S. Remission of Arrears

Author:Julien D. Payne - Marilyn A. Payne
Pages:506-520
 
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Page 506

See note 184

On an application to vary or rescind an order for child support, the court may order a retroactive variation with a consequential remission of all or part of the arrears that have accumulated185but only where there has been a material change of circumstances within the meaning of section 17(4) of the Divorce Act and section 14 of the Federal Child Support Guidelines.186Retroactive variation of a child support order may result in a reduction in the amount payable, where the obligor’s annual income had decreased from that originally accepted in a prior order. However, the payee’s application must be in accordance with the appropriate legislative scheme.187The factors identified in D.B.S. v. S.R.G.; L.J.W. v. T.A.R.;

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Henry v. Henry; Hiemstra v. Hiemstra188are equally relevant to an application made by a non-custodial parent to retroactively reduce the amount of maintenance payable.189An order for a retroactive decrease was refused in Simmonds v. Turner,190in which an overpayment was minimal, the father had suffered no financial hardship, and the mother was unaware of the father’s financial circumstances until he filed and served his application to vary. In Hendrickson v. Hendrickson,191institutional delays had occurred over which the father had no control but the mother had been advised of the father’s intention to seek a reduction in the amount of child support within one month of the trial judge’s written reasons. Under these circumstances, a substantial retroactive reduction in the table amount of child support and in the father’s contribution towards section 7 expenses was deemed appropriate from the month following that in which the mother was advised of the father’s intention to seek a variation order. The mother was given seven months to repay the overpayments of child support, if necessary by refinancing one of her two residential properties.

Retroactive variation of a child support order may result in a reduction in the amount payable, where the obligor’s annual income had decreased from that originally accepted in a prior order. However, the payee’s application must be in accordance with the appropriate legislative scheme.192The factors identified in D.B.S. v. S.R.G.; L.J.W. v. T.A.R.; Henry v. Henry; Hiemstra v. Hiemstra193are equally relevant to an application made by a non-custodial parent to retroactively reduce the amount of maintenance payable."194An order for a retroactive decrease was refused in Simmonds v. Turner,195in which an overpayment was minimal, the father had suffered no financial hardship, and the mother was unaware of the father’s financial circumstances until he filed and served his application to vary. In Hendrickson v. Hendrickson,196institutional delays had occurred over which the father had no control but the mother had been advised of the father’s intention to seek a reduction in the amount of child support within one month of the trial judge’s written reasons. Under these circumstances, a substantial retroactive reduction in the table amount of child support and in the father’s contribution towards section 7 expenses was deemed appropriate from the month following that in which the mother was advised of the father’s intention to seek a variation order. The mother was given seven months to repay the overpayments of child support, if necessary by refinancing one of her two residential properties.197

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A court may refuse to entertain an application to prospectively or retroactively vary an order for child support where the applicant has manifested a flagrant disregard of his or her child support obligation.198Where arrears have accumulated to an unmanageable extent, a partial remission of arrears is preferable to a total discharge of the arrears199which amounts, in effect, to an appeal of the original order.200The court may take a pragmatic approach by ordering a partial remission of arrears where there is a past, present and future inability to pay201so as to get whatever funds are available into the hands of the custodial parent or grandparent202for

the benefit of the children and to provide every encouragement for orderly discharge of the balance of the arrears.203Two most important factors on an application to remit child support arrears are the obligor’s ability to pay at the time when the arrears accrued and the obligor’s current ability to pay. Although the circumstances may render it inappropriate to remit the arrears, the court may conclude that the obligor should be given some breathing space by staying enforcement of the arrears for a specified period, after which time the obligor shall pay a designated monthly amount against the arrears. As an incentive for payment, the court may direct that the obligor shall receive a credit of two dollars against the arrears for every dollar paid so long as all current payments, including the monthly payments against the arrears, are kept up-to-date. The court may further suggest that the Director of Maintenance Enforcement conditionally reinstate the obligor’s driver’s licence in order to increase his or her earning capacity and the consequential ability to discharge the child support obligation.204Where arrears are fixed with a provision that the payor will receive two dollars credit for every dollar paid, an acceleration clause may be inserted in the order whereby the full balance of the arrears will become immediately payable if the obligor fails to make payments against the arrears on time.205The general policy is that the court should be strict in enforcing child support arrears in the absence of an inability to pay when the payments became due.206

Child support is a right of the child and arrears of child support should not be remitted simply because the defaulter lacks the present ability to pay, where there is no indication

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of a permanent future incapacity to pay.207The ability to pay is determined not only by the income of the obligor but also by the assets in his or her possession.208

The test for the judicial remission of arrears of child support is whether the obligor could not pay the support when it fell due, cannot pay now and will not be able to pay in the future.209A court may grant a partial remission of child support arrears where the obligor’s income fell short of the amount previously imputed.210

Pursuant to provincial legislation in British Columbia and Manitoba, the obligor has the burden of establishing on a balance of probabilities that it would be grossly unfair for the court to refuse to remit all or part of the arrears.211Subsections 96(2) and (3) prescribe the test for cancellation or reduction of arrears of a maintenance order made under the Family Relations Act.212The court must consider the following factors:

(i) the efforts the applicant has made to comply with the maintenance order;

(ii) the applicant’s explanation for any delay in applying for variation of the maintenance order; and

(iii) any special circumstances that the court considers relevant.

In Luney v. Luney,213 the British Columbia Court of Appeal stated that simply showing a change in circumstances as required for a variation in maintenance simpliciter is not sufficient on an application to reduce or cancel arrears except where it can be classified as a special circumstance under section 96(3). Furthermore, "[c]ases in which arrears have been cancelled are rare, and generally speaking, this court has continued to hold the bar of ‘gross unfairness’ at a high level . . . ."214The burden of proof will not be discharged by an obligor who wilfully fails to realize his or her earning potential.215An obligor cannot reduce pre-existing child support obligations by a self-induced reduction of income.216An obligor is not entitled to profit from a situation

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of his or her own making.217Although remission of part of accrued child support arrears may be deemed appropriate where enforcement would be grossly unfair to the obligor, a court may decline to abrogate arrears with mathematical precision based on the obligor’s actual income where the obligor failed to avail himself of opportunities for employment for which he was qualified.218Although section 96(2) of the Family Relations Act (B.C.) identifies the test of gross unfairness as the criterion to be applied on an application to reduce or cancel arrears of child support that have accrued under a maintenance order, identical considerations apply in cases involving the enforcement and variation of a separation agreement.219A judge has jurisdiction to cancel or reduce child support arrears that have accrued under a separation agreement that has been registered in the Manitoba Court of Queen’s Bench in accordance with section 53(3.1) of The Family Maintenance Act (Manitoba). Where no evidence is adduced to support a finding that it would be "grossly unfair and inequitable" not to reduce or cancel the arrears, the application for a judicial remission of arrears should be dismissed.220Article 644 of the Quebec Civil Code,221which limits the jurisdiction of the court to remit support arrears, has been held to be inapplicable to a support order granted in divorce proceedings by reason of the doctrine of paramountcy.222However, many decisions across Canada respecting the discretionary judicial jurisdiction to remit arrears have regard to provincial statutory criteria, regardless of whether the order in question was granted pursuant to provincial legislation or pursuant to the Divorce Act. It is inequitable to apply different criteria to the two situations, although it may be legally improper to "directly" apply provincial statutory provisions to a variation proceeding that falls subject to section 17 of the Divorce Act. Provincial statutory criteria may, nevertheless, be used to assist the court in the exercise of its discretion under section 17 of the Divorce Act223Given the general language of section 17 of the Divorce Act...

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