Webb v Pearce: Calculating Income for Support Purposes and Section 7 Expenses
In this judgment of the Ontario Superior Court of Justice, Justice Ramsay examined the definition of income pursuant to the Federal Child Support Guidelines and made an order for interim support.
The parties cohabited for 3 years and were married for 6. There was one child of the marriage, born December 28, 2005. In a motion prior to trial, the Respondent Mother sought interim child support, s. 7 expenses and spousal support.
The child of the marriage, K, was diagnosed with Pervasive Developmental Disorder Not Otherwise Specified at the age of three. At the time, the child was labelled at the low end of autistic spectrum disorder. However, K made remarkable gains and by age four, though still suffering from some expressive language problems, was greatly improved and moved out of the autistic spectrum. At the time of the Motion, the Mother wanted K to leave the autism program he was involved in. Justice Ramsay reviewed the evidence and agreed that K no longer required such programs and could benefit from simply receiving speech and language services.
Throughout the marriage, the Applicant Father worked as an officer of the RCAF and was based out of London, England. He was compensated in Canadian dollars and paid income tax as a resident of New Brunswick. His Line 150 income on his Income Tax Return was a total of his salary as well as his air crew bonus.
The Applicant Father also received a living allowance to compensate for the cost of living in the UK; however, he was not taxed on that amount. At the time of the motion, the Father earned approximately $123,000 per year and the mother earned approximately $58,000. While she educated herself during the marriage, the Respondent Mother mainly devoted herself to being K's primary caregiver.
Calculating the Father's Income for Support Purposes
S. 20(2) of the Federal Child Support Guidelines (FCSG) provides for the conversion of income earned in a foreign currency into Canadian currency for the purposes of determining guideline income and applying the tables.
Justice Ramsay considered s. 20 of the FCSG as well as McGouran v Connelly (2006, ONCA), stating that
the court does not adjust income to take into account cost of living in different countries, and...the court cannot impute a lower amount than is actually earned....however, [the husband's cost of living allowance] is not income for the purposes of the Child Support Guidelines.
According to Justice Ramsay, the cost of living allowance did not meet the definition of "income" in s. 16 of the FCSG. As he noted in paragraph 7, the allowance was received as a condition of his employment because of where he is required to live, and does not result in a benefit to him. Moreover, Justice Ramsay appeared influenced by the fact that the Canadian government, in determining the father's tax obligations, did not consider the amount income. As a result, Justice Ramsay opined that "it is not a question of imputing to the husband less income than he makes. This allowance is not income in the first place."
Ultimately, Justice Ramsay concluded that the Father should pay table child support of $1,063 per month based on an income of $123,391 (not inclusive of the cost of living allowance).
Section 7 Expenses
As previously mentioned, K suffered from certain developmental disorders. At the motion, the Respondent Mother proposed a budget for s. 7 expenses of almost $25,000 for private school and an Educational Assistant (EA) despite the fact that she would be provided the same education with an EA for free from the public school board. Furthermore, the Respondent Mother claimed child care expenses in the amount of $6,420 for child care from K's grandparents, with whom he lived.
Overall, Justice Ramsay found the Mother's claim for extra-curricular sports, summer camp, and child care to be "excessive," especially given K's young age.
In the end, Justice Ramsay determined that it would be appropriate to arrive at a global figure that the family could afford for special expenses, and apportion the Applicant Father his fair share (approximately 70%) taking into account the parties' respective incomes.
Finally, at the Motion, the parties agreed that the Mother was entitled to spousal support, but could not agree on the quantum. The Applicant Father proposed that his spousal support obligation be set-off on an interim basis against an equalization payment that may be forthcoming from the Respondent Mother. The Mother's counsel, in contrast, argued that since equalization had not been determined, that the court should not make any order that speculates as to what it might be.
In the end, Justice Ramsay felt that it was fairer, given that the Respondent Mother may owe the Father money, and because the equalization would affect spousal support, to leave spousal support to be determined by the trial judge.
In making this order, the court was clearly influenced by the fact that the Mother simply wanted extra spending money and was claiming a shortfall of $6,000 per month despite having approximately $80,000 per year to live on.
This is a good lesson to learn about expenses claimed in a Financial Statement. If you are unrealistic with your expectations then the court may not have any sympathy for your position. Had her budget been more realistic, one must wonder whether the result would have been different.