Retroactive Child Support: Benefits and Burdens

2. How Did the Supreme Court Approach the Issues?

A. Establishing the Obligation

Justice Bastarache, speaking for the majority,[14] began his analysis by noting that parentage, in and of itself, establishes a support obligation: "upon the birth of a child, parents are immediately placed in the roles of guardians and providers."[15] For over a century, this parent-child relationship has been understood as entailing both moral and legal obligations.[16] Notwithstanding the breakdown of his or her parents' marriage, the child's right to support from his or her parents survives.[17] Financial support, which is the child's right, survives the breakdown of his or her parents' marriage and should, to the extent possible, provide children with the same standard of living they enjoyed during the time the parents were together.[18]

A key distinction to be recognized, the court held, was between the existence of an obligation and the enforcement of an unfulfilled obligation. Clearly, there was no difficulty in finding that there is an ongoing obligation to pay child support in accordance with income. However, in Canada, the mechanism for seeking to have a court enforce[19] this ongoing obligation is to bring an application pursuant to either the Divorce Act or provincial/territorial legislation. While the legislature could have chosen a different mechanism for enforcement, and indeed, s. 25.1 of the Divorce Act contemplates federal-provincial agreements whereby provincial child support services would be created to recalculate the amount of support owed at regular intervals,[20] in light of this policy decision, the obligation for ensuring compliance rests partially on the recipient parent.[21] However, the existence of an application-based regime does not preclude the court's ability to contemplate retroactive awards, assuming the child is a child of the marriage within the meaning of the Divorce Act[22] and therefore entitled to support at the time the application for retroactive support is filed. Whether a retroactive award should be made in a given case will depend on the specific legislation in effect within a particular jurisdiction, the legislation that applies to a specific case, and the exercise of judicial discretion.[23]

B. Enforcing the Obligation—Stage 1

It is important, in the Supreme Court's view, to balance the payor parent's interest in certainty with the need for flexibility in fulfilling one's parental obligation:

Unlike prospective awards, retroactive awards can impair the delicate balance between certainty and flexibility in this area of the law. As situations evolve, fairness demands that obligations change to meet them. Yet, when obligations appear to be settled, fairness also demands that they not be gratuitously disrupted.[24]

The paying parent's certainty interest is strongest when the payor has been in compliance with a valid court order. However, parents need to understand that the order is based on the circumstances at play when the order is made. It is still possible that a change in underlying circumstances can lead to changed obligations.

According to Justice Bastarache, a payor's certainty interest is somewhat less strong where the obligation has been established by virtue of a private agreement, though agreements should certainly receive considerable weight: "[A] payor parent who adheres to a separation agreement that has not been endorsed by a court should not have the same expectation that (s)he is fulfilling his/her legal obligations as does a payor parent acting pursuant to a court order." [25] Finally, a paying parent does not enjoy any certainty interest where there is no existing order or agreement.[26]

The next aspect of the analysis involves the court considering specific circumstances associated with the case. Among these is the question, noted above, of whether the child qualified for support at the time of the application.[27] Assuming this threshold inquiry is met, one should delve into the reasons for the recipient spouse having delayed in commencing the application for retroactive support. Such delay would, in Justice Bastarache's view, have the effect of strengthening the payor parent's perception that his/her obligations were being adequately fulfilled. "Acceptable" reasons for delay, in the court's opinion, would be the existence of situations where the applicant feared that the payor parent would "react vindictively to the application to the detriment of the family."[28] Equally, a reasonable excuse might exist where the applicant lacked the emotional or financial means to commence an application, or was given inadequate legal advice. However, "a recipient parent will generally lack a reasonable excuse where s(he) knew higher child support payments were warranted, but decided arbitrarily not to apply."[29] Interestingly, as one author has noted:

[T]he difference between a reasonable and unreasonable delay is often determined by the conduct of the payor parent. A payor parent who informs the recipient parent of income increases in a timely manner, and who does not pressure or intimidate her, will have gone a long way towards ensuring that any subsequent delay is characterized as unreasonable.[30]

Moving from an assessment of the recipient parent's conduct, the Court next looks at the payor's conduct, noting that when he or she has engaged in "blameworthy" conduct, his or her interest in certainty will become less compelling.[31] What, then, is "blameworthy conduct" that will diminish the certainty interest? It is "[a]nything that privileges the payor parent's own interests over his/her children's right to an appropriate amount of support."[32] Hiding income, misleading the recipient about real income, consciously ignoring one's support obligation, and intimidating the recipient such that he/she feels unable to pursue increased support all point to blameworthy conduct.[33] A parent who knowingly avoids support obligations should not profit from such behaviour, though not increasing support payments automatically does not necessarily amount to blameworthy conduct.

The issue of blameworthy conduct requires an assessment of the payor parent's subjective view, though objective indicia are helpful in determining whether blameworthiness arises. For example, where the amount paid is fairly close to the amount that should have been paid, the belief that one's obligations were being met is more plausible.[34] While compliance with a previous court order or agreement may raise a presumption that the payor was acting reasonably, this presumption can be rebutted where a change in financial circumstances was significant enough that the payor parent could no longer reasonably rely on the order/agreement and was not reasonable in failing to disclose increased ability to pay.[35] Finally, a payor may have behaved in a way that militates against a retroactive award, as for example, when he or she has paid for expenses over and above amounts required by statute or an order or agreement.[36]

Next, in the court's opinion, it is essential to examine the child's past and present circumstances in deciding whether a retroactive award is appropriate. A child who underwent hardship in the past may be compensated by a retroactive support award, while a child who already enjoyed all of the advantages that he or she would have enjoyed with full parental support reveals a less compelling case for retroactive support.[37] Note that hardship suffered by other family members who made additional sacrifices to assist the child is irrelevant in determining whether retroactive support is appropriate.[38]

The potential hardship of a retroactive award to the payor should also be thrown into the mix of items to consider. For example, a payor's new family obligations should be taken into account, along with the extent to which a retroactive support award would disrupt the payor's management of his or her financial affairs.[39] While retroactive awards should be crafted in a way that minimizes hardship, it will not always be possible to avoid hardship. In Justice Bastarache's view, the extent to which a court should be concerned about this issue is directly linked to the extent to which the payor parent has engaged in blameworthy conduct.[40]

C. Enforcing the Obligation: Stage 2—Commencement Date

Where a court has determined, in light of the balancing of the factors set out above, that retroactive support is appropriate, the next question is which date to use as the commencement date for the order. The possible candidates are: the date that the financial circumstances of the payor parent changed such that a higher support amount was owed; the date of "formal" notice[41] by the recipient parent that additional support was being requested; the date the application for variation was made; and the date of "effective" notice by the recipient parent that there was a need to pay or re-negotiate support payments. In the court's view, using the date on which formal proceedings are commenced would have the effect of discouraging parents from settling matters informally:

[L]itigation can be costly and hostile, with the ultimate result being that fewer resources—both financial and emotional—are available to help the children when they need them most. If parents are to be encouraged to resolve child support matters efficiently, courts must ensure that parents are not penalized for treating judicial recourse as the last resource.[42]

On the other hand, Justice Bastarache takes the position that applying the date that the support obligation would have changed erodes the payor's certainty interest too much.[43] As a result, he adopts the middle-ground "effective notice" date. Justice Abella, in writing the concurring minority opinion, disagrees with Justice Bastarache on this point. In her view, regardless of notice date, support should be varied retroactively to the date of the change in income:

[The payor parent] is the parent with the major responsibility for ensuring that a child benefits from the change as soon as reasonably possible. A system of support that depends on when and how often the recipient parent takes the payor parent's financial temperature is impractical and unrealistic. … Because the child's right to support varies with the [parent's income] change, it cannot … be contingent on whether the recipient parent has made an application on the child's behalf or given notice of an intention to do so.[44]

In addition to setting the generally applicable commencement date, the court introduced what has been referred to as a three year "limitation period" for retroactive child support orders. According to Justice Bastarache, it will usually be inappropriate to make a support award retroactive to a date more than three years before the date of formal notice, though this presumptive three year limitation can be eschewed where the payor has engaged in blameworthy conduct.[45] In one commentator's view, Justice Bastarache's pronouncement "is at once a warning to payor parents to fulfill their child support responsibilities once fixed with effective notice of a claim, and a caution to recipient parents to advance their claims diligently once effective notice has been served."[46]

Again, Justice Abella takes a different view of this aspect of the decision. In her opinion, absent an express statutory direction, a three year limitation is inappropriate.[47] Further, she finds there is no role for blameworthy conduct in determining the date at which children can recover the support to which they are entitled. In her view, "[t]he existence of the increased obligation depends on the existence of the increased income, and fluctuates with parental income, not with parental conduct."[48]

One of the interesting aspects of the three year limitation period is that the issue was "not before the Alberta Court of Appeal, was not pleaded by any party in the Supreme Court of Canada, was not argued by any party and was never mentioned by the court."[49]

While commentators agree that the three year limitation was not stated as an absolute,[50] there is potential for parties seeking some level of predictability to characterize it as such.[51] Concern has been voiced to the effect that the three year period may not always reflect the reality of separated families: "[S]ometimes people do want to wait until the kids grow up in order to avoid the greater evil of grinding the kids up in a fight over money between the parents."[52]

D. Enforcing the Obligation: Stage 3—Quantum

Finally, having determined the appropriate date for the retroactive award, the court must determine an appropriate quantum. This amount must still fit the circumstances, and blind adherence to the applicable tables is not recommended.[53] In summary, "a court should not order a retroactive award in an amount that it considers unfair, having regard to all the circumstances of the case."[54]

In applying the factors set out earlier in its judgment, the court held that retroactive support was inappropriate in two of the cases and appropriate in the other two. In the two cases where retroactive support was held to be inappropriate, the court seemed to focus on the payor's non-blameworthy conduct,[55] while in the latter two cases, payors' blameworthy conduct in refusing to increase support payments where their incomes had increased significantly played a large role in the decision to award retroactive support.[56] Further, in one of the cases where retroactive support was held to be appropriate, the recipient parent had been unable to discern changes in the payor's changed income.[57] In the other, the court accepted that in light of previous overwhelming litigation that had strained the mother-child relationship, it was understandable that the recipient mother would be reticent to commence further proceedings.[58]