Trading your share of the house for reduced child support could leave you paying more

In family law, agreements reached between separating couples often contain more creative and individualized terms than do court orders. One spouse may want to keep the family home, but if the relevant provincial property law is applied, that spouse may not be able to afford to do so. If the spouse seeking to keep the home is also the parent to whom child and/or spousal support must be paid, sometimes that spouse agrees to “trade off” future support rights in exchange for keeping the family home.

While this seems logical, the Divorce Act restricts the ability to do so when the deal involves giving up or reducing child support. Hanson v. Hanson, a recent decision of the Saskatchewan Court of Appeal, shows the importance of providing the right information to the court if a spouse wants to make their creative arrangement stick.

The Divorce Act specifically requires that child support be paid in accordance with the Child Support Guidelines. Most often, a judge will not make such an order, leaving to the parties to agree to alternative arrangements in a separation agreements. As a result, these arrangements most often come to the court’s attention when one of the spouses tries to get out of the agreement.

While the Act gives a judge limited discretion to approve something different than what is otherwise required under the Guidelines, a judge can do so only if she is satisfied that special provisions regarding the spouses’ financial obligations or the division of their property has benefitted a child.

Before a judge can apply the “special provisions” exception, she must also find that the application of the Guidelines would otherwise result in an “inequitable” amount of child support being paid, taking into account the special provisions in the agreement.

In Hanson, the parties separated in 2010 and signed a separation agreement shortly after. The wife kept the family home and cabin and in doing so, received a larger share of the property than she was otherwise entitled to receive. In exchange, the husband was not obliged to pay monthly child support and instead paid only certain sports fees and medical/dental expenses for the child and matched the wife’s RESP contributions.

The separating couple each had counsel when they signed their separation agreement. Their agreement specifically stated that they were aware of the “special provisions” exception of the Divorce Act, that they agreed to an unequal division of property in lieu of periodic child support payments and that this agreement was a direct benefit to the child because it allowed the wife to maintain the family home and cabin without taking on further debt. They also agreed that the arrangement was not inequitable.

About seven years after the agreement was signed, the wife applied to court to request that the husband pay monthly child support going forward, and asked for retroactive payments for activities and RESPs that she said the husband failed to pay. The chambers judge’s decisions (of which there were two, made on different days) first ordered that monthly child support be paid going forward. Later, as he had previously misunderstood the relief the wife sought, the judge changed his order and found that no ongoing child support was payable. Ultimately, the matter found its way to the Saskatchewan Court of Appeal.

The Court of Appeal tackled the wife’s request for prospective child support under the Child Support Guidelines by reviewing the restrictive provisions in the Divorce Act, commenting that just because there had been an unequal division of property, the “special provisions” exception in the Divorce Act did not automatically apply. If the husband wanted to have the “special provisions exception apply, he had the onus of proving to the court that the provisions benefitted the child — not just when the agreement was made, but also at the time of the current court application.

The evidence that the chambers judge had before him was sparse, as the husband appeared before the chambers judge and the Court of Appeal without counsel. There was apparently little evidence given about the child’s and the parents’ circumstances at the date of the 2018 application.

Unfortunately, the Saskatchewan Court of Appeal gives no guidance about the type of evidence a court should have in order to decide whether the “special provisions” that existed in 2010 continued to benefit the child when the wife made her 2018 court application for prospective child support.

Based on the evidence before the Court, the Court of Appeal appears to suggest that the “special provisions” exception was appropriate for the Hanson family when the agreement was signed. However, it was unable to find that the prospective child support ordered by the chambers judge in 2018 application was inequitable, as required by the Divorce Act.

The 2010 property division left the wife with $120,000 more than her entitlement. In the intervening years, the husband had gone bankrupt and now had a lower–paying job. Without much difficulty, the husband could have proven the amount of child support he should have paid over the years, if the couple had not agreed to an unequal division of property: all the husband had to do was provide his tax returns to the court and calculate the Guideline support which he should have paid in each year.

Assuming that the $120,000 property overpayment had not yet been used up, the husband could have argued that being required to pay Guideline child support going forward was inequitable.

Instead, the Court of Appeal decided that the chambers judge had sufficient evidence before him to make his first order (that child support should be paid on a going forward basis). In large part, the decision was made simply because the husband failed to provide the necessary evidence on which the court could make an order continuing his child support holiday.

This article originally appeared in the National Post.