Help Center Category: Blog

When it comes to support payments in family law, the above statements are very common beliefs, albeit erroneous. Clients will often ask what to do if they suspect that their partner is hiding money or deliberately not earning what they could in order to reduce their payments for spousal or child support. It is important for all parties to understand imputation of income.

Where the amount of income declared by the payor is not a fair reflection of their income, they may be attributed income which reflects the payor’s capability of earning and any evidence regarding their actual income, including spending habits and business expenses. There must always be a rational and evidentiary basis for imputing income, which must be governed by the principles of reasonableness and fairness.

An abundance of case law has developed in regard to what monies may be taken into account when the courts are asked to impute income. The following are some of the most common:

• Cash

Additional undeclared cash is considered income for the purpose of imputation. Any undeclared cash income is “grossed up” to take account of its tax-free nature, notwithstanding the payor’s liability to be reassessed by CRA (Ali v. Williams-Cespedes, 2015 ONSC 3560).

• Corporations

When it comes to imputation of income and corporations, the rules are generally driven by available income. Money needed for the legitimate operating needs of a business will not be included in a payor’s income. However, a self-employed person has the onus of demonstrating the basis of their net income. This principle also applies where the person’s employment income is derived from a corporation that he or she fully controls. Dividends may also be grossed up for tax.

• Lifestyle

Where there are no other accurate indicators of income, the court has looked at the cost of the payor’s lifestyle and imputed income (Reyes v. Rollo, [2001] O.J. 5110 (SCJ) at para 62). If a payor’s lifestyle or disclosed expenses are incompatible with disclosed income, it is a red flag that may encourage a judge to draw an adverse inference.

• Social Media

In contrast to lifestyle, caselaw seems to indicate that social media cannot be used for imputation of income. The reason for this conclusion is that evidence from social media accounts are likely to contain an unrealistic portrayal of one’s income, as users try to amplify the quality of their existence to their online peers (DeWaard v. Capture the Flag Indoor Ltd., 2010 ABQB 571).

There are several other types of monies and situations, such as gifts, which the court have considered when it comes to the imputation of income. If you worry that your partner may be hiding their earnings, consult a lawyer to find out how to best proceed.

*The above is drafted by Soica Law Professional Corporation and not intended as legal advice.

For those of you that follow debates in the States, you would be familiar with the famous quote of Ben Shapiro: “Facts do not care about your feelings.” Without taking a stance on his political and social views or confirming agreement to the same, this quote has found popularity for a reason. You have the likes of Kyle Cease, motivational speaker, use Shapiro’s words to indicate that the opposite is true as well: “Feelings do not care about your facts,” which is just another way of saying that people need to deal with their past, stop making excuses, and. JUST. DO. For example, he is a huge believer that, in order to achieve success, any excuses should be set aside. Think about Michael Jackson working at a regular job and having this great talent for music. That is his passion and he wants to do it, except he thinks:

“BUT I can’t, I am too poor and no one believes in me,” 

“BUT I am so close to a promotion and I have to pay my debt.”

The solution is deal with your past, let go, and surround yourself with people that say yes, you can do it, not the complainers, non-achievers, and generally negative ones.

Anyway, without diverting too much, what I want to get through to my clients, potential clients, and the world in general is my own play on this quote: “Courts do not care about your feelings.” And just as we learn from influencers, general psychology, motivational speakers, you name it: when your issue is one about feelings, the court system is definitely not meant to address your feelings. The court generally deals with urgent issues such as danger to children, abuse, and rarely does it have the power to do what is fair without the evidence. Even where there is evidence, family law is so complex that there is rarely fairness. And certainly, the courts and family law procedure are not designed to resolve the feelings and psychological damage of a separation.

Now, as  a family lawyer, I cannot address these issues with every client and I should not. If I focus too much on the feelings, then I take on the client’s feelings, which ultimately is what the client wants (wrongly so). I cannot tell you how many times I have done this early in my practice. And I cannot tell you how many times I deal with other lawyers who aggressively take on their clients’ feelings, resulting in ineffective arguments, higher conflict, and a waste of retainer.  At times, I am left speechless by opposing lawyers’ arguments and instead of retaliating, I practice silence (rather than practicing the “law”) and allow them to believe that they are correct.  I then watch their fall as the judges teach them a lesson. Yet, they do not learn and continue on the same path.

So what is my solution to it all? Quite frankly, due to the complexity of each case, I do not have one. All that I have is a suggestion that might make it better:

1. Always start with a consultation. Use the consultation to interview the lawyer rather than just get the answers to your question. Is the lawyer equally focused on advancing your interest while being reasonable?
2. Stop searching for aggressive lawyers and the archetype lawyer; For instance, let go of the thinking that a lawyer is good if s/he bullies an opposing witness on the stand (judges certainly do not like this). This is not Hollywood.
3. Always inquire about mediation. In mediation, you have a neutral third party to help you address all issues, even feelings, and to get you closer to a settlement. 
4. Focus more on your self-improvement than on proving your ex wrong. Give up the power your ex has on you by moving on, not focusing on their situation, and instead focusing on how to improve yourself and how to minimize the effect of the separation on the children, if any.
5. Instead of increasing legal work and fees by pushing motions left, right and centre, which, ultimately, may not actually achieve results, ask for a reality check from your lawyer.
6. Trust your lawyer.

Having said the above, I should clarify that your lawyer should be focused on you, your strategy, follow negotiation techniques, and should definitely not be “soft”. I should further clarify that going to court can be the answer, which it has been in many of my cases. 

As you can determine, I am very passionate about being real and I admit that the family law system does stir negative emotions in me. For a long time, I complained about the unfairness without doing anything about it. Now, I see a separation from a bird’s eye view, as something that can become almost the same as the goal of being a successful artist. This is why you can treat your separation as an opportunity to finally turn your mind to achievement and not excuses. When you allow your feelings of fear, hate, anger, and jealousy to take over, you forget that NO. ONE. CARES. 

To conclude my thoughts, I welcome you to try this exercise with any feeling you are experiencing in your separation and see where this takes you:

Blank…..does not care about my feelings.

I wish you best of luck.

Deductions and exclusions

The distinction between deductions and exclusions is stark. A deduction will only be made for the value of property belonging to one spouse at the date of marriage. Any subsequent increase in the value of said property during the marriage will be calculated as part of the net family property for the purpose of equalization. In other words, any increase in value during the marriage will be shared by both spouses. For example, if one owns a cottage at the date of marriage worth $150,000, and during that marriage the cottage appreciates to $200,000, the value of the deduction will be $150,000 and the remaining $50,000 will be calculated as part of the net family property.

By contrast, if said cottage is gifted during the course of the marriage, then the full value of $200,000 will be excluded from the net family property calculation altogether. According to s 4(1) of the Family Law Act, deductions at the date of marriage are any property owned at the date of marriage less any liabilities. For example, in deducting the value of that cottage worth $150,000, if one were to have debt valued at $100,000 then the deduction amount would actually be $50,000.

Further, in determining the value of said property to be deducted, the onus or burden of proof rests on the party claiming a deduction. Therefore, it is important to keep any and all documents that are relevant to the value of property at the date of marriage as estimates are hard to make and are not always accepted by the court.

Exclusions made by way of gift or inheritance, on the other hand, must always be given to one spouse alone during the course of marriage. Here too the onus is on the party claiming exclusion to show that the property was indeed a gift intended for only one spouse. As explained above, the entirety of the value of the property will be excluded at the valuation date, assuming certain conditions are met. First, the gift or inheritance must have been intended to have been given to only one of the spouses alone. If the person gifting the property intends that both the spouses benefit from the property, then it will not be excluded from the net family property. Second, the value of the gift or inheritance must be traceable. In other words, it cannot be intermingled with the marital property. For example, if one were gifted the above mentioned cottage with a value of $150,000 during the marriage, and the spouse then sold the cottage for $200,000 and put the money into his or her savings account, then this value would be traceable and the full value of the $200,000 would be excluded from the net family property calculation. On the other hand, if the cottage were sold and the proceeds placed into the spouses’ joint account, the gift might no longer be traceable and the exclusion would be lost. However, if the value of the property is placed in the spouses’ joint account for only a short period of time, such as a few days, and then subsequently used to purchase other property under the spouse’s name alone, then this would be considered traceable and could still be excluded.

Matrimonial home considerations

Finally, it is important to review these concepts in the context of the matrimonial home. The matrimonial home holds a special status as it is the residence in which the family’s life revolves. It must be ordinarily occupied as the family residence and must have been occupied in such a capacity at the date of separation. It is possible for a married couple to have more than one matrimonial home (such as a cottage).

One cannot deduct the value of a house at the date of marriage if that house was subsequently used as the matrimonial home, unless the spouses were no longer occupying that residence as the matrimonial home at the date of separation. Similarly, if one were gifted a house, and that house subsequently became the matrimonial home, it could no longer be excluded from the net family property calculation.

What should you do prior to getting married? And what to do post marriage?

Therefore, there are several things that should be kept in mind before marriage. First, consider which residence should be occupied as the family home in light of the above information. Second, retain relevant documentation in relation to the value of all property owned at the date of marriage. Finally, keep any gifts or inheritances acquired during the marriage separate and/or traceable in relation to family property as otherwise they will no longer be excluded from the net family property calculation.

**The above is not legal advice and subject to exceptions and other considerations based on the specific facts of your case.

Custody and Access

Custody can be defined as the legal and practical relationship between the parents and children. The legal definition of ‘custody’ describes the legal right of a parent or parents to make decisions for their children. The term custody is often misconstrued and used interchangeably with the term access. The basic distinction is that custody means decision-making and access means time spent with the child.

Types of Child Custody in Ontario

1. Joint Custody

Both parents have custody of the children. This type of custody is for parents who can cooperate on parenting matters to make decisions in the best interest of their children. Courts are more likely to make joint custody orders in cases with no conflict, good communication, and ability to co-parent.

There are two types of joint custody:

Joint Legal Custody: Where both parents are permitted to have input on major decisions affecting the children, such as education and health. The residence of the children and visitation schedules may differ.

Joint Physical Custody / Shared Custody: Where both parents spend at least 40% of the time with the children.

2. Sole Custody

When only one parent has custody of the children. The children’s primary residence is with the parent who has sole custody, and the other parent may or may not have access to the children.

3. Split Custody

When one parent has custody of some of the children and the other parent has custody of the other children. However, separating younger children from their siblings is typically not advised; nevertheless, pre-teens and teenagers are often able to choose to live with different parents.

Child Custody Agreements

Joint custody

The fundamental principle of a joint custody agreement is that both parents have custody and that they work together in cooperation toward the best interest for their children. Today, joint custody is very frequently used.

Joint custody does not necessarily mean that the children reside 50/50 with both parents. The specific circumstances of the children’s residence can vary greatly within the agreement. For instance, many agreements provide a child with a primary residence and a secondary residence with the other parent on weekends, holidays, etc.

An optimal joint custody agreement must be developed according to the specific needs and routines of an individual child and parent, with emphasis on the child’s needs. All joint custody arrangements require a commitment by the parents to work in cooperation, notwithstanding being separated, and make joint decisions to the benefit of the children. These elements require consideration during joint custody negotiations, which are then formalized into joint custody agreements. 

Sole Custody

Sole custody refers to cases where only one parent has both physical and legal custody of a child. This means one parent makes all of the important decisions in a child’s life i.e. healthcare and education.

Typically, the other non-custodial parent has access to the child. This parent has the right to some physical time with the child, and the right to inquire and receive information from the other parent in terms of the health, education, and well-being of the child. 

If a parent with sole custody dies, the other parent does not automatically receive custody. A parent with sole custody or a parent entitled to custody can appoint by way of testamentary disposition (will) a legal guardian for the children. This appointment is only binding for 90 days (in accordance with the Children’s Law Reform Act) but the court retains the final authority to appoint the guardian.

Split Custody

Split custody is when one parent has sole custody of one or more children and the other parent has custody of the other children. This is not a common alternative, as it will very rarely be in the best interest of the child to be separated from their siblings.

Nevertheless, when children are older (i.e. pre-teens and teens), their views and preferences have significantly more influence on how the custody agreement is tailored. On the other hand, the views of primary grade children will typically have much less effect on the outcome of an agreement. 

*The content on this website is not legal advice, you should always obtain advice from a lawyer with the particulars of your case.

Once a child or spousal support order is filed with FRO, the party responsible for making the payments must send all payments to FRO. The FRO acts as an intermediary between the payor and the payee. As such, when the FRO receives money from the payor, it will send it directly to the payee.

If the payor is late or misses a required support payment, the FRO has the authority to take certain measures to collect the money. For instance, if the payor is employed, the FRO has the authority to order the payor’s employer to deduct the support payments owing from the payor’s wages. If, however, the payor is unemployed or self-employed, the FRO can attempt to take the support money owing from the payor’s bank account (known as garnishing an account). In addition, the FRO has the authority to place a lien on the payor’s personal property such as a car or home and if the payor attempts to sell the property, the FRO is permitted to collect the outstanding support money owing. In extreme circumstances, such as when the payor is consistently late or where there is a substantial amount of support money owing, the FRO can attempt to compel the payor to pay by suspending their driver’s license and any recreational licenses, such as a fishing or hunting license. The FRO can also cancel the payor’s passport or redirect funds owed to the payor by the government (such as a tax refund or employment insurance benefits) to the payee to satisfy the outstanding support payments.

If the payor resides outside of Ontario but within Canada or the United States, the FRO still has the authority to collect support payments since all the provinces and the states have agreed to permit the FROs to collect support orders across the jurisdictions. The province of Ontario also has similar agreements with other countries, including Bermuda, Ghana, Hong Kong, the Czech Republic and the United Kingdom. If the payor does not live in a country where there is an agreement in place with Ontario, the FRO is unable to help the payee enforce the support order. The only option for the payee is to rely on the laws of the jurisdiction in which the payor lives to enforce the support order.

Payors are well advised to contact a lawyer if they are unable to make payments on time and, even moreso, in situations where the FRO is already taking steps of enforcement.

 by Christina Sappone, law student, and Roxana Soica, lawyer, Soica Law Professional Corporation

**The above is not legal advice and subject to exceptions and other considerations based on the specific facts of your case.

Limitation period for married couples

How long can a party wait to bring an action to set aside a domestic contract? The answer to this question is much simpler than you may think.  The maximum period of time that a party can wait before bringing most legal claims is governed by the Limitations Act, 2002.  The general limitation period as per the Limitations Act is 2 years. This 2 year period applies to most areas of law, including family law, aside from family law claims for equalization of net family property, as set out in section 7(3) of the Family Law Act, 1990, requiring that a property claim be brought within the earliest of either: 

(a) two years after the marriage is terminated by divorce or nullity;

(b) six years after separation and there is no reasonable prospect of resuming cohabitation; or

 (c) six months after the death of the first spouse.  

Limitation period for domestic contracts

The applicability of the 2-year limitation period with respect to setting aside a domestic contract, and the equalization limitation period is perfectly evident in a recent Ontario Superior Court of Justice case, F.K. v. E.A.2019 ONSC 3707. We have discussed this case in great detail on video as well: https://youtu.be/1Q5X7PV3DV0

This case concerned a husband’s application for spousal support, equalization of property, and the setting aside of a marriage contract which had already dealt with support and equalization. Without the marriage contract, there may not have otherwise been a limitation issue as to the husband’s claim for spousal support, nor the equalization claim, of which the six-year limitation period (section 7(3)(b)) applied.  However, the Court held that the application to have the marriage contract set aside was barred by the 2-year limitation period.  Although novel, it was quite clear to Justice Minnema that the application was subject to the 2-year limitation period and the main issue to be determined was when the clock had begun ticking on the 2 year period. The husband argued that the period had not lapsed as he had not discovered issues with the contract, had not known about the limitation period itself, and he did not have the capacity to commence proceedings to set aside the marriage contract.

Justice Minnema very clearly stuck down each of the husband’s arguments,  based on the presumption under Limitations Act, section 5(2), where parties are presumed to have known of the issues upon which the claim is based, unless the contrary is proven. Minnema J found that it was obvious that the husband had discovered, or ought to have discovered issues with the marriage contract at the date on which it was signed.  Furthermore, even if he had rebutted that presumption, it was evident that the husband had discovered that the viability of the marriage contract was an issue long before he issued his application.  This was due to the fact that the husband did not issue his application until almost 5 years after speaking with a lawyer in 2012 regarding the viability of the contract, during which he was given the impression that the lawyer “took the position that the Marriage Contract was not valid” and that the “contract was not worth the paper it was written on.”

Furthermore, it is well established law that confusion or ignorance of the law is not a defence and, as a result, the husband’s argument that this was a novel case and that he had not known about the limitation period, was not accepted by the court.  The husband’s final claim that the limitation period was suspended until 2017, due to incapacity was also not accepted by Minnema J.  The husband had claimed that he had mental health issues and bipolar disorder which delayed him from bringing his application. Yet again however, a legal presumption, this time in section 7(2) of the Limitations Act, resulted in his claim being dismissed.  This presumption provides that a person is capable of commencing a proceeding, unless the contrary is proven.  Justice Minnema found very clearly that the husband had not done so, and thus the presumption stood.

What this case stands to emphasize is that when you seek to set aside a domestic contract dealing with support/equalization, you must do so in a timely manner.  The law very clearly states that the 2-year period applies, and while it is not impossible to argue to set aside the 2 year period, you cannot wait 5 years before bringing a claim and not provide an appropriate and justifiable reason for doing so, as was the case here.

Limitation period for common-law spouses (equitable claims)

Also noteworthy is the limitation period for bringing equitable claims for an interest in property.  This was at issue in McConnell v Huxtable, 2013 ONSC 948 where Justice Perkins was faced with the question as to whether the 2 year limitation period of the Limitations Act, or the 10 year limitation period of the Real Property Limitations Act applied to claims of constructive trusts for an ownership in property where two partners resided during their relationship.  Justice Perkins concluded that because the equitable claim was for real property (or a monetary award in the alternative), it was governed by the 10-year limitation period.  On appeal to the Ontario Court of Appeal (2014 ONCA 86), the application of the 10-year limitation period was affirmed.  However, the court held that, where an equitable claim is not for real property (such as a monetary claim, also pleaded as “damages”), then the 2-year limitation period continues to apply, unless it is a monetary claim as an alternative to a real property claim, in which case the 10-year period applies.

*The above is prepared by Soica Law Professional Corporation, written by Nicholas Heslop (law student), supervised, and is not intended as legal advice.

Obtaining legal advice prior to separation or as soon as practicable thereafter can help prevent this situation and/or equip parents in advance with the knowledge of the steps that should be taken to prevent disadvantages in custody and access cases. An example of difficult cases in my practice have included the following:

1. Parents separate. Parent 1 removes the child from the home and refuses to communicate with Parent 2 and/or to offer any type of access to Parent 2.
2. Mother alleges assault by Father. The police investigates the matter and has reasonable grounds to arrest the Father. Father is thus arrested and subsequently released on an undertaking not to communicate directly or indirectly with Mother and not to be within X metres from the Mother’s home or anywhere the Mother is known to be. This means that Father now has outstanding criminal charges which he has to defend in a process that can last approximately up to two years. This also means that Mother can now prevent Father from seeing the children and from returning to the matrimonial home.
3. Parents separate and reach an oral agreement regarding custody and access. During the access time of Parent 1, Parent 1 has the habit of threatening Parent 2 that the children will not be returned to Parent 2.
4. Parents separate and parents reach an oral agreement between themselves whereas children reside with Parent 1 and liberal access is provided to Parent 2. This situation continues without complications until Parent 1 falls sick. Parent 1, without legal counsel, agrees to Parent 2, with legal counsel, having custody to the children and both parents sign an agreement to this effect. Parents agree orally that children would be returned to Parent 1 upon recovery of Parent 1. However, when the time comes, Parent 2 refuses to return the children to Parent 1 and Parent 1 is now liable for paying child support in the interim.

The legal strategies in each of the above situations can differ and the results also differ based on the intricacies of each case. Parents must, however, understand that the actions taken immediately upon separation can have severe consequences in their legal case. For example, Parent 1 removes the children from the matrimonial home but Parent 2, for any reason, does not immediately seek legal advice to have the children returned. This can be highly detrimental to the custody case and Parent 2 can find herself in a situation of serious disadvantage and, quite likely, at the mercy of the other parent (particularly in the first six months of the family law case).

What action can the police take in a custody case?

Immediate action cannot be emphasized enough and parents should understand that the police has no involvement in separation and custody cases, unless there is a Court Order in place or there are clear grounds to believe that the child is harmed in the care of the other parent. Often times, pursuing emergency motions on the day when the child is taken can result in changing the entire course of the case. The police will only become involved if there is a clear Court Order.

Other times, for example in the situation of alleged assault, a different strategy can be implemented by legal counsel to ensure that the situation is normalized as soon as possible. The answer is rarely to involve the police but, inappropriately, there is a recent rise in cases involving situations where criminal charges are laid against one parent in order to obtain advantage in family court.

Parents should take immediate action

Separation from a life partner is already a highly emotional and difficult process. Parents should be well advised that immediate action, if possible even prior to notifying the other party of the separation, can prevent an even more traumatic experience of separation from the children, not solely from the life partner.

**The above is not legal advice. Please contact a lawyer if you seek legal advice.

The Income Tax Act has a different definition for a common-law partner, which includes “a person who cohabits in a conjugal relationship with the taxpayer and 

(a) has so cohabited throughout the twelve-month period that ends at that time, or

(b) would be the parent of a child of whom the taxpayer is a parent. .. 

and… they are …deemed to be cohabitating in a conjugal relationship unless they were living separate and apart at the particular time for a period of at least 90 days… because of a breakdown of the conjugal relationship”. 

The rules above apply to married couples as well. However, if a married couple separates but does not divorce, they still continue to be related and may avail themselves of the benefits of the ITA. If a common-law couple separates, their relationship continues to exist for tax purposes only for 90 days after they cease living together, following which they cease to be “related” for the purpose of the ITA.

**The content on this website is not legal advice.

Equal possession

The Ontario Family Law Act grants equal possessory rights to both married spouses, irrespective of which spouse holds the title to the matrimonial home. A court order or agreement is necessary to ensure that one spouse has exclusive possession of the matrimonial home. Otherwise, if a spouse decides to leave the matrimonial home, exclusive possession is not definite for the other spouse. This fact is simply one of the many factors that a court would consider in granting exclusive possession, i.e. the fact that the spouse moved out and has other suitable and affordable accommodation. Other factors include: the effects of a move and the wishes of the children, existing equalization or support orders, the financial position of both spouses, written agreements, and history of family violence.

The mere preference of the spouses to remain in the matrimonial home is insufficient to justify an order for exclusive possession. Notwithstanding this, orders will be granted where the separating parties are warring and litigating. The court will grant an interim order for exclusive possession until the final resolution or trial, irrespective of which spouse commences the litigation.

Houseguests

Houseguests can become quite a nuisance for one spouse or the other. If there is a court order or agreement, one of the spouses is only allowed to enter the home subject to the conditions in the court order or agreement. Otherwise, s/he also has the right to possession, which includes inviting houseguests. If a houseguest’s presence is not desired, an application can be made to the court, upon which the court may make an order restraining the spouse of the applicant from molesting, annoying or harassing the applicant or children in the lawful custody of the applicant and may require the spouse of the applicant to enter into such recognizance as the court considers appropriate. A friend helping the husband move would not meet the legal threshold for “molesting, annoying or harassing.” As such, it is important to properly review court orders and/or agreements regarding the exclusive possession of the matrimonial home.

Support

Pending trial, support can be granted within months of starting an application. Choosing to leave the matrimonial home and not seeking support immediately is an argument that the other spouse could use in providing less support, both retroactive and present, both pending trial and at trial.

Equalization

Equalization of the matrimonial home is, typically, one of the most important financial aspects of a separation. This is because the matrimonial home has special status. Spouses cannot use a marriage agreement (commonly known as “pre-nup”) to contract out of the equal rights of both spouses to the value of the matrimonial home. It is important for each spouse to understand their own financial situation and how the matrimonial home impacts the final calculation of asset division.

The above considerations are not exhaustive and each case requires different attention to particular facts and how they impact the spouses’ decisions regarding the matrimonial home.

**The content on this website is not legal advice.