IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           By a notice of application filed on November 30, 2017, Mr. L applies: (i) to retroactively vary his child support obligation, as determined by a separation agreement executed by the parties on May 9, 2008; or (ii) in the alternative, to reduce or cancel the existing arrears of child support.

[2]           The Respondent on this application is now known by her maiden name, S.D.D.  The Applicant has remarried, and I will refer to his present wife as Ms. L.

[3]           Mr. L and Ms. D married on April 8, 1989 and separated on July 1, 2007.  They are now divorced.  They have two children, ages 13 and 15.  On May 9, 2008, they executed a written separation agreement, the relevant terms of which are:

[4]           Ms. D is a financial planner employed by a Canadian chartered bank.  Her income consists of an annual salary and a discretionary bonus. 

[5]           In 2008, Mr. L was employed in the construction industry, and also had his own part-time business doing a variety of construction work for individuals and businesses.  In 2009, he quit his job to devote himself full-time to his own business. 

[6]           Before she married Mr. L, Ms. L was employed as a care aide.  Her annual income from that job was approximately $20,000 annually.  In 2017, she quit her job as a care aide and now assists Mr. L in his business.  Mr. and Ms. L say that they prefer to be self-employed because it allows them to set their own schedules, and so to have more time with the children.  Ms. L acknowledges that this choice has reduced their income, and that they live very simply, but she says that they do not lack for anything, and that she values her family time more highly than the opportunity to increase the family income.

[7]           On the date of execution of the separation agreement, Mr. L’s annual income was about $49,000 and Ms. D’s annual income was about $31,400.  Their respective annual incomes in the succeeding years were:

[8]           Mr. L points out that Ms. D’s income during the period 2009 - 2017 was substantially higher than his, and that, if the child support obligation had been adjusted annually “… to take into account changes to their respective Guideline incomes …” (as required by the separation agreement), Ms. D would have been obliged to pay child support to him.  Mr. L says that no such adjustment was made because of an oral agreement which he says was made in June, 2009.  He says that he told Ms. D that he did not want child support from Ms. D, and that they agreed that neither would be liable for child support in the future.  Ms. D denies that she agreed to any such proposal.  I found both Mr. L and Ms. D to be credible witnesses, and am satisfied that each provided their best recollection of their conversation on the subject.  I conclude that they did have a conversation on the subject of child support in June, 2009, and that each came away from the conversation with a different understanding.  Mr. L believed that they had mutually agreed to waive child support and Ms. D believed that they had simply agreed to leave the issue in abeyance.  It follows that the agreement alleged by Mr. L is not proven.

[9]           Mr. L paid child support at the agreed rate of $250 per month until June, 2009, and has made no regular monthly payments of child support since that time, although he has contributed to the children’s dental expenses.  The parties have not exchanged their income tax returns each year, as required by the separation agreement, nor have they adjusted their child support obligations “… to take into account changes to their respective Guideline incomes.”

[10]        Ms. D took no steps to enforce Mr. L’s child support obligation until 2017.  She says that she is averse to conflict and hoped to resolve the dispute informally.

[11]        In the autumn of 2017, Ms. L applied to Canada Revenue Agency (“CRA”) for child tax credits for the two children of Mr. L and Ms. D.  In response to questions from CRA, she revealed the existence of the joint parenting arrangement set out in the separation agreement.  That information caused CRA to: (i) accuse Ms. D of deliberately filing a false claim for child tax credits on the basis that she had sole custody of the children; (ii) seek to recover from Ms. D past overpayments of child tax credits and benefits under other government programs; and (iii) decide to divide future payments of child tax credits equally between Ms. D and Ms. L.  In the end, the issue between CRA and Ms. D was resolved by an agreement under which Ms. D repaid $8,022.00 to CRA and CRA agreed to waive any claims for interest or penalties.

[12]        After, and as a consequence of, the dispute with CRA, Ms. D resolved to enforce Mr. L’s child support obligation under the separation agreement, and referred the matter to the Family Maintenance Enforcement Program to collect the arrears.

[13]        Section 19(1) of the Federal Child Support Guidelines empowers the court to “… impute such amount of income to a spouse as it considers appropriate in the circumstances …”, where, inter alia, “… the spouse is intentionally underemployed …”.  The governing principles were stated in Hanson v. Hanson 1999 CanLII 6307 (BC SC), [1999] BCJ No. 2532 at paragraphs 13 - 14 (referred to with approval in McCaffrey v. Paleolog [2011] BCJ No. 1753; 2011 BCCA 378 at paragraph 50):

[14]        I have considered whether Mr. L’s child support obligation in respect of the period 2009 to 2016 may have been extinguished by the Limitation Act SBC 2012, c 13.  Although the legislative drafting leaves something to be desired, I construe section 3(1)(l) of the Limitation Act and section 198 of the Family Law Act SBC 2011, c 25 to mean that no limitation period applies to claims for arrears of child support.  As noted below, delay in enforcement of a child support obligation is a factor to be considered on Mr. L’s application to retroactively vary his child support obligation.

[15]        It has been suggested that the court lacks jurisdiction to retroactively vary a child support obligation established by a separation agreement (as distinct from a child support obligation established by a court order): R.M. v. N.M. 2014 BCSC 1755; [2014] BCJ No. 2343 at paragraph 150.  However, that view was rejected in T.L.A. v. M.R. 2017 BCSC 688; [2017] BCJ No. 806 and in C.A.O. v. P.J.O. 2017 BCPC 361; [2017] BCJ No. 2491.  I consider myself to be bound to follow the most recent pronouncement of the British Columbia Supreme Court on the subject, and so to conclude that I have jurisdiction to retroactively vary Mr. L’s child support obligation.

[16]        The burden of proof on this application depends upon whether Mr. L’s application is (i) to retroactively vary his child support obligation; or (ii) to reduce or cancel arrears.  On the former application, he need only show a material change in circumstances justifying a retroactive variation: Family Law Act s. 152.  On the latter application, he must show that it would be grossly unfair to decline to reduce or cancel the arrears: Family Law Act, section 174. 

[17]        The primary objective of the Federal Child Support Guidelines SOR/97-175 is to ensure that each parent pays neither less nor more child support than the amount mandated by the Guidelines.  For that reason, I think that an application to retroactively vary child support is appropriate where the applicant contends that: (i) the figure established (by agreement or court order) for monthly child support ceased to reflect the principles set out in the Guidelines by reason of some event or events which occurred after the agreement or order was made; and (ii) the arrears (or part of them) accrued after that event or those events.  By contrast, an application to reduce or cancel arrears is appropriate where: (i) the figure established by the agreement or order properly reflected the principles set out in the Guidelines throughout the period during which the arrears accrued; but (ii) the applicant contends that, by reason of his present circumstances, it would be grossly unfair to require him to pay the arrears in full.

[18]        In this case, each parent has the children for exactly half of the time.  In such cases, the governing provision of the Guidelines is section 9.  The quantification of child support under section 9 is not arithmetic.  Rather, it requires a subjective assessment of the individual circumstances of each case: Contino v. Leonelli-Contino 2005 SCC 63 (CanLII), [2005] 3 SCR 217; 2005 SCC 63.

[19]        I think it unnecessary to perform in this case the analysis mandated by Contino.  Throughout the relevant period, the combined income-earning capacity of Mr. and Ms. L was approximately equal to, and certainly did not exceed, that of Ms. D.  In that circumstance, it would not have been appropriate to order Mr. L to pay child support at any time during that period.  So, Mr. L’s application is founded on the proposition that the quantum of child support established by the separation agreement did not reflect the principles established by the Guidelines during the period in which the arrears accrued.  For that reason, the burden of proof which he carries is that imposed by section 152 of the Family Law Act, not that imposed by section 174.

[20]        In D.B.S. v. S.R.G. 2006 SCC 37 (CanLII), [2006] 2 SCR 231; [2006] SCJ No. 37,Justice Bastarache said at paragraphs 76 - 78 (citations omitted):

[21]        The remarks of Justice Bastarache quoted in paragraph 20 were made in the context of a case in which there was a custodial parent (the recipient of child support) and a non-custodial parent (the payor of child support).  This case is different because each parent cares for the children for exactly one half of the time.  In such a case, the primary imperative must be to ensure that the children have adequate financial resources in each home.

[22]        This is clearly a case in which the relevant circumstances have changed materially.  When the separation agreement was made, Mr. L earned significantly more than did Ms. D.  Now, he earns significantly less.  Even if each of Mr. and Ms. L fully exploited their income-earning capacities, their household income would less than that of Ms. D.  If I decline to adjust Mr. L’s child support obligation retroactively, he will owe approximately $27,000 in arrears to Ms. D.  The existence of that debt would materially and adversely affect the children’s standard of living in Mr. L’s home.

[23]        Delay is a material factor, partly because it affects the question of fairness as between the parents, but also because it may affect the ability of one parent or the other to adequately provide and care for the children.  Dealing with the question of fairness first, Ms. D and Mr. L each conducted themselves from 2009 to 2017 on the premise that neither would pay child support.  If Ms. D had raised the issue when Mr. L discontinued child support payments in June, 2009, he could have applied to the court to enforce the provision of the separation agreement to adjust child support by reference to Guideline incomes or, failing that, made different choices about his career to enable him to meet the obligation.  To impose upon him now a $27,000 liability for which he has had no opportunity to budget would be unfair.  More importantly, the existence of that obligation would materially impair his ability to care and provide for the children in future.  The children are accustomed to spend half of each week with him, and are reported to be doing well.  It would be unwise to change that arrangement, and impossible for Mr. L to continue to bear the costs of child care while trying to discharge a $27,000 debt.

[24]        Mr. L does not seek an order for child support.  It is clearly appropriate that he receive 50% of the available government benefits for the children.  If an application had been made to vary the applicable term of the separation agreement, I would have granted that application.

[25]        The child support obligations imposed by the separation agreement will be varied to provide that, effective June 1, 2009, neither parent is obliged to pay child support.  That order renders moot Mr. L’s application to reduce or cancel arrears.  No order is necessary or appropriate in relation to government benefits, because that decision has already been made by CRA, and I would not change it if I could.  If there are future material changes of circumstance relevant to the issues of child support, either party is at liberty to apply for the appropriate order.