Colucci v Colucci: Framework for Reducing or Rescinding Child Support Arrears Retroactively

There has been confusion in the courts surrounding the applicable framework for determining applications under section 17 of the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.) to retroactively reduce or rescind the amount of owed child support (Colucci v Colucci, 2021 SCC 24 [Colucci], para 3). This confusion has partly resulted from the courts’ need to consider numerous competing factors and interests when deciding applications under section 17. When addressing requests to vary child support arrears retroactively, there is a need to protect the “certainty and predictability provided by an existing court order,” but also provide for “flexibility in a system that ties support to fluctuating payor income” (Colucci, para 4). These considerations are tied directly to the interests of the parties involved: the payor parent, the recipient parent, and most importantly, the child. In Colucci, the Supreme Court of Canada (“SCC”) balanced all the factors and interests at play and confirmed the applicable framework for determining when to reduce or rescind child support arrears retroactively.

Facts and Background

Mr. and Mrs. Colucci married in 1983 and later divorced in 1996. Their divorce order provided Ms. Colucci sole custody of the parties’ two daughters and required Mr. Colucci to pay child support of $115 per week for each child until they were no longer “children of the marriage” (Colucci, para 11). In April 1998, Mr. Colucci contacted Ms. Colucci through counsel to request a reduction in his child support obligations due to an alleged decrease in his income. He did not provide any financial disclosure, and the parties did not reach an agreement (Colucci, para 12).

From 1998 to 2012, Mr. Colucci was absent from his children’s lives and lost contact with them and Ms. Colucci. During this time, he failed to make voluntary child support payments (Colucci, para 13). Mr. Colucci’s child support obligations ended in 2012 when his daughters were no longer children of the marriage (Colucci, para 12).

In November 2016, Mr. Colucci commenced a motion to change, seeking an order that would decrease child support retroactively to May 1997, when the Federal Child Support Guidelines, SOR/97-175 [Guidelines], which are legally binding subordinate legislation, came into force. He also asked that “any arrears of support . . . not only be fixed but that the payments on those arrears be fixed in accordance with [his] ability to pay” (Colucci, para 14). During the proceedings, Mr. Colucci made numerous claims regarding his whereabouts and financial status throughout the years (Colucci, para 15). However, he provided little documentation to support these claims, relying largely on unsubstantiated assertions in his affidavit (Colucci, para 16).

Procedural History

Ontario Superior Court of Justice

At the Superior Court of Justice, the motion judge held that Mr. Colucci experienced a “material change in circumstances” when the Guidelines were enacted on May 1, 1997. Therefore, Mr. Colucci was entitled to a retroactive adjustment of his child support obligations starting from that date (Colucci, para 17). The motion judge did not consider any other factors in assessing whether a reduction of arrears was warranted, including those found in D.B.S. v. S.R.G., 2006 SCC 37 [D.B.S.] (Colucci, para 20), a landmark decision that “considered the principles and competing interests underlying recipients’ applications for retroactive child support” and applied a “flexible and discretionary approach” to applications for retroactive increases (Colucci, paras 3 and 5). Ms. Colucci appealed the motion judge’s order.

Ontario Court of Appeal

The Court of Appeal for Ontario (Colucci v Colucci, 2019 ONCA 561 [Colucci ONCA]) unanimously ruled that the motion judge erred in concluding that Mr. Colucci was entitled to a retroactive reduction “as of right” (Colucci ONCA, para 14). Writing for the unanimous court, Roberts J.A. found that the motion judge erred in distinguishing D.B.S., stating that while that case involved an application for a retroactive increase, the factors in the case were “intended to serve as general principles applicable, with appropriate adaptation, to retroactive support variations that would decrease the quantum of child support” (Colucci ONCA, para 15).

Applying the D.B.S. factors, the Court of Appeal held that Mr. Colucci failed to “discharg[e] his onus to explain his significant failure to make support payments and his extraordinary delay in proceeding with his application to vary” (Colucci ONCA, para 31). The Court of Appeal further noted that Mr. Colucci breached his ongoing requirement to disclose his finances fully through documentation and failed to produce evidence of his inability to pay while he was accruing arrears (Colucci ONCA, paras 31-32). He had been “at best, a recalcitrant payor” who had caused great hardship to his daughters (Colucci ONCA, para 30). For these reasons, the Court of Appeal overturned the motion judge’s decision. Mr. Colucci appealed the Court of Appeal’s decision to the SCC.

SCC’s Decision

Issues

In line with Mr. Colucci’s originating motion to change, the SCC addressed two questions in its reasons:

1. “What is the appropriate framework for deciding applications to retroactively reduce child support under s. 17 of the Divorce Act?”
2. “What is the appropriate framework where the payor parent seeks to rescind child support arrears under s. 17 based on current and ongoing inability to pay?” (Colucci, para 27)

Framework for Deciding Applications to Retroactively Reduce Child Support

The SCC confirmed that the onus is on the party seeking a retroactive decrease to show a clear change in circumstances (Colucci, para 60). If the claim is based on a material change in income, the payor must meet a certain threshold: the decrease in income must be “significant and have some degree of continuity, and it must be real and not one of choice” (Colucci, para 61). If a party succeeds in establishing this change, 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 (referred to as the “three-year” rule) (Colucci, para 80). An effective notice requires communication of the change in circumstances and disclosure of “reasonable proof” (Colucci, paras 87-88). These requirements demand the payor to substantiate the change and allow the recipient to assess their situation and adjust as needed (Colucci, para 88). If the payor does not give effective notice, courts should generally vary child support to the date of formal notice (Colucci, para 95).

Courts retain discretion to depart from the presumptive date of retroactivity if the result would be unfair to either party. In exercising this discretion, courts should use the D.B.S. factors as a guide. These factors are:

(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) (Colucci, para 113).

Courts should always strongly consider whether the payor has made the best efforts to pay what they can and disclose information regarding income on an ongoing basis (Colucci, paras 102-103). Lastly, if courts determine that support should be retroactively decreased, that decrease must be quantified according to the Guidelines (Colucci, para 109).

Framework for Where the Payor Parent Seeks to Rescind Child Support Arrears

The SCC clarified that the payor’s claim for rescission is considered a “hardship” application as the arrears represent sums that the payor could have paid at the time payments were due (Colucci, para 134). Therefore, the payor’s present financial capacity is the only relevant factor, and the payor must provide sufficient evidence proving their precarious financial situation. The payor must successfully challenge a “presumption against rescinding any part of the arrears” (Colucci, para 138). Courts should take a highly restrictive approach to ensure that rescission is a “last resort” option (Colucci, para 138).

Application to the Case

In considering Mr. Colucci’s application, the SCC was critical of Mr. Colucci’s failure to provide adequate evidence of his income since 2000. Even if Mr. Colucci provided evidence of his income from 1997 to 2000, the three-year presumptive rule would have applied (Colucci, para 117). Furthermore, Mr. Colucci could not point to any actions which would have qualified as effective notice. The SCC rejected the instance when he asked Ms. Colucci through counsel for a reduction in payable child support as effective notice because he did not provide proof of his changed financial circumstances (Colucci, paras 118-119).

The SCC also considered that Mr. Colucci made few voluntary payments during the time in question and showed no willingness to support his children, who suffered hardship as a result (Colucci, para 122). To depart from the presumptive date of retroactivity in this case would have given “tacit approval to this kind of conduct” (Colucci, para 123). As Mr. Colucci gave no effective notice and as the application of the D.B.S factors did not support a longer period of retroactivity, the SCC unanimously concluded that Mr. Colucci was not entitled to a retroactive decrease in income.

In regards to rescinding child support arrears, Mr. Colucci provided no compelling evidence of his recent financial circumstances that could have proved his inability to pay his arrears. As he had not discharged his onus of showing his inability to pay in the present or the future, the SCC unanimously refused to rescind Mr. Colucci’s child support arrears (Colucci, para 142).

Analysis: Significance of the Framework

The immediate significance of the decision is that it clarifies and sets out the framework that courts should follow when considering applications to reduce or rescind child support arrears under section 17 of the Divorce Act. In setting the law, the SCC aptly weighed the different interests of the parties involved. The Court recognized that payors need flexibility in varying owed child support as income can fluctuate. At the same time, the Court also sought to protect recipients and children by ensuring a degree of certainty and predictability during both the dealings between the parties and the legal process. As the SCC pointed out, if a payor requires a decrease in owed child support, then the recipient needs adequate notice to adjust and plan their life and the life of their child (Colucci, para 119).

In weighing the interests, the SCC achieved a balance largely by requiring payors to disclose evidence of any material changes in circumstances if wishing to reduce or rescind arrears. The Court was wary of the “informational asymmetry” between the parties, i.e., only the payor “knows and controls the information needed to calculate the appropriate amount of support” (Colucci, para 49). The disclosure requirement provides recipients and children with the necessary protection from the “informational asymmetry” between the parties while allowing flexibility for the payor. It only demands that payors provide proof of changes in income.

The framework affirmed by the SCC is effective because it protects recipients and children while setting reasonable constraints on payors. Under the framework, payors have to disclose the evidence as they are the only party that possesses it. The presumption of retroactively decreasing child support arrears to the date of effective notice is consistent with the reasonable expectation on payors to communicate with their recipients and provide proof of their claims. The three-year presumptive rule is reasonable because if the payor is serious about reducing their child support payments, they would make an application sooner rather than later. If the payor does not follow what is required but has good reasons for doing so, then courts can consider those reasons by applying the D.B.S. factors.

Going forward, courts can follow the established framework to come to equitable conclusions when deciding applications to reduce or rescind child support arrears retroactively. The SCC did just that in Colucci: the SCC ruled in favour of Ms. Colucci as Mr. Colucci did not act reasonably, made unsubstantiated claims, and caused great hardship to his former spouse and children. If courts utilize the Colucci framework, they will be able to achieve all four objectives listed in section 1 of the Guidelines, namely, “establish a fair standard of support for children,” “reduce conflict and tension between spouses,” “improve the efficiency of the legal process,” and “ensure consistent treatment of spouses and children.”