Date: 19991015 Docket: E006672 Registry: New Westminster IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: RONALD BENJAMIN HANSON PLAINTIFF AND: DIANNA MARIE HANSON DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE MADAM JUSTICE MARTINSON (IN CHAMBERS) Counsel for the Plaintiff: T. M. Carter Counsel for the Defendant: C. Courtenay Place and Date of Hearing: New Westminster, B.C. October 7, 1999 INTRODUCTION [1] This is an application by Dianna Hanson for interim child support (including special expenses) and interim spousal support, and an application by Ronald Hanson for partition and sale of the matrimonial home. A central issue at the hearing was whether income should be imputed to Mr. Hanson based on s. 19(1)(a) of the Federal Child Support Guidelines. It is agreed that the home should be sold. The only issue is whether it should be listed now or in January, 2000. [2] Mr. Hanson and Ms. Hanson have been married for 25 years and separated in February, 1999. Both are 49 years old. They have two sons, Jeffrey who is 20 and Kevin who is 18. While there is a dispute as to whether Jeffrey remains a child of the marriage, it is agreed that this issue should not be decided on an interim application: Newson v. Newson (1998), 115 B.C.A.C. 151. [3] Mr. Hanson is a captain with the North Vancouver fire department. He has also worked for some 20 years marketing concrete in the construction industry, primarily for Residential Ready Mix Ltd. In early September, 1999 he received notice that his work with Residential Ready Mix Ltd. will end on October 31, 1999. He says that this termination, the stress of the marriage breakdown and the resulting litigation, caused him to take stress leave from the fire department in early September. He is still on stress leave. [4] He says he cannot resume concrete marketing for two reasons. First, he cannot do so while he is on stress leave. Second, he has very recently decided that he no longer wishes to supplement the income he earns as a firefighter. [5] The second issue is a matter for the trial and should not be decided on an interim application. However, a Guidelines income must be determined in order to decide the quantum (amount) of interim child support that should be paid by Mr. Hanson. [6] I will first consider the legal principles that apply to the imputation of income and then apply those principles to the facts of this case. LEGAL PRINCIPLES - IMPUTING INCOME Statutory Provisions [7] Section 19(1) of the Guidelines allows the court to impute such amount of income to a parent as it considers appropriate in the circumstances. One of the circumstances is that the parent is intentionally under-employed or unemployed. (s. 19(1)(a)) The Concept of Imputing Income [8] Parents have a joint and ongoing legal obligation to support their children. In order to meet this legal obligation, a parent must earn what the parent is capable of earning. Section 26.1(2) of the Divorce Act says that the Guidelines "shall be based on the principle that spouses have a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation." [9] Imputing income is the way in which the court gives effect to the legal requirement that a parent must earn what the parent is capable of earning. The British Columbia Court of Appeal in Van Gool v. Van Gool (1998), 166 D.L.R. (4th) 528, pointed out that the income imputing provisions in the Guidelines are similar to pre-Guidelines tests based on capacity. That is, the court must consider not only the amount of income a spouse actually earns, but "the amount of income a spouse could earn if working to capacity." (at para. 28) Meaning of "Intentionally" in section 19(1)(a) of the Guidelines [10] Section 19(1)(a) of the Guidelines requires that before income can be imputed, the court must find that the person is intentionally under-employed or intentionally unemployed. There has been some judicial debate about the meaning of the word "intentionally." Is bad faith required? That is, is a specific intent to evade child support obligations required? [11] No such requirement is found in s. 19 itself. The Court of Appeal's conclusion in Van Gool that the obligation to pay child support is based on capacity to earn, supports the view that bad faith is not required. To reach a conclusion that it is required would be to misconstrue the purpose of the Guidelines. [12] They are not designed to punish parents who try to avoid child support payments. Instead, the Guidelines are designed to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both parents after separation. (s. 1(a)) [13] Therefore, bad faith is not required. The parent required to pay is intentionally under-employed if that parent chooses to earn less than he or she is capable of earning. The parent required to pay is intentionally unemployed if he or she chooses not to work when capable of earning an income. General Principles Relating to Capacity to Earn Income [14] The following principles apply when determining capacity to earn an income. (See Dr. Julien D. Payne, Imputing Income, "Determination of Income; Disclosure of Income", Child Support in Canada, Danrab Inc., August 3, 1999.) 1. There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is "no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor." (Van Gool at para 30.) 2. When imputing income on the basis of intentional under- employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to be considered in addition to such matters as availability of work, freedom to relocate and other obligations. 3. A parent's limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills, or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at the lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment. 4. Persistence in unremunerative employment may entitle the court to impute income. 5. A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations. 6. As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income. [15] Professor James G. McLeod has commented on the concept of attributing income when a parent changes jobs or a career. (See Annotation, 45 R.F.L. (4th) 2.) In his opinion, courts have been too willing to attribute income without regard to whether a parent can actually earn money within the immediate future. [16] He suggests that a court should attribute income following a career/job change only if the change was unreasonable in the circumstances or undertaken to defeat support. He argues that in attributing income, courts expose a paying parent to quasi- criminal sanctions if he or she cannot make the payments. He says that a court should not expose a person to such sanctions without some evidence that he or she has acted improperly or at least unreasonably. [17] I agree that income should not be imputed when a change was reasonable in the circumstances. Reasonableness must be assessed in light of the joint obligation of parents to maintain their children and the requirement that a parent must earn to his or her ability. The general principles relating to income earning capacity, set out above, must be applied. [18] Professor McLeod focuses on fairness to the paying parent and the detrimental consequences that the attribution of income can have for that parent. The failure of a parent to earn to the parent's ability can also operate unfairly, with significant detrimental consequences for children. Deciding Whether a Person is Working to His or Her Capacity [19] How does the court decide whether a person is earning to his or her capacity? The court should be provided with information about the parent's capacity to earn and the parent's present income earning situation. The two can then be compared. [20] There are two aspects to a parent's capacity to earn. The first is what the parent is capable of earning based age, education, experience, skills and health. The second is the job opportunities that are realistically available. APPLICATION TO THE FACTS OF THIS CASE [21] What is Mr. Hanson capable of earning? He is able-bodied, relatively young at 49, and has been gainfully employed for at least 20 years, both as a firefighter and in the concrete marketing industry. He has the skills, training and experience for both jobs. I am satisfied that he has the capacity to continue to earn the income that he has traditionally earned. [22] What employment opportunities are available? I am satisfied based on the evidence presented that there are income earning prospects in the concrete marketing industry. Mr. Hanson incorporated a new company in the summer of 1999 for the specific purpose of continuing with that work. He did so with the knowledge that Residential Ready Mix Ltd. was having difficulties. He admitted in his Examination for Discovery that he intended to continue to work in the industry even after he lost the Residential Ready Mix Ltd. account. [23] What is his present income earning situation? He continues to receive full salary as a firefighter. He is taking steps to move in with a relative because of his change in income. While his physician says the date of Mr. Hanson's return to work is unknown, the physician also notes that there is nothing delaying his recovery. The physician's reasons for approving "stress leave" relate specifically to his employment as a firefighter. The physician believes that he is unable to concentrate and might endanger other firefighters. [24] It is likely that the symptoms of stress will be short- lived. There is no suggestion of a history of stress-related problems. Mr. Hanson has always met his financial obligations to his family admirably. He has been recuperating by working out, bike riding and going on a trip. It is reasonable to think that by December 1, 1999 he will be in a position to find other work in the concrete marketing industry. [25] Upon comparing Mr. Hanson's income earning capacity and his present income earning situation, I conclude that he is capable of earning more than he is earning. It is appropriate to impute income to Mr. Hanson based on what he is capable of earning. However, I must take into account the likelihood that it will take some time to build up his business to the level it was when he lost the Residential Ready Mix Ltd. account. [26] I therefore impute income to Mr. Hanson of $1,000 a month beginning December 1st. His Guidelines income until that date is $67,500 and thereafter will be $79,500. For October 1st and November 1st he will pay the table amount of $893. Thereafter, he will pay $1,021. SPECIAL EXPENSES [27] Mr. Hanson will pay his proportionate share of Kevin's hockey expenses as outlined in the affidavit material, based on a Guidelines income for Ms. Hanson of $30,000. Her income includes rental income and will have to be adjusted if that income is no longer available to her. SPOUSAL MAINTENANCE [28] Mr. Hanson will pay spousal maintenance in the amount of $2,500 per month beginning October 1, 1999. SALE OF THE MATRIMONIAL HOME [29] I have concluded that the matrimonial home should be listed for sale by January 5, 2000. The parties will have joint conduct of sale. COSTS [30] Ms. Hanson is entitled to her costs at Scale 3. "D.J. MARTINSON, J." D.J. Martinson, J.