Sorry, No More Support Payments. I Found My Dream Job Flipping Burgers – Intentional Under-Employment in Family Law


Money Issues - Toronto Family Law Lawyer

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Toronto Family Law Lawyer Pei-Shing B. Wang

When it comes to child support and spousal support payments, people react differently. Many honourable payors cut back on other expenses in order to make ends meet, while some others simply quit their jobs and claim inability to pay.

In Ontario, the table child support payments under the Child Support Guidelines are calculated exclusively according to the payor’s income, whereas spousal support obligations depend largely on the gap between the income levels of the payor and the recipient.  In other words, the more you earn, the more you pay. Conversely, the less you earn, the less you are supposed to pay.

Therefore, it’s not unheard of that a payor would intentionally quit his or her job or switch to a lower-paying position voluntarily in a bid to reduce support payable. At times I’ve seen a payor’s six-figure salary reduced to social assistance payments, purportedly because of the “economic downturn.”

Thankfully, under the law, if the court is of the opinion that a payor is intentionally unemployed or underemployed, it can impute income and fix the support amount accordingly.*

In deciding whether income should be imputed, the court must ask whether the payor chooses to earn less than what he or she is capable of earning, or whether the reduction is involuntary and reasonable.

Of course, no litigant will state to the court that his or her income has been intentionally reduced in an effort to evade support obligations. The Ontario Court of Appeal ruled in Drygala v. Pauli that there is no need to find a specific intent to evade support obligations before income is imputed.^ As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income. If the payor chooses to earn less than what he or she is capable of earning, income may be imputed. A finding of “bad faith” is not required.

When imputing income, the court must determine whether the reduction of income is voluntary or involuntary, and reasonable or unreasonable. The factors include the age, education, experience, skills and health of the payor parent. The court may also look at the support payor’s financial circumstances and the history of payment or non-payment. Available job opportunities may also be relevant.

*The same principle regarding imputation of income applies both to child support and spousal support. See, e.g., Rilli v. Rilli, 2006 CanLII 24451 (ONSC)

^ (2002), 61 O.R. (3d) 711 (C.A.)

This blog is provided for educational purposes and for your reference. It is not intended as legal advice and should not be regarded as such. The law may have changed since the publication of this article.

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Collaborative Family Law Series: Successfully Concluding a Case

Wrapping up a collaborative family law case can bring mixed feelings. (Photo courtesy of SXC, all rights reserved.)

Toronto Family Law Lawyer Pei-Shing B. Wang:

In previous postings, I’ve talked about starting and managing collaborative family law cases. Today’s discussion is about wrapping things up.

In my experience, “the end” in a collaborative family law case is almost always bittersweet. On the one hand, the spouses are relieved that they have sorted out their legal issues and don’t need to worry anymore about being sued. On the other hand, they realize that they are no longer spouses to each other and must move on with their lives.

In collaborative family law, most agreements are not binding until they’ve been formally executed. Therefore, once the spouses have agreed on a settlement, it’s important for the lawyers to act quickly to bring the matter to its formal conclusion.

Usually the final settlement agreement is written as a separation agreement with a few tweaks. Basic background information, such as the dates of marriage and separation, will of course be stated. The final agreement will confirm that both spouses have chosen the collaborative process and that each spouse has been aided by his or her own lawyer. Other professionals who have helped the couple during the process will also be specified along with the tasks they have performed.

If there are children involved, a separate parenting plan may be attached as an exhibit to the agreement. The parenting plan may be drafted by the child specialist or the divorce coach who has worked with the parents extensively as part of the collaborative process. Invariably, there will be clauses stating that the parents will remain flexible to accommodate special circumstances, such as illness and school events, and put the best interests of the children above their own.

Finally, there is almost always a special paragraph where the spouses acknowledge that they have been advised of the relevant laws and understand that their decisions as outlined in the settlement may differ from those adjudicated by the court system.

This blog is provided for educational purposes and for your reference. It is not intended as legal advice and should not be regarded as such. The law may have changed since the publication of this article.

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Professional Licence and Degrees in Family Law in Ontario

Toronto Family Lawyer - Pei-Shing B. Wang

Dr. Caratun married Mrs. Caratun to assist him in immigrating to North America to practise dentistry. Mrs. Caratun worked extremely hard over a number of years in Israel and Canada to assist him in reaching this goal. Two days after reaching it, he rejected Mrs. Caratun as his wife, at a time when family assets were next to non-existent but his future income-earning ability was substantial.

Mrs. Caratun sued to include Dr. Caratun’s licence to practise dentistry as property.*

Was Dr. Caratun’s licence to practise dentistry considered as property in Ontario?

The short answer is : No. The Ontario Court of Appeal held that a degree or professional licence acquired during the marriage with the contribution of the other spouse does not constitute property for the purposes of s. 4 of the Family Law Act.^

The Ontario Court of Appeal explained that the broad definition of “property” clearly encompasses many forms of intangibles. However, there are several difficulties in considering a professional degree as property: (1) it is not transferable; (2) the value of it in the future depends on the efforts of the degree holder; and (3) the only difference between a licence and any other right to work is in its exclusivity. Therefore, it was deemed clearly inappropriate to consider such attainments as property for the purposes of determining equalization payments pursuant to the Family Law Act.

The Court of Appeal, by allowing Dr. Caratun’s appeal, concluded that not all rights to income are considered as properties, especially if they are dependent on personal service.

In the end Mrs. Caratun was awarded compensatory support in the amount of $30,000, the sum determined by the trial judge to reflect her contribution to Dr. Caratun’s licence.

* (1992), 11 O.R. (3d) 385 (C.A.)

^R.S.O. 1990, c.F.3, as am.

Please note that the law is only applicable in Ontario and may have changed since the publication of this article. This blog is provided for your reference only and is not a substitute for the law. This article is not legal advice and should not be regarded as such.

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A Brief Note on the Missing Spouse and Substituted Service in Family Law

It’s not unheard of for a spouse to suddenly move away, never to be heard from again. When this happens, the sudden disappearance can create major hurdles for the remaining spouse if he or she wants to claim support or seek divorce.

One of the fundamental principles of the common law system is that parties ought to have meaningful opportunity to participate in the process; often this means notice. When proper notice is not given to a party, the fairness of the proceeding is greatly tainted.

Readers can appreciate that if the wife or the husband moves out of the matrimonial home and vanishes, the one remaining may have trouble finding the former partner and giving him or her the proper notice required under the law.

The law requires that the remaining party exercise reasonable efforts to locate the one who ran away. If the whereabouts of the disappeared can be ascertained, he or she must be served according to the rules.

A lawyer’s office can help with the task of locating the missing person, having access to searches that are generally not available to the public. An MTO or driver’s licence search may be conducted if the lawyer undertakes not to use the results for purposes other than the anticipated litigation.

If the husband or wife cannot be found directly, the court may permit substituted service through a friend or relative who remains in contact with the disappeared.

If all else fails, the court may consider an order dispensing with service if it’s satisfied that all reasonable efforts have been exercised and the other side is intentionally evading service. However, dispensing with service is hardly a solution to the problem. Because ex-parte (without notice) litigation violates the principles of procedural fairness, once the other side becomes aware of the proceeding, he or she may be entitled to move to set the results of any ex-parte proceeding aside and start afresh.

PSWLaw in Toronto is your family law advocate.

Call 416-433-5531 for an appointment today.

Note: Please keep in mind that this article is provided for information and educational purposes. It does not constitute legal advice and should not be regarded as such. The law may have changed since the publication of the article.

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A Brief Note on Terminating Child Support

In Ontario the majority of child support payments are enforced by the Family Responsibility Office (FRO) if the payments are made pursuant to a court order or a registered domestic contact, unless the parties have withdrawn their file from the FRO.

The support obligation in Ontario, unlike other jurisdictions, is not automatically extinguished under the law when the child turns 18.

There are two ways to cease the enforcement of child support. If both the payor and the recipient agree that the support should be terminated, they can file their consent with the FRO and the FRO will close the file accordingly.

If the parties can’t agree whether the support obligation should end, there’s nothing the FRO can do. Instead, the support payor must bring a motion to change before the court that granted the child support payments in the first place.*

It’s perhaps a good idea to discuss the proposed termination with the recipient to find out whether a consent order to terminate child support could be a possibility. If so, the support payments may be terminated without the parties’ attending the court by way of a consent motion. If not, the support payor will have to ask the court to change or terminate the support.

*Family Law Rules O. Reg. 114/99, R. 15

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Legal Assistance for the Middle Class in Manitoba

The Law Society of Manitoba recently approved a pilot project to make lawyers more accessible to those who often fall between the cracks of the legal system – the middle class, reported The Vancouver Sun.

While the poor in Manitoba have access to Legal Aid Manitoba, and the rich can simply write a cheque, many middle class individuals find the cost of retaining a lawyer daunting.

As a result, many people have no alternative but to represent
themselves without adequate understanding of the rules and procedures.
It often results in delay and waste of time and resources. A pity.

To address this problem, the Law Society of Manitoba will act as a brokerage for legal services on behalf of the Family Law Access Centre.

The Law Society will seek to buy legal services from the private bar at a discount rate and make them available to the public for family law cases involving issues such as divorce, custody, and support.

As a lawyer who practises in family law, I applaud this initiative. On many occasions I have personally had to decline meritorious matters because of the individuals’ lack of financial resources.

Let’s see if the pilot project becomes a success. Perhaps the Law Society of Manitoba’s Ontario counterpart will then follow suit.

PSWLaw- your family law legal advisor.

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A Brief Note on Driver’s Licence Suspension and the Family Responsibility Office (FRO)

Today I’d like to talk about the suspension of one’s driver’s licence by the Family Responsibility Office (FRO).

Under the legislation,* the FRO is entitled to suspend a default support payor’s driver’s licence with30 days’ notice. In this notice the FRO will inform the support payor that his or her driver’s licence may be suspended unless the payor makes an agreement satisfactory to the Director of the FRO, obtains a court order refraining the director from doing so (“refraining order”), or pays all arrears owing under the support order.

The 30-day period following the first notice is crucial. Under the law, the 30-day period is the only window during which the court may deal with the suspension of the driver’s licence. If the 30-day period has expired, the court will no longer have jurisdiction in ordering the FRO not to suspend the licence.

If the driver’s licence has already been suspended by the FRO, it becomes a more serious problem. The court cannot order the director to reinstate the licence. Rather, the support payor must satisfy the conditions as set out in the legislation to have it reinstated.

If you require further assistance, please contact my office at 416 433 5531.

PSWLaw provides effective solution to your family law matters.

*Family Responsibility and Support Arrears Enforcement Act, S.O. 1996, c. 31

Please Note: This article is provided for information and educational purposes. It does not constitute legal advice and should not be regarded as such. Regulation/Legislation referred to may have been amended or repealed since the publication of the article.

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A Brief Note on the Family Orders and Agreements Enforcement Assistance Act and the Family Responsibility Office (FRO)

Previously I wrote about the power of the Family Responsibility Office (FRO) power to enforce child and spousal support payments under the provincial legislation.*#

Today I’d like to discuss the federal counterpart legislation, the Family Orders and Agreement Enforcement Act.^

Under the federal legislation, provincial enforcement services (i.e., the FRO in Ontario) have wide access to personal information of the debtor. For example, information banks such as those controlled by the Department of Social Development, the Canada Revenue Agency, and the Canada Employment Insurance Commission may be searched.

Further to the access of personal information, federal funds (for example, income tax refunds) may be garnished under the applicable provincial law.

The provincial enforcement agencies (in Ontario, the FRO) may also seek the denial of certain licences to debtors who are in persistent arrears. Possible actions include

  1. the denial of new licences,
  2. suspension of currently held licences,
  3. the denial of the renewal of licences.

Examples of the licences covered by the provision include the following:

  • Canadian passport
  • Licences issued under the Aeronautics Act, such as commercial pilot licences – aeroplane
  • Licences issued under the Canada Shipping Act, such as able seaman certificates,

However, in my opinion, the biggest potential damage to a debtor doesn’t come from the mere denial of a licence: it stems from the fact that there is no appeal for any action taken by the FRO under this piece of federal legislation**.

Once a licence is denied or suspended, it can only be lifted if the enforcement agency is satisfied in accordance to the provisions under the Act, or that the support payment in question is no longer enforced by the FRO.

PSWLaw is your family law advocate.

*See “Failure to Pay Support” (posted March 22, 2009).

# Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31.

^R.S.C. 1985 , c. 4 (2nd Supp) as am.

** ibid., s. 71

Please Note: This article is provided for information and educational purposes. It does not constitute legal advice and should not be regarded as such. Regulation referred to may have been amended or repealed since the publication of the article.

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Child Support: The 40% Access Time Myth

Section 9 of the Child Support Guidelines *states the following:

9. Where a parent or spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the order for the support of a child must be determined by taking into account,

(a) the amounts set out in the applicable tables for each of the parents or spouses;

(b) the increased costs of shared custody arrangements; and

(c) the condition, means, needs and other circumstances of each parent or spouse and of any child for whom support is sought.

This provision has lead to a mini-industry through which individuals comes up with various methods of calculation to reach the 40% threshold, hoping that they will be relieved from paying child support.

Alas, even if the 40% threshold is reached, it doesn’t necessarily mean that the support amount will be reduced. As the primary residential parent’s expense (e.g. housing costs) are more or less fixed, the increased time spent with the other parent doesn’t lead to reduction of costs. Rather, the overall parenting costs may nonetheless increase as both parents have to incur substantial expenses on housing, clothing, food, and entertainment.

Therefore, the court will have to go beyond the mathematical approach and consider all circumstances, following steps such as these:^

  1. Start out with the simple set-off amount under the Guidelines.
  2. Inquire whether shared custody results in an overall increase in costs and the portion shared by each parent.
  3. Take into account the resources and needs of the parents and children and consider the ability to bear the increased costs of shared custody.
  4. Investigate whether the standard of living for the children in each household is comparable.

If there’s a great income disparity between the spouses – for example, one spouse is a stay-at-home parent, while the other is a highly skilled professional – the high income earner will often end up paying the full table amount or very close to it.

Finally, the potential reduction in support payable applies to the prescribed table amount only. The extraordinary expenses that often constitute the majority of the support payable, are generally not affected.

Hence, it’s wise to conduct a comprehensive analysis before bringing a motion under s.9. It may not be worth it.

* O. Reg. 391/97

^ Contino v. Leonelli-Contino, [2005] S.C.C. 63, for applications of the rule, see e.g. Daulby v. Daulby, [2007] CanLII 52431 (ON S.C.)

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New Contents Added: Support Payment Tax Consequences, Foreign Divorces in Ontario

I am pleased to announce that new contents on support payment tax consequences and foreign divorces have been added under the Family Law section of the website.

Click on the links below to visit the pages.

Support Payments and the Tax Consequences

Remarriage & Foreign Divorce in Ontario

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