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MAINTENANCE AND SUPPORT - Child support - Calculation or attribution of income - Agreement  

Monday, August 17, 2020 @ 9:28 AM  

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Appeal by the father from a decision not to uphold the child support provisions of the parties’ separation agreement that deviated from the Federal Child Support Guidelines. The parents agreed to shared custody. The terms concerning child support were reached by the parents with the advice of legal counsel and accountants. Both parents had self-employment incomes which fluctuated annually. The father was the sole shareholder of three companies and had an interest in a fourth company. The mother was a self-employed real estate agent who worked for a company owned and operated by her mother. In the agreement the parents agreed to impute income of $130,000 to each for child support purposes. Less than 15 months after the separation agreement was signed, the mother applied for divorce and sought child support from the father consistent with his Guideline income. The mother argued that income should be imputed to the father for capital cost allowances and pre-tax income his companies had historically deducted, and that income should be imputed for cash benefits and business expenses received and deducted by the father, some of which were known business practices when their separation agreement was signed. The judge, in spite of her finding that adequate arrangements were made for the support of the children, and in the absence of evidence the father’s accounting practices had changed from the date the separation agreement was signed, imputed income to the father in the amount of $511,338 in 2016, and $454,484 for the years 2017 and 2018, obligating the father to pay $142,280 in child support.

HELD: Appeal allowed. The corollary relief order was amended to uphold the child support provisions set out in the separation agreement. While the separation agreement provided for an annual exchange of income information, this provision should not be interpreted to permit the recalculation of Line 150 income in this case where there was no evidence to support a change in the father’s corporate accounting practices and where the judge was satisfied that adequate arrangements were made for the support of the children. The application judge did not turn her mind to the question of whether the father’s sources of income had changed. She applied a mechanical approach to the Guidelines, without considering whether the terms of the agreement met the objectives of the Divorce Act and the Guidelines. The financial statements showed the father did not change the way his companies reported their incomes. These accounting practices were within the knowledge of the mother when the agreement was negotiated.

M.G.H. v. K.L.D.H., [2020] N.B.J. No. 158, New Brunswick Court of Appeal, B.V. Green, B.L. Baird and R.T. French JJ.A., July 9, 2020. Digest No. TLD-August172020002