Children Come First: A Report to Parliament Reviewing the Provisions and Operation of the Federal Child Support Guidelines - Volume 2

4. SECTION-BY-SECTION REVIEW OF THE FEDERAL CHILD SUPPORT GUIDELINES AND THE DIVORCE ACT (cont'd)

SECTION 5: SPOUSE IN PLACE OF A PARENT

BACKGROUND

Parents and the courts determine whether a child for whom a spouse stands in the place of a parent (a "stepchild") is entitled to child support after separation or divorce by reference to subsection 2(2) of the Divorce Act.[114]

Spouse in Place of a Parent
5. Where the spouse against whom a child support order is sought stands in the place of a parent for a child, the amount of a child support order is, in respect of that spouse, such amount as the court considers appropriate, having regard to these Guidelines and any other parent's legal duty to support the child.

Section 5 of the Federal Child Support Guidelines currently allows courts to set a child support amount they consider appropriate in these cases. Courts must take into account the amount set out in the Guidelines and the legal duty of any parent other than the step-parent to support the child.[115]

Most provinces and territories have adopted a similar provision in their own child support guidelines.[116]

APPLICATION

ISSUES

Section 5 applies in cases where support is being claimed from a person who is not the child's biological or adoptive parent. The reference to "any other parent" in the section includes a non-custodial biological or adoptive parent. The section gives the courts discretion to determine the child support amount in these cases. This discretion has resulted in courts across the country adopting various approaches to determining the amount of child support payable by a step-parent. Because of this discretion, it is increasingly difficult for parties to agree on a child support amount.

Other issues have been raised under section 5, such as the duration of the obligation of a step-parent to pay support for a stepchild,[117] as well as the issue of adding a party to an application for child support from a step-parent. Here is what cases so far have determined.

CASE LAW

Because of the discretion provided by section 5 in determining the child support amount in these cases, courts have used various approaches to calculate the amount of child support a step-parent should pay under both the Federal Child Support Guidelines and provincial and territorial child support guidelines. No one approach has been consistently adopted nor has there been any direction provided by appeal courts.

The following are some examples of the varied and numerous approaches that courts have used when applying section 5.

The Supreme Court of Canada, in Chartier v. Chartier,[133] stated that the existence or absence of a post-separation relationship between a child and his or her step-parent should not determine whether a step-parent will be liable to pay support for a step-child. However, such a relationship may be considered in determining the amount and duration of support.[134]

There seems to be confusion between the issue of the liability of a step-parent for child support and the wording of section 5 of the Guidelines. Some courts are not prepared to distinguish between a biological or adoptive parent and a step-parent.[135] However, section 5 of the Guidelines does make this distinction by providing discretion for the courts to determine any other parent's legal duty to support the child.

It is important to note that the Supreme Court of Canada did not refer to section 5 of the Guidelines in Chartier. Although the appeal was heard after the Guidelines came into force, the case was tried before May 1997 and was decided based on the older version of the Divorce Act.

AMENDMENT

There have been no amendments to this section since the introduction of the Guidelines in 1997.

RECOMMENDATIONS

The Divorce Act defines a child of the marriage (a child eligible to receive child support) as a child of two spouses or former spouses, including "any child of whom one is the parent and for whom the other stands in the place of a parent." Once it has been established that a spouse stands in the place of a parent, the step-parent's obligations are similar to those of the natural parent. The Federal Child Support Guidelines allow courts to set a child support amount they consider appropriate in these cases. Courts must take into account the amount set out in the Guidelines and the legal duty of any parent other than the step-parent to support the child.

Courts have adopted a variety of approaches to this issue. In light of the resulting inconsistencies some people have argued that the regulations should give judges explicit direction about determining the amount of support for step-children. However, allocating child support among natural parents and step-parents is quite a complex task, which is largely driven by the facts of each case. During consultations, most respondents were concerned that a rigid formula could create unfair results. For these reasons, this section should not be amended.

SECTION 6: MEDICAL AND DENTAL INSURANCE

BACKGROUND

This section was included to permit courts, when ordering child support, to order parents to get or continue medical or dental insurance for the child when either spouse can get such insurance through his or her employer or through some other means at a reasonable rate.

Medical and dental insurance

6. In making a child support order, where medical or dental insurance coverage for the child is available to either spouse through his or her employer or otherwise at a reasonable rate, the court may order that coverage be acquired or continued.

APPLICATION

CASE LAW

This section has been applied consistently and as intended. In many instances, the court simply orders the continuation of insurance coverage already in place.[136] In other instances, the court has ordered the spouse to provide medical and dental insurance coverage for any children.[137] On occasion, when a spouse has cancelled insurance, the court has ordered him or her to re-acquire and maintain it.[138]

Courts have said that section 6 court orders are in addition to the support payable under the Guidelines.[139] Where coverage is continued but the custodial parent is having difficulty getting reimbursed by the spouse holding the insurance, the court may order an additional amount of support to replace the health insurance coverage.[140]

AMENDMENT

This section has not been amended.

RECOMMENDATION

No amendments to this section are recommended.

SECTION 7: SPECIAL OR EXTRAORDINARY EXPENSES

BACKGROUND

There is a presumption in section 3 of the Federal Child Support Guidelines that courts must order the amount prescribed in the applicable child support tables when making child support orders.[141] The child support tables are based on a formula.[142] The application of this formula, by way of the tables, helps parents, lawyers, and judges set fair child support amounts in a way that is consistent and predictable.

Special or extraordinary expenses

7.(1) In a child support order the court may, on either spouse's request, provide for an amount to cover all or any portion of the following expenses, which expenses may be estimated, taking into account the necessity of the expense in relation to the child's best interests and the reasonableness of the expense in relation to the means of the spouses and those of the child and to the family's spending pattern prior to the separation:

  1. child care expenses incurred as a result of the custodial parent's employment, illness, disability or education or training for employment;
  2. that portion of the medical and dental insurance premiums attributable to the child;
  3. health related expenses that exceed insurance reimbursement by at least $100 annually, including orthodontic treatment, professional counseling provided by a psychologist, social worker, psychiatrist or any other person, physiotherapy, occupational therapy, speech therapy and prescription drugs, hearing aids, glasses and contact lenses;
  4. extraordinary expenses for primary or secondary school education or for any other educational programs that meet the child's particular needs;
  5. expenses for post-secondary education; and
  6. extraordinary expenses for extracurricular activities.

SOR/2000-337, s. 1(1), (2), (3)
SOR/2000-337, s. 1

While the table amounts reflect average expenditures on children, some kinds of expenses do not lend themselves to averages. Section 7 of the Guidelines provides flexibility to adjust the child support amount to account for these various expenses. Six categories of child-related expenses can be included in the child support amount if they are reasonable and necessary in light of the needs of the child, of the means of the parents and the child, and of any family spending pattern established before separation. Although this discretion may make the Guidelines more difficult to apply and result in less consistency in child support amounts, the discretion creates a balance between consistent application and consideration of particular circumstances.

Regarding the amount of the expense payable, subsection 7(2) sets out the guiding principle that all special or extraordinary expenses be shared by the parties in proportion to their respective incomes, less the contribution from the child, if any. Subsection 7(2) supports the objective set out in paragraph 1(a) of the Guidelines, which states that children should continue to benefit from the means of both spouses after separation.

Subsection 7(3) ensures that any amounts that reduce the sum of the special expenses should be taken into account to ensure that parents are contributing toward the net amount of the expense. To ensure that there is no overpayment, one must determine subsidies, benefits, tax deductions, credits, and so forth.

APPLICATION

Section 7 provides parents and the courts with the discretion to change the basic child support amount. Inevitably, this discretion can lead to disagreement, so there is ample case law under section 7. However, since 1997, the courts have resolved many of the disputed issues. For example, in interpreting subsection 7(1), courts have confirmed that either parent can request a special expense when applying for child support or for a variation of child support.[143] Still unresolved is whether student loans are part of the "means" of the child and how to interpret the term extraordinary.

Sharing of expenses

(2) The guiding principle in determining the amount of an expense referred to in subsection (1) is that the expense is shared by the spouses in proportion to their respective incomes after deducting from the expense, the contribution, if any, from the child.

Subsidies, tax deductions, etc.

(3) In determining the amount of an expense referred to in subsection (1), the court must take into account any subsidies, benefits or income tax deductions or credits relating to the expense, and any eligibility to claim a subsidy, benefit or income tax deduction or credit relating to the expense.

SUBSECTION 7(1)

ISSUES

When deciding whether to include special expenses in a child support order, the court must address the means of both the parents and the child. The courts have set out the factors to be taken into account when doing so.

  • 32.3 percent of cases included one or more section 7 expenses.
  • Child care expenses were specified in 12.4 percent of all cases.
  • Medical or dental insurance or premiums were specified in 10.8 percent of all cases.
  • Extracurricular activities were specified in 10.5 percent of all cases.
  • Health-related expenses were specified in 10 percent of all cases.
  • Post-secondary education was specified in 6.6 percent of all cases.
  • Primary or secondary education was specified in 6.2 percent of all cases.

Source: Survey of Child Support Awards database, October 1998-February 2001

CASE LAW

Any section 7 expense must satisfy two discretionary tests: the necessity of the expense, given the best interests of the child, and the reasonableness of the expense, given the means of both the parents and the child and given the spending pattern of the family before separation.[144]

Expenses listed in paragraphs (d) and (f) must be "extraordinary" to be considered as additional expenses. In the case of extraordinary expenses, the necessity and reasonableness analysis is not done until after the expense in question has been found to be extraordinary.[145]

The reasonableness test is based on the means of the spouses and the child and on the family's pre-separation spending pattern. It has been accepted in many cases that reasonableness involves examining the full means of the parties.[146] This requires assessing their separate status and other factors including income distribution, capital, access costs, third party resources that affect their ability to pay, other spousal or child support obligations, and spousal support received.

The means of the child is most frequently an issue in cases where the child is in his or her late teens and capable of earning employment income. In Di Fabio v. Di Fabio,[147] in assessing extraordinary expenses under paragraphs (d) and (f), when assessing the means of the children, the judge considered benefits payable to the children under the Canada Pension Plan Act,[148] child maintenance received from the parents, and income from employment. The judge held that it was reasonable that a portion of the above amounts be applied against the costs of the extraordinary expenses.

Most courts share the view that a child should not be required to contribute every dollar from his or her employment to the payment of expenses falling under section 7, as a child should be given the opportunity "to experience some personal benefit from the fruits of his or her labours."[149]

This issue becomes particularly relevant under paragraph (e) concerning expenses for post-secondary education. Children are expected to contribute to their post-secondary education expenses and this approach is reflected in the judgments.[150] Whether student loans should be considered and how much the child is expected to work are matters of some debate. It was held in Carnell v. Carnell[151] that it is appropriate for the child to contribute to post-secondary education expenses, whether through student loans or employment earnings. Taking an opposite approach, the court in Wesemann v. Wesemann[152] held that although children must make a reasonable contribution, not all of their income must be applied to their education, nor should they be required to work during the school year. Furthermore, the child does not have to get a student loan merely because one may be available, as a loan simply delays rather than defrays a student's expenses.

The issue also arises with children over the age of majority, primarily with respect to any post-secondary school expenses. In Risen,[153] the judge held that both income and student loans should be included when calculating a child's means. In Glen,[154] the judge held that the child was financially capable of paying all of her post-secondary and health-related expenses and having money remaining; the judge did not order section 7 expenses. In Morissette v. Ball,[155] the judge ended support after the child's first year of a post-graduate degree, as she was spending most of her employment income on extravagant expenses. The judge held that she had no right to expect her parents to support her educational endeavors while she failed to contribute to her future in any meaningful way.

An inheritance received by a child has also been held to constitute means. In Griffiths v. Griffiths,[156] the child was ordered to pay for his educational expenses using inheritance money from his grandmother.

PARAGRAPH 7(1)(A): CHILD CARE EXPENSES
ISSUES

The application of paragraph 7(1)(a) is relatively straightforward.

CASE LAW

Overall, the courts seem willing to almost automatically order child care expenses under paragraph 7(1)(a). Furthermore, the courts seem particularly sensitive to the custodial parent's need to re-enter the workforce. This approach is partially justified because the cost to the paying parent will decrease as the custodial parent becomes gainfully employment.

For example, in Wedsworth v. Wedsworth,[157] the Nova Scotia Court of Appeal overturned the lower court's decision and restored the payment of day care expenses for six months. The court felt that both parties would benefit in the long term if the custodial parent could complete her retraining and find suitable employment.

Similarly, in Van Deventer v. Van Deventer,[158] the court reasoned that day care was necessary as the custodial parent now had to work full time and could not be the full-time caregiver that she had been during the marriage. In Rebak v. Rebak,[159] the court canvassed many factors before deciding that the trial judge had erred in not ordering child care expenses. One of the factors was that during the marriage the family had employed a nanny.

Appeal courts seem content to let trial judges use their discretion to determine special child care expenses, even when the trial judges do not explain how they reached a particular figure.[160] These payments are also given priority over various other debts incurred by the paying parent.[161]

PARAGRAPH 7(1)(B): MEDICAL AND DENTAL INSURANCE PREMIUMS

This paragraph allows one parent to ask the other parent to share some of the child's medical and dental premiums. It complements section 6 of the Guidelines, which lets a court order a spouse to get or continue medical or dental insurance coverage for a child.

ISSUES

There are no significant issues relating to this paragraph.

CASE LAW

The spouse carrying the insurance has to show what portion of the premium is directly attributable to the child.[162] The court will not accept a mere guess as to this amount.

Courts have held that it is appropriate to share insurance premium payments if those payments are higher because there are children.[163] In other words, apportionment is not appropriate if it doesn't cost the insured person anything extra to insure the child.

A review of the cases shows that, when interpreting this paragraph, the courts have properly applied the tests of necessity and reasonableness and that they have considered the means of the spouses, the best interests of the children, and the spending pattern of the family before separation.[164]

PARAGRAPH 7(1)(C): HEALTH-RELATED EXPENSES

Under this paragraph, one parent can ask the other parent to share health-related expenses that are at least $100 a year more than those reimbursed by insurance. Valid health-related expenses may include hearing aids, glasses, contact lenses, professional counseling, speech therapy, and prescription drugs.

ISSUES

There are no significant issues related to this paragraph.

CASE LAW

The paragraph is not a list of all valid expenses. Courts have, for example, accepted claims for non-prescriptive medications[165] and they have liberally and broadly interpreted the phrase health-related.[166] Such cases are decided by the relationship between the child's health and the associated expense.

PARAGRAPH 7(1)(D): EXTRAORDINARY EXPENSES FOR PRIMARY OR SECONDARY SCHOOL EDUCATION

This paragraph enables one parent to ask the other parent to share extraordinary expenses for primary or secondary school education or for other educational programs that address the child's individual needs.

ISSUES

The circumstances under which a court can order sharing of educational expenses remain controversial, particularly regarding the meaning of the term extraordinary which is addressed under the analysis of paragraph (f) below.

CASE LAW

In Andrews v. Andrews,[167] the court held that an order under paragraph 7(1)(d) must satisfy three criteria: the education expense must be extraordinary, the order must consider whether the expense is necessary given the child's best interests, and the order must take into account the reasonableness of the expense given the means of the parents and the spending patterns of the family when they all lived together. In this case, the court found that the family had specific educational expenses not covered by the basic table amount.

From a review of the cases, it seems that the courts prefer the status quo that existed when the family lived together.[168] For example, in Van Deventer, the court remarked that the father had been content to have his son attend private school while the parties were together and he was unable to point to any change in circumstances indicating that this expense had become unreasonable or unnecessary.

However, the courts are willing to examine a number of other factors, such as the educational history of the parents (including, for example, whether the parent attended private school), the children's private pre-schooling, whether the child's talent has developed, and the ability of the non-custodial parent to pay.[169]

In Wait v. Wait,[170] the custodial parent was seeking support for the tuition for a special pre-school program. The court held that as there is no question that the custodial parent must work, the tuition must fall under paragraph (a) as child care expenses. Given the means of the spouses and the lack of evidence that the child had needs that differed from those of normal children, the pre-school tuition could not fall under paragraph (d).

The appeal courts defer to trial judges' analysis of the evidence and determination of what is in the best interests of the child.[171] This is the case even when the trial judge does not refer to the principles in section 7.[172]

PARAGRAPH 7(1)(E): EXPENSES FOR POST-SECONDARY EDUCATION

This paragraph allows the court to order the sharing of expenses related to the child's post-secondary education.

ISSUES

The basic issue is simply to determine under what circumstances this section is being applied.

CASE LAW

Generally, the courts seem willing to make orders under this paragraph, subject to the tests of necessity and reasonableness. It has been held that, "[g]enerally speaking, academically qualified children, with reasonable expectations of undertaking post-secondary education, should receive support to permit their completion of an undergraduate university degree or college diploma."[173]

PARAGRAPH 7(1)(F): EXTRAORDINARY EXPENSES FOR EXTRACURRICULAR ACTIVITIES
ISSUES

Presently, there is judicial controversy over how to determine whether an expense for an extracurricular activity is extraordinary. There are two divergent schools of thought, one applying an objective test[174] and the other applying a subjective test.[175] Some people have intimated that this controversy may be fueled by the lack of direction in the Guidelines themselves.[176] The leading cases to date are Raftus [177] and McLaughlin.[178]

All the courts agree that the use of the word extraordinary in the section implies that usual or ordinary expenses are included in the table amounts. The difficulty arises in differentiating between ordinary and extraordinary expenses for extracurricular activities, since further support is justified for the latter. Similarly, the courts agree that extraordinary applies to the expense itself and not the associated activity.

CASE LAW

In Raftus,[179] the Nova Scotia Court of Appeal had to decide whether a non-custodial parent was required to contribute to his children's extracurricular activities, such as swimming, soccer, and tae kwon do, which came to another $2,259 annually. The majority applied an objective test, presuming that the prescribed tables in the Guidelines already provided for ordinary extracurricular expenses. The extraordinary nature of the expenses must be determined not in light of parental income, but by the nature of the activities and the nature of the expenses.

This objective approach was also adopted in Andries,[180] where the court held that an expense for an extracurricular activity is extraordinary only when it is out of proportion to the usual costs of that particular activity. The court felt that this approach would be sensitive to regional differences within a province. As in Raftus, whether an expense was extraordinary had nothing to do with the parents' incomes.

The minority judgment in Raftus applied a subjective test, based on the parents' joint incomes. In McLaughlin,[181] the British Columbia Court of Appeal followed the minority judgment in Raftus. It assessed the combined incomes of both spouses to decide whether the expense was extraordinary under paragraph 7(1)(f). Further, the court said that it should also consider the nature and amount of the individual expenses, the nature and the number of the activities, any special needs or talents of the children, and the overall cost of the activities. The court reasoned that justice done would outweigh any loss of certainty of result. This test has been applied in many other cases.[182]

Once expenses for extracurricular activities are found to be extraordinary, the court must then determine whether the expenses are necessary in relation to the child's best interests and reasonable, having regard to the means of the spouses and those of the child, and to the family's spending pattern prior to separation.  This process would be the same for "extraordinary" educational expenses under s. 7(1)(d).  Finally, while other expenses included under subsection 7(1) need not be extraordinary, they must also meet the tests of necessity and reasonableness.

Use of Provisions on Extraordinary Expenses for Education and Extraordinary Extracurricular Activities,  by Province (4)
  Section 7 cases Education (1) Extracurricular
Province/territory All n (2) # % # % of
all cases 		# % of
all cases
Nova Scotia 1,272 259 20.4 18 1.4 63 5.0
New Brunswick 757 190 25.1 26 3.4 66 8.7
Ontario 4,237 1,731 40.9 366 8.6 593 14.0
Manitoba 1,700 477 28.1 50 2.9 51 3.0
Saskatchewan 864 291 33.7 18 2.1 90 10.4
Alberta 8,049 3,455 42.9 700 8.7 1,212 15.1
British Columbia 610 174 28.5 32 5.2 46 7.5

Source: Survey of Child Support Awards database, February 2001.

SUBSECTION 7(2)SHARING OF THE EXPENSE

ISSUE

There are no significant issues relating to this subsection.

CASE LAW

Although the courts have exercised their discretion under this subsection, in the majority of cases, the special or extraordinary expenses have been shared proportionally.[183] Courts have not applied the guiding principle when one parent lived in poverty;[184] when the recipient had a low income and had raised two-thirds of the cost of the special expenses;[185] and when there was inadequate financial disclosure.[186]

SUBSECTION 7(3): SUBSIDIES, TAX DEDUCTIONS, ETC.

ISSUE

There are no significant issues relating to this subsection.

CASE LAW

In Kelly v. Kelly,[187] the court confirmed that in calculating net special expenses, the deduction of benefits includes not only the income tax deduction but also the part of the increased federal and provincial tax credits and GST credit payable to the recipient parent. This is so because claiming a deduction for certain special expenses lowers the parent's income.

AMENDMENTS

Since 1997, section 7 has been amended twice. These amendments came into effect on November 1, 2000. They clarified legislative intent and were meant to reduce litigation.[188]

As can be seen by the wording of subsection 7(1), the parents, the court, or both can now estimate the amount of the expenses if they cannot determine the exact amount at the time of the order. This should make the legal process more efficient. It should also reduce legal costs for parents who want an order for special expenses but who cannot immediately determine the amount. Paragraph 7(1)(c) was also amended to remove the reference to "per illness or event"; sometimes children have several illnesses or health-related events that cost less than $100 each, but which total more than $100 for the year.  Paragraph 7(1)(d) was also amended to add the word "other" to make it consistent with the French wording, which is the correct version.  No amendment was made to the French section.  

The French version was amended to remove words that were inadvertently inserted when the first set of November 1, 2000 amendments were made.

RECOMMENDATIONS

The term extraordinary should be defined to better guide parents and the court and to improve consistency across the country among families in similar circumstances.

The term extraordinary has been interpreted differently across the country. Some courts of appeal have adopted a subjective approach and others an objective approach. This has created some confusion and inconsistency resulting in calls for an explanation of extraordinary. Also, research has shown that in the provinces that have adopted an objective approach, such as Manitoba and Nova Scotia, the number of extraordinary expenses in child support orders is lower than in jurisdictions that have adopted a subjective approach, such as British Columbia and Ontario.[189]

Parents and courts will be directed to examine whether the expense is extraordinary in relation to the income of the parent asking for and paying for the expense. If this test alone is not applicable, parents and the court will be directed to consider other factors in addition to income, such as:

The proposed approach is consistent with the original intent of the section and with the interpretation adopted by several appeal courts.

SECTION 8: SPLIT CUSTODY

BACKGROUND

In a split custody arrangement, one or more children reside with each spouse. Unlike shared custody, children in split custody situations do not reside with each parent at least 40 percent of the time. When parents have split custody of their children, the child support order is the difference between the amount that each parent would otherwise pay the other parent if a child support order were sought against each of them. This method is popularly known as the "set-off" method for determining support: each parent's child support obligation is set off against the child support obligation of the other parent.

Split custody

8. 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 most cases, one determines the difference between the amount that each parent would otherwise be required to pay by using the child support tables for the number of children residing with the other parent. One then adds a proportionate share of any special or extraordinary expenses under section 7 of the Guidelines, if applicable.[190]

When it comes to determining child support under section 8, the court has to use the set-off method. Of course, the Guidelines do allow for discretion in calculating the two amounts, such as in cases involving incomes over $150,000, involving adult children, or involving step-parents. In addition, after using section 8 to find the amounts, one is allowed to depart from those amounts, within the overall structure of the Guidelines, on the grounds of undue hardship or by way of special provisions in an order or agreement.

The Federal-Provincial-Territorial Family Law Committee recommended the set-off method in split custody situations. In its 1995 report, [191] the Committee said each child should benefit from an individual support determination. This approach accounts for one parent having higher income than the other and for parents having different numbers of children in their care.

APPLICATION

ISSUES
COMPLEX CUSTODY ARRANGEMENTS

When family situations involve both split and shared custody, it is hard to describe the custodial arrangement and to determine the amount of child support. For example, if each parent has custody of one child and a third child spends equal time with each parent, should support be based on section 9, dealing with shared custody, or on section 8, dealing with split custody?

DISCRETION NOT TO EMPLOY SET-OFF

Because under section 8 there is no discretion to depart from the set-off method, courts have generally chosen one of two possible methods to determine a different amount. First, a court may assess a claim for undue hardship under section 10. Second, subsection 15.1(5) of the Divorce Act permits courts to order a different amount when special provisions have otherwise been made for the benefit of a child and the guideline amount would therefore be inequitable (a similar provision is applicable for variation applications, subsection 17(6.2)).

CASE LAW

The vast majority of courts have interpreted section 8 of the Guidelines as intended by setting off the amounts owed by each spouse for the children in the other spouse's custody.[192] In many cases, section 7 special or extraordinary expenses are then apportioned between the parties.[193]

COMPLEX CUSTODY ARRANGEMENTS

There are few cases involving complex custody arrangements. As sections 8 and 9 are mutually exclusive, the courts must apply the relevant section, based on the particular circumstances before the court.[194] A review of the case law suggests that the courts are very adept at applying the appropriate section. Overall, it is in the best interests of the children to let courts sort out any complex custody situations.

For example, in Herbert-Jardine v. Jardine,[195] one child (T) lived primarily with the father and the other child (R) lived equally with the father and the mother. The court used the shared custody provision (section 9) because the mother was seeking child support from the father but R spent equal time with both parents. However, the split custody provision (section 8) was relevant to T's situation because his primary residence was with the father and the father was both entitled to and liable for child support with respect to R. The court assessed the support payable by both parties under the relevant section for each child and arrived at a net amount of support to be paid.

DISCRETION NOT TO ORDER SET-OFF

In MacLeod v. Druhan,[196] the judge recommended that the section 8 set-off amounts be adjusted because a straight application of section 8 would constitute undue hardship for the mother. However, although the judge referred to undue hardship, the decision did not analyze undue hardship itself.

In Farmer v. Conway,[197] the court held that it was appropriate to consider the standards of living of the two households when assessing the effect of a section 8 set-off. In this case, the mother's common-law husband contributed financially, which raised the standard of living in the household above that of the father's household. As such, the father's child support payment was reduced. Again, although undue hardship was cited as the reason for the reduction, no mention was made of section 10. These sorts of cases were once prevalent in Nova Scotia, but have become less so in recent years.

Often, the courts have used their discretion under subsection 15.1(5) of the Divorce Act to order an amount different from the set-off amount determined under section 8 of the Guidelines.

In Dudka v. Dudka,[198] the judge exercised his discretion under subsection 15.1(5), deciding that a straight set-off would be inequitable. He ordered the mother not to pay the table amount of $428 for the two children living with the father. However, the father had to pay the table amount of $201 support for the one child living with the mother; the father had repaired the mother's house and thereby increased her mortgage.

In Holtby,[199] the judge increased the set-off amount by $49 per month to the wife because of the interest consequences when a property equalization payment was postponed. The judge felt the straight set-off amount produced an inequitable result.

In Hutchings v. Hutchings,[200] the British Columbia Court of Appeal discharged the mother's obligation to pay child support under section 8 of the Guidelines for children in the father's care, because she had previously paid a lump sum for child maintenance. The father was ordered to pay the table amount to the mother for support of the child in her care.

AMENDMENT

There have been no amendments to section 8 of the Federal Child Support Guidelines.

RECOMMENDATION

The Department of Justice recommends no amendments to section 8.

SECTION 9: SHARED CUSTODY

BACKGROUND

This section sets out a special rule for determining the amount of child support in shared custody situations. If family arrangements meet the description of shared custody, this section is used to calculate child support.

Shared Custody

9. Where a spouse exercises a right of access to, or has physical custody of, a child for not less than 40 percent of the time over the course of a year, the amount of the child support order must be determined by taking into account:

  1. the amounts set out in the applicable tables for each of the spouses;
  2. the increased costs of shared custody arrangements; and
  3. the condition, means, needs and other circumstances of each spouse and of any child for whom support is sought.

When parents share custody, each directly pays part of the child's expenses. However, the overall parenting costs are generally higher because some fixed expenses will be duplicated, such as housing, transportation, and even clothing. Every dollar spent by one parent does not necessarily result in a dollar saved by the other parent. The details can vary greatly depending on the exact nature of the arrangements.

Regardless of the wording of a custody and access arrangement, the amount of time each parent is responsible for the children is the only factor used to determine whether this section applies. Thus, parents who have a joint custody order or agreement may not meet the shared custody threshold.

The draft Federal Child Support Guidelines initially proposed that parents could meet the shared custody threshold if they shared substantially equal physical custody over the course of a year. Ultimately, the Federal Child Support Guidelines adopted the 40-percent time threshold as recommended by both the Federal-Provincial-Territorial Family Law Committee and the Standing Senate Committee on Social Affairs Science and Technology, which reviewed Bill C-41.

APPLICATION

Most people agree that this section has not made it easier to determine child support in shared custody situations. A review of the case law suggests that the 40-percent time threshold has been controversial and that no consensus has emerged on how to calculate support in shared custody situations. There is also concern that courts may not be considering all three listed factors when determining the amount of support. Because of this lack of certainty, parents may have difficulty resolving this issue.

THE 40-PERCENT TIME THRESHOLD

ISSUES

Critics have argued that the time threshold is not appropriate and that it is hard to tell whether 40 percent has been reached. The Guidelines do not help parties interpret the 40-percent time threshold. No consistent approach to calculating time under this section has emerged from the cases.

The shared custody rule was not intended to change the long-standing legal principle that child support and custody are unique issues that parents should deal with separately. Given this, the time threshold approach has been criticized because it links financial interests and time spent with the children. The parties may each have financial incentive to use access as a negotiating point. Receiving parents may benefit financially by negotiating less access and paying parents may have a financial incentive to increase access.

In some cases these incentives might have made it harder to reach access agreements and might have prolonged litigation. Some parents have strictly focused on access details during difficult litigation, even keeping computer printouts of contacts with their children. This has been referred to as "stopwatch" litigation. In some cases, paying parents have taken every access opportunity during the legal proceedings, thereby qualifying for shared custody and a reduced order, only to decrease their access afterward, leaving the receiving parent with too little support and the prospect of further court proceedings to correct it. In other cases, receiving parents have resisted further access to avoid shared custody. These incentives directly undermine the stated Guidelines objectives of reducing conflict and encouraging settlement.

Many people fault the threshold rule for being too arbitrary and for creating a "cliff effect" at the 40-percent threshold. The cliff effect describes the potentially different treatment for a paying spouse who sees the children 39 percent of the time and one who sees them 41 percent of the time.

CASE LAW

Although there has been much discussion in the case law regarding the appropriate application of the 40-percent threshold rule,[201] emerging consistency in the case law holds that the receiving parent starts with 100 percent of the time, including those "on-call" hours when the child is not directly in the parent's care, such as while at school or sleeping. The access parent's time with the child is subtracted from 100 percent. In other words, in order to meet the threshold, the paying parent must exercise access or physical custody 40 percent of the total time.[202] This is consistent with the intended application of the threshold, which was meant to measure the relative time that each parent is responsible for and cares for the children over the course of a year. There are no appeal cases on point.

Regardless of the approach, calculating the time itself is a difficult task. Some judges have commented that adding up the time that each spouse spends with the children is a cumbersome and unhelpful process because it does not help parties determine how much support should be paid in the circumstances. As is pointed out succinctly in Rosati  v. Dellapenta,[203] tallied hours tell the court nothing of parenting or expenses. Counting time also poses many evidentiary difficulties, especially with self-represented litigants.

DETERMINATION OF THE AMOUNT OF SUPPORT

ISSUES

When the time threshold is met, the court has to consider the three factors set out in paragraphs 9(a), (b), and (c) to decide the amount of the support order. Section 9 requires no formula, giving judges discretion to consider individual circumstances when the child support tables would not necessarily achieve a fair result.

Judges have used several approaches and some courts have not referred to all three of the factors. In some cases, the courts review the mandated factors, or at least some of them, and determine an amount without following any set formula. In many other cases, courts employ one of at least three different formulae to help them decide the appropriate amount of support. As is discussed below the courts of appeal in both British Columbia and Newfoundland and Labrador have decided cases directly on this point.

Although judges often cite the table values when determining support orders, and although the table values form the basis for each of the formulae, judicial discretion is still very active. The family's particular circumstances seem to determine judges' orders to some degree. Judicial discretion may result in fair amounts for many people who appear before the court, but it undermines the goals of simplicity of proceedings and certainty of result.

CASE LAW

The following review of selected cases highlights the various ways that courts have decided the support amount and discusses some of the advantages and disadvantages of each.

NO FORMULA

In many cases, the court exercises its discretion without applying a formula. For example, in Henke v. Henke,[204] the father established the shared custody time threshold, but the court refused to reduce his support payable from the table amount, since his only additional expense was food. The court considered all of the section 9 factors and concluded that the increased access did not cost the father much more than a usual access regime, nor did it save the mother a significant amount of money.

In this case, and others like it, the court squarely places the onus on the paying parent to establish an economic reason to reduce support.[205] This generally has the advantage of focusing on the needs of the child in the circumstances, but it may lead to inconsistent results and it gives parents little guidance in determining the amount of support.

SIMPLE FORMULA

In some early cases, courts used a formula that reduced the table amount in direct proportion to the amount of time the paying parent spent with the children. This became a starting point in determining the support amount.[206] That is, the court starts by determining the table amount payable to the receiving parent and reduces that number proportionally by the percentage of the time that the paying parent spends with the children.[207]

There are several advantages to the simple formula approach: it is easy to calculate, promotes certainty, and bases orders on the table values, in keeping with the Guidelines. However, the formula may reduce support by more than the receiving parent saves because of the shared custody arrangement. This formula may also reduce support by more than the amount of the extra costs that the paying parent has to pay, because the formula does not account for the fact that shared custody may not increase the paying parent's fixed costs. Finally, this model may hurt children living with lower income parents, because the support will be reduced regardless of the child's needs.

BASIC SET-OFF FORMULA

The basic set-off formula has been used in many cases in several jurisdictions.[208] It is very similar to the approach required by section 8 of the Guidelines in split custody cases.[209] With this approach, support is calculated by determining the table value for each of the parents as though the other were seeking support. Unlike split custody cases, the table amounts are determined by considering the total number of children for whom the parents share custody. The court compares the resulting table values for each parent. The amount payable is the difference between the two.[210]

This method is relatively easy and objective and it meets the Guidelines objectives of certainty and predictability. It also accounts for the fact that shared custody is more expensive than sole custody, since the table values for the total number of children are compared. However, as with any formula, it doesn't consider the unique spending patterns of the particular family.

SET-OFF FORMULA WITH A MULTIPLIER

Many courts favour this approach, particularly in Ontario.[211] It is similar to the basic set-off formula described above, but the support amount is increased by a factor called the multiplier. In many courts, the multiplier has been 1.5.[212]

The multiplier recognizes that shared custody arrangements are more expensive than sole custody arrangements. Using it adjusts the amount upward to approximate the actual savings the receiving parent enjoys because of the shared custody arrangement. Use of the multiplier also reduces the possibility that an inadequate base amount of child support will be allocated between two households.

The method is objective, relatively easy to calculate, and offers certainty and predictability, in keeping with many of the objectives of the Federal Child Support Guidelines. As with any formula, when the set-off formula is used with a multiplier, courts and parents do not have to calculate the details of the costs and savings associated with shared custody, thereby significantly simplifying court procedures.

However, a strict formula is inflexible and may be unfair to some families. In addition, many people note that there isn't yet enough research to prove that any given multiplier will accurately reflect the increased costs of shared custody.[213] A 1.5 multiplier assumes that 50 percent of the costs of child rearing, such as housing and transportation, are fixed.

In cases where one parent has no ability to pay (table value of 0), this method results in support orders 50 percent higher than the table amount of the other parent. The courts have remedied this difficulty by limiting the amount payable to the table value of the paying parent.

APPEAL CASES

There are only two appeal cases related to determining the amount of support in shared custody situations.

In Green,[214] the question was the determination of the amount of support, given that the threshold was not at issue. The court noted that a dollar spent by an access parent is not a dollar saved by the receiving parent.[215] The court rejected the idea of a single, all-purpose formula as being too rigid. It examined, but did not endorse, the three prevalent judicial approaches: the simple percentage reduction approach used in Spanier,[216] the basic set-off method applied in Middleton,[217] and the set-off method with a multiplier adopted in the Ontario case of Hunter.[218]

In the end, the court reduced Mr. Green's support obligation from the table amount by $250 after considering all of the section 9 factors. In coming to that conclusion, the court considered extensive evidence of the costs that Mr. Green attributed to his access (paragraph 9(b)) and the parties' relative financial positions (paragraph 9(c)). Although various formulae helped the court, it followed none of them. The decision in Green promotes relatively unfettered judicial discretion in determining the amount of support in all shared custody cases.

In Slade v. Slade,[219] the trial judge determined the amount of child support by using a straight set-off of the parties' respective table values for all of the children. The father wanted to overturn the amount on appeal, arguing in part that the judge at trial did not consider all of the elements of section 9 of the Guidelines, as required. The Honourable Mr. Justice Cameron, for the Newfoundland Court of Appeal, upheld the order, stating:

No one approach has been accepted by the courts adjudicating support issues under section 9 of the Guidelines. Two of the approaches, which have been used by various courts, were advocated by counsel before the trial judge--. Ultimately the trial judge accepted the approach suggested by counsel for the wife and adjusted the amount to account for childcare expenses.[220]

The court then discussed other possible approaches, notably the set-off with a multiplier approach. It decided that this approach should be used only when there isn't enough evidence proving the actual costs of shared custody.

The multiplier has been used in a number of cases in this Province and, to be frank, when specific evidence regarding the increased cost of shared custody is not before the trial judge the multiplier would appear to be a method of providing rough justice . . .What is clear is that under s. 9 the trial judge is given a great deal of discretion in fixing the amount of support and no one approach can be said to be the only correct method of determining support in shared custody situations.[221]

Neither Green nor Slade appears to have settled the question of determining the amount of support in shared custody situations.

THE QUEBEC APPROACH

In Quebec, the child support amount is adjusted in two distinct scenarios: when the paying parent has access for more than 20 percent and less than 40 percent of the time, or when parents share custody. Shared custody applies to situations where each parent has custody of the children at least 40 percent of the time.

Unlike the Federal Child Support Guidelines, child support orders made under the Quebec Child Support Guidelines are determined according to the income of both parents.

In the first scenario, when custody is not shared, the paying parent's contribution to child support is reduced in proportion to the access,[222] creating a sliding scale for support. However, since only time above 20 percent is considered, this reduces the impact of the reduced support. When parents share custody, the support adjustment is much more significant because the paying parent's base contribution will be made directly proportional to the custody time he or she assumes.

OTHER APPROACHES

Jurisdictions outside Canada use various approaches to determine support in shared custody situations.

In the United States, statutes in individual states govern child support. When custody is shared, states use several methods to determine child support: some apply a formula;[223] some use a sliding scale for access time greater than a certain threshold that lies between 20 percent and 40 percent;[224] and some define shared custody or extraordinary visitation in other ways to permit a departure from the table values.[225]

In states where the threshold is defined as substantially equal time, the guidelines generally require use of a formula to calculate support. However, most of these states will allow the table values to be adjusted if access exceeds a fixed percentage of time, as long as access is not substantially equal. In those states that use time thresholds between 20 percent and 40 percent, many use a sliding scale to reduce support proportionally with the amount of access.

Australia allows courts to depart from the usual formula when the paying parent has access between 10 percent and 40 percent of the time or when parents share custody. Support is reduced by one formula if access is between 10 percent to 19 percent of the time, by another for 20 percent to 29 percent of the time, and by yet another for 30 percent to 39 percent of the time. The deductions increase at each level. If the child spends more than 40 percent of his or her time with each parent, this is defined as shared custody.

New Zealand allows courts to depart from the usual formula when there is a substantially equal sharing of care of the child. This occurs when the paying parent has care of the child overnight for at least 40 percent of the time during the year or if the paying parent shares substantially equal ongoing daily care of the child with the other parent. In these cases, child support is calculated according to a shared custody formula; the amount for one child is half the amount for one child in a sole custody situation.

AMENDMENTS

There have been no amendments to this provision since the introduction of the Federal Child Support Guidelines.

RECOMMENDATION

The 40-percent threshold test should not be changed. However, when the time threshold is met, courts will have to determine support by using a set-off formula based on the table value for the total number of children for whom the parents maintain a shared residence, unless that amount is deemed inappropriate based on, for example, how the parents share the child's expenses.

DISCUSSION

I.   THRESHOLD TEST

The use of a threshold based on time has been criticized because it directly links child contact and support. However, no alternative can demonstrably improve the test. Such techniques as counting meals with the child or determining how much the parents share financial management of the child were rejected. Despite their merit, none of the alternatives simplifies the court process and each represents a radical departure from the status quo. Not basing the threshold test on time, for example, would increase uncertainty and litigation, contrary to the Guidelines objectives.

The 40-percent time threshold has also been criticized as being too arbitrary. A parent who cares for a child 39 percent of the time may have a different child support obligation than someone who has a child 40 percent of the time. However, any fixed time threshold is arbitrary. The test can only be made less arbitrary by introducing a two-step, multi-step, or sliding scale approach. While these methods are less arbitrary, each more closely links child contact with the amount of support than does the current test and may not reflect actual costs. This creates an even greater financial incentive for each parent to leverage time spent with the child. This has the likely effect of increasing litigation, contrary to the guidelines objectives. In addition, these approaches would complicate court processes and increase uncertainty, contrary to the Guidelines objectives.

The time threshold could be lowered to, for example, 30 percent. But fixing the time threshold at a lower percentage will magnify some of the drawbacks of the current regime, including the financial incentive to litigate time, because more parents will meet the threshold. In addition, a relatively low time threshold may be met in cases where there are little or no increased fixed costs to the paying parent or significant savings to the receiving parent. Parents who spend extensive time with their child, but who do not meet the 40-percent time threshold, may be able to use the section 10 undue hardship rules for relief from payment of the table amount.

Going the other way, we could increase the time threshold or use the concept of "substantially equal". This has some advantages, including perhaps reducing the link between child support and child contact. It is possible, but by no means certain, that this language might decrease the incentive to leverage child contact to improve financial results. A substantially equal time threshold ensures that parents who meet the test each have significant fixed costs, a primary reason to depart from the table values.

However, this high threshold will be unfair to paying parents who have the child in their care for very significant periods of time and who have increased fixed and other costs, but who do not meet the threshold. In addition, substantially equal is not defined and would undoubtedly cause some confusion and litigation. No other jurisdiction has implemented a "substantially equal" threshold without offering relief for paying parents with an intermediate level of contact. Payment of the table amount for a parent who falls just short of the "substantially equal" time threshold raises the question of fairness, especially when one considers that someone with little or no contact with the child will be required to pay the same child support amount.

Since none of the alternatives to the 40-percent threshold test would demonstrably advance the Guidelines objectives, this threshold should not be changed.

II. DETERMINING THE AMOUNT

The federal Department of Justice recommends using the basic set-off method to determine the amount of support when parents meet the shared custody time threshold. The set-off formula would be based on the table values for the total number of children for whom the parents share custody. Courts should have the discretion to depart from the formula when using it would be inappropriate. To decide whether the formula is appropriate, the court may consider how the spouses share the child's expenses. This factor is especially relevant in determining the appropriate amount of support.

Because it is based on the total number of children, the set-off method accounts for the increased costs of shared custody. This situation differs from split custody situations, in which the table values account for the number of children in each parent's care. The set-off method is consistent with the Guidelines approach that requires each parent's contribution to be based on what it would have been if the family were intact.

Use of a presumptive formula makes it easier to determine support and provides certainty and predictability. It gives parents and courts more direction in determining the amount of support in shared custody situations while maintaining flexibility. Overriding judicial discretion to depart from the formula in appropriate cases means that unfair amounts would not be ordered. Many courts are already applying this test in appropriate cases.

We do not recommend a multiplier. There is no current research showing how much shared custody increases costs. Without empirical evidence on the relative proportion of fixed and "shiftable" costs, the Department of Justice cannot support the use of a multiplier as a presumption in shared custody cases. Specifically, a 1.5 multiplier, as is used in some U.S. states, assumes that 50 percent of the costs of child rearing are fixed. However, if fixed costs are less than 50 percent of total child costs, the multiplier overcompensates the receiving parent.

For example, consider the following examples that compare the amount payable if the parents split custody (equal number of children in the custody of each parent) or if they share custody (using both the basic set-off method and the set-off method with a multiplier that is capped at the table value).

1. An Ontario family with two children. The paying parent's annual Guidelines income is $40,000, whereas the receiving parent earns $10,000 a year.
Method Split custody Shared custody with basic set-off method Shared custody with basic set-off method and multiplier
Payer's contribution 345 570 570
Recipient's contrib. 79 119 119
Set-off 345 - 79 = 266 570 - 119 = 451 570 - 119 = 451 (x 1.5 = 676.50)
Total payable 266 451 570 (capped at table amount)

2. An Alberta family with four children. The paying parent's annual Guidelines income is $40,000, whereas the receiving parent earns $20,000 a year.
Method Split custody Shared custody with basic set-off method Shared custody with basic set-off method and multiplier
Payer's contribution 571 897 897
Recipient's contrib. 300 488 488
Set-off 571 - 300 = 271 897 - 488 = 409 897 - 488 = 409 (x 1.5 = 613.50)
Total payable 271 409 613.50

3. A New Brunswick family with four children. The paying parent's annual Guidelines income is $40,000, whereas the receiving parent earns $10,000 a year.
Method Split custody Shared custody with basic set-off method Shared custody with basic set-off method and multiplier
Payer's contribution 545 861 861
Recipient's contrib. 87 114 114
Set-off 545 - 87 = 458 861 - 114 = 747 861 - 114 = 747 (x 1.5 = 1,120.50)
Total payable 458 747 861 (capped at table amount)

In each case, the set-off method for shared custody provides substantially higher values than those for split custody. This is so because the table values for all of the children are considered, which accounts for the increased costs of shared custody.

When determining support, courts should have to use a set-off formula based on the table value for the total number of children for whom the parents share custody, unless that amount is deemed inappropriate. One of the most important factors in appropriateness is the way the spouses share the children's expenses.