In the recent decision of R.R. v. J.F. (2020 ONSC 6778), the Hon. Justice Conlan of the Superior Court of Justice (Central West) heard a trial on retroactive child support. The Court considered various issues that might impact payors who wish to retroactively vary (reduce) child support because of unforeseen reductions in income caused by an injury.

The parties had married in 2006, separated in 2008, and divorced in 2010. On February 4, 2014, the Hon. Justice Trimble made a Final Order on consent (the “Final Order”), ordering, inter alia, that the Father pay child support for the two children for $800.00 a month based on an imputed income of $53,900.00. In 2018, about 4 years later, the Father brought the matter back to Court as a variation proceeding. The Father had argued that the Final Order should be varied because:

1. it was not valid as he was “under duress” when consenting to it;
2. three Material Change in Circumstances had occurred since it had been entered;
   1. he was hit by a car on July 26, 2015, when riding his bicycle in Milton;
   2. his construction business terminated in late December 2016; and
   3. all contact between the Father and his children had been severed.

He also argued that personal injury settlement funds should not be included when imputing his income.

Duress

The Father alleged that he only consented to the Final Order because it was the only way to continue access with his children. The Court found this allegation to be unsupported by any evidence at trial. The Father had essentially no relationship with the Children at the time the Final Order was made. It was also nonsensical that a Father would agree to be unreasonably imputed with income to preserve access with the Children. In any event, there was nothing in the materials to suggest that the self-represented Father had been “hoodwinked” by the opposing side, as he had been quite the hard-nosed negotiator.

Material Change in Circumstance

The Court accepted that the Father had experienced a material change in circumstances because of his accident. However, it cited the Ontario Court of Appeal’s decision in Gray v Rizzi (2020 ONCA 153) for the principle that material changes need to be continuous when the variation is determined and not simply a temporary setback in the circumstances.

The Court accepted the Father’s evidence that when he was hit by a car in June 2015, he suffered injuries to his left knee, both shoulders, his back, and required surgery on his knee. However, based on the medical evidence the Court heard at trial, it concluded that by January 2018, the effects of the July 2015 accident should have worn off (para 34). It did not help the Father that his family physician effectively changed her position in her testimony at trial. Although the family physician had written as recently as July 2019 that the Father was “totally disabled,” at cross-examination, the physician admitted to basing this conclusion “almost entirely” on the Father’s “self-reporting” (para 31-32).

The Court found that it was unnecessary to consider whether the termination of the Father’s construction business constituted a material change in circumstance as it was directly related to the Father’s accident. As for the Father’s argument that his severed contact with the Children was a material change in circumstance, the Court dismissed this argument because the mother was not unilaterally withholding the Father’s access. His non-contact with the Children was rather the result of the access schedule set out in the Final Order.

Retroactive Variation

The Court then analyzed whether the retroactive change in Child Support was warranted because the Father waited nearly 3 years after his accident to seek a variation. The two-step analysis requires a Court to:

1. first, ask whether the retroactive variation is warranted; and
2. second, determine which date such variation should be set at.

The Court cited Punzo v Punzo 2016 ONCA 957 (Punzo), for factors that determine the first step of the analysis:

1.  the nature of the support obligation, whether contractual, statutory, or judicial;
2.  the ongoing needs of the support recipient and the child;
3.  whether there is a reasonable excuse for the payor’s delay in applying for relief;
4.  the ongoing financial capacity of the payor and, in particular, his ability to make payments towards the outstanding arrears;
5. the conduct of the payor, including whether the payor has made any voluntary payments on account of arrears, whether he has cooperated with the support enforcement authorities, and whether he has complied with obligations and requests for financial disclosure from the support recipient;
6. delay on the part of the recipient in enforcing the child support obligation does not, in and of itself, constitute a waiver of the right to claim arrears; and
7. any hardship that may be occasioned by a retroactive order reducing arrears or rescinding arrears, or by an order requiring the payment of substantial arrears.

The Court then looked at Punzo for the second step of the analysis and identified four possible dates from which an award may be retroactive:

1. the date when the application was made to the Court;
2. the date when the formal notice was given to the other party;
3. the date when the effective notice was given to the other party (effective notice does not require legal action; all that is required is that the topic be broached); or
4. the date when the amount of child support should have increased/decreased, being “the time when circumstances changed materially.”

In Punzo, the Court cited the Supreme Court of Canada’s decision in DBS, which says that where a retroactive award is appropriate, the general rule is that the date of effective notice should serve as the date to which the award should be retroactive. The Court pointed out that although this would be when the Father commenced the proceeding (March 2018), this would lead to an absurd outcome because by that time, the impact of the Father’s accident had or ought to have subsided. As such, the Court found that the change in the Father’s retroactive child support obligation should take place August 1, 2015, being the first day of the month following his accident.

The Court imputed the Father with an income of $6,318.00 between his accident in July 2015 to December 2015. At this level of income, the Father was waived of his obligation to pay any arrears for that period of time. The Court further imputed the Father with an income of $15,163.00 for 2016, meaning he was obligated to make payments of only $175.38 a month for that year.

For 2017, however, the year that the Father collected a personal injury settlement of $112,500.00 (net) from his motor vehicle accident, the court imputed him with $53,900.00 – the level of income the Father was imputed at as per the Final Order. Generally, personal injury settlements are not calculated in determining a payor’s income for child support purposes. However, the Father admitted in cross-examination that he withdrew all of the settlement funds from his bank account days after receiving it and then did not disclose this money in an attempt to frustrate the Family Responsibility Office’s garnishment efforts. This was egregious enough to warrant imputation.

The Court found that by the beginning of 2018, the impact of the Father’s accident and the collapse of his construction business should have been disappeared. As such, the Court agreed with the Mother that the Father remained “intentionally underemployed” from 2018 and fixed his income at the amount ordered in the Final Order, $53,90.00, for the years 2019 and 2020.

What is instructive about this case is that rarely are retroactive variations to reduce support worth the trouble. Although the Father here was self-represented and saved a bit on the legal expense, the outcome was not great. He only managed to reduce child support for one and a half years from July 2015 to the end of 2016. Had he retained counsel, he would have easily dwarfed the benefit of that reduction via legal fees.