As you can imagine, the economic slowdown as the result of the COVID-19 has created unprecedented challenges for families. The economic future is uncertain. How and when the courts will open is uncertain. And nobody has a crystal ball. Nobody. Employees don’t know when they are returning to work. Business owners don’t know how to make staffing decisions. Judges don’t know when they will be allowed back into the courthouse.
In the meantime, support payments are still being made. The Family Responsibility Office continues to do its work of collecting and distributing support. Some families are handling their support payments privately.
Clients and former clients are reaching out to me. If a theme has developed, it is that incomes have dramatically dropped in recent months. Payors of support want to know how much he or she should pay and if the amount should change. Recipients of support want to know if the amount he or she is receiving will be suspended or reduced.
So, I thought I would spend a few minutes and summarize my thoughts.
Not all cases are the same (how many times have you heard that, as true as it is). So it is necessary to categorize exactly what the current situation is. I am going to give these examples from the perspective of the spouse paying support for the sake of simplicity.
When Support is Being Paid Under a Final Court Order or Separation Agreement
Let me draw from a typical situation. I represented the husband. He has two children. He is paying spousal support and child support under the terms of a final (not temporary) court order (often in the form of a divorce order) or a final separation agreement.
Under the order or agreement, he has to pay child support of $1500 per month and spousal support of $500 per month. He has been temporarily laid off but is in receipt of some government COVID relief. His income has not gone down to “zero”, but a payment of $2000 per month is clearly inappropriate and a change from the original order or agreement is needed.
What to do…. Well, it depends on whether the payments are made privately or through the Family Responsibility Office.
1. Support is Being Paid Privately
Rather than going through the Family Responsibility Office, the husband pays support privately, and typically, by way of electronic transfer.
First, let’s review the basics. A court order is a court order. A separation agreement is a binding agreement. One party does not have the right to change, unilaterally, the amount of support. After all, if that was the case, why bother getting a court order or agreement?
By the same token, the situation has obviously changed. All child support orders, and the vast majority of spousal support orders, are based mainly, if not entirely, on the payor’s income. Income goes up, the obligation goes up. Income goes down, the obligation goes down.
But these changes are not instantaneous.
This is where the trick is. For income-calculated support, the income is determined on a 12-month basis, usually in the calendar year. So, for example, if the husband’s income went up or down each week depending upon the number of hours he worked, his support did not change from week to week.
At some point, usually at the end of the year, an accounting is done. If his income was higher or lower to any appreciable degree, he is entitled to a credit on future support because his income went down, or he has an obligation to get caught up, because his income went up.
So this is the nasty part of COVID-19, with respect to the economic fallout for payors of support. We just don’t know how long it is going to last. A few months? More? Less? Furthermore, if and when the economy opens up, we don’t know if the husband is going to work like crazy to get caught up.
It is all about making reasonable assumptions for the future. I would advise the husband to do his very best to predict what he is 2020 income will be from all sources. As the support is not being enforced by the Family Responsibility Office, I would encourage the husband to email his wife, with the supporting documents (i.e. year-to-date pay statements) and ask if a change could be made until the end of the year.
What if that doesn’t work?
At the risk of being overly simplistic, I make the following recommendation to the husband: continue to pay what you are obligated to pay under the court order or agreement, if at all possible. Then, at the end of the year, apply for a credit on your 2021 payments.
I realize this may cause temporary hardship. I get it. But legal fees aren’t cheap, and I really don’t want to advise the husband to take steps now, only to have those steps revisited again in seven months.
Measure twice, cut once.
2. Support is Being Enforced Through the Family Responsibility Office
I digress for one moment. At this time, the government has not announced or even suggested, that there will be a framework put into place for dealing with COVID-19 and the impact on support payments enforced through the Family Responsibility Office (FRO). This means that changes in support will be dealt with in the same manner as any other change of income.
I can tell you that everybody in the legal community is worried about an onslaught of cases. By the same token, the Ministry of the Attorney General is not announcing (understandably so, in my view) when it will be safe to even open up the courthouse. Like many other things in our life, I think we are going to start a “new normal”, and we don’t yet have an appreciation of what that might look like. I cannot help but think that the Ministry will try to come up with something to deal with the spike in cases. But not yet.
Herein lies the problem. The FRO is, at its core, a collection agency. It does not have the mandate or authority to change court orders. Its sole task is to collect support in the most efficient way possible.
So, let’s go back to our husband’s example. Even if he could definitely prove to the FRO that he has permanently lost his income and that his only source of income will be some meagre form of government assistance, the FRO does not have the authority to change the amount of support he owes.
So my recommendation to the husband is as follows: it’s time to do some economic algebra. He can’t predict the future. That being said, he can try to determine what is most likely. It is most likely, for example, that he will not be run over by a train today. As a result, he will take the most likely course of action and leave the house, despite the risk. And assuming that he has watched everything on Netflix that there is to watch.
There is no question that the husband is entitled to reduce his support. The question is when it makes the most amount of sense to pull the trigger and commence a court application. Again, risking oversimplification, I recommend to the husband that he be patient and wait until the end of the year, or near the end of the year. This way, he doesn’t have to review his support now and again later.
Support is Being Paid Under a Temporary Court Order or a Temporary or Informal Separation Agreement
This arises when cases are not yet complete, but support is being paid either under a temporary court order, temporary separation agreement, or an informal understanding. These situations are much easier.
The procedure to change a temporary order is much more efficient than it is to change a final order. The reasons are obvious: the court file is already open and most of the financial disclosure is completed. If there is a temporary separation agreement in place, most agreements contain a “termination notice” provision in which the agreement can be cancelled.
Lastly, informal arrangements are just that: informal. Much easier to change.
That being said, if the temporary order or temporary agreement is being enforced through the FRO, a new order will have to be requested after the reopening of the courts. As of today’s date, the earliest this date may be is July 6. And when I say July 6, I simply mean that the doors will be unlocked, so to speak. The actual date of a hearing may be several weeks after that.
I won’t say “I told you so”, but….
Allow me to get something off my chest about the functionality of the court system in Ontario, and the response to the COVID-19 pandemic.
If you’re not interested, I get it and there is no reason to read further. But I have got to say a couple of things.
The civil court system has been trapped in the past for a long period of time. Going into this crisis, the main avenue of communication with the courthouse was either in paper (usually requiring a court clerk to physically attend the courthouse every day) or by fax. Telephone hearings? Nope. Emails? Only for rudimentary communication. Videoconference? Surely, you jest.
And, to a certain extent, I understand. If you are in government and you can either hire a teacher to reduce class sizes or pay an IP expert to modernize the courthouse, which are you going to choose? Furthermore, the Supreme Court of Canada has made it clear that a criminal accused has the right to a trial within a reasonable period of time. So sometimes the courthouse is faced with a version of Sophie’s Choice: schedule the family case but run the risk of criminal charges being dismissed, or, schedule the criminal hearing despite the family case that needs some attention.
In many ways, the COVID-19 crisis has exposed the decision of successive governments not to spend the money on the justice system. Or worse, divert funding into programs like the “mandatory information program”, a program that no client has ever – not even once – told me that he or she found it informative.
I am going to use an overused phrase: COVID-19 has created the perfect storm. But the storm was created only because nobody has really studied the family law weather reports.
This too will pass. But it was all so unnecessary.