DM v SP, 2021 ABQB 738

Court of Queen’s Bench of Alberta Citation: DM v SP, 2021 ABQB 738 Date: 20210915 Docket: FL03 45228 Registry: Edmonton Between: DM Applicant - and - SP Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice M. J. Lema _______________________________________________________ A. Introduction [ 1 ] A child- and spousal-support payor applies under the interjurisdictional-support-orders mechanism to cancel post-2017 and ongoing support payments.

The support recipient opposes both aspects. [ 2 ] I find that no variation should be made for January 2017 to January 2021, no support was properly payable thereafter, the payer is entitled to a repayment of overpaid support, and no ongoing support is currently payable.

B.

Proper characterization of certain monies (property or support) [ 3 ] The first issue is the appropriate characterization of certain monies derived from sale of jointly-owned property, which was applied (in part) to clear child- and spousal-support arrears. [ 4 ] The parties agree that approximately $33,000 of those proceeds were properly applied to clear such arrears. [ 5 ] The dispute is over a further approximately $93,000 distributed to the recipient. [ 6 ] The payor asserts that that amount should be treated as an advance payment on forms of support and as full satisfaction of both claims (with both measured as though no support as payable after January 1, 2017). [ 7 ] This aspect is straightforward: • Loparco J.’s June 7, 2019 order expressly states that the approximately $93,000 “represents the [recipient’s] share of the net proceeds from the sale of the house as well as part of her share of other joint assets sold off by the [payor] ” (with the recipient’s property claims particularized, at least in part, by her affidavit filed March 28, 2019); • in other words, that amount was a property distribution to the recipient, gauged by Loparco J. as necessary to reflect the recipient’s status as a co-owner of the property and to balance the property equation as between the parties, with the payor having received the entire proceeds of certain other jointly-owned assets; • this “property character” ruling undercuts any argument that these monies should somehow be treated as advance support payments; and • even if the payor did not receive proper notice of the application to Loparco J. (on which I make no ruling), he has taken no steps since to try to set aside that order or to appeal it . [ 8 ] In the end, Loparco J.’s order governs: absent a successful set-aside application or appeal, I have no authority to characterize these monies any differently. [ 9 ] Accordingly, the credit in question will retain its property character i.e. cannot be treated as a support credit.

C. Payor’s application to cancel post-2016 child and spousal support Orders directing child and spousal support [ 10 ] The support obligations stem from orders by Browne and Lee JJ. [ 11 ] In February 2015, Browne J. directed monthly child support for two children of $1,235, based on the payor’s “pre-disclosure” income of $86,410. [ 12 ] In May 2015, with the payor then currently unemployed but the recipient “entitled to spousal support and … currently in financial need”, Lee J. directed monthly spousal support of $500, on top of the noted child support.

History of payments [ 13 ] While at times support arrears have arisen, between payments made by the payor, the interception of certain tax refunds, and the above-noted arrears-clearing payment made out of the house proceeds, the payor is square, or better than square, with both species of payment. (A MEP report current to July 27, 2021 shows a small ($35.47) credit in his favour.) Payor’s position (retroactive cancellation to start of 2017 and going forwards) [ 14 ] The payor’s core position is that he has not, since the support orders were made, earned the perceived-initial-income of approximately $88,000 – in fact, far less – and that, as a result, both species of payment should be retroactively cancelled, to January 1, 2017, and set at zero going forward.

Colucci v Colucci applicable to variation applications under Family Law Act [ 15 ] This position directly engages the Supreme Court of Canada’s recent decision in Colucci v Colucci , 2021 SCC 24 , which specifically focused on applications to reduce support on account of later-disclosed payor-income decreases. [ 16 ] I recognize that Colucci involved variation under the Divorce Act and that the present case involves child support under the Family Law Act .

[17] In Colucci, the Supreme Court noted the existence of the two regimes and that provinces are free to depart from the federalapproach: All provinces and territories have an equivalent to the Guidelines or have adopted the federal Guidelines for the purpose of determiningchild support under provincial family law legislation.

Of course, the provinces are free to depart from the approach in thefederal Guidelines, as child support that is not incidental to divorce falls within provincial competence (D.B.S. [v S.R.G., 2006 SCC 37],at paras. 49 and 53). [para 35] [18] As noted in the above excerpt from Colucci, the Supreme Court confirmed in DBS that a province can blaze its own trail onsupport for the children of unmarried persons: see paras 49-54 of DBS.

However, it found there that the provincial provisions at issue intwo of the four cases decided together were materially similar to the Divorce Act provisions governing the other two i.e. making the DBSanalysis equally applicable to all of them. [19] The Supreme Court echoed this provinces-can-depart point in Michel v Graydon, 2020 SCC 24: Nor do I [i.e. Brown J. writing for the five-person majority] accept that the Court in D.B.S. stated a sweeping principle that transcendsthe Divorce Act to embrace all other statutory schemes and operates irrespective of legislative intent.

Indeed, the Court insisted thatprovinces remain “free to espouse a different paradigm” than that adopted by Parliament in the Divorce Act (para. 54).

Andwhere they do so via legislation establishing an application-based regime such as the FLA, and where an application forretroactive child support is brought thereunder, it is that legislation which governs a court’s authority to grant retroactive childsupport (paras. 55-56). [20] The question becomes whether Alberta has blazed its own trail here, versus mirroring the Divorce Act approach. [21] Comparing the variation provisions in the Divorce Act and the Family Law Act (ss 17 and 77, respectively (reproduced inAppendix A)), I find material similarity. [22] Both have a “material change” threshold, both permit the same kinds of changes (prospective and retroactive variations,suspensions, and terminations), both impose the same analytical framework for both initial and variation applications, and both limit newterms to those that could have been included in the initial order.

While each contains a handful of unique terms, this does not detract fromtheir core similarity. [23] I conclude that the variation principles are materially similar under the two statutes and, accordingly, that the Colucci analysisapplies to FLA variation applications. (For a similar approach in a cancellation-of-arrears context, see DD v YM, 2021 BCPC 187 (LeePCJ) at paras 25-30.) Colucci v Colucci framework for deciding whether variation appropriate [24] Here are the (very extensive) key teachings from Colucci as they apply here: Overview (segment) The controversy between the parties centres on whether the framework for retroactive decreases under s. 17 should reflect the flexibleand discretionary approach applied to retroactive increases in D.B.S.

With certain modifications, I conclude that it should. A payor whohas established a past decrease in income is not automatically entitled to a retroactive decrease of support back to the date of thedecrease, as suggested by the motion judge in this case. The overall decision is a discretionary one.

As I will explain further, the court’s discretion is structured by a presumption in favour of retroactively decreasing support to thedate the payor gave the recipient effective notice of an intention to seek a downward adjustment of the child support obligation,up to three years before formal notice is given of an application to vary under s. 17. …\ Given the informational asymmetry between the parties, a payor’s success in obtaining a retroactive decrease will depend largely onthe payor’s financial disclosure and communication.

Indeed, effective notice in this context is only “effective” when there hasbeen disclosure of the changed financial circumstances.

At the stage of considering the D.B.S. factors, disclosure will once again be akey consideration in assessing whether the payor’s conduct operates to shorten or lengthen the presumptive period of retroactivity. [paras5-7] Foundational Principles in the Guidelines and DBS (segment) In D.B.S. [i.e. the Supreme Court’s decision in DBS v SRG, 2006 SCC 37], the Court also drew attention to three interests which mustbe balanced to achieve a fair result in retroactive variation cases: first and foremost, the child’s interest in receiving theappropriate amount of support to which they are entitled; second, the interest of the parties and the child in certainty andpredictability; and third, the need for flexibility to ensure a just result in light of fluctuations in payor income (D.B.S., at paras. 2, 74and 96; see also Templeton v.

Nuttall, 2018 ONSC 815, at para. 43 ; Contino v. Leonelli-Contino, 2005 SCC 63, [2005] 3 S.C.R.217, at para. 33). The child’s interest in a fair standard of support commensurate with income is the core interest to which allrules and principles must yield.

A fair result that adequately protects this interest will sometimes lean toward preservingcertainty, and sometimes toward flexibility. [para 46] The Applicable Framework Retroactive Decreases Where the Prior Order Overestimates Payor Income This [now-under-discussion] category of cases covers situations in which the payor has experienced a material drop in income that

affected their ability to make payments as they came due. The payor will argue that the recipient was in fact owed a loweramount under the Guidelines than the amount payable under a pre-existing order or agreement, thus necessitating arecalculation of the amount owing for past years based on the payor’s actual income, the number of children to be supported inthose years, and the table amounts. Decreased income is an all too common and unfortunate reality for many families.

Any frameworkdeveloped to accommodate retroactive variations of child support in response to decreased payor income must deal fairly with a widerange of factual situations, from payors who diligently paid the proper amount until they lost their employment or otherwise fell on hardtimes, to those who have made little effort to meet their responsibilities and are absent, intentionally underemployed or persistentlydelinquent.

In this section, I first discuss the threshold the payor must meet to access a retroactive decrease under s. 17, namely therequirement of showing a change in circumstances that would justify varying the amount of child support. I then reconcile thedivergent lines of authority about what happens when this threshold is met, settling on a presumption-based approach that leaves spacefor judicial discretion structured by the D.B.S. factors.

Under this approach, once the payor has met the threshold of showing achange in circumstances, a presumption is triggered in favour of varying support back to the date of effective notice, up to threeyears before formal notice. I explain what effective notice means and why it is an appropriate presumptive date in this categoryof case. I then discuss how the D.B.S. factors can be adapted to retroactive decreases in deciding whether to depart from thepresumptive date of retroactivity.

Finally, I address quantum, the final stage of the analysis, which requires the court to calculate theproper amount of support in accordance with the Guidelines. The Threshold Requirement of a Change in Circumstances Like any applicant seeking a retroactive variation under s. 17 of the Divorce Act, a payor seeking a downward retroactive changemust first show a past change in circumstances, as required under s. 17(4).

Section 14 of the Guidelines lists situations constituting achange in circumstances for the purpose of s. 17(4) of the Divorce Act, including the coming into force of the Guidelines (s. 14(c)). Achange in circumstances could also include a change that, if known at the time, would probably have resulted in different terms, such asa drop in income (Guidelines, s. 14(a); Willick v. Willick, (SCC), [1994] 3 S.C.R. 670, at p. 688; Gray, at para. 39). The onus is on the party seeking a retroactive decrease to show a change in circumstances (Punzo v.

Punzo, 2016 ONCA 957, 90R.F.L. (7th) 304, at para. 26; Templeton, at para. 33). In some cases that may be relatively straightforward: for example, establishing thatthe children are no longer legally entitled to support because they are no longer children of the marriage. Most commonly, the retroactive variation claim will be based on a material change in income. To meet the threshold, a decreasein income must be significant and have some degree of continuity, and it must be real and not one of choice (Willick, at pp. 687-88; Earle v. Earle, (B.C.S.C.), at para. 27; MacCarthy v.

MacCarthy, 2015 BCCA 496, 380 B.C.A.C. 102, atpara. 58, citing Earle; L.M.P. v. L.S., 2011 SCC 64, [2011] 3 S.C.R. 775, at para. 33; Gray, at para. 39; Brown v. Brown, 2010 NBCA 5,353 N.B.R. (2d) 323 (“Brown”), at para. 2; Templeton, at para. 35). Trivial or short-lived changes are insufficient to justify a variation(Templeton, at para. 35). In this way, the threshold inquiry preserves some sense of certainty and predictability for the parties and thechild, while allowing some flexibility in response to changes in the payor’s income.

The payor must have disclosed sufficient reliable evidence for the court to determine when and how far their income fell, and toascertain whether the change was significant, long lasting, and not one of choice. A decision to retroactively decrease support canonly be made based on “reliable, accurate and complete information” (Earle, at para. 28).

The payor cannot ask the court tomake findings on income that are contrary to the recipient’s interests “while at the same time shielding information that isrelevant to the determination of their income behind a protective wall” (Templeton, at para. 67; see also Tougher v. Tougher, 1999ABQB 552, at paras. 14-15 ; Terry, at para. 9).

Of course, a payor whose income was originally imputed because of an initial lack of disclosure cannot later claim that a changein circumstances occurs when he or she subsequently produces proper documentation showing the imputation was higher thanthe table amount for their actual income. The payor cannot rely on their own late disclosure as a change in circumstances toground a variation order (Gray, at paras. 33-34). This would “defeat the purpose of imputing income in the first place” and act as“a disincentive for payors to participate in the initial court process” (Trang v.

Trang, 2013 ONSC 1980, 29 R.F.L. (7th) 364, atpara. 53). Reconciling Divergent Authorities on the Application of DBS Assuming the threshold of a change in circumstances is met, the parties disagree on two crucial questions: how to decide whetherretroactive relief should be granted in the first place, and how far back a court should go when varying a previously orderedamount. [paras 57-64] There is … merit in a simplified framework which takes the benefits of Brown and Corcios/Gray but removes their drawbacks.

Toadvance clarity, simplicity and predictability, the analysis should be focused on a single presumption regarding the date of retroactivity.Once the applicant establishes a change in circumstances, a presumption is triggered that support will be varied back to a certain date(i.e., effective notice, up to three years before formal notice). The D.B.S. factors are then concentrated on one question: should the courtdepart from the presumptive date of retroactivity to achieve a fair result?

It is on this question only that the factors of delay, payorconduct, the child’s circumstances and potential hardship are brought to bear. [para 71] … in a claim for a retroactive decrease, as indicated in D.B.S., at para. 98, the interest in certainty lies with the recipient parentand child, while the interest in flexibility lies with the payor parent. Under the Guidelines, the payor is only responsible for childsupport commensurate with income, but a retroactive reduction in support means a disruption to the certainty enjoyed by thechild and the recipient.

The recipient is entitled to expect that the existing order will be complied with unless they are in receiptof reasonable proof that a relevant change in the payor’s circumstances has occurred. Again, the payor holds the relevantinformation and knows when there has been a decrease in income. It is in the payor’s own best interest to use this knowledge tonotify the recipient of the change in circumstances and take steps to formally vary a child support order. [para 78]

The Presumptive Date of Retroactivity Even before the D.B.S. factors come into play, the choice of the presumptive date of retroactivity itself aims to reach a preliminarybalancing of these competing interests. Although the general preference for effective notice as the presumptive date in increasecases may need to be revisited for the reasons previously stated, for retroactive decreases, this presumptive date properly reflectsthe recipient’s informational disadvantage and represents a fair balancing of certainty and flexibility.

As such, once the payorestablishes a change in circumstances, a presumption arises in favour of varying support to the date of effective notice, up tothree years before formal notice. [para 80] The Rationale for Effective Notice as the Presumptive Date … The presumption in decrease cases that support will be reduced back to the date of effective notice strikes a fair balance betweenthe certainty interest of the child and recipient and the payor’s interest in flexibility. While recipients should be aware thatsupport in the Guidelines era varies with payor income, they are at an informational disadvantage.

The recipient is entitled torely on the court order or agreement in the absence of proper communication and disclosure by the payor showing a decrease inincome that is lasting and genuine (H.G.S. v. J.R.M., 2018 ABQB 892, 16 R.F.L. (8th) 404, at para. 87). As the Court of Appeal statedin this case, “the support amount provided for in the prior order or agreement will have formed a part of the recipient parent’sbudget and the support recipient often will have undertaken financial obligations premised on the continuation of the support setout in the order” (para. 26).

A retroactive decrease will mean less funds, a possible set-off and even a repayment from the recipient to the payor. This in turnimplicates and intensifies the certainty interest of the child and the recipient who have relied on the prior court order. It willgenerally be more difficult to adjust to the receipt of lesser, rather than greater amounts of support, increasing the likelihood and severityof hardship. Those with lower incomes will have less ability to absorb negative financial events. The best interests of the child lie in predictability and stability of household finances.

The Guidelines contemplate that a drop inpayor income may lead to a drop in the child’s standard of living, just as it would if the parents were still together. However,payors must promptly communicate such changes to the recipient, just as they would if the parents had not separated, and moveto have the terms of the order or agreement changed to restore certainty to child support arrangements between the parties. Thisensures that the child is impacted as little as possible by the parents’ separation and continues to benefit from predictable andregular support from the payor parent.

A drop in support can be presumed to have detrimental impacts on the child, butongoing communication and disclosure cushions those impacts and preserves the child’s best interests to the fullest extentpossible. For these reasons, in the absence of effective notice of a drop in payor income, certainty and predictability for the childare to be prioritized over the payor’s interest in flexibility. The payor’s interest in flexibility comes to the forefront once effective notice is given (H.G.S., at para. 82).

As such, by makingthe date of effective notice the presumptive date of retroactivity, the framework preserves ample flexibility for the payor. Thepresumption also provides payors with the certainty of knowing that any material change in income should be disclosed. Not onlyis the payor the one who is aware of their financial situation, but they also control the date on which they disclose thatinformation.

The payor therefore has control over the date of notice and the date of retroactivity. [paras 82-85] Effective Notice What qualifies as “effective notice” must be viewed in light of the information asymmetry between the parties and the way thatcertainty, flexibility and the child’s best interests play out in retroactive decrease cases. … In the decrease context,… experience has shown that it is not enough for the payor to merely broach the subject of a reduction ofsupport with the recipient. A payor seeking a retroactive decrease has the informational advantage.

The presumptive date ofretroactivity must encourage payors to communicate with recipients on an ongoing basis and move with reasonable dispatch toformalize a decrease through a court order or change to a pre-existing agreement. The timing and extent of disclosure will be acritical consideration in ascertaining whether and when effective notice has been given and determining whether to depart from thepresumptive date of retroactivity.

In decrease cases, therefore, courts have recognized that effective notice must be accompanied by “reasonable proof” [e.g. ofreduced income] that is sufficient to allow the recipient to “independently assess the situation in a meaningful way and respondappropriately” (Gray, at para. 62, citing Corcios, at para. 55; Templeton, at para. 51). This ensures that effective notice provides arealistic starting point for negotiations and allows the recipient to adjust expectations, make necessary changes to lifestyle andexpenditures, and make informed decisions (Hrynkow v. Gosse, 2017 ABQB 675, at para. 13 ; Hodges v.

Hodges, 2018 ABCA197, at para. 10 ). In some cases, such as where the payor is incarcerated or suffers a serious health setback, clear communication may be sufficient to meetthe requirements of effective notice. In other cases, the payor may not have access to full income information at the time notice isgiven, but should provide proof of the change in circumstances by promptly obtaining and disclosing available documents, suchas those demonstrating new employment, reduction of salary or termination of employment.

Even where a diligent payor believesin good faith that a decrease in income will be temporary, the most prudent course of action is nevertheless to communicate the change tothe recipient and provide information which substantiates the claimed change in circumstance.

After communicating a change and providing available documents, a payor maintains “an ongoing obligation to engage inmeaningful dialogue with the recipient, advise the recipient of changes in their circumstances that may impact their ability to paysupport and voluntarily disclose pertinent information so that the recipient can continue to independently assess the situationand react appropriately” (Templeton, at para. 52). Failure to do so may impact the period of retroactivity when the court applies thediscretionary D.B.S. factors.

Further, effective notice of an initial change in income will not amount to effective notice of subsequent

changes (Corcios, at para. 55). [paras 86-90] Where No Effective Notice Given Where no effective notice was given before proceedings were commenced, the start date of the variation will generally be the dateof formal notice. … [para 95] Discretion to Depart from the Presumption: The Four DBS Factors The court retains discretion to depart from the presumptive date of retroactivity where the result would otherwise be unfair inthe circumstances of a particular case.

In this section, I explore how the D.B.S. factors — adapted to suit the retroactive decreasecontext — help the court reach a fair balancing of the three interests at play, namely the child’s interest in a fair standard of support, thepayor’s interest in flexibility, and the interest of the child and recipient in certainty. There is no fixed formula; none of the factors isdeterminative and they must be viewed holistically (D.B.S., at para. 99).

Understandable Reason for the Delay The first factor is whether the payor has an understandable reason for the delay in giving effective notice or seeking relief in thecourts. Judges are well placed to assess whether the reasons proffered for the delay explain the extent of the payor’s inactivity.Where the payor has such a reason, fairness may militate in favour of extending the date of retroactivity to a time before the dateof effective notice or not applying the three-year limit.

Understandable reasons for delay may include health problems or other difficulties that prevent the payor from confronting thesituation, or an unwillingness to disrupt a fragile parent-child relationship (D. Smith, “Retroactive Child Support — An Update”(2007), 26 C.F.L.Q. 209, at p. 239). The payor may also lack the financial or emotional wherewithal to proceed with the matter(Brown, at para. 34). In some cases, the recipient’s conduct may be at play, such as where the recipient threatens to withhold access or uses other tactics todiscourage the payor from applying to reduce support.

To ensure the child’s best interests are protected, recipient conduct is only asignificant factor where the recipient is aware of the change in the payor’s circumstances and has therefore been able to plan fora possible reduction in support. Courts must also be cautious to distinguish bad faith on the part of the recipient from situations whererecipient conduct results from safety concerns arising from a history of family violence. The recipient’s delay in enforcing arrears is irrelevant to the analysis (Haisman v. Haisman (1994), 1994 ABCA 249 , 157 A.R.47 (C.A.), at para. 46; Templeton, at para. 48).

Courts must bear in mind that child support arrears are a debt. Under general principles ofdebtor-creditor law, the debtor is required to seek out and pay the creditor, and debts are not forgiven by the mere passage of time in theabsence of a statutory limitation period (Brown, at para. 33). The Payor’s Conduct The second factor is the payor’s conduct. Blameworthy conduct is conduct that has “the effect of privileging [the payor’s] interestsover the child’s right to support” (Goulding, at para. 44 (emphasis in original); see also D.B.S., at para. 106).

The payor’s subjectiveintentions are rarely relevant (Goulding, at para. 44). The payor’s efforts to disclose and communicate will often be prominent considerations in assessing the payor’s conduct in thecontext of an application for a retroactive decrease of support. For example, if the payor provides effective notice but fails tocommunicate and disclose information on an ongoing basis after the date of effective notice, the payor’s silence may militate in favour ofabbreviating the period of retroactivity.

Conversely, if more than three years have passed between the date of effective notice andthe date of formal notice, the court might consider declining to apply the three-year rule if the payor has made ongoing efforts todisclose, communicate and engage in dialogue with the recipient. The court may also consider whether the payor made voluntary payments against the arrears, continued to pay in accordancewith their ability to pay, cooperated with enforcement agencies, and showed a willingness to support the child rather thanevading child support obligations (see DiFrancesco v.

Couto (2001), (ON CA), 56 O.R. (3d) 363 (C.A.), atpara. 25). It should go without saying that a person who is subject to a child support order must “comply with the order until it isno longer in effect”, and this principle is now expressly enshrined in the Divorce Act “[f]or greater certainty” (s. 7.5). Genuine efforts tocontinue paying as much as the payor can will show good faith and a willingness to support the child. Circumstances of the Child The circumstances of the child are the third factor.

If the child has experienced hardship or is currently in need, this factormilitates 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 repaysupport to remedy an overpayment. The framework under s. 17 of the Divorce Act should not penalize payors for havingcontinued to pay the full amount of support under an order or agreement after they experience a drop in income. However,reimbursement or set-off may cause hardship for the child and recipient.

As such, where repayment is a possibility, it is evenmore important for the payor to give the recipient prompt notice of the decrease in their income — complete with disclosureenabling the recipient to meaningfully assess the extent of any potential future repayment — and move with reasonable diligenceto seek a formal variation (Corcios, at para. 55; Gray, at para. 60; see also Fleury v. Fleury, 2009 ABCA 43, 448 A.R. 92, at para. 32).

In cases involving claims of overpayment, it will rarely be appropriate, given the recipient’s absence of knowledge, toretroactively decrease support to a date before the recipient could have expected that child support payments received from thepayor might need to be repaid at some future date. This approach protects the child’s best interests and the recipient’s certainty

interest, while allowing payors who have overpaid to seek a retroactive decrease as long as the recipient has been given proper notice and disclosure. Hardship The final factor is hardship to the payor if the period of retroactivity is not lengthened beyond the presumptive date . The payor must adduce evidence to “establish real facts” supporting a finding of hardship ( Goulding , at para. 57). Bald assertions are not enough ( ibid ). The payor must also provide a complete picture of their financial situation, including income, assets and debts.

For example, in this case, an assessment of hardship requires consideration of not only Mr. Colucci’s present income and future earning capacity, but also the funds he received from his mother’s estate and any other assets. A showing of hardship will not automatically justify a departure from the presumed date of retroactivity. Hardship carries much less weight where brought on by the payor’s own unreasonable failure to make proper disclosure and give notice to the recipient ( D.B.S. , at para. 116 ).

Hardship to the payor must also be viewed in the context of hardship to the recipient and child if the court were to extend the period of the retroactive decrease ( Goulding , at para. 56). It is a holistic and relative assessment ( Michel , at para. 100 , per Martin J.). [paras 96-108]

Summary To summarize, where the payor applies under s. 17 of the Divorce Act to retroactively decrease child support, the following analysis applies:

(1) The payor must meet the threshold of establishing a past material change in circumstances. The onus is on the payor to show a material decrease in income that has some degree of continuity, and that is real and not one of choice .

(2) 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. In the decrease context, 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.

(3) Where no effective notice is given by the payor parent, child support should generally be varied back to the date of formal notice , or a later date where the payor has delayed making complete disclosure in the course of the proceedings.

(4) The court retains discretion to depart from the presumptive date of retroactivity where the result would otherwise be unfair. The D.B.S. factors (adapted to the decrease context) guide this exercise of discretion. Those 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). The payor’s efforts to pay what they can and to communicate and disclose income information on an ongoing basis will often be a key consideration under the factor of payor conduct.

(5) Finally, once the court has determined that support should be retroactively decreased to a particular date, the decrease must be quantified.

The proper amount of support for each year since the date of retroactivity must be calculated in accordance with the Guidelines . [para 113] [all emphasis added] Application of Colucci principles here (January 2017 to September 2020) [ 25 ] I believe it is common ground and, in any case, indisputable that the decreases to the payor’s income represent “material changes of circumstances.” As discussed below, the question is what to do about those changes. [ 26 ] I focus first on the father’s bid to retroactively cancel child and spousal support back to the start of 2017, through to September 2020, when he first gave notice of his intention to vary support (as discussed further below). [ 27 ] Given the obvious centrality of financial disclosure to variation applications, I start examining the payor’s income disclosure to the recipient. [ 28 ] Recall that the payor’s income for child-support purposes was set (at $86,410), in February 2015, on a “pre-disclosure basis” i.e. before the payor had made full disclosure of his income. [ 29 ] I note as well that both Browne J.’s and Lee J.’s orders obliged the parties to provide each other with “a copy complete copy of his or her income tax return and any notice of assessment or reassessment issued to him or her by the Canada Revenue Agency on an annual basis, on or before June30th of each year ….” [ 30 ] In a “Response – Family Law Act ” filed March 31, 2015, the payor conveyed disagreement with the “quantum of child support” (among other things), for three reasons: • [one child, not the subject of the present application] does not live with the [recipient]; • the [recipient] and I have not been in an adult interdependent-partner relationship for years; and • the [recipient] is supported by her current boyfriend. [ 31 ] Notably he did not argue that the pre-disclosure income estimate was off-target.

Nor could he have (with any justification), as discussed next.

[ 32 ] Income-disclosure-wise, his reply statements (child support and spousal / partner), filed at the same time, indicated income for 2011, 2012 and 2013 of $95,574, $95,489, and $86,410.36, respectively i.e. an average income in those years of $92,491 i.e. about $6,000 more than the pre-disclosure estimate [ 33 ] He also, at that time, provided some disclosure of his 2014 earnings, via pay stubs which appear to cover his June, July and October earnings (via early July, August, and November stubs). His gross earnings for those months appear to be $8,359, $7,650 and $2,600, respectively.

If those months are representative samples of his 2014 income, and given that they average to roughly $6,200 per month, his gross earnings for that year would have been roughly $74,400. [ 34 ] However, with no explanation for why only those three months were provided, and if we were looking at this at the time (late March 2015), I would not have been prepared to work from that narrow (three-month) subset. (In any case, as it turns out, and as reflected in income disclosure made this year (January 2021) in support of the present application, the payor’s line 150 income for 2014 was $90,377, roughly in line with his 2011-2013 average). [ 35 ] In an affidavit filed April 28, 2015, the payor advised (in part) that: I have not worked since February 16, 2015.

I work in oilfield construction as an equipment operator, and there are currently no jobs available. I have applied [to various potential employers}.

I am on these companies’ list to call as soon as there is work available. [ 36 ] In April 2016, in response to a recipient application for (further) disclosure (sparked in part by her understanding that the payor was employed again, as a heavy equipment operator), Pentelechuk J. (as she then was) directed disclosure of additional details of the payor’s 2013 and 2014 income, plus other (bank statements and credit card) information, by April 19, 2016. [ 37 ] As far as I can tell from the court file and the materials filed by the parties on the recent application, things then sat dormant, at least disclosure-wise, until the father filed his variation application in mid-September 2020 . [ 38 ] In support of that application, the payor disclosed (among other things) copies of his 2017, 2018 and 2019 tax returns, reflecting line 150 income of $78,083.62, $9,001.65, and $50,960.46, respectively. [ 39 ] He also estimated that his 2020 income would be $11,573.70, consisting of Canada Recovery Benefit payments, plus Canada Pension Plan payments (which started April 1, 2020, when the payor turned 60). [ 40 ] In her response affidavit (filed November 18, 2020), the recipient swore (in part) that: The [payor] was required to provide his financial disclosure to enable us to resolve the issues of spousal support, child support, and [a] constructive trust claim.

The [payor] did not provide any information regarding his financials. … The Court eventually [in spring 2015] relied on … limited information to grant a spousal support amount of $500 which, I believe, was nothing close to what the [payor] should be paying. The child support order was also based on the limited information regarding the [payor’s] work and income. I believe the [payor] should be paying more in child support once his information is known. [para 23] [ 41 ] The father’s variation application first came before Michalyshyn J., on November 25, 2020.

While the recipient (via counsel) and an Alberta Justice (“friend of the court”) lawyer were present, the father was not, with no explanation offered for his absence. [ 42 ] Michalyshyn J. reviewed the earlier orders and the payor’s materials and noted (in part) that: • “… the [payor] has not complied with [the Pentelechuk J. disclosure order, among other orders] either completely or partially”; and • “the [payor] included copies of his income tax returns for 2017, 2018 and 2019 … but did not include any notices of assessment for these years.” [ 43 ] He then determined that: … [the father’s variation application] should be adjourned so that [he] can comply with disclosure from the [earlier orders] and other disclosure ordered below ….” [ 44 ] The “ordered below” disclosure was: • a fully completed ISO Form 1, including budget, assets, debts and income for 2020, with proof where possible; • compliance with any [outstanding] orders for disclosure from [among other orders] [the Pentelechuk order]; • if desired …, a response to any materials filed by [the recipient] …; and • other relevant information that the [payor] deems appropriate. [ 45 ] In response, the father filed a supplementary affidavit on January 4, 2021 providing various information, including copies of his CRA notices of assessment for 2013, 2014 and 2017-2019, all confirming the per-income-tax-return income reported earlier by the father (with the exception of 2014, where the three-month estimate was off, as discussed above).

Conclusion on income disclosure [ 46 ] Based on the evidence reviewed above, I find that the payor did not disclose his 2017-2019 income or his estimated 2020 income until he filed his variation application, in September 2020.

[ 47 ] I also find that the mother was unaware, and reasonably so, of his income changes in those years, until she received that application i.e. she did not have any other window into his income in those years. [ 48 ] Recall as well that, even though sizeable arrears arose from time to time, the payor was able, over time (and obviously boosted by the redirection of a portion of the house-sale proceeds), to pay all the required support i.e. the recipient had no reason to suspect that the payor’s income had tailed off in any material way, until receiving his variation application last fall. [ 49 ] As noted, the payor reported earning $78,032 in 2017 i.e. about $8,000 less than his “pre-disclosure” income.

His required support that year ($747 in child support plus $500 in spousal support i.e. $1,247 monthly x 12 months) was $14,964.

His actual payments that year were $12,430. [ 50 ] For 2018, he reported earning $9,001, and paid support of $7,395 (compared to required support of $14,964). [ 51 ] For 2019, he reported earning $50,960, and paid $32,835 (out of the noted house-sale proceeds), covering ongoing support through to June 2019 and clearing off most of then-outstanding arrears (reducing them to approximately $8,000). [ 52 ] For 2020, against his estimated-as-of-September-2020 income of $11,573 (and obviously drawing on other resources), he made payments of $32,826, covering ongoing payments and clearing more recent (than June 2019) arrears. [ 53 ] Even if the recipient was somehow expected to deduce that the payor’s income in 2017-2020 had tailed off sharply from both his pre-disclosure ($86,410) and average-of-2011-to-2014 income ($91,962), his support payments in 2017-2020, while somewhat erratic and obviously boosted by the house-sale-proceeds payment (approximately $33,000), did not signal that he had actually experienced any tailing off. [ 54 ] In any case, per Colucci , what matters here is the father’s income disclosure to the mother.

On that front, he did not perform his provide-annual-tax-information duty or otherwise keep the mother abreast of his income each year or at all, until advising her, after the fact (in September 2020), via his application. [ 55 ] In these circumstances, and as explained in Colucci , the mother’s “certainty” interest outweighs the father’s “flexibility” interest.

It was obviously in his power to provide year-by-year disclosure of his income and, by doing so, to adjust her support expectations i.e. so that she would know (assuming that she accepted his reported income) that support would be decreasing. [ 56 ] This is the central insight of Colucci for support payors: if you wish to have your support payments adjusted to reflect your decreased income, you must provide timely (i.e. as-you-go) disclosure of your changed income i.e. not wait until years later to reveal the decreases.

With no ongoing disclosure, the recipient is entitled to assume that the payor’s income has not changed (at least in any material way) and that the ordered support will be paid in line with the (reasonably perceived) ongoing income. [ 57 ] This is especially so (as here) where ongoing payments are being made or at least caught up from time to time.

Given (even eventual) full payment of support, it is even more reasonable for the recipient to assume that “all is well” on the payor’s income front. [ 58 ] Further, I do not see anything in the evidence justifying the payor’s delay in making his 2017-2020 income disclosure.

It was obviously within his power to update the recipient, each year, of his income changes and that he intended to seek support adjustments to square with his overall-reduced income. [ 59 ] But he did not provide timely disclosure, only after-the-fact revelations. [ 60 ] Combined with the fact that retroactive reduction or elimination of support for 2017-2020 would require repayment of support by the mother, and given no indication that the support funds have simply been saved (i.e. not spent on ongoing needs), I see no reason to adjust the otherwise applicable Colucci result here. [ 61 ] By not making year-by-year disclosure of his reduced income and, in any case, not advising the mother of his intention to vary support downwards (i.e. before filing his application, in September 2020), there is no “effective notice” date here i.e. earlier than the filing of the application itself, when “formal” notice was given. [ 62 ] In other words, and per Colucci , the payor cannot (reasonably) say to the recipient: “Not only has my income dropped, but you knew it had dropped, and you also knew that I was planning to have support adjusted in line with that drop (or those drops).” [ 63 ] Instead, he left the mother reasonably assuming that no material changes had happened.

Per Colucci , she is entitled to rely on that reasonable assumption. [ 64 ] And the father cannot (reasonably) blame her for having that expectation, when he had, and held onto, the income-decrease information, for years, until “revealing all” in September 2020. [ 65 ] That was too late for him in these circumstances.

Conclusion on variation for January 2017 – September 2020 [ 66 ] For these reasons, I am not prepared to make any retroactive adjustments to either child or spousal support, at least through September 2020. [ 67 ] In passing, I note that Colucci ’s caveat relating to pre-disclosure setting of income (para 63 of that case) does not apply here, with the payor’s income in the years leading up to Browne J.’s February 2015 pre-disclosure order (2011 – approximately $96,000; 2011 -- $95,000; 2013 -- $86,000; and 2014 -- $90,0000 i.e. an average of $92,000) actually exceeding the pre-disclosure income set by her ($86,000).

In other words, the payor is not arriving with late disclosure showing that the pre-disclosure income set by the Court was off- target at the time.

Variation for September 2020 to present [68] How about from September 2020 onwards? [69] Given the payor’s initial variation-application filing in September 2020 and his update materials in January 2021, he did nothave (and could not have had) any 2020 income tax return or assessment. [70] As noted, he estimated in fall 2020 that his 2020 earnings would be $11,573, consisting of CRB benefits and his starting-in-April-2020 CPP benefits. [71] As for 2021 (and per his January 2021 update), he forecast income of only $7,431.60 i.e. his $619.30 monthly CPP benefit,over twelve months. [72] I take October 1, 2020 as the dividing line i.e. the first full month after the mother received notice of the father’s by-that-pointradically reduced income. [73] I acknowledge that, despite his sharp income decreases, the father continued to make $1,300 monthly support payments (i.e.even higher than the required $747 + $500 = $1,247) in each of October 2020 through January 2021 (inclusive), as well as a $1,050payment in February 2021, before (per my March 2021 order) the spousal support payment was suspended (pending the hearing of thisapplication, on June 1, 2021) and child support was reduced to $230 monthly. [74] I also note that the father appears to have stayed current with the latter payment (March 2021 to at least July 2021). [75] The key here is that, since September 2020, the mother has known of the sharp decreases to the father’s income.

From thatpoint, the Colucci analysis shifts in the payor’s favour.

Having made full disclosure of his changed income, the mother’s “certainty”factor diminishes: she then knew that the father’s income had dropped, and could no longer reasonably assume that support wouldcontinue at historical levels. [76] Assuming fulsome disclosure as of September 2020, and subject to the “imputation” analysis below, the father could thenreasonably invoke the “flexibility” factor i.e. that support should ordinarily track with income, with the mother knowing of his reducedincome. [77] I would have found that, as of October 1, 2020, and taking the father’s estimated income for 2020 and 2021 at face value (atleast for present purposes), the father’s income was too low for either child or spousal support to flow. (The Child Support Guidelines forAlberta set a floor level of $12,00, and the Spousal Support Advisory Guidelines reflect a floor of $20,000 i.e. the incomes below whichsupport is ordinarily not payable.) [78] Nonetheless, the father paid support totalling $7,110 after October 1, 2020, through to July 1, 2021. [79] Absent anything else, the father would be entitled to a refund of that amount from the mother. [80] He would also, in light of his reported current income (less than $7,500 annually), have no ongoing child or spousal supportobligations, in light of the “floor incomes” noted above. [81] However, running against those initial impressions is the concept of imputed income i.e. the possibility that the payor’sreported income and apparent retirement are too low and not warranted, respectively, as discussed further below. [82] As also discussed below, the father’s disclosure was not complete until early January 2021.

Imputing income to the father [83] Here is the key Child Support Guidelines provision: 19

(1) The court may impute such amount of income to a spouse as it considers appropriate in the circumstances, whichcircumstances include the following: (

a) the spouse is intentionally under-employed or unemployed, other than where the under-employment or unemployment is requiredby the needs of a child of the marriage or any child under the age of majority or by the reasonable educational or health needs of thespouse …. [84] In Taylor v Taylor, 2009 ABCA 354, the Court of Appeal outlined the key principles in applying this provision: We begin our analysis by reviewing the law applicable to imputation of income for support purposes under s. 19(1) (

a) of the FederalChild Support Guidelines. All applicable factors and principles are referred to and considered in this Court’s majority reasons in Hunt v.Smolis-Hunt, 2001 ABCA 229, 286 A.R. 248. First, in imputing income, trial courts should have regard to the overall purpose of the Guidelines, which is to establish fair levels ofsupport for children from both parents in a predictable and consistent manner: Smolis-Hunt at paras. 60-61, Francis v.Baker, (SCC), [1999] 3 S.C.R. 250 at para. 39. Second, s. 19(1)(

a) requires proof of a specific intention toundermine or avoid support payments or proof of circumstances which permit the court to infer that the payor’s intention is toundermine or avoid his or her support obligations. This principle arises from the plain reading of s. 19(1)(a), which states that thespouse who is called on to pay support must be intentionally under-employed or unemployed: Smolis-Hunt at para. 42.

In this appeal, there is no direct evidence that the appellant was unemployed because he intended to avoid or evade support obligations . Indeed, the trial judge held that the appellant left his employment primarily because he was uncomfortable working for an enterprise controlled by the respondent’s family. It was therefore incumbent on the trial judge to consider whether he could infer the requisite intention. The third relevant principle from Smolis-Hunt is that persons who are involved in divorce proceedings are entitled to change employment.

Individuals, including those obliged to pay support, are free to pursue work that provides not only income but also a sense of self-worth and emotional well-being. It must also be kept in mind that the best interests of children are often best served when the identity, self-worth and emotional well-being of both parents are carefully considered: Smolis-Hunt at para. 68 . We add that in circumstances where the parties have agreed on a shared custodial regime this factor gains in significance because the children will essentially spend equal time with each parent.

Intent to evade support obligations may be found where the unemployment, under-employment, or other acts of the person obliged to pay support, indicate a deliberate refusal to live up to the obligation to support one’s children: Smolis-Hunt at para. 73 . The paying parent’s history of support payments is a relevant factor in inferring the requisite intention: Smolis-Hunt at paras. 74- 75 .

In the context of a parent who has generally paid support on time and in appropriate amounts, as opposed to a parent who has never paid or has paid only sporadically, a change of employment is less likely to be considered a deliberate attempt to evade child support . In any event, courts should be careful not to infer intentional evasion of support obligations from legitimate disputes about amount or timing. For example, a paying parent may quite legitimately dispute payment for a s. 7 activity he or she considers to be unnecessary or frivolous.

Even if a court ultimately directs that it is a legitimate expense, the paying parent’s bona fides “failure” to pay up until directed by the court to do so should not be held against him or her. [paras 11-16] [emphasis added] [ 85 ] In Blanchard v Blanchard , 2019 ABCA 53 , the Court of Appeal again explored income imputation: The appellant submits that the chambers judge erred by failing to impute income to the respondent for 2016. The appellant does not dispute that the respondent became unemployed in November 2015, and continued to be unemployed for much of 2016 .

Section 191) (

a) of the Federal Child Support Guidelines , SOR/97-175 [ Guidelines ], permits a court to impute income to a spouse in circumstances where the spouse is "intentionally under-employed or unemployed". In Hunt v Smolis-Hunt , 2001 ABCA 229 at para 42 , 286 AR 248 [ Hunt ], this Court ruled that a person seeking to impute income to another under section 19(1) (

a) of the Guidelines , must adduce evidence that the obligor engaged in a “deliberate course of conduct for the purpose of evading child support obligations”. Proving a deliberate course of conduct requires “proof of a specific intention to undermine or avoid support obligations, or circumstances which permit the court to infer that the intention of the obligor is to undermine or avoid his or her support obligations”: Hunt at para 42 . DBF v BF , 2017 ABCA 272 at para 77 , 98 RFL (7th) 1 recently applied Hunt ; see also Shigehiro v Shigehiro , 2017 ABCA 392 at para 55 , 3 RFL (8th) 25.

The question is whether the respondent engaged in non-remunerative activities with the intention of avoiding child support obligations: DBF v BF at para 79 . In our view, the chambers judge did not err in determining there was insufficient evidence to conclude that the appellant was intentionally under-employed in 2016 with the intention of avoiding his child support obligations .

To the contrary, the chambers judge found that the respondent was making voluntary payments in excess of, or around the table amount for $150,000 income in the years he was making a substantial salary in the oilfield industry, and that he continued to make child support payments from his savings in late 2015 and most of 2016 when he was unemployed and while his new family was in transition. The chambers judge found that the respondent’s “pattern of paying child support over the years does not belie an intention to undermine his obligations to pay reasonable child support”. We agree .

Additionally, the chambers judge was entitled to accept the respondent’s evidence that he lost his employment due to a downturn in the oil industry and that , . . . while there is sparse evidence regarding the steps Mr. Blanchard actually took to find further employment, it is reasonable to infer that he would have continued to work as an electrician if that work was available as deliberate underemployment by Mr. Blanchard would have a negative impact not only on the child support payable to Ms. Blanchard, but also on the standard of living of Mr.

Blanchard’s new family for which he is apparently the sole income earner. [paras 37-41] [emphasis added] [ 86 ] More guidance comes from Keating v Keating , 2017 ABCA 428 : While the trial judge did not make an express finding that the appellant was intentionally underemployed to avoid his support obligations, it is apparent when her decision is read in its entirety that she was satisfied that the appellant was underemployed so as to avoid his support obligations. She took into account the following considerations : a. The appellant received his journeyman lineman certificate about 9 years ago. b.

Since he lost his driver’s license in 2013 due to his failure to pay child support, he has been unable to obtain permanent work as a journeyman lineman. Prior to trial, the appellant took no steps to get his driver’s license back . c. A journeyman lineman earns approximately $100,000 annually. The appellant might have had to start as a lineman at $50,000- $60,000 per year but it would go up after that. d.

The evidence of the appellant’s father was that the appellant could have been employed over the past four years as a lineman if he had a driver’s license as there were opportunities for employment based on the appellant’s reputation and skill . e. The appellant’s evidence was that he had no health issues preventing him from working. He made no efforts to find jobs in

general construction. He applied for journeyman lineman jobs that he knew he couldn’t get without a driver’s license and provided two emails of other job applications in 2015. He claimed he was overqualified to work as a lineman . f. Since 2013 the appellant has had odd jobs in retail or making pizza. g. The appellant received money from his parents and lives with his girlfriend in a house owned by his parents for which he pays $1500/month when he is working and nothing when he is not working. He estimated that he had borrowed $90,000 from his parents over the past five years.

His father’s evidence was that he and his wife had transferred $165,000 to the appellant in the past four years, excluding funds transferred for legal fees, and that he sends the appellant $3000/month. The appellant estimated that his expense for rent, utilities and food was $2300/month. h. The appellant made no efforts to stay enforcement of the interim support orders prior to 2015.

When a stay of enforcement was granted in 2015 that would have permitted him to regain his driver’s license if he paid $550 per month toward his child support arrears, he only made two payments despite receiving $18,100 from his parents between mid-May and mid-October of 2015, an average of $3620/month. That exceeded his estimated expenses by $1320/month. We are satisfied that the trial judge reasonably concluded that it was appropriate to impute income to the appellant commencing in 2014 on the basis that it could be inferred from his overall conduct that he was attempting to avoid his support obligations.

He failed to take steps to regain the driver’s license which he lost for failing to pay child support, which prevented him from working as a lineman. He provided no satisfactory explanation for why he did not pursue reinstatement of his driver’s licence. He chose not to make support payments when he had the financial resources to do so. His actions permit the inference that he intended to undermine or avoid his support obligations . [paras 12 and 13] [emphasis added] [ 87 ] Sullivan J. imputed income in Ghebremeskel v Tesfu , 2021 ABQB 341 , emphasizing these factors: Since separation, Mr.

Tesfu has earned virtually no income, therefore he has paid no child support other than what MEP has enforced . Mr. Tesfu had four children under the age of majority at the time of separation. It was incumbent on him to find some way to support his family .

In Hunt v Smolis-Hunt , 2001 ABCA 229 at para 42 the Alberta Court of Appeal said that income may be imputed “where the obligor has pursued a deliberate course of conduct for the purpose of evading child support obligations” which requires “either proof of a specific intention to undermine or avoid support obligations, or circumstances which permit the court to infer that the intention of the obligor is to undermine or avoid his or her support obligations.” In Taylor v Taylor , 2009 ABCA 354 at para 15 the appeal court stated that the “intent to evade support obligations may be found where the unemployment … of the person obliged to pay support, indicate[s] a deliberate refusal to live up to the obligation to support one’s children.” I find it difficult to conclude that Mr.

Tesfu’s unemployment exhibits a deliberate course of conduct for the purpose of evading his child support obligations and I echo Justice Yungwirth’s comments in Smith v Gulka , 2020 ABQB 32 that it is time for our Court of Appeal to reconsider the stringent test in Smolis-Hunt in favour of the reasonableness approach that applies in all other jurisdictions. Nonetheless, I find I can infer the necessary intention from Mr. Tesfu’s decision to remain unemployed since returning from his business trip to Eritrea. Immediately prior to the parties’ separation and the commencement of this litigation, Mr.

Tesfu was in Africa working hard to start up a new business venture. I find that if he had the energy for such an undertaking, he also should have been able to work upon his return to Canada. I note that he obtained employment with Seaview but he left after three months. While Mr. Tesfu has testified that he is unable to work due to his medical conditions and he has offered letters from his physician in support, this documentary evidence is inadmissible. In the absence of evidence confirming his inability to work, I find can infer the requisite intention.

I find that despite his difficult circumstances, he should have been able to engage in some form of employment for the purposes of supporting his four children so as to live up to his child support obligations. [paras 227-228] [emphasis added] [ 88 ] In Smith v Gulka , 2020 ABQB 32 , after a broad survey of imputing income-cases (paras 122-141), Yungwirth J. x-rayed Alberta’s current approach to imputing income and then applied it: I do not think the Alberta case law can be consistently reconciled with Hunt .

Attempts have been made in Mercer , VLW , and numerous other cases to try and avoid the strict test set out in Hunt . In doing so, many have applied elements of a reasonableness test in determining whether an inference could be drawn that the payor took steps to undermine or avoid his or her support obligations. From a practical perspective, the Court will rarely have direct evidence of a specific intention to undermine or avoid support obligations.

This leaves judges in the position of having to determine if the evidence permits an inference that the intention of the obligor is to undermine or avoid his or her support obligations. Though past conduct may provide clear evidence to support such an inference , judges have often resorted to considering the reasonableness of overall conduct as part of the analysis of whether such an inference is supported. The result has been that in an effort to apply Hunt and still accomplish a just result, elements of a reasonableness test have necessarily been utilized.

This may be an indication that the strict test in Hunt casts too wide a net and catches some payors that should not benefit from such a strict test. In this case, applying the strict test in Hunt , I am not able to find that Ms. Smith engaged in a “deliberate course of conduct for the purpose of evading child support obligations”, either by “proof of a specific intention to undermine or avoid support obligations, or in circumstances which permit the court to infer that the intention of the obligor is to undermine or avoid his or her support obligations ” ( Hunt at para 42 ).

Though I am bound by Hunt to make this finding, I question whether it is just in this case. Both parents have an obligation to support their children. If, for lifestyle or other reasons, a parent does not work or reduces his/her income in a significant way, thereby negatively impacting his/her ability to pay child support, the court should have some discretion to do what is just without being constrained by a strict test . Had I not been bound by the strict test in Hunt , I would have concluded that going forward it would be fair for income to be imputed to Ms. Smith . While Caden is living with Mr.

Gulka, he must assume all of Caden’s expenses because Ms. Smith has no

income to apply in the set off contemplated by s. 8 of the Guidelines . Though Ms. Smith made the decision to remain out of the workforce completely for many reasons (including the fact that her husband’s income allowed her to do so), there is no evidence that her twins, who are now of pre-school age, are not able to attend pre-school. By the fall of 2020, they will be kindergarten age. Had I not been bound by Hunt , for child support going forward, I would have imputed income to Ms. Smith at a level that would reflect at least part-time work or minimum wage full-time work.

She should not be able to avoid her obligation to pay base child support for Caden by her choice to remain out of the workforce. Perhaps it is time for the decision in Hunt to be revisited. The use of a test that is more consistent with the minority decision in Hunt would make this area of the law more consistent with what is actually happening in the trenches of family chambers to achieve a fair result, even where the strict test in Hunt is not met. Where “lifestyle” choices are made – even for good reasons - fairness may require that in some cases, income be imputed to the parent who has made those choices .

There should be more consideration given to the effect of the choices made than the strict test in Hunt allows. I am not suggesting that a parent’s child support obligation can only be met if they earn the maximum they are capable of earning.

However, the reasonableness of a parent’s decisions in relation to their income must be considered in light of the child’s right to be financially supported by both parents . [paras 142-143 and 151-155] [emphasis added] [ 89 ] In Craig v Craig , 2019 ABQB 375 , Fraser J. declined to impute income, emphasizing (in part) the payor’s having remained current with child support: [9] Since it is Ms. Craig that is seeking to have income imputed, it is her burden to prove that Mr. Craig engaged in a deliberate course of conduct for the purpose of evading his child support obligations.

Proving a deliberate course of conduct requires "proof of a specific intention to undermine or avoid support obligations, or circumstances which permit the court to infer that the intention of the obligor is to undermine or avoid his or her support obligations", par 42, Hunt , supra. This test was recently confirmed in DBF v BF , 2017 ABCA 272 . [10] Since this matter comes before me as a Special Chambers Application, all the evidence is in affidavit form. Both parties in this matter provided very general affidavits, with few specific facts to assist the court. Mr.

Craig’s affidavit simply states that his income has decreased and provides his 2017 notice of assessment as support. There is no indication of why his income has decreased, or what efforts he has made to try and rectify the situation . [11] In her affidavit, Ms. Craig states her belief that he is purposefully underemployed. The basis for this belief is that he became unemployed shortly after the parties reached the resolution agreement that formed the basis of the October 2017 consent order. Her affidavit also has attached as exhibits job postings that appear to be in line with Mr.

Craig’s education and experience. There is even one posting from his former employer that seems to be for an identical position. [12] Ms. Craig submits that in order to avoid child support of $10,080 per year, Mr. Craig has decided to become unemployed, drawdown his RSP savings, move into the basement of a family member, and rely on the financial assistance of family members. This submission is undermined by her admission in her affidavit that Mr. Craig has paid approximately $840 per month in child support since October 2017.

There is some evidence that he is in arrears regarding child support, but neither party provided any evidence as to the amount of the arrears or when the arrears started to accumulate. Since MEPP has been involved in enforcing child support since October 2017, it should have been easy for either party to produce a statement outlining what payments were made and what arrears were owing. [13] Mr. Craig’s payment of child support demonstrates that his unemployment was not done with the intention of avoiding his support obligations.

It may be wise for him to reconsider his employment choices, and perhaps pursue a different, less lucrative area of employment. However, I cannot find that he is attempting to avoid his child support obligations . … [paras 9- 13] [emphasis added] [ 90 ] See also LAG v CGG , 2019 ABQB 433 , where Graesser J. provides a helpful overview of imputation-of-income principles and applied them to impute income to a spousal-support recipient (paras 31-59).

Application of those principles here [ 91 ] The mother’s main response to the father’s variation application was resisting his proposed adjustments to historical and ongoing support i.e. versus seeking to impute income to him.

As discussed, she was largely successful on the retroactive front (January 2017 to September 2020). [ 92 ] At the first (March 2021) instalment of the current application (adjourned to allow for cross-examination of the father by the mother’s counsel, which occurred at the second instalment), I imputed income to the father, pending the continuation of the application, of approximately $32,000 i.e. the minimum wage for British Columbia (where he now lives), assuming work-weeks-per-year and work- hours-per-week provided by the friend of the Court. [ 93 ] As noted, the father has been paying child support per that imputed income since then. [ 94 ] The mother did not cross-apply or otherwise apply to continue that imputation of the father’s income or otherwise to impute income to him i.e. on the basis that he is under-employed (actually not employed at all) or that his apparent retirement, at age 60 or 61, is premature in light of his child and spousal support obligations. [ 95 ] However, it was clear from the mother’s submissions at the second instalment that she effectively takes both positions i.e. the father should be employed, that (despite his age) he is capable of earning in the neighbourhood of his historical (2011-2014) earnings, or

even his 2017 earnings, and that his retirement (if that is what he has done) is premature. [ 96 ] The father’s supplementary affidavit detailed a MEP-initiated loss of his driver’s licence, from September 2019 through to March 2020.

He stated that “[he] was unable to work in that lengthy time period and lost [his] job as a long-distance driver because of this” and that, shortly after his license was reinstated “Covid hit, and no jobs [were] available … I will soon be 61 years old, and employers want younger people and are reluctant to hire once [one’s] license has been pulled once.” [ 97 ] The father says that, at 61, he is effectively unemployable and that his income is just over $7,000 annually.

He swears that he makes ends meet only thanks to the income, assets, and generosity of his new partner. [ 98 ] The mother argued, mostly in theory (i.e. without reference to any particular job postings or other employment-possibility evidence), that the father is capable of earning his historical (i.e. 2011-2014 and 2017) level of income. [ 99 ] Here are the key factors on the Hunt v Smolis-Hunt requirement of intention to undermine or avoid support obligations: • despite sharply decreased income after 2017, the payor has remained current with his support obligations.

Admittedly, the redirection of some of the house-sale proceeds assisted, but even afterwards (since June 2019) he has made the required payments (even if occasionally requiring catch-up payments); • staying current has required payments out of proportion to his current income (as reflected, for example, in the 2020 data reviewed above) i.e. with support payments apparently sourced out of assets or contributions by his new partner (or both); • the payor gave evidence, effectively uncontradicted by the recipient, that, at his age (61), opportunities for driving- or heavy- equipment-related jobs are limited and that employers are even less interested in applicants who have lost their licenses, even if regained; • the payor gave (admittedly unsupported) evidence that he has “major medical issues with stress”; • the recipient did not provide any particular evidence about potential employment opportunities for the payor (in contrast, for example, to job information at para 6 of her May 7, 2015 affidavit); and • the payor has a new partner and is presumably expected to contribute, as able, to their household and other expenses. (This cuts against any suggestion that the payor is deliberately undermining his support obligations, since that would also impose a presumably unacceptable price on his new partner). [ 100 ] I do not necessarily accept that, at 61, a person’s working life is necessarily done, at least not without clear evidence (e.g. from employment statistics, outcomes of job searches, opinions of employment experts) that such is the case. [ 101 ] As well, I do not see a retirement decision (if that is what the payor has done) at that age, with a 12-year-old child, as an automatically reasonable decision i.e. without more evidence (as above). [ 102 ] However, “reasonableness” is not the test. [ 103 ] The Court of Appeal has recently granted leave, in Peters v Atchooay , 2021 ABCA 237 , for the Hunt v Smolis-Hunt test to be re-visited. [ 104 ] However, for the time being, Hunt continues to govern imputation cases. [ 105 ] I am not satisfied that, in the circumstances here (and particularly with him being current with his support obligations), the father’s retirement at 61 was deliberately aimed at sabotaging those obligations. [ 106 ] Accordingly, I am not prepared to impute income to him for September 2020 onwards i.e. once he provided effective (and formal) notice of an intention to revisit support, accompanied by his disclosure at that time and topped up by his January 2021 disclosure. [ 107 ] When all the dust settles, his income since September 2020 has been below the above-noted floors for both child and spousal support, and I do not see any reason to impose below-floor-income support obligations here.

What to do about overpaid support [ 108 ] As noted, the father has paid support of approximately $7,000 since October 1, 2020 (through July 1, 2021). [ 109 ] As also noted, I suspended his spousal-support payment ($500 monthly) and reduced his child support payment ($747 for the remaining child of the marriage) to $230, both as of April 1, 2021. [ 110 ] As it turns out, in light of his actual 2020 income and expected-so-far 2021 income and my “no imputation” decision, he should not have been required to pay any support after September 2020 (assuming full disclosure at that point, as discussed further below). [ 111 ] In Colucci , the Supreme Court discussed a repayment-of-support scenario: A retroactive decrease will mean less funds, a possible set-off and even a repayment from the recipient to the payor.

This in turn implicates and intensifies the certainty interest of the child and the recipient who have relied on the prior court order. It will generally be more difficult to adjust to the receipt of lesser, rather than greater amounts of support, increasing the likelihood and severity of hardship. Those with lower incomes will have less ability to absorb negative financial events.

Another relevant consideration is whether the retroactive decrease would result in an order requiring the recipient to repay support to remedy an overpayment. The framework under s. 17 of the Divorce Act should not penalize payors for having continued to pay the full amount of support under an order or agreement after they experience a drop in income. However, reimbursement or set-off may cause hardship for the child and recipient.

As such, where repayment is a possibility, it is even more important for the payor to give the recipient prompt notice of the decrease in their income — complete with disclosure enabling the recipient to meaningfully assess the extent of any potential future repayment — and move with reasonable diligence to seek a formal variation ( Corcios , at para. 55 ; Gray , at para. 60 ; see also Fleury v. Fleury , 2009 ABCA 43 , 448 A.R. 92, at para. 32 ).

In cases involving claims of overpayment, it will rarely be appropriate, given the recipient’s absence of knowledge, 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.

This approach protects the child’s best interests and the recipient’s certainty interest, while allowing payors who have overpaid to seek a retroactive decrease as long as the recipient has been given proper notice and disclosure . [paras 83, 105, and 106] [emphasis added] [ 112 ] In Umperville v Vanberg , 2021 ABQB 520 , Malik J. explored a repayment of overpaid s. 7 expenses: The Applicant fairly concedes that the reimbursement

schedule must be reasonable and occur over a period time such as not to leave the parties’ child without appropriate support. I agree. He refers me to several cases ( ZAM v AVT , 2018 ABQB 319 at para 67; Sumka v Graham , 2013 ABQB 265 at paras 79-80 ; and Pereira v Richardson at para 104) where reimbursement has been ordered to be credited against a payor’s support obligations. The Respondent cites from the headnote in Colucci v Colucci , 2021 SCC 24 and argues that applying the reimbursement as a credit against the Applicant’s ongoing support would create hardship for the Respondent.

She proposes that reimbursement should be made by applying a 50% credit in the Applicant’s favor with respect to the cost of future

section 7 expenses. [The Respondent further argues that I should allow her some child care expenses between 2018 to February 2019, when the child started school. In my view, the Respondent has been unjustly enriched as a result of having received payments that she was not properly entitled to. I appreciate that the Applicant’s proposal will impact upon the Respon

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