Undue Hardship and Child Support; possibility of "imputation" of income

What is "undue" hardship? 

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A payor of child support may make an application to the court for a finding of "undue hardship". If the court makes the positive finding, then the court may order a child support amount that is below what the Federal Child Support Tables indicate.

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It is typically difficult to succeed in making the undue hardship claim. Ordinarily, the undue hardship claim is made on behalf of payors attempting to reduce the amount of child support payable. However, it is possible for recipients to make such a claim in order to increase the amount of child support received though this would be rare.

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In simple terms, the analysis is as follows:

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1) the payor must make the application for undue hardship;

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2) the payor must complete the requisite information and provide the necessary evidence in the payor's financial statement;

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3) the payor must point to a circumstance that would support the finding of undue hardship; which I will reproduce below from the Federal Child Support Guidelines: 

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Undue hardship

10 (1) On either spouse’s application, a court may award an amount of child support that is different from the amount determined under any of sections 3 to 5, 8 or 9 if the court finds that the spouse making the request, or a child in respect of whom the request is made, would otherwise suffer undue hardship

‍Circumstances that may cause undue hardship

(2) Circumstances that may cause a spouse or child to suffer undue hardship include the following: [emphasis added]

‍(a) the spouse has responsibility for an unusually high level of debts reasonably incurred to support the spouses and their children prior to the separation or to earn a living;

‍(b) the spouse has unusually high expenses in relation to exercising access to a child;

‍(c) the spouse has a legal duty under a judgment, order or written separation agreement to support any person;

‍(d) the spouse has a legal duty to support a child, other than a child of the marriage, who is

‍(i) under the age of majority, or

‍(ii) the age of majority or over but is unable, by reason of illness, disability or other cause, to obtain the necessaries of life; and

‍(e) the spouse has a legal duty to support any person who is unable to obtain the necessaries of life due to an illness or disability.

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[Note: these categories are not exhaustive. I will provide a case which illustrates the the calculation the court used to calculate undue hardship. In the case below, the court accepted that the payor's rental accommodation expense was an acceptable factor to proceed to completing the undue hardship calculation.]

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4) the court must consider the parties' standards of living and may utilize the calculation provided in Schedule II of the Federal Child Support tables which I provide a link to as follows:

Standards of living must be considered

‍(3) Despite a determination of undue hardship under subsection (1), an application under that subsection must be denied by the court if it is of the opinion that the household of the spouse who claims undue hardship would, after determining the amount of child support under any of sections 3 to 5, 8 or 9, have a higher standard of living than the household of the other spouse.

Standards of living test

‍(4) In comparing standards of living for the purpose of subsection (3), the court may use the comparison of household standards of living test set out in Schedule II.

Link to Standards of Living Test: Schedule II.

[note: interpreting Schedule II is most effective when considering and example of the calculation which I will provide below.]

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5) if the payor's household standard of living is lower than the recipient's then the court may award a different amount of child support. 

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Examples from: Dugan v. Dugan, 2001 BCSC 2019 (Canlii)

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[2]        There are three children of the marriage who reside primarily with the plaintiff.  They exercise access to their father on weekends.  There is an older child, Michael, who turned 19 on November 5, 2000. Michael resides with the defendant.  Michael has been employed since May 2000 at a job that pays $8.00 per hour.  The defendant concedes that Michael is no longer a “child of the marriage” even though the defendant in fact assists him by providing room and board at less than cost ($50 every 2 weeks).

[3]        The defendant’s Guideline income for the purpose of determining child support is $33,414 per year.  The amount of child support payable at that level of income, without consideration of the hardship provision is $640 per month. The defendant says that the payment of child support pursuant to the Guideline table would create an undue hardship within the meaning of s.10.

[5]        Section 10 involves a two step analysis.  In the first step the court must consider whether there are facts that establish “undue hardship”.  If undue hardship is established the court may depart from the Guideline table only if the household of the party seeking the remedy has a lower standard of living than that of the other spouse. [Emphasis added.]

[6]        Further, where the applicant is the spouse who is obliged to pay child support and the court finds that both parts of the test are satisfied and that it is appropriate to deviate from the Guideline table, the amount of any adjustment ought not to tip the balance the other way such that the standard of living of the household of the paying spouse becomes higher than the standard of living of the household of the receiving spouse. [Emphasis added.]

[8]        It is also clear from the authorities that the list of factors that may establish undue hardship set out in subsection (2) is not exhaustive [Symons v. Symons [1998] B.C.J. No. 1375]. In Sutton v. Sutton [1999] B.C.J. No. 1933 at paragraph 13 Master McCallum expressed the opinion that “evidence of hardship might include evidence of having to move from one’s accommodation, give up a vehicle, operate on a restricted diet and so forth.”

[10]    Counsel for the defendant puts heavy reliance on the fact that the defendant has rental expense of $650 per month whereas the plaintiff has no current rental expense in submitting that undue hardship would exist if the defendant were required to pay the table amount of support.

[13]    I am persuaded that under the present circumstances, where the plaintiff would have a $1,500 per month surplus and the defendant would have a$359 per month shortfall, due in large measure because the plaintiff in fact has no rental expense, an undue hardship is established. [Emphasis added.]

[14]    I must then turn to the issue of the relative standards of living of the two households.  I will employ the analysis provided by Schedule II.  

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Step 1:   Establish the annual income of each person in each household (guideline income minus taxes)

Defendant: $33,414 - $6,682 = $26,732

Michael: $16,640 -  $2,185 = $14,455

Plaintiff: $33,644 - $5,229 = $28,415

Plaintiff’s parents: (per affidavit of E.M. Lindstrom) $18,427

Step 2:  Adjustments to the income

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Defendant’s income $26,732

Minus undue hardship factor, (see note below), $(5,400)

Minus child support payable if no undue hardship $(7,680)

‍Defendant’s adjusted income $13,652

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Plaintiff’s income $28,415

Plus child support receivable if no undue hardship    $ 7,680

Plaintiff’s adjusted income $36,095

Note:  Counsel for the defendant submits that under Schedule II a deduction should be made for the amount of rent payable by the defendant that being the principal factor that creates the hardship.  The problem that I see in deducting the whole of the rent expense is that what is being compared in this analysis is the standard of living of the household.  The defendant's household has a rent expense of $650 per month.  The plaintiff has no rent expense but the household of which she and the children are members is not altogether free of accommodation expense.  There are taxes and upkeep on the house that has to be paid out of the household income.  I do not have evidence of those amounts but will assume they are significantly less than the defendant’s rent expense.  Given the imprecision of the evidence and the fact that this is only an interim order, I propose to deduct $450 of the defendant’s rent expense in determining his household standard of living measure.

Step 3:   Add adjusted incomes for each member of household to determine household income

Defendant’s adjusted income $13,652

Michael’s income $14,455

Defendant’s household income $28,107

Plaintiff’s adjusted income $36,095

Plaintiff’s parents’ income $18,427

Plaintiff’s household income $54,522

Step 4:   Determine low income measures from Schedule II

Defendant’s household = 2 adults = $14,535

Plaintiff’s household = 3 adults and 3 children = $28,031

Step 5:   Determine household income ratios

Defendant’s household = $28,107/$14,535 = 1.93

Plaintiff’s household = $54,522/$28,031 = 1.95

[15]    The ratio for the defendant’s household is only marginally lower than that for the plaintiff’s household.  The amount of support that would equalize the ratios is $7,600 per year or $633 per month.  Interim child support will be payable in that amount.  

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Imputation of Income

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Of note, when making an undue hardship claim, the payor must be cognizant that the making of the claim invites the court to scrutinize the payor's household circumstances which includes the payor's spouse. In the course of scrutinizing such circumstances the court may exercise its discretion to "impute" income to the payor thus affecting the undue hardship calculation as is seen in the case below:

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Van Gool v. Van Gool, 1998 CanLII 5650: 

[3]  Counsel for Mr. Van Gool submits that the chambers judge erred in failing to find that Ms. Dryden was"intentionally under-employed" within the meaning of s. 19(1)(a) of the Guidelines and, thus, in refusing to impute income to her for the purpose of determining the amount of child support payable under the basic guideline table.

[4]  Counsel for Mr. Van Gool also submits that the chambers judge erred in finding that Ms. Dryden would suffer"undue hardship" if she were required to pay the amount of child maintenance provided in the basic guideline table.

[17] The chambers judge reviewed the history of the litigation between the parties, including the specific directions given to Ms. Dryden by Mr. Justice Coultas concerning her efforts to obtain employment.  The chambers judge noted that Ms. Dryden had obtained part-time employment as a lifeguard and swimming instructor with the City of Abbotsford in March 1997 where she had previously done volunteer work.  She was working 20 hours per week at $12.16 per hour, plus 12 per cent in benefits.  The chambers judge extrapolated from those figures to arrive at an estimated income for Ms.Dryden of $14,000 per year.

[31] It is apparent from this case, and others to similar effect, that the intention of the legislators both before and after the enactment of the Guidelines was to ensure that parties liable for child maintenance were not permitted to avoid their responsibilities simply by virtue of being unemployed or under-employed.

[32] In assessing Ms. Dryden's intentions from the time of Mr. Justice Coultas's order until the time of the review of maintenance before the chambers judge, it is relevant to have regard to her actions and attitude with respect to obtaining employment in the past.  They are aptly described by Mr. Justice Coultas in the excerpt from his reasons for judgment set forth at para. 14 of these reasons.  The finding of Mr. Justice Macdonald that Ms. Dryden was a person prepared to deceive the court in order to further her own interests over those of Mr. Van Gool, even at the expense of the children, is also a relevant factor to consider.

[33] In this case, Ms. Dryden offered no persuasive reason for refusing to seek additional employment.  In essence, she said that she wanted to be "available" for Eric at the beginning and the end of the day, and for Mataya and Ryley during periods of access.  But Eric was 13 years old at the time of the hearing, and there is no suggestion that he had special needs for care, transportation or otherwise which would require her to be available to him so as to preclude her from obtaining full-time or increased part-time employment.  Further, her desire to be home during access visits does not justify her almost complete failure to take steps to find increased employment during the week, or on weekends when she did not have access.  Nor is this a case in which the reasonable educational or health needs of Ms. Dryden justified her state of under-employment so as to bring her within the qualifying words contained in s. 19(1)(a) of the Guidelines. [emphasis added]

[34] While it is true that Ms. Dryden has limited work experience and job skills, this does not explain her failure to pursue employment which does not require significant skills, or employment in which she could learn the necessary skills on the job.  While these would doubtless be jobs at the low end of the wage scale, this Court has never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because they could not obtain interesting or highly-paid work.  Rather, this Court has made it clear that a person is expected to take reasonable steps to obtain employment commensurate with such factors as their age, state of health, education, skills and work history.

[35] The chambers judge in this case did not specifically address the question of whether Ms. Dryden's state of under-employment was intentional.  Rather, she focused on the fact that Ms.Dryden had obtained part-time employment.  She concluded that her efforts in that regard were sufficient to meet Mr. Van Gool's assertion that Ms. Dryden had demonstrated an intentional refusal to pursue employment beyond part-time employment, and that any efforts she had made were the bare minimum necessary to avoid judicial censure.  

[36] In my view, the evidence in this case, including the background to which I have referred, leads overwhelmingly to the conclusion that Ms. Dryden was intentionally under-employed at the time of the review application with a view to avoiding, or minimizing, her child support obligations.  It is apparent from Mr. Justice Smith's consent order on April 14, 1994 that the parties contemplated at that time that Ms. Dryden would obtain employment within three months.  In the two and a half years between that order and the order of Mr. Justice Coultas on December 6, 1996, Ms. Dryden had obtained some qualifications toward becoming a lifeguard, but she had otherwise made no attempts whatever to obtain employment or upgrade her skills.  Her justification for failing to complete her lifeguard qualifications is that she could not afford to take the three courses to do so.  But she made no inquiries through the Ministry of Social Services and Planning, or any other government agency, to determine whether she could obtain financial assistance to upgrade her qualifications, either as a lifeguard, or at all.  This is despite Coultas J.'s direction that she do so.

[37] In the three months between the order of Mr. Justice Coultas and her obtaining part-time employment with the City of Abbotsford, she sent out only four letters seeking employment, all limited to employment as a lifeguard.  The letters themselves were prepared in a careless fashion and contained typographical errors and handwritten notations at the bottom.  After obtaining part-time work of 20 hours per week, there is no indication that Ms. Dryden attempted to obtain increased hours with that employer.  Nor is there evidence that she attempted to supplement her income with part-time work from any other source.  The irresistible inference which arises from the evidence is that Ms. Dryden's preference was not to work at all.  To the extent that the court had directed her to do so, she complied by making the least effort possible to obtain part-time work. [emphasis added]

[38] In summary, I am satisfied that the only reasonable inference to draw from the limited and desultory efforts made by Ms. Dryden to obtain part-time employment, her failure to comply with the directions of Mr. Justice Coultas as to the ongoing steps she should take to maximize her employability, the history of the relationship between the parties, including Ms. Dryden's lack of regard for the truth in the earlier proceedings, and her ongoing animosity toward Mr. Van Gool, is that she decided to remain under-employed for as long as possible.  In so doing, she acted to the detriment of Mataya and Ryley, who are entitled to reasonable financial support from both parents.  The chambers judge accepted Mr. Van Gool's evidence that the reasonable monthly expenses associated with Mataya and Ryley were $1,700 per month.  To date the most that Ms. Dryden has contributed to that support is $125 per month.

[41] In my view, counsel's suggestion is reasonable and takes into account the reality that Ms. Dryden may not be able to obtain full-time employment at this time.  Based on a projected 30-hour workweek, 48 weeks per year, Ms. Dryden's total income would be approximately $19,000 per year.  Subject to the question of undue hardship, the amount which Ms. Dryden would be required to pay to Mr. Van Gool for the support of Mataya and Ryley pursuant to the basic guideline table at an income of $19,000 per year would be $282 per month. [Emphasis added.]

[47] It appears from the cases decided to date that the most common situation in which an application under s. 10(2)(d) will arise is where a payor spouse has acquired a second family.  In this case,however, Ms. Dryden's claim relates to her legal obligation to provide support for Eric, her child from a prior relationship.  This obligation exists whether Eric is in her custody, as he was at the time of the application, or in the custody of his father, as he is at present. [Emphasis added.]

[51] Although s. 10 can be used by either the payor or the payee spouse to seek a level of maintenance other than that provided under the basic guideline table, thus far the applications have been almost entirely by payors for a reduction in the table amount.  Since the basic tables were designed to be a "floor" for the amount of maintenance payable, rather than a ceiling, it is not surprising that the authorities have held that the threshold for a finding of undue hardship is high.  Hardship is not sufficient; the hardship must be "undue", that is, "exceptional", "excessive"  or "disproportionate" in all of the circumstances.  The onus is on the party applying under s. 10 to establish undue hardship; it will not be presumed simply because the applicant has the legal responsibility for another child or children and/or because the standard of living of the applicant's household is lower than that of the other spouse.  The applicant must lead cogent evidence to establish why the table amount would cause undue hardship. [Emphasis added.]

[52] In this case, there is a dearth of evidence which would permit the court to find that the payment of the basic table amount of $282 would cause Ms. Dryden undue hardship.  There is no evidence as to the costs Ms. Dryden incurs relating to Eric; nor is there any suggestion that he has care requirements beyond those associated with most children his age.  Ms. Dryden was receiving $250 per month from Eric's father, together with a child tax credit of $85 per month at the time of the hearing. There was no evidence of the father's income which would enable the court to determine whether he was capable of providing additional support.  Ms. Dryden provided some evidence as to her anticipated expenses for the periods in which she had access to Mataya and Ryley, but these expenses were unrealistic in that they incorporated amounts for housing, automobile and other expenses which could not reasonably be regarded as costs associated with access.

[53] While the court can take judicial notice that 13-year-old boys are not inexpensive to house and maintain, this is not sufficient, in itself, to lead to a finding of undue hardship for someone with an imputed income of $19,000 per year.  Whether an applicant has legal obligations to children from prior or subsequent relationships, some evidence is needed to establish that this has resulted in "undue" hardship to the applicant, not simply hardship.  Undue hardship will not be presumed, except in those situations in which the payor is at the lowest income level for the payment of any child support, which is approximately $7,000 per year.  Ms. Dryden's income is significantly above that level.  In my view, she has not met the burden upon her to prove that her legal responsibilities to Eric have resulted in undue hardship to her. [Emphasis added.]

[54] Since I have found that Ms. Dryden has not met the test of undue hardship under s. 10(1) of the Guidelines, it is unnecessary to go on to determine whether the standard of living of her household is lower than that of Mr. Van Gool.  In this case, however, it was accepted that she had met that test with income of $14,000 per year and it was not suggested that imputing additional income to her of $5,000 per year would change that result.

CONCLUSION

[55] In the result, I would allow Mr. Van Gool's appeal and increase the amount of child maintenance payable by Ms.Dryden for the support of Mataya and Ryley to $282 per month, commencing December 1, 1998.  While it is open to this Court to make the payments retroactive to the date of the decision under appeal, I do not consider it appropriate to do so in circumstances in which it has taken over a year for the appeal to reach this Court.  There is no reasonable prospect that Ms. Dryden would be able to pay the "instant arrears" of maintenance such order would create.  I am satisfied that a December 1st starting date for the increase in maintenance is reasonable to permit her approximately one month's grace to seek to increase her working hours to accord with the income I have imputed to her.

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