Defaulting Dentist Dad Owes $500K – Lands in Jail for Non-Payment of Support
The father owed more than $500,000 in arrears of child and spousal support, for a period spanning about three years and ending in 2010. The Family Responsibility Office (FRO) stepped in to help the mother enforce the arrears, and the matter went before the Family Judge for a determination.
In explanation for his non-payment, the father claimed that he had experienced a drop in annual income from his dental practice – from about $475,000 at the time of separation, down to about $150,000 at the time of the hearing. He also claimed that he was meeting his support obligations to the best of his ability, under the circumstances.
However, the facts told a different story. According to the court, and despite his income having been in “free fall” since the initial support order was made seven years earlier, the father provided no evidence to suggest that he had changed his lifestyle at all. He still spent about $80,000 annually in after-tax dollars on personal expenses, and was still paying $1680 in monthly expenses on a Lexus automobile even though his license has been suspended since 2010 due to steps taken by the FRO He had also managed somehow to promptly pay an amount demanded by Canada Revenue Agency for unpaid taxes.
In reality, the father was deliberately under-employed. But even if he continued to work at his current income level, he still had the ability to pay at least some of the support arrears; the court was also entitled to order him to cash some of the $300,000 in RRSPs, despite the adverse tax consequences.
In considering the relatively drastic step of ordering a period of jail, the court also noted that the family litigation had a “tortuous history”, characterized by the father’s repeated failures to appear in court and comply with orders. There were also considerable delay on this part (including a 5-year delay in providing certain court-requested information), as well as many admonishments and warnings by judges. Still, the court added:
The Court of Appeal has held that imprisonment for non-payment is not a punishment for the debtor, but a means of enforcing payment, which should be imposed only when other reasonable measures have been attempted. If imprisonment is justified, the duration of the term should be proportionate, considering the amount owing and other factors related to the non-payment.
With these factors in mind, the court ordered the father to spend 15 days in jail, unless he paid the sum of $25,000 sooner. He was also ordered to pay $2,500 per month for a certain period, followed by an increase to $3,250 per month; if he did not do so, then he would be sent back to jail for 5 days. He was also ordered to pay $175,000 before a specified date, or else he would be put back in jail yet again for 120 days.
For the full text of the decision, see:
Ontario (Family Responsibility Office) v. Chiang (2014),
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