Felice Colucci Appellant v. Lina Colucci, 2021 SCC 24

SUPREME COURT OF CANADA Citation: Colucci v. Colucci, 2021 SCC 24, [2021] 2 S.C.R. 3 Appeal Heard: November 4, 2020 Judgment Rendered: June 4, 2021 Docket: 38808 Between: Felice Colucci Appellant and Lina Colucci Respondent - and - West Coast Legal Education and Action Fund Association, Women’s Legal Education and Action Fund Inc. and Canada Without Poverty Interveners Coram: Wagner C.J. and Abella, Moldaver, Karakatsanis, Côté, Brown, Rowe, Martin and Kasirer JJ.

Reasons for Judgment: (paras. 1 to 143) Martin J. (Wagner C.J. and Abella, Moldaver, Karakatsanis, Côté, Brown, Rowe and Kasirer JJ. concurring) Felice Colucci Appellant v . Lina Colucci Respondent and West Coast Legal Education and Action Fund Association,

Women’s Legal Education and Action Fund Inc. and Canada Without Poverty Interveners Indexed as: Colucci v. Colucci 2021 SCC 24 File No.: 38808. 2020: November 4; 2021: June 4.

Present: Wagner C.J. and Abella, Moldaver, Karakatsanis, Côté, Brown, Rowe, Martin and Kasirer JJ. on appeal from the court of appeal for ontario Family law — Support — Child support — Retroactive decrease — Rescission of arrears — Father owing $ 170,000 in child support arrears and seeking retroactive decrease in child support and rescission of arrears — Framework governing applications by payor parent to retroactively decrease child support based on material change in circumstances — Framework governing applications by payor parent for rescission of child support arrears based on current and ongoing inability to pay — Divorce Act, R.S.C. 1985, c. 3 (2nd Supp .), s. 17 .

The parties were married in 1983 and divorced in 1996. The mother was granted sole custody of the parties’ two daughters and the father was required to pay child support of $ 115 per week per child until they were no longer children of the marriage. In 1998, the father requested a reduction in his child support obligations, but provided no financial disclosure to support his request and the parties reached no agreement at that time. The father’s child support obligations ended in 2012.

From 1998 to 2016, the father made no voluntary child support payments and only limited sums were collected through enforcement mechanisms. During the period in which the arrears accrued, the father was absent from the children’s lives and his whereabouts were unknown. In 2016, the father applied to retroactively reduce child support and rescind the arrears of approximately $ 170,000. He provided little documentation or financial disclosure to support his claims. The motion judge retroactively decreased support, effectively reducing the arrears owing to $ 41,642.

He found that this variation was warranted in order to bring the child support in line with the Federal Child Support Guidelines and to reflect the father’s drop in income over the period when the arrears were accruing. The Court of Appeal overturned that decision and ordered that the father pay the full amount of the arrears. Held : The appeal should be dismissed. Courts have and need wide discretion to vary child support orders to ensure the correct amount of child support is being paid and to adapt to the enormous diversity of individual circumstances that families face.

In building a framework for cases involving the variation of child support and the rescission of arrears, three interests must be balanced to achieve a fair result: the child’s interest in receiving the appropriate amount of support to which they are entitled; the interest of the parties and the child in certainty and predictability; and the need for flexibility to ensure a just result in light of fluctuations in the payor’s income. The child’s interest in a fair standard of support commensurate with income is the core interest to which all rules and principles must yield.

A fair result that adequately protects this interest will sometimes lean toward preserving certainty, and sometimes toward flexibility. Any framework for decreased child support must also account for the informational asymmetry between the parties and the resulting need for full and frank disclosure of the payor’s income. The child support system depends upon adequate, accurate and timely financial disclosure. Disclosure is the linchpin on which fair support depends and the relevant legal tests must encourage the timely provision of necessary information.

In a system that ties support to payor income, it is the payor who knows and controls the information needed to calculate the appropriate amount of support. The recipient does not have access to this information, except to the extent that the payor chooses or is made to share it. Thus, full and frank disclosure of income information by the payor lies at the foundation of the child support regime and is also a precondition to good faith negotiation. Without it, the parties cannot stand on the equal footing required to make informed decisions and resolve child support disputes outside of court.

The payor’s duty to disclose income information is a corollary of the legal obligation to pay support commensurate with income. Proactive disclosure of changes in income is the first step to ensuring that child support obligations are tied to payor income as it fluctuates. The framework applicable to a payor’s application for a retroactive decrease in support based on a material change in circumstances covers situations in which the payor has experienced a material drop in income that affected their ability to make payments as they came due.

A payor seeking a downward retroactive change must first show a past change in circumstances. Most commonly, the retroactive variation claim will be based on a material change in income. The payor must have disclosed sufficient reliable evidence to determine when and how far their income fell, and to ascertain whether the change was significant, long lasting, and not one of choice. A payor’s whose income was originally imputed because of an initial lack of disclosure cannot rely on their own late disclosure as a change in circumstances to ground a variation order.

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. 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 — it is not enough for the payor to merely broach the subject of a reduction of support with the recipient.

The presumption that support will be reduced back to the date of effective notice strikes a fair balance between the certainty interests of the child and recipient and the payor’s interest in flexibility. While recipients should be aware that support varies with payor income, they are at an informational disadvantage. The recipient is entitled to rely on the court order or agreement in the absence of proper communication and disclosure by the payor showing a decrease in income that is lasting and genuine.

While a drop in support can be presumed to have detrimental impacts on the child, ongoing communication and disclosure cushions those impacts and preserves the child’s best interests to the fullest extent possible. In the absence of effective notice of a drop in payor income, certainty and predictability for the child are to be prioritized over the payor’s

interest in flexibility. The payor’s interest in flexibility comes to the forefront only once effective notice is given. The presumption provides payors with the certainty of knowing that any material change in income should be disclosed. The payor therefore has control over the date of notice and the date of retroactivity. Even where the payor has given proper effective notice, the period of retroactivity is presumed to extend no further than three years before the date of formal notice.

The presumptive three - year limit allows the parties time to negotiate but recognizes that the payor must commence proceedings in a timely manner if negotiations fail in order to protect the certainty interests of the child and recipient. The presumptive three - year limit is also justified by evidentiary concerns as the best evidence of income or ability to earn income is generally more readily available closer to the time that the income is earned.

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. The court retains discretion to depart from the presumptive date of retroactivity where the result would otherwise be unfair in the circumstances of a particular case. The four factors set out in D.B.S. v.

S.R.G. , 2006 SCC 37 , [2006] 2 S.C.R. 231 — adapted to suit the retroactive decrease context — help the court reach a fair balancing of the three interests at play, namely the child’s interest in a fair standard of support, the payor’s interest in flexibility, and the interest of the child and recipient in certainty. The first factor is whether the payor has an understandable reason for the delay in giving effective notice or seeking relief in the courts. 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 date of effective notice or not applying the three - year limit. The recipient’s delay in enforcing arrears is irrelevant to the analysis. The second factor is the payor’s conduct. The payor’s efforts to disclose and communicate will often be prominent considerations. Genuine efforts to continue paying as much as the payor can will show good faith and a willingness to support the child. The circumstances of the child are the third factor.

If the child has experienced hardship or is currently in need, this factor militates 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 repay support to remedy an overpayment. 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. 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 hardshi p. 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. 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. Once a 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 statutory scheme that applies to the award.

Full and complete disclosure is required to quantify the appropriate amount of support for the period of retroactivity, just as it would be when quantifying prospective support. The onus is on the payor to show the extent to which their income decreased during the period of retroactivity. If the payor fails to provide all relevant evidence required for the court to fully appreciate their true income during any part of the period of retroactivity, the court may draw an adverse inference against the payor.

The payor must also make complete disclosure of their current financial circumstances if seeking a periodic payment plan or temporary suspension on hardship grounds. In applications where the payor seeks recission of arrears based on current inability to pay, the prior child support order or agreement corresponds with the payor’s income and the arrears accurately reflect the amount of support that the payor should have paid.

The only relevant factor is the payor’s ongoing financial capacity and therefore the payor must provide sufficient reliable evidence to enable the court to assess their current and prospective financial circumstances. The payor must overcome a presumption against rescinding any part of the arrears. The presumption will only be rebutted where the payor parent establishes on a balance of probabilities that even with a flexible payment plan, they cannot and will not ever be able to pay the arrears.

While the presumption in favour of enforcing arrears may be rebutted in unusual circumstances, the standard should remain a stringent one. Rescission of arrears is a last resort in exceptional cases. The rule should not allow or encourage debtors to wait out their obligations or subvert statutory enforcement regimes that recognize child support arrears as debts to be taken seriously.

If the court concludes that the payor’s financial circumstances will give rise to difficulties paying down arrears, it ought first to consider whether hardship can be mitigated by ordering a temporary suspension, periodic payments, or other creative payment options. In the instant case, the coming into force of the Guidelines did constitute a change in circumstances. While this legal change opens the door at the threshold step, it does not obviate the need for evidence of the father’s earnings in the years since the Guidelines came into force .

To the extent that he relies on drops in income, the father’s deficient communication, inadequate evidence and insufficient disclosure are fatal to his application. It was not enough for the father to advise the mother that his income had fallen without taking any further steps, and since the father did not provide reasonable proof to allow the mother to meaningfully assess the situation, his request fell short of effective notice. As the father gave no effective notice before arrears stopped accumulating in 2012, he is not entitled to any retroactive decrease in his child support obligations.

The application of the three - year rule would preclude any retroactive decrease, given that the children were no longer eligible for child support beginning in 2012 and he gave formal notice in 2016. Nor would the application of the D.B.S. factors support a longer period of retroactivity. The father made few, if any, voluntary payments and showed no willingness to support the children, who suffered hardship as a result of his failure to fulfill his obligations. His conduct shows bad faith efforts to evade the enforcement of a court order.

This case provides an example of the kind of inadequate disclosure that would justify a refusal to vary back to the date of formal notice. The father is not entitled to relief on the basis of a decrease in income. Further, the father’s failure to adduce adequate evidence of his financial circumstances would be fatal to any application to rescind arrears. As such, he has not discharged his onus of showing that he will be unable to pay now or in the future even with a flexible payment plan. Cases Cited

Applied: D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231; considered: Corcios v. Burgos, 2011 ONSC 3326; Gray v.Rizzi, 2016 ONCA 152, 129 O.R. (3d) 201; Brown v. Brown, 2010 NBCA 5, 353 N.B.R. (2d) 323; referred to: D.B.S. v. S.R.G., 2005ABCA 2, 361 A.R. 60; Brear v. Brear, 2019 ABCA 419, 97 Alta. L.R. (6th) 1; MacMinn v. MacMinn (1995), (ABCA), 174 A.R. 261; Hunt v. Smolis-Hunt, 2001 ABCA 229, 97 Alta. L.R. (3d) 238; Paras v. Paras, (ON CA), [1971] 1O.R. 130; Whitton v. Shippelt, 2001 ABCA 307, 23 R.F.L. (5th) 437; Michel v.

Graydon, 2020 SCC 24, [2020] 2 S.C.R. 763; C. (M.) v.O. (J.), 2017 NBCA 15, 93 R.F.L. (7th) 59; Goulding v. Keck, 2014 ABCA 138, 42 R.F.L. (7th) 259; Burchill v. Roberts, 2013 BCCA39, 41 B.C.L.R. (5th) 217; Greene v. Greene, 2010 BCCA 595, 12 B.C.L.R. (5th) 330; Carlaw v. Carlaw, 2009 NSSC 428, 299 N.S.R.(2d) 1; Damphouse v. Damphouse, 2020 ABQB 101; Templeton v. Nuttall, 2018 ONSC 815; Contino v. Leonelli-Contino, 2005 SCC 63,[2005] 3 S.C.R. 217; Shamli v. Shamli, ; Hietanen v. Hietanen, 2004 BCSC 306, 7 R.F.L. (6th) 67; M.K.R. v. J.A.R.,2015 NBCA 73, 443 N.B.R. (2d) 313; Francis v.

Terry, 2004 NSCA 118, 227 N.S.R. (2d) 99; Roberts v. Roberts, 2015 ONCA 450, 65R.F.L. (7th) 6; Leitch v. Novac, 2020 ONCA 257, 150 O.R. (3d) 587; Roseberry v. Roseberry, 2015 ABQB 75, 13 Alta. L.R. (6th) 215;Cunningham v. Seveny, 2017 ABCA 4, 88 R.F.L. (7th) 1; Rick v. Brandsema, 2009 SCC 10, [2009] 1 S.C.R. 295; Sawatzky v. Sawatzky,2018 MBCA 102, 428 D.L.R. (4th) 247; Willick v. Willick, (SCC), [1994] 3 S.C.R. 670; Punzo v. Punzo, 2016 ONCA957, 90 R.F.L. (7th) 304; Earle v. Earle, ; MacCarthy v. MacCarthy, 2015 BCCA 496, 380 B.C.A.C. 102; L.M.P. v.L.S., 2011 SCC 64, [2011] 3 S.C.R. 775; Tougher v.

Tougher, 1999 ABQB 552; Trang v. Trang, 2013 ONSC 1980, 29 R.F.L. (7th) 364;M.W. v. K.T., 2019 NLSC 14, 19 R.F.L. (8th) 51; Morwald-Benevides v. Benevides, 2019 ONCA 1023, 148 O.R. (3d) 305; MacEachernv. Bell, 2019 ONSC 4720, 33 R.F.L. (8th) 68; H.G.S. v. J.R.M., 2018 ABQB 892, 16 R.F.L. (8th) 404; Hrynkow v. Gosse, 2017 ABQB675; Hodges v. Hodges, 2018 ABCA 197; Brown v. Barber, 2016 ABQB 687, 85 R.F.L. (7th) 401; Janik v. Drotlef, 2018 ONCJ 287;Haisman v. Haisman (1994), 1994 ABCA 249 , 157 A.R. 47, rev’g (1993), (AB KB), 7 Alta. L.R. (3d) 157;DiFrancesco v. Couto (2001), (ON CA), 56 O.R. (3d) 363; Fleury v.

Fleury, 2009 ABCA 43, 448 A.R. 92; Kinsella v.Mills, 2020 ONSC 4785, 44 R.F.L. (8th) 1; C.L.W. v. S.V.W., 2017 ABCA 121; Blanchard v. Blanchard, 2019 ABCA 53; S.A.L. v.B.J.L., 2019 ABCA 350, 31 R.F.L. (8th) 299; Semancik v. Saunders, 2011 BCCA 264, 19 B.C.L.R. (5th) 219; Mayotte v. Salthouse(1997), 1997 ABCA 145 , 29 R.F.L. (4th) 38; Heiden v. British Columbia (Director of Maintenance Enforcement) (1995), (BC CA), 16 B.C.L.R. (3d) 48; Walsh v. Walsh (2004), (ON CA), 69 O.R. (3d) 577, with additionalreasons (2004), (ON CA), 6 R.F.L. (6th) 432; St-Jules v.

St-Jules, 2012 NSCA 97, 321 N.S.R. (2d) 133; Tremblay v.Daley, 2012 ONCA 780, 23 R.F.L. (7th) 91; Schmidt v. Schmidt (1985), (MB KB), 46 R.F.L. (2d) 71. Statutes and Regulations Cited Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 178(1)(c). Child Support Guidelines, O. Reg. 391/97, s. 24.1(1). Civil Code of Québec, S.Q. 1991, c. 64, art. 596 para. 2. Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), ss. 7.3, 7.5, 17, 26.1. Family Law Act, R.S.O. 1990, c. F.3, s. 39.1(2). Family Law Act, S.B.C. 2011, c. 25, ss. 5(1), 10. Family Responsibility and Support Arrears Enforcement Act, 1996, S.O. 1996, c. 31.

Federal Child Support Guidelines, SOR/97-175, ss. 1, 3, 4, 7, 10, 14, 19, 21(1), Sch. I. The Family Maintenance Act, C.C.S.M., c. F20, s. 56.2(2), (3). Authors Cited Bakht, Natasha, et al. “D.B.S. v. S.G.R.: Promoting Women’s Equality through the Automatic Recalculation of Child Support” (2006), 18C.J.W.L. 535. Bala, Nicholas. “Reforming Family Dispute Resolution in Ontario: Systemic Changes and Cultural Shifts”, in Michael Trebilcock,Anthony Duggan and Lorne Sossin, eds., Middle Income Access to Justice. Toronto: University of Toronto Press, 2012, 271.

Dalphond, Pierre J., and Anushua Nag. “Enfin une réforme de la

Loi sur le divorce” (2019), 78 R. du B. 255. Davies, Christine. “Retroactive Child Support: the Alberta Trilogy” (2005), 24 C.F.L.Q. 1. Gordon, Marie L. “An Update on Retroactive Child and Spousal Support: Five Years after S. (D.B.) v. G. (S.R.)” (2012), 31 C.F.L.Q. 71. Martinson, Donna, and Margaret Jackson. “Family Violence and Evolving Judicial Roles: Judges as Equality Guardians in Family LawCases” (2017), 30 Can. J. Fam. L. 11. Payne, Julien D., and Marilyn A. Payne. Child Support Guidelines in Canada, 2020. Toronto: Irwin Law, 2020. Smith, D. “Retroactive Child Support — An Update” (2007), 26 C.F.L.Q. 209.

Sowter, Deanne M. “Advocacy in Non-Adversarial Family Law: A Recommendation for Revision to the Model Code” (2018), 35Windsor Y.B. Access Just. 401. APPEAL from a judgment of the Ontario Court of Appeal (Brown, Roberts and Zarnett JJ.A.), 2019 ONCA 561, 26 R.F.L.(8th) 259, [2019] O.J. No. 3528 (QL), 2019 CarswellOnt 10845 (WL Can.), setting aside in part a decision of Hockin J., 2018 ONSC6627. Appeal dismissed.

Richard Gordner and Michael Gordner , for the appellant. Cheryl Goldhart and Surinder Multani , for the respondent. Jennifer Klinck , for the interveners the West Coast Legal Education and Action Fund Association and the Women’s Legal Education and Action Fund Inc. Ceilidh Joan Henderson , for the intervener Canada Without Poverty. The judgment of the Court was delivered by Martin J. — I.

Overview [ 1 ] This appeal centres on the appropriate framework for determining applications to retroactively decrease the amount of child support owing or forgive child support arrears under s. 17 of the Divorce Act , R.S.C. 1985, c. 3 (2nd Supp .). The amount of child support payable varies based on the payor parent’s income, and income often fluctuates. As a result, applications to retroactively vary support are a common occurrence in courtrooms across the country.

In an ideal world, when parents work together in the best interests of their children, they will provide full and accurate income information every year and recalculate the proper amount of support owing. When that does not occur, s. 17 of the Divorce Act allows a parent to ask the court to vary an existing order retroactively to align with the payor’s actual income for the relevant period. [ 2 ] In the present case, Mr. Colucci did not make any voluntary payments toward his child support obligations for over 16 years and now owes approximately $170,000 in arrears. On application by Mr.

Colucci, the motion judge retroactively decreased support, effectively reducing the arrears owing to $41,642. The Court of Appeal for Ontario overturned that decision and ordered him to pay the full amount of the arrears. [ 3 ] The divergent results in the lower courts highlight the confusion surrounding the applicable framework with respect to applications under s. 17 to retroactively reduce or rescind arrears, a confusion that has persisted since this Court’s landmark decision in D.B.S. v. S.R.G . , 2006 SCC 37 , [2006] 2 S.C.R. 231.

In that case, the Court considered the principles and competing interests underlying recipients’ applications for retroactive child support. The Court is now asked to clarify the principles which guide the exercise of judicial discretion where a payor seeks to retroactively decrease support to reflect a past reduction in income. The courts have and need wide discretion to vary child support orders to ensure the correct amount of child support is being paid and to adapt to the enormous diversity of individual circumstances that families face.

There is, however, a pressing need for clear statements about what must be established before a court will retroactively decrease the amount owing under an existing child support order. [ 4 ] The applicable framework must give effect to the objectives and provisions of the Federal Child Support Guidelines , SOR/97-175 (“ Guidelines ”), particularly the core objective of safeguarding the child’s right to a “fair standard of support” ( s. 1 ).

Retroactive variation applications also require courts to weigh the certainty and predictability provided by an existing court order against the need for flexibility in a system that ties support to fluctuating payor income. The framework set out below balances these interests in a way that incentivizes payment of the right amount of child support when it is due and the timely disclosure of financial information — the linchpin of a just and effective family law system.

Rules which create perverse incentives to ignore or postpone parental support obligations are to be firmly rejected in favour of legal standards designed with the fundamental purposes of child support in mind. [ 5 ] The controversy between the parties centres on whether the framework for retroactive decreases under s. 17 should reflect the flexible and discretionary approach applied to retroactive increases in D.B.S. With certain modifications, I conclude that it should.

A payor who has established a past decrease in income is not automatically entitled to a retroactive decrease of support back to the date of the decrease, as suggested by the motion judge in this case. The overall decision is a discretionary one. [ 6 ] As I will explain further, the court’s discretion is structured by a presumption in favour of retroactively decreasing support to the date 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 .

This presumption is triggered as soon as a past material change in circumstances is established — it is no longer necessary to first ask whether retroactive relief is generally appropriate before moving to the question of how far back retroactive relief should extend. Discretionary factors parallel to those considered in D.B.S. may justify departing from the presumptive date in favour of a longer or shorter period of retroactivity. For consistency, this presumption-based approach should be mirrored where the recipient seeks a retroactive increase.

Once a past material change in income is established, a presumption is triggered in favour of retroactively increasing support to a certain date, with the D.B.S. factors guiding the court’s exercise of discretion in deciding whether to depart from that date. [ 7 ] Given the informational asymmetry between the parties, a payor’s success in obtaining a retroactive decrease will depend largely on the payor’s financial disclosure and communication. Indeed, effective notice in this context is only “effective” when there has been disclosure of the changed financial circumstances.

At the stage of considering the D.B.S. factors, disclosure will once again be a key consideration in assessing whether the payor’s conduct operates to shorten or lengthen the presumptive period of retroactivity. [ 8 ] In the courts below, it appears Mr. Colucci also sought rescission of all or part of his arrears on the basis of a current and ongoing inability to pay. Applications of this kind require a different analysis. In these cases, the court order or agreement reflects the correct amount of child support owing, but the payor has failed to keep up with payments as they fell due.

The payor subsequently asks the court to forgive all or part of the accrued debt because of present financial hardship. When the arrears reflect the amount that ought to have been paid, the payor cannot rely on a past decrease in income to explain why there are arrears. In these cases, there is a presumption against rescinding any part of the arrears, as courts have a range of other remedial options. Rescission sits at the far end of the range because it wipes out a legally recognized debt. As such, rescission is only appropriate in exceptional circumstances.

Such circumstances may arise where full disclosure of the payor’s financial circumstances shows that the payor is unable to pay thearrears and will be unable to pay in the future, even with a flexible payment plan. [9] In these reasons, I will set out the foundational principles established by the Guidelines and D.B.S., followed by adiscussion of the centrality of financial disclosure to the child support regime. Against this backdrop, I will explain the framework courtsought to apply to determine when to retroactively reduce child support under s. 17 of the Divorce Act.

In doing so, I will reconcile thedivergent lines of authority on the applicability of the contextual D.B.S. factors. Finally, I will set out the analysis that applies where thepayor seeks rescission of arrears based on current inability to pay rather than a past change in circumstances. Applying the framework tothe facts of this case, there is no reason for this Court to intervene to reduce or forgive the debt accrued under the existing child supportorder. I would dismiss Mr. Colucci’s appeal. II. Background [10] In 2016, Mr.

Colucci applied to retroactively reduce child support and rescind arrears totalling approximately$170,000 at the time of the application. [11] The parties were married in 1983 and divorced in 1996. The order of McMahon J., dated May 13, 1996 (“DivorceOrder”), made on consent, provided that Ms. Colucci would have sole custody of the parties’ two daughters, aged 8 and 6 at the time,and required Mr. Colucci to pay child support of $115 per week per child (indexed) until they were no longer “child[ren] of themarriage”. The record does not show what Mr.

Colucci’s income was at the time of the order, but the amount of child support wasnegotiated taking into account that Ms. Colucci forewent any claim to spousal support. One year after the order was made, theGuidelines came into force. [12] In April 1998, Mr. Colucci contacted Ms. Colucci through counsel to request a reduction in his child supportobligations on the basis of a decrease in his income. He provided no financial disclosure to support his request and the parties reached noagreement at that time. Mr.

Colucci’s child support obligations ended in 2012, when the daughters were no longer children of themarriage. After that time, no further support payments accrued. Until he brought this application in 2016, Mr. Colucci took no furthersteps to vary the Divorce Order. [13] From 1998 to 2012, the period during which arrears accrued, Mr. Colucci was absent from the children’s lives andhis whereabouts were unknown to Ms. Colucci and the children.

He made no voluntary child support payments and the FamilyResponsibility Office (“FRO”) was only able to collect limited sums through enforcement mechanisms from 1998 to 2016. Enforcementaction taken by the FRO includes garnishment of Mr. Colucci’s Workplace Safety and Insurance Board payments and federal income taxrefunds, the suspension of his driver’s license and Canadian passport, the issuance of a writ of seizure and sale, and reporting to the creditbureau. [14] Mr. Colucci commenced a motion to change in November 2016.

He sought orders retroactively varying childsupport to the date the Guidelines came into force (May 1, 1997) and “[f]ixing the arrears of child support if any and determining thepayments on those arrears in accordance with [his] income” (A.R., vol. II, at p. 4). He also asked that “any arrears of support . . . not onlybe fixed but that the payments on those arrears be fixed in accordance with [his] ability to pay” (p. 10). [15] In the course of these proceedings, Mr. Colucci eventually disclosed where he had been all these years. He said hemoved to the United States in 2000 and worked there until 2005.

He claims he earned approximately USD 25,000 annually during thoseyears. In 2005, he returned to Italy to care for his mother until her death in 2008. From 2005 to 2008, he states that he made between€3,000 and €4,000 per year, with the exception of 2007, when he made €19,000. Soon after his mother’s death, he received aninheritance of €15,000. He said he lived on these funds until 2016, when he returned to Canada. In 2016, Mr. Colucci received anadditional €15,000 from the sale of his mother’s property.

He is entitled to a further €15,000 from the sale, which he was scheduled toreceive on August 31, 2019. [16] Mr. Colucci provided little documentation or financial disclosure to support these claims. He relied largely onunsubstantiated assertions in his affidavit about where he worked and how much he was paid, making it extremely difficult to accuratelydetermine his income for the relevant years. Mr. Colucci claims he is unable to provide tax returns for the years 2000 to 2015.

He sayshe cannot obtain tax returns from the Internal Revenue Service for the years he worked in the United States, in part because “[h]e doesnot have a Canadian passport . . . and may be denied re-entry” if he attends in person to obtain the returns (A.R., vol. II, at p. 59). Heclaims he worked for cash only between 2007 and 2015 and “did not file any income tax returns” (ibid.). Mr. Colucci offers no otherexplanation for the absence of tax returns for these years. He explained that he did not file a tax return in 2017 because he did not wantthe authorities to garnish his tax refund. III. Judicial History A.

Ontario Superior Court of Justice, 2018 ONSC 6627 (Hockin J.) [17] In brief reasons, the motion judge held that a material change in circumstances occurred when the Guidelines wereadopted in May 1997, entitling Mr. Colucci to a retroactive adjustment of his child support obligation from that date forward. The motionjudge relied on principles from Corcios v. Burgos, 2011 ONSC 3326, at para. 40 , to impute income to Mr. Colucci based onOntario’s minimum wage for the two years before he went to the U.S. and six of the years he spent in Italy.

However, the motion judgedid not apply the factors set out in Corcios for assessing whether a reduction of arrears is warranted. [18] After finding a material change in circumstances, the motion judge simply completed a mathematical calculation.Based on the income attributed to Mr. Colucci for the years 1997 to 2012, the motion judge retroactively reduced Mr. Colucci’s childsupport obligations, effectively reducing the arrears owing from approximately $170,000 to $41,642.

The motion judge found that thisvariation was warranted in order to bring the child support arrears in line with the principles stemming from the Guidelines, in particularthe table amounts (which were implemented one year after the Divorce Order), and to reflect changes in Mr. Colucci’s drop in incomeover the period when the arrears were accruing (paras. 14-15).

[ 19 ] Prospective payments against the arrears were fixed at $425 per month based on Mr. Colucci’s asserted current income. Mr. Colucci was also ordered to pay Ms. Colucci €15,000 upon receiving the funds from the sale of his mother’s house. He was scheduled to receive the funds on August 31, 2019. As of the date of the hearing before this Court, this amount had yet to be paid to Ms. Colucci. [ 20 ] The motion judge made no reference to the D.B.S. factors, referring to D.B.S. only to note that “the so-called [three- year] rule does not apply” (para. 20).

The “three-year rule” is a presumption established in D.B.S. that a retroactive increase in support should extend no more than three years before the recipient gave formal notice of the application to vary under s. 17 of the Divorce Act . The motion judge added that [t]his is not a retroactive support order but a case where arrears have accumulated and require adjustment. In any event, it would be wrong to limit the calculation in view of [Mr. Colucci’s] delinquency. [para. 20] B. Court of Appeal, 2019 ONCA 561 , 26 R.F.L. (8th) 259 (Brown, Roberts and Zarnett JJ.A.) [ 21 ] Ms.

Colucci appealed the motion judge’s order on three grounds: (1) the motion judge failed to apply the principles on retroactive variation from D.B.S. and Gray v. Rizzi , 2016 ONCA 152 , 129 O.R. (3d) 201, in order to evaluate whether it was appropriate to reduce the arrears in this case; (2) the motion judge failed to apply the three-year rule; and (3) the motion judge incorrectly imputed income to Mr. Colucci (para. 13). [ 22 ] Speaking for the court, Roberts J.A. found that, while the enactment of the Guidelines constituted a change in circumstances, the motion judge erred in concluding that Mr.

Colucci was entitled to a retroactive variation extending back to 1997 “as of right” (para. 14). The motion judge also erred in distinguishing D.B.S. and failing to follow Gray .

Roberts J.A. stated: While [ D.B.S. ] involved an application for a retroactive increase in support, the factors articulated by the Supreme Court were intended to serve as general principles applicable, with appropriate adaptation, to retroactive support variations that would decrease the quantum of child support. [para. 15] [ 23 ] In line with these remarks, the Ontario Court of Appeal in Gray adapted the four D.B.S. factors to applications to reduce or rescind child support arrears, along with the rule that variation should extend to the date of effective notice unless that date is more than three years before formal notice (paras. 15-18). [ 24 ] Roberts J.A. noted that, given Mr.

Colucci’s failure to make full and accurate financial disclosure, the court was unable to determine whether he sought relief based on a current inability to pay the arrears or a change in financial circumstances that affected his ability to meet his obligations as they came due. However, the outcome is the same in either scenario (para. 28). [ 25 ] With respect to the second scenario of changed circumstances based on decreased income, the motion judge ought to have applied the Corcios / Gray factors (C.A. reasons, at paras. 22-23). Applying those factors, the Court of Appeal found that Mr.

Colucci failed to “discharg[e] his onus to explain his significant failure to make support payments and his extraordinary delay in proceeding with his application to vary” (para. 31). His blameworthy conduct as a “recalcitrant payor” (para. 30) and in failing to produce documents and misrepresenting his mother’s estate, along with hardship experienced by his daughters (including considerable student debt), militated against varying the child support order more than three years from the date of effective notice, that is November 17, 2016, the commencement of the motion to change (paras. 27-32).

As this date does not affect the amount of the accumulated arrears to 2012, no reduction in arrears was allowed (paras. 34-36). [ 26 ] Further, the Court of Appeal noted that Mr. Colucci was in breach of his ongoing requirement to make full documentary and financial disclosure (at para. 32) and had failed to produce any reliable evidence of his inability to pay while arrears were accumulating (para. 31). IV.

Issues [ 27 ] This appeal raises two questions: first, what is the appropriate framework for deciding applications to retroactively reduce child support under s. 17 of the Divorce Act , and second, what is the appropriate framework where the payor parent seeks to rescind child support arrears under s. 17 based on current and ongoing inability to pay? V.

Analysis [ 28 ] While children should be shielded from the economic consequences of divorce to the fullest extent possible, the federal child support regime contemplates that the family as a whole — including the child — will share the rising and falling fortunes of the payor parent, just as they would have before the separation. Because child support under the Divorce Act is tied to payor income and income tends to fluctuate, a child support order or agreement reflects a snapshot in time and is never final ( D.B.S. , at para. 64; D.B.S. v.

S.R.G . , 2005 ABCA 2 , 361 A.R. 60 (“ D.B.S. (C.A.)”), at para. 100; Brear v. Brear , 2019 ABCA 419 , 97 Alta. L.R. (6th) 1, at para. 20 , per Pentelechuk J.A.). Various legal, administrative and consent-based mechanisms exist to periodically change child support orders to bring them in line with financial realities. [ 29 ]

Section 17 of the Divorce Act is one such mechanism. It provides that, on application, a court “may make an order varying, rescinding or suspending , retroactively or prospectively, a support order or any provision of one” (s. 17(1)(a)). As the wording indicates, s. 17 confers wide discretion on the judge, who “may” — but is not required to — vary, rescind, or suspend an order into the future, the past, or both.

The Divorce Act expressly confers such broad powers because wide judicial discretion is necessary to respond to the multiplicity of factual situations produced by human behaviour. [ 30 ] Experience teaches that there are three main categories of claims for retroactive relief under s. 17, each with its own particular set of considerations:

1. The recipient seeks to retroactively increase support because of a past change in circumstances, with the change usually beingan increase in the payor’s income. In such circumstances, the existing order or agreement underestimates the payor’s income. 2. The payor seeks a retroactive decrease in support because of a past change in circumstances. The paradigmatic change is a dropin income that impacts the payor’s ability to make payments as they come due. In such circumstances, the existing order or agreementoverestimates the payor’s income. 3.

The payor seeks to rescind or suspend arrears because of current and future inability to pay rather than a past change incircumstances. [31] Mr. Colucci seeks two forms of relief under s. 17. He invokes the second category when he asks this Court to goback to the date the Guidelines came into force in 1997 and reduce his support obligation to correspond to what he says his income wasfor each of the years during which child support was payable, up until 2012.

In his motion to change and before the Court of Appeal, itappears that he also sought to rescind all or some of what he ought to have paid because he says he is unable to pay even a reducedamount. This falls within the third category of cases. [32] In this section, I start by setting out the basic principles of child support law established in the Guidelines and D.B.S.,which must underpin and inform the courts’ approach to variation of child support and rescission of arrears. It will become clear fromthis discussion that the linchpin holding the child support regime together is financial disclosure.

As such, before turning to theapplicable framework under s. 17, I will elaborate on the importance of disclosure, a theme that will run throughout the analysis thatfollows. A. Foundational Principles in the Guidelines and D.B.S. [33] Child support under the Divorce Act is determined in accordance with the Guidelines, which are legally binding assubordinate legislation enacted pursuant to s. 26.1 of the Divorce Act. The Guidelines establish the goals, principles and provisionswhich govern all child support applications and determinations under the Divorce Act.

Section 1 of the Guidelines sets out fouroverarching objectives that must be borne in mind in any child support proceeding in which the Guidelines apply: (

a) to establish a fair standard of support for children that ensures that they continue to benefit from the financial means of both spousesafter separation; (

b) to reduce conflict and tension between spouses by making the calculation of child support orders more objective; (

c) to improve the efficiency of the legal process by giving courts and spouses guidance in setting the levels of child support orders andencouraging settlement; and (

d) to ensure consistent treatment of spouses and children who are in similar circumstances. [34] The enactment of the Guidelines in 1997 marked a paradigm shift in Canadian child support law away from a need-based approach to one which clearly established the child’s entitlement to support commensurate with the payor’s income (D.B.S., atparas. 42-45). The Guidelines rest on the principle that “spouses have a joint financial obligation to maintain the children of the marriagein accordance with their relative abilities to contribute to the performance of that obligation” (Divorce Act, s. 26.1(2)).

Section 3 of theGuidelines provides that the amount of child support is presumptively determined in accordance with the applicable table in

Schedule I.Putting aside shared custody arrangements, the tables generally allow parents and courts to calculate the amount of child support owingbased on just two numbers: the payor’s income, and the number of children to be supported. (For s. 7 expenses under the Guidelines, theincome of the recipient is also relevant.) The amount of child support is determined based solely on parental income and not the child’sneeds (unless the payor’s income is over $150,000) (s. 4). [35] All provinces and territories have an equivalent to the Guidelines or have adopted the federal Guidelines for thepurpose of determining child support under provincial family law legislation.

Of course, the provinces are free to depart from theapproach in the federal Guidelines, as child support that is not incidental to divorce falls within provincial competence (D.B.S., atparas. 49 and 53). [36] Building on the sea change initiated by the Guidelines, D.B.S. was a landmark decision in which the Courtconsidered four cases involving applications by recipient parents for retroactive child support.

The Court confirmed the long-establishedprinciples that support is the right of the child and that parents have a financial obligation to their children arising at birth and continuingafter separation (D.B.S., at paras. 37-38; see also MacMinn v. MacMinn (1995), (AB CA), 174 A.R. 261 (C.A.), atpara. 15; Hunt v. Smolis-Hunt, 2001 ABCA 229, 97 Alta. L.R. (3d) 238, at para. 17; Paras v. Paras, (ON CA), [1971]1 O.R. 130 (C.A.), at p. 134).

The Court also explained that, in the Guidelines era, the payor parent is always under a free-standing legalobligation — independent of any court order — to pay child support commensurate with income (D.B.S., at para. 68). [37] Prior to D.B.S., some courts had yet to move away from the judicial reluctance to award retroactive support thatcharacterized the pre-Guidelines era. In order to obtain retroactive support capturing the period before formal proceedings were

commenced, the recipient parent generally had to show exceptional circumstances or, at the very least, “appropriate circumstances” (C.Davies, “Retroactive Child Support: the Alberta Trilogy” (2005), 24 C.F.L.Q. 1, at p. 8; Whitton v. Shippelt, 2001 ABCA 307, 23 R.F.L.(5th) 437, at para. 19). In D.B.S., the Court took a decisive step into the Guidelines era by emphasizing that retroactive child supportawards “cannot simply be regarded as exceptional orders to be made in exceptional circumstances” (para. 5).

When the payor’s incomerises but they continue to pay in accordance with an existing court order, they fall short of meeting the free-standing legal obligation topay support commensurate with income. D.B.S. confirmed that a retroactive increase of support in such circumstances is therefore “nottruly retroactive”; rather, it “enforce[s] an obligation that should have been fulfilled already” (paras. 67-68; see also para. 69). [38] The majority in D.B.S. found that a retroactive increase in support will not always be appropriate (para. 95).

The courtmust exercise its discretion to determine whether a retroactive award should be given at all, and how far back it should extend. JusticeBastarache set out four factors to guide the courts’ discretion: (

a) the recipient’s delay in seeking retroactive support; (

b) the payor’sconduct; (

c) the child’s circumstances; and (

d) hardship entailed by a retroactive award. These factors were recently considered by thisCourt in Michel v. Graydon, 2020 SCC 24, [2020] 2 S.C.R. 763 (para. 29, per Brown J.; paras. 111-26, per Martin J.). [39] Where a retroactive increase in child support is appropriate, the majority in D.B.S. suggested that the date ofretroactivity should generally be the date of “effective notice” (para. 118). “Effective notice” in this context was said to simply requirethe recipient to “broac[h]” the subject of an increase in child support (para. 121).

The majority of the Court noted, however, thatrecipients should be encouraged to move discussions forward after giving effective notice. To that end, the majority concluded thatretroactive awards should generally extend no further than three years before the date of formal notice.

This is known as the “three-yearrule”, although it is a presumption only. [40] In a significant caveat to these general rules, Justice Bastarache added that the date of the payor’s increase in incomemay sometimes be a more appropriate date of retroactivity, particularly where the payor engages in “blameworthy conduct” (para. 124).Such conduct includes the payor’s failure to disclose material increases in income.

At para. 124, Bastarache J. said: Not disclosing a material change in circumstances — including an increase in income that one would expect to alter the amount of childsupport payable — is itself blameworthy conduct. The presence of such blameworthy conduct will move the presumptive date ofretroactivity back to the time when circumstances changed materially.

A payor parent cannot use his/her informational advantage tojustify his/her deficient child support payments. [41] Since D.B.S., various courts have accepted and acted upon the principle that failing to disclose an increase in incomeis blameworthy conduct justifying variation to the date of the change (C. (M.) v. O. (J.), 2017 NBCA 15, 93 R.F.L. (7th) 59, at para. 37;Goulding v. Keck, 2014 ABCA 138, 42 R.F.L. (7th) 259, at para. 44; Brear, at para. 74, per Pentelechuk J.A.; Burchill v. Roberts, 2013BCCA 39, 41 B.C.L.R. (5th) 217, at paras. 29-30; Greene v.

Greene, 2010 BCCA 595, 12 B.C.L.R. (5th) 330, at para. 73; Carlaw v.Carlaw, 2009 NSSC 428, 299 N.S.R. (2d) 1, at paras. 23-25; Damphouse v. Damphouse, 2020 ABQB 101, at para. 72 ).“Blameworthy conduct”, as that concept has developed in the cases, does not simply extend to the most egregious cases of deception orintentional evasion, like this case.

It may also extend to cases of mere passivity and “taking the path of least resistance” (Burchill, atpara. 30). [42] Most recently, in Michel, my colleague Brown J. (speaking for the Court on this point) confirmed that “the date ofeffective notice is not relevant when a payor parent has engaged in blameworthy conduct (irrespective of the degree ofblameworthiness)”, including failure to disclose material information (para. 36; see also para. 33). Payor parents are “subject to a duty offull and honest disclosure” (para. 33).

Where the payor fails to comply with this duty and leaves the recipient unaware of increases inincome, a retroactive award “will commonly be appropriate” because non-disclosure “eliminates any need to protect [the payor’s] interestin the certainty of his [or her] child support obligations” (paras. 32 and 34). [43] In practice, then, the date of retroactivity is frequently adjusted to align with the date of the material increase inincome, despite the “general rule” of varying to the date of effective notice in D.B.S. (para. 118).

It would be “untenable to suggest that aparent who fails to provide financial disclosure can assume that the amount being provided is adequate because the recipient parent hasnot brought a court application” (Brear, at para. 74, per Pentelechuk J.A.).

Further, even where the payor has disclosed increases inincome, the D.B.S. factors may support extending a retroactive increase of support back to the time of the change in income. [44] In settling on the date of effective notice as the “general rule”, D.B.S. represented a kind of compromise between thepre-Guidelines world — with its payor-focused concepts of laches and hoarding — and the child-centered era of the Guidelines.

In thepre-Guidelines era, notice was considered important because it was viewed as unfair to surprise payors with a retroactive award whenthey could not know the extent of their child support obligation until it was determined by the court (D.B.S. (C.A.), at para. 79). After theGuidelines became law, parents knew about the existence and extent of their obligations, but courts continued to show reluctance to grantretroactive awards and pre-Guidelines concepts like notice and laches retained some influence.

This background helps explain themajority’s wariness in D.B.S. about changing the rules for payors mid-stream. Since D.B.S., however, expectations of and for payorshave evolved.

The Guidelines and s. 17 of the Divorce Act are clear and D.B.S. itself gave notice to payor parents that they must paymore support as income rises and that this obligation may be enforced after the fact. [45] In light of the existing approach to blameworthy conduct and the pervasiveness of non-disclosure, it may benecessary in a future case to revisit the presumptive date of retroactivity in cases where the recipient seeks a retroactive variation toreflect increases in the payor’s income.

A presumption in favour of varying support to the date of the increase would better reflect therecipient’s informational disadvantage and remove any incentive for payors to withhold disclosure or underpay support in the hopes thatthe status quo will be maintained.

Such a presumption would accord with other core principles of child support and reinforce that payorsshare the burden of ensuring the child receives the appropriate amount of support. [46] In D.B.S., the Court also drew attention to three interests which must be balanced to achieve a fair result inretroactive variation cases: first and foremost, the child’s interest in receiving the appropriate amount of support to which they areentitled; second, the interest of the parties and the child in certainty and predictability; and third, the need for flexibility to ensure a justresult in light of fluctuations in payor income (D.B.S., at paras. 2, 74 and 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 supportcommensurate with income is the core interest to which all rules and principles must yield.

A fair result that adequately protects thisinterest will sometimes lean toward preserving certainty, and sometimes toward flexibility. [47] In addition to the fundamental principles established in the Guidelines and D.B.S., any framework for decreasedchild support must account for the informational asymmetry between the parties and the resulting need for full and frank disclosure ofthe payor’s income. It is to this point which I now turn. B.

Encouraging Timely and Full Disclosure [48] After applying the Guidelines and D.B.S. for many years, it has become clear just how much the child supportsystem, including s. 17 variations, depends upon adequate, accurate and timely financial disclosure. The centrality of disclosure in childsupport matters has been recognized in a rich body of jurisprudence both before and after D.B.S. (see, e.g., Shamli v. Shamli, (Ont. S.C.J.), at para. 8; Hietanen v. Hietanen, 2004 BCSC 306, 7 R.F.L. (6th) 67, at para. 11; Gray, at para. 63; M.K.R. v. J.A.R.,2015 NBCA 73, 443 N.B.R. (2d) 313, at paras. 14 and 20; Francis v.

Terry, 2004 NSCA 118, 227 N.S.R. (2d) 99, at para. 9; Goulding,at para. 44). Simply stated, disclosure is the linchpin on which fair child support depends and the relevant legal tests must encourage thetimely provision of necessary information. [49] The pivotal role of disclosure comes as no surprise since the premise underlying the Guidelines “is that the supportobligation itself should fluctuate with the payor parent’s income” (D.B.S., at para. 45). The structure of the Guidelines thus creates aninformational asymmetry between the parties.

In a system that ties support to payor income, it is the payor who knows and controls theinformation needed to calculate the appropriate amount of support. The recipient does not have access to this information, except to theextent that the payor chooses or is made to share it. It would thus be illogical, unfair and contrary to the child’s best interests to make therecipient solely responsible for policing the payor’s ongoing compliance with their support obligation. [50] This is why frank disclosure of income information by the payor lies at the foundation of the child support regime.In Roberts v.

Roberts, 2015 ONCA 450, 65 R.F.L. (7th) 6, the Court of Appeal described the duty to disclose financial information as“[t]he most basic obligation in family law” (para. 11). A payor’s failure to make timely, proactive and full disclosure undermines thepolicies underlying the family law regime and “the processes that have been carefully designed to achieve those policy goals” (Leitch v.Novac, 2020 ONCA 257, 150 O.R. (3d) 587, at para. 44).

Without proper disclosure, the system simply cannot function and theobjective of establishing a fair standard of support for children that ensures they benefit from the means of both parents will be out ofreach (Michel, at para. 32, per Brown J.; Brear, at para. 19, per Pentelechuk J.A.). [51] Full and frank disclosure is also a precondition to good faith negotiation. Without it, the parties cannot stand on theequal footing required to make informed decisions and resolve child support disputes outside of court.

Promoting proactive payordisclosure thus advances the objectives — found in s. 1 of the Guidelines — of reducing conflict between the parties and encouragingsettlement. [52] In line with these realities, courts have increasingly recognized that the payor’s duty to disclose income informationis a corollary of the legal obligation to pay support commensurate with income (Brear, at paras. 19 and 69, per Pentelechuk J.A.;Roseberry v. Roseberry, 2015 ABQB 75, 13 Alta. L.R. (6th) 215, at para. 63; Cunningham v. Seveny, 2017 ABCA 4, 88 R.F.L. (7th) 1, atparas. 21 and 26).

As explained by Brown J., speaking for the full Court in Michel, payor parents “are subject to a duty of full and honestdisclosure — a duty comparable to that arising in matrimonial negotiations” (para. 33, referencing Rick v. Brandsema, 2009 SCC 10,[2009] 1 S.C.R. 295, at paras. 47-49). Courts and legislatures have also implemented various mechanisms to incentivize and even requireregular ongoing disclosure of updated income information by the payor, along with tools to move proceedings forward in the face ofnon-disclosure.

Those mechanisms include imputing income to payors who have failed to make adequate disclosure, striking pleadings,drawing adverse inferences, and awarding costs. By encouraging timely disclosure, these tools reduce the likelihood that the recipientwill be forced to apply to court multiple times to secure disclosure. [53] Following D.B.S., lawyers and courts also began implementing “proactive strategies to avoid tedious and conflictingarguments related to ‘asking versus telling’ about income increases”, such as the use of mandatory annual disclosure obligations in childsupport orders in Alberta and Ontario (M. L.

Gordon, “An Update on Retroactive Child and Spousal Support: Five Years after S. (D.B.)v. G. (S.R.)” (2012), 31 C.F.L.Q. 71, at p. 72; see also Sawatzky v. Sawatzky, 2018 MBCA 102, 428 D.L.R. (4th) 247, at para. 58;Roseberry, at para. 64). In Ontario, the legislature has echoed this trend by amending the guidelines to include a requirement that payorsdisclose income information annually without the requirement of a request from the recipient (Child Support Guidelines, O. Reg. 391/97,s. 24.1(1)).

Similarly, in British Columbia, s. 5(1) of the Family Law Act, S.B.C. 2011, c. 25, imposes a general duty to disclose “full andtrue information” for the purpose of resolving family law disputes. [54] In keeping with these developments, the exercise of judicial discretion and the setting of legal standards under s. 17of the Divorce Act must encourage financial disclosure and in no way reward those who improperly withhold, hide or misrepresentinformation they ought to have shared.

Proactive disclosure of changes in income is the first step to ensuring that child supportobligations are tied to payor income as it fluctuates. Inadequate disclosure breeds “a backlog of [retroactive] support applications”(Roseberry, at para. 61). Indeed, with full, frank and regular disclosure, long-term arrears — such as Mr. Colucci’s — should be rare. C.

The Applicable Framework [55] In building a framework for the variation of child support and the rescission of arrears, judicial discretion must bestructured to safeguard the child’s interest in receiving the appropriate amount of support to which they are entitled. Alongside thisparamount interest, there must be a fair balancing of certainty and flexibility to reach a just result in light of fluctuations in payor incomeand the particular circumstances of each case.

In addition, the framework under s. 17 must promote the timely disclosure of accurateinformation, which in turn encourages equal bargaining and fair settlements, as the payor parent “holds the cards” when it comes to childsupport (Michel, at para. 32, per Brown J.). Above all, “the ultimate goal must be to ensure that children benefit from the support theyare owed at the time when they are owed it. Any incentives for payor parents to be deficient in meeting their obligations should be

eliminated” (D.B.S., at para. 4). Payors should not be better off from a legal standpoint if they do not pay the child support the law saysthey owe. Nor should payors receive any sort of benefit or advantage from failing to disclose their real financial situation or providingdisclosure on the eve of the hearing. [56] Based on these guiding principles, I will first set out the framework applicable to a payor’s application for aretroactive decrease in support based on a material change in circumstances. I will then explain the applicable framework where thepayor seeks to rescind arrears based on present inability to pay rather than a past change in circumstances.

(1) Retroactive Decreases Where The Prior Order Overestimates Payor Income [57] This category of cases covers situations in which the payor has experienced a material drop in income that affectedtheir ability to make payments as they came due. The payor will argue that the recipient was in fact owed a lower amount under theGuidelines than the amount payable under a pre-existing order or agreement, thus necessitating a recalculation of the amount owing forpast years based on the payor’s actual income, the number of children to be supported in those years, and the table amounts.

Decreasedincome is an all too common and unfortunate reality for many families.

Any framework developed to accommodate retroactivevariations of child support in response to decreased payor income must deal fairly with a wide range of factual situations, from payorswho diligently paid the proper amount until they lost their employment or otherwise fell on hard times, to those who have made littleeffort to meet their responsibilities and are absent, intentionally underemployed or persistently delinquent. [58] In this section, I first discuss the threshold the payor must meet to access a retroactive decrease under s. 17, namelythe requirement 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 a change incircumstances, a presumption is triggered in favour of varying support back to the date of effective notice, up to three years beforeformal notice. I explain what effective notice means and why it is an appropriate presumptive date in this category of case.

I then discusshow the D.B.S. factors can be adapted to retroactive decreases in deciding whether to depart from the presumptive date of retroactivity.Finally, I address quantum, the final stage of the analysis, which requires the court to calculate the proper amount of support inaccordance with the Guidelines. (

a) The Threshold Requirement of a Change in Circumstances [59] Like any applicant seeking a retroactive variation under s. 17 of the Divorce Act, a payor seeking a downwardretroactive change must first show a past change in circumstances, as required under s. 17(4).

Section 14 of the Guidelines lists situationsconstituting a change in circumstances for the purpose of s. 17(4) of the Divorce Act, including the coming into force of the Guidelines(s. 14(c)). A change in circumstances could also include a change that, if known at the time, would probably have resulted in differentterms, such as a drop in income (Guidelines, s. 14(a); Willick v. Willick, (SCC), [1994] 3 S.C.R. 670, at p. 688; Gray, atpara. 39). [60] The onus is on the party seeking a retroactive decrease to show a change in circumstances (Punzo v.

Punzo, 2016ONCA 957, 90 R.F.L. (7th) 304, at para. 26; Templeton, at para. 33). In some cases that may be relatively straightforward: for example,establishing that the children are no longer legally entitled to support because they are no longer children of the marriage. [61] Most commonly, the retroactive variation claim will be based on a material change in income. To meet the threshold,a decrease in income must be significant and have some degree of continuity, and it must be real and not one of choice (Willick, atpp. 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. [62] The payor must have disclosed sufficient reliable evidence for the court to determine when and how far their incomefell, and to ascertain whether the change was significant, long lasting, and not one of choice. A decision to retroactively decrease supportcan only be made based on “reliable, accurate and complete information” (Earle, at para. 28).

The payor cannot ask the court to makefindings on income that are contrary to the recipient’s interests “while at the same time shielding information that is relevant to thedetermination of their income behind a protective wall” (Templeton, at para. 67; see also Tougher v.

Tougher, 1999 ABQB 552, atparas. 14-15 ; Terry, at para. 9). [63] Of course, a payor whose income was originally imputed because of an initial lack of disclosure cannot later claim thata change in 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 to ground avariation order (Gray, at paras. 33-34).

This would “defeat the purpose of imputing income in the first place” and act as “a disincentivefor payors to participate in the initial court process” (Trang v. Trang, 2013 ONSC 1980, 29 R.F.L. (7th) 364, at para. 53). (

b) Reconciling Divergent Authorities on the Application of D.B.S. [64] Assuming the threshold of a change in circumstances is met, the parties disagree on two crucial questions: how todecide whether retroactive relief should be granted in the first place, and how far back a court should go when varying a previouslyordered amount. [65] To answer these questions, each party relies on one of two divergent lines of authority in the post-D.B.S. jurisprudenceconcerning retroactive decreases in child support. Mr.

Colucci says the payor who satisfies the threshold is entitled to a retroactivedecrease without any consideration of contextual factors. This reflects the approach taken in Brown. In Brown, the New Brunswick Courtof Appeal concluded that D.B.S. does not apply to arrears at all, given Bastarache J.’s comments at paras. 1 and 98 of D.B.S. (discussedbelow). Under the Brown test, the court considers only whether there has been a material change in circumstances since the original

order was made and, if so, what the proper amount of child support should have been under the Guidelines . As such, the Brown test is a “no-fault” test ( M.W. v. K.T. , 2019 NLSC 14 , 19 R.F.L. (8th) 51, at para. 43 ). [ 66 ] Ms. Colucci relies on the Corcios / Gray line of authority, in which the contextual D.B.S. factors have been adapted to suit applications to retroactively decrease support.

Under the Corcios / Gray framework, the court may consider these factors in deciding whether a retroactive decrease is appropriate, in setting the date of retroactivity, and sometimes in setting the amount to be paid ( Gray , at para. 60 ; Templeton , at paras. 49-50 ). Mirroring D.B.S. , the Corcios / Gray approach establishes a general rule in favour of varying back to the date that the payor gave the recipient effective notice of their intention to seek a decrease based on changed circumstances, up to a presumptive maximum of three years before the date of formal notice ( Gray , at para. 61 ).

The Court of Appeal followed the Corcios / Gray approach in the case at bar. [ 67 ] In my view, both lines of authority have something to offer. Brown offers simplicity and predictability. However, it ignores the interest of the recipient and child in certainty and does nothing to encourage the payor to disclose changes in income to the recipient. Further, the Brown framework is inconsistent with the discretionary language of s. 17 of the Divorce Act , which provides that the court “may” retroactively vary a support order.

On the Brown approach, the court must vary the order once the payor has established a change in circumstances, and must vary back to the date of the change. The Brown framework also makes it much easier for a payor parent to obtain a retroactive decrease than it is for a recipient to obtain a retroactive increase, a shortcoming that is even more unfair when considered in light of the recipient’s informational disadvantage. This undermines the objective in s. 1 of the Guidelines of ensuring consistent treatment of spouses in similar circumstances.

These are serious limitations which stand in the way of a fair resolution on the facts of each case. [ 68 ] The Corcios / Gray framework mitigates these limitations by adapting D.B.S. to the decrease context, in terms of both focusing on the date of effective notice as the default date of retroactivity and leaving room to shift the date of retroactivity based on contextual factors.

The problem, however, is that Gray directs the court to consider multiple factors over three different questions (whether a retroactive order is appropriate, how far back it should extend, and what the quantum should be) ( Gray , at para. 60 ). The result is often confusion and undue complexity: the questions are mingled, the factors become muddled and the layering of discretion over multiple steps of the analysis means that predictability and transparency are sacrificed. This complexity makes the framework less useful for family law litigants who are increasingly self-represented ( Morwald-Benevides v.

Benevides , 2019 ONCA 1023 , 148 O.R. (3d) 305, at para. 19 ). [ 69 ] A framework that involves the application of multi-factoral discretion at multiple steps of the analysis is also less useful as an anchor for negotiations and settlement of child support matters. There is a trend in family law away from an adversarial culture of litigation to a culture of negotiation (see, e.g., D. Martinson and M. Jackson, “Family Violence and Evolving Judicial Roles: Judges as Equality Guardians in Family Law Cases” (2017), 30 Can. J. Fam. L. 11, at p. 22; D. M.

Sowter, “Advocacy in Non- Adversarial Family Law: A Recommendation for Revision to the Model Code” (2018), 35 Windsor Y.B. Access Just. 401, at p. 402; P. J. Dalphond and A. Nag, “Enfin une réforme de la

Loi sur le divorce ” (2019), 78 R. du B. 255, at pp. 312 et seq.). Not only is encouraging settlement one of the objectives of the Guidelines , but recent amendments to the Divorce Act reflect this shift by requiring parties, where appropriate, to try to resolve family law disputes through family dispute resolution processes ( s. 7.3 ). Parents should be encouraged — absent family violence or significant power imbalances — to resolve their disputes themselves outside the court structure and legal rules should be clear and accessible so they may reach fair agreements.

Reaching a negotiated settlement not only saves resources but also reduces the need for future court applications by setting up a less acrimonious relationship between the parties (N. Bala, “Reforming Family Dispute Resolution in Ontario: Systemic Changes and Cultural Shifts”, in M. Trebilcock, A. Duggan and L. Sossin, eds., Middle Income Access to Justice (2012), 271, at pp. 286-87). [ 70 ] To support a culture of negotiation, the framework under s. 17 of the Divorce Act must provide parties with a foundation for their efforts to resolve the matter themselves.

A framework that promotes timely disclosure and structures judicial discretion through clear and simple presumptions will provide a solid starting point for negotiation between the parties. [ 71 ] There is thus merit in a simplified framework which takes the benefits of Brown and Corcios / Gray but removes their drawbacks. To advance 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 court depart from the presumptive date of retroactivity to achieve a fair result?

It is on this question only that the factors of delay, payor conduct, the child’s circumstances and potential hardship are brought to bear. [ 72 ] It is therefore no longer necessary to first ask whether retroactive relief is warranted as a general proposition, with contextual factors guiding both this preliminary inquiry and the question of how far back retroactive relief should go.

Already in the jurisprudence, this preliminary question has often been blurred with the question of the timing of any retroactive order, casting doubt on the utility of inquiring first into the general appropriateness of retroactive relief. For example, even though the analytical framework in Corcios called for a separate step of asking whether retroactive relief is appropriate in the first place, the court did not separate out this preliminary question from the inquiry into how far back retroactive relief should extend.

Moving directly to a presumptive date simplifies the analysis and enhances fairness and predictability for the parties. [ 73 ] To ensure consistency and even-handedness, this same presumption-based approach should be applied in all retroactive variation contexts, including where the recipient applies under s. 17 for a retroactive increase.

It would not be fair if payors claiming a decrease benefit from a presumption that is unavailable to recipients claiming an increase, especially when applications to retroactively reduce support will often be countered by an application for a retroactive increase in the same proceeding, or vice versa. A recipient is thus no longer required to demonstrate as a preliminary matter that a retroactive award is appropriate based on the D.B.S. factors. Once an increase in the payor’s income has been shown, the only question is how far back retroactive support should extend.

No injustice arises if the inquiry into the general appropriateness of retroactive child support is omitted, as any fears that payors will be taken by surprise by ex post changes are fully answered by the express reference to retroactive variations in the wording of s. 17 , the way the Guidelines work, and the fact that the Court’s reasons in D.B.S. were given over 15 years ago.

[ 74 ] Thus, where a past material change in the payor’s income is established, the amount set out in the child support order no longer reflects the content of the payor’s legal obligation to pay support in line with the table amounts. The only question is what remedy flows from this legal fact. In the decrease context, the presumption of varying back to the date of effective notice, up to three years before formal notice, assists the court in answering this question.

It will still be true under this approach that not all applications will lead to retroactive variation, but the focus will be on whether a material change in circumstances has been proven and the date to which a retroactive variation should extend. [ 75 ] This means I reject Mr. Colucci’s argument, based on Brown , that the D.B.S. factors have no role in retroactive decrease applications. He submits that para. 98 of D.B.S. is binding authority establishing that the D.B.S. factors do not apply to arrears.

At para. 98, Bastarache J. wrote: . . . these factors are not meant to apply to circumstances where arrears have accumulated. In such situations, the payor parent cannot argue that the amounts claimed disrupt his/her interest in certainty and predictability; to the contrary, in the case of arrears, certainty and predictability militate in the opposite direction. There is no analogy that can be made to the present cases. [ 76 ] In my view, this passage does not support the proposition that the D.B.S. factors are wholly irrelevant where the payor seeks a retroactive decrease based on a change in circumstances.

Rather, Bastarache J. was pointing out that the balance between certainty and flexibility is very different as between the increase and decrease categories of cases. Those interests will pull in different directions depending on whether the recipient or the payor seeks to retroactively vary support.

This is a point that bears further elucidation, as it will be relevant to the way effective notice is defined in the increase and decrease contexts. [ 77 ] On an application for a retroactive increase, the recipient seeks the flexibility of a retroactive award to capture the payor’s increased income and secure payment of child support in the correct amount. It is the payor who has some interest in the certainty and predictability supplied by an existing court order or agreement ( D.B.S. , at para. 63).

However, this certainty interest is heavily qualified by the Guidelines -era principle that more income means more support. The payor cannot reasonably expect their child support obligations to remain static in the face of material increases in income. Given the structure of the Guidelines , the only real “certainty” in the face of fluctuating income is that the payor is responsible for paying the

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