Alberta Falls in Line with the rest of Canada on Test for Underemployment for Child Support
November 15, 2022
When it comes to family law, there are many areas included in the process that can cause conflict during the initial separation or divorce, such as the division of property. Some other issues can pop up again years or decades later, such as child support, spousal support, and parenting time. When it comes to support (spousal or child), we often see allegations about the support payer intentionally leaving the workforce or taking a lower-paying job with the sole interest of lowering their support obligations.
A recent decision from the Court of Appeal from Alberta promises to make significant changes to how courts approach questions of people taking steps to be underemployed.
Alberta does away with the Hunt test
For the last 21 years, Alberta courts have used what is known as the Hunt test, which gets its name from a decision named Hunt v Smolis-Hunt. When a court is considering whether a support payor is employed appropriately in relation to their skills, education, and experience, a court might determine that the person is underemployed and then impute an income on them, meaning their support payments are in line with a higher level of income. In the Hunt test, the court stated that the approach to impute income requires the recipient of support to prove that the payor of support deliberately and intentionally sought to evade child support obligations through the employment of their lifestyle.
This approach stands in contracts to the Federal Child Support Guidelines (“the Guidelines”) as well as jurisprudence issued in every other province in Canada. Instead, other jurisdictions in Canada follow a test which asks whether “the actions of the parent are reasonable having regard to all the circumstances.” That might not sound like a significant difference, so let’s take a moment to dig into it.
Intentionality test vs. reasonable test
As we mentioned before, the Hunt test, which stood as law in Alberta since 2001, required the person receiving support (or receiving it on behalf of a child) to prove that the support payor took deliberate actions to reduce their income in order to lessen or eliminate their support obligations. The burden to do so could prove difficult to some, as intent requires a higher burden of proof than we will see in the reasonableness test. This is because a reasonableness test, which we will explain in more detail, can ask whether or not someone “could” have earned more income. The Hunt test required direct or indirect proof that not only could they have, but they deliberately chose to make less money to reduce support obligations.
In its decision, the court referenced the Guidelines, which state in Section 19 a number of circumstances when a court can impute income. This includes intentional underemployment but also opens the door to other moves a support payor might make, such as unreasonably deducting expenses from income.
In seeking to bring Alberta law in line with the rest of Canada, the court imposed a new test which it wrote would apply when underemployment or unemployment is at issue, and there may be a need to impute income. The test is quoted in full below:
- Is the parent in question intentionally under-employed or unemployed? Imputation of income is not available under s 19(1)(a) where the under-employment or unemployment arises through circumstances truly beyond the control of the payor, and thus involuntary. Examples include lay-offs, reduced hours, or termination without cause. (At some point, however, the continued under-employment or unemployment may become unreasonable for purposes of s 19(1)(a), making imputation of income available). Moreover, even ostensibly “voluntary” decisions to make less money than in the past will not always amount to “under-employment” where factors like age mean that present and future earning capacity is being met but is less than past earning capacity.
- Do the listed exceptions to imputation in s 19(1)(a) apply? Is the under-employment or unemployment required by the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of the spouse? These exemptions are not intended to be automatic or permanent, and their availability will depend on the circumstances of the case: Spring v Spring, 2022 ABCA 19 at para 18. The factors set out in Demers v Moar, 2004 ABCA 380 at para 21 provide a useful starting point for the consideration of the “needs of the child” exemption in the context of parental leaves and child-care requirements of young children.
- Should judicial discretion to impute income be exercised? If the under-employment or unemployment arises from voluntary choice and the listed exceptions to imputation do not apply, the court may exercise its mandate to impute income under s 19(1)(a). However, because this is discretionary, the question of whether to impute income (and if so, how much) involves determining if voluntary under-employment or unemployment was reasonable, having regard to all the circumstances.
The court explained that this test could be applied both on an initial application for support or a motion to vary support. When it comes to a motion to vary support, the onus is still on the person seeking the variation to prove a material change in circumstances.
We will be sure to keep our readers up to date with how Alberta courts apply this test.
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