Vancouver and BC high net asset divorce and high income spousal and child support cases bring into play a number of exceptions and special challenges. After listening to our explanation of the Spousal Support and Child Support Guidelines, our high income earner clients can be forgiven for concluding “so it’s like the story of Robin Hood then?” We explain it might seem that way but that with proper strategy and evidence the exceptions can be favourably applied. Our BC High Income Support Lawyer legal team would be pleased to meet with you to discuss your case.
Remember, it is important these exceptions be raised and argued early on in the case or disastrous consequences can result. Ensure you hire a top family lawyer at the outset when the stakes are high.
In BC there are potential high income and family property exceptions for:
- high value family property division cases and how they impact spousal support;
- income earning paying spouses who earn more than $150,000 for child support;
- income earning paying spouses who earn over $350,000 for spousal support annually.
- spousal support when the recipient spouse receives more than half of the family property.
A “Perfect Support Storm” For The Paying Spouse?
These exceptions rarely come into play all at once but in the recent BC Court of Appeal case of Hathaway they did to the consternation of the high income earner husband.
The husband who earned $1,000,000 per year appealed:
- the spousal support monthly award of: $24,124
- the child support monthly award of: $12,814
- the family property division that gave his wife more than $5 million of the substantial family property which had a total value of $9 million.
The Husband’s Support and Property Division Appeal Failed
The official case summary states:
The Court is not required, as a matter of principle, to depart from either the SSAG or the FCSG in the context of high-income earners. Any support order must be made on the basis of an individualized, fact-specific analysis. The appellant did not meet his onus of demonstrating that the child support order was “inappropriate” pursuant to s. 4 of the FCSG, or that the spousal support order failed to comply with the objectives of s. 15.2 of the Divorce Act. Similarly, reapportionment is not prohibited as a matter of principle in circumstances involving significant family assets and a high-income payor. The trial judge properly considered the factors under s. 65(1) of the Family Relations Act and addressed the possibility of double-recovery.
One of the problems for the husband was that he had not originally raised the exception arguments before the trial judge as he should have.
BC Child Support For Paying Spouses Earning Over $150,000
The BC Appeal court reviewed the law for BC child support where the payor’s income exceeds $150,000 and then rejected the husband’s appeal on this issue.
[28] The leading authority on the principles governing a judge’s discretion under s. 4 of the FCSG is Francis v. Baker, [1999] 3 S.C.R. 250. Madam Justice Newbury provided a concise summary of these principles in Metzner v. Metzner, 2000 BCCA 474 at para. 30:
1) It was Parliament’s intention that there be a presumption in favour of the Table amounts in all cases (para.42);
2) The Guidelines figures can only be increased or reduced under s. 4 if the party seeking such a deviation has rebutted the presumption that the applicable Table amount is appropriate (para.42);
3) There must be clear and compelling evidence for departing from the Guidelines figures (para.43);
4) Parliament expressly listed in s. 4(b)(ii) the factors relevant to determining both appropriateness and inappropriateness of the Table amounts or any deviation therefrom (para.44);
5) Courts should determine Table amounts to be inappropriate and so create more suitable awards only after examining all circumstances including the factors expressly set out in s. 4(b)(ii) (para.44);
6) Section 4(b)(ii) emphasizes the “centrality” of the actual situation of the children. The actual circumstances of the children are at least as important as any single element of the legislative purpose underlying the section (para.39). A proper construction of s. 4 requires that the objectives of predictability, consistency and efficiency on the one hand, be balanced with those of fairness, flexibility and recognition of the actual “condition, means, needs and other circumstances of the children” on the other. (para.40)
7) While child support payments unquestionably result in some kind of wealth transfer to the children which results in an indirect benefit to the non-paying parent, the objectives of child support payments must be kept in mind. The Guidelines have not displaced the Divorce Act which has as its objective the maintenance of children rather than household equalization or spousal support (para.41).
8) The court must have all necessary information before it in order to determine inappropriateness under s. 4. If the evidence provided is a child expense budget, then “the unique economic situation of high income earners” must be considered.
9) The test for reasonableness of expenses will be a demonstration by the paying parent that the budgeted expense is so high “as to exceed the generous ambit within which reasonable disagreement is possible”: Bellenden v. Satterthwaite, [1948] 1 All E.R. 343 at 345.
[29] I would add to this list the comment from Hollenbach v. Hollenbach, 2000 BCCA 620 at para. 45, in which this Court interpreted Francis as creating a “formidable onus” for wealthy payors seeking to establish that the FCSG amount is inappropriate.
(30) The trial judge was clearly alive to his entitlement to depart, in his discretion, from the table amount under the FCSG. He set out the relevant principles in para. 172 of his reasons, as they apply in the context of a wealthy payor. He referred to the fact that there must be clear and compelling evidence before a court could conclude that the table amount is “inappropriate”. He recognized that the appellant faced a formidable onus to establish that the children could not reasonably use the extra funds, having regard to the standard of living of other children with very wealthy parents.
BC Spousal Support For Incomes Over $350,000
The Appellate court next reviewed the law on when a court could depart from the Spousal Support Advisory Guidelines:
….[66] Section 11 of the Spousal Support Guidelines is not a hard ceiling or cap. Rather, it is an income level above which the court can choose to apply the formulas or use a discretionary approach.
(67) Section 12 provides examples of situations in which the court may wish to depart from the formulas set out in the Spousal Support Guidelines. The exceptions are said by the authors to apply in “unusual or atypical cases” where the “formulas generate results inconsistent with the support factors and objectives found in the Divorce Act and an appropriate result can only be achieved by departing from the formula.” The application of s. 12 is not mandatory. Whether the court should consider an exception depends on the specific circumstances in question.
(45) Section 11 describes a “ceiling” and a “floor”, which is an “attempt to define the upper and lower bounds of the typical case, for which guideline formulas can generate acceptable results.” In s. 11.1, the ceiling for a payor’s income is set at $350,000 gross annual income. This is not an “absolute” ceiling or a cap: Smith v. Smith, 2008 BCCA 245 at para. 31.
(48) In The Spousal Support Advisory Guidelines: A New and Improved User’s Guide to the Final Version (2010), the authors comment that “[t]he formulas are not to be applied automatically above the ceiling, although the formulas may provide an appropriate method of determining spousal support in an individual case, depending on the facts” (emphasis in original). The authors state that “[a]bove the ceiling, spousal support cases require an individualized, fact-specific analysis” (emphasis in original). Lastly, the authors note that “[f]ar too often, in these high-income cases, lawyers and judges fail to consider the SSAG formula ranges at all, in arriving at their conclusions.”
(57) In summary, I do not accept the appellant’s position that the trial judge erred in principle by failing to expressly consider s. 11 of the SSAG. The purpose behind a compensatory award for spousal support is to account for the economic advantages and disadvantages of the marriage. It is clear from the trial judge’s reasons that he exercised his discretion to make an award for spousal support that meets those objectives. I would therefore not accede to this ground of appeal.
(58) Lastly, I have been unable to find support in the case law for the suggestion that courts will apply the SSAG tables on incomes ranging between $350,000 and $700,000, but depart from them above that range. In my view, the argument that the table amount should not be used to determine spousal support was equally available on an income of $688,000 as one of $1 million.
Unequal Division of BC Family Property Can Occur In High Asset Cases
After dismissing the husband’ arguments on child support and on spousal support they also dismissed his claim to set aside the unequal division of the family home in his wife’s favour by stating:
(71) The objectives behind spousal support under s. 15.2 of the Divorce Act and asset division under s. 65(1) of the Family Relations Act overlap with regard to economic self-sufficiency. This overlap has long been acknowledged and, accordingly, the principles from Moge apply to the analysis under s. 65(1)(e) and (f). This was recently explained by this Court in Bodine-Shah v. Shah, 2014 BCCA 191:
(70) It does not necessarily follow that the respondent’s entitlement to spousal support is diminished or extinguished by reason of the order reapportioning 100% of the family residence in her favour. In Moge, the Court held that the factors and objectives of spousal support listed in ss. 15.2(4) and (6) of the Divorce Act, R.S.C. 1985, c. 3 (2d Supp.) promote the doctrine of equitable sharing of the economic consequences of marriage and its breakdown upon dissolution (at 864), and that equitable distribution can be achieved by spousal and child support, by the division of property and assets, or by a combination of both (at 849).
(71) While in some cases asset division may address all or most of the objectives of spousal support and thereby eliminate or reduce the need for such an award, that is not necessarily the case, particularly where the conceptual basis for support is predominantly compensatory. See Chutter v. Chutter, 2008 BCCA 507 at paras. 76, 82, 86 B.C.L.R. (4th) 233, leave to appeal ref’d [2009] S.C.C.A. No. 41, and Marquez v. Zapiola, 2013 BCCA 433 at para. 41, 51 B.C.L.R. (5th) 55. As was observed by Madam Justice Prowse in Tedham v. Tedham, 2005 BCCA 502 at paras. 63-64, 47 B.C.L.R. (4th) 254, and Toth v. Toth (1995), 13 B.C.L.R. (3d) 1 at para. 59 (C.A.), there is a “legislative link” between the reapportionment of property under ss. 65(1)(e) and (f) and spousal support. In Tedham, Prowse J.A. identified two potential pitfalls presented by the link between reapportionment of property and spousal support: (1) the potential for double recovery; and (2) the potential for inadequately compensating an entitled spouse. Where there has been a reapportionment of family assets in favour of one spouse, that spouse’s entitlement to and the quantum of spousal support will be determined by the extent to which the reapportionment of property is found to have adequately compensated him or her for the economic consequences of the marriage and its breakdown, including any claims for compensatory and non-compensatory support.
(72) While there were fewer assets at stake in Bodine-Shah, the principles are nonetheless the same. I have found no case establishing a rule, or even a presumption, that reapportionment is not available when the parties have substantial assets to divide. Whether assets should be reapportioned is a fact-specific inquiry, governed by the factors set out in s. 65(1) of the Family Relations Act. Those factors are not displaced in high value cases or in cases where there may be a claim for indefinite spousal support.
In conclusion high net income and asset cases require a highly skilled BC High Income Support Lawyer. Call us toll free across BC at 1 877 602 9900 before it is too late.
