Hidden liability

Family lawyers know how expensive and complex family breakdown can be. They may not be aware, however, that the stakes are even higher for immigrant clients who have undertaken to sponsor family members.

Sponsorship agreements are enforceable contracts — and provinces are increasingly suing to recover social assistance costs incurred by relatives when sponsors default on agreements due to family breakdown or other reasons. The liability can extend to hundreds of thousands of dollars.

“I would say 10 years ago in Ontario it wasn’t happening; now it’s happening all the time,” says Lorne Waldman, a Toronto immigration lawyer. “It’s a sea change over the course of the last 10 years in Ontario.”

He’s seen sponsors with accrued debts of more than $100,000 from the previous 10-year sponsorship period. “And now it’s going to be 20 years. The potential is for more than $200,000 in impossible liability in some of these cases.

“I had a client come in to see me and said, ‘my in-laws left, I didn’t want them to leave, I was willing to support them, but they got into a fight with my wife and they up and left and now they’re on welfare.”

Sponsors must undertake to provide food, shelter and other requirements for 20 years for parents and grandparents and their dependent relatives. Before 2013, the requirement was 10 years; in the case of spouses, it’s now three years.

The sponsorship agreement is “basically a 20-year undertaking that the parents or dependents … — sometimes it can be three or four or five people that you’re sponsoring — will not go on welfare or any other form of social services, and if they do you’re liable to pay that debt,” Waldman says, calling it a “hidden liability.”

The average age of the parents and grandparents (PGP) group is 65, meaning they’re more likely to be a burden on the health-care system, while being less likely to significantly contribute to the tax base, according to a regulatory impact analysis statement published in the Canada Gazette in May 2013.

“Spouses are generally younger so they’re not likely to be a major burden on the social welfare net,” Waldman explains. “In the case of parents, it has gone the other way … the expectation is that parents may well end up being a burden.”

The data also shows an increase in PGPs signing up for social assistance “from about 3 per cent during a sponsorship undertaking to close to 20 per cent immediately after the undertaking has ended,” suggesting that once the sponsor is no longer responsible for them they turn to social assistance for an income.

Default on a sponsorship agreement can happen in any number of ways: an abused spouse quits the marriage before the end of the undertaking and goes on welfare; a husband sponsors the wife’s parents, and the marriage subsequently breaks down before the undertaking is completed; a sponsor loses his or her job and is unable, though willing, to provide support.

Waldman, who gave a presentation at the OBA Institute in February on the pitfalls awaiting lawyers at the intersection of family and immigration law, says: “It occurred to me as I was thinking about this presentation that a lot of lawyers weren’t aware there could be that potential for a huge debt.”

According to the Supreme Court’s interpretation of the sponsorship agreement in Canada (Attorney General) v. Mavi, provinces may defer repayment but have no discretion to forgive the debt, which can accrue even if the sponsor is unaware that it exists.

Writing for the court, Justice Ian Binnie noted that while “demand for payment from a number of the sponsors was not made before their indebtedness became relatively large… it is inherent in the sponsor’s support obligation that the sponsor is to keep track of the sponsored relative he or she has undertaken to support.” The province does owe a “duty of procedural fairness when enforcing sponsorship debt,” which includes notifying the sponsor at his or her last known address, he added.

Waldman says every family lawyer should ask questions about sponsorship and immigration when discussing family breakdown with clients.

“This is a possible liability in every divorce case involving people who are immigrants,” said Waldman. “Because now the law is clear that the liability is enforceable. Lawyers are now put on notice that this is a possible area that can come back and bite them down the road.”

And if the client has an issue of immigration status, or an outstanding sponsorship undertaking, “then it’s probably not a bad idea to get advice from an immigration lawyer to see how this will affect negotiations or your client’s rights,” he adds.

"This is a possible liability in every divorce case involving people who are immigrants."