What can be done to reduce or eliminate child and spousal support arrears?
2025.01.20 //
Michael Long recently appeared as counsel at the B.C. Court of Appeal, where he successfully upheld a Supreme Court decision eliminating $280,000 of child and spousal support arrears, interest, and penalties: Hildebrand v. Hildebrand, 2024 BCCA 395
An unpaid child support or spousal support order can have serious consequences for the payor. Under the Family Maintenance Enforcement Act, the B.C. Family Maintenance Agency (“BCFMA”) (Formerly, the Family Maintenance Enforcement Program), has wide-ranging powers of enforcement, including the ability to garnish wages and bank accounts, intercept tax refunds and EI benefits, cancel a driver’s license, and deny the issuance of a new passport.
Before taking enforcement steps against a payor, the BCFMA will often contact the recipient and enter a voluntary payment arrangement, sometimes agreeing to accept lower payments than required by a court order. However, this should only be viewed as a stop-gap measure, as arrears and interest will continue to accumulate based on an order until it is either fully paid or changed by a new order. The BCFMA will typically expect a payor in arrears to take action to change their support order in a timely manner if they do not have the means to pay the full amount required.
Retroactive variation
In situations where a payor’s income has decreased since the time when a support order was granted, it is possible to apply for a retroactive variation of support. To succeed, a payor must provide evidence of a past material change in their income. An important limitation on retroactive variations is the presumption that the court will only vary a support order back to the date of effective notice, up to three years before formal notice. In this context, effective notice refers to notice from the payor to the recipient that their income has declined with appropriate financial disclosure. Formal notice refers to notice of an application to vary support. As a payor, if you no longer earn as much income as when your child or spousal support payments were determined, a critical first step is to communicate in writing to the recipient that your income has decreased and to provide the evidence required by s. 21 of the Federal Child Support Guidelines, including tax returns, notices of assessment, and recent pay stubs.
Reducing or cancelling arrears
Applications to cancel arrears, referred to as rescission under the Divorce Act, are based on a different set of factors. Section 174 of the Family Law Act allows the court to reduce or cancel arrears owing under a support order if satisfied that to not do so would be grossly unfair. In making this determination, the court may consider the efforts made by the payor to comply with the order, the reasons why the payor cannot pay the arrears, and other relevant circumstances. Since the support arrears often represent sums that the payor had a historical ability to pay but chose not to, courts have taken a highly restrictive approach to cancelling arrears. Generally, to succeed in an application to cancel arrears, the payor must establish a material change in circumstances preventing them from paying either now or in the future.
Long-term retroactive variation
Hildebrand v. Hildebrand, 2024 BCCA 395 (“Hildebrand”), was a special case in which the payor was able to retroactively vary his support over almost a decade. The Supreme Court found that the payor had overpaid support relative to his actual income since support orders were entered in 2014. The long-term recalculation of the payor’s support eliminated $280,000 of support arrears, interest, and penalties. The Court of Appeal upheld this result because the Supreme Court applied the four-part test set out by the Supreme Court of Canada in Colucci v. Colucci, 2021 SCC 24 (“Colucci”) to depart from the usual presumptive three-year limitation on retroactive variation given the unusual circumstances of the case.
The four-part test in Colucci considered:
1. The reason for the payor’s delay in seeking to reduce support;
2. The conduct of the payor;
3. The circumstances of the children; and
4. The hardship to the payor if the period of retroactivity was not lengthened beyond the presumptive date.
In Hildebrand, the Supreme Court accepted that the payor’s delay was to some degree explained by the parties’ frequent litigation over parenting issues and the payor’s limited means. In terms of conduct, the payor had always made payments and overpaid relative to his actual income with limited exception. The Supreme Court observed that the children had participated in expensive hockey programs and that the recipient had the ability to make substantial charitable donations. Finally, with respect to the payor’s hardship, the Supreme Court found that without adjustment, the payor’s support obligations would effectively consume close to the entirety of the payor’s after-tax income over a nine-year period. The Court of Appeal did not find that the Supreme Court erred in its analysis.