Supreme Court establishes framework for retroactive decreases in child support

Appellant owed nearly $170,000 in unpaid child support

Supreme Court establishes framework for retroactive decreases in child support
Cheryl Goldhart, Surinder Multani and Maneesha Mehra of Goldhart & Associates acted for the respondent.

In denying a father’s bid to have his child support debt cancelled or substantially reduced, the Supreme Court of Canada has established a framework for courts to follow when a parent tries to retroactively decrease child support.

In Colucci v. Colucci, a unanimous Supreme Court upheld an Ontario Court of Appeal decision finding that the payor father owed to his ex-wife approximately $170,000 in retroactive child support payments for the parties’ two daughters.

Justice Sheilah Martin, who wrote the decision, “has provided a nice, neat framework that will assist lawyers, judges, and participants in the system in the future,” says Cheryl Golhart, principal of Goldhart & Associates in Toronto, and lead counsel for the respondent mother before the Supreme Court.

This “will decrease legal fees, and hopefully decrease conflict to the betterment of children, and to ensure child support gets paid, which is a huge issue in our in our family law system.”

“It’s a very important decision,” agrees Richard Gordner of Gordner Law in Windsor, Ont., and counsel for the appellant father, “because there were two lines of authority” regarding requests for variations in child support orders, arising from cases from New Brunswick and Ontario.

The decision establishes a framework for judges to follow in the “very common” situations in which the payor parent requests a retroactive decrease in ongoing child support as a result of the payor’s reduced  financial circumstances, he says.

“Now you’ll have a framework applied throughout Canada as opposed to different analysis depending on province you’re in.”

Background

The parties were married in 1983 and divorced in 1996. They have two children. Their divorce judgment, dated May 1996, gave custody of the children to the respondent mother and required the appellant father to pay child support of $115 per week per child; these obligations ended in 2012. By that year, however, the appellant had fallen into substantial arrears and his taxable income had been in decline since 1997 onwards; the arrears with interest totalled more than $170,000.

In 2016, the appellant brought a motion to retroactively vary the child support and to fix the arrears of child support (if any), and determine the payments on the arrears in accordance with his income. The motion judge recalculated and reduced the arrears owing to $41,642. The Court of Appeal allowed the appeal in part and set aside the paragraph of the motion judge’s order which reduced the arrears owing. The appellant’s cross-appeal from the costs award was dismissed, and he appealed to the Supreme Court.

Issues

The court in this case was asked to decide, first, “the appropriate framework for deciding applications to retroactively reduce child support under s. 17  of the Divorce Act , and second, what is the appropriate framework where the payor parent seeks to rescind child support arrears under s. 17  based on current and ongoing inability to pay?”

In her reasons, Justice Martin noted the long-established principles of child support law in Canada: that children have the right to a fair standard of support, and that parents are obliged to support their children financially from birth and continuing after separation of the parents.

She also noted that courts have and should have a wide amount of discretion to vary child support orders “to ensure the correct amount of child support is being paid and to adapt to the enormous diversity of individual circumstances that families face.”

Three interests

Three interests must be balanced in deciding these retroactive variation cases, the court found; in its decision in D.B.S. v. S.R.G., 2006 SCC 37, those were defined as i) the child’s interest in receiving the appropriate amount of support to which they are entitled; ii) the interest of the parties and the child in certainty and predictability; and iii), the need for flexibility to ensure a just result in light of fluctuations in payor income.

“The child’s interest in a fair standard of support commensurate with income is the core interest to which all rules and principles must yield,” Justice Martin wrote. “A fair result that adequately protects this interest will sometimes lean toward preserving certainty, and sometimes toward flexibility.”

Information sharing and disclosure

In addition to the principles established in the Federal Child Support Guidelines of 1997 and in D.B.S., “any framework for decreased child support must account for the informational asymmetry between the parties and the resulting need for full and frank disclosure of the payor’s income,” the court found.

“Simply stated, disclosure is the linchpin on which fair child support depends and the relevant legal tests must encourage the timely provision of necessary information,” Justice Martin wrote, as it’s the payor who knows and controls the information needed to calculate the appropriate amount of support, not the recipient, except to the extent the payor willingly shares or is require to share it.

Promoting proactive payor disclosure also advances the objectives of reducing conflict between the parties and encouraging settlement.

“What this court has now said is, the payor has all the information, [and] that the payor has to provide disclosure; the payor can't lay in the weeds and wait,” as the appellant father did before making an application in 2016 – four years after his child support obligations had ended -- for a retroactive decrease in support payments and a rescission of arrears owing.

“They have to provide the disclosure and ask for a change in a timely way.”

Test for retroactive decrease in child support

The parties in this case had disagreed as to whether “the framework for retroactive decreases under s. 17  [of the Divorce Act] should reflect the flexible and discretionary approach applied to retroactive increases in D.B.S. With certain modifications, I conclude that it should,” Justice Martin wrote.

“A payor who has established a past decrease in income is not automatically entitled to a retroactive decrease of support back to the date of the [income] decrease, as suggested by the motion judge in this case. The overall decision is a discretionary one.”

The court concluded that since the appellant had given no effective notice before arrears stopped accumulating in 2012, he was therefore not entitled to any retroactive decrease in his child support obligations.

Part of the test established by Justice Martin places the onus on the payor to show that there's been a material and continued decrease in income, says Goldhart.

With proper disclosure, once that change is established the Supreme Court of Canada has now introduced a presumption in favour of retroactively decreasing child support to the date the payor gave the recipient effective (or informal) notice, up to three years before formal notice is given of the application to vary the support order.

And the meaning of “effective notice” now is clear; “it must be accompanied by full and frank disclosure that will substantiate the change,” says Goldhart, who describes the lack of disclosure as “the bane of family court existence,” which the Ontario appellate court has described as “a cancer.”

“The presumption in decrease cases that support will be reduced back to the date of effective notice strikes a fair balance between the certainty interest of the child and recipient and the payor’s interest in flexibility,” Justice Martin wrote, with the presumptive three-year limit being justified by evidentiary concerns.

Payor’s conduct

A payor’s efforts to disclose and communicate information will often be prominent in assessing the payor’s conduct in the context of an application for a retroactive decrease of support, the Supreme Court noted. In this case, the appellant father had disappeared for periods of time without letting his ex-wife or daughters know his whereabouts; and he had never willingly made a support payment (payments had been enforced).

A lack of disclosure of assets can also be considered blameworthy conduct, says Goldhart.

Rescission

Recission of arrears is a last resort, in exceptional cases, the court noted, and while the presumption in favour of enforcing arrears may be rebutted in unusual circumstances, the standard should remain stringent and not based on current financial incapacity only. The court ought to first consider whether hardship to the payor can be mitigated by ordering a temporary suspension, periodic payments, or other creative payment options.

“I agree with Ms. Colucci that the availability of rescission would otherwise become an ‘open invitation to intentionally avoid one’s legal obligations,’” wrote Justice Martin.

Future cases

Goldhart also noted that the court seemed “to be inviting a case where there’ll be a retroactive increase, for another case on another date,” given the decision’s framework for retroactively increasing child support that was also included.

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