In Pelchat v Chisholm, the court was tasked with determining the payor spouse’s income for spousal and child support purposes. This case was contentious because the payor’s income was highly irregular and there was a large difference in the amount of regular base income vs. dividend/ bonus payments.
Case Background
The Applicant filed an interim motion for child and spousal support. The payor requested that he be allowed to pay support on his base income and then pay equity disbursements to the recipient as he receives them on an agreed upon proportion.
It is not uncommon that income is irregular due to income being divvied up in irregular payment structures. Sometimes income is apportioned through shares, dividends, bonuses, etc. As a result, for the purposes of support payments the base income usually does not accurately reflect the income available for support.
Although this may seem unfair to a recipient, the allowing of the unbalanced payments is for practicality seeing as how imposing payment on someone for an amount of money they are not guaranteed or in possession of, could create serious cash flow and uncertainty issues. It is a goal of the courts to try to avoid this from happening.
In the present case, the husband is a lawyer earning about $950,000 per year, which is comprised of about $650,000 in regular income payments and another $300,000 in dividend payments. He requested that he be allowed to pay child and spousal support based on his monthly draw of about $650,000 annual income, which equates to child support of about $8,000 per month and about $10,000 per month in mid-range spousal support. He agreed to share the additional distributions of equity from his firm with his wife when he receives them on an agreed upon proportion.
The mother argues that support should be payable on the husband’s total 2017 income of $989,000, which equates to approximately $12,000 a month in child support and $20,000 per month in spousal support. The mother’s argument is that is it unfair that she be required to wait for additional payments and should be entitled to receive consistent payments on his average yearly income of over $900,000.
Case Analysis
The court referred to an earlier Ontario case that addressed irregular income for the purposes of support payments. In Easton v. Coxhead, the judge took into consideration multiple factors in assessing whether the bonus income should be accounted for in regular support payments.
The judge pointed to the fact that paying additional equity distributions when they are received ensures that the recipient is not being paid too little or too much and avoids significant adjustments later on. The judge also thought it important to note that given the structure of the payor’s job, additional amounts are not guaranteed.
Additionally, the judge took into consideration the cash flow of the payor and noted that requiring him to pay on the bonuses before they are received would create a grossly disproportionate amount of his monthly disposal income going to the recipient.
The father must cooperate with both disclosure and payment of additional equity distributions when received and his historic ability to do this carried much favour. Finally, there was no demonstrated need by the mother for the additional amount of support each month to meet her expenses. She will have more than enough to meet her needs and those of the children.
In taking into consideration the same factors, the judge in Pelchat v Chisholm agreed with the judge in Easton v. Coxhead and accordingly found that the father should pay support based on his annual draw with spousal support in the mid-range and that he will share his additional firm distributions when and if they become available.
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