As British Columbia spousal and child support lawyers we are often asked when a BC lump sum spousal and child support award will be made. It is important to note that child support payments whether lump sum or periodic are not tax deductible. Spousal support payments are tax-deductible if paid on a periodic basis and on most occasions this will mean monthly payments are being made. Lump-sum spousal support payments are not tax deductible and so it is important when deciding whether to settle for a lump sum payment or when asking for or opposing a lump-sum payment in court that the lump-sum payment reflects the lack of tax deductibility as well as the fact that the money is being paid up front so that a correct figure is reached for settlement or by way of a court decision.
Lump sum support payments are rarely made in British Columbia and the recent British Columbia Court of Appeal decision in the case of Wu v. Sun [2011] BCJ No. 914 considered factors that justified the award of a lump sum spousal award in concluding that an award of $500,000-$750,000 was an appropriate award to give to a wife from the net sale proceeds of a family home. In coming to the conclusion that a lump sum award of this magnitude was appropriate the court noted:
- The parties live a lavish lifestyle primarily based on significant gifts from the father’s parents;
- the matrimonial home had been purchased by the husband’s parents and put in the husband’s name;
- the husband’s parents owned several businesses which provided income to the husband;
- the husband at trial refused to disclose his true income;
- the husband consistently failed to pay spousal and child support;
- at the time of trial the husband was $130,000 in arrears on his support payments; and
- at trial the husband was evasive on the stand concerning his income and finances and he had repeatedly ignored court orders.
The court pointed out that the husband who had a failed to obey numerous court orders was on shaky ground in seeking to appeal the orders that he himself had flouted. The court also pointed out that:
- the trial had been a lengthy and difficult one where both the husband and wife had strained the court’s patience with their actions;
- the likelihood of further refusals to pay support by the husband ; and
- the lack of assets in BC that would make collection difficult if not impossible;
and awarded the entire husband’s share in the family home to the wife to end matters and ensure that spousal and child support was paid.
The Court of Appeal’s summary of their reasoning is set out below:
51] The parties are a high conflict couple who presented difficult challenges to the court system in this jurisdiction. Neither party brought candour or a willingness to abide by the Rules of Court to this litigation. Philip has no connection with British Columbia except for the child and the Drummond money. He evinces no intention of doing anything more than paying child support and has demonstrated an indifference to court orders. The disposition of this appeal should, in my view, bring an end to the conflict to the greatest extent possible. Issues relating to the child and to the W. 40th property must remain open. In all other respects, we should design a result that closes the book.
[52] The only change I would make to the order on family assets is to take out $1.6 million for the China and Hong Kong assets. That reduces Tania’s entitlement by $720,000 (45% of $1.6 million).
[53] Philip will never pay Tania spousal support. The judge found arrears to the date of judgment of $130,000. A conservative estimate of arrears, post-trial, is $100,000, making a total of arrears of $230,000. I can foresee months, if not years, of conflict over calculating the arrears if the parties were left to fight about it. This must be avoided.
[54] A lump sum award for spousal maintenance is, in my opinion, the appropriate way to end that issue. An award in the range of $500,000 to $750,000 would be appropriate under this category. The remainder of the Drummond money would satisfy that obligation.
[55] In the result, Tania is entitled to an order releasing the entire proceeds to her. The trial order is amended by substituting a lump sum for periodic spousal maintenance.
[56] Success being divided, I would order no costs in the appeal.
In summary– in cases where there is a need to bring finality to a spousal or child support case, where there is the likelihood that support payment will not be made, where one spouse is deliberately underemployed making enforcement of support difficult or impossible and where there is a lack of assets to secure the support within the Province of British Columbia a lump sum support payment may be made. It is important to note that lump sum support payments should be made that are consistent with a spouses real or contributed guideline income as it is not appropriate to make a lump-sum spousal or child support award that is not based on the real earning ability of the paying spouse.
If you have a child or spousal support case and are concerned about obtaining or defending against a lump sum spousal or child support award contact us at any of our 4 offices throughout the province of British Columbia or toll-free at 1 877 602 9900.
