Retroactive Reduction of Back Child Support

The factors a court must consider before making an order for back child support were identified by the Supreme Court of Canada in D.B.S. v. S.R.G., 2006 SCC 37. In that case, the recipient parent sought an increase in child support payments with retroactive effect to reflect an increase in the payor parent’s income. But what about a situation where it is the payor seeking the variation, and what is sought is a reduction in back child support, not an increase? Faced with such circumstances in Gray v. Rizzi, 2016 ONCA 152, the Ontario Court of Appeal adapted the D.B.S. factors to suit applications for reduction of back child support.

Facts underlying the motion for reduction of back child support

Ms. Gray and Mr. Rizzi started living together in June 1986, married in October 1989, and separated in August 2002. Both of their children suffered from mental health problems. The children (aged 20 and 25 in 2016) resided with their mother post-separation, but in more recent years, the son alternated between his parents.

Ms. Gray commenced an application for divorce and corollary relief in December 2003. Mr. Rizzi, a self-employed computer programmer, repeatedly failed to provide financial statements despite being ordered to do so. As a result, Loukidelis J. imputed annual income in the amount of $133,000 to Mr. Rizzi and made a final order dated November 1, 2005 dealing with custody, access, child support, and spousal support (the “Final Order”).

Payor seeks variation of back child support and spousal support order

In 2009 Mr. Rizzi brought a motion to change the Final Order pursuant to sections 17(4) and (4.1) of the Divorce Act on the ground that he had experienced a material change in circumstances as a result of a significant reduction in his income. The trial judge re-calculated Mr. Rizzi’s income from the date of separation in 2002 through to 2013 using a lower imputed income of $60,000, thereby eliminating $320,000 in support arrears owed by Mr. Rizzi and imposing on Ms. Gray an obligation to reimburse Mr. Rizzi some $113,000 for overpayment of support.

Material change must be since the making of the Final Order

The Court of Appeal found that the trial judge improperly relied on events that pre-dated the Final Order to conclude that Mr. Rizzi had met the threshold for a variation of support. Before varying the Final Order, sections 17(4) and (4.1) of the Divorce Act require a change in circumstances have occurred “since the making” of the Final Order – not since the date of separation. However, the Court of Appeal agreed with the lower court that Mr. Rizzi had experienced a material change in his financial circumstances since the Final Order which met the threshold for variation of back child and spousal support obligations. The Court accepted the evidence that for the years 2006 to 2013 Mr. Rizzi had an average annual income of $60,000. He was not able to service the child and spousal support payments contained in the Final Order, which were calculated using an imputed income of $133,000. The Court of Appeal made modifications to the trial judge’s orders with respect to back child support and spousal support, but this post will only delve into the child support aspect.

Do the D.B.S. factors apply to reduction of back child support?

Having met the threshold for a variation of child support, the next question was how to approach a retroactive reduction. In D.B.S., the Supreme Court of Canada identified four factors that a court should consider before making a retroactive order for increased child support, including blameworthy conduct of the payor parent, which I discussed in a previous post.

The trial judge in Gray v. Rizzi distinguished D.B.S. on the basis that it was the payor, not the recipient, who was seeking the variation, and that it was a reduction in back child support, not an increase, which was sought. The Court of Appeal disagreed. While the D.B.S. factors require some minor alteration to suit circumstances where the payor’s income has gone down, the fundamentals still apply.

Modified D.B.S. factors

The following factors should guide a court in determining whether to grant reduction in back child support (at paras. 55 to 64):

1. The nature of the obligation to support, whether contractual, statutory or judicial;

2. The ongoing needs of the support recipient and the child;

3. Whether there is a reasonable excuse for the payor’s delay in applying for relief;

4. The ongoing financial capacity of the payor and, in particular, his or her ability to make payments towards the outstanding arrears;

5. The conduct of the payor, including whether the payor has made any voluntary payments on account of arrears, whether he or she has cooperated with the support enforcement authorities, and whether he or she has complied with obligations and requests for financial disclosure from the support recipient;

6. Delay on the part of the support recipient, even a long delay, in enforcing the child support obligation does not, in and of itself, constitute a waiver of the right to claim arrears;

7. Any hardship that may be occasioned by a retroactive order reducing arrears or rescinding arrears, or by an order requiring the payment of substantial arrears.

If a reduction of back child support is appropriate in light of these factors, the retroactive order will normally commence as of the date of effective notice. Where a payor seeks a reduction in back child support, effective notice requires the payor to provide reasonable proof that a relevant change in the payor’s circumstances has occurred, so that the recipient can independently assess the situation in a meaningful way and respond appropriately.

Application of the modified D.B.S. principles

The Court of Appeal started its analysis by noting that the continuing needs of the children during much of the time period under consideration weighed strongly against making any retroactive reduction in child support.

With respect to the date of notice, Mr. Rizzi filed his motion to change in July 2009. However, a number of factors weighed heavily against using a date as early as July 2009. In particular, the Court of Appeal emphasized Mr. Rizzi’s inexcusable delay in moving his motion to change forward to a hearing with due dispatch, his failure to make full and frank disclosure of financial information until the eve of trial, and his lack of co-operation with the support enforcement agencies.

The court found that while Mr. Rizzi was unable to make all ordered support payments, the evidence did not support a finding that he would not be able to pay the arrears in the future. There was no evidence of impairment to his future earning capacity and all sources strongly indicated that he could earn more than the $60,000 income that was imputed to him when the Final Order was varied. Also weighing against a significant reduction in back child support was the uncontested finding that Mr. Rizzi could have used the equity in a home to avoid the accumulation of support arrears, but chose not to. Mr. Rizzi’s mother died in June 2005, and he was the sole beneficiary of her estate. In an attempt to avoid seizure for the back child and spousal support, he did not probate her will or transfer title in the house to himself until shortly before the trial.

Lastly, the Court of Appeal found that the trial judge’s retroactive variation order would work significant hardship on the recipient, Ms. Gray, who would be required to repay approximately $113,000 to Mr. Rizzi. Given Mr. Rizzi’s desultory pursuit of his motion to change, failure to provide timely financial disclosure, and failure to co-operate with the support enforcement agencies, the Court of Appeal concluded that absolutely no hardship should result to Ms. Gray from any retroactive variation order.

Conclusion on reduction of back child support

In the result, Mr. Rizzi was not entitled to any retroactive variation of his child support obligations for his daughter because he only saw fit to fulfill his financial disclosure obligations on the eve of trial, over four years after he had initiated his application. As to child support for their son, the parties acknowledged that he began to receive Ontario Disability Support Program payments in December 2010. Consequently, child support obligations for the son were terminated as of December 31, 2010. Amounts owing for back child support from the time of the Final Order were recalculated using the imputed annual income of $60,000.

Take home points on retroactive reduction of back child support

The factors the Supreme Court of Canada identified in D.B.S. provide useful guidance to a court faced with a request to reduce child support based upon a payor’s material decline in income. As with applications to modify back child support based on a payor’s increase in income, blameworthy conduct on the part of the payor parent is a significant factor in the analysis. Behaviour that indicates wilful non-compliance on the part of the payor or failure to work cooperatively to address child support may militate against even partial rescission or reduction of arrears.