The Imputation of Income for Support Purposes: Tillmanns v Tillmanns, 2014 ONSC 6773

This case addresses the issue of imputation of income for support purposes.

Background

The parties were married on October 20, 2000 and separated on November 28, 2005. There is one child of the marriage who resides with the Mother. The Respondent was laid off as a result of a plant closure and, as a result, sought to reduce child support payable to the Applicant. The Applicant Mother seeks to impute an income to the Respondent as she is of the opinion that he has made “poor and self-serving choices in selecting replacement work” (paragraph 12).

Analysis

The Court commences its analysis by stating that it is “easier to speculate about things a displaced worker could have done to meet child support obligations – but harder to be sure exactly what he or she should have done” (paragraph 1). The Court further stated that sometimes imputing an income can be a relatively straightforward decision. However, in some cases it becomes difficult to distinguish between reasonable and unreasonable efforts to mitigate job loss.

The Court then considered the evidence pertaining to the Respondent’s severance package. From the evidence before the Court, it appears as though the Respondent did not consider his options upon being laid off and did not seek independent legal advice regarding same. Rather, the Respondent chose to accept the severance package, instead of deferring same to maintain his “re-call rights”.

The Court found that the Respondent acted in good faith. Further, the Respondent “understandably concluded that re-call rights were meaningless once Hood Packaging’s plastics operation had been permanently relocated out of Canada” (paragraph 21). The court further held “that it was reasonable and prudent for the Respondent to elect to take a severance package, rather than hold out for two year re-call rights at a plant which had permanently closed” (paragraph 21).

The Respondent pursued an apprenticeship in plumbing. The Applicant, however, accused the “Respondent of ignoring immediate opportunities to find a replacement job at comparable wages” (paragraph 27). The Court held that the Respondent had “acted in good faith in preparing and submitting his resumes to potential employers” (paragraph 33). Further, the typographical error in the Respondent’s resume was nothing more than a mistake.

The Court was unable to conclude from the evidence before it “that there were promising job opportunities which the Respondent should have pursued in favour of an apprenticeship” (paragraph 34). The Court further found that there was nothing suspicious or inappropriate about the Respondent’s lifestyle or expenditures.

The Court continued its analysis by considering the Child Support Guidelines, which purpose is to establish “a fair standard of support that children continue to benefit from the financial means of both spouses after separation, using a methodology that strives to achieve objectivity, efficiency and consistency” (paragraph 45). Support levels may have to be adjusted on accession to “reflect current ability to pay” (paragraph 47). However, the Court may consider imputing an income under section 19(1)(a) of the Child Support Guidelines to give effect to the “joint and ongoing obligation of parents to support their children” (paragraph 49).

In Drygala v Pauli, the Ontario Court of Appeal set out the following three-part test to be applied in considering a request to impute income:

  1. Is the spouse intentionally underemployed or unemployed?
  2. If so, is this required by virtue of his or her reasonable educational needs, or the needs of the child of the marriage, or arising from reasonable medical needs?
  3. If the answer to #2 is “no”, then the court must decide whether to exercise its discretion to impute income and, if so, in what amount.

The Court further held in paragraph 54:

There is a duty on the part of the payor to actively seek out reasonable employment opportunities that will maximize their income potential so as to meet the needs of their dependants.

Surely a payor’s reckless behaviour which diminishes income earning capacity may also result in the imputation of income (Rogers v Rogers, 2013 ONSC 1997). However, the Court need not find a specific intent on behalf of the payor to evade child support obligations or bad faith in order to impute income (Drygala v Pauli). The onus remains on the party seeking to impute an income to the other party that he/she is “intentionally underemployed or unemployed” (paragraph 58).

The Court then stated in paragraph 58-62:

If a Court is not satisfied that the support payor is intentionally underemployed, the inequity ends there. But once intentional underemployment is established the onus shifts to the payor to show one of the exceptions of reasonableness…When an employment decision results in a significant reduction of child support, it needs to be justified in a compelling way…The court will not excuse a payor form their support obligations or reduce those obligations where the party has persisted in un-remunerative employment, or where they have pursued unrealistic or unproductive career aspirations.…A parent cannot pursue an improvident career path at the expense of the child.

Further, a Court maintains a significant degree of discretion when imputing an income (Menegaldo v Menegaldo, 2012 ONSC 2915). “If a court finds a payor is intentionally underemployed or unemployed, a court cannot arbitrarily allocate an imputed income. There must be an evidentiary basis for the income level to be imputed” (paragraph 66).

In the case where one of the parents involuntarily loses his or her job through a layoff followed by a lengthy period of unemployment, the Court must consider the “payor’s situation, options, and opportunities…in the context of other individuals…facing similar circumstances” (paragraph 68). An “involuntarily laid off employee may require a reasonable period of time to investigate and pursue reasonable income-producing options” (paragraph 69).

In relation to the Respondent’s pursuit of a career as a plumber, the Court cited Lamoureux v Lamoureux, 2010 CarswellOnt 6176 (Ont. SCJ), which provides “Merely being enrolled in an educational program is not sufficient to discharge the onus, once intentional underemployment has been established. There must be a clear and realistic plan for re-entering the workforce” (paragraph 72). Further, on this issue, the Court found that “Retraining after an involuntary job loss may be more reasonable, particularly if employment prospects in the previous field of employment are uncertain or bleak” (paragraph 73).

The Court found, at paragraphs 75-76, that income may be imputed to an individual where:

There is an obvious motive to avoid support; where parent is simply lazy or self-centred; where a parent is content or resigned to continue to receive minimal income because he or she has been able to reduce living expenses; and where a parent elects to languish in underemployment because his or her needs are being otherwise met by receiving support from another family member or a new partner. … A person’s lifestyle can provide the criteria for imputing income.

In the event that a party pursues self-employment as an alternative income earning path, a court can examine whether such a choice is reasonable in all of the circumstances and may utilize its discretion to impute an income (paragraph 77).

The above-mentioned principles all have one common theme – reasonableness. “Parents are required to act responsibly when making financial decisions that may affect the level of child support available. They must not arrange their financial affairs so as to prefer their own interests over those of their children” (paragraph 81).

Given the above, the Court found that the Respondent’s choices and conduct was reasonable considering all of the circumstances. The Court further found that the Respondent’s plan to pursue a career as a plumber and engage in an apprenticeship as reasonable. Further, there was no evidence that the Respondent has disregarded his family responsibilities. As such, the Court declined to impute an income to the Respondent, but held he should be paying child support in accordance with his current income of $35,000 and be contributing to the child’s section 7 expenses proportionate said income.

The Court concluded by stating:

Imputing income in child support cases is relatively easy where payors make obviously irresponsible choices, or deliberately try to evade their obligations. But where parents work hard their entire lives and then suddenly they are thrust into unemployment – all we can expect is that they will make reasonable choices in extremely difficult circumstances.

Andrew Feldstein

The Feldstein Family Law Group (FFLG) is one the largest family law firms that practices Family Law exclusively in Greater Toronto, with ten lawyers and counting. The boutique law firm has won the Top Choice Award for Family Law™ in Toronto for the past eleven years (2007 to 2017 inclusive).

Managing Partner Andrew Feldstein has been practicing family law for more than 20 years and frequently comments on Family Law issues through the media. The Feldstein Family Law Group offers vast written, video, and media resources on its website to those who find that they need to end their relationship.

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