Law Times

Law Times • November 30, 2015 Page 13 www.lawtimesnews.com Judge nixes support payment claim 'Unfair' to exempt structured monies from child expense claims BY YAMRI TADDESE Law Times he story of Zoe Childs, a victim of a horrific drunk driving acci- dent, was in the head- lines about a decade ago when the Supreme Court of Canada decided hosts of parties cannot be held liable for serving alcohol to a person who goes on to cause a car crash. Childs, who was 17 when a 1999 accident left her paralyzed from the waist down, was back in court recently, this time to determine how her structured settlement funds would be con- sidered following her separation from her husband, Ryan Phelps. A Superior Court judge found Child's structured settle- ment income will not be used to pay spousal support, but he decided it's fair game to factor in the lump sum monies for what's deemed extraordinary expenses for the children of her marriage. To leave out Child's struc- tured settlement payments while calculating extraordinary expenses under s. 7 of the Fed- eral Child Support Guidelines would be "unfair" to Phelps, Jus- tice Michael Quigley said. After the accident, Childs re- covered more than $300,000 in cash from various settlements, and became the beneficiary of two structured settlements. One of the structured settlements, in the amount of $850,000, pays her approximately $4,000 per month, and she receives $20,000 annually from a second one with a value of $400,000, the court said. Childs and Phelps, who sepa- rated in 2013, have three chil- dren together. The court said both parents "testified as to the desire to involve the children in extracurricular activities," an expense that's considered extraordinary under s. 7 of the Federal Child Support Guide- lines, Quigley wrote. "The Section 7 expenses in- curred for 2014 amounted to $16,826.15. I find no difficulty in concluding that the Section 7 expenses incurred in 2014, and continue to be incurred for the children, are beyond the scope of parents with modest incomes. No doubt, these monies con- tinue to be expended because of the substantial tax-free mon- ies accruing to the respondent [Childs]," Quigley said. "Any calculation of income for the purpose of Section 7 ex- penses of necessity will have to be arbitrary. To calculate Section 7 expenses based on the income of the applicant, $18,000.00 (2013) and $34,525.00 (2014), and only the taxable income of the respondent (ignoring the respondent's structured settle- ments) would be grossly unfair to the applicant and not afford- able by him," the judge also said. The way structured settle- ments are considered follow- ing separation often depends on the specific facts of the case, says Barry Chobotar, managing partner at Hen- derson Structured Settle- ments LP. In this case, Child's struc- tured settlement income "was such a large amount compared to the amount be- ing made by the applicant that it looks like the court felt the mother, the respondent, should contribute to what they're calling s. 7 expenses for extracurricular activities," Chobotar says. "You've got expenses of almost $17,000 and the applicant, or the fa- ther, only making $34,000," he adds. But, in spite of that finding, Quigley declined to grant the husband's request for $10,000 in spousal support for two years following the separation. "Although the respondent had during those years in excess of $80,000.00 being deposited into her bank account, I am not persuaded that any of that amount would qualify as income for the purpose of calculating spousal support payable by her," the judge said. "Therefore, ... an order shall go dismissing the appli- cant's claim for spousal sup- port for the years 2013 and 2014." The court decided not to use Childs' settlement funds for spousal support likely be- cause those funds were never meant to replace lost income, Chobotar says. At the time of her accident, Childs was an unemployed student. In his experience, cases where spousal support was garnished from structured settlements involved some form of economic loss on the part of the accident victim, Chobotar says, adding that the court in this case also had an ex- pert testimony that said Childs' recovery following her accident was in fact less than what she required for her medical needs. "That would have played into why they wouldn't have consid- ered [her structured settlement income] for spousal support," Chobotar says. In Jennifer Lyn Mason v. Dan- iel Mark Mason, a judge found that only the portion of the fa- ther's structured settlement that was meant to compensate him for lost income would go into spousal and child support. In that case, it didn't matter that the mother argued that the fam- ily relied on the whole of the father's income from the struc- tured settlement to support their lifestyle and his income should not be reduced for pur- poses of calculating support. Historically, people rarely considered whether structured BRIEF: STRUCTURED SETTLEMENTS CANADA & USA 1.800.265.8381 | EMAIL info@mckellar.com | www.mckellar.com The reason why we are Canada's largest and most comprehensive structured settlement firm has everything to do with our passion for service and performance— without exaggeration, we make life easier for you. The largest Swiss Army knife has 85 tools that can perform 141 tasks. Almost as helpful as McKellar. Untitled-3 1 2015-11-24 4:02 PM T It's important to protect structured settlements from the 'unfortunate event of a dissolution of a marriage,' says Kyla Baxter. See All, page 15

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