The Supreme Court of Canada decision of Colucci v Colucci, 2021 SCC 24 (“Colucci”) rendered on June 4, 2021 has brought clarification as to which frameworks to rely on when faced with an application to retroactively vary a child support agreement brought under section 17 of the Federal Divorce Act, RSC 1985, c 3 (2nd supp), s 17 (“Divorce Act”). From the initial mindset that retroactive support was only to be awarded in exceptional circumstances, to D.B.S v S.R.G, 2006 SCC 37 (“D.B.S.”)  establishing a free-standing legal obligation on parents to pay child support commensurate with income, Colucci has clearly defined the obligation placed on payor parents to uphold their financial duty to their children.

D.B.S. v S.R.G.

In the landmark case of D.B.S. v S.R.G. the courts endorsed an obligatory child-centric system of support, and moved away from the payor-centric system that existed before the Federal Child Support Guidelines, SOR/97-175 (“Guidelines”) came into effect in 1997. Though the Guidelines were put in place to establish a child-centric view of retroactive support payments, D.B.S. formally acknowledged in caselaw that support is the right of the child and parents have a financial obligation to their children that begins at birth and continues even after parental separation. Additionally, D.B.S. clarified that if a payor’s income increases, it is the duty of the Payor to increase support payments under a free-standing legal obligation to their children. An always present factor to be considered while referring to the Guidelines and principles from D.B.S. is the informational asymmetry present between the recipient and the payor. This asymmetry results in the consistent need for full and frank disclosure of income by the payor. It is often said that accurate and timely disclosure of income is the linchpin of the child support system.

Considering the above interaction, if a retroactive increase of support variation is sought in light of an increase in income that wasn’t reported, it is not truly retroactive because the payor should have fulfilled the obligation to increase payments already.

D.B.S. Factors interpreted in Colucci

The ultimate goal, as stated in Colucci, is to ensure that the child involved is receiving what they are owed at the time they are owed it. To uphold this goal, Colucci has interpreted and endorsed the factors stated in D.B.S. to ensure that the objective is achieved.

Threshold requirement

The threshold requirement addressed and clarified in Colucci is “an established change in circumstances” that would justify varying the amount of child support as required by section 17(4) of the Divorce Act. Before Colucci, there were diverging authorities that respectively considered either the interests of the payor, or the interests of the recipient and child. Colucci has blended these two competing narratives. Now, it has been determined that once the applicant has established a change in circumstances, there is an automatic presumption triggered saying that support will be varied back to a certain date. By creating this threshold trigger, Colucci has combined the former D.B.S. requirements and factors into as single question:

“Should the court depart from the presumptive date of retroactivity to achieve a fair result?”

The effect of this paring down is that the recipient no longer has to demonstrate by way of the preliminary D.B.S. factors that a retroactive award is appropriate. These requirements are expanded on below.

What is the presumptive date?

When an applicant attempts to retroactively vary a child support agreement, and they have successfully established a material change in circumstances, there is an automatic timeframe of retroactivity that is triggered, known as the “presumptive date”. This date, is the date of effective notice, and from that point in time there can only be retroactive changes concerning the previous three years of support payments. In the absence of effective notice, certainty and predictability for the child will be prioritized over the payor’s flexibility interest.

In the context of a material increase in income, effective notice can be established by a simple conversation on the topic of a potential increase. If the recipient and the payor have a discussion about a prospective increase in income, the date that this conversation took place will be the date of effective notice. The payor, in this instance, is taken to know that an increase in income means an increase in support.

In the context of a material decrease in income, effective notice must be accompanied by “reasonable proof”. This proof must be sufficient enough to allow the recipient to independently assess the situation, and respond accordingly.

Why a three- year rule?

As stated above, there is a presumption that retroactive changes can only be made to the  three years before effective notice was given. D.B.S. established this time frame purposefully to incentivize recipients to move discussions forward and to protect the payor’s flexibility interest. By establishing a three year presumptive limit, the parties are given ample time to negotiate varying the child support agreement, but also recognizes that the payor must commence proceedings in a timely manner in the event negotiations fail. The three-year rule ensures that the interests of the child and recipient are kept at the forefront.

Discretion to Depart from the Presumption

When a court is considering whether or not to use their discretion and depart from the presumptive timeline, Colucci has established 4 factors that should be considered and they are as follows:

Factor 1: Understandable reason for the delay.

If the payor has delayed in disclosing their financial documentation, it generally tips the scales towards the courts not upholding an order for retroactive variation. Afterall, clear and honest financial disclosure is the linchpin of child support agreements. Understandable reasons for  delay have been identified as significant health issues, an unwillingness to disrupt a fragile parent-child relationship, and the payor lacking the financial and emotional wherewithal to proceed with the matter. This case highlights one of the mischiefs of delayed retroactive variation applications. Because of the many years that had passed between the application date and the last date of support payment, Mr. Colucci was unable to obtain past income statements. The court states in its analysis that the passage of time is not a valid reason to be unable to produce such financial documentation. Mr. Colucci only relied on the passage of time as his reason for delay, and the court determined that this was not an application where the delay was understandable.

Factor 2: The payor’s conduct

Blameworthy conduct on the payors part is a considerable factor to consider when determining retroactive child support variations. As defined in Goulding v Keck, 2014 ABCA 138 at paragraph 44, blameworthy conduct is conduct that has “the effect of privileging [the payors] interests over the child’s right to support”. In applying this factor, the court will look to whether or not the payor has put in effort to disclose and communicate with the recipient about their financial situation. Here, the courts will also look at whether the party made voluntary payments against the arrears, if they continued to pay in accordance with their ability to pay, if there was cooperation with enforcement agencies, and if they showed willingness to support their child rather than absconding those obligations.

Factor 3: Circumstances of the child

When considering a retroactive variation in child support, the court will highlight how such a change in support will affect the recipient and the child. Commonly, this analysis will appear for a retroactive decrease in support, and how the chance of having the recipient pay back parts of support would detrimentally affect the child. The child’s interests are paramount, and a variation application will only be granted if the effects on the child are relatively insignificant.

Factor 4: Hardship

Lastly, hardship to the payor will be considered. In order to establish hardship, the payor must disclose evidence to establish real facts in support of a finding of hardship. However, a showing of hardship will not automatically trigger a departure from the presumptive three year rule. This fourth and final factor will carry less weight in the instance that the payor has made an unreasonable failure to make proper disclosure or give notice to the recipient.

Summary

The SCC determined that the motion judge erred in principle by determining that meeting the threshold of material change in circumstances amounted to the Mr. Colucci’s right vary the child agreement order. In addressing this error in principle, the SCC provided a concise framework for child support variation cases to move forward in a fashion that puts the child first, instead of continuing to uphold the antiquated ideology that the payor’s interests are of paramount importance.

In order for a party to move forward with an order to vary child support, the party must ensure that they are consistently disclosing full and accurate financial changes, that if necessary there is effective notice given, and are aware that the conduct of the payor will be scrupulously analyzed.

This case has effectively entrenched the already known, but intermittently enforced principle that parents are financially obligated to support their children from birth until the child is no longer a legal child of the marriage. This includes throughout a separation if it were to occur.

The Colucci framework will be a useful tool when dealing with child support variation applications, and we at Clark Wilson are more than happy to discuss how this may affect you and your legal affairs. Please feel free to contact Clark Wilson family law group for more information.