Determination Of Income When A Payor’s Income Fluctuates
Quiquero v. Quiquero, 2016 ONSC 6696
This recent decision from the Superior Court of Justice provides guidance for lawyers and future courts with respect to the determination of income when a payor’s income fluctuates. This case suggests that although many courts have chosen to average income to determine income for support purposes, material evidence which substantiates current income may be grounds to forego such averaging. This case provides a useful guide with regards to the jurisprudence in respect of income averaging.
The parties had a shared parenting arrangement in respect of the three children of their marriage, aging in range from 11 to 17.
The father is self-employed, and through the use of an expert report, determined that he previously earned an income of $59,000 in 2012, $84,000 in 2013, and $69,000 in 2014. Through a subsequent report, the father’s experts’ determined that his income in 2015 drastically reduced to $23,000.
The mother brought a motion that the father should pay child support for the children in accordance with his actual income from 2012 onwards, and based upon an imputed income for 2015 onwards. The mother’s position is that the drastic reduction in the father’s income was a red flag, and she submitted to the Court that his 2015 income should be imputed to an amount which is the averaging of his previous years. The father’s position was that ongoing support should be based upon his current income, and alternatively, if there was to be any averaging, such averaging should include his 2015 income.
In making its decision in this case, the Court undertook a thorough analysis of the case law in respect of averaging incomes. The Court highlights that prior to November 1, 2000, section 17(1) of the Federal Child Support Guidelines explicitly stated that a court may average income over three years when determining income for support purposes. However, the current version of the Guidelines does not explicitly state as such, and provides only that “the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income of receipt of non-recurring amount during those years”. The Court that this word grants discretionary authority to judges in determining income, but does not require the Court to average income.
Although courts are not required to average income, upon a review of the case law, the Court found that many courts have continued to use a three-year average, and in some cases, an average of even more years. However, the Court also noted multiple cases wherein it was held that averaging was not required.
The Court accepted the father’s submission that the best evidence available in respect of his income was that of the experts. As such, the Court found that the father ought to have paid support in accordance with his actual income from 2012 until December, 2014, including an order for the arrears of same. However, as the Court accepted the expert evidence with respect to the father’s income for 2012-2014, the Court found that it would be contradictory not to accept the expert evidence with respect to the father’s decreased 2015 income. As such, the Court ordered set off child-support as of January 2015, in accordance with the father’s decreased income of $23,000, and until such time as his actual income can be determined, spousal support was suspended, as the father no longer had the ability to pay.