Paying Child Support is not optional, but this does not mean that these payments are easy to make. Some parents find themselves in a position where they can no longer keep up with their payments due to job loss or other financial circumstances. In Colucci v Colucci, 2021 SCC 24, a father applied to have his arrears lowered as they amounted to over $170,000, a request that the Court ultimately denied. In this case, the Supreme Court of Canada describes the circumstances in which such arrears can be lowered due to financial hardship.
The parties separated after 13 years of marriage and the father was ordered to pay child support amounting to $230 per week to support their two children. For over 16 years, the father avoided his payments, making none voluntarily, spending years outside of the country, and not filing his taxes to avoid having his refunds garnished. In 2016, the father applied to have his arrears forgiven, despite offering little financial documentation supporting his request. Essentially, he claimed he could not afford to pay $170,000 in arrears, but he did not show documentation that proved he did not have the funds.
2. Previous court decisions
3. Question before the Court
- Can a parent’s arrears be lowered if their past support obligations were too high compared to their actual income?
- If the support amount was in fact correct, can a parent request to have their arrears lowered or forgiven due to a current inability to pay?
4. Supreme Court decision
The Court firstly clarifies the framework used when a parent requests to have their arrears lowered because their financial situation changed and they could not afford to make the payments (also known as “retroactively decreasing child support”). Secondly, the Court specifies that arrears can be lowered if a parent illustrates that it would be impossible for them to pay back the arrears due to their present financial circumstances.
Balance of three interests
A court must balance three interests when deciding if it is fair to lower a parent’s arrears because of a past reduction of income:
- the child’s interest, as the child is entitled to support based off their parents’ incomes,
- the parents’ and the child’s interests in “certainty and predictability”, and
- the need for flexibility, as a payor parent’s income might fluctuate.
For example, a court may find that it is not in the child’s best interest to lower arrears, even if the parent was ordered to pay an amount that was too high.
A court will also look for disclosure of the payor parent’s income. If the recipient of child support is unaware of the payor parent’s income, it is impossible to establish if the child is receiving the correct amount of support. Essentially, if a parent claims that they were ordered to pay too much money, it is crucial to disclose their income as proof.
5. Lowering child support arrears because the parent was asked to pay too much
Change of income
The first step to lowering arrears is to show that the payor’s income had changed. To do so, the parent must provide prove that their income a) lowered significantly, b) for a long period, and c) that this change was out of their control. In doing so, the parent is illustrating to a court that with the amount of money they were actually making, the child support they had to pay was too high.
Three-year rule and its exceptions
If the payor parent successfully shows a long-term change in income, a court may agree to decrease past child support. The decrease will normally only be granted up to the date that the payor gave the recipient informal notice that they were applying to have their support decreased. Furthermore, this notice can only go back up to three years before the formal date of notice of an application to vary arrears. Therefore, the payor parent must not delay in giving notice to the recipient that they cannot afford the payments and will be applying to have them reduced.
The three-year rule does have some wiggle-room. A court can lower arrears that have piled up for over three years before the payor parent gave formal notice. The court evaluates four factors to determine if it is fair to lower arrears up to a later date:
- If the payor parent has an understandable reason for their delay in giving notice or applying to a court for relief – a health problem, for example.
- If the payor parent showed good faith and honesty when disclosing their income – if they made voluntary payments against their arrears and paid what they could, for example.
- If the child experienced (or continues to experience) hardship following the payor spouse’s inability to pay the appropriate amount of support.
- If the payor parent will experience hardship in paying such a high amount of arrears – if this parent did not willingly disclose their income, hardship will not likely be accepted.
As these factors are difficult to establish, the three-year rule is normally what applies.
Calculation of support that should have been ordered
If a court establishes that arrears should be lowered during a specific period, the amount that still needs to be paid must be calculated. To do so, a court uses the actual income of the payor parent during this period to determine the correct amount of child support that should have been ordered.
6. Current inability to pay arrears
There are times when a payor parent has been ordered to pay the correct amount of child support, but they still fell behind on their payments. In these cases, the parent can ask a court to have the arrears lowered or forgiven due to financial hardship. To argue hardship successfully, the parent must show with sufficient, reliable documentation that they cannot, and will not ever, be able to pay their arrears.
This is not an easy argument to make. Forgiving arrears is a last resort and only occurs in special circumstances, such as in the case of a major medical issue. Therefore, a court will attempt to look at all other possible options – such as a flexible payment plan or a temporary suspension of payments – before choosing to rescind arrears.
7. Conclusion: The father must pay the arrears
The first issue is that the father did not disclose his earnings for the years in which he wished to lower arrears. The Court had no way of determining the correct amount of support he should have paid during that time. Secondly, he did not provide effective notice to the recipient. Furthermore, the three-year rule had passed, and the father could not illustrate why he deserved to have arrears before this period lowered.
Lastly, as the father did not disclose his finances, the Court could not determine if he had a current inability to pay the arrears.
For 18 years, the father did not pay support and he hid from his obligations. The Supreme Court of Canada ordered him to pay the full amount of $170,000.
8. The take-home
This case illustrates the importance of timely disclosure of income.
If the payor parent’s income changes, they must provide documentation of this change and they must notify the recipient of their intention to apply to have the payments lowered. Furthermore, in respect to the three-year rule, the payor parent must not delay when they do experience an income change – if they wait too long, it is quite possible that they will still have to pay the arrears, even if they were ordered to pay too much.
If the payor parent does not, and will not ever, have the funds to pay their arrears, disclosure of income is crucial. However, courts hesitate before forgiving arrears – they will attempt flexible payment plans and other creative banking options before freeing a parent from this obligation.