Fathers Runs Off to be A Volunteer Missionary in El Salvador – What’s His Income for Support Purposes?
Some of the cases from the past few months involve a court having to determine the income of a support-paying spouse. Most often, this becomes necessary because that spouse has decided not to be forthcoming with his or her true income figures.
This week I wanted to write about a different scenario: The court had to determine a payor’s income because he had decided to do volunteer work in another country. The question was whether he could be considered deliberately “underemployed” in law, which would entitle a court to impute a higher income to him for calculating support obligations.
In Newell v. Newell, the father had operated a travel agency, where at its peak he earned up to $100,000 per year. However, after he and the mother separated in 2004, he claimed his income had dropped off almost entirely, and in some years he reported less than $5,000 annual on his tax return. By agreement, he and the mother of their three children agreed that his income for calculating child support would be set at $30,000 per year.
His financial situation became even more bleak in 2010, when he became a volunteer missionary in El Salvador, expecting to earn about $24,000 per year. At this stage, the two oldest children were in university, and the youngest lived with the mother as she always had. He was paying no support for them at all.
The mother brought a motion to have the original 2004 child support order varied. The court summed up the matter as follows:
7 The major issue that is in contention between the parties in this motion is the establishment of the respondent’s income. The applicant has raised a number of issues in her affidavit sworn May 10, 2011 relating to that issue. She points out that during the time the respondent was reporting virtually no income in his financial statement he was able to enjoy a lifestyle that allowed him to spend large sums of money on the children, including ski trips, vacations, cell phones, expensive activities and expensive purchases for them (computers, ski equipment etc.).
Indeed, the mother claimed that the father had travelled back and forth from Canada to El Salvador between ten and twelve times, that he had an expensive SUV in El Salvador, and that he had purchased a house there, complete with swimming pool. Also, during a recent two-year period he had taken the children on a number of separate trips, with destinations such as Orlando, California, Mexico, Calgary, Guatemala, Wales, Honolulu, Central America, and several trips specifically to El Salvador. The father also had more than $50,000 in a bank account.
In explanation, the father stated that he was able to pay for this lifestyle because he had received almost $300,000 from a family trust that had been set up and was under the direction and control of his mother, but that the money was merely a “loan”. However, there was no documentation to that effect.
The court considered these circumstances, and concluded that the father was “intentionally underemployed” in law. In short: he had voluntarily chosen to take a path that would provide him with less income than he was capable of earning. The court wrote:
39 In making that finding, I am not attributing bad faith to the Respondent. His sense of calling to Christian Ministry in El Salvador may very well be legitimate, and as such commendable. I find that on the balance of probabilities, he is able to make that voluntary choice more easily because of the safety net provided to his financial security by the family trust. He acknowledges a “loan” from his mother in the amount of $295,000.00. Even without documentation to confirm that, it is improbable under all of these circumstances that there is any realistic expectation that such a loan will be repaid.
The court therefore treated the purported loan as “income” instead, and spread it across 8-10 years, so that the father was deemed to be earning about $60,000 per year. Child support was awarded accordingly. In doing so the court also took into account the father’s demonstrated ability to earn income in the travel business, but conceded that he may never again make the $100,000 he once earned, due to the vagaries of self-employment.
For the full text of the decision, see:
Newell v. Newell, 2012 ONSC 3565 http://canlii.ca/t/frsh8