Retroactive Child Support and Structure of Support Reviews

The Court of Appeal for British Columbia recently discussed the interpretation of provisions in a separation agreement regarding spousal support and the effective date of notice with respect to retroactive child support. In Chu v. Eastman, 2016 BCCA 331 Dickson J.A. affirmed the following principles:

1. Where a party asserts that a spousal support review provision in a comprehensive separation agreement has been triggered, the matter is to be approached as a “straightforward matter of contractual interpretation” according to its terms;

2. In general, a retroactive child support order should be retroactive to the date when effective notice was given to the payor that the current amount needs to be renegotiated; and

3. Trial judges are to be afforded significant deference in the context of support orders.

The Facts: Marriage, children, and separation

Mr. Eastman and Ms. Chu married in 1989. They had two children – Sara, born in November 1992 and Mitchell, born in June 1998. Prior to the marriage, Mr. Eastman worked as a plumber. Ms. Chu studied nursing and worked steadily in that profession after completing her studies. Shortly after Sara’s birth, Mr. Eastman took on the role of primary child care provider and homemaker for the family. Until the parties separated in 2006, he did occasional work outside the home but had not worked full-time since 1993. Ms. Chu was the primary income earner and worked as a registered nurse.

Agreement with respect to spousal support and child support

The parties engaged in a collaborative law process which culminated in the execution of a separation agreement in February 2007 (“the Separation Agreement”). Both were represented by counsel throughout. The Separation Agreement stipulated as follows:

• Chu would pay spousal support of $1,017 per month based on the Spousal Support Advisory Guidelines, the amount of which would only be revisited in the event of death, her retirement, or a decrease in her income; or Mr. Eastman began earning income.

• While both children were residing primarily with Mr. Eastman, Ms. Chu would pay $983 per month for child support based on the Child Support Guidelines.

Application for review of spousal support and retroactive child support  

By March 2007, Sara was spending most of her time at Ms. Chu’s home and Mitchell resided primarily with Mr. Eastman, thus in September 2008, Ms. Chu reduced her child support payment by one-half to reflect the split living arrangement. Throughout the same period, Ms. Chu’s regular employment income remained similar, but her income from additional work for a company called Amerisource increased.

In light of those factors, Mr. Eastman sought an order for retroactive child support for Mitchell and an increase in the quantum of spousal support payable by Ms. Chu. The trial judge dismissed the application for increased spousal support and made an order for retroactive child support limited to the date of effective notice. Mr. Eastman unsuccessfully appealed both aspects of the lower court’s decision (indexed at 2014 BCSC 1928).

Review of spousal support under the Separation Agreement

Mr. Eastman did not seek an order under s. 15 of the Divorce Act modifying the spousal support provisions of the Separation Agreement. Rather, he asserted the Separation Agreement’s spousal support review provision applied and was triggered. As such, the Court of Appeal agreed with the trial judge’s approach to the structure of the support review as a “straightforward matter of contractual interpretation.”

The trial judge engaged in the requisite interpretive exercise, reviewing the contract as a whole and considering the plain meaning of its words in order to ascertain the parties’ objectively expressed intention. The analysis began by asking if Mr. Eastman had established grounds for a review of the spousal support under the terms of the Separation Agreement. Clause 15(b) stated that entitlement and quantum of spousal support would be reviewed if there was a “material change in her income” – however, when read in the context of the whole agreement, it was clear that the parties had agreed on the pre-conditions for review. The only adjustment to spousal support contemplated was a reduction if Ms. Chu’s income was materially reduced; or Mr. Eastman began earning income. The parties intended and agreed that there would be no upward adjustment in quantum regardless of any increases in Ms. Chu’s income and, accordingly, the spousal support review provision in the agreement was not triggered. In any event, the court was not persuaded that there has been a material change in Ms. Chu’s income on the basis of her earnings from Amerisource as she had begun working for Amerisource in 2006, before the Separation Agreement was negotiated and signed; Mr. Eastman knew of her income from that source. Finally, the court noted that the Separation Agreement in this case was specified to be a “final settlement” of spousal support.

Appeal with respect to retroactive child support award

Mr. Eastman had applied for an increase in child support retroactive to September 2008 when Ms. Chu halved her child support payments. The trial judge considered the criteria discussed in D.B.S. v. S.R.G., 2006 SCC 37, and concluded that a retroactive adjustment to child support should commence in May 2011, one month after Mr. Eastman’s counterclaim was filed. In support of this conclusion she noted that Mr. Eastman did not ask Ms. Chu for an increase before filing his counterclaim and he failed to explain why he did not seek an increase earlier. She also noted that Ms. Chu worked long hours to meet her support obligations, paid other child-related expenses, and would need to borrow money to pay a retroactive award.

The trial judge concluded that blameworthy conduct was not established but, nevertheless, Mitchell would benefit from the payment of retroactive child support. After imputing income to Mr. Eastman, dealing with Ms. Chu’s business expense deductions and setting off the calculated sum, she retroactively adjusted child support for the May 2011 to December 2013 period and fixed arrears at $8,948.

On appeal, Mr. Eastman said the judge erred in limiting the retroactive child support award to the date of effective notice. In his submission, the award should have been retroactive to September 2008. Mr. Eastman submitted that Ms. Chu’s failure to advise him of her increased income privileged her own interests over Mitchell’s, and that this was blameworthy conduct worthy of rebuke.

The Court of Appeal dismissed the appeal, finding that the trial judge considered, weighed and balanced the requisite factors in reaching her decision. When viewed in context (including Ms. Chu’s financial contributions to Sara and Mitchell beyond child support), her failure to pay increased child support for Mitchell and exchange income information with Mr. Eastman did not amount to blameworthy conduct

Defence to trial judge in the context of support orders

Dickson J.A. closed the written reasons with the following comment (at para. 34):

[…] Trial judges are afforded significant deference in the context of support orders. Unless a material error, a serious misapprehension of the evidence or an error of law can be demonstrated, an appellate court should not intervene. In particular, an appellate court is not entitled to overturn a support order simply because it would have made a different decision or balanced the factors differently. This deferential approach respects the fact-based nature of the determination and the trial judge’s advantaged position in exercising his or her discretion. It also promotes finality and cost control in family law litigation by limiting incentives to appeal: Hickey v. Hickey, [1999] 2 S.C.R. 518 at paras.10-12.

At bottom, Dickson J.A. noted that Mr. Eastman’s real complaint was that the judge did not respond to the facts in the manner he advocated. He invited the Court of Appeal balance the factors differently and arrive at a different conclusion, but following Hickey, that invitation was properly declined.

Take home points on the structure of support reviews and retroactive child support

Where a party asserts that support review provisions of a separation agreement have been triggered, the issue should be approached as a straightforward matter of contractual interpretation.

On an application for retroactive child support, the court should consider the reasonableness of the delay in seeking support, the conduct of the payor, the circumstances of the child, and the hardship occasioned by a retroactive child support award. In general, an award should be retroactive to the date when effective notice was given to the payor that the current amount needs to be renegotiated. Blameworthy conduct on the part of the payor may move the presumptive date of retroactivity back, but conduct must be examined in context using a holistic approach.