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| Fanda Wu |
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| Dalton Stark |
One question that now comes up with increasing frequency is whether support payors are permitted to reduce support payments considering that their income has dropped because of the COVID-19 pandemic.
The answer to this question depends on the nature of the document (or lack thereof) which sets out the payor’s support obligations. Typically, support obligations will be set out in one of two ways:
- Court order or separation agreement;
- No separation agreement or court order, in which case it is a legislative obligation (i.e. Divorce Act or Family Law Act statutory obligations).
Court order/separation agreement
Parties who have gone through the court process to have a judge determine their support obligations will typically have an interim or final court order. Parties who commenced court proceedings but settled outside of court will likely have a consent order. Parties may also have a separation agreement, which can also be filed with the court, and thus is enforceable as if it were an order of the court.
Failure to pay in accordance with a court order or filed separation agreement will land a party in contempt of court, which can carry punishments ranging from fines to, in the most extreme circumstances, jail time. Failure to pay in accordance with an unfiled separation agreement is a breach of the agreement and may result in costs consequences.
Payors whose obligations are set out in a court order or agreement must continue to pay support in accordance with that order or agreement until they have either:
- Obtained the consent of the recipient to lower support. As a best practice, this consent needs to be documented in a consent order or amendment to the separation agreement; or
- Applied to the court to have a judge vary the support order or agreement.
When a recipient is deciding whether to agree to a reduction in support, it is important to be reasonable, otherwise the recipient risks facing cost consequences against them if the payor must commence an application to reduce support payments and is ultimately successful.
The recipient also risks having to return the overpayment of support received from the date of the change in the payor’s income. When negotiating reduced support, the payor should provide the recipient with financial documents evidencing their drop in income.
If the support recipient does not agree to a reduction of support, the payor must commence a court application to vary the order or agreement to reduce ongoing support payments and retroactively recuperate overpayments from the date of the material change in circumstances (i.e. the date of the job loss or significant reduction in business or investment income occurred).
To reduce ongoing support, the payor must provide evidence to the court that their income has decreased, that the decrease was due to circumstances outside of the payor’s control and that the decrease is expected to continue moving forward.
In determining whether to award a retroactive reduction of support, the B.C. Court of Appeal in GMW v. DPW 2014 BCCA 282 held that the factors cited in DBS v. SRG 2006 SCC 37 apply to applications for retroactive reduction. Therefore, the court will look at the following DBS factors:
- Reason for delay in seeking reduction;
- The payor parent’s conduct;
- The children’s circumstances; and
- The hardship occasioned by a retroactive award.
To successfully make out a claim for retroactive reduction of support, the payor is encouraged to put the recipient on notice that she or he will be pursuing this claim; make reasonable attempts to negotiate a reduced support figure outside of court; provide financial documents evidencing the decrease in their income; and commence the application within a reasonable time frame, following the court’s resuming regular operations.
Payors should keep in mind that court orders and filed separation agreements can be registered with the Family Maintenance Enforcement Program (FMEP), which will take steps to enforce the child and spousal support payments, including garnishing the payors’ wages, pensions, income tax refunds or GST credits, bank accounts or other assets.
FMEP can also register a lien against personal property (including a car, boat or manufactured home), report the payor to the credit bureau, instruct the Insurance Corporation of British Columbia (ICBC) to refuse to issue or renew the payor’s driver’s licence and charge default fees, amongst other things. Therefore, it is advisable that payors take the correct legal steps if they wish to vary their support obligations.
No separation agreement or court order (legislative obligation)
If there is no agreement or court order setting out support obligations, then the payor cannot be found in contempt or in breach of an agreement. However, federal and provincial legislation still require that child support be paid commensurate with the payor’s income, and if there is an entitlement to spousal support, that spousal support be paid taking into consideration the objectives of spousal support and the parties’ incomes.
For parties who are married, ss. 15.1 and 15.2 of the federal Divorce Act govern child support and spousal support. For both married and unmarried parties, Part 7 of B.C.’s Family Law Act governs child and spousal support.
The absence of a separation agreement or court order does not extinguish a person’s obligation under the law to pay support. The distinction under this category is that the payor does not need to commence a court application or seek the agreement of the other party to vary support.
However, it is recommended that the parties try and reach an agreement as to the amount of both child and spousal support. The payor should first have a discussion with the other party prior to reducing support so that the other party may plan their own financial future accordingly.
Payors should also keep in mind that any unilateral reductions in support could reflect poorly on the payor when the issue is brought before a judge, as the judge will want to see parents co-operating and working together to try and agree on matters, especially during these critical times.
Further, any reductions in support that were not justified (i.e. based on an appropriate calculation of the payor’s income) can result in the judge awarding retroactive child and spousal support amounts, based on what the payor should have actually paid, and costs consequences for the payor.
Final considerations
Matters of child and spousal support need to be considered on a case-by-case basis, particularly now, as many people’s financial situations are in flux. Both parties bear responsibility for financially supporting their children, but also have financial obligations to pay basic living expenses and the like, so parties must be reasonable and try and make things work.
Fanda Wu is an associate at Lindsay Kenney LLP, practising primarily in the areas of family law and estate litigation and has assisted clients with a variety of issues including guardianship, custody and access, child and spousal support and property and debt division. Dalton Stark is an associate with Lindsay Kenney’s general litigation group in Vancouver and practises primarily in the area of family law.
Photo credit / Poike ISTOCKPHOTO.COM
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