This case dealt with a number of issues, many of which will come up in a family law dispute involving a very wealthy spouse. The case dealt with interim spousal support, whether or not the court would order the sale of a cottage, and how the court should calculate spousal and child support. The courts decision regarding when to consider deferred compensation demonstrated how the court will take steps necessary to include these amounts in a calculation, but will not allow payee’s to benefit from such amounts twice.
One of the main issues in calculating spousal support in this case was whether or not the applicant husband’s deferred compensation should be included in his income for spousal support. The applicant was a manager of a software company, and the deferred compensation required a portion of his annual bonus to be used to purchase stocks in the company. The applicant argued that spousal support should be calculated by his base salary and the cash portion of his bonus. The respondent wife resisted this by arguing that the husband reported the deferred compensation as part of his annual income for tax purposes. Section 16 of the Federal Child Support Guidelines states that:
“Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.”
The court stated that this created a presumption in favour of using the payor’s income as it appears on Line 150 on their income tax return for support purposes. The court declined to do so due to the fact that the value of the deferred bonus was taken into account during the valuation of the applicant’s Net Family Property; it would be inequitable to have it count twice. The court stated that deferred income should be taken into account when it is received.
The other issue regarding calculating support is the fact that the applicant’s income was over $150,000 and therefore fell under section 4 of the Federal Child Support Guidelines.
4. INCOMES OVER $150,000 – Where the 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.
The court stated the onus is on the person paying support to show that the guidelines amount is inappropriate. The court will consider the means of the payor and the needs of the children. In this case, the respondent had brought a family budget of $2800 a month, while the child support guidelines recommended an amount of $4000 a month. The court determined that in would be inappropriate to award the table amount, as it was $1,200 more than the budgeted amount for children; and would therefore cross the line into spousal support.
Imputing Income to the Respondent
In determining interim spousal support the court had to determine the respondent’s income. She was 37 years old, and at the date of separation she was working part-time as a Registered Practical nurse. She voluntarily chose to downgrade her employment from part-time to casual, with an average of 6 hours per week from 20. She argued she wished to be available to her 17 and 14 year old children during the separation, and she was considering pursuing education. The court rejected both of these as reasons and determined she was wilfully underemployed. Her children were older and required less care, and her plans for pursing an education were nebulous at best.
Sale of the Cottage
The final issue was whether or not the court would order the sale of a cottage the spouses owned jointly. The cottage was not considered a matrimonial home by the judge, due to the fact that it was purchased 16 months prior to the date of separation with the intention to sell. The Partition Act applied, and the court found the applicant had the power, as a joint owner, to apply to sell the cottage as long as it was not vexatious, malicious, or oppressive. The respondent attempted to resist this by arguing that she and the children wished to use the cottage. But her use thus far had been intermittent, the applicant had limited opportunity to us the cottage as he lived in British Columbia, and the respondent had effectively excluded him from being able to do so by renting out the cottage without his consent. The court thereby ordered the sale of the cottage, as there was no valid reason in law to deny the applicant’s request.