Children Come First: A Report to Parliament Reviewing the Provisions and Operation of the Federal Child Support Guidelines - Volume 2

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4. SECTION-BY-SECTION REVIEW OF THE FEDERAL CHILD SUPPORT GUIDELINES AND THE DIVORCE ACT (cont'd)

REVIEW OF SECTIONS OF THE DIVORCE ACT THAT RELATE TO CHILD SUPPORT

BACKGROUND

Section 2 is concerned generally with the proper interpretation of the Divorce Act. Subsection 2(1) helps parents and courts by defining various terms and expressions found throughout the Act. Subsection 2(1) defines child of the marriage, which is then interpreted in subsection 2(2). A review of both is found below.

Subsections 2(5) and 2(6) are particularly important as they let the Governor in Council designate a province when defining applicable guidelines, as found in subsection 2(1), if the province addresses the particular matters set out in section 26.1. The province must have comprehensive guidelines for determining child support.

APPLICATION

ISSUE

Case law has revealed a difference in the English and French definitions of applicable guidelines in section 2. The English version can be interpreted two different ways. The other definitions and subsections have generally been applied as intended.

CASE LAW

In A.D. v. T.D.,[421] the judge had to decide whether to apply federal or provincial guidelines to determine child support. When the original motion to vary the support order was filed, both parties lived in Quebec, but by the time of the trial, the father had moved to Ontario.

The judge, who was deciding whether to vary a child support order, noted an apparent difficulty with the definition of applicable guidelines, as well as the two possible English interpretations: at the time an application is made or at the time an order is made.

The court concluded that the second interpretation was inconsistent with the way orders were treated in originating applications. In these cases, the applicable guidelines are those in force in the province where the parties live at the time of the filing of the application. This is the case even if the debtor has, by the time of the hearing, moved out of that province. To allow a different rule to apply for variation orders would have the effect of treating initial orders and variation orders differently.

Furthermore, as pointed out in the case, the French version of the definition (lignes directrices applicables) cannot be read in two different ways and refers to the date of the application (la date de présentation) for both a motion for an initial order and a motion to vary.

The judge concluded that, based on paragraph 9(2)(b) of the Official Languages Act,[422] the first of the two possible interpretations of the English version must be adopted. He further held that date de présentation refers to the filing of a motion with the court and not to its presentation before a judge. It was further held that an applicant needs to know which rules he or she will be governed by from the moment an application for a variation is made, as this mandates the forms to be used and the calculations to be made.

Accordingly, the judge concluded that because both parties were ordinarily resident in Quebec when the original application for a variation order was filed, the provincial guidelines were the applicable guidelines in this case, despite the fact that the father was now in Ontario.

The other facets of this definition have been applied as intended. For example, in M.(O.) v. K.(A.),[423] the court ruled that the federal guidelines for Quebec should apply as, contrary to paragraph (a), one of the spouses did not reside in Quebec.

RECOMMENDATION

It is recommended that the definition of applicable guidelines be amended to make it consistent with the French version. This amendment will confirm that, in cases to vary child support orders, courts should apply the guidelines applicable at the time the application is filed and not when the order is made.

SUBSECTION 2(1) OF THE DIVORCE ACT: DEFINITIONS-CHILD OF THE MARRIAGE

BACKGROUND

Courts use the definition of child of the marriage to determine who qualifies for child support. For over 50 years, divorce laws in Canada have allowed child support for older children in appropriate circumstances.[424] Parliament codified the rules for determining support for older children when it introduced the Divorce Act in 1968. Since that time, older children have been eligible for support if they are unable to provide for themselves because of "illness, disability, or other cause." Over the years, the courts have ruled that the term other cause may include secondary or post-secondary studies.[425]

Before the 1997 changes to the Divorce Act, judges were allowed to decide whether child support payments should be made for children 16 years or older, although support was seldom terminated for dependent children when they reached that age. The new child support rules increased the threshold age from 16 to the age of majority in the province or territory where the children live and to 18 for children living out of the country. The age of majority is 18 in six provinces and is 19 in the four other provinces and the territories.

• The age of majority is 18 in six provinces:
  • Ontario
  • Alberta
  • Manitoba
  • Quebec
  • Prince Edward Island
  • Saskatchewan
• The age of majority is 19 in four provinces and three territories:
  • British Columbia
  • New Brunswick
  • Newfoundland
  • Nova Scotia
  • Northwest Territories
  • Yukon
  • Nunavut

The phrase who has not withdrawn from their charge was also added in paragraph (a), so that support payments are not made for independent children under the age of majority.

Most of the provinces and all of the territories have laws that allow support for children the age of majority or over if the separating parents were not married, or if they were married but are not asking for a divorce.[426] Incorporating the provincial age of majority reflects established case law and makes orders under the Divorce Act more consistent with orders made under provincial and territorial statutes.

For more than 30 years, courts have ordered support for older children in school. In many cases, child support continued until the children completed a post-secondary degree, and sometimes later. Bill C-41 did not change the rules used to determine whether support should be paid for children at the age of majority or over. Judges continue to decide these cases on an individual basis.

The changes to the Divorce Act initially proposed to change the definition of child of the marriage to include children at the age of majority or over who are in pursuit of reasonable education. This amendment would have codified existing case law. It also reflected the view, generally expressed during consultations, that adult children should be entitled to pursue a reasonable level of post-secondary education, which is important to a child's long-term well-being. Children of separated parents are much less likely to graduate from high school or to pursue post-secondary studies.[427]

However, during the Senate Committee on Social Affairs, Science and Technology's review of the proposed changes in Bill C-41, several members opposed the change, worrying that it would expand as well as codify the existing case law. The eventual compromise removed the words pursuit of reasonable education from the amendments and allowed existing case law to continue to apply.

There have been no amendments to this section of the Divorce Act since May 1997.

APPLICATION

Since the Divorce Act was enacted in 1968, judges have decided whether older children should receive child support on a case-by-case basis. The 1997 amendments had little impact on case law developments in this area.

Children under the age of majority are entitled to support unless they have withdrawn from parental charge. There is no single definition of the word charge but, just as under the former Act, the word considers both the children's financial dependency and the parents' control.

In Australia, the Family Law Reform Act allows support to be ordered for children beyond age 18 if they need support to finish their education or because of a physical or mental disability.

Today, as before the 1997 amendments, children under the age of majority are generally entitled to support if they are dependent on their parents, but not if they are employed full time, married, or otherwise independent. Generally, if it is reasonable in the circumstances to expect the child to be self-supporting, support will be denied. However, there is no general rule and judges are able to decide each case based on the family's particular situation.

ISSUES

Support for children the age of majority or over continues to be a contentious issue.

Many say that judges have gone too far and that the Act should be amended to limit their discretion. Some argue that there should be a maximum threshold after which support is not payable, such as when the child reaches age 21 or completes a post-secondary degree. It is said that the current law makes it too hard for paying parents to plan their financial affairs because they do not know when their child support obligations may end. Moreover, restricting the court's discretion by defining a maximum threshold would produce more predictable and consistent results, per the Federal Child Support Guidelines objectives.

Others believe that the Act should be amended so that courts are more often required to order support for older children, given the overwhelming view of the case law that children who are reasonably pursuing their education should be supported until they have their first undergraduate degrees. For post-graduate studies, children should have to show why support should continue. Some say that eligibility should be expanded by including a phrase such as pursuit of reasonable education, which originally appeared in Bill C-41, particularly since these children are statistically less likely to go as far in their education.

However, because families come before the court in so many different circumstances, any attempt to absolutely limit or extend child support in all cases may lead to unjust orders. Deserving older children may be denied support while other children who should be self-supporting may continue to qualify. The courts are in a unique position to review and balance all of the relevant circumstances in any given family and determine, within the context of the phrase other cause, whether to order support for older children.

Moreover, almost all provinces and the territories permit parents and courts to decide child support for children the age of majority or over if the separating parents were not married, or if they were married but are not asking for a divorce. In fact, in some of the provinces and territories, these laws also apply to intact families. In other words, parents who are not separated may also have a legal obligation to support their older children. Many people believe that child support under the Divorce Act should not be more limited than that under provincial and territorial laws.

RECOMMENDATION

No change to this definition is proposed. The Divorce Act should continue to permit parents and judges to decide whether older children qualify for support on a case-by-case basis.

SUBSECTION 2(2) OF THE DIVORCE ACT: CHILD OF THE MARRIAGE

BACKGROUND

The definition of child of the marriage in subsection 2(2) of the Divorce Act determines whether spouses must support children for whom they "stand in the place of parents."

Laws in most provinces and territories contain a similar definition.[428] Once there is a relationship between a spouse and a child of the other spouse, the roles and responsibilities are similar to those of other parents, including the right to apply for custody or access.

The 1968 Divorce Act adopted the Latin phrase in loco parentis to describe a situation where a person voluntarily assumes a parental role for children. This reflected the well-established legal principle that sometimes children may be eligible for support from a person who acted as their parent.[429] The 1985 Divorce Act replaced the words in loco parentis with the translation, in the place of parents. There have been no subsequent amendments.

APPLICATION

ISSUES

Many argue the Divorce Act should set out objective criteria for deciding when a spouse is standing in the place of a parent, given the rights and obligations that flow from such a finding.

CASE LAW

The Manitoba Court of Appeal, in Carignan,[430] held that a spouse could unilaterally terminate the in loco parentis status once the marriage to the child's natural parent had ended. However, the Saskatchewan Court of Appeal, in Andrews v. Andrews,[431] came to the opposite conclusion. The Alberta Court of Appeal also endorsed this position.[432]

In 1998, the Supreme Court of Canada, in Chartier decided that a step-parent[433] cannot unilaterally terminate a relationship with a stepchild solely because the step-parent ceases to have a relationship with the child's biological parent, as this is not in a stepchild's best interests. The courts must look at the nature of the relationship at the time the family functioned as a unit to determine whether a person does in fact stand in the place of a parent to a child.

The Supreme Court held that one must decide to assume the role of a parent. The courts must assess both the intention one formally expresses and the intention that can be inferred from one's actions. Does the child participate in the extended family, as would a biological child? Does the person provide financially for the child (depending on ability to pay)? Does the person discipline the child as a parent? Does the person give the impression, either explicitly or implicitly, that he or she has parental responsibilities for the child? What is the child's relationship with the absent biological parent?

The Supreme Court held that, if the child is considered to be a child of the marriage, the step-parent has the same "joint and several" obligations to that child she or he would have to biological children per the Divorce Act. The contribution issue should not affect the child. If one paying parent pays more than his or her share, that parent can claim a contribution against the other but still has to pay support. The biological parent's contribution should be assessed independently.

CASES APPLYING CHARTIER

Courts across Canada have recognized the significance of the Supreme Court's decision in Chartier. For example, the court in Marud v. Marud[434] stated that Chartier represents an important shift in the philosophy concerning individuals who stand in the place of parents. Furthermore, the court held that the Chartier decision re-focused the inquiry away from a step-parent's intentions and toward his or her actions and the effects of those actions on the child.

It appears that courts recognize that it is solely a question of fact whether a spouse stands in the place of a parent.[435] Courts in many provinces have been considering and applying the factors set out in Chartier to determine this.[436] Moreover, in R.M. v. P.M.,[437] the court held that the factors set out in Chartier are not exhaustive and that it is not necessary that all the factors be present. It said that each individual family situation must be carefully assessed to establish the existence of factors that define a parental relationship.

Courts have been attentive to the main finding from Chartier: a spouse who stands in place of a parent cannot unilaterally terminate his or her obligation to the children involved. For example, in B.L.H. v. D.L.J.A.,[438] it was held that, even though the children and their stepfather of six years disliked each other, the children were still entitled to financial support. Similarly, in Cox v. Cox,[439] the court held that any post-separation estrangement between the paying step-parent and his or her stepchildren is not relevant to child support.

Applying Chartier, courts determine the nature of the relationship when the family functioned as a unit and not at the time of the order or hearing.[440]

Cases have arisen where courts have declined to find a parental relationship. In Marshall v. Marshall,[441] the court held that the three-month relationship was too short. In See v. See,[442] the court found no evidence that the stepfather engaged in fatherly activities but merely tolerated the presence of the child as a consequence of the relationship with the child's mother.

The court in Cook v. Cook[443] said there should be a relatively high threshold for finding a parental relationship and one must be able to demonstrate or infer a fairly clear assumption of responsibility over a sufficient period of time to amount to a parental relationship. The court feared penalizing step-parents for behaving kindly or offering emotional, physical, and financial assistance to a child. Obligations to the child should only be imposed where it can be unmistakably shown that the role of the step-parent was "in substantial substitution for the natural parent's role."[444] The tendency to find parental status should be directly proportional to the length of the marriage and inversely proportional to the involvement of the natural parent. This decision has been subsequently applied.[445]

As yet, only two appeal courts have had the opportunity to apply or interpret Chartier. The British Columbia Court of Appeal, in Dutrisac [446] held that the lower court judge mistakenly read Chartier as precluding the court from reducing a step-parent's child support.

In the second instance, the majority of the Quebec Court of Appeal in V.A. v. S.F.[447] held that subsection 2(2) should be interpreted restrictively and that one should only find a standing in place of a parent in exceptional circumstances.[448] The court felt that, because of Chartier, such a finding would become absolute and automatic in the majority of cases. Overturning the lower court's decision, the majority held that the judgment was based on conflicting evidence and that the stepfather should not be forced to pay child support for at least 10 years when the marriage had lasted less than three. The judge writing the minority opinion felt Chartier set out the governing principles, and not absolute rules, for courts attempting to relieve the economic effects of divorce on children. Decisions should be based on an assessment of all the potential elements of a parent-child relationship, particularly a spouse's substantial involvement in the maintenance, care, and education of a child.

OTHER ISSUES

If someone mistakenly believes he is a child's biological parent, that person cannot be defined as standing in place of a parent, as such a person would not necessarily have the knowledge and intention required.[449] Similarly, adoptive parents are the child's parents, and not standing in the place of another.[450]

RECOMMENDATION

SECTION 11 OF THE DIVORCE ACT

BACKGROUND

Paragraph 11(1)(b) imposes a duty on the court to stay a divorce application when there are no reasonable arrangements for child support in place. This protects a child's right to reasonable support.

Paragraph 11(1)(b) was amended in 1997 by specifying that the court will consider the applicable guidelines when determining whether the child support arrangement is reasonable.

APPLICATION

ISSUE

In some situations the paying parent cannot be located or there may be a history of violence, which prohibits contact between the spouses. In such situations, it may not be reasonable to insist that child support be in place before granting the divorce.

CASE LAW

In Zarebski v. Zarebski,[452] the court, in granting the divorce, stated that despite the court's duty under paragraph 11(1)(b), it would be unrealistic, impractical, and inequitable to require the mother to get non-existent financial information from the father. Although the current situation was not ideal for the mother, she had managed to cope, and she wanted to get on with her life with her child.

In Cole v. Cole,[453] the court refused to grant the divorce until the respondent filed further income information, even though the petitioner was prepared to accept child support payments based on the available income information. Invoking 11(1)(b), the judge wrote:

All of these incidents, including the efforts counsel has made to get appropriate documentation and documentation which would conform with the [Federal] Child Support Guidelines led me to the conclusion that further information was being deliberately withheld and that I should consider imputing income under the appropriate sections of the Guidelines.[454]

The court therefore made an order for disclosure under section 21 of the Guidelines.

RECOMMENDATION

No amendments to this section are recommended.

SECTION 15.1 OF THE DIVORCE ACT

BACKGROUND

Section 15 of the former Divorce Act dealt with both child and spousal support. Bill C-41 separated them into two distinct sections (child support in section 15.1 and spousal support in section 15.2) to give effect to the Federal Child Support Guidelines.

Subsection 15.1(3) requires a court to make an order or interim order for child support based on the applicable guidelines.

Subsection 15.1(5) qualifies the requirement in 15.1(3), allowing a court to order a different support amount if special provisions have been made for the benefit of the child and if applying the Guidelines would be inequitable given those special provisions. Subsection 17(6.2) parallels this section by allowing the court to also consider such provisions when varying a child support order.

Subsections 15.1(7) and (8) permit the court to order a different amount if both parties agree, as long as this is reasonable given the applicable guidelines. This allows parents to negotiate a different support amount according to their particular circumstances.

APPLICATION

ISSUE

15.1(1): DISCRETION TO ORDER SUPPORT

In some appellate decisions, the term may in subsection 17(1) of the Divorce Act has been interpreted as giving the court discretion to decline ordering child support in a variation application.[455] Based on this section 17 jurisprudence, it has been successfully argued that there is a corresponding discretion under section 15.1, particularly in cases when there is a prior separation agreement or a non-Divorce Act court order that sets out the spouses' child support obligations.

To vary a child support order under section 17, the court must find that there has been a change in circumstances since the previous order was made. This obligation is specifically set out in subsection 17(4). Under section 15.1, because the court is dealing with an originating application (meaning that there is no previous Divorce Act order), there is no similar requirement for a "change in circumstance."

Some spouses had a court order or had previously signed a separation agreement before applying for support under the Divorce Act. Case law is unclear as to how much (if any) consideration judges should give such documents.

This was also an issue before the 1997 amendments to the Divorce Act. However, today a court cannot order child support by simply incorporating the child support provisions found in a pre-May 1st, 1997 agreement in the divorce judgment, without income tax implications.[456]

Therefore, case law suggests that if the court wants to maintain the prior separation agreement, it must either exercise discretion under subsection 15.1(1) and decline to make an order, or it must find that the child support provision in the separation agreement constitutes a "special provision" under subsection 15.1(5). However, the Guidelines intended for parents and the court to apply guidelines unless there were special provisions in the agreement or order. To do otherwise renders subsection 15.1(5) unnecessary.

This has created confusion and inconsistency. In some jurisdictions, the Guidelines are applied if no special provisions are found in the separation agreement. In other jurisdictions, the court exercises discretion by declining to order child support, regardless of whether there are any special provisions. In those jurisdictions, the courts usually review the separation agreement by comparing it with the Guidelines amount and then decide which amount most benefits the child.

APPLICABLE GUIDELINES

In four designated provinces, the provincial child support guidelines are the applicable guidelines. In those provinces, the provincial guidelines are applied in Divorce Act cases if both parents reside in the province.[457]

In 1997, Quebec adopted a somewhat different set of child support guidelines.[458] As of May 1, 1997, Quebec was "designated," meaning that its guidelines would apply in all Divorce Act cases if both parents lived there. However, section 3 of Quebec's guidelines created a void in the law, because they didn't apply to cases already being processed on May 1, 1997. This issue was eventually resolved by an appeal court decision that stated that the federal guidelines would apply in the cases already before the courts on May 1, 1997.

SPECIAL PROVISIONS

Generally, the courts have interpreted the term special provisions consistently. However, when courts have pondered whether child support under the Guidelines would be inequitable in light of any special provisions, they have tended to find inequity only when the Guidelines amount would be lower than the amount found in the agreement or the order.

CASE LAW

15(1): DISCRETION TO ORDER SUPPORT

In Fung-Sunter v. Fabian,[459] the British Columbia Court of Appeal made numerous significant findings.

• There is discretion under subsection 15.1(1) of the Divorce Act to not order child support.
• When exercising the discretion under section 15.1, courts must compare the provisions of the agreement and the amount that would be ordered under the Guidelines.
• Where there is an existing separation agreement, it is not necessary to establish a "change in circumstances" when the application is brought under section 15.1 of the Divorce Act because it is an originating application.
• The significance of a separation agreement, on an application for child support under subsection 15.1(1), is related to subsection 15.1(5) (special provisions). A separation agreement may lead to an order not strictly in accordance with the Guidelines if it falls under 15.1(5).

Some lower courts have ruled that when there is a prior separation agreement or provincial court order, the court has discretion to not order child support. Other courts have ruled that they must order child support because it is an originating application and that no change in circumstances is required.

In Smith v. Smith,[460] the court stated that, per subsection 15.1(3) of the Divorce Act, when someone first applies for child support, a court "shall" make an order based on the Guidelines. The court went on to say that subsection 15.1(5) permits a court to make an order that differs from the Guidelines amount if there are special provisions and the application of the applicable guidelines would result in an inequitable amount given those special provisions. In that particular case, no such special provision existed and therefore the court held that the separation agreement was essentially irrelevant and that support must be ordered under the Guidelines.

In Rogers v. Rogers,[461] the court, relying on Sherman v. Sherman,[462] stated that it did not accept the argument that it had the power to make an original child support order under subsection 15(1) "irrespective of whether a material change in circumstances has taken place and despite the existence of a separation agreement."[463] The court went on to say that, based on Sherman, the existence of the Federal Child Support Guidelines did not require that child support orders automatically be varied. It did, however, provide a "triggering mechanism" to permit a review of the circumstances to see whether there was enough of a change to warrant varying child support payments.

In Close v. Close,[464] the court stated that the use of the word may in subsections 15.1(1) and 15.1(4) left discretion with the court. However, unlike the cases mentioned above, there was no previous separation agreement in this case. The court declined to order child support in order to prevent contact between the spouses, as "the granting of a support order [was] bound to result in the harassment and interference of the recipient spouse."[465]

The cases which formerly held that the courts had discretion to act or to decline to act can no longer be taken to be the law. Unless the unique circumstances of s. 15.1(3) or 17(6.1) of the Divorce Act, relating to special provisions, can be successfully invoked, either spouse is entitled to a Guidelines-based order even in the face of a valid and subsisting support agreement.[466]

APPLICABLE GUIDELINES

Section 3 of the Act to Amend the Civil Code of Quebec[467] states that the new rules do not apply to cases before the court when the Act came into force. In an initial judgment, Justice Sénécal concluded that the Quebec guidelines applied to all cases before the court, including those launched before May 1, 1997.[468] Justice Dalphond, in a further decision on the same point, concluded that the federal guidelines applied to matters launched before May 1, 1997. [469] Two subsequent decisions[470] concurred with Justice Sénécal's opinion; while two others concluded that the provincial guidelines did not apply.[471]

The Quebec Court of Appeal[472] settled the question by ruling that the Federal Child Support Guidelines would apply:

The provisions of the Divorce Act, namely "a court making a (child support) order or an interim order shall do so in accordance with the applicable guidelines" (Subsection 15.1(3)), pursuant to the coming into force on May 1, 1997, of An Act to Amend the Divorce Act, the Family Orders and Agreements Enforcement Assistance Act, the Garnishment, Attachment and Pension Diversion Act and the Canada Shipping Act (S.C. 1997, c. 1), are immediately applicable and must be applied to matters pending on that date.[473]

SPECIAL PROVISIONS

How the courts interpret the term special provisions is closely related to the issue of the court's discretion under section 15.1.

In Hall v. Hall,[474] the court stated that a "special provision" must be one that, in whole or in part, replaces the need for ongoing support for the children. Generally, the mere fact of an unequal division of property does not in itself constitute a special provision.[475] In Demonte v. Demonte,[476] the court stated that any benefit conferred by any special provision must be a financial benefit.

In Duncan v. Duncan,[477] the paying parent had relinquished her claim to a share of the other spouse's inheritance as consideration for not paying child support. The appeal court upheld the chambers judge's finding that it would be inequitable to require her to pay child support in light of that special provision in the separation agreement.

RECOMMENDATION

No amendments to this section are recommended. Over time, the issue of whether the term 'may' allows courts to not order support under the Guidelines is becoming less important, as all orders and agreements will have been made pursuant to the Guidelines, except for a few in cases provided for in the Divorce Act.

SECTION 15.3 OF THE DIVORCE ACT

BACKGROUND

Giving priority to child support in section 15.3 reinforces "the child-centred" approach of recent reforms and reflects the pre-existing case law giving priority to children's needs. This section recognizes and reinforces the fact that the obligation to pay child support and the obligation to pay spousal support spring from different jurisdictional bases and are independent of each other.

Subsections 15.3(2) and 15.3(3) protect spouses who might otherwise be left in poverty once child support ends.

When, because it has given priority to child support, a court makes no order for spousal support, or orders less spousal support than it normally would have, subsection 15.3(2) requires the court to record its reasons for doing so.

Under subsection 15.3(3), any time child support is reduced or ended, this is deemed to be a change of circumstance. The spouse can apply for a variation of the spousal support amount if an order has been made, or the spouse can apply for an original order if there is no previous spousal support order.  

APPLICATION

ISSUES

As only five years have elapsed since section 15.3 came into force, it is still too early to gauge the impact of the child support priority on spousal support. However, initial findings regarding subsection 15.3(1), are positive.

There is anecdotal information about parents circumventing subsection 15.3(2) and negotiating high spousal support orders to benefit from the deduction/inclusion taxation of spousal support. However, this supposition is not supported by research findings. See Volume I, objective 1 for further discussion.

Finally, subsection 15.3(3) does not now apply to variation applications under section 17 of the Divorce Act. A technical amendment to the Divorce Act is required to resolve this problem.

CASE LAW

Courts have fairly consistently applied section 15.3 in giving child support obligations priority over spousal support obligations.[478]

Judicial discussions of section 15.3 have raised three main issues: the nature or scope of the "priority" in section 15.3; the impact that the priority in section 15.3 has had on spousal support; and the tax implications of section 15.3.

NATURE OF THE PRIORITY

Section 15.3 applies when members of the same family apply for both child support and spousal support. It does not establish priorities among sequential families. For example, if a former wife of a first marriage applies for spousal support, she does not get statutory priority over the paying parent's obligations to children of a second dissolved marriage.

Courts have clearly distinguished child support obligations from spousal support obligations. In terms of timing, the court must determine the child support before evaluating spousal support.[479] Because obligations for child support and for spousal support spring from different jurisdictional bases and are independent of each other, an overpayment of spousal support cannot be set off against child support.[480]

The courts often consider the relationship between section 15.3 and other provisions. For example, despite the priority in section 15.3, courts have held that the spousal support claim must be dealt with first if the applicant seeks increased child support on the ground of undue hardship under section 10 of the Guidelines.[481]

Similarly, the courts appear hesitant to give priority to child support that includes the "add-ons" under section 7 of the Federal Child Support Guidelines. Courts have held that the priority in section 15.3 does not mean that courts should order special or extraordinary expenses under section 7 of the Guidelines to supplement the basic amount of child support payable under the applicable provincial or territorial table, if such a supplementary allocation would render the custodial spouse destitute.[482] That is, although section 15.3 requires a court to give priority to child support over spousal support, this does not suggest that an order for much-needed spousal support should yield to an order for extraordinary expenses for optional and non-essential extracurricular activities.[483]

Taking a broader approach, in Nataros v. Nataros,[484] Master Joyce stated that "[w]hile child support, including the s. 7 expenses, must be given priority over spousal support in accordance with s. 15.3(1) of the Divorce Act, in determining the reasonableness of the s. 7 expenses I think it is necessary to give some consideration to the issue of spousal support and to look at the overall picture."[485] An order for interim spousal support may also be reduced if there is a subsequent successful claim for special or extraordinary expenses under section 7 of the Guidelines.[486]

IMPACT OF SECTION 15.3 ON SPOUSAL SUPPORT

Section 15.3 has significantly affected the way courts have determined and allocated spousal support. The most obvious effect has been to reduce or eliminate spousal support when a paying parent must first pay child support from limited funds. The effects of subsection 15.3(1) have been different for custodial parents and non-custodial parents.

Subsections 15.3(2) and (3) have also significantly affected the ways courts consider spousal support in variation applications.

CUSTODIAL PARENTS

In keeping with the tenor of the amendments, the priority in section 15.3 may (and often does) result in an inability to pay adequate spousal support since the funds are exhausted after child support is paid. This inability can reduce or eliminate the amount of spousal support ordered.[487] Where the spousal incomes are approximately equal after the payment of child support, a court may refuse to order spousal support until the child support obligation is eliminated.[488] Although a court may deny periodic spousal support when child support obligations exhaust the paying parent's ability to pay, a lump sum spousal support payment may be a practical alternative.[489]

Since the spouse making the application is most often the custodial parent, the total amount of child and spousal support goes to the same household. No accounting is expected to take place. In the end, it is the total amount of support that matters. However, Parliament did not intend this section to provide everything a child may need or benefit from and leave the spouse destitute.[490]

In the case of Simon v. Simon,[491] the court found that a spouse who is not entitled to support may get spousal support under the guise of child support. The needs of a child and a custodial parent may be so intertwined that it is impossible to separate them for support purposes. As long as the court considers child support first, it won't violate section 15.3.

NON-CUSTODIAL PARENTS

Per section 15.3, courts have denied spousal support to a non-custodial parent if it means reducing child support.[492] That is, a custodial parent's obligation to provide financially for a child of the marriage takes priority over the obligation to pay spousal support to the non-custodial parent. This may reduce the amount of spousal support that would otherwise be ordered.[493]

On the other hand, courts have also held that a non-custodial parent who must pay child support may be entitled to spousal support. In Richter v. Vahamaki,[494] J. Blair declared that a court may order a custodial parent to pay spousal support to a non-custodial parent even if this reduces or cancels the child support the non-custodial parent is required to pay under the Guidelines, once the spousal support is set off against the child support. The custodial father was ordered to pay spousal support that exceeded the child support the mother was ordered to pay.

Lockyer v. Lockyer[495] addressed a similar situation, with a slightly different result. It recognized that section 15.3 applies when the payer of spousal support is financially responsible and cares for the children.  Robertson, J. ordered the custodial father, with whom the children resided 90 percent of the time, to pay spousal support to the non-custodial mother. Notwithstanding the mother's obligation under the Guidelines to pay child support to the father, the judge held that in light of the mother's lack of income, she didn't have to pay child support out of her spousal support.

RECORDING REASONS

The court must record why an amount of spousal support is less than it otherwise would have been because of the child support. Any future reduction or termination of child support will constitute a change in circumstances for the purpose of varying spousal support. For example, in granting a lump sum order for spousal support, the court expressly acknowledged a potential future right to periodic spousal support under subsection 15.3(3).[496]

In the case of Pitt v. Pitt,[497] the judgment was subsequently amended to reflect subsection 15.3(2). The applicant's counsel was concerned that the absence of reasons in the initial order might prevent his client from getting the support increased if and when circumstances changed. At this urging, the judge amended the original order with the following at paragraph 4:

I did, of course, give priority to fixing child support in this instance and, having regard to the thus reduced available income of the respondent and the other factors involved in fixing the amount of spousal support as set out in my judgment, ordered spousal support in a sum less than I would have found appropriate had there been no children of the marriage. That, I believe, satisfies the requirements of the statute.

The respondent, on the other hand, felt such application would not be affected by the lack of reasons. The judge was inclined to agree with the respondent, but could see no harm in complying with the applicant's request since subsection 15.3(2) is new legislation.

Tauber[498] also addressed the requirement for reasons. The husband supported the trial judge's decision that there should be no order for spousal support. He pointed out that, had the trial judge reduced the amount of spousal support because of the child support order, subsection 15.3(2) of the Divorce Act would have required him to explain the reasons why. And in the absence of such reasons, the husband argued that this could not have been why the judge didn't order spousal support.

Although the judge didn't need to decide the issue in the end, the judge doubted that subsection 15.3(2) applied. He found that the subsection applies when the paying spouse does not have the means to pay the full amount of child and spousal support. In such a case, subsection 15.3(1) directs the court to give priority to the child support. This was not a case where the court was "unable" to order spousal support because it had to give priority to child support.[499]

APPLICATIONS FOR VARIATIONS AND INTERIM ORDERS

Under subsection 15.3(3), reducing or ending child support is a material change in circumstances justifying a variation of a spousal support order.[500] That is, a court may reassess spousal support when a child is no longer entitled to support, given the paying parent's improved ability to pay spousal support. This may lead to an increase in support applications for older former spouses after children become independent.

Courts have held that if spousal support had been reduced because child support had priority, when child support ends, spousal support should go up, even if there has been no other material change in either spouse's circumstances.[501]

In Davis v. Davis,[502] the court held that changes to child support (in this case, the end of the obligation) do not automatically change spousal support. Rather, the receiving spouse must show how the change affects the spouses' needs and means. Similarly, in Krill v. Krill,[503] the court held that it was relevant, when varying spousal support, to weigh such factors as whether the spouse needed a house and had taken steps to get on with life after the children had gone.

This subsection may lead to an increase in nominal orders. Under subsection 15.3(1), a low-income paying spouse may not have sufficient resources to pay spousal support after paying child support. But if a court dismisses a spouse's support application altogether, he or she may not be entitled to support later.[504] In such cases, counsel will seek a nominal support order to preserve an entitlement to future spousal support. For example, a court may order a nominal $1 per year in spousal support.[505]

Subsection 15.3(3) has also been interpreted as applying to interim orders of spousal support. In Chambers v. Chambers,[506] the husband submitted that any obligation to pay spousal support would detract from his ability to make the child support payments for the child in the wife's care. He also said that these payments would hurt his ability to provide for the child in his care.

The court set support at a fairly low $500 a month "because of the necessity to give priority to child support."[507] The court acknowledged that once the matter came to trial and the husband's income was clear, this interim spousal support could become permanent. The court also pointed out: "[I]f there is any reduction or termination of child support, the quantum of spousal support can be re-evaluated. This is the intent of s. 15.3(3) of the Act and I think that intent applies equally to interim orders."[508]

TAX IMPLICATIONS OF SECTION 15.3

As child support payments are now tax neutral, while spousal support payments continue to be subject to inclusion/deduction, some parents may have a financial incentive to characterize all support as spousal support.[509] Section 15.3 limits and frustrates this tendency.[510] In fact, a judge is unlikely to order spousal support and deny child support, even on consent, given the wording of section 15.3.[511]

In Thompson v. Scullion,[512] what may have been an attempt to manipulate child and spousal support backfired. The parties had agreed on an amount of spousal support but not child support. The global amount looked large enough to include both spousal support and child support. By calling the payments spousal support, they remained subject to inclusion/deduction. The wife subsequently applied for child support. The paying parent could agree that they had not addressed child support or allege the payments included both and then deal with the Canada Customs and Revenue Agency. The court held that the agreement was not a bar to child support and ordered child support.

Tax is also an issue that overlaps with assessing support variation applications. In determining a spouse's ability to pay, a court should remember that a paying spouse will be able to deduct spousal support payments when calculating income tax and thus reduce the net cost of the payments.[513] In Hope v. Hope,[514] Quinn J. held that the change in child support to tax-neutral payments was a material change in circumstances that allowed a spouse to review spousal support. The change affects the net cost to a paying parent and the net recovery by a recipient of child support, which, in turn, affects the parties' needs and means.

RECOMMENDATION

It is recommended that this section be amended to correct an oversight and ensure that it is applicable to variations under section 17 of the Divorce Act.

SECTION 17 OF THE DIVORCE ACT

BACKGROUND

Section 17 gives effect to the Federal Child Support Guidelines while preserving the former provisions on spousal support. Subsection 17(4) specifies that the criterion for varying a child support order is a change of circumstances as provided for in the applicable guidelines.

Subsection 17(6.1) states that a court must vary a child support order according to the applicable guidelines. Section 14 of the Federal Child Support Guidelines sets out what constitutes a change in circumstances.[515]

Subsection 17(6.2) sets out an exception to this general rule. It allows a court to depart from the Guidelines amount if the result would be inequitable given special provisions that have been made for the benefit of the child.

Subsections 17(6.4) and (6.5) permit the court to order a different but reasonable amount of child support if the parties consent. The broad wording of the section is designed to encompass many different arrangements.

APPLICATION

ISSUE

The main issue with subsection 17(1) of the Divorce Act has been the interpretation of the word may.

CASE LAW

In one set of appellate decisions, the word may has been interpreted as giving the court discretion to make an order. Meanwhile, paragraph 14(c) of the Federal Child Support Guidelines[516] has been treated solely as a "triggering mechanism" allowing a court to review other circumstances to see whether things have changed enough to vary child support payments.[517]

The other set of appellate decisions interprets may as empowering the court to make a variation order, and paragraph 14(c) as constituting a sufficient change to vary a pre-guidelines order, unless there are special provisions under subsection 17(6.2).[518]

As a result, subsection 17(1) has not been applied consistently across the country.

Section 14 was amended twice to address this issue. Since the last amendment on November 1, 2000, court decisions have tended to view paragraph 14(c) as mandating a change to child support orders so that they comply with the Guidelines.

Montalbetti [519] was a British Columbia Court of Appeal case decided after Wang but just before the November 1, 2000 amendments. It ruled:

In my opinion, the chambers judge was correct in concluding that there was a sufficient change in circumstances to warrant a variation. I say that quite apart from the provision in s. 14(c) of the Guidelines that in itself may also have provided a foundation for the variation.[520]

In O'Donnell [521] a New Brunswick case, the court recited the amended section 14 and concluded that the paying parent did meet the test in paragraph (c) and varied the order according to the Guidelines. In Cholodniuk,[522] the paying parent sought to vary his pre-May 1, 1997 child support order to comply with the Guidelines. The court stated:

A previous application to vary this judgment was dismissed on February 11, 1999. Since that time however, s. 14 of the Guidelines has been amended to clarify that a child support order made prior to May 1, 1997 constitutes a change of circumstances that gives rise to the making of a variation order. As the order that Mr. Cholodniuk seeks to vary pre-dates May 1, 1997, he has met the threshold requirement for variation.[523]

In Turner ,[524] the court reviewed all of the relevant jurisprudence, articles written by various legal professionals, child support communications materials from the federal Department of Justice, and the amendments to paragraph 14(c). It concluded that the Guidelines themselves were a change in circumstances entitling a spouse to vary a child support order made before the Guidelines came into effect.

RECOMMENDATION

Furthermore, although the amendments to section 14 of the Federal Child Support Guidelines did not change section 17 of the Divorce Act, the clarification that paragraph 14(c) is, in and of itself, a change in circumstances giving rise to a variation order seems to have had the intended impact.[525] Unless the unique circumstances of subsections 15.1(3) or 17(6.1) of the Divorce Act, relating to special provisions, can be successfully invoked, either spouse is entitled to a Guidelines-based order even in the face of a valid and subsisting support agreement.[526]

SECTION 25.1 OF THE DIVORCE ACT: AGREEMENTS WITH PROVINCES

For a review of section 25.1, please refer to "Federal Funding of Family Justice Services," Volume 1.

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