National Post

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Monday, September 20, 1999

How to divorce a millionaire
Andrew Coyne
National Post

The story is told of the bank robber who was asked why he robbed banks. "Because that's where the money is," was the obvious reply.

Something of the same logic can be seen in the legal establishment's approach to divorce settlements. In any dispute over spousal or child support, legislatures and courts alike have ruled, the principle to be applied is: The Man Pays. Why? Because that's where the money is.

Take, for example, Parliament's recent decision to shift the burden of tax on child support payments from the payee to the payor -- in most cases, from the woman to the man. Traditionally, income tax is paid on income: what comes in, not what goes out the door to your ex. But under The Man Pays principle, that notion has been superseded.

In its Bracklow v. Bracklow decision earlier this year, the Supreme Court went Parliament one better. Not only was the man obliged to pay for the upkeep of children, as in the past, or for the damage his ex-wife sustained to her career by staying home with the children, as more recent judgments had found, but he was now required to pony up even where there were no kids, and no harm to her career. He has money, and she doesn't. Ergo: The Man Pays.

With the case of Baker v. Francis, this nascent principle of jurisprudence has had to be amended somewhat. For in this case, the man was paying -- only not quite enough to suit his ex-wife. Under terms agreed to when they separated in 1985, he (Baker) paid her (Francis) $2,500 a month in support of their two daughters. Since then, however, two things had happened. One, through a series of business deals, he had made a vast fortune, now worth $78-million. And two, in 1997 Parliament had introduced new child support guidelines: part of the same package that reversed the burden of taxation on support payments.

Rather than refer to the actual costs of child-rearing -- the "conditions, means, needs and other circumstances" of the children the Divorce Act says are supposed to be everyone's guide -- judges now consult a simple chart tying payments to the payor's income, the theory being that a child's "needs" will vary according to the means of his parents. According to the guidelines, Mr. Baker's children now had needs totalling $10,034 a month. Tax-free.

The law is not quite such an ass as that, however. At incomes above $150,000, judges are allowed some discretion, where following the guideline would yield an "inappropriate" level of support. As Justice Michel Bastarache observed, writing for a unanimous court, while child support "will often produce an indirect benefit to the custodial parent," the Divorce Act "clearly dictates that maintenance of the children, rather than household equalization or spousal support, is the objective of child support payments."

So the question is: At what point does child support become disguised spousal support? More to the point, how could anyone possibly claim that it costs 10 grand a month to raise two children? These are not "special needs" children. Indeed, Ms. Francis herself, in court papers filed in 1993, put her actual costs of child-raising at around $2,500 a month -- about a third of total household expenses. By 1996, with the new guidelines pending, she had raised her sights, suggesting she could get by on just over $17,000 a month.

How, then, did a trial judge conclude that $10,034 a month was "appropriate"? First, she applied the same one-third ratio of child-raising to total costs from Ms. Francis' 1993 filing to the more extravagant budget proposed in 1996. Then she added the $25,000 annual cost of the children's private school education. But even this only took her up to about $8,500 a month. So she threw in $1,500 for discretionary expenses, and called it quits. After all, he has the money.

This was a masterpiece of legal reasoning, however, beside the appeal court ruling, handed down by Justice Rosalie Abella, once seriously proposed for the Supreme Court. Judge Abella ruled, imaginatively, that judges had no power to find an award was "inappropriately" high. They could only find it was "inappropriately" low.

The Supreme Court has at least spared us from that bit of lunacy. But it agrees that a child's needs should be presumed to expand in line with the father's -- er, "non-custodial parent's" -- income: or at least, that the onus is on him to show why the guideline amount is unreasonable, rather than the reverse. Why? It might be argued children should not be deprived by divorce of the lifestyle to which they had been accustomed. But that's not the case here: He made his millions after he walked out.

Nor is it the case that, without a quadrupling of support payments, they would be consigned to poverty. Even under the original support agreement, Ms. Francis' total income, when combined with her $63,000 salary as a teacher, came to $93,000 a year. With $10,000 in tax-free support payments every month, her annual income will be equal to about $300,000 before tax. The Man Pays. And pays.

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