Recent case: When to impute income

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Lavie v. Lavie, 2018 ONCA 10: The appellant father appealed a 2015 trial decision, raising more than 20 grounds, including the trial judge’s imputation of income to him but not to the respondent mother.

The parties began living together in 1998, married in 2000 and separated in 2009. They have two teenage children. Following separation, the parties agreed on joint custody with the children spending equal time with both parents. The respondent mother worked as a teacher from 1998 to 2004 and left teaching after the second child was born. At that time, the parties agreed that she would not return to teaching so that she could be more available to the children. In 2006, she started a business, Balls of Fun. The father continued with his full-time employment.

Based on expert evidence, the trial judge determined the mother’s income for 2009 to be $15,000. The father was employed as an editor for a television show from 1996 to 2012, when he was terminated. The trial judge determined his income for 2012 to be $77,923.

The trial judge ordered the father to pay $714 and $691 in retroactive child and spousal support, respectively, commencing November 1, 2009. These amounts were based on his income up to his termination in 2012 and thereafter on an imputed income of $70,000.

The trial judge declined to impute income to the mother equal to a teacher’s salary. Based on the fact that, in 2004, the parties had agreed she would not return to work, the trial judge found she was not intentionally under-employed.

The trial judge found that since she was not intentionally under-employed, there was no reason to impute income to her. This finding was based on the fact that opening Balls of Fun was a joint decision made by the parties, for the purpose of improving their family life and also that by operating Balls of Fun instead of returning to teaching, the parties enjoyed the advantage of her being able to be more flexible with the children.

The father argued that the trial judge should have imputed income to her equal to a teacher’s salary in the range of $72,000 to $86,000 per year since she had held that position up until 2004 and remained qualified for it.

The Court of Appeal had to decide whether the trial judge erred by imputing income to the father, the support payor, but not to the mother, the support recipient.

The Court of Appeal found the trial judge erred in concluding that no additional income should be imputed to the mother. The Court found her to be intentionally under-employed.

The Court stated that section 19(1)(a) of the Federal Child Support Guidelines permits the court to impute additional income where a spouse is intentionally underemployed. Drygala v. Pauli, (2002), 61 O.R. (3d) 711 (Ont. C.A.) determined that, in finding intentional under-employment and imputing income, there is no need to find a specific intent to evade child support obligations. Further, for parents to meet their legal obligations to support their children, they must earn what they are capable of earning.

The Court held that the trial judge erred in finding that the mother was not under-employed on the basis that the parties had previously agreed to her opening of Balls of Fun for the benefit of the family. The Court confirmed there is no requirement of a finding of bad faith or intention to evade support obligations. The reasons for underemployment are irrelevant. If a parent is earning less than they are capable of earning, they are intentionally under-employed. The Court held there was nothing on the record to support a finding that she could not return to teaching at the time of separation or trial.

The Court held the trial judge ought to have concluded section 19(1)(a) was engaged and should have imputed income to both or neither of the parties. When imputing income based on intentional under-employment, a court must consider what is reasonable in the circumstances. The factors to be considered are age, education, experience, skills and health of the parent.

At the time of trial, the parties were sharing parenting responsibilities equally and supporting two households. As such, the Court concluded, the children were only benefiting from the mother’s availability to them when they where with her and the balance of the time they would benefit equally from the father’s additional availability.

The Court held that while the father was employed, no income ought to be imputed to the mother; however, once he became unintentionally unemployed, it was inappropriate to impute his full salary to him and nothing to her.

As a result, neither party owes the other spousal or child support.

This case summary was written by Luke’s Place articling student Amanda Smith.