CITATION: Mayer v. Mayer, 2013 ONSC 7099

COURT FILE NO.: FS-10-0030

DATE: 2013-11-25

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Keith William Mayer, Applicant

• and -

Nadine Michelle Mayer, Respondent

Rosemary Arenovich, Respondent

Bryan Wakefield, Respondent

Counsel: William G. Shanks, for the Applicant Michael Cupello, for the Respondent, Nadine Michelle Mayer Kristen Bucci, for the Respondent, Rosemary Arenovich, not taking part in the trial Unrepresented, not taking part in the trial

Heard: June 6, 7 and 26, 2013, at Thunder Bay, Ontario Before: Mr. Justice D. C. Shaw

Reasons For Judgment

[1] This case proceeded to trial on the issues of child support and spousal support under the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp.).

[2] All other issues were resolved by Minutes of Settlement.

General Background

[3] The applicant, Keith William Mayer, is 38 years of age. The respondent, Nadine Mayer, is 32 years of age.

[4] Mr. and Ms. Mayer met in the summer of 2001. They began to live together in the home of Mr. Mayer’s parents in October 2001. In 2002, they moved into a home at 19 Rossdale Street, in Rosslyn Village. Mr. Mayer purchased the home in his name alone for $110,000 with a $12,000 down payment. On September 6, 2003, they were married. They separated on January 2, 2010.

[5] Ms. Mayer has a child, Patricia-Ann Trinity Wakefield, born January 13, 2000. The respondent, Bryan Wakefield, is the biological father of Patricia. Pursuant to an order of the Ontario Court of Justice, dated June 4, 2001, Mr. Wakefield is required to pay to Ms. Mayer child support for Patricia in the sum of $116 per month. Mr. Mayer willingly assumed the role of stepfather to Patricia. He considers Patricia as his daughter.

[6] Mr. and Ms. Mayer also have a son, Noah Keith William Mayer, born to them on November 19, 2004.

[7] The respondent, Rosemary Arenovich, is the biological paternal grandmother of Patricia.

[8] Mr. Wakefield and Ms. Arenovich have access to Patricia pursuant to Minutes of Settlement and an order dated February 22, 2013, made in this action. They did not take part in the case after the order was granted.

Mr. Mayer

[9] Mr. Mayer graduated from university in 2000 with a civil engineering degree. On graduation, he joined the engineering firm of P.G. Himanen and Associates, starting at a salary of $50,000. In 2003, he received his Professional Engineer’s license. His salary increased to $70,000. In 2004, P.G. Himanen and Associates was incorporated, becoming PHA Engineering Ltd. The principal of the company, Mr. Paul Himanen, gifted Mr. Mayer 10% of the shares of the new company. The balance of the shares was owned by Mr. Himanen and his wife.

[10] On August 1, 2007, Mr. Mayer purchased the shares of Mr. and Mrs. Himanen, becoming the sole shareholder of the company. Mr. Mayer paid $300,000 for the shares. He financed the purchase, in part, by increasing the mortgage on his home by $25,000 and by taking out a personal loan for $75,000. He paid the balance by way of a leveraged buy-out, using bank financing against the retained earnings of $205,000 that the company had on its books at the time of the purchase. The loan was repaid in approximately five years. The 2012 financial statement of the company shows no long-term debt as of the March 31, 2012 year-end. The current portion of what was the long-term debt is shown at $10,666 as of the March 31, 2012 year-end.

[11] Mr. Mayer’s income tax returns for the years 2007 through 2012 show the following income:

Year	Employment Income	Taxable Dividends	Interest	Other
2007	$94,979.61	$6,250.00	$1,055.30
2008	$95,394.88
2009	$99,716.16
2010	$102,597.60	$31,250.00	$997.52
2011	$123,169.90	$179.05	$1,146.85
2012	$96,463.44	$18,750.00	$73.79

[12] The dividends received by Mr. Meyer in 2007, 2010 and 2012 were paid to him by PHA Engineering Ltd. (In determining income for purposes of child support, s. 5 of Schedule III of the Federal Child Support Guidelines, SOR/97-175 [Guidelines], requires that the taxable amount of dividends from taxable Canadian corporations received by a spouse is to be replaced by the actual amount of those dividends received by the spouse. Actual dividends are 80% of the taxable dividends, reflecting a 25% gross-up for purposes of the dividend tax credit.)

[13] PHA Engineering Ltd. has done well since Mr. Meyer purchased the company in August 2007.

[14] There is a significant issue between the parties as to whether all or part of the pre-tax income of the company should be included in Mr. Mayer’s income in determining his child support obligation.

[15] At the time that Mr. Mayer purchased the shares from Mr. and Mrs. Himanen, the company had 6 or 7 employees. As of the date of trial, the company had 12 employees, with 2 more about to be hired.

[16] The company is in the business of doing civil engineering work on roads for the Ministry of Transportation and the Ministry of Northern Affairs. Mr. Mayer testified that usually the company has two contracts per year which results in profit for the company of $70,000 to $100,000, net of expenses and taxes. In a three-contract year, which is dependent on how the Provincial Government plans its road-construction year, the company’s profit increases above that usual range. Mr. Mayer testified that since he purchased the shares of the company in 2007, the company has had two years in which it was awarded three contracts.

[17] Mr. Mayer testified that the company needs retained earnings to be able to pay its non-seasonal employees through the winter when no contract revenue comes in. The road building season runs from approximately May to October. He testified that if he did not keep his employees on during the winter, he would not be able to bid on projects. He testified that if the company did not have retained earnings, it could not continue to operate.

[18] In 2010, on the advice of his accountants, Mr. Mayer incorporated a holding company, 1852001 Ontario Limited, to hold the shares of PHA Engineering Ltd. Mr. Mayer is the sole shareholder of the holding company. The holding company sat dormant until sometime during the fiscal year that ran from April 1, 2011 to March 31, 2012. During that fiscal year, the sum of $499,937 was transferred by way of dividends from PHA Engineering Ltd. to the holding company. Mr. Mayer testified that the holding company has no debt. No financial statements for 1852001 Ontario Limited were produced at trial. Mr. Mayer testified that the purpose of the holding company was to hold cash assets that PHA Engineering Ltd. did not need so that PHA Engineering Ltd. could keep its small business designation for corporate income tax purposes. He testified that the holding company provides loans to PHA Engineering Ltd., as required. He testified that in 2013, the holding company loaned $100,000 to PHA Engineering Ltd. for the purchase of two new vehicles.

[19] As noted, Mr. Mayer purchased the shares of PHA Engineering Ltd. on August 1, 2007. The following is a summary of the financial information for the company for the four months running from April 1, 2007 to July 31, 2007 before Mr. Mayer purchased the shares in the company, as well as for the eight months from August 1, 2007 to March 31, 2008 after Mr. Mayer purchased the shares, and for the fiscal years 2009, 2010, 2011 and 2012:

Year-End	Revenues	Expenses	Income Before Taxes	Net Income
July 31, 2007	$298,038	$256,278	$41,897	$34,076
March 31, 2008	$475,255	$361,326	$113,933	$92,852
March 31, 2009	$809,773	$703,080	$104,843	$87,828
March 31, 2010	$1,083,309	$738,802	$344,886	$288,201
March 31, 2011	$1,372,322	$914,805	$454,181	$382,435
March 31, 2012	$834,039	$747,351	$88,413	$74,942

[20] Mr. Mayer testified that he expected that the net income for the company for 2013 would be in the area of $90,000 to $100,000.

[21] The following is a summary of the cash held by PHA Engineering Ltd., together with its long-term debt, the current position of its long-term debt and its retained earnings:

Year End	Cash	Long-Term Debt	Current Position of Long-Term Debt	Retained Earnings
July 31, 2007	$112,841	$Ø	$Ø	$205,006
March 31, 2008	$130,469	$104,667	$32,000	$38,898
March 31, 2009	$151,254	$74,667	$32,000	$126,725
March 31, 2010	$420,968	$42,667	$32,000	$414,926
March 31, 2011	$446,836	$10,666	$32,000	$772,361
March 31, 2012	$233,308	$Ø	$10,666	*$847,303 **$347,366

(*The figure of $847,303 at the March 31, 2012 year-end is the amount of the retained earnings before deduction of the $499,937 that was paid by way of dividends to the holding company.)

(**The figure of $347,366 at the March 31, 2012 year-end is the actual amount of retained earnings after the $499,937 was paid by way of dividends to the holding company.)

[22] With respect to the March 31, 2013 year-end, Mr. Mayer testified that he estimated that income of $90,000 to $100,000 would be added to the retained earnings of PHA Engineering Ltd. This would result in retained earnings as of March 31, 2013 in the range of $437,366 to $447,366, in addition to the $499,937 transferred to the holding company during the fiscal year ending March 31, 2012.

[23] The annual income of Mr. Mayer, for 2007 through 2012, adjusting for actual, not taxable dividends, and the pre-tax income of PHA Engineering Ltd. for the years ending March 31, 2008 through 2012 are as follows:

Year	Mr. Mayer	PHA Engineering Ltd.
2007	$101,034.91	*
2008	$95,394.88	**$113,933.00
2009	$99,716.16	$104,843.00
2010	$128,595.12	$344,886.00
2011	$124,495.80	$454,181.00
2012	$111,537.23	$88,413.00

(*The March 31, 2007 year-end income for PHA Engineering Ltd. is not included because Mr. Mayer did not buy the company until August 1, 2007.)

(**The 2008 year-end income for PHA Engineering Ltd. is for the eight months following Mr. Meyer’s purchase of the company.)

Ms. Mayer

[24] Ms. Mayer has her Grade 11 education. She was 17 when she was pregnant with Patricia. Between October 2001 when she began residing with Mr. Mayer, and March 2002, Ms. Mayer attended school while Mr. Mayer’s mother cared for Patricia. After Mr. Mayer purchased the house at 19 Rossdale Street, Ms. Mayer remained at home, caring for Patricia and looking after the household.

[25] Before Mr. and Ms. Mayer were married, Ms. Mayer enrolled in a one year Personal Service Worker course at the Toronto School of Business in Thunder Bay. Mr. Mayer supported her decision. Tuition was paid through the Ontario Student Assistance Program (OSAP). Ms. Mayer completed the classroom portion of the course. However, she found that the practical portion of the course, in a nursing home, worried her and she realized that this was not something that she wished to continue to pursue. She testified that she paid back OSAP by using the child tax credit of $100 per month. On the other hand, Mr. Mayer testified that he repaid the OSAP loan of about $6000 to $6,500 over four to five years.

[26] After Mr. Mayer purchased 19 Rossdale Street in March 2002, Ms. Mayer worked for five or six months at a corner store near the home as a cashier for minimum wage, seven hours per day, four to five days per week. She then worked at a restaurant as a hostess, at minimum wage. Ms. Mayer testified that she worked because she wanted something to do to get out of the house. Mr. Mayer supported this decision. During this time, Mr. Mayer was working Monday to Friday, 60 to 75 hours per week, including working out of town in the summers.

[27] After Noah was born in 2004, Mr. and Mrs. Mayer agreed that it was not practical for Ms. Mayer to continue to work at the restaurant, earning basically enough to cover her travel costs to work. The parties decided that Ms. Mayer should stay home on a full-time basis, taking care of the children and looking after the household, while Mr. Mayer worked at PHA Engineering Ltd. Mr. Mayer testified that he reduced his hours from 60 to 40 per week and did less out of town work. He said that he was happy to have Ms. Mayer at home with the children on a full-time basis. Mr. Mayer helped out with domestic duties.

[28] Ms. Mayer supported Mr. Mayer’s decision to purchase PHA Engineering Ltd. When Mr. Mayer increased the mortgage on the home to help finance the purchase, the bank required Ms. Mayer’s signature.

[29] In about 2008 or 2009, Ms. Mayer began to work for PHA Engineering Ltd, filing and cleaning for one hour per week. She was paid $200 per month at the beginning, increasing to $700 per month as of the date of separation. This was basically an income splitting arrangement rather than employment of any significance.

[30] When Mr. and Ms. Mayer separated in January 2010, they continued to live at 19 Rossdale Street. Mr. Mayer slept in the basement. This continued until December 2010, when Ms. Mayer moved in with Mr. Gary McCoy, at his parents’ home.

[31] From January 2010 until December 2010, while they were separated but living at 19 Rossdale Street, Mr. Mayer continued to pay the household expenses. He terminated Ms. Mayer’s employment with PHA Engineering Ltd. In March 2010, Mr. Mayer began to provide Ms. Mayer with $800 per month. Meanwhile, Ms. Mayer took a job as a cleaner with Molly Maid, earning approximately $500 every two weeks. She estimated that she earned approximately $12,000 during the year.

[32] For the two or three months after Ms. Mayer moved in with Mr. McCoy at his parents’ home in December 2010, until the end of February 2011, the children resided with Mr. Mayer at 19 Rossdale Street.

[33] In January 2011, the parties resolved the issue of the equalization of their net family property. Mr. Mayer paid Ms. Mayer an equalization payment of $197,505.67.

[34] On February 28, 2011, Ms. Mayer and Mr. McCoy, as joint tenants, purchased a home at 3123 Arthur Street West in Thunder Bay for $255,000. Ms. Mayer paid $100,000 in cash from her equalization payment and she and Mr. McCoy took out a mortgage for $155,000. The balance of the equalization payment, approximately $97,000 was used to furnish the home, replace the home’s septic system, pay legal fees and take a trip to Toronto. There is no money left from the equalization payment monies.

[35] In April 2011, Ms. Mayer took employment as a service advisor in the automotive department of a Canadian Tire store, working 40 hours per week at $11 per hour.

[36] On August 25, 2012, Ms. Mayer and Mr. McCoy had a child, Denon McCoy.

[37] In August 2012, Ms. Mayer went on maternity leave from Canadian Tire and began to receive employment insurance benefits. She received $6,878 in benefits in 2012. She testified that she would be returning to Canadian Tire full-time, working 40 hours per week at $13 per hour in July 2013. This would result in a yearly income of $27,040.

[38] After Ms. Mayer and Mr. McCoy moved into 3123 Arthur Street on February 28, 2011, Ms. Mayer and Mr. Mayer agreed that Patricia and Noah would reside with each of them during alternating weeks.

[39] This arrangement was formalized by the order of Pierce J., dated February 22, 2013, based on Minutes of Settlement. The order also provides that the respondents, Rosemary Arenovich and Bryan Wakefield, shall have access to Patricia two weekends out of four, from Friday at 4:00 pm until Sunday at 7:00 pm.

[40] In December 2011, Mr. Mayer increased his payment to Ms. Mayer from $800 per month to $1,000 for that month. In January 2012 the payment was increased to $1,100 per month. That payment has continued, on a without prejudice basis, through trial.

Mr. McCoy

[41] Mr. McCoy is employed at Accurassay Sales, testing mineral samples for mining companies. His income in 2012 was $33,405.81. He testified that he and Ms. Mayer pay all their expenses jointly. He testified that he consolidated his personal line of credit and his Visa account with the mortgage on 3123 Arthur Street with the result that there is approximately $179,000 owing to the bank. Mr. McCoy testified that in the 2.5 years that he and Ms. Mayer have resided together, they have not gone further into debt, but that they are not climbing out of debt as quickly as they should.

[42] Mr. McCoy testified that on his 2012 income tax return he claimed the three children, Patricia, Noah and Denon, as dependents. He said that for income tax purposes it was better that he, rather than Ms. Mayer, claim the children, because he was the higher income earner. Mr. Mayer had agreed that Ms. Mayer was to receive all the government benefits for the children. Ms. Mayer acknowledged in cross-examination that it was fair to say that Mr. McCoy regarded all three children as his dependents.

Mr. Wakefield

[43] The 2001 order that requires Mr. Wakefield to pay child support of $116 per month is based on imputed income of $14,400 per month. Mr. Wakefield filed a Financial Statement in the instant case, in 2010, showing that he received $928 per month in social assistance. Mr. Wakefield had been employed as a housekeeper at the Valhalla Inn from July 22, 2011 to June 16, 2012, earning $11 per hour for a 35-hour week. However, he quit that job and there is no evidence as to whether he has had employment income since that date. Ms. Mayer testified that while she resided with Mr. Mayer, Mr. Mayer never made an issue of the amount of support that she was receiving from Mr. Wakefield. Mr. Mayer testified that he encouraged Ms. Mayer to follow up with enforcement of Mr. Wakefield’s support but that he did not encourage her to return to court to seek an increase in the support amount of $116 per month.

Issues

Child Support

[44] Ms. Mayer requests support for Patricia and Noah commencing March 1, 2011. This is the date that she and Mr. McCoy moved into 3123 Arthur Street and the children began residing equally with her and Mr. Mayer during alternating weeks. Ms. Mayer is prepared to give Mr. Mayer credit for the voluntary payments which he made, of $800 per month from March 1, 2011 to November 1, 2011, $1,000 for December 2011 and $1,100 per month from January 1, 2012 forward.

[45] The parties agree that the determination of child support is dependent upon answers to the following questions:

a) what is the income of Mr. Mayer?

b) what is the effect of the shared custody arrangement?

c) what is the effect of Mr. Wakefield’s support obligation for Patricia? and

d) does Mr. McCoy have a support obligation for Patricia and Noah for which Mr. Mayer should receive credit?

a) What is the income of Mr. Mayer?

[46] Ms. Mayer submits that Mr. Mayer’s income for support purposes is the total of his personal income plus the pre-tax income of PHA Engineering Ltd, taking into consideration that the bulk of the company’s income as of a particular March 31 year-end was earned in the previous calendar year. For example, in 2009, Mr. Mayer’s line 150 personal income was $99,716. The pre-tax income for PHA Engineering as of March 31, 2010 was $344,886 (earned mostly in the 2009 calendar year). Therefore, Ms. Mayer submits, Mr. Mayer’s income for 2009 should be $99,716 + $344,886, for a total of $444,602. Using the same methodology, and using Mr. Mayer’s estimate of the company’s net income of $100,000 for the 2013 year-end, Ms. Mayer submits that Mr. Mayer had the following income:

2009 - $444,602 2010 - $589,231 2011 - $212,908 2012 - $215,297

[47] In her calculations, Ms. Mayer has not adjusted Mr. Mayer’s personal income to show actual rather than taxable dividends.

[48] Ms. Mayer submits that because the income of PHA Engineering Ltd. varies from year to year, the court should look back over the past few years to determine a fair and reasonable income for the purposes of both child and spousal support.

[49] Mr. Mayer submits that support should be based on his employment income of $96,463.44 for 2012.

[50] He submits that PHA Engineering Ltd. had two exceptionally profitable years in the fiscal years ending March 31, 2010 and March 31, 2011, but that these years were anomalies when the company had three contracts instead of the usual two contracts. Mr. Mayer submits that PHA Engineering Ltd. is a seasonal business which requires funds to pay its employees when work is not available, to ensure that the employees remain with the corporation, and that a high amount of cash is required to maintain operations.

[51] Mr. Mayer points out that he does not use the corporate profits to fund his daily life and that while the parties resided together, they lived on income similar to the income shown in his personal income tax returns.

[52] Mr. Mayer submits that if the income of PHA Engineering Ltd. is taken into account, the most recent year’s income should be used and the company’s two exceptional years should not be averaged in.

[53] Mr. Mayer further submits that if it is found that his income is over $150,000, the corresponding Guidelines Table amount of support would be inappropriate because this income level was not the accustomed standard of living while the parties resided together.

Discussion

[54] The sections of the Guidelines that are applicable to a determination of Mr. Mayer’s income are sections 16, 17. (1) and 18. (1):

Calculation of annual income

16. Subject to sections 17 to 20, a spouse’s annual income is determined using the sources of income set out under the heading “Total income” in the T1 General form issued by the Canada Revenue Agency and is adjusted in accordance with Schedule III.

Pattern of income

17. (1) If the court is of the opinion that the determination of a spouse’s annual income under section 16 would not be the fairest determination of that income, the court may have regard to the spouse’s income over the last three years and determine an amount that is fair and reasonable in light of any pattern of income, fluctuation in income or receipt of a non-recurring amount during those years.

Shareholder, director or officer

18. (1) Where a spouse is a shareholder, director or officer of a corporation and the court is of the opinion that the amount of the spouse’s annual income as determined under section 16 does not fairly reflect all the money available to the spouse for the payment of child support, the court may consider the situations described in section 17 and determine the spouse’s annual income to include

(a) all or part of the pre-tax income of the corporation, and of any corporation that is related to that corporation, for the most recent taxation year; or

(b) an amount commensurate with the services that the spouse provides to the corporation, provided that the amount does not exceed the corporation’s pre-tax income.

[55] In Wildman v. Wildman (2006), 2006 CanLII 33540 (ON CA), 82 O.R. (3d) 401 (C.A.), at para. 27 MacPherson J.A. observed that the purpose of s. 18 is to enable the courts to conduct a fair accounting of the money available for the payment of child support. He agreed with this comment of Martinson J. in Baum v. Baum (1999), 1999 CanLII 5387 (BC SC), 182 D.L.R. (4th) 715 (B.C.S.C.) at para. 128:

Valid corporate objectives may differ from valid child support objectives. The purpose of s. 18 is to allow the court to “lift the corporate veil” to ensure that the money received as income by the paying parent fairly reflects all of the money available for the payment of child support. This is particularly important in the case of a sole shareholder as that shareholder has the ability to control the income of the corporation.

[56] In Goett v. Goett, 2013 ABCA 216 [Goett], the Alberta Court of Appeal at paras. 10 and 11 stated:

10. Any interpretation of the child support guidelines demands a purposive approach, including establishing a fair standard of support for children that ensures that they continue to benefit from the financial means of both parents after separation (see 3(a) of the guidelines).

11. In developing the guidelines, the legislators recognized that determination of income (and disclosure of income) by reliance on s 16 alone may be insufficient or unreasonable in fixing a fair amount of income for the purpose of child support. Specifically, the true income of someone who is self employed or operating a business is not necessarily reflected in their personal tax returns for the purpose of determining child support obligations.

[57] The spouse that proposes that all or part of the pre-tax income of the corporation should be included in the income of the other spouse must demonstrate some basis on which s. 18 should apply. Then, as noted in Goett, supra para. 55 at para. 21: “Once the court is satisfied that it is appropriate to impute income, the onus shifts to the parent who utilizes the corporation to build up retained earnings or to incur expenses to establish that they are reasonable having regard to the business.”

[58] The rationale for this shift in onus is that the shareholder knows much more about the business than the recipient spouse and is therefore in the best position to explain why some or all of the company’s pre-tax income is not available for support or can identify individuals who could be called as witnesses to address the issue (see Elder v. Dirstein, 2012 ONSC 2852, para. 16 and Thompson v. Thompson 2013 ONSC 4001, para. 91.

[59] In Goett, supra para. 55, the Alberta Court of Appeal observed that criteria have been developed in the jurisprudence to inform the exercise of judicial discretion in applying s. 18, to balance, on the one hand, the fundamental unfairness where a parent uses a corporation to avoid paying child support with, on the other hand, the legitimate business expenses and capital requirements of the corporation. At para. 16, the court stated:

These criteria include the role the payor plays in the corporation, whether he or she is the shareholder, the degree of control the payor exercises, the evidence as to the availability of retained earnings to pay child support, and whether those earnings are required to manage the business and ensure its ongoing financial viability.

[60] In Bembridge v. Bembridge, 2009 NSSC 158 at paras. 14 and 33-39, MacDonald J. cautioned judges to be mindful that retained earnings are not cash ready to be withdrawn. Retained earnings are the cumulative net earnings of the company since the inception of the company, less dividends paid out. Retained earnings do not necessarily represent money that the shareholder can take out as income. Failure to appreciate this may undermine the operation of the corporation. Corporations have quite legitimate business reasons to accumulate retained earnings. Further, s. 18 of the Guidelines does not refer to retained earnings. Rather, it refers to the pre-tax income of the corporation.

[61] I am satisfied that Ms. Mayer has shown that it is appropriate to include the pre-tax income of PHA Engineering Ltd. in the annual income of Mr. Mayer, pursuant to s. 18 of the Guidelines.

[62] Mr. Mayer is the sole shareholder and the sole directing mind of PHA Engineering Ltd. and of its holding company 1852001 Ontario Limited. I accept that there are valid business reasons for PHA Engineering Ltd. to have significant retained earnings. The company operates on a seasonal basis. During the months when road building is not taking place and revenue is not coming in, the company requires the ability to continue to pay its staff. It also requires monies to purchase certain capital items. The largest capital expense appears to be vehicles for company business. However, I also accept that the cash that PHA Engineering Ltd. and 1852001 Ontario Limited are holding is more than enough to cover the operating and capital requirements of PHA Engineering Ltd. Mr. Mayer, himself, testified that PHA Engineering Ltd. transferred $499,937 to the holding company, not only for tax reasons but also because it was cash that PHA Engineering Ltd. did not need.

[63] As of March 31, 2012, PHA Engineering Ltd. had no long-term debt. The debt which it had at its March 31, 2008 year-end, totalling $104,667 in long-term debt and $32,000 as the current portion of long-term debt, had been reduced by March 31, 2012, to $10,666, as the current portion of long-term debt. That remaining current portion of the long-term debt will have been paid off during the year ending March 31, 2013. There is apparently a loan of $100,000 from the holding company to PHA Engineering Ltd., which presumably will be on the books as debt, but that is a debt between two companies controlled by Mr. Mayer.

[64] As of March 31, 2012, PHA Engineering Ltd. had cash of $233,308. It had also paid the holding company dividends of approximately $500,000. I note that the company’s year-end of March 31 is almost at the end of the seasonal downtime for the company when its need for cash on hand is the greatest. As of March 31, 2012, the combined cash of the two companies was $733,000. As of March 31, 2013, PHA Engineering Ltd. had income, net of taxes, of $90,000 to $100,000, increasing its retained earnings to well over $400,000, exclusive of the cash in the holding company. Mr. Mayer testified that the holding company has no debt.

[65] Although PHA Engineering Ltd. has capital requirements, it is not a capital intensive business. Its road-building contracts are with the Provincial Government. The Government presumably pays its invoices on a reasonably timely basis. The company does not have to carry accounts receivable for significant periods of time. Uncollectable accounts receivable will not be an issue.

[66] PHA Engineering Ltd. is financially stable. It is profitable. It is not in its development stage, needing to establish and increase its capital structure to survive and grow. Mr. Mayer gave no indication that the company has significant expansion plans that require large injections of capital. The company is adding 2 employees which, given the increase in employees from 6 or 7 when Mr. Mayer purchased the company, to its current 12 employees (before the two new employees are added), would indicate steady, incremental growth. There is no indication of any need for bank financing. The two new vehicles have effectively been purchased by cash, although there is an inter-company loan on the books. There is no evidence that there are any banking restrictions that require the level of retained earnings that the company has.

[67] The onus therefore shifts to Mr. Mayer to show why s. 18 should not apply. In my view, he has not discharged that onus. There is nothing to show that taking the pre-tax income of PHA Engineering Ltd. into consideration for child support purposes would be unfair or that the pre-tax income could not be utilized for child support. Including it in Mr. Mayer’s income would have no impact on the financial health of either the operating company or the holding company. As Huddart J.A. of the British Columbia Court of Appeal in Kowalewich v Kowalewich, 2001 BCCA 450, at para. 41, observed:

I note the use of pre-tax corporate income as a basis for the determination of child support does not strip a spouse of his available money. It is to use available money as a measuring rod for the purpose of fixing annual income and thus the amount of child support.

[68] The question then is, how much of the pre-tax corporate income should be included in Mr. Mayer’s income? How much is available for child support?

[69] Ms. Mayer moved out of the matrimonial home in December 2010. She agrees that child support should not start until March 1, 2011. During the fiscal year April 1, 2011 to March 31, 2012, PHA Engineering Ltd. had pre-tax income of $88,413. During the fiscal year April 1, 2012 to March 31, 2013, Ms. Mayer estimated the net corporate income at $90,000 to $100,000. It was the evidence of Mr. Mayer that it is usual for PHA Engineering Ltd. to have a two-contract year. This was the case for the years ending March 31, 2102 and March 31, 2013. Mr. Mayer has been familiar with the business of the company and its predecessor since he joined in 2000 after graduating from university. Both Mr. Mayer and Ms. Mayer gave their evidence in a straightforward manner. Both were credible. Ms. Mayer did not seek to contradict Mr. Mayer’s evidence that two road building contracts per year were normal for PHA Engineering Ltd. I have no reason not to accept Mr. Mayer’s evidence on the usual number of contracts. Although s. 18 of the Guidelines permits the court to consider the situations described in s. 17, including having regard to the spouse’s income over the last three years, which could capture the three-contract year ending in March 31, 2011, I do not believe that it would be fair and reasonable to attribute the income from an unusual year when there is no evidence that it formed part of a pattern of income during the 2.5 years that support has been payable and where there is no evidence that such income will be available in the future.

[70] In my opinion, it is fair and reasonable to include the pre-tax income of PHA Engineering Ltd. in the amount of $90,000, which is at the low end of Mr. Mayer’s estimate of net corporate income for the year ending March 31, 2013, and which is approximately the amount of corporate pre-tax income for the year ending March 31, 2012. This will be added to his 2012 personal income of $111,537.23, adjusted pursuant to Schedule III of the Guidelines to include actual rather than taxable dividends. I determine that Mr. Mayer’s income for support purposes is therefore $201,537.

b) What is the effect of the shared custody arrangement?

[71] I have found Mr. Mayer’s income for support purposes to be $201,537. I find Ms. Mayer’s income to be $18,757 in 2011, and $21,367.05 in 2012, according to her income tax returns, filed as exhibits. For the first six months of 2013, she received employment insurance benefits. Although she testified that she received employment insurance benefits commencing August 1, 2012 in the amount of $362 every two weeks, her 2012 income tax return shows employment insurance benefits of $6,878, presumably over the five months of August 1 to December 31, 2012, or the equivalent of $1,375.60 per month. Assuming these benefits continued at the same rate during the first six months of 2013, her income for the period January 1 to June 30, 2012, from employment insurance would be $8,253.60 (6 x $1,375.60). Ms. Mayer testified that when she returned to work with Canadian Tire Corporation in July 2013 she expected her earnings to be $27,040 per year. For the six months of July 1 to December 31, 2013, that would be $13,520. I find her income for 2013, from employment insurance and employment to be $21,773.60. I find her income going forward from January 1, 2014 to be $27,040.

[72] Section 9 of the Federal Child Support Guidelines deals with child support in a shared custody arrangement:

9. Where a spouse exercises a right of access to, or has physical custody of, a child for not less than 40 per cent of the time over the course of a year, the amount of the child support order must be determined by taking into account

(a) the amounts set out in the applicable tables for each of the spouses;

(b) the increased costs of shared custody arrangements; and

(c) the conditions, means, needs and other circumstances of each spouse and of any child for whom support is sought.

[73] Mr. Mayer submits that if the court finds that his income is over $150,000, it would not be appropriate to determine his obligation of support as set out in the applicable Table pursuant to s. 3 of the Guidelines.

[74] Section 4 of the Guidelines deals with incomes over $150,000:

4. Where the income of the spouse against whom a child support order is sought is over $150,000, the amount of a child support order is

(a) the amount determined under section 3; or

(b) if the court considers that amount to be inappropriate,

(i) in respect of the first $150,000 of the spouse’s income, the amount set out in the applicable table for the number of children under the age of majority to whom the order relates;

(ii) in respect of the balance of the spouse’s income, the amount that the court considers appropriate, having regard to the condition, means, needs and other circumstances of the children who are entitled to support and the financial ability of each spouse to contribute to the support of the children; and

(iii) the amount, if any, determined under section 7.

[75] Mr. Mayer submits that if it is found that his income exceeds $150,000, the corresponding Table amount would be excessive and would constitute a transfer of wealth from him to Ms. Mayer and it would not be reflective of the needs of the children. He submits that this would not reflect the accustomed standard of living while the partners resided together.

[76] I disagree with these submissions. There is a presumption in favour of the Table amount. The onus is on Mr. Mayer to rebut the presumption. I do not find that Mr. Mayer has shown that the Table amount of support for an income of $201,537 is inappropriate. The word “inappropriate” in s. 4 has been interpreted to mean “unsuitable” (see Francis v. Baker, 1999 CanLII 659 (SCC), [1999] 3 S.C.R. 250, at para. 41 [Francis]).

[77] In D.B.S. v. S.R.G., 2006 SCC 37, [2006] 2 S.C.R. 231, at para. 46, Bastarache J. reiterated the position he set out in Francis:

As I wrote in Francis, presumptively applicable Table amounts listed for payor parents earning over $150,000 may be altered when they “are so in excess of the children’s reasonable needs so as no longer to qualify as child support”.

[78] I do not agree that the Table amount for the income of Mr. Mayer, as found, represents a transfer of wealth to Ms. Mayer. It is only in those cases, as described by Bastarche J., where the presumptive Table amount is so in excess of the children’s reasonable needs that the Table amount could be seen as a transfer of wealth to the recipient parent. Even then, Bastarache J. cautioned in Francis that courts should not be too quick to find that Guidelines Table amounts enter the realm of wealth transfer or spousal support.

[79] I do not agree with the submission that the Table amount should not be paid because the level of income was not the standard of living while the parties resided together. I note that while the parties resided together, the pre-tax income of PHA Engineering Ltd. during the calendar years of 2007, 2008, 2009 and 2010 was higher, and in the case of 2009 and 2010 markedly higher, than the $90,000 that I have included in Mr. Mayer’s income. It was Mr. Mayer’s sole decision to leave all the pre-tax income in those years in the company. I also note that under the Guidelines regime, children are entitled to benefit from increases in the income of the payor. That is the very nature of the Tables.

[80] No evidence was led by either party by way of budgets for the children’s expenses and the actual expenditures of both parents in addressing the needs of the children, which would be necessary to conduct an analysis under s. 9(b) and (c) of the Guidelines as contemplated by Contino v. Leonelli-Contino, 2005 SCC 63, [2005] 3 S.C.R. 217 (see paras. 52-53).

[81] Mr. Mayer submits that there are very few increased costs related to the shared custody of the children, other than the purchase of clothing for the children, which the parties bear equally.

[82] Ms. Mayer submits that there has been an increase in costs as a result of the shared custody arrangement because she has had to purchase a home large enough for the children and because of duplication with clothes and toys.

[83] She submits that Mr. Mayer should pay the Guideline Table amount of support, without any set-off for her income.

[84] I am unable to assume, without evidence, that there have been increased costs because of the shared custody arrangement that require a departure from the first step of setting off the respective Table amounts. The set-off contemplates that each party will have fixed costs related to the children, including housing, food, clothing and transportation.

[85] The Guidelines require a fair contribution by each parent and a fair standard of living for the children. I take into account that although there is a large disparity between the incomes of Mr. and Ms. Mayer, Mr. McCoy is contributing to the expenses of the home. Ms. Mayer, Mr. McCoy and the children reside in a home that is larger and at least as well furnished as the home in which Mr. Mayer and the children reside. In considering s. 9(c), the court should take into account the goal that the children should enjoy a comparable, although not necessarily equal, standard of living in each home. Mr. Mayer has agreed that Ms. Mayer shall have all the government benefits available for the children. Mr. McCoy has deducted the children as dependents for income tax purposes. The time that the children spend in each household is equal. There is no primary residence. There is no evidence that Ms. Mayer has assumed more of the costs of raising the children, for example, by buying most of their clothing or paying for most of their extra-curricular expenses. I am satisfied that the respective Table amounts in the circumstances of this case will provide a fair standard of living for the children in each of the households and that there is no evidence that an adjustment of the set-off, upwards or downwards, is warranted.

c) What is the effect of Mr. Wakefield’s child support obligation for Patricia?

[86] Mr. Mayer submits that I should impute income to Mr. Wakefield in the amount of $20,000, based on the total of his earnings in 2011 – 2012 at the Valhalla Inn, said to be $11,175.76, and social assistance calculated at $10,870. Income of $20,000 results in Guidelines Table support of $160.

[87] Ms. Mayer is prepared to accept a reduction in the support payable by Mr. Mayer by the $116 that she receives from Mr. Wakefield pursuant to the 2001 court order.

[88] Although simply offsetting the support obligation of the stepfather by the support obligation of the birth father is not appropriate in many cases under s. 5 of the Guidelines, I will accede to Ms. Mayer’s position that in this case an offset of the monies actually received from Mr. Wakefield is an acceptable reduction. I see no basis to accept Mr. Mayer’s position that there should be a reduction for monies not being received and when there is no evidence that Mr. Wakefield should in fact be paying a larger amount of support.

(d) Does Mr. McCoy have a support obligation for Patricia and Noah for which Mr. Mayer should receive credit?

[89] Mr. Mayer submits that the income of Mr. McCoy in the sum of $33,405.81 should be taken into consideration in determining Mr. Mayer’s child support obligation. Mr. Mayer contends that his child support obligation should be reduced by the Table amount of $481 that he submits is payable by Mr. McCoy for Patricia and Noah, as his acknowledged dependents.

[90] Mr. Mayer refers to s. 5 of the Guidelines:

5. Where the spouse against whom a child support order is sought stands in the place of a parent for a child, the amount of a child support order is, in respect of that spouse, such amount as the court considers appropriate, having regard to these Guidelines and any other parent’s legal duty to support the child.

[91] Mr. Mayer stands in the place of a parent for Patricia. He submits that the amount of the child support order in respect of his obligation should take into consideration Mr. McCoy’s legal duty, as a parent, to also support Patricia.

[92] Ms. Mayer submits that Mr. Mayer’s support obligation should not be reduced by the Table amount commensurate with Mr. McCoy’s income.

[93] I do not accept Mr. Mayer’s submission on this issue. I will assume for the purposes of this submission, but without making a finding, that Mr. Mayer falls within the definition of “any other parent” within the meaning of s. 5 of the Guidelines. In my view, s. 5 of the Guidelines deals with the support obligations of a step-parent and any other non-custodial parent, such as the situation as regards Ms. Mayer and Mr. Wakefield. It does not deal with the situation where Mr. Mayer seeks to reduce his obligation by the obligation of Mr. McCoy, as a custodial parent. I agree with the observation of Aston J. in MacArthur v. Demers (1998), 166 D.L.R. (4th) 172 (Ont. Sup. Ct. Gen. Div. Fam. Ct.), at para. 28:

The words in section 5 “any other parent’s legal duty to support the child” would include the custodial parent, but the guidelines scheme assumes the custodial parent meets this duty by sharing his or her household standard of living with the child.

[94] Mr. McCoy meets his support obligation by providing his presumed contribution as a custodial parent of Patricia. (I note that the reduction of $481 that Mr. Mayer seeks is based on the Table amount for two children. Section 5 of the Guidelines only applies where the party seeking the reduction in his or her support obligation is not the child’s natural or adoptive parent. Mr. Mayer is the natural parent of Noah. Section 5 would have no application to Mr. Mayer’s obligation towards Noah.)

[95] In summary, for the purposes of child support, I find that Mr. Mayer’s income, inclusive of pre-tax income available for child support from PHA Engineering Ltd. under s. 18 of the Guidelines, is $201,537, for each of the years 2011, 2012 and 2013. The Table amount payable by Mr. Mayer, based on his income as found, is $2,600 per month. After subtraction of the $116 per month paid by Mr. Wakefield, his child support obligation is $2,484 per month.

[96] I find Ms. Mayer’s income to be as follows:

2011 $18,757.00 2012 $21,367.05 2013 $21,773.60

[97] The Table amount payable by Ms. Mayer, based on her income as found, is:

2011 $288.00 2012 $325.00 2013 $330.00

[98] Mr. Mayer’s support obligation, net of Mr. Wakefield’s payment of $116 per month, shall commence March 1, 2011, when the children began to reside with Mr. Mayer and Ms. Mayer on an equal basis.

[99] The total Table amount payable by Mr. Mayer during the 33 months from March 1, 2011 to November 30, 2013, less Mr. Wakefield’s payment of $116 per month, is $81,972 ($2,600 - $116 = $2,484 x 33 months).

[100] The offsetting Table amount payable by Ms. Mayer during that same period of time is:

March 1 – December 31, 2011 ($288.00 x 10 months) = $2,880.00 January 1 – December 31, 2012 ($325.00 x 12 months) = $3,900.00 January 1 – November 30, 2013 ($330.00 x 11 months) = $3,630.00 Total $10,410.00

[101] The offset amount payable by Mr. Mayer for those 33 months is $71,562 ($81,972 - $10,410).

[102] Mr. Mayer has paid:

(a) $800.00 per month from March 1, 2011 to November 30, 2011 ($800.00 x 9 months) $7,200.00 (b) $1,000.00 for December 2011 $1,000.00 (c) $1,100.00 per month from January 1, 2012 to November 30, 2013 ($1,100.00 x 23 months) $25,300.00 Total $33,500.00

[103] Mr. Mayer therefore owes retroactive child support as of November 30, 2013, in the sum of $38,062 ($71,562 - $33,500).

[104] Going forward, with Mr. Mayer’s income determined to be $201,537 and Ms. Mayer’s income determined to be $27,040, I fix ongoing child support at $2,087 ($2,600 - $397 = $2,203; $2,203 - $116 = $2,087).

Spousal Support

[105] Ms. Mayer seeks spousal support, commencing January 1, 2011, when she moved out of the matrimonial home at 19 Rossdale Road.

[106] Ms. Mayer submits that during cohabitation, which was eight years and three months, she was a homemaker and the primary caregiver for the children while Mr. Mayer financially supported her and the children.

[107] Ms. Mayer submits that she suffered an economic disadvantage arising from the marriage and its breakdown. She submits that in carrying out her role as homemaker and caregiver her earning potential was reduced and she was unable to obtain a post-secondary education which would have resulted in a better paying job than she receives from her employment with Canadian Tire Corporation.

[108] Ms. Mayer submits that while she was economically disadvantaged by her roles in the marriage, Mr. Mayer was able to focus on his career and to build a very successful company.

[109] Ms. Mayer submits that she is not disentitled to support because of her cohabitation with Mr. McCoy. To the extent that this cohabitation has an effect on spousal support, Ms. Mayer submits that it should result in a spousal support order at the low end of the range indicated by the Spousal Support Advisory Guidelines [SSAGs].

[110] Mr. Mayer submits that Ms. Mayer is not entitled to spousal support.

[111] He submits that Ms. Mayer did not suffer hardship as the result of the marriage or of the breakdown of the marriage.

[112] Mr. Mayer submits that Ms. Mayer benefitted from the marriage, going from subsidized housing at age 20, with a young child and no significant income, to a comfortable lifestyle paid for by Mr. Mayer. After the breakdown of the marriage, she received an equalization payment of $197,000, she took steady employment with Canadian Tire and re-partnered with Mr. McCoy in a stable relationship, enjoying a standard of living equivalent to or greater than the standard of living that she enjoyed while cohabiting with Mr. Mayer. She and Mr. Mayer share equally in the parenting of Patricia and Noah and Mr. Mayer is paying support for the children.

[113] Mr. Mayer acknowledges that the fact that Ms. Mayer has re-partnered does not disentitle her to support. However, he submits that this re-partnering should be taken into account when determining her entitlement to support based on need. Mr. Mayer points out that while re-partnering does not disentitle a spouse to support, marriage itself does not automatically entitle a spouse to support.

[114] Mr. Mayer submits that Ms. Mayer chose not to pursue her education as a personal support worker and that there is no evidence that her household responsibilities prevented her from pursuing her education.

[115] Mr. Mayer submits that there is no basis on which to award compensatory or non-compensatory spousal support.

Discussion

[116] The relevant provisions of the Divorce Act on the issue of spousal support are contained in s. 15.2:

15.2(1) A court of competent jurisdiction may, on application by either or both spouses, make an order requiring a spouse to secure or pay, or to secure and pay, such lump sum or periodic sums, or such lump sum and periodic sums, as the court thinks reasonable for the support of the other spouse.

(4) In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including

(a) the length of time the spouses cohabited;

(b) the functions performed by each spouse during cohabitation; and

(c) any order, agreement or arrangement relating to support of either spouse.

(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

(b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

(c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

(d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

[117] None of the four statutory support objectives set out in s. 15.2(6) is paramount. All must be considered (see Bracklow v. Bracklow, 1999 CanLII 715 (SCC), [1999] 1 S.C.R. 420, at para. 35 [Bracklow]). The judge must consider the factors set out in s. 15.2(4) in light of those objectives “and exercise his or her discretion in a manner that equitably alleviates the adverse consequences of the marriage breakdown” (para. 36).

[118] There are three conceptual bases for entitlement to spousal support: (1) compensatory, (2) contractual and (3) non-compensatory. The starting position is that marriage is a “‘joint endeavour’, a socio-economic partnership” (Bracklow, supra para. 116 at para. 49). In considering compensation, the court must ask what loss the marriage or marriage breakdown caused that would not have been suffered otherwise. “But even where loss in this sense cannot be established, the breakup may cause economic hardship in a larger, non-compensatory sense” (Bracklow, supra para. 116 at para. 41).

[119] Entitlement is established if any one of the four statutory objectives are met.

[120] I am satisfied that Ms. Mayer is entitled to spousal support.

[121] It is clear that during cohabitation Ms. Mayer was financially dependent on Mr. Mayer. Apart from modest part-time work at the beginning of the marriage, Ms. Mayer had no significant income. In the early years of the relationship, before the birth of Noah, Mr. Mayer worked 60-hour weeks and was out of town on business during many weekdays. Ms. Mayer’s role in the partnership from the outset was homemaker and caregiver, while Mr. Mayer’s role was financially supporting his family. After Noah was born in 2004, the parties agreed that there was no point in Ms. Mayer continuing to work at jobs that paid her very little and that she should remain at home as a full-time homemaker and caregiver. Mr. Mayer testified that he was happy with the arrangement which the parties struck, where each had primary responsibility for the different roles in their partnership. Mr. Mayer was able to devote himself to his professional career and his business, in no small part because Ms. Mayer was prepared to devote her time to the household and the children.

[122] Ms. Mayer supported Mr. Mayer’s decision to purchase PHA Engineering Ltd., including agreeing to an increase in the mortgage on the home to finance the purchase. The business has been highly successful which I regard as an economic advantage to Mr. Mayer arising from the roles assumed in the marriage. Ms. Mayer is entitled to compensatory support in recognition of the benefit conferred on Mr. Mayer.

[123] I also conclude that because of the respective roles assumed, especially after Noah was born, that there has been an economic disadvantage to Ms. Mayer because she was not able to establish a career or pursue further education. I accept that Mr. Mayer was supportive of Ms. Mayer’s enrolment in the personal support worker program early in the relationship and that it was her decision to leave the program. However, I am also prepared to accept that when Mr. Mayer and Ms. Mayer agreed that she was to stay home after Noah’s birth while Mr. Mayer directed his efforts at furthering his career, that arrangement did not provide her with an opportunity to further her education or acquire job skills that would allow her to obtain employment other than in a job similar to the position of a service representative which she presently has at Canadian Tire Corporation.

[124] I accept that Ms. Mayer, too, has experienced advantages form the marriage. The lifestyle she had during the marriage was a significant improvement from that which she had prior to her cohabitation with Mr. Mayer. She has received a sizeable equalization payment of $197,000 following the end of an eight-year marriage. However, having found entitlement, necessary adjustments can be made on the amount and duration of support to be awarded to reflect these advantages.

[125] I am also satisfied that Ms. Mayer has established entitlement on non-compensatory principles. During the marriage she had an arrangement whereby Mr. Mayer took care of her financial needs. After she left the matrimonial home in December 2010, she earned $18,757 in 2011. Her projected earnings have gone up to $27,000. However, there is a marked difference between her income and that of Mr. Mayer. I find that Ms. Mayer has established need for support and that Mr. Mayer has the ability to pay, unrelated to compensation for the respective roles assumed.

[126] I agree with Mr. Mayer’s submission that although Ms. Mayer’s cohabitation with Mr. McCoy does not disentitle her to spousal support, that relationship should be taken into consideration in assessing the extent of her need for support from Mr. Mayer.

[127] I take into account that the parties cohabited for approximately eight years, which is not a long-term relationship. I also take into consideration that Ms. Mayer was a relatively young 29 years of age when she and Mr. Mayer separated. This ties in with the objective set out in s. 15.2(6)(d) of the Divorce Act that an order of support should “in so far as practicable promote the economic self-sufficiency of each spouse within a reasonable period of time.”

[128] I have made findings in relation to child support as to the incomes of Mr. and Ms. Mayer. Those findings will apply to the issue of spousal support. Although the Guidelines apply only to child support, it has been found appropriate to rely on the determination of Guideline income for spousal support. In Brophy v. Brophy (2002), 2002 CanLII 76706 (ON SC), 32 R.F.L. (5th) 1 (Ont. Sup. Ct.) at para. 35, Linhares de Sousa J. stated:

I see no reason why the principle enunciated in s. 18 of the Child Support Guidelines should not apply to spousal support as well. In essence, both situations relate to a paying spouse’s ability to provide support to a dependent.

(See also Murray v. Murray (2003), 2003 CanLII 64299 (ON SC), 66 O.R. (3d) 540 (S.C.J.), at para. 57 [Murray], rev’d on other grounds (2005), 2005 CanLII 30422 (ON CA), 76 O.R. (3d) 546 and Ludmer v. Ludmer, 2013 ONSC 784 at para. 151.)

[129] The application in this case, and the claim for spousal support, was brought in 2010. I am satisfied that a determination of appropriate spousal support should go back to January 1, 2011, as requested by Ms. Mayer.

[130] Ms. Mayer presents a variety of SSAG calculations, with Mr. Mayer’s income set at $200,000, $275,000 and $350,000, and Ms. Mayer’s income set at $25,200.

[131] Although the calculations relating to the respective incomes of $200,000 and $25,200 are not exactly the same as the incomes which I have found, they are close. These calculations result in child support of $2,194 per month and a range of monthly spousal support from a low of $3,047, through a mid-point of $3,698 and a high of $4,227. The low range of these calculations, on a shared custody basis, result in each party having 50% of their combined net disposable income.

[132] Mr. Mayer has also presented a number of SSAG calculations. These set Mr. Mayer’s income at scenarios of $95,000 and $125,000, somewhat removed from the income of $201,537 which I have found for Mr. Mayer.

[133] I have run SSAG calculations for the incomes which I have found for 2011, 2012 and 2013. They each show a low end of approximately $3,100 to $3,500 per month, based on a shared custody arrangement, resulting in each of Mr. Mayer and Ms. Mayer having 50% of their combined net disposable income. The mid and high points of the range result in Ms. Mayer having a greater than 50% of the net disposable income. I see no basis on which the mid and high points of the range would be appropriate.

[134] However, in my view, it would not be appropriate to award Ms. Mayer retroactive monthly spousal support in the area of $3,100 to $3,500.

[135] Firstly, to do so would fail to take into account the contributions that Mr. McCoy makes to the expenses of the household that he and Ms. Mayer share. Mr. McCoy’s annual income is $33,405. Although his income and his relationship with Ms. Mayer does not disentitle her to spousal support, it is a consideration in assessing the condition, needs and other circumstances of Ms. Mayer under s. 15.2(4) of the Divorce Act.

[136] Secondly, a lump sum award today is not tax deductible for Mr. Mayer nor is it taxable in the hands of Ms. Mayer. In submissions, counsel for Mr. Mayer asked that if a retroactive award was made, this fact should be taken into account for that portion of the award encompassing 2011, on the assumption that a spousal support award for the current taxation year and the immediately previous taxation year would be taxable/deductible. However, in the case law, it appears that this court cannot order that a retroactive support order be taxable/deductible even if the order relates to the current year and immediately preceding year, where the payments have not in fact been made in those years. In Murray v. Murray, supra para. 127, Croll J., at para. 108, stated with respect to a retroactive spousal support award:

However, had this support been paid periodically through the years in question, it would have been deductible to Mr. Murray for income tax purposes. Similarly it would have been taxable to Ms. Murray. Any lump sum award made today is not deductible to Mr. Murray, and it is not taxable to Ms. Murray. In my view, in the interest of fairness, it is important that the retroactive spousal support award be tax neutral, that is, that it have roughly the same consequences for the parties as would have been the case had the support payments been made on a periodic basis during the years in question.

(See also Bentley v. Gillard-Bentley, 2013 ONSC 722 at para. 51; O’Neill v. O’Neill, 2007 CanLII 14631 (ON SC), 39 R.F.L. (6th) 72 (Ont. Sup. Ct.) at para. 146; and James G. McLeod & Alfred A. Mamo, Annual Review of Family Law 2011 (Toronto: Carswell, 2011), at p. 570.)

[137] Although no evidence was presented on income tax rates, which would differ as between Mr. Mayer and Ms. Mayer because of their different incomes, it would be an error not to make an adjustment to take into account obvious income tax consequences. I also have the benefit of the income tax information contained in the various SSAG calculations presented to me by the parties. In the circumstances, I will make a notional tax reduction of 30% as the best, albeit imperfect, way of making the retroactive spousal support award tax neutral for both parties.

[138] Taking into account the SSAG calculations and Mr. McCoy’s contributions to Ms. Mayer’s expenses in what appears to be a long-term, stable relationship with a new child, and taking into account the objectives and factors set out in s. 15.2 of the Divorce Act, as discussed, I am of the view that spousal support of $2,500 per month, commencing January 1, 2011, would be fair and reasonable. He will also get credit for the two months he paid $800 to Ms. Mayer while he had the children in January and February 2011. There will be a retroactive support award going back 35 months to January 1, 2011, calculated on the basis of $2,500 per month, less 30% for notional income tax, reflecting that Mr. Mayer will not get a tax deduction and Ms. Mayer will have the benefit of not paying income tax on the retroactive award. The retroactive award is $59,650. This is calculated on the basis of 35 months x $2,500 which equals $87,500. There will be a 30% reduction for notional income tax, which is a reduction of $26,250. Mr. Mayer shall also receive credit for the $800 per month which he paid Ms. Mayer for January and February 2011 while she was living with Mr. McCoy at the home of Mr McCoy’s parents and the children were residing with Mr. Mayer.

[139] Spousal support for the month of December 2013 will also be $2,500. Going forward from January 1, 2014, with Ms. Mayer’s income determined to be $27,040 and Mr. Mayer’s income determined to be $201,537, I fix Mr. Mayer’s spousal support at $2,250 per month.

[140] The SSAGs suggest spousal support for an indefinite (unspecified) duration subject to variation and possibly review, with a minimum duration of four years and a maximum duration of nine years. Quantum and duration are interrelated parts of the SSAG formula. The SSAGs cannot be used to help establish the amount of support without taking into account what they have to say about duration.

[141] As of January 3, 2014, the parties will have been separated for four years.

[142] I have determined that the duration of the spousal support award should be six years from the date of separation, namely, from January 3, 2010.

[143] I have come to this conclusion for a number of reasons.

[144] As of the date of separation, Ms. Mayer was a relatively youthful 29 years of age.

[145] Cohabitation was for a period of eight years which, while not a short-term marriage, was by no means a long-term marriage.

[146] Ms. Mayer is in good health. She is gainfully employed at a steady job which, while it pays her a modest income of approximately $27,000 per year, has since July 2013 paid her a greater income than she earned prior to, during or after separation.

[147] Having entered into the eight-year relationship with Mr. Mayer with no assets, she received an equalization payment of almost $200,000 after separation.

[148] She and the children reside in a large, comfortable, well-furnished home.

[149] A year after separation, she began residing with Mr. McCoy, who is also gainfully employed. They are a stable family unit, with a child born of their relationship.

[150] Mr. Mayer is sharing equally in the care of Patricia, whom he has willingly taken on as his own daughter, and of Noah. Mr. Mayer will be paying significant child support.

[151] It is reasonable to expect that at age 29 on separation, the objective of promoting Ms. Mayer’s self-sufficiency under s. 15.2(6)(d) of the Divorce Act within a reasonable period of time is significant.

[152] I am satisfied that in these circumstances, a support award of six years’ duration, which is two years more than the minimum duration, and three years less than the maximum duration suggested by the SSAGs, complies with the factors and objectives of s. 15.2, recognizes the economic disadvantages arising from the marriage and the breakdown of the marriage, recognizes Ms. Mayer’s needs and recognizes the desirability of a transition towards self-sufficiency.

Divorce

[153] Both Mr. Mayer and Ms. Mayer wish to have a divorce granted. Based on the evidence at trial, a divorce order shall issue.

Conclusion

[154] In summary, for the reasons given:

(a) the parties shall be divorced and the divorce shall take effect 31 days after the date of this order;

(b) Mr. Mayer shall pay to Ms. Mayer retroactive child support as of November 30, 2013, in the sum of $38,062;

(c) commencing December 1, 2013, Mr. Mayer shall pay to Ms. Mayer child support for Patricia and Noah in the sum of $2,087 per month based on a shared custody arrangement under s. 9 of the Federal Child Support Guidelines, based on income for Mr. Mayer of $201,537, based on income for Ms. Mayer of $27,040, and based on the sum of $116 per month received by Ms. Mayer from Mr. Wakefield for the support of Patricia;

(d) Mr. Mayer shall pay to Ms. Mayer retroactive spousal support as of November 30, 2013, in the sum of $59,650;

(e) commencing December 1, 2013, Mr. Mayer shall pay to Ms. Mayer spousal support in the sum of $2,500 for December 2013, and $2,250 per month thereafter. This spousal support shall terminate after the final payment on December 1, 2015;

(f) the payment of retroactive child support and retroactive spousal support described in paragraphs (b) and (d) shall be made within 120 days of this order. To the extent that payment is made from PHA Engineering Ltd. and 1852001 Ontario Ltd., or either of them, the amount of the payment shall not be included in Mr. Mayer’s income for purposes of re-calculating child or spousal support;

(g) on June 1 of each year, commencing June 1, 2015, Mr. Mayer and Ms. Mayer shall deliver to the other a copy of his or her income tax return and accompanying T-4 slips for the previous taxation year;

(h) Ms. Mayer shall receive the Child Tax Benefit and other government benefits related to the children;

(i) each of Ms. Mayer and Mr. Mayer shall maintain extended health care coverage for the children for so long as such coverage is available as an incident of their employment. Ms. Mayer shall use her best efforts to ensure that the children are covered under any extended health care plan of Mr. McCoy as may be available as an incident of his employment;

(j) a Support Deduction Order shall issue, other than for the retroactive child and spousal support referred to in paragraphs (b) and (d) which shall be paid directly to Ms. Mayer.

Costs

[155] If the parties are unable to agree on costs, they shall speak to the Trial Co-ordinator on or before December 31, 2013 to arrange a date to speak to the issue.

___”original signed by”

The Hon. Mr. Justice D. C. Shaw

Released: November 25, 2013