Court File and Parties

COURT FILE NO.: FS-21-025876 DATE: 202304 14 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Paul Joseph Mullan, Applicant AND: Kelly Jean Mullan, Respondent

BEFORE: W.D. Black J.

COUNSEL: Karen Ballantyne, for the Applicant Jeff Rechtschaffen, for the Respondent

HEARD: March 22-24, and March 27, 2023

Endorsement

Overview

[1] The parties were before me for a trial on a limited array of issues.

[2] To their credit, the parties and their counsel had resolved parenting and property disputes shortly before the date set for trial, leaving issues of child support and spousal support for me to determine.

[3] There are also questions of costs that the parties have reserved relative to those resolved (parenting and property) issues, but the parties agreed that the overall costs decision will to some extent flow from my findings on the support items such that costs, including costs of the parenting and property issues, are deferred on consent pending this decision.

Relevant Background Facts

[4] Many of the background facts are uncontroversial.

[5] The parties met in about 2008, when they were both living in the Boston, Massachusetts area.

[6] At that time, the applicant, Mr. Mullan, had his own company (Screenmasters, LLC), which distributed construction equipment. He was originally from Northern Ireland. Ms. Mullan, was born and raised in Vermont and had been a professional dancer earlier in her life. She worked as a teacher and as the director of a dance program at a private school in the Boston area.

[7] The parties moved in together sometime in 2009 and were married on July 2, 2010. They have one child, their daughter Eve, who was born on September 11, 2009.

[8] Around the time the parties first got together, Mr. Mullan’s business was failing, and was ultimately assigned into bankruptcy. Documents from the Bankruptcy proceedings were entered into evidence before me, and they indicate that those proceedings which led to the sale of the parties’ house in Waltham, Massachusetts and other assets, were well advanced by 2012.

[9] In that year, the parties moved to Mr. Mullan’s family’s home in Northern Ireland. Mr. Mullan worked for a time in his father’s company in the insurance industry, but it appears that the situation was not ideal for the parties, and they returned to North America in 2014, settling in Toronto.

[10] The parties lived together for a few years in Toronto, and then separated in either late 2020 or early 2021. They disagree about the date of separation, but agree that nothing turns on that date for purposes of the support issues.

The Parties’ Employment from 2014 to Date

[11] Since arriving in Toronto in 2014, Mr. Mullan has worked selling heavy machinery for a series of companies. Since February of 2021, he has worked with Frontline Machinery Ltd. The question of and a dispute over Mr. Mullan’s compensation in the years since 2014, and particularly since 2021, feature prominently here.

[12] Ms. Mullan, for her part, has not worked outside the home since coming to Toronto. She has, since September of 2020, been pursuing a PhD (in dance studies) at York University. In connection with those studies, from which Ms. Mullan now expects to receive her PhD in 2026, Ms. Mullan has received and continues to receive funding in the nature of bursaries and grants. As at the time of trial, she was considering and in one case applying for administrative and/or teaching positions on a part-time basis to supplement the funding she receives.

[13] The determination of Ms. Mullan’s income, through grants and bursaries, and additional amounts potentially to be attributed to her, was also contentious at this trial.

[14] It is agreed that Mr. Mullan’s employment over the years has required him to travel a great deal, both by car and – particularly in some of his jobs – by plane. This meant that a majority of the parenting for Eve was undertaken by Ms. Mullan (a fact that Mr. Mullan acknowledges).

[15] In part, as a result of Mr. Mullan’s frequent travel and resulting absence from the home, the parties grew apart. There were increasing tensions between them over such questions as to whether or not Ms. Mullan should find work outside the home to supplement the family’s income, and whether or not Mr. Mullan spent too much time and money, when in Toronto, at local bars.

Post-Separation Payment

[16] When Mr. Mullan left the matrimonial home in early 2021, he initially continued to deposit his income into a joint account that the parties maintained. However, when Ms. Mullan directed $12,000.00 she had received in connection with her PhD studies out of the joint account and into a personal account around the beginning of June of 2021, Mr. Mullan in turn stopped depositing his employment income into the joint account, and instead had it deposited into a personal account.

[17] Thereafter, on a monthly basis, Mr. Mullan paid the rent for the matrimonial home in the amount of $2,450.00. Mr. Mullan’s evidence was that he also paid amounts due on joint debts (lease payments on a car and interest payments on a consolidated loan), and that he gave Ms. Mullan an additional amount of $2,500.00 just before Christmas of 2021.

[18] Ms. Mullan, understandably, was finding it difficult, notwithstanding Mr. Mullan’s payment of the rent, to make ends meet for herself and her daughter without any support payments from Mr. Mullan.

Order of Davies J. on February 11, 2022

[19] The matter was addressed at a case conference before Davies J. on February 11, 2022. At that conference, the parties consented to an Order pursuant to which Mr. Mullan has since then been paying child support of $1,515.00 per month, and spousal support of $2,400.00 per month. Mr. Mullan stopped paying the rent for the matrimonial home (of $2,450.00 per month), but agreed, in addition to the child and spousal support payments, to contribute 70% to the payment of Eve’s s. 7 expenses. As Davies J.’s endorsement confirms, these payments were based on an estimated income of $180,000.00 for Mr. Mullan, and represent figures between the mid and high range of the spousal support guidelines (the “SSAGs”).

[20] Importantly, and the subject of considerable evidence and argument at trial, in addition to being based on an estimated income of $180,000.00 – about which there is a dispute – Her Honour’s endorsement confirmed that:

“The quantum of support will be reviewed on a semi-annual basis on July 1st and January 1st commencing on July 1, 2022. If Mr. Mullan has made the equivalent of more than $180,000.00 per year in salary and commission, the support payments will be adjusted accordingly.”

Mr. Mullan’s Income and Payments in 2022

[21] Although it is clear and not disputed that Mr. Mullan made more than $180,000.00 in 2022, at no point before trial were the support payments reviewed and adjusted as contemplated by Davies’ J.’s endorsement.

[22] Instead, Mr. Mullan made what he described as two “top up” payments; the first in July of 2022 in the amount of $4,000.00; and the second in the amount of $2,000.00 in January of 2023.

Mr. Mullan’s Position on Future Payments

[23] Mr. Mullan’s position at trial was that the arrangement set in place through Davies J.’s endorsement should continue, albeit with some modification.

[24] That is, Mr. Mullan proposes that the income referenced in that endorsement, $180,000.00 per year, continue to be the assumed income for purposes of calculating child support and spousal support going forward.

[25] Essentially in keeping with his approach to Davies J.’s Order until now, he also proposes that he will make a top up payment on July 1st of each year, equivalent to 25% of his gross income in excess of $180,000.00, in the event that he has earned more than $180,000.00 in the prior year.

[26] However, Mr. Mullan, while remaining prepared to pay child support in the same amount as ordered by Davies J. (based on an income of $180,000.00), also argues that the spousal support he pays should now be based on the mid-range of the table amounts. He says that this should be the case inasmuch as the support payments based on mid-range, combined with the income earned by and properly imputed to Ms. Mullan will still exceed Ms. Mullan’s monthly budget. He also notes, and offers as additional bases for a mid-range award, that (as part of the property settlement) he is bearing all of the debt incurred during the marriage and that in the arrangement proposed by Mr. Mullan, Ms. Mullan will receive, on a gross monthly basis, approximately $2,000.00 more than what will be left to Mr. Mullan.

[27] Mr. Mullan acknowledged in cross-examination that $180,000.00 proved in 2022, and may well prove going forward, to be an underestimation of Mr. Mullan’s income. In 2022, his income was in fact about $230,000.00. He acknowledged as well that therefore, his resulting support payments, based on an assumed income of $180,000.00, were and may continue to be on the low side. He also acknowledged that his “top up” payments in July of 2022 and January of 2023, did not entirely bridge the gap created by the underestimation of his income.

[28] However, Mr. Mullan maintains, because the “base salary” component of his compensation is $120,000.00, and the balance of his earnings is comprised of commissions, then if his commissions are lower than expected he will have trouble paying his ongoing obligations, while making support payments, because he would have to rely solely or largely on his base income of $120,000.00.

Discussion of Mr. Mullan’s Position on Income and Payments

[29] While I recognize a certain degree of unpredictability relative to an income substantially comprised of commissions, I have some difficulty with Mr. Mullan’s position in this regard.

[30] First, if one looks at Mr. Mullan’s income for the last five years, on average it has exceeded $180,000.00, and has trended upwards.

[31] Using the numbers contained in a chart included in Mr. Mullan’s written closing submissions, his average income for the last five years has been just over $210,000.00. In two of those years, as a result of changes in his employment (moving from one employer to another), he did not work for a full year. Even still, his lowest earning years in the last five years have been in the $160,000.00 – $165,000.00 range. His highest income in any of those years was $278,834.43, and as noted, his income in 2022 was just over $230,000.00 ($230,896.23).

[32] Moreover, his income for the first month of 2023 was almost $40,000.00.

[33] Mr. Mullan fairly observes that his income at points in time, and the apparent trend in that income, is in part a function of the timing of commission payments, which in turn is a function of timing of collection of amounts owing by customers to his employer. He says that this timing is unpredictable and may artificially inflate his overall income if assumed to reliably recur.

[34] Even allowing for the ebbs and flows of commissions and allowing for some degree of unpredictability, I believe that an assumed income of $180,000.00 will continue to represent an underestimation of Mr. Mullan’s income, and that support payments based on that income will predictably undercompensate Ms. Mullan relative to whatever table amounts are selected based on that assumed income. It also strikes me that relying on monitoring Mr. Mullan’s income at twice‑annual intervals and potentially requiring a “top up” payment at any such interval is a cumbersome and inefficient way of approaching Mr. Mullan’s obligations to Ms. Mullan and Eve.

[35] Moreover, as noted, Mr. Mullan acknowledges that the top up payments he made relative to his 2022 income were inadequate, and I am loath to leave the matter to a mechanism that is fraught with potential, on a recurring basis, for disagreement about calculations and amounts owing.

Finding re Income to be Used

[36] As discussed, Mr. Mullan’s average income over the last five years has been just over $210,000.00 per year (including partial years in which he has transitioned employment), and the trend appears to be upwards. In the circumstances, I find that the appropriate income to use as the basis for calculating support payments is $225,000.00 per annum. I accept Mr. Mullan’s suggestion that on an annual basis, on July 1, Mr. Mullan’s prior year’s income, based on the gross amount reported on his tax return, should be disclosed, and that if his income has exceeded the $225,000.00 figure, he should make a top up payment to Ms. Mullan equivalent to 25% of his gross income in excess of $225,000.00.

Discussion re Mid-Range versus High End of Range

[37] I am also not persuaded that Mr. Mullan’s payment of spousal support should be based on the mid-range.

[38] His first purported basis for that position, asserting that even at the mid-range and even based on an income of $180,000.00, the spousal support payments thus calculated will exceed Ms. Mullan’s monthly budget, I find to be illusory.

[39] Ms. Mullan was cross-examined at some length about her monthly budget, and fairly acknowledged that the budget she presented for purposes of this litigation was in the nature of a proposed budget rather than precisely reflecting her current expenses.

[40] However, it was also evident that her actual monthly expenditures were curtailed by virtue of her limited income. As such, Mr. Mullan’s position is akin to saying “because you can live on that amount if you have to, you should live on that amount”.

[41] The second basis for Mr. Mullan’s argument for the mid-range is because he has shouldered, as part of the property settlement, pre-existing debts of the marriage.

[42] While this is so, it bears noting that the two items for which Mr. Mullan assumed responsibility are the remaining payments on a car loan and servicing and ultimately paying off a consolidated loan taken in large measure to pay off credit card debts.

[43] The origins of these debts were disputed between the parties, but there seems little doubt that the vehicle for which the loan was owing was purchased at the behest of Mr. Mullan and that he was significantly responsible for the debts for which the consolidation loan was obtained. Arguably, therefore, it was entirely appropriate for him to assume those obligations as part of the property settlement (a proposition that perhaps informed his willingness to do so).

[44] Moreover, the helpful and authoritative, Spousal Support Advisory Guidelines: The Revised User’s Guide, (Department of Justice: Professor Carol Rogerson and Professor Rollie Thompson: April 2016) emphasizes that “the mid-point of the SSAG ranges for amount should NOT be treated as the default outcome”.

[45] “If anything” say the authors, “the ‘with child’ support cases should more often resolve in the upper half of the range”. This is because “the formula already adjusts for “average” ability to pay”, and because “most of these cases are strongly compensatory and there is great “need” in the home of the primary caregiver for the children, which should push amounts higher in the range”.

[46] Here, the fact that Ms. Mullan was undisputedly the primary caregiver for Eve is offset slightly by the fact that Eve is an only child. Nonetheless, there is a clear compensatory imperative in this case, and it is conceded by Mr. Mullan that there are non-compensatory (needs-based) considerations as well, and taking these various factors into account, the choice made before Davies J. for a figure between the mid and high range in my view remains apt.

Income to be Imputed to Ms. Mullan

[47] As noted, there is also disagreement as to what income to attribute or impute to Ms. Mullan.

[48] Mr. Mullan’s position is that if one combines her actual income by way of PhD funding, with imputed income for the part-time employment for which Ms. Mullan has recently applied, a figure of $60,652.00 should be used.

[49] Ms. Mullan contends that, although she has applied for part-time work, there is no certainty that she will get the job.

[50] In my view, some imputation of income is appropriate for Ms. Mullan, and I find that an overall figure of $55,000.00, combining existing funding with modest imputed income, is appropriate.

Divorcemate Calculations

[51] If I plug these figures into Divorcemate, the figure for Child Support is $1,839.00 per month, and the mid and high range figures for spousal support are $3,563.00 and $4,340.00, respectively. Taking a figure between those two points, which appears to divide the net disposable income roughly equally, I believe $3,750.00 per month is appropriate, and I order that Mr. Mullan pay monthly child support in the amount of $1,839.00, and monthly spousal support in the amount of $3,750.00.

[52] Given the disagreement about what income to impute to Ms. Mullan, and the possibility that she will land a part-time job in the near term (or at some later point), Ms. Mullan, like Mr. Mullan, is to disclose on July 1st of each year her income for the prior year, and if her income exceeds the $55,000.00 that I have imputed to her, then the parties may discuss an adjustment to the support payments. If no agreement is reached, the parties may bring that question back to the court.

Proposed Review of Ms. Mullan’s Income in 2026

[53] In addition, it is anticipated, as noted above, that Ms. Mullan will receive her PhD in the spring of 2026. The expectation is that soon thereafter, Ms. Mullan will be in a position to secure more remunerative employment.

[54] Mr. Mullan suggests, and I agree, that therefore there should be a review of the spousal support payments as at June 1, 2026. That review is to address the numbers, given the likelihood that Ms. Mullan will have a job in her field by then, and also to address the question of the duration of support in whatever amount.

Discussion and Determination of Retroactive Support Owed

[55] In terms of retroactive support owing, starting with 2021, Mr. Mullan’s position is that he overpaid for child and spousal support in 2021 - based on an adjusted income of $129,742.00 for that year - by $5,404.00.

[56] Based on that income, Mr. Mullan says that he should have paid child support of $1,144.00 per month and mid-range spousal support of $773.00 per month, for a total payable for the year of $11,496.00.

[57] Instead, he notes, he paid $2,450.00 per month for the last six months of 2021 (for rent) and an additional payment in December of 2021 of $2,500.00 for a total actually paid of $16,900.00.

[58] The respondent’s position, on the other hand, is that in fact, the appropriate total of child and spousal support for 2021 ought to have been $26,541.00 (essentially, with minor modification, employing the same figures subsequently agreed before Davies J. in February of 2022). Deducting the $16,900.00 actually paid, Ms. Mullan alleges that the net amount of $9,641.00 remains owing for that year.

[59] The gap is larger for 2022.

[60] Mr. Mullan argues that based on an adjusted income of $219,027.00, he ought to have been paying child support of $1,796.00 per month and (mid-range) spousal support of $2,624.00 per month for a total for the year of $53,040.00.

[61] From this figure, he deducts his actual payments of $44,290.00 in 2022, yielding a net underpayment for the year of $8,750.00.

[62] Mr. Mullan then sets off the purported overpayment from 2021 of $5,404.00 against the acknowledged underpayment of $8,750.00 for 2022, and concludes that he owes a total of $3,346.00 for retroactive support. To get to the overall figure, including the first three months of 2023, I infer that Mr. Mullan would take the amounts he proposes for 2022 ($1,796.00 for child support and $2,624.00 for spousal support, for a total of $4,420.00 per month for three months, being $13,260.00) less the amounts actually paid under Davies J.’s Order, being $3,915.00 per month or $11,745,00 for the three months, for a further amount owing of $1,515.00.

[63] Ms. Mullan argues that for 2022 (and the first three months of 2023), based on what proved to be an actual income of $230,000.00, Mr. Mullan ought to have been paying child support of $1,800.00 per month and spousal support – at the high end of the range – of $5,600.00 per month, for a total owing for the 15 months of $111,000.00.

[64] Deducting the actual payments of $61,695.00 over that 15-month period, the net amount of $49,305.00 is owing. Adding that figure to the amount of $9,641.00 Ms. Mullan claims is outstanding from 2021, the total retroactive support she claims is $58,946,00.

[65] In my view, the correct amount of retroactive support owing lies between the parties’ respective positions.

[66] For 2021 I would use Mr. Mullan’s actual income of $165,855.49, which yields child support owing of $1,413.00 per month. I adopt the figure agreed (albeit in February of 2022) before Davies J. for spousal support.

[67] Combining those two numbers adds up to $25,708.00 for support owed for 2021. Subtracting the $16,900.00 actually paid, yields an amount owing of $8,808.00 for 2021.

[68] For 2022 and the first three months of 2023, I use the figures that I have determined above (for Mr. Mullan, the income of $225,000.00 and a figure of $55,000.00 for Ms. Mullan), yielding the amounts of child and spousal support calculated above. For 15 months, these amounts total $83,835.00. I then deduct the actual amount paid of $61,695.00, leaving $22,140.00. Adding the $22,140.00 thus calculated to the $8,808.00 for 2021, the total retroactive support owed is $30,948.00.

Summary of Conclusions

[69] In summary I find that:

(a) Mr. Mullan is to pay retroactive support to Ms. Mullan in the amount of $30,948.00;

(b) From the date of trial forward, Mr. Mullan is to pay to Ms. Mullan child support in the amount of $1,839.00 per month and spousal support in the amount of $3,750.00 per month;

(c) Commencing in 2024, the parties are to provide to one another on July 1 of each year a copy of their respective tax returns for the previous year;

(d) The parties are to agree on the amount of any top up payment required to the extent Mr. Mullan’s income exceeds the $225,000.00 figure used here and/or Ms. Mullan’s income exceeds the $55,000.00 figure used here;

(e) Regardless, the ongoing payments are to be reviewed on June 1, 2026, at which time both the amounts and the remaining duration of support payments are to be reviewed, agreed if possible and, absent agreement, brought back to this court for consideration.

(f) As agreed by the parties, up to June 1, 2026, Mr. Mullan is to continue to pay 70% of the s. 7 expenses for Eve.

Costs

[70] As noted, the parties have yet to address any costs issues (including not only the costs of the trial, but the cost of the proceedings including with respect to parenting and equalization issues).

[71] If the parties are unable to agree on costs once they have this decision in hand, then I direct them to exchange and file with the court written submissions on costs by 30 days from the date of release of this decision, not to exceed six pages in length, plus costs outlines. If when I read the written submissions I wish to hear oral submissions, I will advise the parties and make the necessary arrangements.

W.D. Black, J. Date: April 14, 2023