Canada: Child Support: The Supreme Court of Canada’s Guide to Retroactive Adjustments and Remission of Arrears
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In a recent decision, Colucci against Colucci, 2021 SCC 24 (“Colucci“), the Supreme Court of Canada (“SCC”) has clarified the proper framework for claims brought under s. 17 of the Divorce law.Under this section, parties can apply to the court for a retroactive adjustment of child support or for the reversal of unpaid child support due to a current and continuing inability to pay.
Colucci emphasizes the importance of financial disclosure and how this relates to the child’s right to appropriate child support, as well as the interests of certainty and flexibility in child support payments .
This blog provides a brief overview of the framework of these applications and outlines key points to remember for those paying or receiving child support.
Retroactive Child Support Adjustments
Monthly support is based on the payor’s income. Income can fluctuate for a variety of reasons, and when the payor’s income changes, so do their support obligations. If the parents cannot agree on a change in child support, either party can ask the court for a retroactive increase or decrease in child support.
In all cases, the court must balance three key interests in order to promote appropriate child support and timely disclosure of financial information. These interests are:
- the child’s right to appropriate child support commensurate with the payor’s income
- the interest of the child and the parents in the certainty and predictability of payments
- the need for flexibility to ensure a fair outcome given changes in income.
Framework: Retroactive reduction
The following framework applies when the payer seeks to retroactively reduce their child support payments based on past material to diminish to their income:
- Material change of circumstances
The payer must establish a past change in circumstances. This requires the payer to prove a real and material decrease in income that is neither temporary nor voluntary.
- Presumed date of retroactivity
The presumed date of retroactivity is the date the payor gave the payee “actual notice” of the change in income, up to three years before a formal request was made.
- An “effective notice” requires the payor to clearly communicate their change in circumstances to the payee
and provide evidence of change. The disclosure must be sufficient to allow the beneficiary to validly assess the situation.
- If no actual notice is given, child support must be changed up to the date of formal notice (such as filing a lawsuit).
- When the presumed date is unfair
The courts can deviate from a presumed date of retroactivity if this proves to be unfair. This discretion is guided by the factors set out in DBS versus SRG, 2006 SCC 37, and includes the “DBS Factors”:
- whether the payer had an understandable reason to delay requesting a reduction;
- the payer’s conduct, including its efforts to pay and disclose its earnings;
- the situation of the child;
- prejudice to the payer if a reduction is not granted.
- Quantification of decrease
Finally, the courts will calculate the decrease in child support for each year since the retroactive date based on the Federal child support guidelines.
Framework: Retroactive increase
For requests where a beneficiary wants to retroactively
to augment child support payments based on a material past
to augment in the payor’s income, the courts will follow a similar framework, with some modifications:
- The beneficiary must establish a past material increase in income. If the payor fails to provide sufficient financial information, the courts can impute income, vacate pleadings, make adverse inferences against the payor, and award costs to the payee.
- The deemed date of retroactivity is the date on which the payee gave effective notice to the payor. Here, the actual notice only requires the payee to raise the matter with the payer. Again, courts may deviate from the presumed date based on DBS factors.
Remission of child support arrears
Finally, under art. 17 of divorce law, a paying parent can ask the court to forgive arrears of unpaid child support due to a current and continuing inability to pay, with no past change in income. Payers should note, however, that this is rare and is granted alone last resort.
In Colucci, the SCC held that the payer must provide sufficient reliable evidence of their current and future inability to pay, including employment prospects, assets, inheritances, pensions and other sources of future financial capacity. The payer must demonstrate that, even with a flexible payment plan, they cannot and never will be able to pay the arrears.
Take away food
- Those who pay alimony are subject to a In progressobligation to support their children and an ongoing obligation to disclose their income.
- If you are paying child support and there is a material change in your income, you must send a notice to the recipient as soon as possible. Effective notification requires clear communication as well as financial information demonstrating the change.
- If you receive child support and think the payor’s income has increased, you should send a notice to the payor as soon as possible and request financial disclosure.
- A payer’s failure to provide full, honest and accurate disclosure of income can have serious consequences. For example, failure to disclose reduced income could affect a subsequent claim for a retroactive reduction. On the other hand, failure to disclose an increase in income could result in a heavy retroactive attribution to the beneficiary.
- If you’re having financial difficulties, the worst thing you can do is ignore your child support obligations. You must communicate your situation to the receiving parent and then take steps to change your support obligations.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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