Law Times

Law Times • November 3, 2014 Page 13 www.lawtimesnews.com Child support guidelines become optional Court upholds ability to choose other arrangements that benefit children by Judy van rhiJn For Law Times I n a recent case, the court upheld parties' ability to contract out of the child support guidelines as long as the outcome is to the chil- dren's advantage. As a result, creative solutions tailored to a family's circum- stances are now something fam- ily lawyers must consider with some options being more popu- lar than others. With the increase in medi- ated and negotiated settlements in child support matters, there has been an exploration of al- ternatives to the child support guidelines. One such agreement came under scrutiny from the Ontario Court of Appeal in Stevenson v. Smit. In their separation agree- ment, the parties recorded an intention to share equally the major expenses for the children, such as private school tuition, activity and camp fees, and post- secondary education. It recog- nized that the father was form- ing a new company and had minimal income but substantial assets from which he intended to satisfy his obligations. After three years, he defaulted and alleged he could no longer meet the terms of the agreement. When the mother asked the court for an assessment of ar- rears, he claimed there had been a material change in circum- stances and the child support guidelines should apply. He lost the initial trial and subsequent appeal to the Superior Court before the Court of Appeal con- sidered the case and released its dismissal in July. Frances Wood, a partner at Wood Gold LLP in Brampton, Ont., believes it's important for clients to have finality and says this case delivers that promise. "If the change is foreseeable, it can't ground a claim for material change of circumstances," she says. "In the future, when people are signing, they will know they can't go back for another kick at the can." In the Stevenson case, the par- ties were aware of the father's financial circumstances at the time of the agreement. The court found he had untapped income- earning potential and had cho- sen to resort to his capital. "In our view, the father's remaining grounds of appeal are similarly without merit," wrote appeal court Justice Karen Weiler. "Contrary to his contention, the application judge did not fail to consider the guidelines. To the contrary, she expressly rec- ognized that, in this case, the parties freely and knowingly elected to enter into special ar- rangements regarding child sup- port, outside the parameters of the guidelines. The parties were entitled to do so, as long as the children's needs for and entitle- ment to support were not bar- tered away. That did not occur in this case." "The court has a parens pa- triae jurisdiction," says Wood. "If it does barter away the chil- dren's support, the court is likely to intervene. If there is a fundamen- tally respectable amount of sup- port, the court wants it to be final." Nathalie Boutet of Boutet Family Law in Toronto says the case is significant because the parties made the arrangements in a way that made a lot of sense at the time of negotiation. "It highlights that people can be creative for the benefit of the children but it has to make sense," she says. "The husband was uncom- fortable making a commitment on a monthly basis because of his low income. This worked well and gave him the freedom to get on with his life. The court told him to keep doing it. When it is no longer suiting your purpose, you can't renege on a bargain made in full contemplation of your financial future. The court is saying: 'If you don't manage your property so your wife can get what you agreed, that's your problem.'" Boutet's practice focuses on mediation, collaboration, and ne- gotiation. "I make these sort of ar- rangements all the time, but there has been a fear that the support payer won't honour his or her obligations," she says. As a result, many parents prefer to stick with the child support system with its enforcement powers. When they do stray outside of that system, there has been a cau- tion about going too far. "Until this case, we have really been of the view that you can't deviate too far from the guide- lines, particularly when children are primarily with one parent, say 60 per cent of the time," says Cathryn Paul, a lawyer and me- diator in Oakville, Ont. "The view has been that you are kind of stuck. This case gives a lot of room to negotiate as long as arrangements provide for the children. They can't be worse off. It's a matter of restructuring how their needs are met." Paul notes the guidelines can work in shared parenting. She says that for simplicity, some people like to see what each would pay if the children were with the other parent. The party with the greater obligation pays the difference. "That's one an- swer, but you should really look and see what life is going to be like in two homes," she says. "You don't want kids to have a really unbalanced experience." Paul believes the case has re- leased the shackles of staying close to the guidelines. "We still let par- ties know what the legal landscape is, but the case has given us confi- dence in being creative." Boutet believes that while the guidelines did fill a void in the legal system, they can be an- noying. "With the increasingly frequent shared-parenting ar- rangement, the [guideline] does not provide a proper straight- line answer. We need something more creative. People don't want to deal with each other yearly." For that reason, the shared- expenses arrangement used in Stevenson isn't necessarily an optimal arrangement. "Sharing expenses can be an invitation to fight over what is a major expense and what isn't, what should be shared and what shouldn't," says Wood. "When you restrict it to spe- cific items, there is less opportu- nity for dispute." In fact, Wood prefers to rec- ommend a set amount of money each year so the parties don't have to have an accounting every six months or so. Paul finds parents often pre- fer a lump sum each year so there's a predictable amount. "People having to share expenses is a source of friction. In the first year after separation, there are lots of challenges working out what should be shared. If a per- son is refusing, it's hard to try and correct it." Boutet often recommends the creation of a lump-sum payment to last three to five years so that in that time, the parties can get past the separation anger and move on with their lives. Alarm bells also ring when a party intends to pay its obligations from capital as hap- pened in this case. "It usually can't go on forever," says Wood. "It is usually not sustainable. I would probably have recom- mended a specific review time- line, say five years, to see if it is still appropriate without the par- ties needing to meet the materi- al-change threshold." But lawyers do agree the case does give people the ability to be more creative without hav- ing to look over their shoulder for future challenges. "I thank the Court of Appeal for allowing creativity," says Boutet. LT FOCUS Draft your own customized documents with O'Brien's Encyclopedia of Forms, Eleventh Edition, Ontario – Family Law, Division VI. This service provides, both in looseleaf and electronic formats, a comprehensive collection of documents that can be easily adapted to suit your clients' needs. Compiled by a family law expert, O'Brien's Ontario – Family Law gives you convenient access to: • Domestic contracts with detailed commentary • A section on the division of pensions • Fillable court documents • Commentary on procedure in family law cases • Common Claims Checklist Save time with O'Brien's Online With O'Brien's Online, you can quickly search thousands of documents, pinpoint the right one, and download and edit it to suit your situation. Preparing family law documents has never been easier O'Brien's Encyclopedia of Forms, Eleventh Edition Ontario – Family Law, Division VI Editor: James Herbert Includes online access Order # L91126-65203 $259 1 volume looseleaf supplemented book + online access Anticipated upkeep cost – $183 per supplement 1-2 supplements per year Supplements invoiced separately L91126 Also available in online only or print only formats Master Subject Index also available Shipping and handling are extra. Prices subject to change without notice and subject to applicable taxes. 00218EB-A43200 CANADA LAW BOOK ® Available risk-free for 30 days Order online: www.carswell.com/obriens Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 'I thank the Court of Appeal for allowing creativity,' says Nathalie Boutet. Don't Court Disaster Keep up-to-date on the latest judicial developments by reading Law Times CaseLaw on pages 14 - 15

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