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Family Law: Court gets it right on imputing gifts to husband as income

The Ontario Court of Appeal released a very interesting decision recently, Korman v. Korman, that deals with two important questions that will affect family lawyers’ advice on property and support issues.

The first was whether the husband had a beneficial interest in a matrimonial home he had put into his wife’s sole name for the purposes of creditor proofing (and specifically, whether he could share in the increase in value of the property after separation). The second was whether the court ought to impute to the husband money his parents had consistently gifted to him throughout the marriage and after separation as income for support purposes.

The case is a very important one for counsel to read as it goes a long way toward clarifying years of confusion in the law as to the interplay between equitable remedies and the equalization scheme in the Family Law Act. Indeed, it confirms that resulting trust claims are very much a factor to consider in the equalization context and that the court must assess them before making an equalization calculation. Only once it has determined both legal and beneficial ownership can the equalization analysis take place.

What I find more interesting in this case, however, is the discussion and, frankly, the finding by the trial judge that gifts of money by the husband’s parents ought to factor into his income for the purposes of child and spousal support. While prior judicial decisions have left the door for that somewhat open, the accepted norm certainly had been that gifts of money, even if they occur regularly, shouldn’t factor into an assessment of income. It’s an interesting debate with good arguments on both sides.

If you look at federal and provincial spousal support legislation, the issue isn’t simply income but rather the means and needs of the parties. Child support isn’t as broad and, under both pieces of legislation, it generally must be determined pursuant to the applicable child support guidelines. There are two elements to child support: table support and contribution to special and extraordinary expenses. The starting point is that table support must be paid pursuant to the applicable table under the guidelines based on the payer’s line 150 income as found in his or her income tax return unless the court accepts that it can impute the income. Section 19 of the guidelines lists various situations where it may impute income. The list, however, isn’t exhaustive. When looking at contribution to special and extraordinary expenses under s. 7 of the guidelines, there’s even more flexibility as there’s reference to the court considering the means of the parties rather than just strict income.

In Korman, the result at trial was imputation of some income to the husband due to his mother’s historical gifts of money. The husband appealed and argued that doing so effectively shifts his support obligation on to his mother. The Court of Appeal disagreed, and I tend to as well. Throughout the marriage and the entirety of the children’s lives, the paternal grandparents supplemented the family’s livelihood. They didn’t have to, but that’s what happened. There didn’t seem to be any evidence before the court that that pattern would end any time soon.

Given the husband’s support obligations to his former spouse and his children and the historical pattern of monetary gifts and having regard to the language of the legislation, it was certainly open to the court to impute income. I don’t agree that doing so shifts the support obligation on to the husband’s mother. To me, that’s like saying that considering employment income in a support analysis shifts the support burden on to the payer’s employer. Such an order simply recognizes the reality of what’s happening at the time of the trial while relying on evidence of past events.

Nothing in such an order requires the grandmother to continue making monetary gifts. Should she choose to stop doing so, the husband always has the ability to seek a variation order based on a material change in circumstances.

The case may well open up the door to more litigation over income determination, at least initially. However, the analysis contained in it is sound and, in my view, correct when assessing an ability to pay support. Korman is a very important family law case for 2015 and will certainly affect the opinions we give to clients on the issues of both property and support.   

Marta Siemiarczuk is a lawyer practising family law litigation and collaborative family law at Nelligan O’Brien Payne LLP in Ottawa. She can be reached at

  • Sad but true

    Dave Warren
    Sadly, what Diana seems to suggest is already the case in Ontario Family Court. Most litigants are self-reps. It's not that lawyers overcharge, it's that the court imposed a case management system quadrupling the # of court appearances and creating a myriad of misinforming forms. Lawyers that charged by the hour, or delayed resolution are no longer welcome in family court. Sadly, neither are the great lawyers that took on a lot of these heartaches, pro bono. We settle all we can, but those that need the court's intervention don't have lawyers, anymore. They misdiagnosed the problem, applied the wrong remedy.....and blame lawyers. Audit the Superior Court, Family Branch, over the past ten years...and follow the money. Somebody's doing well, and it ain't the lawyers or the public.
  • Lawyer

    Samuel Mossman
    while it is popular to blame the lawyers it should be noted that it is the AG's office that is responsible for a costly and increasingly cumbersome system that intentionally increases the cost of litigation in order to force parties to mediate, which most often benefits the more obstinate and unreasonable party, rather than to seek "justice" which requires access to a Judge, in a Courtroom, who is prepared to hear evidence, make findings of fact, and apply the law. There is a very serious access to justice issue at play here. Blaming the lawyers is exactly what the AG wants the public to do.
  • times four

    Dave Warren
    I've been through four Attornies General and none have wanted to even hear about the problem. I detailed it here, in Law Times, March 21, 2005...ten years ago. If the public only knew the costs of this "initiative' called case management, there would be an uproar. Senior justices have remained silent, other than calling me a likeable sh^& disturber. People have given up on the system, some have even become violent, and nobody cares about it until they need the court's help. The people who did this should be held responsible.
  • Again Lawyers Bleed the Families for Themselves

    Diana Metcalfe
    "The case may well open up the door to more litigation over income determination"

    No kidding, as divorce lawyers continue to bleed families for every penny they can get from them. I am astounded that the costs of a divorce far exceed that of commercial litigation for a similar claim amount. The entire family law regime should be struck and re-built from the ground-up.

    Get a court triage system in place without any lawyers for any party. Lawyers make money from the conflict, and the families pay their price. It is a huge conflict of interest. But lawyers are quick to dismiss it and lie saying they add value, what nonsense.

    The worst thing that can happen to the finances of an Ontario family is getting a filthy, stinking, piece of garbage, with the title of lawyer involved in their finances.

    The best solution, never get married.

    Now let's see all the down votes and comments from the cockroaches called licensees.
  • Many don't need lawyers

    David DIckinson
    First of all, avoiding marriage is not the answer. If you really want a good insurance system, don't enter into a relationship that lasts more than 12 months. The majority of separating parties are able to come to an agreement and settle their affairs without lawyers. Family law lawyers always do their best to facilitate out-of-court agreements. But the sad reality is that some couples just can't or won't agree. I agree the legal costs for child support should come down. The way to do this is for the provinces to create child support tribunals, as envisioned by the Child Support Guidelines.

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