• by Oriana Visser
Originally published in the OFLM 2024-11 edition
Overview
In Ontario, courts have the authority under Section 34 of the Family Law Act and Section 26.1(1) of the Divorce Act to order lump sum prospective child support payments. Section 11 of the Child Support Guidelines also provides for the possibility of lump sum payments. However, the use of lump sum payments for prospective child support is discouraged.
Case law has established that such awards are only appropriate when a payor has a history of non-compliance, including failure to make voluntary payments or provide required financial disclosure, or where the payor is at risk of leaving the country. In determining the amount of lump sum support, courts consider factors such as the length of time the child(ren) will require support, the possibility of post-secondary education expenses, and the payor’s financial capacity. In situations where a payor has a history of making voluntary support payments and demonstrates an ability to continue fulfilling obligations, courts may decline to order lump sum payments for prospective support.
Introduction
In cases where child support is owed, a “clean break” following separation or divorce is generally not possible. Although Ontario’s Family Law Act permits lump sum child support payments, they are usually reserved for situations involving retroactive support owing or exceptional circumstances where there is clear evidence that future periodic payments may not be made. They may also be appropriate in cases where there are anticipated post-secondary education costs.
A payor seeking to pay their prospective child support obligations in full in order to sever financial ties quickly will likely be out of luck. On the other hand, a payee requesting lump sum child support for prospective payments must demonstrate to the court that there is a genuine risk that periodic payments may not be made.
Child support is a child’s right, aimed at ensuring a fair standard of living by enabling the child(ren) to continue benefiting from both parents’ incomes after separation. As a result, child support can fluctuate year-to-year based on changes to the payor’s income, which is difficult to capture when determining a lump-sum amount. Generally, parents cannot choose to not pay or choose to make a lump sum payment simply because they wish to sever financial ties with each other.
This article will explore the key factors that courts consider when determining the appropriateness of lump sum prospective child support awards and considerations when quantifying their amounts.
Legislative Background
Section 34 of the Family Law Act empowers a court, when ordering support under section 33 of the Act to make an order:
34 (1) (b) requiring that a lump sum be paid or held in trust;
34 (1) (c) requiring that property be transferred to or in trust or vested in the dependent, whether absolutely, for life, or for a term of years;
34 (1) (k) requiring the securing of payment under the order by a charge on property or otherwise.
Similarly, sub-section 26.1(1) (c) of the Divorce Act allows the court to order a lump sum payment of child support.
Section 11 of the Child Support Guidelines provides that: “The court may require in a child support order that the amount payable under the order be paid in periodic payments, in lump sum or in a lump sum and periodic payments.”
General principles
The Ontario Court of Appeal found that “where there is a real risk that periodic payments will not be made” a lump sum child support award may be appropriate (Makeeva v. Makeev, 2021 ONCA 232 at para. 11).
Likewise, the Court of Appeal determined that lump sum child support may be warranted when a payor has failed to make voluntary payments, has not provided adequate financial disclosure, and has prolonged litigation with the other party (Roscoe v. Roscoe, 2012 ONCA 817 at paras. 3 and 4).
Lump sum child support has been ordered in many cases where the payor has a history of poor payment compliance. Case law also supports such orders in situations where a party has a history of asset dissipation or has previously refused to meet their support obligations (Milutinovic v. Milutinovic, 2018 ONSC 4310 at paras. 102 and 103).
Lump sum child support awards may also be appropriate where there is a risk that the payor may leave the country (Thompson v. Westlake, 1996 CanLII 8303 (ONSC) at para. 13).
In the context of family law, a vesting order functions similarly to an enforcement order. Therefore, courts must be convinced that the past behaviour of the person required to make payment, along with their reasonably expected future actions, suggests that they are unlikely to comply with a payment order without the imposition of more stringent measures (Lynch v. Segal, 2006 CanLII 42240 (ONCA) at para. 27).
Additionally, courts should not make an order that prioritizes the interests of a non-compliant support payor over those of the dependent parties. It must take all appropriate, lawful, and reasonable measures to ensure that the payor meets their legal obligations to their dependents (Daciuk v. Daciuk, 2023 ONSC 70 at para. 113).
Quantifying lump sum payments for prospective child support
Once a court decides to award a lump sum payment, its next step is to determine the amount. The court should calculate the present value of the future periodic support payments that the payor spouse will likely make under the Guidelines. To do this, the court must assess how long the child is expected to receive support and whether the support amount is likely to change over that period (Swanson v. Swanson, 2004 CanLII 48679 (ONSC) at para. 115).
Recent case law
Cirota v. Cirota – lump sum awarded
In Cirota v. Cirota (2024 ONSC 4117), the parties met in Italy in 1998 and shortly after married in Canada in 2000. They had three children together. They separated in 2022 after the husband’s threatening behaviour caused the wife to move out of the matrimonial home with the children.
Since separation, the wife had been solely responsible for the children's care, with little financial support from the husband who had moved back to Italy in 2023. At trial the court was tasked with determining, among other things:
- What income should be imputed to the husband for support purposes?
- What Guideline child support and section 7 expenses does the husband owe retroactively and ongoing?
- Should lump sum child support be ordered and paid from the husband’s share of the net proceeds of the matrimonial home?
The court determined that income in the amount of $100,000 should be imputed to the husband who had made no effort to comply with disclosure as required by the Family Law Rules. The husband also had the potential to earn $100,000. He had previously owned a profitable construction business in Canada. He made no effort to find jobs in Canada or in Italy following separation. The court was satisfied that the husband was underemployed.
The court then assessed the wife’s request for lump sum child support and section 7 expenses. Justice Horkins found that a lump sum payment of child support was appropriate. There was a real risk that the husband would not make period payments. He had been non-compliant with court orders and was not forthcoming with disclosure. He had failed to find a job following separation and his move to Italy, refusing to prioritize earning any income. Additionally, he had not made voluntary support payments and had forced the wife to endure financial hardship because of his actions.
The court also noted that if it orders periodic support , the wife would be left trying to “enforce an interjurisdictional support order and hunt down funds in Italy” (at para. 131). The husband had provided no disclosure regarding his Italian bank accounts, which would be necessary information in any attempt to enforce periodic support payments.
Satisfied that lump sum prospective child support was appropriate, Justice Horkins ordered that the husband pay $224,316 in lump sum child support and section 7 expenses from his share of the net proceeds of the matrimonial home. The court accepted the wife’s calculations which were based on her 2023 income of $103,313.10 and the husband’s imputed income of $100,000. Her calculations covered the children until they turned 18, at which time child support would be reviewed for each child. Section 7 calculations contemplated expenses for daycare, tutoring fees, and extracurricular activities, including swimming lessons and soccer.
The husband was also ordered to pay an additional $43,924.78 for retroactive child support and section 7 expenses owing.
The court did not include calculations for potential post-secondary education costs, finding that these expenses should be reviewed when each child proceeds to post-secondary education and the parties exchange updated financial disclosure.
J.A. v. M.K. – lump sum awarded
In J.A. v. M.K. (2024 ONSC 1698), Justice MacPherson ruled on an uncontested trial, finding that, while unusual, it was necessary to make a prospective lump sum child support award in this case.
The parties were married in 1997 and separated in 2017. They had four children together. On the date of separation, the parties and the children resided in Canada. The husband left Canada following separation and it was unclear to the court whether he was living in Israel or Russia. The parties were divorced by a court Order in Russia on May 4, 2018. As the children were habitually resident in Canada on the date of separation, Canada assumed jurisdiction to deal with parenting issues.
The issues remaining were financial, including child support and section 7 expenses on a retroactive and ongoing basis.
The husband had not complied with basic disclosure requirements and had not complied with court ordered disclosure. The husband’s sworn financial statement, deposing an annual income of $45,000 did not explain millions of dollars accumulated in assets and the lifestyle enjoyed by the parties. The husband had made no voluntary support payments. The husband was likely living in Russia, and his assets and income were outside the Court’s reach.
Justice MacPherson was satisfied that the husband’s pattern of obfuscation would continue and found that it was in the best interests of the children and the administration of justice to order lump sum prospective child support.
When determining the amount of the lump sum payment, Justice MacPherson considered the potential that the children would pursue post-secondary education. As the two older children had completed post-secondary studies, the court found it was likely that the two younger children would also attend. Accordingly, the prospective lump sum child support amount was calculated on the basis that child support would end when each child turns 21.
Justice MacPherson accepted the wife’s calculations, finding that the lump sum child support award from the date of separation until December 2035 is set at $2,303,606. The court did not detail what her calculations were based on, citing only an exhibit contained within her trial affidavit. Retroactive section 7 expenses were also ordered in the amount of $45,944.83 based on the husband’s imputed income of $1,210,000 and the wife’s imputed income of $30,000. The wife did not seek prospective section 7 expenses.
Abdul-Ridha v. Kandil – lump sum not awarded
In Abdul-Ridha v. Kandil (2024 ONSC 5089), the court declined to award lump sum child support. Justice Labrosse found that there was no real risk that periodic payments would not be made.
The parties married in 2011 in Cairo, Egypt. They separated in 2018. The parties had two children together, who at the time of the decision, were 10 and 9 years of age.
The wife sought an order that prospective child support be paid in a lump sum from funds held in trust from the sale of a multi-unit building the husband had purchased in Gatineau in 2016.
In this case, the husband voluntarily paid child support dating back to 2018. He stopped paying in 2021 when he was no longer employed and sold the multi-unit building. It was unclear to the court how much funds remained in trust from this sale. The husband also continued to be unemployed
Justice Labrosse considered that the husband had ongoing child support obligations but weighed them against the ability of the husband to subsist. As the husband had voluntarily made child support payments in the past, the court was not convinced that he would not pay in the future. Labrosse J. confirmed that the husband had an obligation to pay child support at least at minimum wage and confirmed that he has an obligation to become gainfully employed. However, the threshold to make an order for prospective lump sum child support was not met.
Practically speaking
Based on the above case law, there are some general factors that courts look for when determining if an order for lump sum child support is appropriate. Consider the following factors when evaluating the suitability of lump sum child support in your case:
- a real risk that that periodic payments will not be made;
- non-compliance with disclosure requests or court ordered disclosure;
- absence of voluntary periodic child support payments;
- payor’s behaviour has required other party to endure protracted litigation;
- a payor residing outside Canada or the potential risk of a payor leaving the country; and,
- children over the age of majority.
Also consider the following factors when quantifying the amount of prospective child support for the court:
- potential post-secondary expenses;
- potential extracurriculars, activities, and other section 7 expenses; and,
- imputing an appropriate level of income
In addition, consider if there are assets from which a lump sum could be paid, such as proceeds from the sale of a property being held in trust. Demonstrating that such assets are available to a payor could assist an argument for lump sum payment of prospective child support where other factors are also present.
Conclusion
While lump sum prospective child support can be a useful tool in certain circumstances, it is not a favoured remedy when determining ongoing child support. Courts are more likely to consider a lump sum prospective child support award when there is a demonstrated risk that periodic payments will not be made, such as in cases of non-compliance with disclosure, failure to voluntarily meet child support obligations, and where a payor lives abroad or may leave the country.
When determining the quantity of a lump sum payment, courts will consider future post-secondary education or section 7 costs that may need to be secured in advance. They will also consider the appropriateness of imputing income to the payor, as these cases in particular often deal with a party who has failed to provide adequate disclosure necessary to determine appropriate income.
Ultimately, these decisions are guided by the principle that child support is the right of the child and is meant to ensure that children continue to benefit from both parties’ income following separation.