Date: 20000607
Docket: 1999-2313-IT-I
BETWEEN:
DIANE GUILLEMETTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(Delivered orally from the bench on May 18, 2000, at Québec, Quebec, and edited at Ottawa, Ontario, on June 7, 2000)
Lamarre Proulx, J.T.C.C.
[1] This is an appeal under the informal procedure for 1992, 1993 and 1994.
[2] The issue for 1992 is whether the appellant must include in her income the maintenance she received for her children.
[3] The issue for 1993 and 1994 is whether payments made by the appellant's former spouse to the appellant's children were so made pursuant to a direction to pay from the appellant, as the respondent claims. The appellant maintains that there was no such direction to pay but merely acceptance of the non-execution of the divorce judgment.
[4] The facts taken into account by the Minister of National Revenue ("the Minister") in making his reassessments for the years at issue are set out as follows in paragraph 9 of the Reply to the Notice of Appeal ("the Reply"):
[TRANSLATION]
(a) on April 29, 1991, the Honourable J.-Claude Larouche rendered a divorce judgment and confirmed at the same time a corollary relief agreement signed by the appellant and her former spouse, Christian Lavoie, on April 19, 1991;
(b) in the corollary relief agreement, Christian Lavoie undertook to pay the appellant maintenance of $100 a week for the children, the said maintenance being indexed;
(c) two children were born of the parties' marriage:
(i) Dany on November 12, 1973, and
(ii) Nadine on May 28, 1976;
(d) on May 15, 1996, the Honourable Mr. Justice Gratien Duchesne confirmed an agreement entered into by the parties following a motion to vary corollary relief brought by Christian Lavoie;
(e) in the said agreement ratified on May 15, 1996, the parties agreed as follows:
1. Mr. Lavoie and Ms. Guillemette agree that, given the situation of their adult children, maintenance is no longer to be paid to Ms. Guillemette for the children;
2. Ms. Guillemette consents to the cancellation of the arrears of maintenance owed to her by Mr. Lavoie for the children;
3. The parties accordingly agree that there are no arrears of maintenance to be paid to Ms. Guillemette and that maintenance is no longer to be paid to her for their adult children;
and the appellant thus waived payment of maintenance for her children and of the arrears owed to her;
(f) it was determined that amounts of $5,742, $5,840, $5,937 and $1,254 were paid for the 1992, 1993, 1994 and 1995 taxation years respectively;
(g) it was at the appellant's request that Christian Lavoie paid the maintenance directly to the children starting in 1993, the appellant having exercised her discretion by favouring that method of payment;
(h) in view of the two agreements establishing that the maintenance had to be paid to the appellant, which agreements were confirmed by the Superior Court on April 29, 1991, and May 15, 1996, the Minister is justified in including the amounts of $5,742, $5,840, $5,937 and $1,254 in the appellant's income for the 1992, 1993, 1994 and 1995 taxation years respectively.
[5] The relevant two paragraphs of the Notice of Appeal read as follows:
[TRANSLATION]
This decision is unfair since all that is involved is a father's moral obligation to his children and unbelievable since the amounts were used solely to support our children, especially given that my divorce led to serious financial problems at the time.
As well, since he was afraid that the money would be used for my benefit alone, their father quickly acceded to our request that the money be paid into our children's respective bank accounts starting in 1993. In addition, he stopped paying the maintenance to our daughter Nadine in October 1994 and to our son Dany in June 1995.
[6] The appellant was the only person who testified. She explained that her former spouse paid her maintenance for her children in 1992 but that the payments were often late and were difficult to obtain. Her former spouse was always afraid that the money paid would not be used by her for their children. Negotiations between lawyers were often required in order to obtain payment so that, in 1993, the appellant apparently suggested through her lawyer that her former spouse pay the amounts directly to their children. As far as she was concerned, this was not a direction to pay but a change to the instructions in the judgment.
[7] No evidence was adduced to the contrary.
[8] The divorce judgment referred to in subparagraph 9(a) of the Reply was filed as Exhibit I-2. Clause 6 of the corollary relief agreement attached to that judgment reads as follows:
[TRANSLATION]
The respondent shall pay the applicant, solely for the children, maintenance of $100 a week as provided for in the corollary relief agreement, with indexation as provided for in article 638. . . .
[9] The judgment referred to in subparagraph 9(d) of the Reply was filed as Exhibit I-3. The agreement between the parties is the most important document in this case. I will quote a few of the recitals and the parties' agreement:
[TRANSLATION]
WHEREAS in the agreement Mr. Lavoie undertook to pay Ms. Guillemette maintenance of $100 a week for their children Dany and Nadine, the said maintenance being indexed;
. . .
WHEREAS since 1993 Mr. Lavoie has paid each child $57.51 by putting the money directly into their respective bank accounts;
WHEREAS, once he was informed that his adult children were working, Mr. Lavoie stopped paying the maintenance, to his daughter Nadine in April 1994, and to his son Dany in June 1995;
. . .
THE PARTIES AGREE AS FOLLOWS:
1. Mr. Lavoie and Ms. Guillemette agree that, given the situation of their adult children, maintenance is no longer to be paid to Ms. Guillemette for the children;
2. Ms. Guillemette consents to the cancellation of the arrears of maintenance owed to her by Mr. Lavoie for the children;
3. The parties accordingly agree that there are no arrears of maintenance to be paid to Ms. Guillemette and that maintenance is no longer to be paid to her for their adult children;
[10] Counsel for the respondent, relying on the explanation given by the appellant in her Notice of Appeal and the above-cited passages from the agreement, argued that the appellant had made a designation for payment. The appellant's position as regards 1993 and 1994 is set out in paragraph 6 of these Reasons. As regards 1992, she argued that the amounts received were for her children and not herself.
Conclusion
[11] With respect to 1992, the Federal Court of Appeal held in Danielle Serra and Denyse Hamer v. The Queen, 98 DTC 6602, that alimony paid to a former spouse for the maintenance of children must be included in the recipient's income in accordance with paragraph 56(1)(b), (c) or (c.1) of the Act.
[12] With respect to 1993 and 1994, it would be difficult for me to conclude that the document referred to in paragraph 9 of these Reasons implies that the appellant gave the payer a direction to pay her children on her behalf. Thus, it should be noted that, when the payer stops paying the maintenance to his children for some reason, he does not start paying it to the appellant again. Moreover, the agreement provides that the amounts the appellant could claim as a creditor will not be claimed.
[13] Payment is an important civil law concept in the area of obligations. It would therefore have been helpful to know the respondent's position in terms of the academic writing and the case law in order to determine the circumstances in which a payment made to a person other than the creditor is accepted as a genuine payment made to the creditor by the debtor.
[14] In this regard, I refer to Jean-Louis Baudouin and Pierre-Gabriel Jobin, Les Obligations, 5th edition, at pages 495, 498 and 515:
[TRANSLATION]
. . . In legal parlance, to pay means to perform an obligation, whatever its nature. . . .
. . .
639 – Payment to creditor – To effect a discharge, payment must be made to the creditor personally or to someone designated to receive it on the creditor's behalf by agreement (a mandatary or the beneficiary of a stipulation for another), by law (tutor, curator) or the courts (trustee in bankruptcy). When the debtor pays the creditor's contractual representative, the debtor must be careful to make sure of the person's capacity as representative, since a payment made to an unauthorized third party is not binding on the creditor and requires the debtor to pay again, except where the creditor has subsequently ratified the act or benefited from the payment (for example, where payment was made to the creditor's own creditor on his or her behalf). Payment made to a third party where there is no right to do so is in principle invalid, and an action will lie for recovery of a thing not due.
. . .
Proof of Payment
670 – Burden of proof – Payment raises problems with regard to the means of proof for demonstrating its existence. In principle, the burden of proving payment is on the debtor once the creditor has proved that a relationship of obligation exists. However, the debtor cannot prove payment by just any means but must comply with the rules of evidence established by the Civil Code (art. 2803 et seq. C.C.Q.)
671 – Written evidence – Since payment is seen by most academic commentators and in most court decisions to be a juridical act, it must, in principle, when the amount is above a certain limit, be proved by a writing. Generally, the writing is the receipt or acquittance issued by the creditor on receiving payment. However, it may also consist of domestic papers or a copy of the instrument of indebtedness that has remained with the creditor and on which it is noted that payment has been received. When the payment is lower than the amount provided for in article 2862 C.C.Q. or when there is a commencement of proof in writing, testimonial evidence is allowed, provided, of course, that the best evidence rule be complied with. The same is true when the debtor has been unable to obtain written evidence or demonstrates that he or she cannot produce the original of the writing despite his or her good faith and diligence.
[15] According to the above commentary, payment is to be made to the creditor personally, and if it is made to third parties, definite proof must be provided that the debtor was authorized to pay the third parties rather than the creditor. I would therefore be inclined to think that, if there is no concurrent evidence, whether written or testimonial, from the two parties to the agreement that the appellant's children were designated to receive payment of the maintenance on her behalf, or if there is no writing signed by the appellant designating her children to receive payment of the maintenance on her behalf, there is no designation for payment.
[16] Neither the testimonial nor the documentary evidence leads me to conclude that the children were so designated to receive the maintenance payments on the appellant's behalf. There was certainly no subsequent ratification either. It is my view that the evidence in this case has shown that, as argued by the appellant, what was involved was simply acceptance by her of the non-execution of the divorce judgment of April 29, 1991.
[17] The appeal is dismissed for 1992 and the appeals for 1993 and 1994 are allowed.
Signed at Ottawa, Canada, this 7th day of June 2000.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]