C. Periodic and Lump Sum Payments

Author:Julien D. Payne - Marilyn A. Payne

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1) Section 11 of Guidelines

Section 11 of the Federal Child Support Guidelines provides that the court making a child support order may require the spouse against whom the order is made to pay the amount in periodic payments, in a lump sum, or in a lump sum and periodic payments. No criteria are defined to indicate when a lump sum might be appropriate.112

2) Limits on Judicial Discretion

In Myatt v. Myatt,113 Kirkpatrick J. reviewed the jurisprudence relating to lump sum awards of child maintenance and identified the following principles and considerations:

(i) The same considerations that apply to orders for lump sum spousal maintenance apply to consideration of a lump sum child maintenance order

(ii) Lump sum maintenance awards are exceptional, and should be made only when there is some special need or specific circumstances render it appropriate.

(iii) The existence of animosity between the parties may favour a lump sum maintenance order to reduce future sources of conflict.

(iv) The only asset of the parent was his interest in the matrimonial home.

(v) The parent was not in a position to pay any amount towards the support of the children.

(vi) It was neither practical nor feasible for the parent to pay periodic maintenance, considering her earning capacity.

(vii) The parent disobeyed a previous maintenance order and had not demonstrated "pru-dent financial management."

(viii) The parent’’s plans were to use available monies to pay off debts instead of child support.

(ix) The parent had limited means to earn income in the foreseeable future and one financial asset.

Although lump sum child support and orders to secure child support are now regulated by sections 11 and 12 of the Federal Child Support Guidelines, instead of by the provisions of the Divorce Act, it has been judicially asserted that no policy change has thereby ensued.114

This may be true in the sense that lump sum orders for prospective child support are still exceptional and case law suggests that a specific or immediate need for a lump sum must be shown, or there must be a history of default,115or a record of poor money management, or

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an inclination to risk the family’s economic security.116However, it may not be true in other contexts. Given that the Federal Child Support Guidelines normally determine a monthly amount of table support on the basis of the obligor’s income and the number of children entitled to support, there appear to be significant limitations on the right of a court to order prospective lump sum child support pursuant to section 11 of the Guidelines.117Insofar as the basic amount of periodic child support under the applicable provincial or territorial table is conditioned on the obligor’s annual income, it is doubtful whether courts have retained their former discretionary jurisdiction to order lump sum child support to be paid where a spouse is unable to pay periodic support, but a lump sum could be provided out of the proceeds of a court-ordered property division or other capital assets.118Where very substantial proceeds or assets are involved, however, a court may impute income on the basis of their income earning potential for the purpose of ordering periodic support under the Federal Child Support Guidelines.119It has been held that it is no longer possible for a court to order lump sum child support for the purpose of providing long-term accommodation for a child,120although no corresponding limitation applies to an order for lump sum spousal support. Lump sum child support cannot be ordered for the purpose of redressing inequities that may flow from a prior separation agreement dealing with a transfer of property and the assumption of family debts.121

Although lump sum orders may be available by way of retroactive child support, section 7 expenses, or pursuant to section 3(2)(b) of the Guidelines for the support of a child over the age of majority,122a court has no general discretionary jurisdiction under section 11 of the Guidelines to order lump sum child support in lieu of the table amount of child support. If the attendant circumstances, such as a history of default or the likelihood of future default, render a lump sum order necessary to protect the financial interests of the child, the periodic amount of child support must first be determined and then converted into a lump sum payment, preferably with the aid of actuarial evidence.123Some of the limitations relating to lump sum child support orders may be addressed by an order to secure periodic child support payments that is available under section 12 of the Federal Child Support Guidelines.

The ensuing analysis, which incorporates cases decided under the pre-Guidelines child support regime, must be understood as falling subject to the aforementioned inherent lim-

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itations concerning the jurisdiction of the court to order lump sum support under section 11 of the Guidelines.

3) Consent Orders for Lump Sum in Lieu of Periodic Child Support

Section 15.1(7) of the Divorce Act empowers a court to order an amount of child support that is different from the amount that would be determined under the Federal Child Support Guidelines if both spouses consent and the court is satisfied that reasonable arrangements have been made for the support of the children. A court may consequently grant a consent order that provides lump sum support to meet the post-secondary education costs of adult children.124Similarly, a court may conclude that reasonable arrangements for the support of the children have been achieved by minutes of settlement that provide for the transfer of the obligor’s equity in the matrimonial home to the parent with whom the children will be living while attending university, such transfer, in effect, constituting a lump sum payment in lieu of periodic support under the Guidelines.125

4) Lump Sums in Addition to Periodic Sums to Reflect Bonuses

A court may order a lump sum in addition to periodic child support to reflect actual and projected bonuses that the obligor has received or will receive as a supplement to his annual income,126but an application by the obligor to delay payment of a portion of the applicable table amount of child support until the annual bonus is received may be dismissed where the obligor has been making insufficient contributions to the support of the children.127

5) Undue Hardship May Trigger Lump Sum

A court may order lump sum child support in addition to periodic child support where undue hardship would be suffered by the children, if there were strict adherence to an income based assessment under the Federal Child Support Guidelines.128

6) Lump Sum by Instalments

Lump sum child support may be ordered to be paid in two129or more instalments.

7) Lump Sum Interim Orders

In the absence of a failure to recognize an obvious obligation or an attempt to avoid it, a parent should not ordinarily be ordered to pay a lump sum for child support on an interim basis. The purpose of an interim order is to make temporary provision for children pending

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trial. An order for lump sum child support should not ordinarily be made until the spousal property division has been finalized and all material facts are known.130

8) Lump Sum Capitalization of Periodic Support

In granting a lump sum order for child support instead of an order for periodic payments, it is customary for the courts to capitalize the periodic payments that would otherwise have been ordered.131Thus, lump sum child support may be ordered on the basis of actuarial evidence respecting capitalization of the periodic support payable pursuant to the applicable provincial table under the Federal Child Support Guidelines where there is a real possibility that the obligor would not comply with an order for periodic support.132

9) Periodic Support as the Norm

Although the amount of child support under the applicable provincial table is calculated on a monthly basis, the court may order proportionate payments to be made on a weekly133 or fortnightly basis.134Lump sum orders have generally been restricted to cases involving special circumstances...

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