Rarely does this blog address decision from the Ontario Court of Justice. A recent decision from that Court by the Hon. Justice Curtis in Atkinson v. Johnson, 2021 ONCJ 15, warrants an article because of the thorough summary it provides on imputing income to self-employed payors, and its explanation and application of the undue hardship test under section 10 of the Child Support Guidelines (“Guidelines”). It also comes with the odd fact that a payor with 11 children still loses an undue hardship argument.

The parties in this case were never married and had four children together. They separated after a ten-year relationship and were able to settle the issues of custody, access, travel, and incidents of custody on a final basis.

The only issue that they were unable to agree on was the father’s child support obligation. Two temporary orders were made throughout the litigation. The most recent being an order for the father to pay $1,433 per month for 3 children and based on an income of $71,825. However, the father only paid support for two months and then stopped. The father had essentially provided no support to these 4 children for their entire lives.

The matter proceeded to a two-day trial where the mother sought support for all 4 children. But before trial, the father amended his Answer to claim reduced child support due to undue hardship under the Guidelines. Remarkably, by that point, the father had 11 children in total – 7 with three other women outside of the litigation. One child was born just two months before trial. In 2020, the Father had also left his employment and started his own company, but only advised the Mother that was an employee of this company.

The main issues before the Court were imputation, and undue hardship.

Imputation of Income

With respect to imputation, Justice Curtis first provided a very helpful list of nearly 40 principles under section 19 of the Guidelines that should be reviewed whenever a litigant wishes to impute income to a self-employed payor (paras 15-44). In the end, Justice Curtis imputed the Father with an amount totaling all of the deposits in the bank accounts each year with an added gross-up (para 75).

To support recipients, this case should alert them to the importance of bank statements. To payors, this should also alert them to the importance of bank statements, and the looming prospect of the added-gross up – a mechanism of the law that allows courts to inflate the deposits to account for unpaid tax. The gross-up is real “salt in the wounds” type of stuff for payors because it assumes that the deposits as they exist will not be taxed by the CRA.

Undue Hardship

After imputing the father with income, Justice Curtis then addressed the undue hardship argument.

The basis of the father’s undue hardship claim was that he had support obligations for his 7 other younger children. He seemed to think that the 4 children who were subject to the proceeding (19, 17, 14, and 10 years old) were not his responsibility. The Court did not entertain this argument.

Section 10 of the Guidelines governs claims for undue hardship and states that a court may award an amount of child support that is different from the table amount if the court finds that the parent making the request, or a child in respect of whom the request is made, would otherwise suffer undue hardship.

However, litigants must be mindful that courts across Canada take an extremely restrictive approach to undue hardship claims – it is very difficult to establish a successful undue hardship claim under s.10 of the Guidelines. These claims are always the exception and not the norm.

Justice Curtis explained that there are 3 parts to the test for undue hardship:

1. The person making the claim must show that there are circumstances that could create undue hardship that is exceptional, excessive, or disproportionate, not merely awkward or inconvenient.
2. If this is the case, the person making the claim must show that his or her standard of living is lower than that of the responding party’s.
3. If the two first parts of the test are made out, the court has the discretion to make a support order different than the table amount, based on the means, needs, and circumstances of the parties. But the courts retain the discretion to refuse a reduction in the table amount even if the first two parts are made out.

Justice Curtis found that the father did not even meet the first part of the undue hardship test. The onus was on the father to prove that payment of the table amounts would cause undue hardship under subsection 10(1) of the Guidelines. Specifically, he had to provide cogent evidence from which the Court could reasonably infer that his other children would suffer significant deprivation if the table amount of support were ordered for the 4 children in this case.

The father provided no compelling evidence to show this. In fact, the Court found that:

• • the father had not been financially supporting these 4 children for many years and he actually benefitted from this;
  • the father admitted that he had paid no support in 2020 for any of the 8 other children, other than the 3 children he was living with;
  • he made the decision to quit his job where he earned in excess of $100,000 annually, to start his own business;
  • he was supporting his new wife (and sponsored to her Canada) and their 3 children;
  • he made several mystery cash deposits into his bank accounts which exceeded $100,000 annually;
  • he did not make full and frank disclosure in the litigation, and did not produce required disclosure about his business or the source of the deposits into his bank account; and
  • he had high expenses with virtually no debts.

The Court importantly stated:

The father’s behaviour regarding his children and the four mothers involved can only be described as flagrant and profoundly irresponsible. He has had large families with three women…He has had two more children since this court case started. And, when he already had eight children, and was not paying support for some of them, perhaps not for any of them, he started a relationship with a financially dependent woman, and had three more children in five years with her. The father has made these decisions, and now he wants to benefit from those decisions by reducing the amount of support for the oldest four children…The father has unrealistic expectations about who is supposed to be supporting these children. Whose responsibility are all these children? They are his responsibility. These children are not just the responsibility of the four women who had children with him. And they are not just the responsibility of the Canadian taxpayer…

The Court also stated that the basis of the father’s undue hardship claim (that he has a support obligation for his other children) is a circumstance that can support an undue hardship claim under s.10(2)(d) of the Guidelines. But the father failed to establish or provide any evidence that he paid any child support for any other children besides the ones he lives with. The onus was on the father to prove that he was paying these child support obligations, not simply that he had these legal obligations.

Justice Curtis founds that that the father’s circumstances were of his “own making” – he “created this situation”. Since the father did not meet the first part of the test, the Court did not proceed to the second part of the test – the household standard of living comparison. The Court made it clear in this case that a mere legal obligation to pay child support cannot be enough to constitute an undue hardship. Overall, the father failed to prove, on a balance of probabilities, that it would create an undue hardship, as defined in the case law, for him to pay the table amount of child support for these 4 children.

This case confirms that a claim for undue hardship is a high threshold test that is very difficult to meet and requires real and concrete evidence.