Recent case on spousal and child support highlights importance of settling early

By Sandy Vander Ziel

Aaron Martens of DBB was counsel for the Appellant in the recent Court of Appeal decision rendered on April 27, 2016, in what has turned out to be a long, expensive trial for both parties on spousal and child support. This case highlights the importance of considering mediation or alternate dispute resolution strategies early on in family cases to resolve issues more efficiently.

We sat down with Aaron to discuss the decision, some of the background facts and what principles in his mind the Court of Appeal articulated. The following summarizes that discussion.

SANDY VANDER ZIEL’S INTERVIEW WITH AARON D. MARTENS COUNSEL ON THE KOHAN DECISION. APPEAL HEARD MARCH 8, 2016; JUDGEMENT PROVIDED APRIL 27, 2016

SVZ:  I am here with Aaron Martens, counsel on the Kohan decision. The Appeal was heard on March 8, 2016 and the Judgment was released on April 27, 2016.

Aaron, can you elaborate on the Kohan case and some factual summaries to provide context to the decision of the Alberta Court of Appeal.

ADM: We went to trial last June and two of the large issues were, there was a child of the marriage who was 20 years and 4 or 5 months old at the time of trial and was living with Mom. Mom was seeking child support for that child and there was very limited evidence about her schooling – she was allegedly being home-schooled but she was also doing a lot of other things.

She is quite a talented young lady and she was doing some singing and things like that.   We had some real reservations about whether or not she actually still qualified for child support because the law is quite clear that if you are over 18, you need to meet certain specific conditions and essentially need to be in school full-time.

So while my client loves and will support his daughter in other ways, he felt that the child support, which was significant, was not justified under law.

We lost that decision at trial so we appealed that.

The other major part of the Appeal, other than costs, which I won’t get into, was spousal support.

The parties were separated for 11 ½ years prior to getting to trial and that created all sorts of problems because my client’s income increased dramatically from the level it was at during the marriage to the level it was at trial and the Wife was seeking full spousal support as if she had entitlement to all of the income that my client was now earning, even though it was 8, 9 and 10 years after separation. And this was an 11-year marriage.

SVZ:  Can you share with us what you feel were the important spousal support principles that you believe have come from this decision?

ADM: Well, there are a few of them and this Court of Appeal talks about lump sum spousal support payment. That’s more interesting to lawyers at more of a scholarly level, so I don’t think that’s really the thing to talk about here.

The main thing that came out of this case was how post-separation increase in income should be dealt with when talking about spousal support implications. So remember, 8 or 9 years after separation, Mr. Kohan is still paying significant child support in the neighbourhood of $120,000 a year ($10,000 a month) and Ms. Kohan was seeking full spousal support over and above that.

This is a family that lived on less than $150,000 for most of the time they were together. So we were saying that was excessive and we urged the trial Justice to limit the amount of spousal support that would be available to Ms. Kohan based on the fact that she was already getting significant child support and that basically she could have lived off the child support alone and that any entitlement she had to additional spousal support should be limited by the factors such as the length of separation, the fact that the parties had shared parenting – so this wasn’t a case where Ms. Kohan was unable to go out and work; she had half of her time free of parenting duties – and the significant increases in income which occurred many years after the separation.

The original trial Justice did not find in our favour, which we thought was a significant error in law and that is why we brought it to the Court of Appeal.

The Court of Appeal virtually agreed with us and found that his income increased for reasons that were quite unique in that they were unprecedented bonuses that were due to market conditions, so it wasn’t really related back to or causally connected to the marriage.

Based on that, they found that his income for spousal support purposes should be capped at $350,000, which is significantly less than what he was earning and again significantly less than he is paying child support on because he paid child support at the highest level of income, which we think was fair, so that is why we never appealed that part of it.

SVZ: What were the principles on child support that emerged from the decision?

ADM: There was a child support angle, as I know you’re aware. All I’ll say on that is, if you have a child that is over 18 and you want a legal entitlement to child support, then you need to make sure that you provide full evidence as to why that child is still financially dependent and that evidence has to show that it falls within the definition of what they call “other cause” because the Divorce Act speaks of the child not being able to be financially self-sufficient due to mental illness, physical illness, disability, or other cause.

So the term “other cause” has been defined by the cases to mean a certain number of things, but in particular school can be that other cause. But the child must show that they are virtually in full-time attendance, that there is really no ability for them to go out and earn an income.

Basically, you cannot have a child that is sort of dabbling at school and receive full child support, or even any child support for that child over 18.

SVZ: In my review of the decision, the Court also discussed the burden of proof. Can you elaborate on that?

ADM: Well, one of the other major points that we argued at the trial level was that the burden of proof lies on the person seeking to obtain these legal remedies.   So we felt that she did not discharge the burden of proof with respect to the child of the marriage.

The child, that is over 18, still being a dependent child within the meaning of the Divorce Act. The Court of Appeal agreed with us.

There was also significant, well what we thought significant – the trial Justice disagreed, but there were deficiencies in Ms. Kohan’s financial disclosure that made it virtually impossible for us to determine her income for several of the years after they separated.

She was self-employed at the time and when you are assessing spousal support, she needs to have all of her ducks in a row. She needs to put forward what her potential income was for those years if she wants to get full spousal support.

So the Court also found that she had not discharged her burden of proving that her financial information was reliable for those years.

The other side tried to argue that it was incumbent upon us to hire a forensic accountant or some kind of expert to say what her income was and the Court of Appeal disagreed quite strongly that the burden is not on us – it is on her to provide adequate financial disclosure for us to sort out what the situation is on that side.

That is why the Court of Appeal referred it back to the trial Court to say we need to go year-by-year and figure out what each party’s income is. Our client’s income is either what his tax return says or the cap of $350,000 that they specifically set out in their Agreement. So really I think that’s their way of saying we need to figure out what her income is each and every year.

Now, I really hope we don’t go back to trial. This matter has been long and expensive on both clients. We are going to be looking at settling matters and hopefully that is how this resolves itself at this point.

On that note, this case is just a prime example of why you should get into settlement-oriented procedures early on in the file.

If you wait too long and things change markedly, that can have a significant impact on what happens. That’s why most of our lawyers here all push towards mediation, collaborative law, even mediation/arbitration.

I highly recommend that you go through a mechanism where you have a skilled third party that is independent that is going to help you resolve matters. It may not be your ideal settlement in your mind, but if you can reach it in 6 months to 12 months, it will cost you much less than the tens of thousands of dollars of going to a trial in Court of Queen’s Bench with the possibility of then going to the Court of Appeal and costs skyrocketing even more.

Get it done.   Get it done properly and early – like our Dispute Application Resolution program here – our DAR program where you can have matters adjudicated on by an arbitrator in short order. Settle what you can settle.

If there are one or two matters in dispute, take it to some alternative dispute resolution person, whether it is at our office or somewhere else, get it done and get it done quickly and efficiently … and get it done by an expert in family law, where the reality is matters can be dealt with more quickly by an expert who focuses entirely on family law.

If you have any questions about retroactive spousal support or any other family law issues, pleases contact us. Our family lawyers are here to help.