Tax Court of Canada Judgments

Date: 20030129

Docket: 2002-1373(IT)I

BETWEEN:

GLORIA EREMITY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

_______________________________________________________________

Appeals heard on November 28, 2002, at Vancouver, British Columbia,

Before : The Honourable Judge E.A. Bowie
	Appearances:
	Counsel for the Appellant:	The Appellant herself
	Counsel for the Respondent:	Nadine Taylor Pickering

_______________________________________________________________

JUDGMENT

          The appeals from determinations made under the Income Tax Act for the 1997, 1998 and 1999 base taxation years are dismissed.

Signed at Ottawa, Canada, this 29th day of January, 2003.

"E.A. Bowie"

J.T.C.C.

Date: 20030129

Docket: 2002-1373(IT)I

BETWEEN:

GLORIA EREMITY,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Bowie J.

[1]      The Appellant and her husband separated in 1993, and subsequently divorced. Before the divorce, she had been receiving the child tax benefit (the benefit) that is provided for in subdivision a.1 of division E of Part 1 of the Income Tax Act (the Act) in respect of their child. From the time of their separation until February 1996, they shared joint custody of their child, and the Appellant continued to receive the benefit, apparently by mutual agreement. In March 2001, she was notified by the Minister of National Revenue that he had determined that for the previous three years she had not been entitled to the benefit payments she had received, and that she would have to repay almost $7,000. These appeals are brought from those assessments.[1] They were heard under the Court's informal procedure.

[2]      Before going further, I should comment upon the Reply to the Notice of Appeal filed by the Deputy Attorney General of Canada in this case. Paragraphs 3 and 4 of that document read:

3.          By Notices dated March 20, 2001, the Minister notified the Appellant for the 1997, 1998 and 1999 taxation years that the amount of [Canada Child Tax Benefits] to which she was entitled had been recalculated and requested that overpayments of $2,861.00, $2,120.13 and $1,948.40 respectively be repaid          

4.          In so notifying the Appellant, the Minister relied on the following assumptions of fact:

a)          the facts stated and admitted above;

b)          the Appellant is a parent of [the child];

c)          in 1997 through 1999 [the child] was a "qualified dependant" as defined in section 122.6 of the Income Tax Act (the "Act");

d)          [the child] did not reside with the Appellant in 1997 through 1999;

e)          the Appellant did not primarily fulfill the responsibility for the care and upbringing of [the child] in 1997 through 1999; and

f)           the Appellant is not an "eligible individual" as defined in section 122.6 of the Act.

It is obvious that no thought went into the creation of these two paragraphs. There was no recalculation of the Appellant's entitlement, as paragraph 3 states. In fact, the Minister determined that it was not the Appellant but her former husband who was the eligible individual for the three years in question, and that she was, therefore, not entitled to any benefit at all. Paragraph 4 purports to recite the assumptions of fact upon which the Minister based his redeterminations. Subparagraph 4(a) states that the content of paragraph 3, that is the fact of issuing the Notices dated March 20, 2001, was assumed and relied on in issuing those Notices, which is obviously impossible. Subparagraphs 4(c), (e) and (f) state conclusions either of law or of mixed fact and law, including, of course, the very conclusions of mixed fact and law that the Court must decide. These comments may seem picayune until it is remembered that case law has conferred a special status on the assumptions of the Minister that underlie an assessment under the Act. I can only repeat what I, and other judges of this Court, have said on numerous recent occasions. If the Deputy Attorney General of Canada persists in filing pleadings which purport to assert assumptions made by the Minister that on their face are specious, then the Court will have no alternative but to treat all the pleaded assumptions simply as allegations of fact as to which the burden of proof is on the Crown.

[3]      Section 122.61 of the Act provides for payment of the benefit to an "eligible individual". In order to meet the definition of that expression, which is found in section 122.6, a person must reside with the child, and must be the parent who "... primarily fulfils the responsibility for the care and upbringing of the [child]".          Even in cases of joint custody, only one parent can meet this definition at any one time. If the child resides with only one of the parents then only that parent can be the eligible individual and receive the benefit payments. In cases of joint custody where the child lives with both parents, entitlement lies with the parent who is found to have primarily fulfilled the responsibility for the child's care and upbringing during the relevant period, taking into consideration all the prescribed factors.

[5]      In the present case, there is no real dispute about the facts that govern entitlement to receive the benefit. Indeed, the Appellant began her evidence with the statement:

... I am not really arguing about who was the primary caregiver for ... our child. What I would like to just argue about is the money I have to pay back.                                                                                                                     (Transcript page 4)

From time to time during her evidence, the Appellant did assert that she and her former husband shared the child's upbringing more or less equally; however, that evidence related only to the years since 1999. I believe that she continued to accept him as the primary caregiver in respect of the period between 1997 and 1999.

[6]      I do not propose to review in detail the evidence of the Appellant and her former husband as to their respective contributions to the care and upbringing of the child during the period in issue here. Clearly they are both loving parents, and both have contributed significantly to the child's needs. In February 1996, by a Consent Order, the Provincial Court awarded sole custody to the father, and ordered the Appellant to pay maintenance. Since then, the child has lived with his father; throughout the years in issue the child visited with the Appellant one afternoon and evening each week, and on alternate weekends from Saturday morning until Sunday evening. On those occasions, and at some other times as well by ad hoc arrangement, she looked after the child's needs. There was little conflict between the evidence of the Appellant and that of her former husband as to the 1997 to 1999 period; taken together, it certainly establishes that during those years, he was the person with whom the child resided, and also the person who was the primary caregiver.

[7]      The Appellant's real objection to the redeterminations in this case is that she says that she and her former husband agreed at the time of their separation that she would continue to receive the benefit for their child, and that she would pass it on to him. Certainly the Appellant feels, perhaps with some justification, that when her former husband applied for the benefit, and did so retroactively, he was violating an arrangement they had made. Her evidence was that she had in fact turned over to him all the benefit payments that she had received during the period, except for the amounts that she paid from it for the child's daycare expenses. Her former husband did not dispute that there was some kind of arrangement, but he did dispute that she made all the payments to him that she claims to have made. The evidence of both parents as to the exact amounts that she paid to him was very unclear, but that is not a matter for me to decide.

[8]      When the Minister issued the redetermination notices and demanded repayment from the Appellant of the benefit payments she had received for three years, he also paid three years benefits retroactively to her former husband, duplicating the payments that the Minister now seeks to recover from the Appellant. It is understandable that she feels aggrieved, facing as she does the demand to repay almost $7,000, which is effectively for his benefit. It is difficult not to sympathize with her; however her plight is the result of entering into the arrangement that she did with her former husband. Clearly, there are financial issues between them, but they will have to be resolved elsewhere. My jurisdiction is only to review the correctness of the Minister's decision that the Appellant was not the eligible individual in respect of the child during the three years from 1997 to 1999. The evidence leaves no room for doubt that the decision was correct, and so the appeals must be dismissed.

[9]      Before leaving this matter, I wish to comment upon the manner in which this case came to be before me. It must have been obvious to the Minister when he received the father's application for the benefit that there was a potential, in fact probable, dispute between the two parents, involving as it did the entitlement to the benefit for a three-year period during which it had already been paid to the child's mother. The Appellant was given no opportunity to dispute her former husband's entitlement, even though the decision in favour of his application necessarily resulted in assessments against her for repayment of $7,000. When the matter reached the Court, the Appellant not only had the burden of proof, but she found herself, as a practical matter, pitted against her former husband, who had the advantage that his case was presented by the Deputy Attorney General of Canada, whose counsel had prepared him to give evidence, led that evidence, cross-examined the Appellant, and finally, presented legal argument to support the father's case. She did all of that very capably, and as a result it was a very one-sided contest. I have decided the case on the basis of the evidence as it came out in Court, as of course I am bound to do. I have no idea how the evidence might have appeared if it had been the Appellant rather than her former husband who had the benefit of counsel paid for by the state. Section 174 of the Act provides a mechanism whereby the issue could have been put before the Court for decision without the Minister committing the resources of the government to assisting one side, to the detriment of the other. Once a question has been stated under that section, the parties can be left to present their own cases. This is frequently done when disputes arise as to the entitlement under section 122.61. In my view, it is a much fairer way to resolve such disputes between former spouses.

Signed at Ottawa, Canada, this 29th day of January, 2003.

"E.A. Bowie"

J.T.C.C.

COURT FILE NO.:

2002-1373(IT)I

STYLE OF CAUSE:

Gloria Eremity and Her Majesty the Queen

PLACE OF HEARING

Vancouver, British Columbia

DATE OF HEARING

November 28, 2002

REASONS FOR JUDGMENT BY:

The Honourable Judge E.A. Bowie

DATE OF JUDGMENT

January 29, 2003

APPEARANCES:

Counsel for the Appellant:

The Appellant herself

Counsel for the Respondent:

Nadine Taylor Pickering

COUNSEL OF RECORD:

For the Appellant:

Name:

N/A

Firm:

N/A

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada