National Post

Page URL: http://www.nationalpost.com/news.asp?f=990917/81106

Friday, September 17, 1999

Millionaire ordered to pay $10,000 monthly support
But court says rich don't have to fork out unlimited support
Elena Cherney
National Post, with files from Southam News

In a decision that will change the way the spoils are divided when upper-income couples divorce, the Supreme Court of Canada ruled yesterday that those who earn a lot of money should not pay unlimited amounts of child support.

The court was ruling on a high-profile appeal by Toronto millionaire Thomas Baker for a reduction of the $10,034 monthly cheque he writes to his former wife, Monica Francis, for the support of their two teenage daughters.

In a unanimous decision, the court rejected his appeal, saying Mr. Baker failed to show why his support payments are excessive.

But the court also affirmed there is such a thing as too much child support.

"Courts must therefore have the discretion to remedy situations where ... amounts are so in excess of the children's reasonable needs that they no longer qualify as child support," the court ruled in its unanimous decision.

"In some cases, courts may conclude that the ... figure is so in excess of the children's needs that it must be considered a functional wealth transfer or de facto spousal support," Justice Michel Bastarache wrote for the court.

The case was widely portrayed in the media as pitting a multi-millionaire father who walked out on his family against his struggling former wife, who earns $63,000 as a schoolteacher but lives in Toronto's crime-ridden Jane-Finch neighbourhood.

The lawyer for Monica Francis, Mr. Baker's former wife, noted in a court document that the lifestyle gap between the two parents was so extreme that Mr. Baker's artwork, appraised at $235,000, was worth more than Ms. Francis' house.

In 1997, Ms. Francis was awarded a lump-sum payment of $500,000, even though she had only asked for $200,000.

Ms. Francis said yesterday she is relieved her fight is over. ''The legal bills were astronomical, over $1-million, and that should have gone to the children,'' she told Newsworld.

In explaining its reasons for rejecting Mr. Baker's appeal, the court made reference to the Federal Child Support Guidelines and their aim of preventing children's living standards from deteriorating due to divorce.

While federal guidelines clearly dictate payments for divorced parents earning less than $150,000 per year, the payment schedule stops at $150,000.

The Baker case challenged the interpretation that those guidelines should apply to support-paying parents earning more than $150,000. It will not affect divorcing Canadians who earn less than $150,000.

For parents such as Mr. Baker with incomes over $150,000, payments start with the set amount on the first $150,000 of income. On the balance of their earnings, they pay a percentage per child. The percentage varies according to the number of children; for one child, it is 0.67% of earnings over $150,000, while for two children, it rises to 1.04%.

But the guidelines allow a trial judge to decide that amount is "inappropriate," and to set another amount. In an Ontario Court of Appeal ruling last year, Justice Rosalie Abella held that an amount could only be deemed inappropriate and increased, not reduced. At issue before the Supreme Court was whether Judge Abella's reading of the word inappropriate was correct.

The Supreme Court, in overruling her interpretation, agreed with Mr. Grant that the Canadian Oxford Dictionary defines "inappropriate" as meaning "not appropriate" or "unsuitable." The court also referred to the French version of the law, which states that a trial judge can determine that an amount "n'est pas indique," -- is not "advisable," "suitable" or "appropriate," according to Le Robert & Collins Dictionnaire.

In explaining why a payment could in fact be inappropriately high, the Supreme Court noted that the child-support guidelines do not supercede the Divorce Act, which clearly spell out that child support is not intended as spousal support.

Stephen Grant, Mr. Baker's lawyer, called the ruling "a victory on principle."

"They agreed with the principles we argued," he said. "At some point, enough is enough. You can be paying too much child support."

The court found that Mr. Grant failed, however, to show that his support payments are excessive -- a burden that the court found remains squarely on the paying parent. Mr. Baker's focus on "the size of the child support payment" overlooks the children's needs, Judge Bastarache wrote for the court.

Mr. Baker may decide to return to court to once again seek a reduction in his support payments on the grounds that there has been a change in material circumstances, said Mr. Grant. The payment was determined at a time when the girls' private-school tuition tallied $25,000 annually. They have since switched schools, and their education now costs between $10,000 and $15,000.

Mr. Baker and his wife separated in 1985, six years after their marriage and less than one week after the birth of their second daughter. Mr. Baker, whose net worth was stated in court documents at $78-million, prospered after the marriage ended, earning $945,538 annually.




RELATED SITES:

(Each link opens a new window)




  • Supreme Court of Canada


  • Spousal Support Under Canada's Divorce Act

    A brief look at the issue of spousal support and how the law treats it.


  • Divorce Source

    Provides free articles and information on the financial and emotional aspects of divorce, plus the Divorce Source Professional Directory.


  • DivorceNet

    "The Net's largest divorce resource" is mostly for an American audience, but it contains a wealth of practical advice about divorce, as well as several interactive bulletin boards.

  • Copyright Southam Inc.