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New SCC decision on retroactive variation/reduction of arrears: Colucci

Ken Proudman - view Arbitrator profile
BARR LLP (Alberta. Joined 2017)

The SCC rendered its decision in Colucci v Colucci, 2021 SCC 24 on Friday.

Based on the headnote, I believe the highlights are:
  • A payor seeking a downward adjustment to child support must first demonstrate a material change in circumstances such as a material change in income.

  • The payor must have disclosed sufficient reliable evidence to determine when and how far their income fell, and to ascertain whether the change was significant, long lasting, and not one of choice.

  • A payor whose income was originally imputed because of an initial lack of disclosure cannot rely on their own late disclosure as a change in circumstances to ground a variation order.

  • Once a material change in circumstances is established, a presumption arises in favour of retroactively decreasing child support to the date the payor gave the recipient effective notice, up to three years before formal notice of the application to vary (ie mirroring DBS. Note this doesn't mean you can go back 3 years before effective notice, that's a common misconception of DBS).

  • Effective notice requires clear communication of the change in circumstances accompanied by the disclosure of any available documentation necessary to substantiate the change and allow the recipient parent to meaningfully assess the situation -- it is not enough for the payor to merely broach the subject of a reduction of support with the recipient.

  • If no effective notice is given, then support should be instead varied back to the date of formal notice, or potentially even a later date if the payor has delayed making complete disclosure.

  • Courts retain the discretion to depart from the presumptive date of retroactivity where the result would otherwise be unfair in the circumstances of a particular case. DBS's four factors, adapted for the retroactive reduction context, can assist. Genuine efforts to continue paying as much as the payor can will show good faith and a willingness to support the child. If a child has experienced hardship or is currently in need, this factor militates in favour of a shorter period of retroactivity.

  • Another relevant consideration is whether the retroactive decrease would result in an order requiring the recipient to repay support to remedy an overpayment. In cases involving claims of overpayment, it will rarely be appropriate to retroactively decrease support to a date before the recipient could have expected that child support payments received from the payor might need to be repaid at some future date.

  • The onus is on the payor to show the extent to which their income decreased during the period of retroactivity. Courts can draw an adverse inference where all relevant evidence required for the court to appreciate their true income during any period isn't provided.

  • The payor must also make complete disclosure of their current financial circumstances if seeking a periodic payment plan or temporary suspension on hardship grounds.

  • If the application is to rescind arrears based on a current inability to pay (ie the amount is otherwise correct), the only relevant factor is the payor's ongoing financial capacity, so they must provide sufficient reliable evidence to enable the court to assess their current and prospective financial circumstances. There is a presumption against rescinding any part of the arrears, which can only be rebutted where the payor establishes on a balance of probabilities that even with a flexible payment plan, they cannot and will not ever be able to pay the arrears. This is meant to be a stringent standard, used as a last resort in exceptional cases. Courts should first consider temporary suspension, periodic payments, or other creative payment options.

TL;DR: as soon as a support payor knows their income will decrease, they should provide notice and documentary proof to the recipient, and should then apply to reduce those arrears within 3 years, otherwise they may be stuck paying more support than they should.

It looks like these comments relate entirely to child support, there aren't any references to spousal support.

2 3 months ago - edited 3 months ago

Wayne Barkauskas, Q.C. - view Arbitrator profile
Wise Scheible Barkauskas (Alberta. Joined 2020)

"ascertain whether the change was significant, long lasting, and not one of choice". Could this be the sleeper phrase here in Alberta? "Not one of choice" seems to be an indirect contradiction to our Court of Appeal's current interpretation of intentional underemployment. Food for thought...

0 3 months ago

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