Case law: Important Supreme Court child support decision

flower handed by a child to a woman

Colucci v. Colucci, 2021 SCC 24: This Supreme Court of Canada case provides a clear framework for dealing with child support arrears and requests by payers for retroactive reductions in child support. This is an important issue for women, generally, and for women whose former partners use non-payment of child support to financially abuse them, often for many years after the relationship has ended.

The case

Notably, the two interveners in this case, Canada Without Poverty and West Coast LEAF (Legal Education and Action Fund) along with LEAF, provided stark evidence in their factums of how common non-disclosure and non-payment have become in Canada. Canada Without Poverty pointed out how the present system is failing to meet the needs of Canada’s children, leading to unacceptable levels of child poverty. LEAF pointed out that child support is gendered, and that inequities in the present system have led to increases in the “feminization of poverty” in this country. LEAF emphasized the “intersection of child support and intimate partner violence” and described how abusive fathers use the present framework to intimidate women, keep them poor, and maintain control over them.

This case involved a father who essentially disappeared for 18 years: no word to his ex-wife or children about his whereabouts, no information about his financial status, and no voluntary payment of child support. He finally appeared, four years after his two children had become adults and were no longer entitled to support. He told the court that he was unable to pay what he owed and asked the court for two things: to retroactively decrease what he owed based on his reduced income dating back to 1998, and to reduce his accumulated arrears (at $170K) because he could not afford to pay. Although evidence of the father’s financial situation was lacking, the trial judge decided in his favour and reduced the arrears to just over $40K.

The Court of Appeal overturned the decision.

The Supreme Court decision

The Supreme Court upheld the decision of the Court of Appeal. As Justice Abella said during the Supreme Court hearing:

he sat on his responsibility for [more than] 16 years, and then came and said, ‘I’m really sorry I didn’t do it, but can you forgive me because now I can’t afford to pay?’ I mean, in terms of principle, and how we deal with support obligations for children, how does that make sense?”

The Court agreed with her, it did not.

In her 84-page decision, Justice Martin clarified the reasons why. She began by noting that the Guidelines were established to make calculating child support more fair and consistent and to reduce conflict between former partners for the sake of the children. While the Guidelines clearly state that children are entitled to “support commensurate with the payor’s income,” unfortunately, however:

the structure of the Guidelines…creates an informational asymmetry between the parties. In a system that ties support to payor income, it is the payor who knows and controls the information needed to calculate the appropriate amount of support [our emphasis]

The system thus depends on full disclosure by the payor to properly function. Disclosure is the basis of equality in the negotiations:

Full and frank disclosure is also a precondition to good faith negotiation. Without it, the parties cannot stand on the equal footing required to make informed decisions and resolve child support disputes outside of court.

and for the sake of fairness,

Payors should not be better off from a legal standpoint if they do not pay the child support the law says they owe. Nor should payors receive any sort of benefit or advantage from failing to disclose their real financial situation or providing disclosure on the eve of the hearing.

Framework for a retroactive decrease

Justice Martin set out the new framework for a retroactive decrease in support due to a material change in circumstances as follows:

  1. A material change in circumstances must be proven with reliable evidence

The onus is on the payor to show that there has been a change in their circumstances. Section 14 of the Guidelines lists various situations that qualify for a material change in circumstances, among which the most prevalent is a decrease in income. For the threshold to be met, the payor must provide “sufficient reliable evidence” that the decrease in income was “significant, long lasting, and not one of choice.” In other words, “trivial and short-lived changes” do not count as they would lead to instability and unpredictability for the children whose primary interests are at stake. The payor cannot fail to disclose and then later seek a retroactive decrease based on a “change in circumstances” because the court over-estimated their earnings.

2. The date of effective (informal) notice should be determined

If the payor cannot prove there was a material change in circumstances, then the court will calculate support back to the date of “effective notice” (i.e., informal notice), which can go back as far as three years before formal legal notice in the courts was made. Because the recipient is at a disadvantage (since the payor has access to all of the information about their income and the recipient does not), the bar for the recipient to set “effective notice” is much lower. The recipient merely needs to bring up the subject informally.

On the other hand, the payor must take several more steps for effective notice. It is not enough, as in the case of Mr. Colucci, to simply notify the ex-partner about a change in circumstances. They must take additional steps to, “communicate with recipients on an ongoing basis and move [quickly] to formalize a decrease through a court order or change to a pre-existing agreement.”

The three-year period ensures that accurate information is still available about the payor’s income. This avoids the need for “guesswork, adverse inferences and the imputation of income” and enhances procedural fairness.

3. If the payor does not give effective notice

If the payor does not give effective notice, the date to vary is set at the date of formal notice, or “or a later date where the payor has delayed making complete disclosure in the course of the proceedings.”

4. Judges can still use their discretion in choosing the date

The judge can set a different date than that indicated above, if that date would pose unfair challenges. In making this decision, the judge must be guided by four factors:

(i) whether the payor had an understandable reason for the delay in seeking a decrease;
(ii) the payor’s conduct;
(iii) the child’s circumstances; and
(iv) hardship to the payor if support is not decreased (viewed in context of hardship to the child and recipient if support is decreased).

Justice Martin cautions that sometimes the payor’s delay in seeking a decrease may be influenced by the recipient’s conduct,

such as where the recipient threatens to withhold access or uses other tactics to discourage the payor from applying to reduce support.

However, she added that,

[c]ourts must also be cautious to distinguish bad faith on the part of the recipient from situations where recipient conduct results from safety concerns arising from a history of family violence.

Payor conduct is not about their overall conduct but focuses on their conduct regarding full and frequent disclosure and their good faith efforts to pay.

5. The result should be calculated

If the court decides that the payor is entitled to a retroactive reduction, then this must be calculated for every year since the “date of retroactivity”, following the Guidelines.

Retroactive increase requests

When a recipient seeks to retroactively increase support the steps are the same with the difference that at step one, the onus is on the recipient to show the material increase in income, and “any failure by the payor to disclose relevant financial information allows the court to impute income, strike pleadings, draw adverse inferences, and award costs.” The date of retroactivity “will generally be the date of increase in income.” Effective notice is considered to be given by the recipient just for “broaching the subject,” it does not need to be formally (i.e., legally) given.

Justice Martin emphasized the need for families to try alternate dispute resolution. She noted, “[g]iven the prevalence of fluctuating income, the preferred solution — absent family violence —  is a yearly recalculation of child support based on disclosure of updated income” [emphasis added] with the help of family mediation services.

Rescinding arrears

Second, she developed the framework for rescinding arrears:

Justice Martin said it is only under “exceptional circumstances” that the court can rescind arrears. “[T]he payor cannot rely on a past decrease in income to explain why there are arrears.” Payors cannot get out of their debt by accumulating arrears. They must show that, on a balance of probabilities, “even with a flexible payment plan, they cannot and will not ever be able to pay the arrears.” Also, “present inability to pay does not…foreclose the prospect of future ability to pay.” (For more details on rescinding arrears, see the decision at paragraphs 133 to 141).

In applying the above framework to the case made by Mr. Colucci, Justice Martin decided that he failed to satisfy all of the above tests. Prior to this case, the last anyone had heard from Mr. Colucci was in 1998, when he contacted his ex-wife to tell her that he was making less money and asked to have his support reduced. She disagreed and never heard from him again. That was only two years after the couple had divorced and they had reached an agreement on support, and only one year after the Guidelines had come into force. At that time, Mr. Colucci made no formal notice and provided no evidence of his income either to his ex-wife or to the court. In the intervening period between then and this case, he disappeared and made no voluntary payments. Extremely limited support was provided to his children through child support enforcement mechanisms. At the time of this case, he still had not provided full financial disclosure.

Justice Martin said this was inexcusable behaviour not to be rewarded by the court,

lack of funds cannot justify his failure to produce reasonable proof of the change in income he claimed at the time of his request, or his subsequent failure to communicate, negotiate or seek a change for 18 years.

She dismissed his appeal with costs.

This article was written by Ottawa University, Faculty of Law Fellowship student, Allana Haist, who is working with Luke’s Place for Summer 2021.