Our Vancouver imputed income lawyers are pleased to explain a recent and important BC Court of Appeal case. The Vancouver Imputed Income Lawyers of MacLean Law note this new imputed income case reiterates the principle that spousal and child support, is paid on what you can really earn, not what you are currently earning if you are underemployed.
Vancouver Imputed Income Lawyers And BC Spousal and Support
Our experienced Vancouver imputed income lawyers know paying spouses cannot work beneath their earning capacity to pay less support nor can recipient spouses refrain from retraining or working to get more support. When someone isn’t working to their full potential and you want to obtain a fair spousal or child support award it pays to hire the top Vancouver Imputed Income Lawyers at MacLean Law.
We are BC’s largest family law firm and have 4 offices across the British Columbia and our Vancouver Imputed Income Lawyers deal with cases involving both underemployed paying and receiving spouses. We will focus on ensuring separated spouses are equally accountable to ensure proper support is paid and to ensure children are protected financially.
In Beissner v. Matheusik, released by the BC Court of Appeal this week, a father’s application to reduce spousal and child support was dismissed because:
- there was no material change in circumstances,
- there was a failure to make full disclosure by him and
- finally the father was underemployed and as such a higher imputed income was attributed to him.
Vancouver Imputed Income Lawyers Explain How The Court Decides Real Income
The BC Court of Appeal provided a tidy summary of the law on how a court may impute income to an underemployed spouse even if their underemployment is not deliberate. The concept of imputed income and support is complicated and we have extracted the key parts of the decision and bolded the legal principles to enable you to get to the key parts quickly.
(30) The judge then turned to the issue of whether income should be imputed to the father pursuant to s. 19 of the Guidelines, noting correctly that his task was to determine whether the father’s financial situation had materially changed from the order of September 24, 2012 (para. 36). He found that it had not, stating:
[37] Imputing income for underemployment does not require a finding of bad faith on the part of the payor or deliberate avoidance of child support responsibilities, but only that the payor is not earning to capacity. To determine if a parent is earning to capacity, the following considerations must be taken into account: that parent’s age; education; experience; skills; health; and the job opportunities reasonably available. Persistence in unremunerated employment will not be regarded as an excuse. Similarly, a self-induced reduction in income does not justify the avoidance of child support obligations.
[38] In the case at bar, Mick is a well-educated, experienced and capable businessman with substantial earning capacity. He is clearly respected in his field. In the material he provided me in support of this application, I note that he was the program committee member and speaker at the Urban Land Institute’s April 2014 meetings in Vancouver. He was featured on the panel focusing on the initiatives of successful resort developers. While I accept for the purposes of this application that the recession of 2008 had its strongest impact on the development and marketing of recreational properties, and that this sector has taken longer than residential and commercial properties to recover, Mick’s skills are transferable and I am satisfied he is making well below what his actual earning capacity is. As noted above, I am also satisfied that Mick is unreasonably deducting expenses from rental income thereby reducing his income for tax purposes. Further, I am not satisfied that Mick has made full disclosure of all financial information required. Finally, Mick made a determination to embark on a high risk, low income yield venture in 2012, immediately after being given an opportunity by this Court to be relieved of the immediate obligation to pay child support for a period of one year so he could catch up on arrears. His decision to do so is a curious one in light of what he knew about the nature and extent of his past and probable future child support obligations at that time. It is a factor I have considered in determining the amount of income to be imputed to him.
What Is A Material Change of Circumstances That Allows For A Change in Support?
(i) Did the judge err in finding the father had not demonstrated a material change of circumstances?
[39] A material change of circumstances is the threshold issue for varying a child support order. In L.M.P. v. L.S., 2011 SCC 64, the Supreme Court of Canada confirmed the legal test in Willick v. Willick, [1994] 3 S.C.R. 670 for the variation of a child support order, stating:
[30] In our view, the proper approach under s. 17 [of the Divorce Act] to the variation of existing orders is found in Willick [citation omitted] …
[31] Willick described the proper analysis as requiring a court to “determine first, whether the conditions for variation exist and if they do exist what variation of the existing order ought to be made in light of the change in circumstances” (p. 688). In determining whether the conditions for variation exist, the court must be satisfied that there has been a change of circumstance since the making of the prior order or variation. The onus is on the party seeking a variation to establish such a change.
[32] That “change of circumstances”, the majority of the Court concluded in Willick, had to be a “material” one, meaning a change that, “if known at the time, would likely have resulted in different terms” (p. 688). …
[33] The focus of the analysis is on the prior order and the circumstances in which it was made. Willick clarifies that a court ought not to consider the correctness of that order, nor is it to be departed from lightly (p. 687). The test is whether any given change “would likely have resulted in different terms” to the order. It is presumed that the judge who granted the initial order knew and applied the law, and that, accordingly, the prior support order met the objectives set out in s. 15.2(6). In this way, the Willick approach to variation applications requires appropriate deference to the terms of the prior order, whether or not that order incorporates an agreement.
[41] With respect, the difficultly the father has in advancing these submissions in support of his application are three-fold.
[42] First, in September 2012, Russell J. found that the father had not established a material change in circumstances to support his application for a reduction in his child support from that provided for in the Minutes of Settlement. Therefore, the only window for consideration of whether he had established a material change of circumstances in his application before Fitch J. was a narrow one of some 18 months. However, all of the evidence tendered by the father with respect to the decline in his financial circumstances arose before his September 24, 2012 application. On that basis, Fitch J. found, as it was open to him to find, that the father’s “financial situation was known to the court at the time of his September 2012 application” and it had “not materially changed since” (para. 36).
[43] Second, the judge found the father’s financial disclosure in support of his application inadequate and unreliable. On appeal, the father applied to adduce fresh evidence, presumably to shore up the basis for his submissions before Fitch J. However, having reviewed that material, I am unable to find that it meets the test for the receipt of such evidence as set out in Palmer v. The Queen, [1980] 1 S.C.R. 759 at 775-76. It is therefore inadmissible.
[44] Third, the judge found that the father was underemployed. In reaching that finding, the court did not have to conclude that the father was intentionally evading or minimizing his child support obligation or that he was intentionally underemployed or unemployed. It only had to determine what income the father was capable of earning: Barker v. Barker, 2005 BCCA 177. The test for a finding of underemployment from Donovan v. Donovan, 2000 MBCA 80, was adopted by this Court in Watts v. Willie, 2004 BCCA 600 at para. 16, and followed in McCaffrey v. Paleolog, 2011 BCCA 378 at para. 46:
[16] In Donovan v. Donovan (2000), 190 D.L.R. (4th) 696, 2000 MBCA 80, Madam Justice Steel gave the judgment of the court and wrote at para. 21:
- The following guidelines may be considered when determining whether to impute income. (See Dr. Julien D. Payne, Imputing Income, “Determination of Income, Disclosure of Income”, Child Support in Canada, Canrab Inc., August 3, 1999).There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is “no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor” (Van Gool v. Van Gool (1998), 166 D.L.R. (4th) 528 (B.C.C.A.))
- When imputing income on the basis of intentional under-employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to be considered in addition to such matters as availability of work, freedom to relocate and other obligations
- A parent’s limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills, or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at the lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment
- Persistence in unremunerative employment may entitle the court to impute income
- A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations
- As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income.
The top rated MacLean Law Vancouver Imputed Income Lawyers are pleased to meet with you to discuss your options if you are frustrated by your spouse failing to work to their capacity or if you feel your spouse is barking up the wrong tree in unrealistically trying to inflate your income for spousal support.
