Date: 20020501

Docket: 2001-1695-IT-I

BETWEEN:

MARNI DANGERFIELD,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

Hershfield, J.T.C.C.

[1]            This is an appeal in respect of the Appellant's 1999 taxation year.

[2]            The Respondent reassessed the Appellant by including in her income child support payments of $3,182.00 received by her in the year in respect of her daughter Kirsten. Such amount had not been included by her but had been deducted by Kirsten's father who had made such payments in the year.

[3]            There was an Agreed Statement of Facts filed with the Court at the outset of the hearing that narrowed the issue in this matter to whether a judgment of the Court of Queen's Bench (Family Division) Winnipeg Centre ordering the subject child support payments was "made" on April 21, 1997 (or on a later date after April 30, 1997) and, if it was made on April 21, 1997, whether it was made with a commencement day, for the purposes of the Income Tax Act (the "Act"), of May 1, 1997. If it was "made" on April 21, 1997 without a specified "commencement day" for the purposes of the Act of May 1, 1997, the support payments would, as asserted by the Respondent, be taxable and the appeal would fail; otherwise, the appeal would be allowed.

FACTS

[4]            Since the facts are for the most part not in issue, I will only summarize them to the extent required in order to deal with the issue as set out above.

[5]            Although Kirsten, born in 1991, was the natural child of the Appellant and Paul John Mountney, the Appellant and Mr. Mountney have never been married and had ceased to cohabit in March 1992. There were no child support orders before or since the order that is the subject of this appeal.

[6]            In February 1997, the Appellant seeking relief from Mr. Mountney, filed a petition in the said Court of Queen's Bench. The petition sought an order for custody, child support, financial disclosure and costs as well as a declaration of parentage. The relief sought was pursuant to provincial legislation that the petition cited as The Family Maintenance Act (F.M.A.), The Queen's Bench Rules (Q.B. Rules) and The Queen's Bench Act.

[7]            Mr. Mountney was living in British Columbia at the time of the petition. The petition, in the form provided for under the Q.B. Rules, served on Mr. Mountney advised that the petition included a claim for child support and confirmed that a failure to answer the petition could result in the claim being granted. The petition did not refer to, nor did it make any request for any special relief in respect of the income tax consequences associated with the child support being sought.

[8]            Prior to filing the petition, the Appellant's then legal representative wrote to Mr. Mountney in December 1996 and requested payment of child support in the amount of $250.00 per month effective January 1, 1997. The letter states the amount requested was based on Federal Government guidelines pursuant to the implementation of new child support laws as of May 1, 1997 and would not be deductible by him or taxable to the petitioner.

[9]            The Petition was heard on April 21, 1997. Mr. Mountney was not present. The judge was provided with exhibits that included the above-noted letter to Mr. Mountney in December 1996 and correspondence from Mr. Mountney (which, according to the transcript of proceedings, indicated he was intending to appoint Manitoba counsel) but the latter correspondence was not included with the book of agreed facts submitted in the case at bar nor was other correspondence (included as exhibits at the hearing considering the petition) that might have shed light on why Mr. Mountney was unrepresented at the hearing. The agreed facts do state that Mr. Mountney was served with notice of the proceedings, that he did not file an Answer to the petition and did not attend to oppose any relief sought. As noted, the petition itself made no mention of a commencement day for tax purposes.

[10]          A copy of the transcript of the proceedings was included with the Agreed Statement of Facts. The following is taken from that transcript:

MS. KATZ (Counsel for the petitioner): ...We are seeking the support in the amount of $250 per month, to commence May 1st, and with payments through court commencing May 1st, payable on the first day of each and every month.

                THE COURT: I confess I have a problem with the commencement date; and it's only because the new guidelines and -

                MS. KATZ: Yes.

                THE COURT: -- regulations indicate that I have to have an astonishing amount of information before I can make an order.

                MS. KATZ: Under the new -

                THE COURT: Yes.

                MS. KATZ: Yes, but this is a matter under the -

                THE COURT: Under F.M.A.?

                MS. KATZ: -- F.M.A.

                THE COURT: All right.

                MS. KATZ: So I don't think we have that problem.

                THE COURT: Well, then I don't have a problem with that at all. How nice. Okay.

                MS. KATZ: That takes care of that problem that we're all -

                THE COURT: That does take care of that problem.

                MS. KATZ: -- going to be having.

                THE COURT: There will be a declaration of paternity. There will be an order of sole custody. There will be an order of child support in the amount of $250 a month commencing May 1st. There will be an opportunity for Mr. Mountney to have this matter brought back for a review of child support following his disclosure of all his financial information, which, in the circumstances, will include information about his wife's income.

                Maintenance will be payable, I assume, through Maintenance Enforcement?

MS. KATZ: Yes.

THE COURT: Okay. There will be a Part VI order under F.M.A. Anything else?

MS. KATZ: No, that's it. Thank you, My Lady.

THE COURT: Thank you

                (PROCEEDINGS CONCLUDED)

[11]          The judgment of the Court was prepared by the Appellant's counsel and signed by the Deputy Registrar on May 5, 1997. The front page of the judgment is dated April 21, 1997 which, according to the form of judgments used by the Queen's Bench of Manitoba, is the date the judgment was made. The judgment makes no mention of a commencement day for tax purposes. The only provision of the judgment that is arguably relevant is the support payment provision which reads as follows:

(c) The Respondent pay to the Petitioner for the support of the said child, the sum of $250.00 per month, payable on the first day of each and every month, commencing May 1, 1997;

[12]          As I will elaborate on later in these Reasons, unlike the Rules of the Tax Court of Canada, the Q.B. Rules provide that the date an order or judgment is "made" is the date it is pronounced which the Respondent asserts is the date the order was spoken by the judge which in this case was April 21, 1997. No argument was made at the trial of the case at bar that no order or judgment was actually uttered on April 21. To the contrary, the Agreed Statement of Facts provided that the judgment in question was "pronounced April 21, 1997 and signed May 5, 1997". However, after reserving my decision and noting that the transcript evidenced that the judge did not herself purport to utter a judgment (using the future tense "There will be an order of child support in the amount of $250.00 a month commencing May 1^st") and that there were particulars yet to be penned in ("payable on the first day of each and every month"), I reconvened the parties on February 14, 2002 and read draft reasons for judgment of the case at bar based on the preliminary finding that a judgment had not been pronounced or made by the Court of Queen's Bench until it was signed in May 1997. I advised the parties that I did not regard myself as bound by the agreement of the parties that the judgment was pronounced on April 21, 1997 as it was a mixed question of law and fact. However, considering that the parties had not addressed the question of the tense and completeness of the statements of the judge on April 21, I invited submissions on the question before finalizing my judgment.

[13]          At the request of counsel for the Respondent, a telephone conference hearing took place on March 1, 2002 at which time a motion was brought by the Respondent to introduce a further exhibit (a disposition sheet) dealing with the entry of the judgment asserted to have been pronounced in April 1997. I indicated that since I had raised this new issue, I would allow such additional evidence. The Appellant's counsel acceded to my order permitting the entry of this further exhibit as part of a written submission. That is, issues of attestation and opportunities for cross-examination were effectively waived by the Appellant much as if this exhibit had been initially included in the book of agreed facts.

[14]          The disposition sheet is dated April 21, 1997 and purports to be signed by the judge on that date. The sheet, amongst other things, notes child support of $250.00 per month commencing May 1, 1997. The type of action is marked as F.M.A. and reference to "Part VI" is made in respect of the child support payment. There is a note on the disposition sheet that there will be an opportunity for Mr. Mountney to have child support reviewed following financial disclosure.

THE POSITION OF THE PARTIES

[15]          The following Q.B. Rules were referred to by the parties:

59.01 An order is effective from the date on which it is made, unless it provides otherwise.

1.04.1 In these rules,

(a) a reference to the date an order or judgment is "made", "given" or "granted" is deemed to be a reference to the date the order or judgment is pronounced; and

(b) a reference to the date an order or judgment is "entered" is deemed to be a reference to the date the order or judgment is signed.

59.02(1) Every order shall, at the time made, be endorsed on a disposition sheet, and the disposition sheet shall be signed by the judge or officer making the order, unless

(a) the order itself is signed by the judge or officer making it; or

(b) the circumstances make it impractical to do so.

...

59.03(3) An order shall be in Form 59A (order) or 59B (judgment) and shall include,

(a) the name of the judge or officer who made it;

(b) the date on which it was made; and

(c) a recital of the particular necessary to understand the order, including the date of the hearing, the parties who were present or represented by counsel and those who were not, and any undertaking made by a party as a condition of the order.

[16]          I also note that the introductory note to Q.B. Rule 59 describes how written forms of orders (including judgments) are to be prepared after decisions have been rendered. In most cases, judges or other judicial officers are required to record or endorse their decisions in writing on the file at the time that the order is made but the successful party is required to prepare a draft of the formal order. Orders are then submitted to the Registrar for signature.

[17]          As to the date when an order or a judgment is pronounced, counsel for the Respondent said there were no Manitoba cases on point but referred to the case of May Estate v. M.N.R., [1989] T.C.J. No. 713. At page 9 of that case, this Court cites page 1025 of R31C Can. Abr. (2nd):

6804. The principle which makes the order, whenever drawn up and entered, to bear date on the day when it is pronounced by the Court conforms with the whole theory of judicial procedure, the theory is that the cogent and binding effect of the order beings immediately from the time when the order is pronounced by the lips of the Judge...

[18]          Accordingly, counsel for the Respondent argues that the "made" date of the subject Queen's Bench judgment is the date it was uttered from the lips of the judge and endorsed on the disposition sheet both of which occurred on April 21, 1997.

[19]          The relevance of the "made" date of the subject judgment of the Court of Queen's Bench is that pursuant to paragraph 56(1)(b) of the Act, child support payments are excluded from the recipient's income only if under an order the "child support amount" became receivable "on or after its commencement day" which includes the "made" date of the order provided that date is after April 1997. Paragraph 56(1)(b) excludes amounts received on or after a commencement day by use of a formula that excludes an amount described in clause "B" of that paragraph. That clause reads as follows:

B              is the total of all amounts each of which is a child support amount that became receivable by the taxpayer from the particular person under an agreement or order on or after its commencement day and before the end of the year in respect of a period that began on or after its commencement day, and

...

[20]          It is clear that if there is no "commencement day" of an order, no amount can be receivable under that order that is "on or after its commencement day". This Court has consistently applied this construction of paragraph 56(1)(b).[1]

[21]          "Commencement day" is defined in subsection 56.1(4) of the Act as follows:

"commencement day" at any time of an agreement or order means

(a) where the agreement or order is made after April 1997, the day it is made; and

(b) where the agreement or order is made before May 1997, the day, if any, that is after April 1997 and is the earliest of

(i) the day specified as the commencement day of the agreement or order by the payer and recipient under the agreement or order in a joint election filed with the Minister in prescribed form and manner,

(ii) where the agreement or order is varied after April 1997 to change the child support amounts payable to the recipient, the day on which the first payment of the varied amount is required to be made,

(iii) where a subsequent agreement or order is made after April 1997, the effect of which is to change the total child support amounts payable to the recipient by the payer, the commencement day of the first such subsequent agreement or order, and

(iv) the day specified in the agreement or order, or any variation thereof, as the commencement day of the agreement or order for the purposes of this Act.

[22]          Counsel for the Respondent argues that the "made" date of the subject order being before May 1997 is not a "commencement day" and, further, argues that pursuant to this definition, there is no other "commencement day" in respect of the subject order so that the child support amounts are not excluded from the Appellant's income under paragraph 56(1)(b) of the Act.

[23]          Counsel for the Appellant argues that the Q.B. Rules should not be determinative of the "made" date of the subject order for the purposes of the Act and that the made date should be the date it has effect. Alternatively, relying primarily on the date that the payments commence under the order, the Appellant argues that there is effectively a "commencement day" specified for the purposes of the Act in the subject order, namely May 1, 1997. Having concluded that the "made" date of an order for the purposes of the Act is the date it is made as determined by the Rules of the Court that made it, I suggest that the Appellant's best case comes down to the following three arguments: (1) the family court judge must be taken to have provided for an effective date of her order of May 1, 1997 and that has the affect of changing the "made" date pursuant to Rule 59.01 to May 1, 1997; or (2) the family court judge must be taken to have provided for an effective date of her order of May 1, 1997 with the purpose of constituting May 1, 1997 as the "commencement day" pursuant to subparagraph (b)(iv) of the definition of "commencement day"; or (3) even if the effective "made" date of the order is not properly regarded as May 1, 1997, the commencement date of the child support payments being May 1, 1997 should, in the circumstances of this case, be treated as the "commencement day" pursuant to subparagraph (b)(iv) of the definition of "commencement day". Each and all of these arguments is pursued in a context that the Appellant asserts makes it clear that the judge and the parties all understood and intended there to be a commencement day for the purposes of the Act of May 1, 1997 as they all understood and intended that the child support payments were not to be taxable to the recipient Appellant and that the order should not be taken as deficient in giving effect to this circumstantially clear state of affairs.

ANALYSIS

[24]          Q. B. Rule 1.04.1 prescribes that an order is "made" when it is pronounced and the May Estate case is sufficient authority, in my view, to confirm a finding that the pronouncement date of an order or judgment is the date it is spoken or uttered from the mouth of the judge. Any other finding would disrupt the interaction of the applicable provisions of the Q. B. Rules referred to and set out above and would seem to fly in the face of the overall scheme of those Rules as they deal with the making and issuance of judgments and orders by the Court of Queen's Bench in Manitoba. For example, pursuant to subsection 59.02(1) of those Q.B. Rules, an order is to be endorsed by the judge making it on a disposition sheet "at the time made". I accept that the disposition sheet bearing the date "April 21, 1997" was signed by the judge on that date. According to the Q.B. Rules, such endorsement further evidences that the order must have been made on that date since the endorsement is to be made at the time the order is made. Even if the utterance from the judge's mouth on April 21, being in the future tense, does not yet constitute an order made at that time, the signing of the disposition sheet on that date is sufficient to fix the "made" date of the order as April 21. Further, Q.B. Rule 59.03(3) provides that the order shall include the name of the judge who made it and the date on which it was made. The particular judge and that date (April 21, 1997) appear on the front page of the subject judgment.

[25]          The Appellant's counsel argues that the made date or pronouncement date of the order should be when it takes effect, which in this case is May 1, 1997. He argues that there is no aspect of the order that needs to be effective prior to that date; everything in respect of the order moves forward from that date.

[26]          The Q.B. Rules do not support this argument. Firstly, there is no reason to assert that an order cannot have an earlier "made" date, even if not effective until after the made date, and secondly, the subject order cannot likely be said to have a later effective date just because the only aspect of it that is date sensitive, namely the first payment date for child support payments, is a future date. The start date of a monthly payment requirement under the order does not fix the effective date of the order itself. In any event, the "made" date governs in this case which is not the same date as when an order takes effect. The "made" date of the subject order is April 21, 1997. That is the end of the matter, then, unless there is a "commencement day" under subparagraph (b)(iv) of the definition of "commencement day". That subparagraph provides that the "commencement day" is the day, if any, after April 1997, that is "specified" in the order, or in a variation thereof, as the "commencement day" of the order "for the purposes of this Act". The Respondent argues no such day is "specified" in the order "for the purposes of" the Act or at least not expressly specified.

[27]          The Appellant counsel's second argument seeks to draw a necessary inference from the effective date argument which is that since nothing happens under the order until May, 1997 and since all the parties including the judge intended or understood that the tax consequences to flow from the order were that the child support payments were not to be taxable to the recipient, there is a commencement day effectively specified in the order for the purposes of the Act. Put another way, the Appellant argues that Q.B. Rule 59.01 permits, in the circumstances, recognition of an effective commencement day of the order as of May 1, 1997 for tax purposes even though the order does not expressly say that and even though the Act makes no reference to the "effective date" of an order for tax purposes. This approach has merit but relies in this case on too many inferences having to be drawn. If I accept that a date can be "specified" in the order by virtue of its intended effective date then this appeal might succeed provided I also found that such intended effective date was intended to ensure that the payments under the order were not taxable to the recipient pursuant to the post April 1997 child support regime embraced by the Act. This would be to find that there was an effective date for tax purposes that was meant to be the "commencement day" of the order without that terminology being used. While this is an attractive approach to giving effect to apparent intentions, it is not one that readily fits within the express terms of the Act and not one that can, in my view, be used where the party relying on the approach not only has to rely on a series of inferences but has failed to establish that they are in fact necessary inferences. There is in the case at bar no necessary inference that the order was intended to have an effective date of May 1. The payment commencement date alone draws no such necessary inference. The order does not specify an effective date or mention tax consequences. The judge asked about a "commencement day" and was told one was not required. If she had been properly informed of the need for a commencement day we can only speculate as to what she would have done as nowhere in her order does she refer to the tax treatment of the child support payments. While the letter to the child's father said the child support payments were to be tax free to the recipient, that letter was not referred to by the judge in the transcript of proceedings. Further, that letter said payments were to commence January 1997 and was thereby wrong in the tax consequences it purported to describe.[2] It seems everyone was being misinformed and to draw necessary inferences from such circumstances is dangerous at best. I would be attracted to this approach if the judge had expressly said anything that confirmed her intent or understanding that the payments ordered were to be tax free payments under the new tax regime for child support. If she had intended this result and would not be inclined to put responsibility for achieving it on counsel who drafted the signed order, I suggested to counsel for the Appellant that the better forum to pursue a just result in this case might have been to go back to that judge who made the order. This was apparently not pursued.

[28]          As to the third argument of the Appellant's counsel, it requires me to find that the payment commencement date of the child support payments should be taken as the commencement day of the order "specified" for the purposes of the Act. It was argued that there was a presumption that commencing the payments on May 1 would bring it into the new system which I accept was the Appellant's intention. I accept the probability that Appellant's then counsel thought the payment commencement date being May 1, 1997, was sufficient to meet the requirements of the Act to bring the Appellant into the new system and that she believed the judge in making the order was making a new system order. It is even possible that the judge thought this was the case as well in spite of having been dissuaded from pursuing questions on the commencement day issue. [3] This is not sufficient however to cause this Court to read in words in an order that the Act requires to be specified in the order itself. Further, subparagraph (b)(ii) of the definition of "commencement day" speaks of the day on which the first payment is made under a varied order as the "commencement day". This focus on the first payment date is absent in both paragraph (a) and subparagraph (b)(iv) of the definition of "commencement day". Such change in focus must be taken as intentional. Accordingly, the date support payments commence cannot be taken to be a "commencement day" in respect of the order itself under subparagraph (b)(iv) of the definition of "commencement day".

[29]          Once the disposition sheet was signed by the judge, I have little doubt the judgment ordering the support payment was complete. I have been shown nothing in the Q.B. Rules to suggest otherwise. That counsel had yet to draft the judgment and that the court registrar was required to approve the judgment (order) so drafted does affect either its "made" date or effective date. While the Q.B. Rules to which I was referred do not suggest what might happen if the order was sought to be enforced (say on May 1^st) prior to the date it was in proper form and finally signed, the practicalities of enforcement of the order is a separate procedural step which cannot determine the date it was made. That is, when an order might be enforced on its terms has no bearing on the determination of a "commencement day" under the Act. Even if the payments under the order could not be required to be made until after the order was signed and entered pursuant to Q.B. Rule 1.04.1(b) on May 7, 1997, there is still no commencement day of the order itself. That there may have been no receivable under the order until May 7 does not mean that the subject payments were not receivable on that day (May 7) under an order made on April 21.

[30]          I am not unmindful that the new regime which makes child support payment receipts tax free is there to help custodial parents such as the Appellant in this case. If the proceedings before the Queen's Bench were concerned with scheduled payment requirements under that regime (which they were not) then it would be clearer that the tax treatment afforded under that regime should apply. In that case the order likely would have expressly dealt with the commencement day of the order for the purposes of the Act or necessary inferences to that effect could more readily be drawn. However, as it is, the provisions of the Act deny the new regime to the Appellant in this case.

[31]          Accordingly, the appeal is dismissed.

Signed at Ottawa, Canada, this 1st day of May 2002

"J.E. Hershfield"

J.T.C.C.

COURT FILE NO.:                                                 2001-1695(IT)I

STYLE OF CAUSE:                                               Marni Dangerfield and

                                                                                                Her Majesty the Queen

PLACE OF HEARING:                                         Winnipeg, Manitoba

DATE OF HEARING:                                           December 18, 2001

REASONS FOR JUDGMENT BY:      the Honourable Judge J.E. Hershfield

DATE OF JUDGMENT:                                       May 1, 2002

APPEARANCES:

Counsel for the Appellant: Thor Hansell

Counsel for the Respondent:              Angela Evans

COUNSEL OF RECORD:

For the Appellant:                

Name:                                Thor Hansell

Firm:                  Aikins, MacAulay & Thorvaldson

                                                                                                Winnipeg, Manitoba

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-1695(IT)I

BETWEEN:

MARNI DANGERFIELD,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on December 18, 2001 at Winnipeg, Manitoba, by

the Honourable Judge J.E. Hershfield

Appearances

Counsel for the Appellant:                    Thor Hansell

Counsel for the Respondent:                Angela Evans

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1999 taxation year is dismissed in accordance with the attached Reasons for Judgment.

Signed at Ottawa, Canada, this 1st day of May 2002.

"J.E. Hershfield"

J.T.C.C.

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