In Ontario spousal and child support cases, the law assumes that – to the extent possible, given economic/job conditions – former spouses will each maximize their earning potential and take the highest-earning jobs that are available to them. Naturally, this ensures that they can meet their spousal and child support obligations, not to mention their day-to-day living expenses.
But what happens if a spouse chooses to take a risk and set up a new business, rather than work to his or her full income-earning potential?
In a recent case called Goodfellow v. Goodfellow, the couple had been married for 17 years, and had three children together. During the marriage, they had worked together in the husband’s textile business, but had routinely lived beyond their means by continuing to over-extend themselves financially. Eventually, the business declined and had to be shut down.
The husband then attempted to set up another business. But while he was trying to get it off the ground, to make ends meet he worked as the operator of a friend’s French Fry Shack, doing odd jobs, and renting out billboards and some storage trailers. The wife, meanwhile, worked part-time at a bank.
Once the couple separated and the husband’s obligation to pay child support became an issue, the court had to consider whether the father was under-employed, and whether he should accordingly be ordered to pay more in support than his true income would otherwise dictate. The wife claimed that child support should be calculated as if the husband was earning $75,000 per year, which is what she felt he could be earning.
The court examined the facts. First of all, the court believed the husband’s claim that he was only earning $30,000 at various employment pursuits, and that he was actively working towards establishing his new business venture as an entrepreneur. It also accepted his evidence that he had been encroaching on his capital assets in order to supplement his income. There was also nothing to suggest that that he was earning (and hiding from the wife) any additional income than he had disclosed.
However, the court – while sympathetic to the husband – pointed out that as between finding remunerative work and setting up a business, it was not an “either/or” situation:
The [husband has a Grade 12 education. He has considerable experience as an entrepreneur, and he has been actively seeking a new venture as an entrepreneur rather than concentrating on obtaining employment per se. It is difficult to argue with the logic of his approach to employment given his history. However, by the same token, there is no reason why he could not be pursuing an entrepreneurial venture in his spare time while enjoying full time employment. I am sympathetic to the [husband’s] plight. He obviously recognizes that he has obligations to meet. It is for this reason he has been encroaching on his capital. The sooner he is able to get into a viable entrepreneurial venture, the better it will be for all concerned. … I anticipate that once the terms of the judgment have been carried out and he has money available to him, he will be able to commence a money making venture and get on with his life.
In the end, the court concluded that the husband could be working full-time earning at least $40,000 while simultaneously pursuing his entrepreneurial dreams at the same time. It therefore calculated his child support obligations as if he had been earning $40,000 per year.
For the full text of the decision, see:
Goodfellow v. Goodfellow, 20143 ONSC 5229 http://canlii.ca/t/g02jq
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