Volume 24, No. 1
February 2012
IMPUTING INCOME TO CAREER CHANGERS
“A person’s support obligations should not be the controlling force in his or her
career and foreclose honest career changes”.
~ Professor Jay McLeod, Annotation to Montgomery v. Montgomery.1
Section 19(1)(a) of the CSG permits a court to impute income to a spouse if it considers it
appropriate in the circumstances, which circumstances include the parent or spouse being
intentionally under-employed or unemployed.2 Attached at Appendix A is a list of the situations
in which Section 19(1)(a) is engaged. This Article focuses on those parents or spouses that
change employment from a high-paying job to a lower-paying job.
The meaning of the word “intentionally” has received inconsistent application in the appellate
courts across Canada, reflecting the competing social policies. The Supreme Court of Canada
has not yet had the opportunity to address this issue.
The “bad faith” cases in which motive has been at the heart of the issue, focus on “intention” and
interpret the word “intentionally” as meaning a deliberate course of conduct for the purpose of
undermining or avoiding the parent’s support obligations. The appellate court in Alberta
currently subscribes to this approach.3
1
th
Montgomery v. Montgomery (2000), 3. R.F.L. (5th) 126, 181 D.L.R. (4 ) 415 (N.S.C.A.).
Other than where the under-employment or unemployment is required by the needs of a child of the
marriage or any child under the age of majority or by the reasonable educational or health needs of the
spouse.
3
Hunt v. Smolis –Hunt [2001] A.J. No. 1170 (Alta.C.A.). The Manitoba Court of Appeal also subscribed
to this approach in Woloshyn v. Woloshyn (1996), 115 Man. R. (2d) 225 (Man.C.A.), but changed its
approach in Donovan v. Donovan (2000), 190 D.L.R. (4th) 696 (Man.C.A.).
2
-2The “strict rule” cases interpret the word “intentionally” as meaning a “voluntary act”, with no
need to find a specific intent to evade Child Support obligations before income can be imputed.
A payor is intentionally under-employed if they choose to earn less than they are capable of
earning, and intentionally unemployed if they choose not to work when capable of earning an
income. There is no requirement of bad faith. This is the more popular Canadian appellate
approach currently (Nova Scotia,4 Manitoba,5 Ontario6 and British Columbia7).
This “strict rule” approach has found justification in s. 26.1(2) of the Divorce Act which states
that the CSG “shall be based on the principle that spouses have a joint financial obligation to
maintain the children of the marriage in accordance with their relative abilities to contribute to
the performance of that obligation.” In other words, a parent must earn what he or she is
capable of earning, given his or her age, education, experience, opportunity, skills and health.
Moreover, there is a duty to seek employment in a case where a parent is healthy.
The “bad faith” approach gives priority to an individual’s freedom of choice in employment,
recognizing that the pursuit of work provides not only a livelihood but also a sense of identity,
self-worth and emotional well-being. In these cases, spouses may not have to support their
children to the maximum of their earning capacity. This approach shows deference to the
decision of the parent.
I believe that the underlying competing social policies must be addressed: the obligation of a
parent to support his or her children or former spouse vs. the parent’s own interests and choices.
The “strict rule” cases and the dominant approach in the appellate courts involve the former
taking precedence over the latter. It is too simplistic to state that the competing interests should
be “balanced”, and take an intermediate approach, even if various factors are identified to limit
that consideration.8 In practice, one approach necessarily dominates the other, demonstrating the
prevalent social policy.
4
th
Montgomery v. Montgomery (2000), 3. R.F.L. (5th) 126, 181 D.L.R. (4 ) 415 (N.S.C.A.)[“Montgomery”].
th
Donovan v. Donovan (2000), 9, R.F.L. (5 ) 306, 190 D.L.R. (4th) 696 (Man.C.A.).
6
Drygala v. Pauli, [2002] O.J. No. 3731, 61 O.R. (3d) 711 (Ont. C.A.) [“Drygala v. Pauli”], Riel v. Holland
(2003), 42 R.F.L. (5th) 120 (Ont.C.A.), Lawson v. Lawson, [2006] O.J. No. 3179 (Ont.C.A.).
7
Barker v. Barker (2005), 15 R.F.L. (6th) 43 (B.C.C.A.)
8
Factors such as the financial impact upon children, acquiescence of the other parent, reasons for the
change of employment, the time lapse since separation, and the effect of prior agreements.
5
-3Personally, I subscribe to the “bad faith” approach, as I believe the actual earnings of a party,
rather than their earning capacity must be considered, so long as the individual did not act
primarily for the purpose of avoiding a support obligation, and so long as the new occupation
does not impoverish the children for a period greater than six months. I believe that the late
Professor Jay McLeod would have concurred based on his comment in the Montgomery
Annotation above. We should deal with a payor’s real income instead of “pretending” he or she
earns more.
When employment encompasses more than half of an individual’s waking hours, I cannot justify
forcing an individual to remain at a vocation that does not fulfill them. This indentured servitude
may even be contrary to s. 7 of the Charter of Rights and Freedoms.
However, the impact on the financial situation of the children cannot be ignored. After a sixmonth hiatus, a person who is unemployed should have at least minimum wage employment
imputed to him or her. I appreciate that children should be sheltered from the financial effects of
separation, but not at the expense of having a happy parent who engages in more satisfying work.
One concern I have with the “strict rule” and intermediate “reasonableness” or balancing
approach is that the court’s discretionary determination to impute income is contrary to the
objectives of the CSG which is to enhance fairness, objectivity, predictability and consistency,
and instead re-imports the uncertainty that characterized the former Child Support regime.
Moreover, judges, who have their own biases and prejudices, must make value judgments about
the reasonableness of a parent’s choices, or whether an individual is furthering “unrealistic or
unproductive career aspirations”. Another concern is the difficulty in quantifying earning
capacity: the approach fails to appreciate that a payor’s earning capacity may in fact be lowered,
without providing medical evidence to substantiate same.
The reality is that most individuals must combine “the best” 20 years of working life, with
bringing up their children. While this involves acting responsibly, the obligations should mirror
those of parents in an intact marriage. This article is concerned about parents who are frustrated
or bored: those that are undergoing midlife angst, aware of the fact that there is less life available
than they have already lived, seeking to live a little more than their current mundane routine.
Those whose friends begin to develop grown-up illnesses and who seek new experiences, such as
-4the experience of a new occupation, in an attempt to find happiness or recapture some measure
of their youth. Surely a happy parent, who undergoes such a recalibration, is worth more to a
child, than a more affluent parent who is miserable and has peaked both in terms of income and
output. The latter may even have more employment demands with mandatory overtime and
more stress, which may negatively impact on his or her relationship with their children.9
In my opinion, imposing onerous financial obligations on a parent who chooses to make a career
change are not justified. The long-term impacts on the health of the payor, the resulting
economic effects and concomitantly the effects on that parent’s relationship with their children
require investigation.
Appendix A
Section 19(1)(a) encompass a myriad of situations, each of which engage the competing social
policies differently, as follows:
a)
Change of employment – from a high-paying job to a lower-paying job is the “hard case”
addressed in this Article;
b) Second jobs – the dominant social policy is to require payors to have one full-time job:
continuing a second job after separation is not required;
c)
Reduced working hours – a payor cannot reduce his or her working hours below a full-time
work week, unless there are special circumstances;
d) Continuing under-employment – in these cases the complaining spouse had acquiesced to the
spouse’s conduct during the marriage, and therefore I find it unfair that a payor would
have to earn his maximum earning capacity after separation, unless the payor’s
employment is below minimum wage10;
e)
Reasonable health needs – this is contemplated as an exception under s. 19(1)(a), and
arguably would not constitute “intentional” unemployment;
f)
Early retirement – this should, in my opinion, be addressed as part of a);
g) Reasonable educational needs – is an exception under s. 19(1)(a);
9
A social policy that discourages “unrealistic or unproductive”, or just plain unusual, career aspirations or
interests would create a very homogenous society. Alternatively, those interests must be pursued as a
youth without children (despite society’s emphasis on our youth aspiring towards “successful” careers),
or as a senior once Child Support obligations cease (when health concerns and deficient energy may
inhibit such pursuits).
10
Although acquiescence should be less of a factor in Child Support cases than Spousal Support cases.
-5h) Child care cases – is also an exception under s. 19(1)(a), although courts have imported a
“reasonable” requirement in assessing the needs of children and whether they result in a
need to remain home with the child.11 There is a mixed response in the case-law with
some cases showing deference to parents with pre-school children;
i)
Criminal and other misconduct cases – some kinds of job misconduct leading to dismissal
should lead to imputed income. In my opinion, the definition of “bad faith” can be
extended to “blameworthy conduct” in these circumstances.
11
The Albertan Court of Appeal Demers v. Moar (sub nom) D. (D.R.) v. M. (J.) (2004), 247 D.L.R. (4th)
569 (Alta. C.A.) at para. 13 stated, “One cannot presume that the desire to avoid the payment of child
support to older children is the sole, or even a likely, reason for pursuing further parenthood.”