Retroactive Child Support Variation in an Agreement

Hinz v. Davey, 2022 BCCA 232

The issue in focus:

The Courts jurisdiction under the Family Law Act (“FLA”) to retroactively vary support payments in a Separation Agreement.

Date of Separation Agreement:                               September 7, 2018
Date Separation Agreement filed in Court:      July 30, 2020

Supreme Court Decision:

The Chambers judge considered three issues:

1. The amount of prospective child support;
2. whether there should be a retroactive reduction in child support; and
3. whether support arrears should be cancelled or reduced.

With respect to the first issue the judge refused to impute income to the Payor and accepted the Payor’s income to be as disclosed because of effects of Covid on his business. A minor amount of income was attributed to the Payor in relation to a vehicle expense. This resulted in the Payor’s income being $46,460 with prospective child support payable of $437 per month.

With respect to the second issue, retroactive variation in child support payments, the Chambers judge referred to Colucci v. Colucci, 2021 SCC 24 for the summary considerations relevant to applications to reduce child support under section 17 of the Divorce Act. Relying on R.M. v. N.M., 2014 BCSC 1755 and Chutter v. Chutter, 2016 BCSC 2407, the judge concluded that s. 148(3) of the FLA did not permit a court to order a retroactive variation of child support:

[29] Notwithstanding the unforeseeable change of circumstances that occurred in this case, I am bound by this court’s previous interpretation of the relevant statutory provisions: Hansard Spruce Mills (Re), [1954] 4 D.L.R. 590 (B.C.S.C.). I therefore find that the agreement cannot be varied retroactively and therefore do not need to deal with the question of effective notice.

Based on the foregoing the Chambers judge did not consider whether the Payor gave adequate notice of his intention to apply for a variation for the purpose of deciding the effective date for a retroactive variation order.

With respect to the third issue, whether support arrears should be cancelled or reduced, the Chambers judge was satisfied that the Payor was currently unable to pay the arrears or any portion of them and ordered a temporary suspension of enforcement of the arrears. The arrears were not cancelled as the Chambers judge did not make a finding that the Payor would never be able to pay them.

Court of Appeal Decision

The Court of Appeal was tasked with:

1. interpreting section 148 of the FLA which deals with the jurisdiction of a court to retroactively vary support payments agreed to in a separation agreement;
2. Determining whether the judge erred in law by ordering the dismissal of the Payor’s application without considering the Payor’s argument to vary the spousal support provision in the Agreement when that issue was directly raised in the Payor’s first notice of application, by the materials before the court and in argument.

For the purposes of this piece the second issue will not be covered.

With respect to the first issue, section 148(3) of the FLA provides as follows:

(3) On application by a party, the court may set aside or replace with an order made under this Division all or part of an agreement respecting child support if the court would make a different order on consideration of the matters set out in section 150 [determining child support].

By contrast, section 152 of the FLA, speaks specifically to “orders” and reads:

(1) On application, a court may change, suspend or terminate an order respecting child support, and may do so prospectively or retroactively.

The court found that section 152 of the FLA expressly provides that a child support order can be modified retroactively while this wording is absent in s. 148(3) of the FLA. The court determined that there is nothing in s. 148(3) of the FLA to suggest that once a court determines that it should replace a provision of an agreement for child support with an order under the Act, it is nonetheless limited to doing so only prospectively.

The Court also noted that section 170 of the FLA explicitly authorizes the making of a retroactive child support order – a court may order that “child support or spousal support be paid respecting any period of time before the date the application for the order is made”.

To determine whether the court would make a different order, the approach in section 150 of the FLA must be followed. The amount of child support must be determined in accordance with the Federal Child Support Guidelines. However, the court may order a different amount if the parties have an agreement respecting child support that adequately benefits the children.

The Court of Appeal concluded that the section 148(3) of the FLA permits a judge to make a retroactive variation to an agreement for child support by setting aside or replacing, in whole or in part, a term of the agreement with an order pursuant to s. 150 of the FLA.

The Court of Appeal found that section 150(4) of the FLA provides the ability to consider the child support provisions in an agreement along with the direct or indirect benefits obtained by the agreement (or whole of the agreement) and order an amount different from that required by the Guidelines.

The Court outlined the steps involved as follows:

1. A party may apply under section 148(3) of the FLA to have the court set aside or replace a provision of a child support agreement with an order under Division 2;
2. Where a judge makes such an order under section 149 of the FLA, the order may provide, pursuant to s. 170(b) of the FLA, that child support be paid respecting any period of time before the date of the application; and
3. In making such an order, the court may, in accordance with s. 150 of the FLA, order an amount of child support that is different from the amount set out in the Guidelines where the parties have entered into a child support agreement. The applicable test for changing a child support agreement is similar to the test for changing a child support order found in section 152(2) of the FLA:

(2) Before making an order under subsection (1), the court must be satisfied that at least one of the following exists, and take it into consideration:

(a) a change in circumstances, as provided for in the child support guidelines, has occurred since the order respecting child support was made;

(b) evidence of a substantial nature that was not available during the previous hearing has become available

(c) evidence of a lack of financial disclosure by a party was discovered after the last order was made.

In conclusion, where the parties are bound by a Separation Agreement that deals with child support, the Separation Agreement may be varied retroactively under s. 148(3) of the FLA.