NOTE: This paper was prepared and delivered prior to the release on September 17th, 1999, of the Supreme Court of Canada's decision in Francis v. Baker which has now set the law for payors with incomes over $150,000. As a result, you should read the comments here subject to the reasons of the Francis v. Baker decision.
Two years ago many of us attended a session not unlike this one, where we contemplated what the future held with the anticipated implementation of the Federal Child Support Guidelines.(1) Working only from the draft legislation, speakers considered how the Guidelines might work and whether the presumptions they provided for would dramatically change the law of child support, as we then knew it. The programme was entitled "Child Support Guidelines: "The Mysteries Unravelled". One and a half years after their implementation, one cannot help but feel that there is more "unravelling" yet to come.
Sections 3(2) and 4
These topics are treated jointly because of the similarity of their language. In both instances, the Court is asked to determine whether the Guideline amount is "inappropriate". On this basis, one can argue that in both of the circumstances of the over the age of majority child and of the payor over $150,000, the same law should apply. The reports to date would suggest otherwise, as will be seen from the case law considered below. I have put particular emphasis on the law in Ontario.
Payor's Income over $150,000
Section 4 of the Guidelines provides:
Where income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is
- the amount determined under section 3; or
- if the court considers that amount to be inappropriate,
- in respect of the first $150,000 of the spouse's income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;
- in respect of the balance of the spouse's income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and
- the amount, if any, determined under section 7.
At the programme in 1996, Stephen Grant asked the question "where will the line really be drawn?"(2) Apparently, Mr. Grant was thereafter to find out, as counsel to Mr. Baker in the Francis v. Baker(3) case.
Mr. Baker earned $945,538 per annum. At the trial level, Justice Benotto had ordered him to pay child support for two children of $10,034 per month calculated strictly by the Guidelines, without additional special or extraordinary expenses pursuant to section 7. On appeal, Justice Abella, writing for the court, upheld the trial judge, finding that the Table amount is a fixed amount, with only the special expenses being subject to judicial review and endorsement.(4)
The husband had disagreed with this concept, preferring a budget-based analysis, as had previously been the standard in child support cases. That approach can be summarized:
- arrive at a sum which is adequate to care for, support and educate the children;
- divide this sum in proportion to the respective incomes and resources of the parents; and
- direct payment of the appropriate proportion by the parent not having custody.
Justice Abella unequivocally rejected the continued use of the budgetary analysis, finding that this was not required for payors under $150,000, and should not be required for those over that threshold. She stated:
"In my view, although the word "inappropriate" appears, on the surface, to be wide in its discretionary reach, its particular meaning in section 4(b). must be considered in the context of the Guidelines as a whole and the approach they mandate designating the Table amount as a starting point for the calculation of child support."(5)
Justice Abella made clear that there is little opportunity for departure from the formulaic application of the Guidelines. The first exception she found at section 3 (2)., where the child is the age of majority or over. The generally different situation for an adult child justified the possibility of treating them differently from younger children when assessing support.
Under section 5., discretion also exists, when the spouse from whom support is sought is not the child's parent, and another parent has a legal duty to pay support. The case law to date has indeed recognized discretion under this head and orders frequently apportion support among spouses and parents.
At ss. section 8 and section
9, discretion is preserved where there is either split or shared
The section permitting the most discretion to vary the Table amount is found at section 10 under undue hardship. This section is the primary way for providing relief from the Table amount. However, no reduction will be ordered where to do so would create a higher standard of living in the payor's household than in the household of the recipient. Justice Abella applauds the reforms that address the need of the child's household rather than the individual child, together with the entitlement of children to live at the standard of living permitted by all available income, even where that means living better than their basic needs demand.
Professor McLeod, in his annotation to the appeal report admits that Justice Abella's decision does promote consistency of awards and would reduce litigation. However, he states, it does so at the expense of individual fairness and the integrity of child support principles. He is particularly troubled by Justice Abella's failure to consider the decision in Willick v. Willick(6) and her concept that child support should always increase with income, regardless of need, at least as long as the child is a minor.(7)
Several reported Ontario cases have been determined with respect to this issue both before and after the appellate decision in Francis v. Baker. As well, the case of Simon v. Simon(8) has been appealed to the Court of Appeal, but the hearing of the appeal has been deferred to permit the Supreme Court of Canada to hear the Francis v. Baker appeal. As the Supreme Court of Canada is unlikely to reach the case for many more months, the Simon matter may remain unresolved for some time.
Following the Francis v. Baker appeal, McCoy
v. Hucker(9) was heard by Justice
Ferrier. The husband earned $180,000 per year. Justice Ferrier
awarded $2700 per month as strict Guideline support, but declined
to order payment of private school expenses as they were not considered
an extraordinary expense and were unreasonable based on the parties'
means. Extracurricular activities were similarly denied. The parties
in this case, despite their good incomes were in generally difficult
financial circumstances. However, this is one of several Ontario
cases where s.7 expenses have not been included over and above
the Table amount.
Justice Salhany in Cosma v. Cosma
In the Simon v. Simon(11) decision, rendered after the trial decision in Francis v. Baker, but before the appeal, a mother sought to vary child support for one child in accordance with the Guidelines. The father was a hockey player with an annual income at the time of the old order of $180,000. At the time of the variation application, father had just signed a two-year contract that gave him an annual income of $1,200,000. Justice Kealey was asked to assess what was "appropriate" or "inappropriate" in the circumstances of the case. Mother argued the trial decision in Francis v. Baker. The effect would have been to raise support from $2,200 per month to $9,215 per month.
Mother had prepared a child care budget showing expenses of $6,085 per month. In assessing what was appropriate in these circumstances, the court was particularly drawn to these significant facts:
- the sudden, extreme increase in the father's income
- the certainty of such an increased income level for two years only
- the precariousness of the future income predictability, the age of the child and his realistic needs
His Honour found that it would not be in the child's best interests for him to experience luxuries and a lifestyle that would be of relatively short duration and then suddenly reduced. Finding that the mother had not provided a credible child support budget, Justice Salhany ordered support of $5,000 per month of which $1,000 was to be paid into an interest bearing trust account to be established and administered as the parties through their counsel agreed.
In Sagl v. Sagl(12) the husband's income was fixed at $274,680 for Guideline purposes. A payment of $1725 was ordered, and found sufficient to cover private school attendance should the parents decide that the child should so attend. No evidence of other s.7 expenses was provided. Considering the high costs of private school, one wonders why this amount was thought to be sufficient in all of the circumstances, and arguably, should private school become an issue, quite inadequate. The explanation may lie in the fact that spousal support was ordered by way of a lump sum of $4,000,000. Should private school become a consideration, perhaps it was felt that there would be sufficient funds to cover the expense elsewhere. Sagl was decided after Francis v. Baker, although there was no reference to it.
Outside of Ontario, several courts have considered section 4 applications both before and after Francis v. Baker. In Salvadori v. Kebide(13) the B.C. Supreme Court followed the Ontario Court of Appeal and found that its decision was in keeping with a strict interpretation of the Guidelines. Guideline support was ordered, together with a sum under s.7. The payor in this case also had made the claim that he would suffer undue hardship under s.10 if such a payment ($1,552) were ordered. The court was not persuaded that s.10 was drafted with a view to those parents earning more than $150,000.
In another B.C. decision, in Greenwood v. Greenwood(14) the husband's average income for child support purposes was found to be $995,819.61. The court did not have the Court of Appeal's decision before it, although judgment in Greenwood was rendered three weeks after it had been released. Nonetheless, the Guideline amount of $6,492.25 was awarded together with extraordinary expenses under s.7. These add-ons included monies for furniture, sporting equipment and $750 per month to establish a post-secondary education fund.
The same court was not as agreeable in the decision of Plesner v. Plesner,(15) an appeal from the Master's decision awarding $7,095.38 per month. The court reduced the sum to $4,000 per month finding that the Master had erred in failing to consider the means of the recipient spouse and the needs of the children. The wife in this case earned $250,000.
In Dergousoff v Dergousoff,(16) the Saskatchewan court found it difficult to accept the universal application of the Francis v. Baker appeal decision. However, a table amount of $3,735 in this case was held not to be inappropriate. The court did not accept the addition of any s.7 add-ons, on the basis that extracurricular activities would be an ordinary expense at this income level.
The s.4 problem may be resolved prior to the Supreme court's decision in Francis v. Baker, as the child support advisory team has recommended to the Department of Justice that there be significant amendment to section 4 (b). Such amendments would make it clear that there should be limited discretion to go above or below the Table amount in the appropriate circumstances.(17)
2. Grant, Stephen M., "Payor's Income Over $150,000, paper presented November 11, 1996, Toronto, Law Society/Canadian Bar programme
3. (1997), 150 D.L.R. (4th) 547 (Ont. Gen. Div.), aff'd (1998), 157 D.L.R. (4th), 1(Ont. C.A.)
4. Ibid. at para. 20
5. Ibid, at para. 29
6. 119 D.L.R. (4th) 405
7. (1998), 34 R.F.L. (4th) at p.320
8. (1998), 33 R.F.L. (4th) 310
9.  O.J. No.2831 (Ont. Gen Div., per Ferrier, J.)
10.  O.J. No.3130 (Ont. Gen. Div., per Salhany J).
11. op. cit.
12. (1997), 31 R.F.L. (4th), 405 (ont. Gen. Div.)
13.  B.C.J. No.1819
14. (1998) 37 R.F.L. (4th) 422
15.  B.C.J. No.2267
16.  S.J. No.290
17. Epstein, Philip M. & Kraft, Melanie, "Sections 3(2) &4 ñ Income over $150,000 and Children over the Age of Majority", May 1998