Date: 20001121
Docket: 1999-1853-IT-G
BETWEEN:
PAM SANFORD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Mogan J.T.C.C.
[1] The Appellant gave birth to a baby girl on August 10, 1997 at Winnipeg, Manitoba. The Appellant applied for the Child Tax Benefit for her daughter. She received the Child Tax Benefit for the months of September 1997 to July 1998. On August 20, 1998, the Minister of National Revenue informed the Appellant (by special Notice) that she would not receive any further Child Tax Benefit payments until she provided her spouse's name and social insurance number. The Appellant has appealed that Notice. The principal issue in this appeal is whether the Appellant had a "spouse" in 1997 within the meaning of the Income Tax Act.
[2] The facts in this appeal are not in dispute. The basic facts alleged in the Notice of Appeal were admitted by the Respondent in the Reply. I will therefore set out below the first nine paragraphs from the Notice of Appeal all of which are admitted:
1. The Appellant is a Canadian citizen. She resides at 735 Wolseley Avenue, Winnipeg, Manitoba, R3G 1C4.
2. * On August 10, 1997, the Appellant gave birth in Winnipeg, Manitoba, to her daughter, Amy Katherine Sanford ("Amy"). The Appellant resides with Amy's father. She is not married to Amy's father according to The Marriage Act, R.S.M. 1987, c.M50, and she is not in a common law marriage with him.
3. On August 25, 1997, the Appellant completed a Child Tax Benefit Application ("the Application") to obtain the Child Tax Benefit for her daughter. In her Application, she reported her current marital status as "Single". She submitted the Application to the Respondent, who received it on or about September 2, 1997.
4. On October 20, 1997, the Minister of National Revenue ("the Minister") wrote the Appellant that her Child Tax Benefit Application could not be processed because it was "incomplete". Specifically, the Minister's letter stated that the Application should be amended to reflect her "correct marital status" and to provide information about her "spouse".
5. An exchange of correspondence followed the Appellant's receipt of the Minister's October 20, 1997 letter. In this correspondence, the Appellant contended that her Application was in fact complete and that the Minister's insistence on her reporting a spouse in order to obtain the Child Tax Benefit for Amy was tantamount to requiring her to lie.
6. On March 20, 1998, the Minister issued the Appellant a Child Tax Benefit Notice in which her Application was allowed. In the Notice, the Minister accepted the Appellant's marital status as reported on her 1996 tax return, that is, as single. The Notice enclosed a cheque for the Child Tax Benefit covering the months from September 1997 to March 1998.
7. The Appellant continued to receive the Child Tax Benefit for Amy during the months from April 1998 to July 1998.
8. On July 20, 1998, the Minister issued the Appellant a Canada Child Tax Benefit Notice which informed her that, if she were to continue to receive the Child Tax Benefit for the period from July 1998 to June 1999, the Minister would require her spouse's name, social insurance number and 1997 tax return.
9. On August 20, 1998, the Minister issued the Appellant a Canada Child Tax Benefit Notice informing her that, until she provides her spouse's name and social insurance number, she would not receive any further Child Tax Benefit payments and that the payment received with respect to July 1998 would be considered an overpayment.
* Partly admitted in Reply but fully admitted at commencement of hearing.
[3] The Appellant was the only witness to testify. I will attempt to summarize her evidence. She is employed as a library clerk at the University of Winnipeg. Before 1989, she was employed by Revenue Canada as an assessor. Since 1989, she has done some seasonal work preparing income tax returns for a few months each spring. The Appellant has cohabited with Markus Buchart since 1990. She and Mr. Buchart have never gone through any form of marriage ceremony. She has not made any kind of marriage promise to him. She does not regard herself as being in a common-law relationship. She refers to Mr. Buchart as "the man I live with". She never refers to him as "husband" or "spouse". She has never heard him refer to her as "wife" or "spouse". The Appellant and Mr. Buchart have never received any spousal benefits.
[4] Having regard to the facts alleged in the Notice of Appeal and admitted, Amy was born on August 10, 1997. The Appellant is Amy's mother and Mr. Buchart is Amy's father. The Appellant and Mr. Buchart have separate finances. The only bank account which they share is for Amy's education. The Appellant and Mr. Buchart share household expenses like food, utilities, car expenses, babysitting costs, etc. The Appellant feels financially independent from Mr. Buchart. When asked why she brought this appeal, the Appellant delivered a very long answer in which she stated that (i) if she trusts someone like Mr. Buchart, she does not need a contract like marriage to confirm or to prove or to evidence that trust; and (ii) the state has no business intruding itself into the life of a particular individual concerning how she might characterize her relationship with another individual.
[5] In cross-examination, the Appellant gave further evidence. She met Mr. Buchart in 1989 and 18 months later, he moved into the house she was renting. Her relationship with him has been intimate and sexual and exclusive and beyond the level of friendship. She has not had a romantic or intimate relationship with any man other than Mr. Buchart since they started living together. In 1993, they purchased the house they had been renting and living in since 1990. They purchased the house together; they shared the cost equally; and they registered the title jointly so that, if the Appellant died, title to the house would go wholly to Mr. Buchart. They have exclusive use of the house except for a portion rented to a tenant. The Appellant and Mr. Buchart take their meals together. The Appellant does most of the cooking but Mr. Buchart makes bread, beer and wine. They share household chores and the task of doing Amy's laundry. They share the cost of furnishing their home. The Appellant does most of the yard work. They visit friends together and they exchange small gifts.
[6] The Appellant stated that they did not hold themselves out as a family raising Amy but she acknowledged answering the following question on examination for discovery:
Q. And do you hold yourselves out with your family (i.e. the Appellant's relatives) as a couple living together, raising a child together?
A. Yes. (Question No. 129)
[7] The Appellant and Mr. Buchart keep a ledger of Amy's expenses. Every couple of months they add up the ledger and allocate it 50-50. The Appellant acknowledged that there is probably a financial benefit from her living together with Mr. Buchart. She thinks that she has long-term disability coverage but, if she or Mr. Buchart lost income-earning capacity, she would not expect that the person without income would be asked to leave the dwelling. The house is registered in both names. The house is insured in both names. Mr. Buchart has a life insurance policy in connection with his employment in which the Appellant is named beneficiary. In 1992, the Appellant and Mr. Buchart purchased a country property in their joint names – 70 acres about 110 kilometres east of Winnipeg.
[8] According to the pleadings, the principal issue in this appeal is whether the Appellant is entitled to the Child Tax Benefit for the months July 1998 to June 1999 inclusive. That statement of the issue is not entirely accurate. In argument, counsel clarified the issue as follows. The question is not the Appellant's entitlement to the Child Tax Benefit for that period of months but whether the income of Markus Buchart must be included in determining the amount of the benefit. This leads to the underlying question of whether Markus Buchart was the Appellant's "cohabiting spouse" for the purpose of the benefit. The relevant sections of the Income Tax Act are set out below:
122.61(1) Where a person and, where the Minister so demands, the person's cohabiting spouse at the end of a taxation year have filed a return of income for the year, an overpayment on account of the person's liability under this Part for the year is deemed to have arisen during a month in relation to which the year is the base taxation year, equal to the amount determined by the formula ... (emphasis added)
The formula is not relevant but subsection 122.61(1) creates a deemed overpayment of tax the amount of which depends in part upon (i) the person's "adjusted income" and (ii) the number and age of the person's qualified dependants.
122.6 In this subdivision,
“adjusted income” of an individual for a taxation year means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual's cohabiting spouse at the end of the year if no amount were included in respect of a gain from a disposition of property to which section 79 applies in computing that income;
(emphasis added)
If a particular person claiming the Child Tax Benefit has a "cohabiting spouse" at the end of taxation year, the income of the cohabiting spouse is combined with that person's income for the purpose of determining that person's "adjusted income" for the year.
“cohabiting spouse” of an individual at any time means the person who at that time is the individual's spouse and who is not at that time living separate and apart from the individual and, ...
252(4) In this Act,
(a) words referring to a spouse at any time of a taxpayer include the person of the opposite sex who cohabits at that time with the taxpayer in a conjugal relationship and
(i) has so cohabited with the taxpayer throughout a 12-month period ending before that time, or
(ii) would be a parent of a child of whom the taxpayer would be a parent, if this Act were read without reference to paragraph (1)(e) and subparagraph (2)(a)(iii)
and, for the purposes of this paragraph, where at any time the taxpayer and the person cohabit in a conjugal relationship, they shall, at any particular time after that time, be deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship; (emphasis added)
(b) ...
[9] Having regard to the extended meaning of "spouse" in paragraph 252(4)(a), the real issue in this appeal is whether, at any relevant time, the Appellant and Markus Buchart did "cohabit in a conjugal relationship". The Appellant argues that there are four marital states in the common law provinces:
(a) single;
(b) cohabitation in sexual relationship of two people of the opposite sex, colloquially referred to as a "common-law relationship" or "living common-law" but properly termed in law "concubinage";
(c) marriage valid by common law or "common law marriage"; and
(d) marriage solemnized pursuant to a statute, which may be termed "statutory marriage" or "solemnized marriage", is often inaccurately referred to as "legal marriage".
The Appellant argues that she and Mr. Buchart fall within state (a) or (b) and not in state (c) or (d) because a marriage under (c) or (d) requires both the legal capacity to marry and a willingness to marry. The Appellant rejects the concept of marriage for herself. She is resolved to remain single with respect to her personal identity. With respect to her cohabitation with Mr. Buchart and their joint parenting of Amy, the Appellant argues that their relationship is "concubinage" (as in marital state (b) above) because there is an absence of any willingness to marry. Counsel for the Appellant summarized this argument as follows:
The essence of both common law marriage and solemnized marriage is an agreement. Marriage is a bargain between two people. It is by definition impossible to be married without both parties' knowledge and consent.
[10] Referring to the four martial states listed in paragraph 9, I am satisfied that there has never been a solemnized marriage between the Appellant and Mr. Buchart. Therefore, I can eliminate state (d). Similarly, I am not concerned with how the Appellant identifies herself as single. Therefore, I can eliminate state (a). I am concerned only with the manner in which the Appellant's relationship with Mr. Buchart is characterized for the purposes of section 122.6 of the Income Tax Act and, considering the four marital states put forward by the Appellant, I seem to be faced with a choice between states (b) and (c). As I understand the Appellant's argument, if I assume that all parties have the capacity in law to marry, the principal distinction between states (b) and (c) is that, under state (b), the cohabiting man and woman have decided that they will not marry and they do not regard themselves as married whereas, under state (c), the cohabiting man and woman are willing to marry without any wedding ceremony or other solemnizing event and they regard themselves as married.
[11] Counsel for the Appellant referred to a discussion of "common-law spouse" by the British Columbia Court of Appeal in Keddie v. Currie, (1991) 60 B.C.L.R. (2d) 1. In Keddie, the question was whether Mr. Keddie could qualify as a "common law spouse" of Dorretta Currie in order to claim against her estate. The British Columbia Court of Appeal was required to construe and apply section 85 of the Estate Administration Act:
85. In this Part ...
"common law spouse" means either a person who is united to another person by a marriage that, although not a legal marriage, is valid by common law, or a person who has lived and cohabited with another person as a spouse and has been maintained by that person for a period of not less than 2 years immediately preceding his death.
(emphasis added)
There was no evidence that Mr. Keddie had ever been "maintained" by Ms. Currie and so the Court was concerned only with the first branch of the section 85 test. Cumming J.A. writing for the majority stated:
Page 18 The effect of the Marriage Act ... is to require that marriages entered into in British Columbia be performed in compliance with the Marriage Act, and to preserve a separate role for the term "common law marriage" from that which is common parlance today. ...
Page 19 In light of the foregoing I have no doubt that common law marriages, i.e. marriages valid by common law, are separate and distinct from common law unions or relationships and that it is common law marriages, in the narrow sense of the term, that are referred to in section 85 of the Estate Administration Act.
Page 23 Having decided that a marriage "valid by common law" is indeed a legal relationship distinct from a "common law union" or "common law relationship", section 85 of the Estate Administration Act must be read in that light. It is clear that the facts in the present case do not fall within the common law marriage exception to the requirements of formal validity of marriage discussed above. Mr. Keddie has failed to show that there was a relationship that placed the parties within the common law marriage exception and that they satisfied the requirements of a common law marriage. ...
[12] Counsel for the Appellant relied on Keddie v. Currie and section 85 of the British Columbia Estate Administration Act to argue that a common law marriage continues to exist in the Province of British Columbia. Similarly, he relied on Blanchett v. Hansell et al, (1944) 52 Man. R. 1, to argue that a common law marriage continues to exist in the Province of Manitoba where the Appellant and Mr. Buchart reside. Without deciding the question, I am prepared to assume that a common law marriage does exist under Manitoba law. The Appellant and Mr. Buchart have not had a solemnized marriage and they are not willing to marry in a common-law sense. Therefore, with respect to the four marital states listed in paragraph 9, their cohabitation may very well be concubinage. This line of argument strikes me as somewhat academic when I am required to interpret the word "spouse" as defined in paragraph 252(4)(a) of the Income Tax Act. The basic question is one of statutory interpretation. If Mr. Buchart is the Appellant's "spouse" within the meaning of paragraph 252(4)(a), then he is a "cohabiting spouse" within the meaning of section 122.6 and his income will have to be combined with the Appellant's income in order to determine her "adjusted income" for purposes of the Child Tax Benefit.
[13] In Corporation Notre-Dame de Bon-Secours v. Communauté Urbaine de Québec et al, 95 DTC 5017, the Supreme Court of Canada set out certain rules for interpreting taxing statutes. After quoting a passage from Dickson C.J. in Bronfman Trust, Gonthier J. (writing for the Court) stated at page 5022:
In light of this passage there is no longer any doubt that the interpretation of tax legislation should be subject to the ordinary rules of construction. At page 87 of his text Construction of Statutes (2nd ed. 1983), Driedger fittingly summarizes the basic principles: "... the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament". The first consideration should therefore be to determine the purpose of the legislation, whether as a whole or as expressed in a particular provision. ...
And at page 5023:
The rules formulated in the preceding pages, some of which were relied on recently in Symes v. Canada [94 DTC 6001], [1993] 4 S.C.R. 695, may be summarized as follows:
A - The interpretation of tax legislation should follow the ordinary rules of interpretation;
B - A legislative provision should be given a strict or liberal interpretation depending on the purpose underlying it, and that purpose must be identified in light of the context of the statute, its objective and the legislative intent: this is the teleological approach;
C - The teleological approach will favour the taxpayer or the tax department depending solely on the legislative provision in question, and not on the existence of predetermined presumptions;
D - Substance should be given precedence over form to the extent that this is consistent with the wording and objective of the statute;
E - Only a reasonable doubt, not resolved by the ordinary rules of interpretation, will be settled by recourse to the residual presumption in favour of the taxpayer.
[14] I propose to follow these rules. With respect to rule B, the underlying purpose of section 122.6 is to provide a financial benefit for a parent who is raising a child on low income. The financial benefit takes the form of an artificial overpayment of tax ("an overpayment ... is deemed to have arisen") which is refunded to the parent on a periodic basis. The financial benefit depends on two basic conditions. First, the child must be younger than a certain maximum age. And second, the fixed amount of the benefit is reduced by a percentage of the parent's "adjusted income" with the result that, if the adjusted income is too high, the financial benefit is cut off. In my opinion, these two conditions are of equal importance if the underlying purpose of section 122.6 is to be achieved. Therefore, when construing the definition of "spouse" in paragraph 252(4)(a), I am not inclined to give either a strict or liberal interpretation. I will revert to rule A and follow the ordinary rules of interpretation construing the words "in their entire context and in their grammatical and ordinary sense".
[15] The important words in paragraph 252(4)(a) are "cohabit in a conjugal relationship". There is no doubt in my mind that the Appellant and Markus Buchart cohabit. In paragraph 2 of her Notice of Appeal, she alleges that "The Appellant resides with Amy's father". That allegation was admitted. In her oral evidence, she stated that Markus Buchart was Amy's father. In argument, counsel for the Appellant used the four marital states listed in paragraph 9 above to make the point that the "cohabitation" of the Appellant and Markus Buchart was "concubinage" within state (b). According to the Appellant's oral evidence, there is no doubt that she and Markus Buchart have an intimate relationship. The Canadian Oxford Dictionary (1998) defines "cohabit" as follows:
Live together amicably; live together in a sexual and romantic relationship without marriage;
I find as a fact that the Appellant and Markus Buchart did cohabit at all relevant times within the meaning of paragraph 252(4)(a).
[16] Did the Appellant and Markus Buchart cohabit in a "conjugal relationship"? They certainly had a relationship. Was it conjugal? The Canadian Oxford Dictionary (1998) defines "conjugal"as follows:
Of marriage or the relation between husband and wife;
Black's Law Dictionary (1990) has a similar definition:
Of or belonging to marriage or the married state; suitable or appropriate to the married state or to married persons; matrimonial; connubial;
This last dictionary definition offers the alternatives "marriage or the married state" and "appropriate to the married state or to married persons". The Appellant and Markus Buchart have never participated in any wedding ceremony or other solemnizing event which would cause them to be married persons. There has been no solemnized marriage or statutory marriage. But the status of the Appellant and Markus Buchart as a woman and man cohabiting in an intimate relationship, and bearing and raising a daughter, is "of or belonging to" the married state and "suitable or appropriate to" the married state. The status of the Appellant and Markus Buchart (cohabiting and raising their daughter together) has the badges of the "married state" even if the Appellant and Markus Buchart personally reject the concept of marriage.
[17] An old cliché comes to mind. If a two-legged creature with feathers waddles like a duck, quacks like a duck, and looks like a duck, it must be a duck. By parallel reasoning, if a man and woman own and share the same dwelling; take their meals together; share housekeeping chores; live in physical intimacy; and bear and raise a child, they must be in a relationship that is "suitable or appropriate to the married state" per Black's Law Dictionary. In other words, they cohabit in a conjugal relationship. The Appellant's argument depends on her subjective attitude toward marriage. How could a stranger know that the Appellant and Markus Buchart do not accept the institution of marriage or that they have an agreement not to marry when all of their surrounding circumstances give them the appearance of having either a solemnized marriage or a common-law marriage?
[18] In deciding whether the Appellant and Markus Buchart cohabit in a conjugal relationship within the meaning of paragraph 252(4)(a), their status must be determined by objective standards and not by subjective attitudes. Reading the words "cohabit in a conjugal relationship" in their ordinary sense and harmoniously with the scheme of section 122.6, those words describe the domestic status of the Appellant and Markus Buchart. In my opinion, Markus Buchart is the "spouse" of the Appellant within the meaning of paragraph 252(4)(a). Accordingly, he is the Appellant's "cohabiting spouse" for the purposes of section 122.6. The appeal is dismissed with costs.
Signed at Ottawa, Canada, this 21st day of November, 2000.
"M.A. Mogan"
J.T.C.C.