Conspiracy By Family Members

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In Leitch v. Novac (2020 ONCA 257) the Ontario Court of Appeal held that “invisible litigants” cannot impede family law proceedings with impunity. Writing for the Court, Houringan J. described these invisible litigants as the parties’ extended relatives who insert themselves into family law proceedings far beyond the permissible grounds of providing emotional support. Rather, invisible litigants exacerbate litigation by encouraging the parties to advance needlessly adversarial positions and by helping to shield a party’s income and assets from the courts.

The Parties
The parties in this case were married for 17 years. They have teenage twin daughters. The Applicant-appellant (“Leitch”) is a law professor and mother of the children. The respondents are the children’s father (“Novac”), his casino management company (“Sonco”), members of the Novac family, two family trusts, and directors of Sonco.

Background
This case arose when Leitch filed for divorce and corollary relief from Novac. She subsequently amended her pleadings to include a claim of conspiracy against the above-noted respondents. On application by the non-family respondents, Justice Cory Gilmore of Ontario’s Superior Court held that Leitch’s conspiracy claim was appropriate for partial summary judgement.

Summary Judgement
In the summary judgment proceeding, Leitch argued that the respondents conspired to withhold business income from Novac until his divorce proceedings were completed. This allegation principally arose with regards to a buy-out of Sonco’s five-year management agreement with an Alberta Casino. Under that agreement, Novac was to receive 40% of the contract price as management fees. Consequently, Novac was entitled to 40% of Sonco’s $5.75 million buy-out as income (i.e. $2.3 million). Instead, the respondents diverted this income away from Novac by arranging a loan between Novac and his father. Memos and emails between Sonco’s Chief Financial Officer, Novac, and Sonco’s accountant suggested that this loan was structured with the purpose of shielding Novac’s share of the buy-out proceeds from Leitch’s corollary support claims.

In her decision, Justice Gilmore, as the motion judge, dismissed Leitch’s conspiracy claim on two grounds. First, she found that Leitch’s evidence failed to prove that Novac had the requisite knowledge to have committed the tort. Furthermore, the summary judgment appears to have been decided, in part, because no funds were actually transferred between the defendants.
Second, Judge Gilmore dismissed the claim on policy grounds. She held that the circumstances were analogous to Frame v. Smith, 1987 CanLII 74 (SCC), wherein the Supreme Court of Canada restricted conspiracy claims with regards to custody and child support. If conspiracy claims were not so restricted, Judge Gilmore reasoned that they would “become the new norm” in any family law case where a “payor spouse, in conjunction with a new spouse/relative/business partner, did not fully disclose income, unreasonably deducted expenses, or received income in the form of cash or goods” (para. 41). In effect, she surmised that conspiracy claims would become a form of punitive damages” (ibid.). Instead, she held that the existing legislation and its associated guidelines constitute a complete code from which Leitch could have sought an imputation of income against the father.

In her summary judgment, Justice Gilmore dismissed Leitch’s conspiracy claim and awarded a total of $1.2 million in costs against her for the proceedings.

The Appeal
The Court of Appeal found that Justice Gilmore made palpable and overriding errors of fact and law. Taken in turn, she misunderstood critical email evidence relating to the alleged conspiracy that was sent between Sonco’s Chief Financial Officer, accountant, and Novac. Next, the Court of Appeal also suggested that Justice Gilmore may have erred in law by accepting the argument that the tort of conspiracy requires an actual transaction, when, in fact, a temporary withholding of funds to impede another party’s entitlement can constitute an “act in furtherance to a conspiracy” (para 51).

On the public policy basis for dismissing Leitch’s claim, the Court of Appeal rejected Justice Gilmore’s reasoning because limiting the tort of conspiracy from family law proceedings would enable invisible litigants to interlope in court proceedings with impunity. While Justice Gilmore was correct in holding that an imputation of income claim would enable a claimant to get access to otherwise withheld funds, this remedy does not address the subsequent enforcement problem that arises when a payor has made themselves creditor-proof by conspiring with invisible litigants (para. 47).

Finally, the Court of Appeal made two further procedural comments. First, it held that this case should not have been bifurcated because the factual basis for Leitch’s conspiracy and support claims were indistinguishable. Contrary to the principle established in Hryniak v. Mauldin, 2014 SCC 7, this created the “substantial risk of inconsistent outcomes” between the summary judgement and the subsequent trial. Second, the Court of Appeal found the motion judge’s costs award “troubling.” Citing Yaiguaje v. Chevron Corporation, 2017 ONCA 827, the Court of Appeal reaffirmed the courts’ obligation to ensure that protection orders, such as security for costs, are not misused as litigation tactics. In this case, the motion judge should have considered the order holistically, assessing whether the overriding interests of justice are served by the order sought. In other words, the motion judge’s costs awards were excessive because they would have impeded Leitch’s ability to proceed with the subsequent trial.

Due to Justice Gilmore’s errors of fact and law, the Ontario Court of Appeal remitted this case back to the Superior Court for a re-determination at trial. The $1.3 million dollars in costs were set aside, and Leitch was awarded costs on the appeal.

For our readers, the principle provided by Leitch v. Novac is that family members acting as invisible litigants are not immune from liability.

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Enforcing Child Support Orders

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If your child’s co-parent has claimed that they cannot afford to pay their child support obligations, what are your options? Under these circumstances, it is important to remember that child support is the right of the child, not the receiving parent. This means that parents cannot negotiate a lower monthly rate than the minimums prescribed by the Federal Child Support Guidelines. Any such agreement would be considered invalid by the courts.  Instead, there are two primary avenues for enforcing a child support order.

First, the recipient parent’s best avenue to enforce a support order is to register their separation agreement or court order with the Family Maintenance Enforcement Program (FMEP). This is a public organization that assists parents with enforcing both child and spousal support orders. The FMEP can enforce the orders by “attaching” it to the debtor’s income, including wages, tax returns, rental revenues, etcetera. The organization’s Director may also seek a court order to direct the payment of security for future support obligations from larger sources of funds, e.g. an inheritance. If the debtor parent refuses to pay, the FMEP Director may, among other remedies, report them to the credit bureau, seek a seize-and-sell court order, or instruct ICBC to refuse their license and vehicle registration issuance or renewal.

To enroll in the FMEP, you must submit an application which provides details about the paying parent and a copy of your support agreement or court order. The application can be found here. Upon completion, the EMEP will provide a Notice of Enrollment to the paying parent. The key advantage of the FMEP is that it is free. The disadvantage is that the receiving parent cannot undertake any enforcement proceedings themselves while they are registered in the program.

The recipient parent’s second enforcement avenue is to privately seek court enforcement remedies under section 230 of the Family Law Act. Specifically, they may request that the debtor parent pay security for future support obligations, plus legal expenses, up to $5,000 dollars in damages for the delayed payments, and a fine of up to $5,000.  If the debtor further fails to comply with these payments, the court may make an order for their imprisonment for up to 30 days. Importantly, this imprisonment will not discharge the debtor’s support obligations; it is simply an enforcement mechanism. Of course, this is a draconian option that the courts will rarely apply.

For debtor parents experiencing genuine financial difficulty that is impeding their ability to meet their support obligations, they may respond to enforcement action by applying to the courts for a variation order under section 152 of the Family Law Act or section 17 of the Divorce Act. On proof of a material change that renders the original order inappropriate, the court may vary the obligation amount, suspend enforcement proceedings, or make an order it deems otherwise appropriate.

For more information regard child support and their enforcement, please contract our office at (250) 753-2202.

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Child Support Obligation Even If Not Married

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Child Support Obligations Even if not Married?

Is there potential for child support obligations even if you are not the child’s biological parent.  Yes. Similarly, can there be child support obligations even if you are not living with the child? Yes.

For a stepparent to have support obligations the following must be true:

  1. You must be considered a stepparent under the Family Law Act (FLA);
  2. The stepparent contributed to the support of the child for at least one year; and
  3. A proceeding for an order under this Part, against the stepparent, is started within one year after the date the stepparent last contributed to the support of the child.

 

  1. Being a Stepparent

A stepparent under the FLA means a person who is a spouse of the child’s parent and lived with the child’s parent and the child during the child’s life. Being a stepparent is therefore incumbent on the definition of “spouse” as well as “lived with”.

Spouse

A spouse under the FLA is a person who has lived with another person in a marriage-like relationship, and has done so for a continuous period of at least 2 years. There is no checkbox list to determine when there is a marriage like relationship. But here are some indicia:

  • Whether the parties lived in the same residence and, if so, what were the sleeping arrangements in the shared residence;
  • Whether the parties prepared and ate their meals together;
  • Whether the parties performed domestic chores, tasks and services together;
  • Whether the parties had sexual relations, maintained an attitude of fidelity, and communicated on a personal level with one another;
  • Whether the parties bought each other gifts and celebrated special occasions together;
  • Whether the parties shared financial arrangements and supported each other financially;
  • Whether the parties conducted themselves socially and in public as a married couple.

The presence or absence of any one of these factors is not determinative of a marriage-like relationship. The relationship must be taken in its entirety to determine whether a marriage-like relationship exists.

Lived With

As a matter of law, it is well established that parties can maintain two residences and still be in a marriage-like relationship: W. (S.L.M.) v. W. (M.R.G.), 2016 BCSC 272. “Lived with” can involve parties living under different roofs for extended periods of time.  Staying over several times per week could be found to be “cohabitation”.

  1. Contributed to the Child for at Least One Year

Expenditures by the stepparent on behalf of the stepchild that are trivial in nature or are sporadic or in the character of gestures of occasional generosity or kindness may not qualify as contributions that attract a duty to support: McConnell v. McConnell, 2007 BCSC 748 (B.C. S.C.) and D. (D.C.) v. C. (R.J.P.) 2014 BCSC 2420. The support contributions must be of a more significant nature. Examples from the case law include contributions made by the stepparent to shelter, food or vacations: Z. (O.) v. Z. (M.), 2016 BCPC 416.

Conclusion

It is very important to know your legal rights and obligations when you enter into a relationship with another person, especially when that other person has a child from a previous relationship. If you are unaware of your legal position in relation to the child, you may end up subject to unwanted support obligations.

If you are concerned about potential child support obligations or if you have any other family law concerns please contact Heath Law LLP 250-753-2202.    

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Is a Parent Legally Responsible For Their Child’s Actions?

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Can parents be held legally responsible for their children’s negligence? Yes. Under B.C.’s Parental Liability Act (PLA), “if a child intentionally takes, damages or destroys property of another person, a parent of the child is liable for the loss of or damage to the property experienced as a result by an owner and by a person legally entitled to possession of the property.”[1] The maximum liability for parents is $10,000. However, a parent can defend themselves from the lawsuit by demonstrating that they were exercising reasonable supervision over the child, and that they made reasonable efforts to prevent or discourage the child from damaging someone’s property.[2] The PLA effectively codifies the existing legal tradition (i.e. the common law). As such, this post will briefly review the common law to clarify the reason for parental liability, and it will explain this reason’s associated standard of supervision as a limiting factor to liability.

At common law, a parent cannot be held liable for damages resulting from their children’s negligent acts (i.e. their tortious conduct). In the 1860 English case of Moon v Towers the court held that “a father is not liable in damages for the torts of his child.” This principle has been applied in numerous B.C. cases.[3] In Hatfield v. Pearson, for example, three teenaged boys stole a car which was damaged in the ensuing police chase. The owner’s claim for damages against the children’s parents failed on the principle set out in Moon v Towers. Similar dismissals have arisen in response to children’s acts of vandalism,[4] arson,[5] and murder.[6] However, parents with unruly children should not take too much comfort in this knowledge, for the rule is not absolute.

Parents have a personal duty to supervise their children.[7] When careless in this duty, a parent can be held liable for any resulting damages. There is a subtle but important difference here. The parent is not vicariously liable for their child’s negligence; rather, they are personally liable for their prior negligence in not properly supervising their child to the acceptable standard of preventing foreseeable harm to others. In the 1994 B.C. Supreme Court Case of Poirier (Guardian of) v. Cholette, for instance, parents were held liable for failing to properly supervise their two adolescent boys while they wrestled on a trampoline with friends, resulting in the breakage of a young girl’s arm. As the court wrote: “had the defendants provided proper supervision, the prohibited circumstances of three or four children indulging in horseplay and wrestling on the trampoline would not have occurred.   The infant plaintiff would, on a balance of probabilities, not have fallen.”[8] Of course, this foreseeability of harm changes with the child’s age. As the child nears the age of majority (18 years old) and expectations regarding their comportment with social standards increase, the parents’ duty to supervise will correspondingly decrease.[9]

If the child demonstrates a propensity for the negligent behavior that eventually resulted in damage, the parents’ duty to supervise is increased. In the B.C. case of M.I.M. v. T.H., for example, a foster parent was found to have fulfilled such an elevated standard arising from his knowledge regarding his two foster children’s proclivity for stealing. But, their eventual arson attack was unforeseen, and therefore, the foster parent could not be held liable.[10] In other words, the supervision standard is limited to what a reasonably prudent parent would do in similar circumstances.

An “error in judgment” will not amount to negligent supervision. That is, the reasonable parent standard is broad, insofar as any circumstance will afford various courses of reasonable action. Even when one of those actions has an unfortunate outcome, its mere selection will not amount to negligence. In Arnold v. Teno, for example, the Supreme Court of Canada found that a mother allowing her children to cross a residential street to purchase items from an ice cream truck was within the community standard, even though that choice later resulted in one of the children being struck by a vehicle. While an instance of poor judgment, the decision did not amount to a failure to supervise.

Taken together, parents cannot be vicariously liable for their children’s negligent acts. Yet, they may be liable for failing to supervise their children to the appropriate community or circumstantial standards. The PLA’s codification of these common law principles bridges the distinction between vicarious and parental liability. It simply makes parents liable for their children’s negligence. However, the distinction implicitly persists with the statute’s supervision defence. Also, it should be noted that the PLA maintains a $10,000 liability limit that does not exist at common law. That said, other statutes also override the Moon v. Towers principle and impose parental liability in certain circumstances. Section 10 of B.C.’s School Act, for example, imposes liability on parents for any damage their children cause to school property.[11] There, the statue sets no upper limit on parental liability.

[1] Parental Liability Act, Part 2, s. 3

[2] Ibid., ss. 9 & 10

[3] Moon v. Towers (1860), 8 C.B.N.S. 611, 141 E.R. 1306; also see, The Law Reform Commission of Ireland, Report On The Liability In Tort Of Minors And The Liability Of Parents For Damage Caused By Minors Ireland, <https://www.lawreform.ie/_fileupload/Reports/rDamagecausedbyMinors.htm>

[4] M.I.M. v. T.H., [1991] 5 WWR 699, 82 DLR (4th) 609, 57 BCLR (2d) 1.

[5] Smith v. British Columbia, 1997 CanLII 3267 (BC SC),

[6] D.L. et al. v. C.P. et al., 2019 MBQB 42

[7] Arnold v. Teno, [1978] 2 S.C.R. 287; Hatfield v. Pearson (1956), 6 D.L.R. (2d) 593 (B.C.C.A.)

[8] Poirier (Guardian of) v. Cholette, 1994 CanLII 1182 (BC SC)

[9] Lelarge v. Blackney, (1978) 92 D.L.R. (3d), 440 (N.B.C.A.) at pp. 446-7.

[10] M.I.M. v. T.H., 1991 CanLII 5722 (BC CA), at para 138.

[11] School Act, RSBC 1996, c 412, s 10; also see School District No. 43 (Coquitlam) v. T.W.D., 1999 BCCA 95

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Family Law: Poor Behaviour and Parenting Time

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When Bad Behaviour by one Spouse can Impact Parenting Time

In the recent case SEV v. TMV, 2018 BCSC 30 (“SEV”), the BC Supreme Court considered whether to grant a father increased parenting time.

In SEV, the two parties, a father and mother, were married and had two children aged approximately 7 and 9 at the time of trial. The parties separated on January 2, 2015, and in January 2017 the children began spending four days and four nights with their mother, followed by four days and three nights with their father.

The Court made several findings with respect to the father’s conduct towards the mother, including that the father sent the mother offensive text messages, communicated with others negatively about the mother, including with co-workers at the parties’ place of work (both the mother and father were RCMP officers), and that the father had two offensive decals on his truck which he acknowledged were directed at the mother – a vehicle which he used to transport the parties’ children while he exercised parenting time.

The father’s conduct was such that he was formally reprimanded by the RCMP for his communications with other members of the Detachment. The father was also ordered not to park his truck on RCMP property until the offensive decals were removed, but, at the time of trial, the father continued to park his vehicle on the street close to the Detachment so he did not have to remove the decals in questions.

In determining how to allocate parenting time, the judge noted that the legal framework for the analysis regarding parenting time is set out in ss. 37-42 of the Family Law Act and s. 16 of the Divorce Act, and that the primary purpose of these provisions is for the Court to consider the best interests of the child or children.

In reaching the decision, the judge wrote:

  • He was not satisfied that it was is in the children’s best interests that the status quo regarding primary residence and parental responsibilities should be altered;
  • The father still harboured significant anger towards the mother which at times was detrimental to the children. This included the father’s steadfast refusal to remove the offensive decals from his truck, and what the judge considered the father’s “intransigence” in communicating appropriately at times with the mother regarding the children;
  • The mother, at the time of trial, was the more stable and reliable parent;

The judge also wrote:

[40]         I would add that, although I was not asked by [the mother]to make a finding that [the father’s] conduct towards her amounts to family violence as defined in s. 1 of the FLA and its assessment per s. 37 and 38, in my view it is very close to the line in that regard. The fact that [the father] continues to drive the children in his truck bearing the decals in question remains an important consideration regarding ongoing parenting arrangements. That is because it would be a simple matter to remove the decals but [the father] has chosen not to do so, notwithstanding his employer’s view of the matter and the needless ongoing embarrassment and discomfort which they cause [the mother]. They will also, at some point, no doubt be the subject of questions from the children.

As a consequence, the judge ordered a shared parenting schedule on a rotating cycle whereby the mother would have parenting time for six days, and that the father would have parenting time for two days thereafter.

 

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Family Law – Parenting Time and Responsibilities

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On separation, a couple must decide how they will share time with their children and what responsibilities they will have in respect to each child. The implications to the couple will depend on whether legal proceedings are under the federal Divorce Act or the BC Family Law Act. A couple may only proceed under the Divorce Act if they are married; however, anyone can proceed under the Family Law Act for most matters dealing with children.

Terminology

Under the Divorce Act, the proper terms to describe parenting rights and responsibilities are “custody” and “access”. The term “custody” refers to with whom the child will live and the rights and responsibilities regarding the care of the child. The term “access” refers to the time a parent without custody, or another relative, is entitled to spend with the children.

Under the Family Law Act, the proper terms are “parenting responsibilities” and “parenting time”. The term “parenting responsibilities” refers to the ability to make decisions for the child. Guardians may share these responsibilities or one guardian may have these responsibilities on his or her own. The term “parenting time” refers to the amount of time that a guardian spends with a child and may also include smaller, or day-to-day, decision making while the child is in the care of that guardian.

Determining Parenting Time and Responsibilities

Parents may reach an agreement as to how they will share responsibilities and how much time they will spend with the children or they may apply to Court to receive an Order. A Court will determine these issues by considering what is in the best interests of the children. A Court may determine that it is in the best interests of the children to give shared rights and responsibilities to both parents, to only one parent or a combination of both. How these issues are divided may affect the amount of child support that each party is responsible to pay.

In many communities, before a parent can go to Court, he or she must attend a Parenting After Separation Course. This course discusses the effect of a couple’s separation on the parents and the children.

 

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Child Support – Family Law, Separation, Divorce

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My Partner and I are Separating, Do I Need to Pay Child Support?

Introduction

A parent has an obligation to help financially support his or her children. When two people who have had a child together separate, there is a responsibility to pay child support regardless of whether the parents were married. A step-parent may also be responsible for paying child support. Although a parent will generally be responsible for paying child support, there are a number of factors that may affect how much you have to pay and for how long you have to pay.

How Much Child Support will I have to Pay?

There are guidelines that generally determine how much child support you will have to pay. These guidelines are called the Federal Child Support Guidelines. The amount you will have to pay depends on how much money you make and how many children you have. In addition to the basic amount that the Guidelines set out, you may also be responsible for a portion of other special expenses, such as daycare or the cost of braces.

It is possible that you will have to pay an amount that is different than the amount set out in the Guidelines. For example, a court may order you to pay an amount that it decides is fair in the circumstances. It is also possible to agree with the other parent to pay a certain amount of child support. This amount must be reasonable as a court will change the amount if it determines that reasonable arrangements have not been made for the support of the child.

Step-parents

Although your financial obligation may be different than the amount set out in the Guidelines, if you are a step-parent, you may also have a responsibility to pay child support. If you are a step parent, whether you have to pay child support may depend on the legislation. If you were married, you may proceed under the Divorce Act. Under the Divorce Act, you will likely be responsible to pay child support if you lived with the child and behaved like a parent towards the child.

Under the Family Law Act, you will be responsible for paying child support if you are a legal spouse of the child’s parent and you helped support the child for at least one year. You will be a spouse of the child’s parent if you were married or if you lived in a marriage-like relationship with the child’s parent for a continuous period of two years or if you had a child together. Under the Family Law Act, you will also only be responsible for child support if a court proceeding is started within one year of the last time you providing support for the child. Under the Family Law Act, a step-parent’s responsibility to pay child support is secondary to other parents or guardians and may depend on several factors, including how long the step-parent lived with the child.

How Long Do I have to Pay Child Support?

In most cases, a parent will be responsible to pay child support at least until the child reaches the age of 19. A parent’s obligation to pay child support may continue after the child reaches 19 if that child still relies on his or her parents due to illness or disability, or because he or she is going to school full-time.

If you need legal advice on this subject or any other law related inquiry please contact us.

 

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