income earning capacity of the payor that gave rise to the assets in the company and this argument was not valid.
-No $350,000 cap would be used for the husband’s income which would have drastically lowered the wife’s support.
We look forward to helping high net worth spouses involved in complex family law cases.
A Happy Client gives Lorne MacLean a Great Birthday Cake
Lorne MacLean, Senior Partner at MacLean Family Law Group, was interviewed on June 9th 2010 by Anne Drewa of Global TV and we provide a summary of the facts of the Interview on this interesting issue.
In a current Osoyoos, BC parental support claim made by Ken Anderson’s mother against him and his three siblings, the facts as disclosed in the media are:
• There was an alleged abandonment/estrangement by the mother when the Mr. Anderson was 15 when his mother disowned him
• Mr. Anderson allegedly does not have sufficient funds to pay the mother
• The children will have to pay money to fight this that could be used to support their immediate families
Section 90 of the Family Relations Act states:
(1) In this section:
“child” means an adult child of a parent;
“parent” means a father or mother dependant on a child by reason of age, illness, infirmity or economic circumstances.
(2) A child is liable to maintain and support a parent having regard to the other responsibilities and liabilities and the reasonable needs of the child
Current claim
The history of section 90 as applied by B.C. judges shows that there have been 5 reported cases of which only two were successful, one of those on an interim basis only. The other was a case where a child had promised to pay a mortgage her mother had taken out. The child reaped the benefits of the mortgage, and then failed to pay for it. MacLean feels the section is anachronistic and should be repealed as a vestige of a bygone era where governments in the 1920′s and 30′s sought to reduce their liability to support indigent persons.
Result of a similar case brought by a father in 1997, Newsom v. Newsom, BCSC per Mr Justice Burnyeat:
Quote: The applicant is the author of his current standard of living. He can blame no one other than himself for the fact that his previous income and his previous capital base are no longer present. The state support which is available to him allows him to live in what the state has decided is a minimum acceptable standard of living. He should not be allowed to look to those he abused and to whom he provided virtually no economic or emotional support so that he can live in a manner more in keeping with a lifestyle that he enjoyed almost 30 years ago.
However, on an appeal at the BCCA in 1999, it was decided that factors of estrangement and the obligations of the children to their families should not be dealt with on an interim application. Therefore, two of the children were ordered to pay a sum of $200 each per month on an interim basis. There is a possibility, therefore, of interim success if the mother can make out a bare bones case, but success on a final Order will be much harder.
Synopsis of principles:
An adult child may be responsible for the support of his or her biological mother and father. Under s. 91, a parent, or an agent of the provincial Attorney General, such as an agent of the Public Guardian and Trustee of British Columbia, can make the application on behalf of the parent although in reported cases only parents themselves have applied.
Factors from Newsom:
• “The obligations that of each of the defendants (adult children) have to their own families will take priority over any obligations that they owe to the applicant;
• “Any assets and income which are available to the (adult children/defendants) from their spouse or former spouses are not to be taken into account when determining whether, on the basis of their responsibilities and liabilities and their reasonable needs, they also have an ability to maintain and support the applicant;”
• Evidence of abandonment, abuse and estrangement can be taken into account as one of the factors in the objective evaluation of the application;
• “The length of the period of estrangement is also a factor to be taken into account in the objective evaluation of the application and the consequent ranking of the needs of the adult child; and
• “A parent should first look to spousal support and, only if such support is not available, to then look to possible child support”
There are reasons to repeal the section:
• Many children already support their parents
• Some parents already have provincially and federally funded support such as welfare or CPP
• There is a stigma attached to parental support
• If child support ends in the mid twenties at best why would an adult be entitled to support?
• Why punish children for the choices of their parents?
• There is little prospect of success and a claim will have a negative impact on family relationships caused by this section do we really want to open old family wounds?
The B.C. Law Institute has recommended repealing s. 90 in their March 2007 report:
“Parental support legislation creates mischief for older adults, their families, and the general public, and this mischief cannot be completely remedied by amending the legislation.
Section 90 has been rarely used in the past and it will likely continue to languish in the future, because it is based on a fundamental contradiction. Litigation is too costly, time consuming, and complicated to be an effective method to deliver relief to the poor. Repealing section 90 will not deprive the poor of a practical tool to better their lot.â€
It appears no legislative action has been taken, but cases remain few and far between in any event and provinces such as Alberta have already gotten rid of similar legislation.
However, with pending demographic changes and a surging aging population will governments again need to reduce their budgetary commitments to the elderly and infirm?
We are often asked to review BC separation agreement or BC marriage agreements with a view to setting the BC separation or BC Marriage agreement aside and Shelagh Kinney of our BC Family Law office had a nice win recently in a case on behalf of the wife in L v. L, a BC Supreme Court separation agreement variation 2010 decision.
Our Supreme Court in the Brandsema decision warned spouses that fair agreements made with full disclosure between spouses on an equal footing will be protected but unfair exploitive agreements will not be sanctioned. In Brandsema the Court focussed on non-disclosure by the husband and varied the agreement to give the wife more money on the following basis:
Abella J., speaking for the majority, stated (at paras. 1–6):
“This court has frequently recognized that negotiations following the disintegration of a spousal relationship take place in a uniquely difficult context. The reality of this singularly emotional negotiating environment means that special care must be taken to ensure that, to the extent possible, the assets of the former relationship are distributed through negotiations that are free from informational and psychological exploitation.
…
This appeal, therefore, attracts a spotlight to the duties owed by separating spouses during the process of negotiating and executing a separation agreement for the division of matrimonial assets. In Miglin, based on the inherent vulnerability of spouses during negotiations, this Court stated that in order to safeguard a separation agreement from judicial intervention, a spouse must refrain from using exploitative tactics. It held that the failure to do so, particularly if the agreement fails to materially comply with the objectives of the governing legislation, could well result in the agreement being set aside.
The circumstances of this case move us to consider the implications flowing from Miglin for the deliberate failure of a spouse to provide all the relevant financial information in negotiations for the division of assets. In my view, it is a corollary to the realities addressed by this court in Miglin that there be a duty to make full and honest disclosure of such information when negotiating separation agreements.
The husband’s exploitative conduct, both in failing to make full and honest disclosure and in taking advantage of what he knew to be his wife’s mental instability, resulted in a finding of unconscionability. The trial judge accordingly ordered that the wife be compensated in an amount representing the difference between her negotiated equalization payment and her entitlement under British Columbia’s Family Relations Act, R.S.B.C. 1996, c. 128. On the facts and law, I see no reason to disturb his conclusion.”
Spouses need to approach the settlement negotiations frankly and ensure the opposing party gets independent legal advice. Home made agreements are unlikely to protect either side and a little money and effort spent doing it right the first time will ensure savings on expensive legal fees after the fact.
Lorne MacLean
MacLean Family Law Group Layers and Articled Students
P.P.W. v. R.S.L.B., 2010 BCSC 58 – 2010/01/15
Is an interesting BC unmarried couples, BC common law and BC marriage like relationship case where the BC Supreme Court had to determine if unmarried parties lived in a “marriage like relationship” for a period of two years sufficient to justify entitlement to a spousal support award. The court viewed the evidence of separate residences, some overnights together, sexual exclusivity, vacations together, no joint bank accounts although there were financial benefits provided tithe Plaintiff as well as the dysfunctional relationship and held while the alleged “wife†wanted there to be a “marriage like relationship the Defendant alleged “husband†did not and the Court dismissed the alleged “wife’s†claim for support and property division under trust law. The Court reviewed the key cases on what needs to be proven to succeed on a common law support claim.
96] The FRA also provides the definition for spouse:
“spouse” means a person who
(a) is married to another person,
(b) except under Parts 5 and 6, lived with another person in a marriage-like relationship for a period of at least 2 years if the application under this Act is made within one year after they ceased to live together and, for the purposes of this Act, the marriage-like relationship may be between persons of the same gender,
(c) applies for an order under this Act within 2 years of the making of an order
(i) for dissolution of the person’s marriage,
(ii) for judicial separation, or
(iii) declaring the person’s marriage to be null and void, or
(d) is a former spouse for the purpose of proceedings to enforce or vary an order.
[97] The law concerning the definition of spouse under the FRA is quite settled, with Gostlin v. Kergin (1986), 3 B.C.L.R. (2d) 264 (C.A.), remaining the authority on the matter. The focus of the analysis is on the parties’ subjective intentions to live in a marriage-like relationship, looking to objective factors to assist in this determination. Absent clear evidence of the intention of the parties, no one objective factor is determinative. For the most part, each case is factually unique, and therefore must be judged on its own circumstances.
[98] In Gostlin v. Kergin, the Court of Appeal stated at 267 that upon marriage, individuals assume the support obligations contained in the FRA, and that absent marriage, these obligations should not be thrust upon individuals unless they live together for at least two years as husband and wife in a marriage-like relationship.
[99] Lambert J.A. stated at 269 that when it comes to determining whether an individual is entitled to spousal support under the FRA, it is an all-or-nothing examination:
If the relationship had the characteristics of a true marriage throughout the period of at least two years that is required by the definition of “spouse”, then the parties lived together as husband and wife and there is an entitlement to claim maintenance or support. If the relationship did not have those characteristics, there is no entitlement. And there is no middle ground where the relationship has only some of the characteristics of a true marriage with the result that there is a diminished entitlement. [Emphasis added.]
[100] Takacs v. Gallo, [1998] 9 W.W.R. 235 (B.C.C.A.), provides useful direction to a court in determining if a common-law relationship exists between the parties. Newbury J.A., for the majority, states at para. 53:
The starting point in this province for the analysis required in cases of this kind is the judgment of this court in Gostlin v. Kergin (1986) 3 B.C.L.R. (2d) 264, and in particular, the comments of Lambert J.A. at 267-8 which are quoted in Madam Justice Huddart’s judgment. I read those comments as focusing first on the intentions of the parties to live “as husband and wife”, or in a marriage-like relationship. Such an intention may or may not include financial dependence. The various “objective indicators” referred to in Gostlin were advanced as a means of divining those subjective intentions where the latter “prove elusive”. By the same token, of course, subjective or conscious intentions may be overtaken by conduct such that whilst a person living with another might not say he or she was living in a marriage-like relationship, the reality is that the relationship has become such. [Emphasis added.]
And continued at para 55:
In both Gostlin and Fitton, the question of whether persons were living together as spouses notwithstanding that they were not legally married involved the court in an examination of their intentions and not simply an objective assessment of whether their financial and living arrangements were “intertwined”. If the Legislature had intended the latter, it would have been an easy matter to so state. Objective factors will of course be relevant to determine the parties’ intentions as Lambert J.A. noted in Gostlin but those factors will rarely be determinative in and of themselves. Many combinations of people may live together and meet many of the criteria set forth in Molodowich v. Penttinen (1980) 17 R.F.L. (2d) 376 (Ont. Dist. Ct.), but without intending or in fact entering the kind of psychological and emotional union that one associates with marriage. [Emphasis added.]
[101] Thompson v. Floyd, 2001 BCCA 78, is often cited for confirming that despite the change in the wording of the definition of spouse under the FRA, the Gostlin inquiry remains the authority and that other cases are helpful in determining whether a spousal relationship exists, but each case must be judged on its own facts.
[102] This is the legal framework often employed in determining the existence or not of a common-law relationship under the FRA.
[103] In order to establish an entitlement, the plaintiff must prove that she and the defendant lived together in a marriage-like relationship for a period of at least two years prior to the commencement of her claim.
We recommend you contact us immediately if you are considering entering into a marriage like relatiuonship or are in one that is breaking down as there is a1 year time limit to apply for relief.
Lorne MacLean- Divorce Lawyer- brings a Fresh Perspective to Your Case
Many BC divorce and British Columbia Separated parents involved in a BC child custody case think their chances of receiving child custody, more or less support, or a larger share of the family property will change if their spouse has had an affair.
In reality an affair has little if any impact on the issues surrounding marriage breakdown. In the infamous case of Leskun we acted for husband who had had an affair and we were successful in the Supreme Court of Canada in upholding the principle that a spouse’s affair was irrelevant to the issues of spousal support unless it could be proven, supported by medical evidence, that the affair had a negative financial impact the other spouse that prevented them from earning what they normally would have earned. The ability of one spouse to sue the other spouse or mistress for damages for an affair or for “alienation of affection†was long ago abolished in British Columbia. While there still is the ability to sue for damages for physical and mental abuse in British Columbia, the Supreme Court of Canada has narrowed the scope of this claim in their decision of Frame v. Smith.
We warn our spouses that a new relationship during the end of a shaky marriage or immediately after the marriage has broken down can negatively impact a child custody claim if it is shown that the new person is introduced too soon into a relationship or that the new relationship distracts the separating spouse from focusing on their children and putting their children’s interests ahead of their own. A new relationship can also impact and reduce a receiving spouse’s claim for support under some circumstances. We want people to go slow as it is imperative people do not “jump from the frying pan into the fireâ€.The existence of a new relationship often will not help promote a quick settlement so this is a critical factor to consider as well!
Some people argue that Canada should return to the old fault days of divorce where misconduct resulted in negative consequences to the offending spouse. As an example of what might happen if Canada were to return to the antediluvian days of fault we point to the recent decision in United States below.
Wife’s $9m victory in adultery case warns mistresses to ‘lay off’: Cynthia Shackelford, 60, was awarded the unprecedented sum by a jury in the United States for damages to her feelings under an obscure 19th century adultery law; North Carolina is one of seven states in America where the so-called “alienation of affection†law is still in force. It evolved from common law under which women were classes as property of their husbands. As property, they were something that could be stolen. The award was made against Anne Lundquist, 49, an administrator at a private school, who was accused of having an affair with Allan Shackelford, a 62 year-old lawyer who had been married to Mrs. Shackelford for 33 years. The jury awarded her $5 million compensation and also awarded $4 million in punitive damages to be paid by Miss Lundquist. Miss Lundquist, who is now the dean of students at Wells College, in Aurora, New York, did not attend the court hearing and said she had not even been told it was happening. She is appealing. She said: “I’m so caught off guard by everything. I don’t have a lot of money, so where this $9 million comes from is kind of hysterical.†“My main message is to all those women out there who might have their eyes on some guy that is married to not come between anybody,†Ms. Shackelford told “Good Morning Americaâ€. “I wanted other people to understand, before they do it, how much it hurts.†Lee Rosen, of the Rosen Law Firm in North Carolina, said the state has around 200 “alienation of affection†claims a year. He said: “If your spouse is going to cheat, you really would like them to cheat with somebody who has a lot of money.â€
As reported in:
Coffee Break – North, Fort St. John, Vol. 1.23 March 27-April 4, 2010
Warning-Pre tax profits are the default guideline income for spousal and child support.
We often warn our family clients involved in a BC spousal or child support case that the tax return of a BC self employed spouse does not present an accurate picture of the income that the court will use for determining guideline income for BC child and BC spousal support. Recent cases presume that pre-tax profits are available to pay child support or spousal support from the company the paying spouse owns unless that spouse proves a need to keep profits in the company to advance legitimate company objectives.
In the recent case of Purvis v. Purvis 2009 BCSC 1794 the husband successfully overcame the presumption that pre-tax corporate income will be imputed to a payor when they own or control a company.
This case involved an action by the husband for a review and retroactive variation of a 2002 order for child and spousal support payments. The husband unilaterally decreased the support payments in 2003. The wife claimed that the husband had failed to make accurate financial disclosure for the annual review, which was a term of the Mediated Settlement Agreement incorporated into the 2002 order. She sought payment of outstanding arrears for support and that the husband’s income include pre-tax corporate profits from his holding company. The husband’s 2007 and 2008 income were the years in dispute.
Retained earnings or funds needed to operate?
The husband claimed that for the purpose of tax planning, the company Praetorian Construction Management (Praetorian) paid annual dividends to its shareholders to reduce its retained earnings. The dividends were paid as income to the husband’s holding company Tukcon Holdings Inc. (“Tukcon”). The court examined the pre-tax earnings and the retained earnings for Tukcon, the latter showing a shareholder loan for $730,916 owing from Praetorian. The husband said that Praetorian was not in a position to repay the shareholder’s loan to Tukcon and therefore Tukcon could not pay out the retained earnings balance to its shareholder (the husband).
Application of the law
In applying Section 18 of the Child Support Guidelines the court mentioned Hausmann v. Klukas, 2009 BCCA 32, where it had been held that if there is any evidence of legitimate calls on corporate income for the purpose of continuing the operations of the business the income will not be included in determining annual income thereby “not killing the goose who lays the golden egg†(Baum v. Baum [1999] B.C.J. No. 3025 B.C.S.C.)). The court in Hausmann (supra) said that where a corporation is owned and controlled by the payor spouse, there is a presumption that pre-tax corporate income will be available to a payor in the absence of evidence to the contrary.
Control of the company
In determining who controlled the holding company, Tukcon, the court found that the husband did not present evidence to reveal the extent to which the previous non-voting shareholder (his ex-common law spouse) was involved in the company pre-2009 and that from 2009 he was Tukcon’s only shareholder. Tukcon was one of the 3 companies who owned Praetorian, for whom the husband was the President and the key employee for obtaining new contracts,
Retained earnings required to continue operations
Applying Hausmann (supra), the court found that the husband had to rebut the presumption. On the evidence submitted by the husband’s accountant, the court found that the amount of $700,000.00 in 2007 was legitimately retained by Tukcon to enable Praetorian to continue operations and was not imputed as income to the husband. However, the evidence did not defeat the presumption that the remaining pre-tax profits for 2008 and the pre-tax profits for 2007 and these amounts were imputed as income to the husband.
Support applied retroactively
On another issue, the court cited case law that supports the proposition that retroactive awards should not reach back farther than three years from the date of notice to the payor parent, unless there is blameworthy conduct on the part of the payor D.B.S. v. S.R.G. 2006 SCC 37. The effect of not disclosing a material change in circumstances (his increased income) resulted in the husband having to pay support retroactively to the date when his circumstances changed in 2003. The wife had the reasonable excuse for not bringing her claims earlier of caring for the children and making attempts to become self-supporting.
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