Date: 20001221
Docket: A-640-99
Ottawa, Ontario, Thursday, December 21, 2000
CORAM: DÉCARY
LÉTOURNEAU
NOËL, JJ.A.
BETWEEN:
SYLVIE LAVOIE
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
JUDGMENT
The application for judicial review is dismissed with costs.
"Robert Décary"
J.A.
Certified true translation
Suzanne M. Gauthier, LL.L., Trad. a.
Date: 20001221
Docket: A-640-99
CORAM: DÉCARY
LÉTOURNEAU
NOËL, JJ.A.
BETWEEN:
SYLVIE LAVOIE
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
Hearing held in Montréal, Quebec, Thursday, November 30, 2000
Judgment rendered in Ottawa, Ontario, Thursday, December 21, 2000
REASONS FOR JUDGMENT BY: LÉTOURNEAU J.A.
CONCURRING: NOËL J.A.
DISSENTING REASONS: DÉCARY J.A.
Date: 20001221
Docket: A-640-99
CORAM: DÉCARY
LÉTOURNEAU
NOËL, JJ.A.
BETWEEN:
SYLVIE LAVOIE
Applicant
AND:
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
[1] I am of the opinion that this application for judicial review should be dismissed.
[2] The applicant and her friend (a Mr. Ross) reported they were common-law spouses in their tax returns for the years in dispute. On the basis of this statement, the Minister of National Revenue (the Minister) refused the child tax benefit provided in section 122.6 of the Income Tax Act, claimed by the applicant. The Minister had no need to develop at length the presumptions of fact on which he based his notice of assessment since the parties themselves acknowledged they were common-law spouses living under the same roof.
[3] At the hearing before Judge Dussault of the Tax Court of Canada, only the applicant testified. As is apparent from the following extract from his decision, the judge clearly did not believe her explanation as to the fact that she and her friend had identified themselves as common-law spouses:
[21] In the case at bar, the appellant and Mr. Ross indicated that they were de facto spouses in their respective tax returns for a number of years. The appellant's explanation of this is hardly persuasive. An accountant and tax expert, one Mr. Quintal, who handled their investments, allegedly told them that they had to describe themselves as such to avoid problems with the tax authorities. It is hard to see how the appellant, who seems to be an intelligent, educated individual and who says she is a planning advisor, and Mr. Ross, whom the appellant described as someone who is also intelligent and educated, could have agreed to declare themselves to be de facto spouses if they were not really such without wondering and asking more questions about the consequences of doing so. This is not a complex tax issue, and it is astonishing that the appellant and Mr. Ross could have agreed so easily, without making further inquiries, to present themselves as de facto spouses if they were convinced that they were not.
This is a finding of fact based on the credibility of a witness he saw and heard. It is not up to us to substitute our assessment of this evidence for his on such a fundamental factor.
[4] Dussault J.T.C.C. also cited other important factors allowing him to conclude as he did. Among other things, the applicant had a joint bank account with her friend from which payments for food were made. There was also the cohabitation under one roof, a sharing of intimacy, certain sexual relations, all leading to the purchase as co-tenants of the house shared by both parties. Finally, the Minister's counsel, both before Dussault J.T.C.C. and before us, pointed to the inconsistency between, on the one hand, the applicant's statement that Mr. Ross's presence was justified by financial considerations, and on the other hand the fact that she did not report this boarding income to the taxation authorities because, she said, it barely covered the expenses occasioned by Mr. Ross.
[5] In regard to the implicit natural justice argument in the appellant's submissions, an argument according to which, if I correctly understand it, the Minister's counsel had, at the hearing, added some new allegations of fact or elaborated on some that already existed, I think this reflects the appellant's misunderstanding of how the self-assessment system works and of her role in the case of an objection.
[6] The Minister does not have an intimate knowledge of the appellant's private life. However, he did note, in the wake of some audits, certain facts that he took as established in issuing his assessment. These allegations of fact made by the Minister in issuing his assessment should not be confused with the judge-made criteria to which the Minister's counsel referred the judge at trial.
[7] In fact, in citing the Milot case, rendered on May 10, 1995, docket 94-2925, the Minister did not raise any new allegations of fact. Rather, he chose to base his argument on a relevant existing juridical source that the trial judge could criticize, qualify, distinguish, question or accept. The judge chose to interpret the evidence supplied by both parties in light of the tests laid down in Milot, supra, which he was evidently entitled to do.
[8] For these reasons, I would dismiss the application for judicial review with costs.
"Gilles Létourneau"
J.A.
"I agree.
Marc Noël, J.A."
Certified true translation
Suzanne M. Gauthier, LL.L., Trad. a.
Date: 20001221
Docket: A-640-99
CORAM: DÉCARY
LÉTOURNEAU
NOËL, JJ.A.
BETWEEN:
SYLVIE LAVOIE
Applicant
- and -
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
DÉCARY J.A.
[1] I would allow this application for judicial review and order a new trial because the prosecuting attorney was not above board with the taxpayer in the Tax Court of Canada during the hearing, which was held under the informal procedure. The impugned decision, which was rendered by His Honour Judge Dussault, may be consulted at [1999] T.C.J. No. 688 (QL).
[2] The taxpayer claimed the child tax benefit under section 122.6 of the Income Tax Act ("the Act") for the 1994, 1995 and 1996 taxation years. The Minister of National Revenue ("the Minister"), following a review, refused this benefit on the ground that the taxpayer was living in a conjugal relationship with Mr. Vincent Ross during those years and that the combined income of the taxpayer and her spouse was too high to allow the benefit. At the relevant time paragraph 252(4)(a) specified that "spouse" included the person of the opposite sex who "cohabits ... with the taxpayer in a conjugal relationship".
[3] The following are the facts that the Minister assumed for the purpose of determining the assessment:
[TRANSLATION]
(a) in her tax returns for the years at issue, the appellant put herself down as a de facto spouse;
(b) in his tax returns for the 1994, 1995 and 1996 taxation years, Vincent Ross indicated that he was Sylvie Lavoie's de facto spouse;
(c) the appellant and Vincent Ross are co-owners of a residence located at 291, rue Beaumont Est in Saint-Bruno;
(d) during the years at issue, the appellant, her two children and Vincent Ross lived under the same roof;
(e) the appellant and Vincent Ross both had the same accountant;
(f) the appellant and Vincent Ross invested in the same research and development corporation;
(g) in the Minister's view, the appellant was cohabiting with Vincent Ross in a conjugal relationship during the years at issue;
(h) during the taxation years at issue, the net income of the appellant and Vincent Ross (family income) was as follows:
|
1994 |
1995 |
1996 |
|
|
Appellant |
$56,432 |
$51,403 |
$58,921 |
|
Vincent Ross |
$40,459 |
$51,800 |
$54,002 |
|
$96,891 |
$103,203 |
$112,923 |
(i) the Minister revised the appellant's child tax benefits for the 1994, 1995 and 1996 base taxation years to nil because the family income was too high.
[reasons, para. 4]
[4] The taxpayer admits the facts related in paragraphs (a) to (f) as well as those in paragraph (i) and says she considers paragraph (g) as a mere legal conclusion from the facts alleged in paragraph (a) to (f). She argues that these facts should be situated in their context and that four of them, paragraphs (a), (b), (e) and (f), are explained by the bad advice given by an accountant, one Pierre Quintal, who -- this is evidence on the record, which the Minister does not dispute -- mysteriously disappeared and is being sought by the judicial authorities.
[5] In the course of the trial, the taxpayer, who represented herself and called no witnesses -- she did file an affidavit by Mr. Ross as an appendix to her notice of appeal, saying she thought this could replace the presence of the witness in Court, but this statement was clearly inadmissible and was not considered by the judge -- gave the following explanations.
[6] She separated from her husband in 1988, gained custody of her two children and continued to occupy the family home with the children. Her husband defaulted on regular payment of the alimony he had undertaken to pay, and Ms. Lavoie decided to take in a lodger, which would help her financially. As she had been the victim of a major theft in 1991, she decided to take a man rather than a woman as a lodger:
[Translation] A. ... I could have taken in a woman to live with me, but I said to myself that thieves would be less fearful than if it were a man living with me, in the same property.
[Defendant's record, at p. 15]
[7] Her choice in 1992 fell on Mr. Ross, a long-time co-worker. The house is a large single-family home: eleven rooms, including several unused ones in the basement. Mr. Ross occupies two rooms in the basement, a bedroom and an office, and he uses the basement bathroom: "those are his rooms." Ms. Lavoie's daughter occupies a bedroom "on the other side of the basement" (p. 19) and the ground floor is occupied by her and her son.
[8] Since Mr. Ross "was getting on" (p. 20), it was the taxpayer who looked after the washing, meals and upkeep of the property. Mr. Ross paid her about one hundred and twenty-five dollars a week, an income that Ms. Lavoie did not report to the taxation authorities.
[9] In 1995, again according to Ms. Lavoie, Mr. Ross ceased being a lodger and became a co-owner in the following circumstances:
[Translation] A. ... In 95, the judge, during the divorce, gave me one month in which to sell the house or buy it, and it was in May, it was the time for the children's examinations, it was a bit crazy, and Mr. Ross, he was all right, he liked Saint-Bruno, all that, I asked him if he was interested in taking a share in the property, so as my ex had half and I had the other half, well, my ex's half, Mr. Ross took half of that and I took the other half, which gives me three quarters (3/4) of the property and him, one quarter (1/4) ownership.
[at p. 16]
[10] To describe the relationship that had developed between the taxpayer and Mr. Ross, I can do no better than to reproduce some extracts from Ms. Lavoie's testimony. I am all the more comfortable in doing so in that the judge did not question her credibility, other than in regard to the entry "common-law spouse" in her tax returns. In this regard, in fact, the judge said the explanation provided was "hardly persuasive" (reasons, para. 21).
[Translation]
A. ... if I had someone, a lodger, it would help me financially, but of course I couldn't take just anyone, I had a fourteen (14) year old daughter at the time, plus a son. Mr. Ross had been a co-worker and I knew he was someone who was responsible, someone who is honest....
[at p. 15]
A. ... But Mr. Ross, he lives in his rooms, except when the meal is taken in the kitchen, ... Mr. Ross does not look after my children, Mr. Ross, I am not his heir, I don't know his income, his investments, he not a common-law spouse....
[at p. 16]
A. ... I have already had a spouse, who was my ex, it's not at all the same thing, truly not.
[at p. 17]
A. [The $125.00], ... it covered the food, it covered the travel, sometimes he came to work, he rode with me in the car, plus the laundry, the expenses for making the meals, when you cook it's time, and I spent an hour of my time doing that...
[at p. 20]
A. [In the joint account, besides the hypothec], ... there is the insurance that goes there, there is the food that goes there, but the food is not equal, because, since I have children, I put more into the joint account than Mr. Ross, O.K., and after that there is the insurance... there is the Hydro, Hydro, everything affecting the property, the electricity goes in that joint account.
[at p. 22]
A. ... it means that no one watches T.V. in the living room, the T.V. in the living room is, suppose there is someone who comes.
Q. O.K.
A. And the T.V. in the basement, it is more for Mr. Ross, and the children.
Q. O.K. So, the children share the T.V. with Mr. Ross...
A. Yes.
Q. ... in the basement?
A. And even there, excuse me, I want to correct something, my daughter had her T.V. in her room and my son had the T.V. in his room, along the way, because his aunt had given him a television set.
Q. Uh-huh.
A. So, there was a good... perhaps several months, there, there had been a television, but after that, each had his television, there was one who did not have a television in the house, it was me.
[at p. 25]
A. ... it may have happened two or three times, Your Honour, that I had sexual relations with Mr Ross and those relations, I was very careful, in relation to the children, to be very discreet, but when you are living alone sometimes you feel very lonely as well.
[at p. 33]
[by counsel]
Q. ... it happened two or three times...
A. Yes.
[by counsel]
Q. ... during all those years?
...
A. ... but more with friends...
[at p. 39]
[by counsel]
Q. ... you had other persons in your life...
A. ... Yes... It was also occasionally.
[at pp. 33-34]
[by counsel]
Q. ... On special occasions, I don't know, birthdays or holidays, do you exchange gifts?
A. It can happen.
[by counsel]
Q. O.K.
A. Not systematically, but it can happen, if Mr. Ross is alone, he has his family in Québec, but if he is all alone I will not leave him all alone down there.
[by counsel]
Q. O.K.
A. If he is with us, I am going to offer him something.
[at pp. 34-35]
[by counsel]
Q. Do you sometimes, apart from work, obviously, go out together, go to the movies or some place?
A. Let's suppose there is a film playing and it interests me, I am going to go and see it.
[by counsel]
Q. With Mr. Ross?
A. I can make him an offer, if I know it is a type of film that interests him.
[by counsel]
Q. O.K.
A. As I can offer it to other friends, as well.
[by counsel]
Q. So, you did happen to go together to some activities?
A. Yes, but he will pay his entrance to the movie theatre, I will pay my entrance to the theatre.
[at pp. 35-36]
[by counsel]
Q. Can you describe to us a little the attitude, the relationship that exists between Mr. Ross and your children, is there a good understanding between them?
A. Mr. Ross carries on his life and my children carry on their life with me.
[by counsel]
Q. I understand, but they share the same dwelling, so necessarily there is some relationship between the two parties?
A. No, because the relationship is clear, he is not the father, he is not the spouse.
[by counsel]
Q. I understand.
A. He doesn't intrude in the life of their mother, they have... when they were small, in any event he was thirteen, I think Marie-Ève was thirteen (13), and Charles seven or eight, they didn't lose anything in their mother's accessibility....
[by counsel]
Q. I understand.
A. ... and I think it means they were able to live there without difficulty.
[by counsel]
Q. I understand, but didn't they sometimes play with him, that's what I would like to know?
[by counsel]
A. No, that's not his style.
[by counsel]
Q. No?
A. And I am answering you honestly, Sir, even if I am looking at His Honour, I am answering you honestly, it is not his style, he is the intellectual kind who will read, he does not play with a child.
[by counsel]
Q. But, can we say that if your children did not like Mr. Ross or hated him, you would not have let him live in the house, if someone is making trouble for your children or upsetting them, he would not have stayed?
A. If someone had made trouble for my children, no indeed the person would not remain.
[by counsel]
Q. Is Mr. Ross still living with you in the house?
A. Mr. Ross still occupies his rooms and the house has been up for sale since last February, since my daughter has been gone to her own apartment since January.
[at pp. 36-38]
A. I did not live and I am not living in a conjugal relationship with Mr. Ross.
[by the judge]
Q. Mr. Ross keeps to his chamber, he sleeps in his room, you sleep in your room...
A. Yes, Sir.
[by the judge]
Q. ... it has just ended?
A. Yes, Sir, it's like that. But he is a type with whom I was comfortable because I know he would not attack my daughter, my daughter can be secure, my son also, I trusted him, that is why I could sleep in peace upstairs, I was not worried, I have respect for that man, but he is not my spouse.
[by the judge]
Q. No, no in the sense that it is understood...
A. No.
[by the judge]
Q. ... common law...
A. No.
[by the judge]
Q. ... you are not married to him, that's for sure...
A. And my intimate relationships, I have them more outside.
[by the judge]
Q. ...but in front of your children, in front of your children, he has never appeared as being your life companion?
A. No.
[by the judge]
Q. Your spouse?
[by the judge]
A. No.
[by the judge]
Q. In fact, that is not what you claimed, and it is not what he claimed either?
A. Either.
[by the judge]
Q. In front of the children. O.K. That's enough for me.
[at pp. 41-42]
[11] I come now to the role of the accountant, Quintal. Mr. Quintal was the accountant of Ms. Lavoie's former husband. He was the one who handled her investments and that is why she had chosen him to do her tax returns. He was the one, she says, who urged her to write "common-law spouse" on her tax returns:
[Translation]
A. ... We're talking about the years 94, 95 and 96. In fact, I wrote "common-law spouse" on the tax returns for the good reason that the person who was making out my tax return had informed me that once there is someone living at the same address as you, you must state "common-law spouse", even if the person is a lodger and occupies some rooms in the basement.
She told me that I had to make a new entry, and that there had to be a new street address, anyway, I had just divorced, and I wanted to have a lodger to help me financially, it seemed huge to me, so I was told: "If you don't put ‘common-law spouse', you are going to have some problems with the Department of Revenue."
So, I was having enough problems with my ex-husband, I said, I don't want any more, so I wrote "common-law spouse" and it, it lasted until 97, that situation.
[at pp. 10-11]
A. ... But this Mr. Quintal, at the same time, given that the investments were complex, he told me: "I can also do your tax returns." Now, I had never made a tax return, it was my father who did them, after that it was my ex, after that it was some companies and so, he offered to do my tax return, well, I said O.K. and it was in December ninety... in 92 I had made some investments with Mr. Quintal and he had done my tax return, it went well.
In 93, when he did my tax return, he had also made some investments during the year, he told me: "There is something new" because there was Mr. Ross who had moved into the basement at my place and he said: "Well, you can no longer put "separated", you have to put "common-law spouse", especially when he said "If you don't do that, you are going to have some problems with the Department of Revenue", so I said: "You put it in, and I will sign, that's all right, if that's what I am told, that's what we will do."
And Mr. Ross, he had also made some investments with Mr. Quintal and of course he received the same information from Mr. Quintal, so he too, he stated "common-law spouse", since he didn't want to have any problems and worries either.
[at pp. 12-13]
[12] That is all for Ms. Lavoie's testimony.
[13] The Minister called only one witness, an objections officer with Revenue Canada. The only person she said she had contacted for the purposes of her investigation was the taxpayer's former husband. She had telephoned him. He was not home. So she spoke to his new spouse, who said that in her opinion Ms. Lavoie and Mr. Ross were husband and wife. The judge rejected this testimony, of course. The former husband returned home during the telephone discussion. He did not want to say anything.
[14] Once the Minister's proof was completed and prior to the commencement of the oral argument, the judge informed the Minister's counsel that he had
[Translation] the intention to allow the appeal, with the evidence I have before me..., I think the lady has testified sufficiently for me to be able to make the decision that this does not involve common-law spouses....
[at p. 46]
[15] During the argument that followed, the Minister's counsel referred to a decision of Judge Lamarre Proulx in Sylvie Milot, rendered May 10, 1995, docket 94-2925 (IT), which reviews the appropriate meaning of the expression "cohabit in a conjugal relationship" that is found in paragraph 252(4)(a) of the Act.
[16] Dussault J.T.C.C. does not appear to have been aware of the existence of this decision, which he says is "unreported" (reasons, para. 20). I checked and found that the English text of the decision is published at [1996] 1 C.T.C. 2247.
[17] I repeat here in extenso the lengthy extract from this decision reproduced by Dussault J.T.C.C. in his reasons, at paragraph 20:
This definition leads us to consider the notion of conjugal relationship. When can two persons be considered as living in a conjugal relationship? This notion has often been studied for the purposes of various statutes. In Quebec, for example, this notion was studied in particular for the application of the Automobile Insurance Act, R.S.Q., c. A-25, s. 2, para. 2, and the Act respecting the Québec Pension Plan, R.S.Q., c. R-9, s. 91. See Les personnes et les familles, Knoppers, Bernard et Shelton, Tome 2, Les éditions Adage, the first chapter of which is entitled "Les familles de fait". It states that cohabitation is fundamental in a conjugal relationship and in conjugal conduct. That conduct may be determined through sexual relations, emotional and intellectual exchange, financial support and common knowledge.
In their book, Introduction to Canadian Family Law, Carswell, 1994, the Ontario authors Payne and Payne refer to the judgment by Kurisko J. in Molodowich and Penttinen, 17 R.F.L. (3d) 376. I cite these authors at pages 38 and 39 because it seems to me they provide an excellent synthesis of the elements that must apply in order to determine whether two persons are living in a conjugal relationship:
Not all arrangements whereby a man and a woman live together and engage in sexual activity will suffice to trigger statutory support rights and obligations.28 As was observed by Morrison J.A., of the Nova Scotia Court of Appeal:
I think it would be fair to say that to establish a common law relationship there must be some sort of stable relationship which involves not only sexual activity but a commitment between the parties. It would normally necessitate living under the same roof with shared household duties and responsibilities as well as financial support.29
More specific judicial guidance as to what constitutes cohabitation or a conjugal or marriage-like relationship is found in a judgment of the Ontario30 District Court, wherein Kurisko D.C.J. identified the following issues as relevant:
1. Shelter
(a) Did the parties live under the same roof?
(b) What were the sleeping arrangements?
(c) Did anyone else occupy or share the available accommodation?
2. Sexual and Personal Behaviour:
(a) Did the parties have sexual relations? If not, why not?
(b) Did they maintain an attitude of fidelity to each other?
(c) What were their feelings toward each other?
(d) Did they communicate on a personal level?
(e) Did they eat their meals together?
(f) What, if anything, did they do to assist each other with problems or during illness?
(g) Did they buy gifts for each other on special occasions?
3. Services:
What was the conduct and habit of the parties in relation to:
(a) preparation of meals;
(b) washing and mending clothes;
(c) shopping;
(d) household maintenance; and
(e) any other domestic services?
4. Social:
(a) Did they participate together or separately in neighbourhood and community activities?
(b) What was the relationship and conduct of each of them toward members of their respective families and how did such families behave towards the parties?
5. Societal:
What was the attitude and conduct of the community toward each of them and as a couple?
6. Support (economic):
(a) What were the financial arrangements between the parties regarding the provision of or contribution toward the necessities of life (food, clothing, shelter, recreation, etc.)?
(b) What were the arrangements concerning the acquisition and ownership of property?
(c) Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?
7. Children:
What was the attitude and conduct of the parties concerning the children?
As Kurisko D.C.J. further observed, the extent to which each of the aforementioned seven different components will be taken into account must vary with the circumstances of each particular case.
__________
28 See Jansen v. Montgomery (1982), 30 R.F.L. (2d) 332 (N.S. Co. Ct.).
29 Soper v. Soper (1985), 67 N.S.R. (2d) 49, at 53 (C.A.).
30 Molodowich v. Penttinen (1980), 17 R.F.L. (3d) 376, at 381-382 (Ont. Dist. Ct.). See also Gostlin v. Kergin (1986), 3 B.C.L.R. (2d) 264, at 267-268 (C.A.).
Dussault J.T.C.C. does not cite any decision other than that in his reasons.
[18] The decision of Lamarre Proulx J.T.C.C. had a decisive impact on the trial judge since, on the day following the oral argument, the judge who, the day before, had said he was of a mind to allow the appeal, changed his mind and dismissed Ms. Lavoie's appeal by applying to her case the seven tests listed in Milot, supra.
[19] It is at this point, I think, that there was a breach on the part of the prosecution of the elementary "fair play in action" rule referred to by Harman L.J. in Ridge v. Baldwin, [1963] 1 Q.B. 539 (C.A.), at p. 578.
[20] The Minister's allegations, which I reproduced in paragraph 3, were as general as can be. The only genuinely relevant allegations of fact are those in paragraphs (a) to (d). The allegations in paragraphs (e) and (f) are in themselves of no relevance, and paragraph (g) is either a conclusion of law or an allegation of fact referring by implication to the factors enumerated in Milot, supra. If paragraph (g) is an allegation of fact, it is clearly insufficient. Furthermore, the allegation of cohabitation in paragraph (d) simply refers to the requirement in paragraph 252(4)(a) of the Act that there be cohabitation. It does not refer to the fact that such cohabitation must be "in a conjugal relationship". Had the Minister known, in 1997, when he revised his assessments, the factual elements pertaining to the legal concept of "conjugal relationship" to which he alluded in paragraph (g), he should have based himself on much more explicit allegations of fact, thus enabling the taxpayer and the Court to understand the actual onus that had to be reversed.
[21] Instead, the Minister chose to hide from the taxpayer and the judge, up to the time of the oral argument, the factual elements that served as a backdrop to his cross-examination, and thereby to obtain a surprise judgment. The injustice was consummated when the judge, instead of reopening the inquiry so as to confront Ms. Lavoie with the new criteria that the Minister's counsel had just identified, chose to confront her in his reasons with seven criteria he had just discovered himself:
Coming back now to the various criteria for determining whether there is a conjugal relationship between two individuals, I must begin by noting that, in her testimony, the appellant provided little by way of information or explanation regarding a number of points.
[reasons, para. 22]
[22] The most elementary justice, and I say this with respect, required that Ms. Lavoie be confronted with these seven factors before judgement was rendered. Indeed, in the circumstances of this case, which are completely unique, these factors amounted for all intents and purposes to allegations of fact. Ms. Lavoie had imposed on her, a posteriori and without the possibility of reply, an onus the scope of which was unknown to both her and the judge in the course of the trial. It is as if the notice of assessment had been amended once the evidence was in. I note, for example, that in regard to factors 4 (social relations), 5 (societal relations) and 7 (children), counsel confined himself to very general questions, and that questions 67, 109 and 112 are a faithful copy of factors 2(d), 2(f) and 2(g).
[23] It is not as if some principles of law or points of fact generally recognized at the time were involved. The decision of Lamarre Proulx J.T.C.C., while published in an English version, was defining some criteria of the nature of those which, in tax matters, are generally found in some form or other in the allegations of fact on which the Minister bases an assessment. In Milot, supra, for example, the Minister's allegations were much more specific, albeit at a time when the list of seven criteria on which the Tax Court of Canada was eventually to rely was not yet established:
|
(a) |
during the 1992 and 1993 taxation years, the appellant and Serge Duval both lived at 583-A Laurendeau in Repentigny; |
||
|
(b) |
the rental lease of 583-A Laurendeau in Repentigny for the period from July 1, 1992 to June 30, 1994 was made in the name of the lessees Serge Duval and Sylvie Milot; |
||
|
(c) |
Serge Duval is the father of the appellant's second child, Audrey, born on November 18, 1993; |
||
|
(d) |
the names of Serge Duval and the appellant appear as the child's father and mother on the certification of Audrey's declaration of birth dated November 18, 1993, and it is mentioned that they were living as a couple; |
||
|
(e) |
Serge Duval and the appellant had a joint term deposit and a joint bank account during the period in issue; |
||
|
(f) |
family allowances of $268 were received by the appellant during the 1992 taxation year; |
||
|
(g) |
in her income tax returns for the 1992 and 1993 taxation years, the appellant did not mention that she was living with Serge Duval as a couple; |
||
|
(h) |
when the appellant filed her income tax returns for the 1992 and 1993 taxation years, she claimed an equivalent-to-married credit of $914.60 ($5,380 x 17%) in computing the total of her non-refundable tax credits; |
|
[...] |
|
(j) |
when the appellant filed her income tax return for the 1993 taxation year, she claimed the goods and services tax credit as well as the child tax benefit. |
[24] In a supreme irony, the judge had asked Ms Lavoie at the hearing:
[Translation] Q. Do you know the definition of "common-law spouse"?
She had replied:
[Translation] A. I looked it up in the dictionary, and common law spouse is that they live as man and wife [vivre maritalement], so I looked up "maritalement", who live as husband and wife, and husband and wife means they live as spouses, it goes round in circles, I don't want to be impertinent, it is true that I looked it up, and Ms. Morinville, she looked it up too. I have already had a spouse, who was my ex, it's not at all the same thing, truly not.
And the judge concludes:
[Translation] Q. Well, all right.
[at pp. 16-17]
The Minister's counsel was careful not to intervene at that point to say that he had a more precise definition to propose.
[25] Nor am I convinced that the principle described by Bastarache J. in Continental Bank of Canada v. Canada, [1998] 2 S.C.R. 358, at p. 367, was applied in this case:
Taxpayers must know the basis upon which they are being assessed so that they may advance the proper evidence to challenge that assessment.
In my opinion, the only way to ensure that justice is rendered is to order a retrial.
[26] I would add, for the purposes of the rehearing, that the factors set out in Milot, supra, do not have absolute value. They are useful, to be sure, but they must be adapted to the context in which they are used. If we look too closely at the trees, we may not see the forest. In this case the forest is the conjugal relationship, a concept that evokes a common life, which presupposes that the couple are involved with each other, together and in a lasting way on the personal, sexual, family, social and financial levels. As Hall J. put it, in Montgomery v. Jansen, [1982] N.S.J. No. 18 (Nova Scotia County Court) (QL),
[13] From the foregoing it will be seen that to "live together as husband and wife" connotes an element of permanence and commitment to each other by the parties to the relationship to a substantial degree. Certainly it should not be thought that every arrangement where a man and woman share the same living accommodations and engage in sexual activity to some extent should be regarded as living together as husband and wife [...]
[27] Quite recently, in M. v. H., [1999] 2 S.C.R. 3, at pp. 50-51, the Supreme Court of Canada (per Cory and Iacobucci JJ., for the majority), endorsed the factors set out in the Molodowich case on which Lamarre Proulx J.T.C.C. relied:
Molodowich v. Penttinen (1980), 17 R.F.L. (2d) 376 (Ont. Dist. Ct.), sets out the generally accepted characteristics of a conjugal relationship. They include shared shelter, sexual and personal behaviour, services, social activities, economic support and children, as well as the societal perception of the couple. However, it was recognized that these elements may be present in varying degrees and not all are necessary for the relationship to be found to be conjugal. While it is true that there may not be any consensus as to the societal perception of same-sex couples, there is agreement that same-sex couples share many other "conjugal" characteristics. In order to come within the definition, neither opposite-sex couples nor same-sex couples are required to fit precisely the traditional marital model to demonstrate that the relationship is "conjugal".
Certainly an opposite-sex couple may, after many years together, be considered to be in a conjugal relationship although they have neither children nor sexual relations. Obviously the weight to be accorded the various elements or factors to be considered in determining whether an opposite-sex couple is in a conjugal relationship will vary widely and almost infinitely. The same must hold true of same-sex couples. Courts have wisely determined that the approach to determining whether a relationship is conjugal must be flexible. This must be so, for the relationships of all couples will vary widely....
[28] The trial judge will also have to be conscious of the possible implications of his decision. The conjugal relationship has so far been examined more in the context of family law. Although a decision of the Tax Court of Canada that, for the purposes of the Income Tax Act, two persons form or do not form a "conjugal relationship" is not binding on any courts that might be called on to determine whether there is a conjugal relationship for the purposes of the family law, the tax law decision could nevertheless have major ramifications in terms of family law, given that the factors to be weighed are virtually the same.
[29] I note, in closing, that in the case at bar the dispute involves three taxation years. Should the trial judge reach the conclusion that there is a conjugal relationship, he will have to ascertain that there was a similar relationship during each of the years in question. For example, the conclusion might not be the same in regard to the period during which Mr. Ross was a lodger rather than the owner of a 25% cotenancy.
[30] For these reasons, I would allow the application for judicial review, I would set aside the decision of the Tax Court of Canada judge, and I would send this matter back to the Tax Court for redetermination by another judge. I would also order the respondent to reimburse Ms. Lavoie the disbursements incurred as a result of the application for judicial review.
"Robert Décary"
J.A.
Certified true translation
Suzanne M. Gauthier, LL.L., Trad. a.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET NO: A-640-99
STYLE: Sylvie Lavoie
- and -
The Minister of National Revenue
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: December 1, 2000
REASONS FOR JUDGMENT BY: Létourneau J.A.
CONCURRING: Noël J.A.
DISSENTING REASONS BY: Décary J.A.
DATED: December 21, 2000
APPEARANCES:
Sylvie Lavoie The applicant, representing herself
Sophie-Lyne Lefebvre
Muynez Ayadi For the respondent
SOLICITORS OF RECORD:
Morris Rosenberg
Deputy Attorney General of Canada For the respondent