Conspiracy By Family Members

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In Leitch v. Novac (2020 ONCA 257) the Ontario Court of Appeal held that “invisible litigants” cannot impede family law proceedings with impunity. Writing for the Court, Houringan J. described these invisible litigants as the parties’ extended relatives who insert themselves into family law proceedings far beyond the permissible grounds of providing emotional support. Rather, invisible litigants exacerbate litigation by encouraging the parties to advance needlessly adversarial positions and by helping to shield a party’s income and assets from the courts.

The Parties
The parties in this case were married for 17 years. They have teenage twin daughters. The Applicant-appellant (“Leitch”) is a law professor and mother of the children. The respondents are the children’s father (“Novac”), his casino management company (“Sonco”), members of the Novac family, two family trusts, and directors of Sonco.

Background
This case arose when Leitch filed for divorce and corollary relief from Novac. She subsequently amended her pleadings to include a claim of conspiracy against the above-noted respondents. On application by the non-family respondents, Justice Cory Gilmore of Ontario’s Superior Court held that Leitch’s conspiracy claim was appropriate for partial summary judgement.

Summary Judgement
In the summary judgment proceeding, Leitch argued that the respondents conspired to withhold business income from Novac until his divorce proceedings were completed. This allegation principally arose with regards to a buy-out of Sonco’s five-year management agreement with an Alberta Casino. Under that agreement, Novac was to receive 40% of the contract price as management fees. Consequently, Novac was entitled to 40% of Sonco’s $5.75 million buy-out as income (i.e. $2.3 million). Instead, the respondents diverted this income away from Novac by arranging a loan between Novac and his father. Memos and emails between Sonco’s Chief Financial Officer, Novac, and Sonco’s accountant suggested that this loan was structured with the purpose of shielding Novac’s share of the buy-out proceeds from Leitch’s corollary support claims.

In her decision, Justice Gilmore, as the motion judge, dismissed Leitch’s conspiracy claim on two grounds. First, she found that Leitch’s evidence failed to prove that Novac had the requisite knowledge to have committed the tort. Furthermore, the summary judgment appears to have been decided, in part, because no funds were actually transferred between the defendants.
Second, Judge Gilmore dismissed the claim on policy grounds. She held that the circumstances were analogous to Frame v. Smith, 1987 CanLII 74 (SCC), wherein the Supreme Court of Canada restricted conspiracy claims with regards to custody and child support. If conspiracy claims were not so restricted, Judge Gilmore reasoned that they would “become the new norm” in any family law case where a “payor spouse, in conjunction with a new spouse/relative/business partner, did not fully disclose income, unreasonably deducted expenses, or received income in the form of cash or goods” (para. 41). In effect, she surmised that conspiracy claims would become a form of punitive damages” (ibid.). Instead, she held that the existing legislation and its associated guidelines constitute a complete code from which Leitch could have sought an imputation of income against the father.

In her summary judgment, Justice Gilmore dismissed Leitch’s conspiracy claim and awarded a total of $1.2 million in costs against her for the proceedings.

The Appeal
The Court of Appeal found that Justice Gilmore made palpable and overriding errors of fact and law. Taken in turn, she misunderstood critical email evidence relating to the alleged conspiracy that was sent between Sonco’s Chief Financial Officer, accountant, and Novac. Next, the Court of Appeal also suggested that Justice Gilmore may have erred in law by accepting the argument that the tort of conspiracy requires an actual transaction, when, in fact, a temporary withholding of funds to impede another party’s entitlement can constitute an “act in furtherance to a conspiracy” (para 51).

On the public policy basis for dismissing Leitch’s claim, the Court of Appeal rejected Justice Gilmore’s reasoning because limiting the tort of conspiracy from family law proceedings would enable invisible litigants to interlope in court proceedings with impunity. While Justice Gilmore was correct in holding that an imputation of income claim would enable a claimant to get access to otherwise withheld funds, this remedy does not address the subsequent enforcement problem that arises when a payor has made themselves creditor-proof by conspiring with invisible litigants (para. 47).

Finally, the Court of Appeal made two further procedural comments. First, it held that this case should not have been bifurcated because the factual basis for Leitch’s conspiracy and support claims were indistinguishable. Contrary to the principle established in Hryniak v. Mauldin, 2014 SCC 7, this created the “substantial risk of inconsistent outcomes” between the summary judgement and the subsequent trial. Second, the Court of Appeal found the motion judge’s costs award “troubling.” Citing Yaiguaje v. Chevron Corporation, 2017 ONCA 827, the Court of Appeal reaffirmed the courts’ obligation to ensure that protection orders, such as security for costs, are not misused as litigation tactics. In this case, the motion judge should have considered the order holistically, assessing whether the overriding interests of justice are served by the order sought. In other words, the motion judge’s costs awards were excessive because they would have impeded Leitch’s ability to proceed with the subsequent trial.

Due to Justice Gilmore’s errors of fact and law, the Ontario Court of Appeal remitted this case back to the Superior Court for a re-determination at trial. The $1.3 million dollars in costs were set aside, and Leitch was awarded costs on the appeal.

For our readers, the principle provided by Leitch v. Novac is that family members acting as invisible litigants are not immune from liability.

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Enforcing Child Support Orders

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If your child’s co-parent has claimed that they cannot afford to pay their child support obligations, what are your options? Under these circumstances, it is important to remember that child support is the right of the child, not the receiving parent. This means that parents cannot negotiate a lower monthly rate than the minimums prescribed by the Federal Child Support Guidelines. Any such agreement would be considered invalid by the courts.  Instead, there are two primary avenues for enforcing a child support order.

First, the recipient parent’s best avenue to enforce a support order is to register their separation agreement or court order with the Family Maintenance Enforcement Program (FMEP). This is a public organization that assists parents with enforcing both child and spousal support orders. The FMEP can enforce the orders by “attaching” it to the debtor’s income, including wages, tax returns, rental revenues, etcetera. The organization’s Director may also seek a court order to direct the payment of security for future support obligations from larger sources of funds, e.g. an inheritance. If the debtor parent refuses to pay, the FMEP Director may, among other remedies, report them to the credit bureau, seek a seize-and-sell court order, or instruct ICBC to refuse their license and vehicle registration issuance or renewal.

To enroll in the FMEP, you must submit an application which provides details about the paying parent and a copy of your support agreement or court order. The application can be found here. Upon completion, the EMEP will provide a Notice of Enrollment to the paying parent. The key advantage of the FMEP is that it is free. The disadvantage is that the receiving parent cannot undertake any enforcement proceedings themselves while they are registered in the program.

The recipient parent’s second enforcement avenue is to privately seek court enforcement remedies under section 230 of the Family Law Act. Specifically, they may request that the debtor parent pay security for future support obligations, plus legal expenses, up to $5,000 dollars in damages for the delayed payments, and a fine of up to $5,000.  If the debtor further fails to comply with these payments, the court may make an order for their imprisonment for up to 30 days. Importantly, this imprisonment will not discharge the debtor’s support obligations; it is simply an enforcement mechanism. Of course, this is a draconian option that the courts will rarely apply.

For debtor parents experiencing genuine financial difficulty that is impeding their ability to meet their support obligations, they may respond to enforcement action by applying to the courts for a variation order under section 152 of the Family Law Act or section 17 of the Divorce Act. On proof of a material change that renders the original order inappropriate, the court may vary the obligation amount, suspend enforcement proceedings, or make an order it deems otherwise appropriate.

For more information regard child support and their enforcement, please contract our office at (250) 753-2202.

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Do Spousal Support Obligations Survive Death?

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What happens to spousal support when the person making the payments (the “Payor”) passes away?  Does the spousal support die along with the Payor or does the obligation survive, binding the estate of the Payor?

When married or common-law couples end their relationship, sometimes spousal support arises.  Spousal support is payment from one spouse to the other in recognition that one of the parties to the relationship may have sacrificed their own financial independence to help the overall landscape of the relationship whether that was providing care to the children of the marriage or giving up opportunities they would have otherwise been able to pursue had they not been supporting their partner.  Spousal support is usually paid pursuant to a separation agreement or a Court order.

Pursuant to s. 170(1)(g) of the Family Law Act of British Columbia (the “Act”), an order respecting spousal support can provide for payment after the death of the Payor.  S. 171(1) of the Act provides the elements that have to be present before a Court will order spousal support after the death of the Payor:

  • that the person receiving child support or spousal support has a significant need for support that is likely to continue past the death of the person paying child support or spousal support;
  • that the estate of the person paying child support or spousal support is sufficient to meet the need referred to in paragraph (a) after taking into account all claims on the estate, including those of creditors and beneficiaries; and
  • that no other practical means exist to meet the need referred to in paragraph (a).

If there was an agreement or order in place that provides for spousal support after death, then those provisions will have full force and effect and will bind the Payor’s estate until the period of payment provided for in the agreement or order expires.  To end the spousal support payments before the agreement or order expires, the Personal Representative of the Payor’s estate can apply under s.171(2) of the Act to set aside the agreement or order.

If the agreement or order for spousal support is silent as to whether spousal support survives death, the person receiving support can apply under s.171(3) of the Act to get an order requiring the Payor’s estate to continue to pay spousal support.

What about spousal support payments that are in arrears at the time of the Payor’s death?  Any spousal support payments in arrears at the time of the Payor’s death, will constitute a debt of the Estate: L.S.M.K. v. J.W.K., 2019 BCSC 2025.

Please contact Heath Law LLP at 250-753-2202 if you have any questions regarding spousal support or have any other Family Law related concerns.

 

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Child Support Obligation Even If Not Married

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Child Support Obligations Even if not Married?

Is there potential for child support obligations even if you are not the child’s biological parent.  Yes. Similarly, can there be child support obligations even if you are not living with the child? Yes.

For a stepparent to have support obligations the following must be true:

  1. You must be considered a stepparent under the Family Law Act (FLA);
  2. The stepparent contributed to the support of the child for at least one year; and
  3. A proceeding for an order under this Part, against the stepparent, is started within one year after the date the stepparent last contributed to the support of the child.

 

  1. Being a Stepparent

A stepparent under the FLA means a person who is a spouse of the child’s parent and lived with the child’s parent and the child during the child’s life. Being a stepparent is therefore incumbent on the definition of “spouse” as well as “lived with”.

Spouse

A spouse under the FLA is a person who has lived with another person in a marriage-like relationship, and has done so for a continuous period of at least 2 years. There is no checkbox list to determine when there is a marriage like relationship. But here are some indicia:

  • Whether the parties lived in the same residence and, if so, what were the sleeping arrangements in the shared residence;
  • Whether the parties prepared and ate their meals together;
  • Whether the parties performed domestic chores, tasks and services together;
  • Whether the parties had sexual relations, maintained an attitude of fidelity, and communicated on a personal level with one another;
  • Whether the parties bought each other gifts and celebrated special occasions together;
  • Whether the parties shared financial arrangements and supported each other financially;
  • Whether the parties conducted themselves socially and in public as a married couple.

The presence or absence of any one of these factors is not determinative of a marriage-like relationship. The relationship must be taken in its entirety to determine whether a marriage-like relationship exists.

Lived With

As a matter of law, it is well established that parties can maintain two residences and still be in a marriage-like relationship: W. (S.L.M.) v. W. (M.R.G.), 2016 BCSC 272. “Lived with” can involve parties living under different roofs for extended periods of time.  Staying over several times per week could be found to be “cohabitation”.

  1. Contributed to the Child for at Least One Year

Expenditures by the stepparent on behalf of the stepchild that are trivial in nature or are sporadic or in the character of gestures of occasional generosity or kindness may not qualify as contributions that attract a duty to support: McConnell v. McConnell, 2007 BCSC 748 (B.C. S.C.) and D. (D.C.) v. C. (R.J.P.) 2014 BCSC 2420. The support contributions must be of a more significant nature. Examples from the case law include contributions made by the stepparent to shelter, food or vacations: Z. (O.) v. Z. (M.), 2016 BCPC 416.

Conclusion

It is very important to know your legal rights and obligations when you enter into a relationship with another person, especially when that other person has a child from a previous relationship. If you are unaware of your legal position in relation to the child, you may end up subject to unwanted support obligations.

If you are concerned about potential child support obligations or if you have any other family law concerns please contact Heath Law LLP 250-753-2202.    

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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 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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Spousal Support: Lump Sum vs Period Payments

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Spousal support is included in many separation agreements and Court Orders.  While the issue of whether a spouse is entitled to spousal support is addressed in a different blog, this blog, Spousal Support: Lump Sum vs Period Payments, discusses what form the support will take. Spousal support traditionally comes in two forms: lump sum or periodic (generally monthly) payments.

In a lump sum situation, the spouse paying spousal support (the “Payor”) transfers assets or money to the receiving spouse (the “Payee”) when the agreement is signed or when the Court Order is made.  Once that transfer is made, there will be no more spousal support payments.  For periodic payments, the Payor pays a certain amount of money to the Payee on a predetermined schedule, usually monthly.  The default option is periodic payments.

If the matter goes to a trial, the Court is more likely to award lump sum support (versus periodic payments) if any of the following circumstances exist:

  • There is a real risk that the Payor will not make the periodic payments;
  • The Payor is able to make a lump sum award payment;
  • The Payor has not made proper financial disclosure;
  • The Payor has the ability to pay lump sum but not periodic support; and
  • Lump sum support can immediately satisfy an award of retroactive spousal support.

The advantages and disadvantages of lump sum support will depend on the facts in each individual case.  Some advantages may be terminating ongoing contact between the spouses, providing money or assets to meet an immediate need of the Payee, ensuring spousal support will be paid where there is a real risk of non-payment of periodic support, and making it easier for a spouse to enforce lump sum support if the Payor does not pay.  Some of the disadvantages may be that the spouses are locked into the lump sum amount and are effectively deprived of the right to apply for a variation if the Payor’s income goes up or their income goes down.

Periodic payments are taxable income to the Payee and tax deductible for the Payor so are often preferred by Payor’s for that reason.  Lump sum amounts are not taxable or tax deductible.

If you would like to book an appointment with any of our family law lawyers, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

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Family Law: Date of Separation

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When dealing with a divorce or separation from a spouse, determining the date of separation could be crucial.  For example, if the value of an asset is being divided as of the date of separation (a bank account, for example), then the date of separation could be crucial if the balance goes up or down significantly.  However, the date of separation may not be agreed upon by the spouses, and it can significantly affect property division, child and spousal support, and even the ability to bring a family law claim.

If the spouses disagree on the date of separation, the Court may look at several factors to determine which separation date is accurate:

  • Whether the spouses lived in the same house or slept in the same bedroom;
  • Whether the spouses vacationed together;
  • How the spouses participated in joint social activities and the manner in which the spouses presented themselves to others;
  • Plans for the future, including estate planning;
  • The absence of sexual relations;
  • The absence of communication between the spouses;
  • Attempts to reconcile the relationship;
  • The performance of household tasks and changes to routines;
  • Economic support and dependency between the spouses;
  • How the spouses conducted their financial affairs, including how they filed their taxes; and
  • How the spouses engaged with their children.

The Court may consider factors beyond those in this list, and the presence or absence of any particular factor is not determinative.  For instance, spouses may be separated but remain in the same house because of financial circumstances.  It only requires one spouse’s intention to terminate the relationship.  Both spouses do not need to agree that the relationship is over.  The Court will objectively assess all of the evidence and determine if or when one spouse intended to separate and communicated that intention through words or conduct to the other spouse.

If you would like to book an appointment with any of our family law lawyers, please contact Heath Law LLP at 250-753-2202 or toll free: 1-866-753-2202.

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Collaborative Family Law

Collaborative family law is a form of dispute resolution where each spouse is separately represented by a lawyer, and the spouses and their lawyers sign a participation agreement which provides for the following:

  • If either party starts contested court proceedings, all of the collaborative professionals (including the lawyers) are disqualified from acting for the parties;
  • both parties agree to full and timely disclosure of all relevant information and documents, and agree to good faith negotiations;
  • the negotiations are confidential and without prejudice; and
  • the negotiations are concluded when the parties come to an agreement, which is put into writing (a separation agreement) by the lawyers and then signed by the parties and witnessed by the lawyers.

All collaborative professionals must be certified in the collaborative process. The process often includes the following professionals:

  • Coach, who is a licenced mental health professional whose primary function is to provide emotional support, communication, and conflict resolution between the spouses.  This provides for long-term improved communications, with the outcome that the parties are able to resolve their matters on their own in future rather than requiring further legal assistance and litigation.  There can be one Coach for both parties or each party may be separately supported by a Coach;
  • Child Specialist, who is a licenced mental health professional whose primary function is to provide a voice for the children and ensure that their thoughts, concerns, and needs are heard in the separation process.  This is one Child Specialist for all children and this person is referred to as a “neutral”, meaning that he or she has no allegiance or bias for one party over the other.  He or she has the primary goal of speaking for the children;
  • Financial Specialist, who is a certified financial professional whose primary function is to help the spouses analyze their financial, business, and tax situation and plans for the future.  The intention is to help the parties make the most out of their settlement and settle on financial terms that are the most advantageous to both spouses.  The Financial Specialist is a neutral;
  • Collaborative Lawyer, who is a member in good standing of the Law Society of BC and assists their client by providing legal advice, supporting and facilitating negotiation and communication, and ensuring that their client’s legal interests are protected.

There is a myth that Collaborative Family Law is more expensive than negotiation and litigation because of the involvement of all of the experts.  The process is designed so that the action taken by each of the experts is not duplicated by the others, but rather each of the experts address a particular issue in their respective areas of expertise.  In addition, it is often possible to submit the expenses from the Coach and/or Child Specialist to one’s extended health benefits as it is an invoice from a registered clinical counsellor, psychologist or social worker.  Furthermore, the hourly rates charged by the non-lawyer specialists are often less than the rates charged by the lawyers.

Collaborative Family Law encourages and facilitates negotiations that are respectful and constructive.  This process is often more supportive of everyone involved, including the children.

If you would like to book an appointment with our Collaborative Family Law lawyer, Kathleen Sugiyama, please contact Heath Law LLP at 250-753-2202 or TOLL FREE: 1-866-753-2202.

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