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Fathers Runs Off to be A Volunteer Missionary in El Salvador – What’s His Income for Support Purposes?

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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

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

Husband’s Wealthy Family Slipped Him Funds “As Needed” – Spousal Support Obligation Set Accordingly

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Husband’s Wealthy Family Slipped Him Funds “As Needed” – Spousal Support Obligation Set Accordingly

The husband was a Canadian citizen and resident. In 2009 he met a woman in Iran while visiting family there, and they got married in that country a few months later. The husband then returned to Canada and sponsored the wife to join him.
As part of that sponsorship process, the husband agreed to support the wife for at least three years from the date that she officially became a permanent resident. As is customary for Canadian sponsors, he gave Citizenship and Immigration Canada an undertaking to provide the wife with food, clothing, shelter, and other personal and medical needs, and also promised that neither the sponsored wife nor her family will need to apply for social assistance. He committed to this undertaking irrespective of any changes in his life.

The wife joined the husband in Canada in late 2009. She had studied English, but had not become entirely proficient. Despite being trained as an optometrist in Iran, she had not qualified to work as one in Canada and never obtained a job in her field. She also did not have her own bank account here.

The husband and wife separated in 2011, and the wife applied for interim spousal support pending trial.

In response to that spousal support application, the husband claimed that he was a self-employed Pilot Examiner earning approximately $26,000 per year. However, there was evidence in the form of a letter to Citizenship and Immigration Canada from an employer called Lakeview Millworks – a company apparently owned by the husband’s brother – attesting to the fact that the husband had been employed there at a job earning $58,500 per year.

However the husband was the sole title-holder on a home that was listed for sale at a price of $949,000. He also was the registered owner of five vehicles (though he claimed to use only three of those personally). It was also clear that the husband came from a wealthy family; his parents resided in Canada for only about half the year, and travelled back and forth to Iran two or three times annually. There was clear evidence that they frequently slipped him some money when needed.

In summary about his banking practices, the court said:

In this case, where the Husband had a “primary chequing account” at the Bank of Montreal in his name alone, funded from deposits from other Bank of Montreal accounts in his name or from others, where he has deposed that he received his father’s assistance “as needed,” that his father “typically” pays the monthly mortgage payments on the matrimonial home and where it appears that the Husband also pays his credit card balances using funds from this account, where he qualified for a $600,000 mortgage, where he showed yearly expenses of $110,994.60 and claimed income of $29,418.96 per year in his financial statement of March 14, 2012, his asserted income level is in doubt.

In this case, there are copies of uncashed cheques in addition to the income he is claiming and a representation to the Government of Canada of earnings of $58,500.

I do not accept that the Husband’s means are as limited as he alleges.

In my view, there is ample evidence that spousal support should be calculated on an income of far more than $26,000 or $45,000 per year. It is clear from the Husband’s own affidavits that he “typically” received and expected to receive funds “as needed” to support his lifestyle from his family, a lifestyle and a source of means that he shared with his Wife during the marriage.

The court accordingly imputed an annual income of $200,000 to the husband. At that income level, the Spousal Support Advisory Guidelines would have dictated monthly spousal support in the range of $700 to $933. However, this amount was insufficient in the circumstances; the court was required to consider the means of both parties.

In that regard, the court pointed out that by sponsoring the wife and bringing her to Canada as a permanent resident, the husband had promised to help her become a Canadian citizen, and had provided an undertaking to provide for her until December of 2012. However – aside from a one-time payment of $5,000 which was prompted by a court order – the husband had not provided her with any funds for the past six months. The Guideline amount had to be increased to provide the wife with a reasonable standard of living, having regard to the parties’ respective means and to the standards they reasonably expected to enjoy together at the time she relocated to Canada, and that she had actually enjoyed during the time they lived together.

Taking into account all the circumstances, the court therefore ordered the husband to pay interim spousal support in a gross monthly amount that would leave the wife with $3,250 net.

Kkabbazy v. Esfahani (2012), 2012 ONSC 4591  http://canlii.ca/t/fsrdq

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

Husband Downgrades Job, Then Quits Altogether – But Support Stays the Same

Husband Downgrades Job, Then Quits Altogether – But Support Stays the Same

This was a case which shows that a voluntary change in circumstances – including a significant reduction in income – does not necessarily mean that a parent’s obligation to pay child support will be reduced correspondingly.

The husband and wife met while in college and got married. They had three children, ranging from 12 to 17. At the beginning of the marriage, the husband had a job with General Motors Acceptance Corporation (GMAC) earning about $30,000. The wife never worked. By the end of the marriage, about 15 years later, the husband was earning about $86,000. At that time, the parties agreed as part of their separation that the husband would pay spousal support of $1,500 per month, and $1,350 in monthly child support.

The husband remarried in the summer of 2007, and filed for bankruptcy a few months later. He then voluntarily quit his job with GMAC and moved to his new wife’s hometown in New Brunswick, taking a job at a car dealership which paid $52,000 per year. Prior to this move – and although he was evasive to the court about his new wife’s finances – he indicated that she had been working at GMAC earning “less than $80,000”, but there was further evidence that she was later let go from that GMAC job and had been earning $100,000 elsewhere. Furthermore, he did not provide evidence as to what the new wife was now earning in New Brunswick, but it appeared that she had purchased a very comfortable home there, in which the both of them lived.

Nonetheless, the husband brought a motion to reduce his existing child support obligations to his first wife, and to end his liability to pay her spousal support altogether. Indeed, before the hearing the husband unilaterally stopped paying spousal support completely, and self-adjusted his child support payments to reflect his new $52,000 income. (And note that as part of a related interim hearing, the court ordered the husband to continue paying both child and spousal support at the old levels, which he failed to do.)

Meanwhile, the husband was let go from his employment in New Brunswick due to a change in the company’s ownership; he began collecting Employment Insurance benefits of $485 per week. This prompted him to stop making any child support payments whatsoever, despite him later admitting to the court that he owed $447 per month, based on his new level of E.I.-based income.

Still, the husband came to court to ask to have his child and spousal support obligations reduced to reflect his change in income. At this point, he was actively looking for work, but was limiting his search to Atlantic Canada.

The court refused his request. First of all, Ontario law gives the court the right to impute income where a spouse is “intentionally under-employed”, meaning deliberately choosing to earn less than he or she is capable of. In this case, given that the husband’s employment decision resulted in a significant reduction in child support, it needed to be justifiable in a compelling way.

This requirement was not met here: the husband had considered only his own interests.

First of all, it found that the husband’s decision to quit his employment with GMAC was entirely his own. It said:

Regarding his decision to quit GMAC Mr. Thompson said that he had heard unofficially from friends and managers that his job was in jeopardy. He claimed that his work performance was suffering because the stressors noted above were weighing on him. Without a vehicle he was often arriving late. However, there was no independent evidence from GMAC that Mr. Thompson’s job situation was indeed insecure. Mr. Thompson did not suggest or provide any evidence that he had been subject to discipline. While we heard that there was financial turmoil with General Motors around that time, there was no evidence that anyone at GMAC or its successor lost their jobs. Mr. Thompson had 22 years of seniority at the time he quit.

Next, citing the husband’s understanding that his children needed only to be “minimally covered” by his child support payments, the court found that the husband failed to appreciate that he had a legal obligation to support his children and that he could not avoid that duty by a self-reduction in income. Furthermore, at the time he made his decision to quit, he had no substantial debt, no other dependents, a good-paying job, and was at minimum sharing living arrangements with a new wife who earned well and owned a home mortgage-free.

The husband had unilaterally reduced the child support payments and was found by the court to be intentionally under-employed. As a result, the court imputed an income of about $86,000 to him, which was in accord with his prior earning levels, and ordered him to continue paying both child support and spousal support accordingly (although it did allow a $500 monthly reduction in spousal support due to other factors).

For the full text of the decision, see:

Thompson v. Gilchrist (2012), 2012 ONSC 4137 http://canlii.ca/t/fs2d2

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at www.RussellAlexander.com.

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