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Difference between revisions of "Spousal Support Arrears"

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Spousal Support Arrears (view source)

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==Reduction or cancellation of arrears==
==Reduction or cancellation of arrears==


Payors may apply to court to have their arrears cancelled or reduced. Technically, there are two ways to do that and each has its own considerations.  The ''Divorce Act'' and the former ''Family Relations Act'' each allowed only one.  Now, the ''Family Law Act'' allows both.  This is important because it is a little easier to succeed under the one than the other, if you have a choice.
Payors may apply to court to have their arrears cancelled or reduced. Technically, there are two ways to do that and each has its own considerations.


The two approaches are these.  The first is to say, in effect, “Yes, that is the proper amount of arrears.  I owe that, but I can’t pay it.  Please allow me some relief.”  It is essentially a debtor’s relief approach and as you might expect, the law takes a fairly hard view.
The two approaches are these.  The first is to say, in effect, “Yes, that is the proper amount of arrears.  I owe that, but I can’t pay it.  Please allow me some relief.”  It is essentially a ''debtor’s relief approach'' and as you might expect, the law takes a fairly hard view.
   
   
This is the approach the former ''Family Relations Act'' took.  In order to succeed, the payor had to show that failure to grant relief would be “grossly unfair” to the payor.
This is the approach the former ''Family Relations Act'' took.  In order to succeed, the payor had to show that failure to grant relief would be “grossly unfair” to the payor.
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The second approach is to say, in effect, “Yes, this is the amount I owe under the original order or agreement, but my situation changed.  If I had applied when the change happened, the amount would have been reduced.  So, please let me apply now and recalculate the arrears accordingly.”
The second approach is to say, in effect, “Yes, this is the amount I owe under the original order or agreement, but my situation changed.  If I had applied when the change happened, the amount would have been reduced.  So, please let me apply now and recalculate the arrears accordingly.”


This is the ''retroactive variation'' approach (applying late, or after the fact) and is the approach allowed under the ''Divorce Act''.  The court still requires the payor to explain why he or she deserves a second chance, but is a little easier to persuade the court to do this than to allow the payor to pay something less than the full amount.
This is the ''retroactive variation'' approach (applying late, or after the fact).  The court still requires the payor to explain why he or she deserves a second chance, but is a little easier to persuade the court to do this than to allow the payor to pay something less than the full amount.
 
The ''Divorce Act'' does not have a provision like the ''Family Relations Act'' or ''Family Law Act''.  It does not allow the court to grant relief if the money is truly owing.  All it allows the court to do is correct the amount, by allowing the payor to vary the order or agreement after the fact.
 
The flip side is that the ''Family Relations Act'' did not expressly allow the payor to vary an order retroactively.  Because of that omission, the courts concluded that the section allowing the courts to reduce or cancel arrears was the “complete code” on this issue and, therefore, even if there were two approaches possible they had to be treated the same way.  The payor still had to meet the “grossly unfair” test.
 
Now, the ''Family Law Act'' allows both for a reduction or cancellation of arrears (s 174) and for a retroactive variation of support order (s 167).  So, the cases that said there is only one approach under the former act no longer apply.  Payors have a choice (though it may be awhile before everyone recognizes this.  Many judges and lawyers are still too familiar with the old law.) 


Now, the ''Family Law Act'' allows both for a reduction or cancellation of arrears (s 174) and for a retroactive variation of support order (s 167).  So, the cases that said there is only one approach under the former act no longer apply.  Payors have a choice. This is important because it is a little easier to succeed on a retroactive variation than a pure cancellation or reduction of arrears.  Just be sure you are clear with the court which route you are taking.


===Retroactive reduction of support===
===Retroactive reduction of support===
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Hardship is a two-way street.  The court has to consider the position of both the payor and the recipient.  If the recipient relied on the order or agreement and went into debt in the expectation that the arrears would eventually be paid, that weighs against granting relief.  If, on the other hand, it was clear to both parties that the order or agreement was unreasonable in light of current circumstances, that weighs in favour of granting relief.  A retroactive reduction will be very unlikely if it would require the recipient to pay back money already received and spent.
Hardship is a two-way street.  The court has to consider the position of both the payor and the recipient.  If the recipient relied on the order or agreement and went into debt in the expectation that the arrears would eventually be paid, that weighs against granting relief.  If, on the other hand, it was clear to both parties that the order or agreement was unreasonable in light of current circumstances, that weighs in favour of granting relief.  A retroactive reduction will be very unlikely if it would require the recipient to pay back money already received and spent.
There was some doubt whether a retroactive reduction was allowed under the new ''Family Law Act'', but several cases have held that it does, including ''[http://canlii.ca/t/glb4d N.M. v G.M.]'', 2015 BCSC 1732.


Remember, though, that a retroactive variation application can only adjust the arrears to what they should have been, had the order or agreement been adjusted for current circumstances in a timely manner.  If arrears would still have accrued, it does not allow any relief beyond that.
Remember, though, that a retroactive variation application can only adjust the arrears to what they should have been, had the order or agreement been adjusted for current circumstances in a timely manner.  If arrears would still have accrued, it does not allow any relief beyond that.
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===Cancellation or reduction of (proper) arrears===
===Cancellation or reduction of (proper) arrears===


The ''Divorce Act'' does not have any provision for this. Section 174(1) of the ''Family Law Act'' says this:
Section 17 of the ''Divorce Act'' says this:
<blockquote><tt>
17 (1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,
:(a) a support order or any provision thereof on application by either or both former spouses; or …
</tt></blockquote>
 
The power to cancel or reduce arrears under the ''Divorce Act'' is not often pursued, but it does exist: Haisman v Haisman, 1994 CBCA 249; and ''[http://canlii.ca/t/1d20m Earle v Earle]'', 1999 CanLII 6914 (BCSC).
 
Section 174(1) of the ''Family Law Act'' says this:


<blockquote><tt>(1) On application, a court may reduce or cancel arrears owing under an agreement or order respecting child support or spousal support if satisfied that it would be grossly unfair not to reduce or cancel the arrears.</tt></blockquote>
<blockquote><tt>(1) On application, a court may reduce or cancel arrears owing under an agreement or order respecting child support or spousal support if satisfied that it would be grossly unfair not to reduce or cancel the arrears.</tt></blockquote>
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<blockquote><tt>(3) If a court reduces arrears under this section, the court may order that interest does not accrue on the reduced arrears if satisfied that it would be grossly unfair not to make such an order.</tt></blockquote>
<blockquote><tt>(3) If a court reduces arrears under this section, the court may order that interest does not accrue on the reduced arrears if satisfied that it would be grossly unfair not to make such an order.</tt></blockquote>
<blockquote><tt>(4) If a court cancels arrears under this section, the court may cancel interest that has accrued, under section 11.1 of the ''Family Maintenance Enforcement Act'', on the cancelled arrears if satisfied that it would be grossly unfair not to cancel the accrued interest.</tt></blockquote>
<blockquote><tt>(4) If a court cancels arrears under this section, the court may cancel interest that has accrued, under section 11.1 of the ''Family Maintenance Enforcement Act'', on the cancelled arrears if satisfied that it would be grossly unfair not to cancel the accrued interest.</tt></blockquote>
A similar section of the old ''Family Relations Act'' was described as a "complete code" regarding the reduction or cancellation of arrears under that act, meaning that the only ground on which a court can reduce or cancel arrears was "gross unfairness," as set out in s. 96(2). I expect the courts will take the same approach to s. 174 of the ''[[Family Law Act]]''.


The courts have interpreted "gross unfairness" under the ''Family Relations Act'' to mean that the payor is not only incapable of repaying the arrears but is also unlikely to be able to repay them in the foreseeable future without suffering severe financial hardship.  
The courts have interpreted "gross unfairness" under the ''Family Relations Act'' to mean that the payor is not only incapable of repaying the arrears but is also unlikely to be able to repay them in the foreseeable future without suffering severe financial hardship.  
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