2001-4595(IT)I
BETWEEN:
NAOMI KRAMER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on November 6, 2002 at Montréal, Quebec, by
The Honourable D.G.H. Bowman
Associate Chief Judge
Appearances
Agents for the Appellant: Angela Veitch, Student-at-Law
Jean-Nicolas Prévost, Student-at-Law
Counsel for the Respondent: Philippe Dupuis, Esq.
CORRECTED REASONS FOR JUDGMENT
Whereas there was a typographical error in the name of Ms. Angela Veitch on the ninth line of paragraph [20] of the reasons for judgment issued on January 7, 2003
Page 5 of the reasons for judgment is to be substituted.
Signed at Ottawa, Canada, this 27th day of January 2003.
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A.C.J.
2001-4595(IT)I
BETWEEN:
NAOMI KRAMER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on November 6, 2002 at Montréal, Quebec, by
The Honourable D.G.H. Bowman
Associate Chief Judge
Appearances
Agents for the Appellant: Angela Veitch, Student-at-Law
Jean-Nicolas Prévost, Student-at-Law
Counsel for the Respondent: Philippe Dupuis, Esq.
JUDGMENT
It is ordered that the appeals from assessments made under the Income Tax Act for the 1997 and 1998 taxation years be dismissed.
Signed at Toronto, Canada, this 7th day of January 2003.
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"D.G.H. Bowman" |
A.C.J.
Date: 20030107
Docket: 2001-4595(IT)I
BETWEEN:
NAOMI KRAMER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bowman, A.C.J.
[1] These appeals are from assessments made under the Income Tax Act for the appellant's 1997 and 1998 taxation years. The issue is whether the amounts of $16,744 and $18,819 respectively are to be included in her income for those years as support payments under paragraph 56(1)(b) of the Income Tax Act.
[2] The appellant and her former husband, Mendel Kramer, married on March 23, 1987 and they had two children born in 1986 and 1988 respectively. The spouses separated on November 28, 1994.
[3] On November 21, 1994 the appellant moved in the Superior Court of Quebec for a judgment of the court for a number of things, including custody of the children, use of the matrimonial home, use of the family car, the payment by the husband of an alimentary allowance of $2,500 per month, and the payment of a number of expenses relating to the matrimonial home.
[4] The matter was not heard because on November 28, 1994 the parties entered into a consent agreement, described as a "consent to interim measures". The agreement dealt with a number of matters, including custody of the children, access to the children, possession of the house and use of the family car and alimony.
[5] Clause 5 dealt with the support payments, as follows.
The Defendant shall pay alimony for one minor children and the Plaintiff in the sum of $1,425.00 monthly, on the first day of each month at the Plaintiff's residence, in advance.
[6] The appellant contends that I should draw some inference from the access provisions about the temporary nature of the agreement and I therefore reproduce clauses 1, 2 and 3 of the agreement.
1. The Plaintiff shall have custody of the minor children, Yeshaya and Eliazer.
2. The Defendant shall have access to the children as follows up to and including 12 December 199
a) one (1) day each weekend from 8:00 A.M. until 9:30 A.M. the following morning.
b) Monday and Wednesday evenings from 5:00 P.M. to 9:00 P.M.
3. After 12 December 1994 the Defendant shall have access to one children as follows:
a) one (1) day each weekend from 8:00 A.M. until 9:30 A.M. the following morning;
b) Tuesday and Thursday evenings, from 5:00 P.M. to 9:00 P.M.;
c) from 2 January to 9 January 1995 either for the entire period or during the days (the Plaintiff will have the children exclusively from 23 December 1994 to 1 January 1995);
d) the first Passover Seder, from 13 April 2:30 P.M. until 14 April 1994, 3:30 P.M.;
e) from 24 February, 5:00 P.M. until 26 February 9:00 P.M., 1995.
[7] I note that in the second line of clause 2 the last digit in the date seems to have been cut off in the photostat which was made on exhibit. I have not seen the original but I assume the missing number is 4.
[8] In any event, the handwritten agreement, which was drafted by the parties' lawyers, after it was signed, was taken to a "Greffier spécial", who placed the following stamp on the first page of the motion, and signed it.
Le 28 novembre 1994
Requête accordée.
Entérine et déclare exécutoire
le consentement intérimaire signé le 28 novembre 1994
pour valoir jusqu'au 17 janvier 1995.
[illegible]
Greffier spécial
[9] The procès verbal (Exhibit A-1) signed by a Greffier spécial on November 28, 1994 contains the notation
Requête continuée en salle 2.17 le 17 janvier 1995.
[10] Evidently no one told Mrs. Kramer of the new hearing date of January 17, 1995 and it seems no one turned up, or at all events Mrs. Kramer did not, and the notice of motion contained the following further notation
Hon. Juge Israel Mass JCS
le 17 janvier 1995
Ads Sine Die [illegible]
[and a signature]
[11] I gather from this that nothing happened and the matter was simply adjourned sine die.
[12] Payments seem to have been made but apparently not regularly because on May 24, 1996 the appellant, through another lawyer, applied for a "bref de saisie-arrêt après jugement" against the husband and the college where he worked.
[13] The evidence is not clear what further steps were taken pursuant to this writ, but the Direction de la perception automatique des pensions alimentaires, evidently a branch of the Direction générale des contribuables of the Quebec Ministry of Revenue ("La Direction"), became involved and the support payments were made through that office.
[14] It seems that the application of the writ of seizure on May 24, 1996 prompted La Direction to look into the matter and on March 3, 1999 La Direction wrote to Mrs. Kramer as follows.
Subject: File closed
We wish to advise you that your file was reviewed further to the filing of a statement of non-payment of support with the office of the Superior Court.
Your file indicates that the judgment rendered on November 28th 1994, was valid until January 17th 1995 as indicated by the special bailiff.
Consequently, the Minister of Revenue has to interrupt the support payments.
[15] This surprising piece of news led Mrs. Kramer to conclude that if there was no obligation on Mr. Kramer after January 17, 1995 to make the payments she should not have had to include them in her income.
[16] She applied for a refund for 1995, 1996 and 1997 and did not include any payments in her income for 1998. She received the refunds. The CCRA then reassessed Mr. Kramer and disallowed the deduction of the payments for 1997 and 1998. He objected and subsequently appealed to the Tax Court of Canada. The Department of Justice must have agreed with him because his appeals were allowed on consent.
[17] The CCRA then went back and reassessed Mrs. Kramer for 1997 and 1998 to include the payments in her income. Hence these appeals. She was not reassessed for 1995 or 1996 presumably because the years were statute barred.
[18] To finish the picture on 19 April 2000 the Honourable Mr. Justice Marx of the Superior Court of Quebec rendered a judgment of divorce based on a consent to judgment. In his judgment he made the following declaration:
Declares that the defendant paid alimentary support for the minor children Eliazer and Yeshaya from November 28, 1994 to March 15, 1999 in virtue of both an Agreement and a Judgment dated November 28, 1994.
[19] One may, I believe, safely start from the premise that where paragraph 56(1)(b) speaks of a written agreement it is implicit that it be a valid and enforceable written agreement. Certainly we have what on its face purports to be a written agreement signed by both parties. The appellant's position is however that the words "pour valoir jusqu'au 17 janvier 1995" written on the notice of motion and signed by the Greffier spécial means that its effect ceases on January 17, 1995 as assumed by La Direction in its letter of March 3, 1999.
[20] For support payments to be covered by paragraph 56(1)(b) they must be paid pursuant to a written agreement or a court order. The notation made by the Greffier spécial may well have given to the agreement the effect of a court order and that effect was to last until January 17, 1995 when the matter was to come before the court. When no one appeared on January 17, 1995 the matter was adjourned sine die. Obviously both parties considered themselves bound after that date. It is true the effect of the court order expired on January 17, 1995 but the written agreement continued in full force. The appellant's position was presented with great skill by Ms. Angela Veitch and Mr. Jean-Nicolas Prévost. Where I am however in respectful disagreement with them is the effect of the notation signed by the Greffier spécial. It gave the agreement the force and effect of an order of the court until January 17, 1995. It did not cause the agreement to be any the less an agreement or change it from an agreement into an order so that on the expiry of the order on January 17, 1995 nothing remained. The expiry of the effect of the ratification was that compulsory execution no longer was possible. The agreement continued to exist and to have effect under the law of Quebec. The Code civil reads:
1378. A contract is an agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a prestation.
...
1385. A contract is formed by the sole exchange of consents between persons having capacity to contract ...
...
1458. Every person has the duty to honour his contractual undertakings.
...
1590. An obligation confers on the creditor the right to demand that the obligation be performed in full, properly and without delay.
[21] In Droit de la famille québécois by Justice Jean-Pierre Senécal, paragraph 35-190, p. 3,524, the following appears:
... la validité d'une convention entre les conjoints ne dépend nullement de son homologation par le tribunal. ... À cet égard, soulignons qu'il ne faut pas confondre la validité d'une convention avec ses possibilités d'exécution: même si une convention non homologuée peut créer certains problèmes (puisque pour exécuter il faut un jugement), ce n'est pas à dire que la convention n'est pas valable, l'une des parties pouvant, en fait, être contrainte d'y donner suite par jugement lorsque nécessaire.
[22] It follows that the payments were made pursuant to a written agreement which had not terminated.
[23] I shall mention briefly a point which I raised in argument and it is the effect of the declaration of Justice Marx on April 19, 2000 which I quoted above. According to the Federal Court of Appeal in Dale et al. v. The Queen, 97 DTC 5252, an order of a superior court is not susceptible of lateral attack, on grounds of jurisdiction or otherwise. In Dale the Nova Scotia court on an ex parte application retroactively amended the letters patent of a corporation that at the time to which the order was effective was a Prince Edward Island company. If an ex parte order of a Nova Scotia court can have retroactive and extra-territorial effect then it seems incontrovertible that effect must be given to the declaration of the Quebec Superior Court on April 19, 2000.
[24] It follows that I must dismiss the appeals. The payments were made pursuant to a written agreement and must be included in the appellant's income for 1997 and 1998.
[25] If there ever was a case for at least the waiver of interest under the Minister's discretionary powers pursuant to the fairness package this is it. The appellant acted in good faith upon the letter of March 3, 1999 from La Direction. She applied for and received a refund. As a result of a consent judgment in favour of her husband to which she was not a party the CCRA seeks to recover the amount refunded to her. The least the Minister can do is to waive the interest under subsection 220(3.1) of the Income Tax Act if not the tax under the Financial Administration Act.
[26] The appeals are dismissed.
Signed at Toronto, Canada, this 7th day of January 2003.
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"D.G.H. Bowman" |
A.C.J.
COURT FILE NO.: 2001-4595(IT)I
STYLE OF CAUSE: Between Naomi Kramer and
Her Majesty The Queen
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: November 6, 2002
REASONS FOR JUDGMENT BY: The Honourable D.G.H. Bowman
Associate Chief Judge
DATE OF JUDGMENT: January 7, 2003
APPEARANCES:
Agents for the Appellant: Angela Veitch, Student-at-Law
Jean-Nicolas Prévost, Student-at-Law
Counsel for the Respondent: Philippe Dupuis, Esq.
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm: --
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada