Section 7 expenses also known as special and extraordinary expenses under the Federal Child Support Guidelines are unfortunately frequently at the centre of matrimonial disputes between parents of a child over the payment of the expense.

In the recent decision of the Superior Court in Dorsett v Levy¹ the Court analyzes the legal status of contributions one spouse makes to another for the payment of their child’s section 7 expenses. In addition the court canvases what remedies are available when a recipient spouse fails to use the funds received by the payor spouse for the payment of the child’s special and extraordinary expenses.

The Court concludes that the payee spouse holds these moneys in an express trust for the child.²

Facts

The Payor spouse was having his income garnished by the Family Responsibility Office (“FRO”) and paid to the payee spouse who was to use the money to pay their child’s college tuition or in the alternative pay the child’s OSAP loans. The problem arose when the funds that were garnished as section 7 expenses were not paid by the payee spouse to the child’s college expenses or OSAP Loans. The Payor spouse brought a motion seeking the reimbursement of his contributions made to the payment of his child’s tuition against the payee spouse as their child did not receive the money.

Analysis

The Court held a trust was created whereby the payor spouse was a settler who paid amounts to the payee spouse who acted as trustee for the purpose of paying the child’s tuition. The Court stated:

In finding a trust relationship, it is not necessary “for any technical words or expressions for the creation of a trust”.  All that is needed is that the intention to create a trust can be inferred with certainty.  The language used in the Guidelines makes clear the legislative intention that a parent’s contribution to the payment of a child’s tuition be used for that purpose.³

In finding that the payee spouse held the money in trust for the child the Court differentiated special and extraordinary expenses from regular child support. The Court provided the following analysis in reaching the conclusion that section 7 expenses were different then regular child support payments and therefore could be considered trust monies:

A contribution to the payment of a designated s. 7 expense is different than periodic child support in the following important respects:

a)           The expense is, by its nature, extraordinary, which the Guidelines define as one that cannot reasonably be expected to be paid from the periodic (table) child support that the recipient parent receives;

b)           The existence of the designated special and extraordinary expense is the basis of the court’s jurisdiction, pursuant to s. 7 of the Guidelines, to order the payor parent to contribute to its payment, and of FRO’s power to enforce the order by garnishment; the funds must therefore be used for that designated purpose.

c)           The amount of the payor parent’s contribution to the payment of the s. 7 expense is not deducted from the child support to be paid to the recipient parent.  Accordingly, imposing a trust on the amount paid for the purpose of the designated expense does not undermine the certainty of the Table child support amount prescribed by the Guidelines.

d)           The recipient parent does not exercise her discretion in the use of the payor parent’s contribution to the payment of the child’s s. 7 expense.  She is not entitled to balance the child’s present and future needs in deciding how the contribution is to be applied.  Such a discretion would undermine the purpose for which the payment is made, and frustrate the policy objective of ensuring that the child’s education needs are met.⁴

The Remedy

After finding that section 7 monies as held by a payee spouse on behalf of a child are trust funds, the court then addressed the remedy for the payee spouses “breach of trust”. The Court rejected the father’s claim for reimbursement as the beneficiary was the child and not the payor spouse. The Court concluded with the following advice to litigants where the payment of section 7 expenses is in issue:

In a case where a payor parent seeks to enforce the recipient parent’s obligation to pay the received contribution to the payment of the expense which it was intended to cover, the payor parent should serve the child who was the intended beneficiary of the trust, if that child is an adult, or the Office of the Children’s Lawyer, if the child is a minor.⁵

In this case as the child was an adult the Court ordered his reasons be served on the child and granted leave to the child to file responding materials.

Heads-up

In light of this decision parents and children may want to consider bringing a claim for an accounting against a payee parent where there are concerns that those payments have not been used for the section 7 benefit of the child.

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1. Dorsett v Levy, 2016 ONSC 345.

2. Ibid at para. 30.

3. Ibid at para. 33.

4. Ibid at para. 43

5. Ibid at para. 51.