Does Shared Custody Mean No Child Support?

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Does Shared Custody Mean No Child Support?

In Canada, child support obligations are usually dictated by the federal child support guidelines.  The guidelines work on the principle that both parents should share the same portion of their income with their children as if they lived together.  The guidelines set out monthly child support amounts in a table that uses the paying parent’s level of income and the number of children eligible for child support.

In almost all cases, judges are required to follow the guidelines when determining the amount of child support.  There are however exceptions one of which is when the parents have split or shared custody of the children.

Split custody refers to a child custody arrangement in which one parent has sole custody of one or more children while the other parent has sole custody of the remaining siblings.

In split custody situations the child support is guided by s.8 of the guidelines which states:

Where each spouse has custody of one or more children, the amount of a child support order is the difference between the amount that each spouse would otherwise pay if a child support order were sought against each of the spouses.

In other words, if parent A’s obligation to parent B for the children in B’s care is $1,000 per month, and that parent B’s obligation to parent A for the children in A’s care is $250 per month, A would pay $750 per month in child support, the difference between A’s obligation and B’s obligation, and B would pay nothing.

Shared custody refers to a child custody arrangement where a child spends about an equal amount of time in the care and home of each of the two separated parents, and the parents share the legal rights in regards to the child.

In shared custody situations the child support is guided by s.9 of the guidelines which states:

Child support must be determined by taking into account the amounts set out in the applicable tables for each of the spouses, the increased costs of shared custody arrangements and the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought.

The analysis starts by determining each parent’s income, finding each parent’s support obligation amount under the applicable Guidelines tables then offsetting the two numbers to come up with a figure that the higher earning parent owes the other. If parent A would pay $940 per month under the guidelines, and parent B would pay $1,040 per month under the guidelines, then the set-off amount is $100.

Shared or split custody does not mean no child support but a different formula is used to determine what the child support obligation should be.

 

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Does A Child Get To Choose The Parent They Will Live With?

Does a Child Get To Choose Which Parent They Will Live With?

When parents separate an obvious and perhaps most important decision is where the children of the relationship are going to live.  Any decisions about the time the child will spend with their parents have to be made in the best interests of the child.

What choice does the actual child have in the matter?  It depends.

Either the parents themselves or the courts will have to make the decision as to the time the children will spend with each of the parents.

The separating parents can come to an agreement with regard to parenting arrangements.  Parents when making such agreements may hear the opinions of their children and come to the agreement accordingly.

If the parents cannot come to an agreement then the courts will have to get involved.  The court will decide where the child should live and how much time the child will spend with each of the parents.

The BC Family Law Act says that the court must think only about the child’s best interests which includes a consideration of the following:

  • the child’s health and emotional well-being;
  • what the child thinks or wants, unless it’s inappropriate to consider this;
  • the love and affection between the child and important people in the child’s life;
  • need for stability, which can depend on the child’s age and stage of development;
  • who looked after the child in the past and how well they looked after the child;
  • how well the parents or any other person who wants guardianship, parenting time, or contact will be able to look after the child;
  • if there was any family violence, its effect on the child’s safety, security, and well-being; and
  • whether arrangements that need the child’s parents to cooperate with each other are appropriate.

When considering the opinion of the child a major factor is the age and maturity of the child.  An older more mature child’s opinion will be given much more weight than a younger more immature child.

It is very helpful to get legal advice when children are involved in a separation.  Meeting with a lawyer does not mean you have to go to court.  Seeing a lawyer can in fact often help avoiding going to court and will ensure a fair deal for all parties involved.  Please call Heath Law LLP at 250-753-2202 for family law related inquiries.

 

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The Validity Of No Contest Clauses

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Wills – No-Contest Clause Validity

A no-contest clause in a Will attempts to limit a beneficiary’s ability to challenge the Will.  An example of such a provision would be:

To X but if X directly or indirectly attempts to contest or oppose the validity of this Will, then X shall forfeit his or her right to the legacy, bequest or gift.

How have the BC courts treated no-contest clauses?

There have been two BC cases that have dealt with no-contest clauses.  In both of the cases, the no-contest clause was deemed invalid.  In one case the no-contest clause was deemed invalid as it breached the in terrorem doctrine by not including a gift-over provision in the no-contest clause and the other was deemed invalid on the basis of public policy as the no-contest clause attempted to circumvent the provisions of legislation formerly known as the Wills Variation Act (“WVA”).

In Bellinger v. Nuytten Estate, 2003 BCSC 563, a no-contest clause was the subject of judicial scrutiny.  The court deemed the no-contest clause void.  The court based its decisions on a breach of the in terrorem doctrine.  This doctrine is creature of equity and stands for the proposition that the will-maker had not really meant to impose the no-contest clause, and that therefore the condition could only be valid if the will-maker demonstrated, by the inclusion of an explicit gift-over clause, that the will-maker intended as the Will suggests.  So in other words, for a no-contest clause to be valid it must include an explicit gift over clause.  A gift over clause using the example above would look like this:

To X but if X directly or indirectly attempts to contest or oppose the validity of this Will, than X shall forfeit his or her right to the legacy, bequest or gift.  If X forfeits his or her right to the legacy, bequest or gift, then the forfeited gift will fall into the residue of my estate.

In Kent v Mckay, [1982] B.C.J. No. 67 the court determined that the no-contest clause was void not because of the lack of a gift over clause but on the basis of public policy.

The court observed that the no-contest clause in Kent purported to forbid “any litigation in connection with any of the provisions of this my Will.” It therefore encompassed even applications under the WVA.

The court in Kent further stated that it is a matter of public policy that support and maintenance be provided for those defined individuals under the WVA and it would be contrary to public policy to allow a testator to circumvent the provisions of the WVA by the creation of such a no-contest clause as was present in Kent. It is important to the public as a whole that widows, widowers and children be at liberty to apply for adequate maintenance and support in the event that sufficient provision for them is not made in the will of their spouse or parent.

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Executors Remuneration

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Executor’s Remuneration

When you are named as the Executor in another’s Will, there are many duties, obligations and rights associated with that designation.  One of those rights is Executor remuneration.

Executor’s remuneration in BC is guided by s. 88 of Trustee Act.  An executor can receive a maximum of 5% of the gross aggregate value of the estate for his or her care, pains, trouble and time spent in and about the executorship.  The Executor can also receive a fee of .4% of the average market value of the assets on a yearly basis for the care and management of the assets by the Executor.

In addition to the principles found in s.88 the Will itself could designate the amount of remuneration for the Executor.

In either scenario, the amount of remuneration still must be fair and reasonable and bear some reasonable relationship to the work and responsibility of the Executor.  If there is a dispute amongst the beneficiaries and Executor as to how much remuneration an Executor is entitled to, the court will have to intervene and determine the appropriate level of remuneration. The factors that a court will consider when determining Executor remuneration include:

  1. the magnitude of the estate;
  2. the care and responsibility involved;
  3. the time occupied;
  4. the skill and ability displayed; and
  5. the success achieved in the final results.

An Executor can also be reimbursed for expenses he or she may have incurred as a result of fulfilling his or her duties as Executor.  For example, an Executor may have to seek the aid of lawyers or accountants when handling the estate.  The fees that the Executor pays to these various professionals can be recovered as long as they related to the estate and for services that the Executor could not have performed themselves.

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The Family Maintenance Enforcement Program and Costs

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The Family Maintenance Enforcement Program (FMEP) and Cost Awards

The purpose of this blog will be to provide a brief overview of the purpose behind the FMEP as well as discuss the type of cost awards the FMEP will enforce.

The FMEP is a free service provided by the BC government. The FMEP enforces support orders and agreements on behalf of the person who is owed support (“Creditor”).  Once someone is enrolled in the FMEP, all support payments must be sent to the FMEP. The FMEP processes the payments and sends them on to the Creditor.

To enforce a support order or agreement, the FMEP can take all legal steps the Creditor could take on their own. The FMEP can also take other steps the Creditor cannot, like restricting the driver’s licence of the person who owes support (the “Debtor”) or taking away their passport.

If support payments are missed and arrears are owed, the enforcement steps the FMEP takes depend on how much arrears are owed, the current situation of the Debtor, and the actions the FMEP thinks have the best chance of success in the circumstances.

The FMEP can garnish wages, redirect money from government institutions, file liens on the Debtor’s property, place restrictions on the Debtor’s licence or passport and even put the Debtor in jail.

As can be seen from the above the FMEP can be a very forceful tool in enforcing payments under maintenance orders.  However, what type of court costs will the FMEP enforce?

First, what are court costs?  There are costs associated with going to court.  They can include court filing fees, legal bills, attendance at court, “disbursements” (i.e., photocopy charges, printing etc.) and other related matters.  The general rule of costs is that absent any special circumstances or considerations, a successful litigant can obtain an order for his or her costs.  This means that if you win your case, the other party may have to pick up a significant portion of your court costs.

The FMEP will enforce maintenance payments and included in the definition of maintenance under the Family Maintenance Enforcement Act is fixed costs awarded under the regulations in favour of the director or a creditor.  Section 15 of the Family Maintenance Enforcement Regulations (the “Regulations”) say that the court can award costs if the court believes the default under the maintenance order could have been avoided.  This would lead to the conclusion that the FMEP will only enforce court costs that stem from s.15 of the Regulations.

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Tax Evasion vs Tax Avoidance

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Tax Evasion vs Tax Avoidance

The purpose of this blog is to give an overview of the main differences between tax evasion and tax avoidance.  Everyone wants to avoid paying taxes but it is simply not possible to avoid paying them all together.  Many businesses and individuals devise schemes and plans with third parties (accountants, lawyers) to limit their amount of tax payable.  It is important know the line between what is legal and what is not.  This leads to the first and likely most important takeaway: tax avoidance complies with the letter of the law whereas tax evasion does not.

The Canada Revenue Agency (“CRA”) says that tax avoidance is legal but “is inconsistent with the overall spirit of the law”.  In other words, tax avoidance occurs when the taxpayer does not provide false information to the CRA, but the provisions of the law are used in a manner that was not intended by Parliament.  Even though tax avoidance is legal, the CRA can still use s. 245 of the Income Tax Act, the general anti-avoidance rule, to invalidate tax savings if the benefit came from a series of transactions done with no commercial purpose other than avoiding tax.  Notwithstanding the ‘legality’ of tax avoidance, the CRA can still recapture some of your avoided tax.

The CRA has legitimate avenues available for individuals and businesses to reduce their taxes.  These avenues are referred to as “effective tax planning” by the CRA.  Examples of effective tax planning would be taking advantage of RRSP tax deductions and using tax credits or gaining benefit form certain small business deductions.  Where effective tax planning starts to turn into something more sinister is when the CRA starts to become concerned.  For example, if you start to divert your business income to family members that can be a legitimate way of reducing tax.  However if it is discovered that you are diverting your business income to your 8 year old child, that would likely be considered unscrupulous by the CRA as there is likely no commercial purpose behind the income diversion besides the avoidance of tax.

This leads to a discussion regarding tax evasion.  The CRA describes tax evasion as deliberately ignoring a specific part of the law.  For example, those participating in tax evasion may under-report income or claim deductions for receipts or expenses that are non-deductible or overstated. They might also attempt to evade taxes by willfully refusing to comply with legislated reporting requirements.  Tax evasion violates the object, spirit and letter of the law.  A very important distinction to be made aware is that tax evasion, unlike tax avoidance, has criminal consequences. Tax evaders can face prosecution in criminal court.

Both tax avoidance and tax evasion are not looked at kindly by the CRA as they both violate the spirit of the law.  However, tax evasion goes one step further in actually breaking the law.  This is an important distinction which can result in significant consequences for the tax-payer if they are not careful in their tax planning strategies.

 

 

 

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Contract Language – Best Efforts vs Reasonable Efforts

Best Efforts vs Reasonable Efforts
Contracts require the performance of certain obligations. These obligations can be in the form of mandatory obligations which are referred to as covenants. Covenants are usually drafted with imperative language such as “shall” or “must”. There are also contingent obligations which arise upon certain events occurring. They are usually drafted with “If…then” clauses. There can also be obligations that are based on an objective standard. An example of those types of obligations in a contract would be if the contract stipulated a party to use its “best efforts”, “reasonable efforts” or “commercially reasonable efforts”.
One looking at a contract would not probably put much thought into the implications of the words “best efforts” and “reasonable efforts”. However, at law there is a legally significant difference between these standards.
In general, the case law has established that an obligation to use “best efforts” imposes a higher standard than some of the other common phrases found in contracts such as “reasonable efforts”. The leading case on the interpretation of “best efforts” is Atmospheric Diving Systems Inc. v. International Hard Suits Inc. (1994), 89 B.C.L.R. (2d) 356 (B.C. S.C.) [Atmospheric].

The court summarized the principles relating to “best efforts” as follows:

1. “Best efforts” imposes a higher obligation than a “reasonable effort”.

2. “Best efforts” means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned.

3. “Best efforts” includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.

4. The meaning of “best efforts” is, however, not boundless. It must be approached in the light of the particular contract, the parties to it and the contract’s overall purpose as reflected in its language.

5. While “best efforts” of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary for the plaintiff to prove that the defendant acted in bad faith.

6. Evidence of “inevitable failure” is relevant to the issue of causation of damage but not to the issue of liability. The onus to show that the failure is inevitable regardless of whether the defendant made “best efforts” rests on the defendant.

7. Evidence that the defendant, had it acted diligently, could have satisfied the “best efforts” test, is relevant evidence that the defendant did not use its “best efforts”.

“Best efforts” does not require a party to disadvantage themselves economically to the point of bankruptcy but it does require for the interests of the other party to be of high priority.
When a contract requires “reasonable efforts” or “commercially reasonable efforts” something less than “best efforts” is required but more than no effort at all. Generally, the courts have interpreted “reasonable efforts” to mean efforts that are reasonable in the circumstances all things considered.

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The New BC Corporate Transparency Register

Corporate Law – The Impending Requirement for a Transparency Register in British Columbia

 

British Columbia Bill 24-2019: Business Corporations Amendment Act, 2019 (“Bill 24-2019”)‎ ‎received Royal Assent on May 16, 2019. A copy of Bill 24-2019 can be found here. While Bill 24-2019 is not in effect as of the date of writing this article, the anticipated requirements on businesses in British Columbia are significant.

 

This Bill requires many corporations to maintain a “transparency register” which must list significant individuals. For the purposes of Bill 24-2019, a significant individual is either someone who owns a significant number of shares (i.e. 25% or more of the issued shares of the company or issued shares of the company that carry 25% or more of the rights to vote at general meetings) or someone who can elect, appoint, or remove a majority of the directors of the company. The relevant provisions of Bill 24-2019 with respect to “significant individuals” are reproduced below:

 

Significant individual

119.11  (1) In this section, “significant number of shares”, in respect of a private company, means either of the following:

 

(a) 25% or more of the issued shares of the company;

 

(b) issued shares of the company that carry 25% or more of the rights to vote at general meetings.

 

(2) Subject to any prescribed class of exclusions, an individual is a significant individual in respect of a private company if any of the following apply:

 

(a) the individual has any of the following interests or rights, or any combination of them, in a significant number of shares of the private company:

 

(i) an interest as a registered owner of one or more of the company’s shares;

 

(ii) an interest as a beneficial owner of one or more of the company’s shares, other than an interest that is contingent on the death of another individual;

 

(iii) indirect control, within the meaning of the regulations, of one or more of the company’s shares;

 

(b) the individual has any of the following rights or abilities, or any combination of them, that, if exercised, would result in the election, appointment or removal of the majority of the directors of the private company:

 

(i) the right to elect, appoint or remove one or more of the company’s directors;

 

(ii) indirect control, within the meaning of the regulations, of the right to elect, appoint or remove one or more of the company’s directors;

 

(iii) the ability to exercise direct and significant influence over an individual who has the right or indirect control described in subparagraph (i) or (ii);

 

(c) the individual has a prescribed interest, right or ability in relation to the private company, or a prescribed criterion or circumstance applies to the individual in relation to the private company.

…

 

At least once a year, within two months of the anniversary the company was recognized as a company in BC, a BC company must update their transparency register. Steps a company can take to determine who significant individuals are may include requesting that a shareholder provide the company with information about significant individuals for the purpose of maintaining the company’s transparency register.

 

Particularly onerous on shareholders, directors, and officers of BC companies impacted by Bill 24-2019 are the new offence provisions under Bill 24-2019. These offence provisions state as follows:

 

Transparency register – incorrect entries and false information

427.1  (1) In this section:

 

“private company” has the same meaning as in section 119.1;

 

“significant individual” means a significant individual under section 119.11.

 

(2) Subject to subsection (4), a private company commits an offence if its transparency register

 

(a) identifies an individual as a significant individual who is not a significant individual in respect of the company,

 

(b) excludes an individual who is a significant individual in respect of the company,

 

(c) contains information about a significant individual that is false or misleading in respect of any material fact, or

 

(d) omits information about a significant individual, the omission of which makes the information false or misleading.

 

(3) If a private company commits an offence under subsection (2), any director or officer of the company who, subject to subsection (4), authorizes, permits or acquiesces in the commission of the offence also commits an offence, whether or not the company is prosecuted or convicted.

 

(4) No person is guilty of an offence under subsection (2) or (3) if the person

 

(a) did not know that the identification or exclusion of the individual was incorrect or that the information about a significant individual was false or misleading, and

 

(b) with the exercise of reasonable diligence, could not have known that the identification or exclusion of the individual was incorrect or that the information was false or misleading.

 

(5) Subject to subsection (6), a shareholder of a private company who sends information to the company for the purposes of the company’s transparency register commits an offence if the information

 

(a) is false or misleading in respect of any material fact, or

 

(b) omits any material fact, the omission of which makes the information false or misleading.

 

(6) No person is guilty of an offence under subsection (5) if the person

 

(a) did not know that the information was false or misleading, and

 

(b) with the exercise of reasonable diligence, could not have known that the information was false or misleading.

 

In addition to the proposed amendments Bill 24-2109 proposes to make to the Business Corporations Act, regulations with respect to the transparency register are also anticipated to come into force. Due to the prospective liability under the proposed amendments, and the uncertainty with respect to the regulations which have not yet been passed, shareholders, directors, and officers in BC companies should remain vigilant to ensure the requirements of the transparency register are met accurately and within the mandated timelines.

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Are Electronic Signatures Legal

Are electronic signatures Legal?

Each province has enacted functionally equivalent electronic commerce legislation.  BC’s is called the Electronic Transactions Act (ETA).  The ETA states that if there is a requirement under law for the signature of a person, that requirement is satisfied by an electronic signature.  There are however exceptions, as electronic signatures are not accepted for wills, trusts created by wills, powers of attorney, and documents that create or transfer interests in land and that require registration to be effective against third parties.   Besides those documents just mentioned, electronic signatures can seemingly be used for all other types of documents that require signatures.

The ETA provides that consent is required for electronic commerce to be effective.  “Nothing in the ETA requires a person to provide, receive or retain information or a record in electronic form without the person’s consent”.

The definition of electronic signature under the ETA, is quite vague, “[I]nformation in electronic form that a person has created or adopted in order to sign a record and that is in, attached to or associated with the record”.

An electronic signature to meet the rigors of the ETA therefore could be a digitized image of a handwritten signature, a biometric signature such as an electronically recorded thumbprint, a digital signature using a public key infrastructure and a certification authority, or a voiceprint of a person saying his or her name.

The imprecise requirement under the ETA is unlikely to encourage clients nor law firms of the surety of that signature.  A system that guarantees the electronic signature and ensures that the document has not been amended is required.  This is where digital signatures come in.

A digital signature gives the recipient reason to believe that the message was created by a known sender in a way that they cannot deny sending it (authentication) and that the message was not altered in transit (integrity).

 

 

 

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Selling or Buying a House with an Unsavoury History

This blog will discuss the disclosure that is required in a real estate transaction when a home has a stigmatized history.

The case which highlights this issue is Wang v. Shao, 2018 BCSC 377.

The facts of this case were as follows:

  • The case surrounded the purchase of an upscale home in Vancouver in 2009 (the “Shaughnessy Home”)
  • The seller of the Shaughnessy Home was Ms. Wang (the “Seller”) who was an immigrant from China
    • The Seller lived with her daughter, Ms. Yuan, Ms. Yuan’s husband Raymond Huang and their children
  • In 2007, Raymond Huang was shot to death on the sidewalk in front of the property
    • It was believed that this was a gang affiliated attack
  • As a result of the murder, the children were asked to leave the private school they were attending and started attending a private school in West Vancouver
  • Yuan then purchased a house in West Vancouver
  • The Seller meanwhile had gone back to China and Ms. Yuan moved to West Vancouver, meaning the Shaughnessy Home was empty and as a result, put on the market
  • When the Shaughnessy Home was put on the market, Ms. Yuan asked the realtor whether it was necessary to disclose the murder to prospective purchasers and the realtor said that unless a prospective purchaser specifically inquired about a death, there was no need to disclose
  • The eventual purchaser was a Ms. Shao (the “Buyer”) who received this answer when asking why the seller was selling:
    • the reason for selling was that the daughter had moved to a school in West Vancouver where she would have a better chance to practice her English
  • Eventually, a contract of purchase and sale dated September 3, 2009 was signed specifying a price of $6,138,000 and a closing date in November, 2009
  • On September 30, 2009, the Buyer learned through a friend that “a death had occurred” at the front entrance of the property. The Buyer then conducted a Google search and discovered that an alleged gangster had been shot fatally near the front entrance of the Shaughnessy Home
  • The Buyer informed the Seller that she would not be not be completing the transaction due to a breach of the Contract of Purchase and Sale
    • The breach being that the Seller expressly stated that there were no latent defects on the property that render the property dangerous or potentially dangerous to the occupants
  • The Seller then initiated a claim against the Buyer for breach of contract and the Buyer filed a counterclaim for fraudulent misrepresentation

There were two issues that the court had to decide on:

  • whether there was a latent defect on the property; and
  • whether there was a fraudulent misrepresentation

On the first issue, the court determined that there was not a latent defect on the property relying chiefly on the caveat emptor doctrine which basically means buyer beware.   The court reasoned that subjective concerns of this kind were not amenable to measurement on an objective standard and would impose an impossible standard of disclosure in circumstances such as this.  The court also said that latent defects dealt with defects or imperfections in respect of the property itself or any measurable condition or quality of the property and that the murder did not affect the property itself.

On the second issue, the court determined that the incomplete representation was a misrepresentation upon which the Buyer relied to her detriment. The court accepted the Buyer’s evidence that she would not have agreed to purchase the property had she known that a reputed gang leader had been murdered at the property’s front gate. The fraudulent misrepresentation vitiated the contract for purchase and sale and the Seller’s action was dismissed.

However, there was an appeal, Wang v Shao, 2019 BCCA 130.

The latent defect issue was not appealed and the fraudulent misrepresentation was overturned.

The court reasoned that If the law were now to be modified to require that upon being asked a general question like the one asked in this case, vendors must disclose all of their personal reasons and explain the causes for those reasons, even when they bear no relationship to the objective value or usefulness of the property, the door would be open to a huge number of claims. Buyers, perhaps unhappy with their purchases, could claim that information was ‘concealed’ or that a misrepresentation by omission had occurred — despite the fact the undisclosed information is, on an objective view, completely irrelevant to the value and desirability of the property.

In conclusion, latent defects are only those defects that affect the actual property and are not discoverable through reasonable inspection and if you have any particular concerns about the property you should ask outright.

It should also be noted that leave to appeal has been filed in the Supreme Court of Canada.

 

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