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MAINTENANCE AND SUPPORT - Child support - Undue hardship

Tuesday, June 18, 2019 @ 10:24 AM  

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Appeal by the mother from a 2016 child support order for the parties’ young daughter. The father resided in Ontario. The mother had primary care. The father was the sole shareholder and director of two companies that operated as a snow removal and landscaping business. He ran his business from home and some of his business and personal expenses were combined. His retained earnings in 2012 were $370,918 and in October 2015, $398,032. The mother argued that the father’s income for the purpose of determining his child support obligation ought to include the pre-tax income of his corporations. The father argued otherwise and stated that his high access costs were such that it would create an undue hardship if he paid the guideline table amount of child support. The application judge concluded the father’s income for calculating child support was $85,000 which would provide for a guideline table payment of $762 per month. She also concluded the father made out a claim of undue hardship and ordered him to pay support of $500 per month plus 51 per cent of child care expenses.

HELD: Appeal allowed. New hearing ordered. The application judge’s reasons disclosed that she did not reference s. 16 of the Guidelines at all in determining the father’s income. She did not identify his line 150 income and neither looked at the last year nor whether she ought to consider income patterns over the past three years in determining his income. This was not a case where it was obvious from the record what the father’s line 150 income should be. It was also difficult to determine how much corporate income the application judge later added to the father’s line 150 income. The application judge did not reference the pre-tax income of the father’s companies at all. She did not clearly explain how the father met his burden to establish that all or some of the corporate pre-tax income should not be included for child support purposes. It was incumbent on the application judge to explain not only how that burden was met, but what portion of the pre-tax income was not available for child support purposes. From her reasons, it appeared the application judge misapplied the two-step test to determine undue hardship and her reasons were insufficient for determining how she concluded, other than by a straight comparison of income, that the father’s household standard of living fell below that of the mother. The reasons suggested the application judge utilized the comparison of household standards only which was an incorrect approach. The application judge did not explain how the high threshold for finding an undue hardship was met. Simply having unusually high access costs, coupled with a purported lower standard of living, did not establish undue hardship. Given the objectives of the Guidelines and the high threshold for successfully establishing an undue hardship claim, the reasons should be more than an acknowledgement that the parties had similar incomes, with the father having high access costs.

Reid v. Faubert, [2019] N.S.J. No. 219, Nova Scotia Court of Appeal, D.R. Beveridge, C.A. Bourgeois and A.S. Derrick JJ.A., May 23, 2019. Digest No. TLD-June172019005