Shared custody and guardianship is becoming more common in British Columbia and in general terms, when BC separated parties share custody on a relatively equal basis the set off method is often used. The setoff method reflects the increased costs of the British Columbia family law party sharing custody and the supposed decreased costs to the parent who has the children less than the majority of the time. Often the cost of maintaining two homes results in less cost saving than simply arguing that a person who shares custody 50/50 will have only half the cost compared to them having them the majority of the time. The setoff method simply subtracts the salary of the lower income spouse from that of the higher income spouse and uses the resulting net income as a basis for the correct calculation of child support. Problems may develop using this method when one party does not work or is underemployed and other methods such as arguing the earning spouse pay 50 percent to reflect the direct child raising costs the payor has by supporting them for 50 percent of the time.
What must a spouse prove to change support in a shared child custody situation?
The recent BC Court of Appeal decision in Clarke v. Babensee answered this question in the context of a husband’s application to increase child support from the date of a consent order when his wife earned $382,000 and he earned $54,100 compared to the circumstances that existed on his variation application when his wife was earning $425,000 and he was earning only $46,000 to $51,000 as a result of him losing his job based on a sexual assault charge although he was acquitted. Despite these income changes, the husband’s application to obtain more child support then the $2000 originally agreed to was dismissed as being insufficient to meet the material change‚Äù test required by section 9 and 14(b) of the Child Support Guidelines. This case- as well as others where there is a large disparity of incomes -raise the issue of children suffering a much lower standard of living in one household than the other and the impact this may have on the parent child bond in each respective household. The Court of Appeal reviewed the law on shared custody child support variation in detail:
[14] In his reasons the learned judge cited the leading case on s. 9 of the Guidelines, the Supreme Court of Canada’s decision in Continuo v. Leonelli-Contino, 2005 SCC 63, [2005] 3 S.C.R. 217.
[15] The judge continued at paras. 7 to 11 of his reasons:
[7] At para. 3 of Contino, Justice Bastarache notes:
…Shared custody arrangements are not a simple variation of the general regime, they constitute by themselves a complete system.
[8] The factors in s. 9 that I have read are to be read conjunctively, and no one factor should prevail (para. 27 of Contino). At para. 82, Justice Bastarache notes the difficulty inherent in determining an equitable division of the costs, and he says this:
The determination of an equitable division of the costs of support for children in shared custody situations is a difficult matter; it is not amenable to simple solutions. Any attempt to apply strict formulae will fail to recognize the reality of various families. A contextual approach which takes into account all three factors enunciated by Parliament in s. 9 of the Guidelines must be applied.
[9] I accept, as well, that the analysis should be contextual, and here I refer to para. 55 of Contino where this is said:
The analysis should be contextual and remain focussed on the particular facts of each case. For example, an application that represents a variation of a prior support arrangement, will usually raise different considerations from a s. 9 application where no prior order or agreement exists. In the former case, the recipient parent, when he or she first got custody, may have validly incurred expenses based on legitimate expectations about how much child support would be provided. These expenses should be taken into [account] and a court should have proper regard to the fixed costs of the recipient parent.
[10] In taking a contextual approach which encompasses the three factors in s. 9, I note that the consent order of January 7, 2005, reflected a comprehensive settlement between the parties of their property and financial issues. That settlement was recorded in the separation agreement of October 6, 2004. Setting off the plaintiff’s Guideline income of approximately $54,000 against the defendant’s Guideline income of $382,000 would have resulted in the defendant paying $3,265 per month rather than the $2,000 per month for the two children, which was agreed upon.
[11] I accept that a consent order reflects the agreement of the parties and was seen by them as correct when it was made. As Mr. Justice Curtis noted in the recent decision of Amos Investments Ltd. v. Minou Enterprises Ltd., 2008 BCSC 332, a consent order is to be interpreted as a contract between the parties that made it, using the usual methods of construing a contract.
[16] Mr. Justice Brooke then advanced to consider whether there had been a change of circumstances” under s. 14(b) of the Guidelines, that is whether there was any change in the condition, means, needs or other circumstances of either spouse or of any child who is entitled to support …”.
[17] The learned judge cited this Court’s decision in T.L.A.T. v. W.W.T. (1996), 26 B.C.L.R. (3d) 319, 24 R.F.L. (4th) 51, and the Supreme Court of Canada’s decision in Willick v. Willick, [1994] 3 S.C.R. 670, 119 D.L.R. (4th) 405, in concluding that a change in circumstances must be material, substantive, unforeseen and of a continuing nature.‚Äù The judge quoted a portion of a paragraph from the judgment of Mr. Justice Sopinka in Willick (at 688):
In deciding whether the conditions for variation exist, it is common ground that the change must be a material change of circumstances. This means a change, such that, if known at the time, would likely have resulted in different terms. The corollary to this is that if the matter which is relied on as constituting a change was known at the relevant time it cannot be relied on as the basis for variation. …
[18] The learned judge then continued (at paras. 14-16):
[14] Can it be said that the change in the plaintiff’s income and employment and the increase in the defendant’s income is a material change in that sense? I do not think so. First of all, some change of circumstances was specifically acknowledged to be foreseeable, in the separation agreement at para. 18, where this is said:
The Parties acknowledge that they have both received professional legal assistance in the negotiation and finalization of this Agreement and the Parties acknowledge that some degree in the change of their circumstances is foreseeable and that they are aware that health, job markets, parental responsibilities, housing markets and values of assets are all subject to change and are contemplated by the Parties in coming to this Agreement.
[15] While I accept that the plaintiff lost his former employment through no fault of his own, he has regained employment, and he has the academic and work experience and qualifications appropriate to more remunerative employment. To the extent that the plaintiff’s expenses have increased, that cannot be a factor to be taken into account where at least a significant part of the expense is attributable to the three additional children that he and his wife share responsibility for 50 percent of the time, and their own child who was, of course, born before the separation agreement was entered into and the order previously referred to was made. Despite the rise in her income and the accumulation of retained earnings in her professional corporation, the defendant continues to live in the same home that she and the plaintiff occupied with their children. She has no expensive hobbies or interests other than an interest in travel, and it cannot be said that her lifestyle and that of the children whilst in her care is lavish. She may buy the children designer clothes, but she buys them at a discount retailer, such as Winners. The plaintiff, it must be remembered, has added significantly to the size of his home, not to accommodate his two children with the defendant, but to accommodate his extended family. Similarly, while expensive vacations may not be a realistic prospect for him, he does have a lake cottage that all of his extended family enjoy. It must also be remembered that the plaintiff obtained the benefit of an unequal division of the family assets and that his net worth reflected that.
[16] In the result, I am not persuaded that there has been a material change in circumstances sufficient to justify a variation of the existing consent order. There is no basis for a variation of support, and perforce there is no basis for any retroactive change. In the circumstances, the application is dismissed with costs to the defendant.
[19] The appellant complains that there are demonstrable errors of fact in this portion of the reasons. For example, he argues that the renovations to his home included the addition of bedrooms to accommodate his two children of the marriage to the respondent. But I have concluded that this is a minor error in a peripheral matter.
[20] That said, there is an apparent confusion in the record, and in the reasons of the chambers judge, as to the incomes of the parties in 2007, the most relevant year in the circumstances of the variation application.
[21] At para. 3 of his reasons, the chambers judge (writing in early 2008) stated:
[3] Since the order, the plaintiff has lost his normal employment and has obtained new employment at a salary considerably less than that of his former employment as administrator for the hospital foundation. He now earns a little less than $30,000 per year, in fact, $27,963 per year. The defendant’s income at the same time has grown to $464,222. The plaintiff says there are other material changes as well. He has remarried and his wife has three children who live 50 percent of the time with her and the plaintiff, and the plaintiff and his wife now have a child, Mackenzie Grace Clarke, who was born on December 11, 2004.
[22] In fact, as I have related, the respondent earned $426,147 in 2007 and the appellant earned substantially more than $27,963 that year. Apparently, before Brooke J., the appellant admitted that he earned $51,245 that year. Before this Court, the appellant suggested that it was more like $46,245, which his counsel simply estimated based on the appellant’s various sources of income in that year. It bears observation that an applicant on a variation application has the onus of leading precise evidence of his or her financial circumstances. It is unacceptable that the Court is left to extrapolate an annual income for an applicant from various pieces of financial information in the appeal book. However, even accepting the appellant’s lower income figure, he still has not demonstrated reviewable error in the material change analysis. His strongest argument is that the chambers judge implicitly underestimated the impact on the appellant’s circumstances wrought by the criminal charge and the appellant’s resulting ostracism within the community. But that submission hardly seems made out when one considers that in 2007, following his acquittal, the appellant managed to earn an income from three sources which approached his income at the time of the 2005 order and, one of those sources ‚Äì the handyman work ‚Äì saw the appellant undertaking services directly to the community in question.
[23] Of course, on an absolute scale there has been a change in the incomes of the parties since the 2005 order; the respondent’s income has increased and the appellant’s has, in 2007, decreased. However, the income of a spouse is but one consideration in the support regime established by s. 9 of the Guidelines and as Contino holds, no one factor in that analysis should prevail. More to the point, it is but one consideration in the constellation of factors set out in s. 14(b) of the Guidelines.
[24] In Hickey v. Hickey, [1999] 2 S.C.R. 518, 172 D.L.R. (4th) 577, the Supreme Court of Canada discussed the deferential approach which should be adopted on appellate review of family support orders (at paras. 10-12):
10 When family law legislation gives judges the power to decide on support obligations based on certain objectives, values, factors, and criteria, determining whether support will be awarded or varied, and if so, the amount of the order, involves the exercise of considerable discretion by trial judges. They must balance the objectives and factors set out in the Divorce Act or in provincial support statutes with an appreciation of the particular facts of the case. It is a difficult but important determination, which is critical to the lives of the parties and to their children. Because of its fact-based and discretionary nature, trial judges must be given considerable deference by appellate courts when such decisions are reviewed.
11 Our Court has often emphasized the rule that appeal courts should not overturn support orders unless the reasons disclose an error in principle, a significant misapprehension of the evidence, or unless the award is clearly wrong. These principles were stated by Morden J.A. of the Ontario Court of Appeal in Harrington v. Harrington (1981), 33 O.R. (2d) 150, at p. 154, and approved by the majority of this Court in Pelech v. Pelech, [1987] 1 S.C.R. 801, per Wilson J.; in Moge v. Moge, [1992] 3 S.C.R. 813, per L‚ÄôHeureux-Dub?© J.; and in Willick v. Willick, [1994] 3 S.C.R. 670, at p. 691, per Sopinka J., and at pp. 743-44, per L‚ÄôHeureux-Dub?© J.
12 There are strong reasons for the significant deference that must be given to trial judges in relation to support orders. This standard of appellate review recognizes that the discretion involved in making a support order is best exercised by the judge who has heard the parties directly. It avoids giving parties an incentive to appeal judgments and incur added expenses in the hope that the appeal court will have a different appreciation of the relevant factors and evidence. This approach promotes finality in family law litigation and recognizes the importance of the appreciation of the facts by the trial judge. Though an appeal court must intervene when there is a material error, a serious misapprehension of the evidence, or an error in law, it is not entitled to overturn a support order simply because it would have made a different decision or balanced the factors differently.
[25] While there is confusion in the record as to the parties‚Äô respective incomes for 2007, the actual facts fully support the chambers judge’s conclusion that the required change in circumstances has not been established by the appellant. The appellant has demonstrated no reviewable error. I would dismiss the appeal.
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Lorne MacLean
