Colucci v. Colucci

Colucci v. Colucci
Collection
Supreme Court Judgments
Date
2021-06-04
Neutral citation
2021 SCC 24
Report
[2021] 2 SCR 3
Case number
38808
Judges
Wagner, Richard; Abella, Rosalie Silberman; Moldaver, Michael J.; Karakatsanis, Andromache; Côté, Suzanne; Brown, Russell; Rowe, Malcolm; Martin, Sheilah; Kasirer, Nicholas
On appeal from
Ontario
Subjects
Family law
Notes
Case in Brief SCC Case Information
Decision Content
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 hardship. 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., 2005 ABCA 2, 361 A.R. 60; Brear v. Brear, 2019 ABCA 419, 97 Alta. L.R. (6th) 1; MacMinn v. MacMinn (1995), 174 A.R. 261; Hunt v. Smolis‑Hunt, 2001 ABCA 229, 97 Alta. L.R. (3d) 238; Paras v. Paras, [1971] 1 O.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 BCCA 39, 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, 2004 CanLII 45956; 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, 65 R.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, [1994] 3 S.C.R. 670; Punzo v. Punzo, 2016 ONCA 957, 90 R.F.L. (7th) 304; Earle v. Earle, 1999 CanLII 6914; 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; MacEachern v. 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 ABQB 675; 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), 157 A.R. 47, rev’g (1993), 7 Alta. L.R. (3d) 157; DiFrancesco v. Couto (2001), 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), 29 R.F.L. (4th) 38; Heiden v. British Columbia (Director of Maintenance Enforcement) (1995), 16 B.C.L.R. (3d) 48; Walsh v. Walsh (2004), 69 O.R. (3d) 577, with additional reasons (2004), 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), 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), 18 C.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 Law Cases” (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), 35 Windsor 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 ONSC 6627. 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 the arrears 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 a discussion of the centrality of financial disclosure to the child support regime. Against this backdrop, I will explain the framework courts ought to apply to determine when to retroactively reduce child support under s. 17 of the Divorce Act . In doing so, I will reconcile the divergent lines of authority on the applicability of the contextual D.B.S. factors. Finally, I will set out the analysis that applies where the payor seeks rescission of arrears based on current inability to pay rather than a past change in circumstances. Applying the framework to the facts of this case, there is no reason for this Court to intervene to reduce or forgive the debt accrued under the existing child support order. 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 (“Divorce Order”), 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 the marriage”. The record does not show what Mr. Colucci’s income was at the time of the order, but the amount of child support was negotiated taking into account that Ms. Colucci forewent any claim to spousal support. One year after the order was made, the Guidelines came into force.
[12] In April 1998, Mr. Colucci contacted Ms. Colucci through counsel to request a reduction in his child support obligations on the basis of a decrease in his income. He provided no financial disclosure to support his request and the parties reached no agreement at that time. Mr. Colucci’s child support obligations ended in 2012, when the daughters were no longer children of the marriage. After that time, no further support payments accrued. Until he brought this application in 2016, Mr. Colucci took no further steps 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 and his whereabouts were unknown to Ms. Colucci and the children. He made no voluntary child support payments and the Family Responsibility Office (“FRO”) was only able to collect limited sums through enforcement mechanisms from 1998 to 2016. Enforcement action taken by the FRO includes garnishment of Mr. Colucci’s Workplace Safety and Insurance Board payments and federal income tax refunds, the suspension of his driver’s license and Canadian passport, the issuance of a writ of seizure and sale, and reporting to the credit bureau.
[14] Mr. Colucci commenced a motion to change in November 2016. He sought orders retroactively varying child support to the date the Guidelines came into force (May 1, 1997) and “[f]ixing the arrears of child support if any and determining the payments on those arrears in accordance with [his] income” (A.R., vol. II, at p. 4). He also asked that “any arrears of support . . . not only be 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 he moved to the United States in 2000 and worked there until 2005. He claims he earned approximately USD 25,000 annually during those years. 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 an inheritance of €15,000. He said he lived on these funds until 2016, when he returned to Canada. In 2016, Mr. Colucci received an additional €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 to receive on August 31, 2019.
[16] Mr. Colucci provided little documentation or financial disclosure to support these claims. He relied largely on unsubstantiated assertions in his affidavit about where he worked and how much he was paid, making it extremely difficult to accurately determine his income for the relevant years. Mr. Colucci claims he is unable to provide tax returns for the years 2000 to 2015. He says he cannot obtain tax returns from the Internal Revenue Service for the years he worked in the United States, in part because “[h]e does not 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). He claims he worked for cash only between 2007 and 2015 and “did not file any income tax returns” (ibid.). Mr. Colucci offers no other explanation 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 want the 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 were adopted in May 1997, entitling Mr. Colucci to a retroactive adjustment of his child support obligation from that date forward. The motion judge relied on principles from Corcios v. Burgos, 2011 ONSC 3326, at para. 40 (CanLII), to impute income to Mr. Colucci based on Ontario’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 judge did 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 child support obligations, effectively reducing the arrears owing from approximately $170,000 to $41,642. The motion judge found that this variation was warranted in order to bring the child support arrears in line with the principles stemming from the Guidelines, in particular the table amounts (which were implemented one year after the Divorce Order), and to reflect changes in Mr. Colucci’s drop in income over 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 tie