Imputing Income Extract From Payne and Payne, Child Support Guidelines in Canada, 2024, chapter 4, Irwin Law, U of Toronto Press Imprint Dec, 2024)

4)?? Earning Capacity; Intentional Underemployment or Unemployment

Section 19(1)(a) of the Federal Child Support Guidelines confers a discretion[1] on the court to impute such income as it deems appropriate to a spouse who “is intentionally under-employed or unemployed, other than where the underemployment or unemployment is required by the needs of a child of the marriage or any child under the age of majority or by reasonable educational or health needs of the spouse.”[2] Appellate courts in British Columbia,[3] Manitoba,[4] New Brunswick,[5] Newfoundland and Labrador,[6] Nova Scotia,[7] Ontario,[8] Québec,[9] and Saskatchewan[10] have long concluded that section 19(1)(a) of the Guidelines is not confined to circumstances where a parent deliberately seeks to evade his or her child support obligations or recklessly disregards his or her children’s financial needs while pursuing his or her personal choice of employment or lifestyle. Although such deliberate or reckless conduct, where it exists, weighs heavily in the exercise of the court’s discretion to impute income to a parent, the proper test for the judicial imputation of income to a parent pursuant to section 19(1)(a) of the Guidelines is perceived in the aforementioned appellate judgments as being a test of reasonableness. According to this criterion, the court must have regard to the parent’s capacity to earn in light of such factors as employment history, age, education, skills, health, available employment opportunities, and the standard of living enjoyed during the marriage.[11] In Peters v Atchooay,[12] a five-member panel of the Alberta Court of Appeal, revisited Hunt v Smolis-Hunt,[13] wherein the Alberta Court of Appeal, by a majority of 2:1, had concluded that the judicial imputation of income under section 19(1)(a) of the Federal Child Support Guidelines is confined to circumstances where a parent deliberately seeks to evade child support obligations through their choice of employment or lifestyle. After a detailed review of Smolis-Hunt and relevant caselaw across Canada, the Alberta Court of Appeal in Peters v Atchooay rejected the deliberate evasion test and endorsed the reasonableness as exemplified by the following summary of section 19(1)(a) principles:

[92]?The following is a non-exhaustive list of principles to guide the determination of whether to impute income under s 19(1)(a):

1.?? ?General Duty to Work. There is a duty to seek employment where a parent is healthy and can work. A parent’s limited work experience or job skills do not justify a failure to pursue lower skilled employment or employment in which the necessary skills can be learned on the job. While this may mean a job at the lower end of the wage scale, parents cannot refuse to take reasonable steps to support their children simply because they cannot obtain interesting or highly paid employment. Nor can a high-earning or highly skilled parent refuse employment indefinitely by holding out for employment commensurate with their skills and previous level of earning, job title or seniority.

2.?? ?Earning Capacity Used to Assess Reasonableness. When determining whether to impute income on the basis of under-employment or unemployment, a court must consider what is reasonable in the circumstances. The starting point is the payor’s earning capacity, which is the objective measure by which the reasonableness of the parent’s decision or conduct is assessed. Earning capacity is determined based on factors like age, education, experience, skills, and health of the payor, along with availability of work, the freedom to relocate, and other obligations.

3.?? ?Discretion. Income will not be imputed where a parent’s decision to earn less than the maximum they are capable of making is found to be reasonable. Nor is there a presumption that a career choice resulting in a reduction in income is unreasonable.

4.?? ?Obligation to Support Children is the Overarching Goal. The reasons for under-employment or unemployment must be objectively scrutinized. A parent is required to act in a manner reflective of his or her obligations and cannot be excused from support obligations in furtherance of unrealistic, unproductive or non-remunerative career aspirations. Persistence in unremunerative employment or repeated education initiatives may also entitle the court to impute income. Parental self-fulfillment is a consideration but does not trump child support requirements.

5.?? ?Agreements Contextualize Reasonableness. The parties’ pre-separation agreements or social contracts have some weight in determining Guidelines income, but they are not determinative. The parenting arrangement, and the payor’s involvement or lack of involvement with the children, the length or time the arrangement has been in place, and the ages of the children may be considered in assessing the reasonableness of the payor’s under-employment or unemployment.

6.?? Reasonableness Is Not Fixed in Time. The payor’s history of paying child support and providing financial disclosure are objective measures by which to assess the reasonableness of the payor’s employment decision or conduct. What is reasonable (or unreasonable) is determined at one point in time and will not necessarily remain static for the entire time the children are owed support.

7.?? ?The Ultimate Onus Rests on the Party Opposing Imputation. Assuming the financial disclosure requirements have been met, the onus is on the party opposing imputation to prove on a balance of probabilities: 1) that the under-employment or unemployment was not voluntary, that is, not due to their own decision or conduct; or, 2) that the under-employment or unemployment is as a result of one of the listed exceptions in s 19(1)(a). If neither circumstance applies, that party must establish on a balance of probabilities that their under-employment or unemployment is reasonable, having regard to all the existing circumstances. However, where it is an initial application, the person seeking an imputation of income under s 19(1)(a) has a preliminary onus to establish some basis for the imputation sought. Either way, each stage of the analysis requires evidence that is as objective as possible. Bare assertions will not suffice.

[93]??On the issue of amount, a court cannot choose an arbitrary number; “there must be a rational basis underlying the selection of any such figure. . . grounded in the evidence”. . . . ?However, if a reasonable figure can be determined in between earning capacity and actual earnings that is grounded in the evidence, it may be the more appropriate amount to impute in circumstances where the payor’s actual income is unreasonable.[14]

[1]????????? SDM v KFM, [2004] BCJ No 67 (SC); Kochar v Kochar, 2014 ONSC 3220; Algner v Algner, [2008] SJ No 182 (QB).

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[2]????????? See Rollie Thompson, “Slackers, Shirkers, and Career-Changers: Imputing Income for Under-Employment and Unemployment” in The Law Society of Upper Canada, Special Lectures 2006: Family Law (Toronto: Irwin Law, 2007) 153–82, (2007) 26 Family Law Quarterly 135; Lorne MacLean, Fraser MacLean, Kaye Booth & Oliver Spinks, “COVID-19 and Canadian Spousal and Child Support: There is a light at the end of the tunnel but how long is the tunnel?” County of Carleton Law Association, Annual Institute of Family Law 2021, 23 March 2021, Ottawa. As to the imputation of income to a parent on the basis of intentional underemployment or unemployment pursuant to s 19(1)(a) of the Child Support Guidelines in the post-COVID pandemic era, see the judgment of Dewolfe Fam Ct J in RC v AL, 2021?NSFC?01. And see Bowes v Bowes, 2021 NLCA 10 at para 77, Butler JA. As to the impact of COVID-19 on averaging annual income over three years under s 17 of the Federal Child Support Guidelines, see ARJ v ZSH, 2021 BCSC 274; Church v Church, 2021 MBQB 20 at paras 20–21. See also McClelland v Harrison, 2021 ABCA 89. As to imputing income on the basis of a parent’s refusal to be vaccinated against COVID-19, see Lyons v Lyons, 2022 SKQB 70 (interim spousal support order); see also Almon v Hill, 2022?NSSC?310. For an excellent summary of principles relating to the judicial imputation of income on the basis of intentional unemployment or underemployment, see the judgment of Pazaratz J in Abumatar v Hamda, 2021 ONSC 2165 at para 28; see also Lavoie v Lavoie, 2024 ABCA 85 (shared parenting); Evans v Evans, 2023 ONSC 3919 at para 77.

[3]????????? Van Gool v Van Gool, [1998] BCJ No 2513 (CA); TK v RJHA, 2015 BCCA 8; Beissner v Matheusik, 2013 BCCA 308.

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[4]????????? Donovan v Donovan, [2000] MJ No 407 (CA); Schindle v Schindle, [2001] MJ No 564 (CA); Steele v Koppanyi, [2002] MJ No 201 (CA).

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[5]????????? DLM v JAM, 2008 NBCA 2; JF v GF, 2016 NBQB 46.

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[6]????????? Duffy v Duffy, 2009 NLCA 48. See also DB v HMB 2019 NLSC 105.

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[7]????????? Montgomery v Montgomery, [2000] NSJ No 1 (CA); see also Smith v Helppi, 2011 NSCA 65.

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[8]????????? Drygala v Pauli (2002), 29 RFL (5th) 293 (CA); Riel v Holland, [2003] OJ No 3901 (CA); Akkawi v Habli, 2017 ONSC 6124; Lavie v Lavie, 2018 ONCA 10. For an excellent summary of relevant principles and Ontario caselaw, see Tillmanns v Tillmanns, 2014 ONSC 6773 at paras 48–81; Verhey v Verhey, 2017 ONSC 2216; Templeton v Nuttall, 2018 ONSC 815; McBennett v Danis, 2021 ONSC 3610. And see Yeung v Silva, 2016 BCSC 1682 at paras 43–52, Dardi J.

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[9]????????? Droit de la famille?—?1275, 2012 QCCA 87; Droit de la famille?—?133554, 2013 QCCA 2176.

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[10]??????? Pontius v Murray, 2011 SKCA 121; Pellegrini v Tkach, 2023 SKCA 85, leave to appeal denied 2024 CanLII 25741 (SCC).

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[11]??????? For an excellent summary of the principles applicable under s 19(1)(a) of the Federal Child Support Guidelines, see Algner v Algner, [2008] SJ No 182 (QB), cited with approval in Pellegrini v Tkach, 2023 SKCA 85, leave to appeal denied 2024 CanLII 25741 (SCC).

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[12]?? 2022 ABCA 347; see also Khan v Khan, 2022 ABCA 370; Kaser v Kaser, 2023 ABKB 6; SY v PZ, 2024 ABKB 636.?

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[13]?? 2001 ABCA 229.

[14]? Peters v Atchooay, 2022 ABCA 347 at paras 92–93; see also Shumate v Patrick, 2023 ABKB 98; Ma v Xu, 2023

??? ABKB 346; Mohamud v Abdullahi, 2023 ABKB 371; Lavoie v Lavoie, 2024 ABCA 85 (shared parenting); Yu v

??? Zhu, 2024 ABKB 154; CP v AP, 2024 ABKB 334;?LKB v JG, 2023 NBQB 90; MM v LD, 2024 NBKB 125.

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