Court of Appeal Overturns Application Judge’s Decision On Child Support
When parents get divorced or separated and their child, or children, primarily live with one of the parents, it’s not uncommon for the other parent to have to pay child or spousal support. The amount of support required can be determined by looking at a number of factors, but the paying parent’s income is the most significant. For most people with regular jobs, it’s easy to determine how much money they make, and therefore how much money they should pay in support. But that’s not always the case. Take for example a recent decision from the Nova Scotia Court of Appeal which involved a father who lived in Ontario. In this case, the father owned two businesses, and the mother argued his child support obligations should be calculated based on the income of the businesses as opposed to the salary he took out of them.
The family’s background
The mother and father were living together in Ontario when the child was born in November 2013. Shortly after the child’s birth the mother and child moved to Nova Scotia. The father stayed in Ontario but spent a substantial amount of time with the child in both provinces.
The parents agreed on a parenting arrangement after their separation, but they were unable to agree on the issue of child support. The father is the sole shareholder and director of two companies which operate snow removal and landscaping businesses.
The mother was of the opinion that the father’s income should be calculated based on the pre-tax income of his corporations. The father argued that determining his income in that fashion, as well as the high costs associated with his access to the child, would create an undue hardship.
Decision from the lower court
The issue was initially heard by an application judge, who concluded that the father’s business income should not be used to calculate his child support obligations. Despite the businesses making over $350,000 per year, the application judge noted that he has operation costs associated with his businesses, including the upkeep of vehicles. Instead, the court looked towards the cash he had on hand at the end of each year ($77,000 one year and $81,000 the next) in order to determine that his income should be set at about $85,000 per year.
The application judge also sympathized with the father on the cost of his travel, though, writing
“The [father] is responsible for an unusually high [cost] of exercising access. When he comes to Nova Scotia to visit he has airfare, ground transportation, hotel and food expenses. When he picks up [the daughter] to take her back to Ontario for parenting time, he has the expenses of air travel which involves four plane tickets for him and two for his daughter. He has tried to maintain the relationship with his daughter through travelling to Nova Scotia approximately monthly, to either be with her here in Nova Scotia or taking her back to Ontario. Furthermore, the parties have agreed on a parenting schedule which I conclude to be in the child’s best interest. Such a schedule results in significant access costs of approximately $18-20,000 per year.”
Based on these factors the application judge ordered the father to pay $500 per month in child support as well as 51% of child care expenses.
The mother appealed the application judge’s decision on the grounds that they erred in concluding the father’s income should calculated as $85,000 as well as the finding that he father did experience undue hardship associated with his travel costs.
The court agreed with the mother’s argument that the application judge did not properly assess the father’s income. The application judge had failed to consider his “line 150” income from his tax returns. The court also found the application judge had failed to look at the father’s income patterns over a longer period of time. Finally, the court found the application judge did not follow s. 18(1)(a) of the Child Maintenance Guidelines, which state they should have considered “all or part of the pre-tax income of the corporation…for the most recent taxation year.
In regards to the finding of undue hardship, the court found the application judge had failed to engage in the two-step process called for in the Guidelines. The first step is that the party claiming undue hardship must establish that paying what the Guidelines called for would create an undue hardship as a result of one of the listed non-exhaustive factors. The application judge skipped this portion and went right to the second step, which is a consideration of the payor’s household standard of living.
The court did not make a new order on any of the issues. Instead, a new trial was ordered.
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