Cullen,
J.:—This
is
an
appeal
by
way
of
statement
of
claim
against
a
notice
of
reassessment
for
the
plaintiff's
1981,
1982
and
1983
taxation
years.
The
appeal
concerns
whether
certain
annual
payments
made
by
the
plaintiff
to
his
former
spouse
of
$10,000,
$10,000,
and
$5,000
in
1981,
1982
and
1983
respectively
were
deductible
as
alimony
by
virtue
of
subsection
60(b)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
Facts
The
plaintiff
is
an
orthodontist
residing
in
Winnipeg.
The
plaintiff
married
Naomi
Cohen
in
1959,
and
separated
from
her
in
1979.
The
plaintiff
entered
into
a
written
separation
agreement
with
Naomi
Cohen
on
October
31,
1980.
The
relevant
provisions
of
the
agreement
are
reproduced
below:
7.
Maintenance—The
husband
shall
pay
to
the
wife
as
maintenance
for
herself
the
sum
of
$1,500
per
month
from
November
1,
1980
until
November
1,
1982.
Additionally,
the
husband
shall
pay
to
the
wife
as
maintenance
the
sum
of
$25,000
in
the
following
instalments:
(i)
$10,000
on
November
1,
1981
(ii)
$10,000
on
November
1,
1982
(iii)
$5,000
on
November
1,
1983
Provided
that
the
aforesaid
maintenance
instalments
shall
be
paid
to
the
wife
regardless
of
her
marital
status
and
that
in
the
event
the
husband
should
die
prior
to
the
termination
date
of
the
aforesaid
maintenance
instalments,
his
estate
will
assume
the
husband's
responsibilities
and
obligations
as
above
set
forth
in
respect
of
the
said
maintenance
instalments
to
the
wife.
Subsequent
to
the
payment
of
the
aforesaid
maintenance
and
in
consideration
of
the
said
payments
ana
in
consideration
for
the
husband
transferring
to
his
wife
his
interest
in
the
marital
home,
the
wife
waives
all
future
rights
to
maintenance,
support
or
alimony
from
the
husband
for
herself.
9.
Cost
of
Living
Increase—The
maintenance
payable
to
the
wife
under
this
agreement
shall
increase
yearly
relative
to
the
cost
of
living
index
as
established
by
Statistics
Canada
or
by
10%,
whichever
is
less.
The
first
increase
shall
occur
on
November
1,
1981
and
yearly
thereafter
on
November
1st.
14.
Final
Agreement—The
husband
and
wife
agree
that
this
agreement
has
been
entered
into
in
contemplation
of
dissolution
of
the
marriage
and
as
a
final
property
settlement
as
a
result
thereof
and
the
parties
further
agree
that
each
has
been
fully
advised
of
the
estate
and
assets
of
the
other
and
each
has
had
independent
legal
advice.
They
are
aware
that
this
is
a
final
agreement
and
that
no
further
claims
Will
be
made
against
either
party
by
the
other
arising
from
the
marriage
or
the
dissolution
thereof.
Both
parties
have
been
made
aware
of
the
possibilities
of
fluctuation
of
their
respective
income
and
assets
and
are
cognizant
of
the
possible
increases
and
decreases
in
the
cost
of
living
and
each
are
prepared
to
accept
the
terms
of
this
agreement
as
a
full
and
final
settlement
and
waive
all
further
claims
as
set
out
herein
save
and
except
those
arising
under
the
agreement.
All
the
payments
were
made
in
accordance
with
the
provisions
of
the
agreement.
In
filing
his
income
tax
returns
for
the
taxation
years
1981,
1982
and
1983,
the
plaintiff
deducted
from
his
income
the
amounts
of
$10,000,
$10,000
and
$5,000
respectively
as
maintenance
payments
to
Naomi
Cohen.
The
Minister
of
National
Revenue
allowed
these
deductions
in
the
years
in
which
they
were
made.
However,
Naomi
Cohen
did
not
report
these
amounts
as
income
in
her
tax
return
for
the
years
in
question.
The
Minister
determined
that
the
payments
should
have
been
included
in
Naomi
Cohen's
income
in
accordance
with
paragraph
56(1)(b)
of
the
Act
as
alimony
or
as
other
allowance
payable
on
a
periodic
basis
for
her
maintenance.
Naomi
Cohen
appealed
this
determination
successfully
to
the
Tax
Court
of
Canada.
In
a
decision
reported
at
[1987]
1
C.T.C.
2306;
87
D.T.C.
246,
the
Tax
Court
held
that
in
the
context
of
the
separation
agreement,
the
payments
in
question
were
instalments
of
a
lump
sum
maintenance
award,
and
not
an
allowance
within
the
meaning
of
paragraph
56(1)(b)
of
the
Act.
By
notice
of
reassessment
dated
July
31,
1987,
the
Minister
reassessed
the
plaintiff
in
respect
of
the
1981,
1982
and
1983
taxation
years,
and
disallowed
the
purported
maintenance
deductions
on
the
grounds
that
the
amounts
paid
by
the
plaintiff
in
those
years
were
not
paid
pursuant
to
a
decree,
order,
or
judgment
of
a
competent
tribunal
or
pursuant
to
a
written
agreement,
as
alimony
or
other
allowance
payable
on
a
periodic
basis
for
the
maintenance
of
the
plaintiff's
spouse
within
the
meaning
of
subsection
60(b)
of
the
Act.
The
plaintiff
objected
by
notice
of
objection,
and
by
notice
of
confirmation
dated
February
22,
1988,
the
reassessments
were
confirmed
by
the
Minister.
The
plaintiff
appeals
to
the
Federal
Court
of
Canada.
Position
of
the
Plaintiff
The
plaintiff's
position
is
that
the
payments
in
question
were
paid
for
the
maintenance
of
Naomi
Cohen,
and
that
the
payments
were
in
the
nature
of
an
allowance
payable
on
a
periodic
basis
made
pursuant
to
a
written
separation
agreement,
and
that
at
the
time
of
the
payment
the
plaintiff
was
living
apart
from
Naomi
Cohen.
He
submits
that
the
payments
meet
all
the
requirements
of
subsection
60(b)
of
the
Act
and
should
therefore
be
considered
deductible.
The
plaintiff
also
submits
that
as
the
Minister
initially
allowed
the
deduction
and
took
the
position
before
the
Tax
Court
proceedings
involving
Naomi
Cohen
that
the
payments
should
be
included
in
her
income
(and
conversely
deductible
to
the
payer),
the
Minister
should
now
be
estopped
from
taking
the
position
that
payments
to
Naomi
Cohen
are
not
deductible
under
subsection
60(b).
Position
of
the
Defendant
The
position
of
the
Crown
is
that
the
intention
of
the
plaintiff's
spouse
in
the
course
of
the
separation
negotiations
was
to
obtain
a
lump
sum
payment
that
would
not
be
subject
to
income
tax,
in
order
to
provide
her
with
some
long-term
security
beyond
the
limited
periodic
maintenance
she
was
to
receive.
It
submits
that
the
lump
sum
was
made
payable
in
three
instalments
in
order
to
accommodate
the
plaintiff,
who
was
experiencing
financial
difficulty
at
the
time.
The
lump
sum
payment
accordingly
was
not
periodic
and
not
an
allowance
and
thus
did
not
meet
the
requirements
of
subsection
60(b).
The
Crown
also
points
to
provisions
of
the
separation
agreement
that
accord
different
treatment
to
the
instalment
payments
than
to
the
periodic
maintenance.
The
obligation
to
pay
the
instalments
was
not
terminated
by
the
death
of
the
plaintiff,
in
which
case
his
estate
would
continue
to
pay
the
required
instalments.
The
periodic
maintenance
payments
were
to
be
increased
annually
to
reflect
increases
in
the
cost
of
living,
while
the
instalment
payments
were
to
remain
the
same.
Also,
the
Crown
relies
on
the
provision
in
the
agreement
that
payment
of
the
monthly
maintenance
and
the
instalments
would
constitute
a
full
and
final
settlement
of
Naomi
Cohen's
marital
rights,
and
thus,
rather
than
being
a
periodic
payment
or
allowance,
was
rather
a
capital
payment
resulting
from
the
division
of
property
and
the
settlement
of
all
claims.
The
Case
at
Hand
Witnesses
for
the
plaintiff
were
Mr.
Ernest
Cohen
himself
and
Mr.
George
Orle
who
represented
the
plaintiff
during
the
separation
negotiations.
For
the
defendant
we
heard
from
Naomi
Cohen,
the
plaintiff's
former
wife
and
Alan
Maclnnes,
the
lawyer
who
represented
Mrs.
Cohen
during
the
separation
negotiations.
Doctor
and
Mrs.
Cohen
were
married
on
September
26,
1959
and
there
were
two
children
of
the
marriage,
a
daughter
born
in
1963
and
a
son
born
in
1966.
This
couple
separated
on
December
31,
1979
and
a
separation
agreement
dated
October
31,
1980
was
signed
by
them.
From
the
evidence
it
is
clear
this
was
an
amicable
separation
and
when
they
initially
separated
(Doctor's
evidence
at
page
55
of
transcript):
A.
Well,
she
agreed
not
to
run
up
big
bills
and
I
agreed
to
pay
for
them.
Whatever
she—I
agreed
to
pay
for
her
maintenance
and
the
children.
Q.
Was
there
any
fixed
cash
amount
agreed
to?
A.
I
don't
think
so.
At
the
time
this
couple
were
married
the
wife
was
19
and
the
husband
was
26.
Immediately
following
the
separation
the
husband
and
wife
endeavoured
to
make
some
arrangements
without
involving
lawyers
and
when
they
weren't
getting
anywhere
doing
things
on
their
own,
Mrs.
Cohen
retained
Mr.
Alan
Maclnnes
(Maclnnes).
Even
after
counsel
were
retained
by
both
parties
they
continued
to
meet
to
endeavour
to
arrange
some
kind
of
settlement
or
at
least
agree
on
amounts
to
be
paid.
The
$25,000
figure
which
is
the
subject
of
this
action
was
negotiated
and
was
a
compromise
between
the
parties.
At
the
time
of
the
separation,
and
for
that
matter
during
the
course
of
the
marriage,
Mrs.
Cohen
did
not
work
outside
the
home
save
and
except
for
teaching
some
yoga
at
a
local
high
school.
Mrs.
Cohen
also
received
a
small
amount
of
money
as
a
result
of
an
investment
made
by
her
father.
Mrs.
Cohen
laughingly
commented
that
she
did
the
payroll
at
her
husband's
orthodontic
practice
but
that
primarily
was
a
cheque-signing
task
and
she
received
some
sort
of
remuneration
for
that.
Her
yoga
activities
netted
somewhere
between
$1,000
and
$1,800
a
year
and
it
wasn't
full
employment
but
represented
about
three
sessions
a
year.
Consequently,
at
the
time
of
the
separation
Mrs.
Cohen
was
not
really
trained
for
work
in
the
business
world
and
frankly
conceded
that
she
knew
very
little
about
income
or
income
taxes.
Once
legal
representation
was
secured
by
each
of
the
parties
negotiations
got
under
way
to
determine
what
benefits
should
accrue
to
Mrs.
Cohen
and
what,
therefore,
should
be
incorporated
into
a
separation
agreement.
After
meeting
with
their
clients
the
two
counsel
exchanged
views
on
what
form
the
separation
agreement
should
take.
Maclnnes
produced
a
memorandum
in
his
own
handwriting
which
indicated
to
him
that
he
either
met
with
or
spoke
by
telephone
with
George
Orle
on
April
2,
1980
and
the
memo,
"generally
would
be
the
content
of
my
discussion”
(page
137
of
transcript).
As
described
by
Maclnnes
at
page
136
of
the
transcript:
On
.
.
.
April
2,
I
guess,
1980
I
have
a
document
headed
"Orle",
"$2,750.00—two
years.
1,375,
1,375
to
kids,”
and
then
"$50,000.00—lump
sum,
$26,000.00—loan.
He’ll
see
whether
paid.
Equity
in
house
or
maintain
house
and
pay
$75,000.00
lump
sum.
Space
out
lump
sum
payments
if
necessary."
At
page
138
of
the
transcript
the
question
was
put:
Q.
Now,
there
are
the
words
"lump
sum"
on
that
page
but
no
amount.
Can
you
tell
me
what
Mrs.
Cohen's
position
was
in
the
negotiations
as
of
that
date?
A.
No,
I
can't.
However,
Maclnnes'
evidence
is
that
he
had
had
a
meeting
with
Mr.
Fagus,
Mrs.
Cohen's
financial
adviser,
and
he
had
heard
from
Mrs.
Cohen
that
Fagus
had
suggested
a
$50,000
cash
lump
sum.
All
of
this
was
very
preliminary
on
or
about
February
1,
1980
and
at
that
time
Maclnnes
had
not
received
any
instructions
about
how
to
proceed
but
was
simply
giving
him
information
that
she
had
secured
from
Fagus.
There
was,
however,
no
question
that
as
of
April
2,
1980,
Mrs.
Cohen
was
looking
at
a
$50,000
lump
sum
in
addition
to
other
benefits.
In
a
later
memo
of
May
2,
1980,
written
again
by
Maclnnes,
he
states:
"She
still
wants
lump
sum
of
$50,000
and
house.”
There
was
an
exchange
of
correspondence
between
the
solicitors
and
on
June
12
Maclnnes
has
another
memorandum
to
file
in
his
own
handwriting
reading:
June
12,
1980
spoke
to
Mrs.
Cohen.
Told
her
of
discussion.
Only
real
issue
is
lump
sum.
Told
her
of
my
discussion
with
Orle
as
to
manner
in
which
payment
could
be
made.
His
giving
us
the
house
is
really
only
the
equivalent
of
equalizing
division
of
marital
assets.
Told
her
lump
sum
arguable
but
should
stick
to
our
demand
for
it.
And
then
Maclnnes
had
a
further
memo
to
file,
again
handwritten,
and
again
dated
June
12,
1980,
to
which
he
refers
at
page
142
of
the
transcript
as
follows:
George
Orle
and
me.
"Transfer
of
home",
reference
to
periodic
maintenance,
reference
to
furnishings,
and
then,
"Told
him
that
we'd
spread
lump
sum
by
way
of
monthly
payments
and
then
instalments”.
Orle
wrote
a
letter
to
Maclnnes
dated
June
27,
1980
(Exhibit
1,
page
107)
and
made
reference
to
the
meeting
of
June
12.
In
that
letter
Orle
makes
reference
to
Dr.
Cohen
paying
Mrs.
Cohen
the
sum
of
$25,000
cash,
referred
to
as
a
lump
sum
by
Orle.
At
page
144
of
the
transcript
we
have
this
exchange
dealing
with
the
June
27
letter:
Q.
And
then
in
the
second
paragraph
of
page
2—
A.
It
talks
about
periodic
payments,
or
periodic
maintenance,
rather,
in
the
second
paragraph
of
page
2.
And
that
was
certainly
consistent
with
what
we
were
discussing,
that
is,
both
a
lump
sum
and
periodic
maintenance.
This
letter
of
June
27
is
really
an
initial
proposal
but
it
comes
from
Dr.
Cohen
and
it
provides
that
the
house
be
sold
and
the
equity
of
about
$100,000
be
divided
between
them,
that
the
Transcona
building,
a
property
in
which
Dr.
Cohen
had
an
interest,
be
sold
and
the
net
proceeds
be
divided,
and
then
this
phrase,
”
Dr.
Cohen
from
his
share
of
the
net
proceeds
will
pay
to
Mrs.
Cohen
the
sum
of
$25,000
cash
in
addition
to
this
lump
sum
cash
payment."
Following
these
three
proposals
from
Dr.
Cohen,
reference
is
made
to
something
that
they
treat
as
entirely
different
and
I
quote:
”
Insofar
as
monthly
maintenance
is
concerned
Dr.
Cohen
is
of
the
opinion
that
the
$2,750
per
month
requested
by
your
client
is
more
than
he
can
afford."
Thus,
in
this
letter
there
is
a
clear
distinction
between
maintenance
payments
and
a
lump
sum
cash
payment.
I
think
it
is
fair
to
say
that
counsel
for
the
defendant
had
it
right
when
he
said
at
page
220
of
the
transcript:
Now,
obviously
what
she
would
be
looking
for
when
the
marriage
was
over
was
a
roof
over
her
head.
She
would
be
looking
for
some
income,
monthly
income,
to
support
herself
and
her
children,
and
she
would
be
looking
for
something
in
recognition
of
having
spent
twenty
years
in
that
marriage.
As
Mr.
Macinnes
said
in
his
cross-examination
this
morning,
something
over
and
above
straight
equalization
of
assets
was
in
order
in
this
case
because
she
had
been
in
that
marriage
for
twenty
years.
Throughout
the
negotiations
Dr.
Cohen
paid
very
little
attention
to
that
which
his
lawyer
was
telling
him
about
his
obligations
on
the
breakdown
of
a
marriage.
Dr.
Cohen
was
endeavouring
to
be
fair
and
on
balance,
if
his
counsel
is
correct
and
I
think
he
is,
he
ended
up
paying
considerably
more
than
might
have
been
required
under
the
provincial
legislation.
Throughout
these
negotiations,
however,
the
components
were
always
the
house,
the
periodic
maintenance,
and
the
lump
sum
payment.
Mrs.
Cohen
endeavoured
to
be
accommodating
and
accept
periodic
payments
of
the
lump
sum
because
her
husband
was
unable
to
borrow
that
money
from
the
banks.
Issue
Are
the
payments
in
question
maintenance
within
the
meaning
of
subsection
60(b)
of
the
Act
and
therefore
deductible
from
the
income
of
the
plaintiff?
Analysis
Under
subsections
60(b)
and
60(c)
of
the
Act,
alimony
payments
are
deductible
by
the
person
making
them
if
certain
conditions
are
met.
These
provisions
read
as
follows:
60.
There
may
be
deducted
in
computing
a
taxpayer's
income
for
a
taxation
year
such
of
the
following
amounts
as
are
applicable:
(b)
an
amount
paid
by
the
taxpayer
in
the
year,
pursuant
to
a
decree,
order
or
judgment
of
a
competent
tribunal
or
pursuant
to
a
written
agreement,
as
alimony
or
other
allowance
payable
on
a
periodic
basis
for
the
maintenance
of
the
recipient
thereof,
children
of
the
marriage,
or
both
the
recipient
and
children
of
the
marriage,
if
he
was
living
apart
from,
and
was
separated
pursuant
to
a
divorce,
judicial
separation
or
written
separation
agreement
from,
his
spouse
or
former
spouse
to
whom
he
was
required
to
make
the
payment
at
the
time
the
payment
was
made
and
throughout
the
remainder
of
the
year.
In
Klement
v.
The
Queen,
[1987]
2
C.T.C.
27;
87
D.T.C.
5284
(F.C.T.D.),
the
following
criteria
which
must
all
be
met
in
order
for
payments
made
to
a
spouse
or
former
spouse
to
be
deductible
were
set
out
at
page
29
(D.T.C.
5285):
1.
The
amount
must
be
paid
pursuant
to
a
decree,
order,
or
judgment
of
a
competent
tribunal
or
pursuant
to
a
written
agreement;
2.
The
payment
must
be
in
the
nature
of
alimony
or
other
allowance
"paid
on
a
periodic
basis”;
3.
The
amount
must
be
paid
to
the
taxpayer's
spouse
or
former
spouse;
4.
The
amount
must
be
for
the
maintenance
of
the
recipient,
the
children
of
the
marriage
or
both;
5.
The
taxpayer
must
be
living
apart
from
the
recipient
at
the
time
of
the
payment
and
throughout
the
remainder
of
the
year;
6.
The
taxpayer
must
be
separated
from
the
recipient
pursuant
to
a
divorce,
judicial
separation
or
written
separation
agreement.
In
the
present
case,
the
issue
is
whether
the
payment
"was
in
the
nature
of
alimony
or
other
allowance
paid
on
a
periodic
basis”,
all
the
other
requirements
having
been
met.
In
determining
whether
the
payment
is
made
(a)
periodically
and
(b)
as
alimony
or
an
allowance,
it
is
necessary
to
examine
the
nature
of
the
payments
in
light
of
all
the
circumstances.
The
interpretation
of
this
requirement
has
been
the
subject
of
considerable
litigation.
It
has
been
repeatedly
established
that
money
paid
in
a
lump
sum
in
settlement
of
future
spousal
obligations
is
not
an
allowance
or
a
periodic
payment:
Larivière
v.
The
Queen,
[1986]
1
C.T.C.
206;
86
D.T.C.
6549
(F.C.T.D.);
Gagné,
G.
v.
M.N.R.,
[1982]
C.T.C.
2655;
82
D.T.C.
1672
(T.R.B.);
Pisony
v.
M.N.R.,
[1982]
C.T.C.
2010;
82
D.T.C.
1023;
Veliotis
v.
The
Queen,
[1974]
C.T.C.
237;
74
D.T.C.
6190
(F.C.T.D.).
While
it
is
not
conclusive
of
the
issue,
it
has
been
held
that
administrative
practices
and
interpretations
may
be
of
assistance
and
can
be
accorded
weight:
Harel
v.
D./M.R.
(Quebec),
[1978]
1
S.C.R.
851;
[1977]
C.T.C.
441;
77
D.T.C.
5438
at
448
(D.T.C.
5442;
S.C.R.
859).
The
Minister
of
National
Revenue,
in
Interpretation
Bulletin
IT-118R2,
has
determined
that
in
general,
instalment
payments
of
a
specified
sum
are
not
considered
déductible:
Specified
Sum
Payable
on
a
Periodic
Basis
14.
Where,
under
a
court
order
or
an
agreement,
a
specified
sum
of
money
is
to
be
paid
and
payment
is
required
to
be
made
in
whole
or
in
part
by
regular
instalments,
such
regular
instalments
normally
do
not
qualify
under
paragraph
60(b),
(c)
or
(c.1)
and
are
not
income
of
the
recipient.
Where
Payments
Excessive
15.
Alimony
or
maintenance
is
generally
a
sum
not
in
excess
of
an
amount
sufficient
to
maintain
the
recipient
and
or
children
in
the
style
to
which
they
were
accustomed
prior
to
the
breakdown
of
the
marriage
or
common-law
union.
Where
the
periodic
payments
are
considerably
in
excess
of
maintenance
requirements,
there
is
a
presumption
that
the
whole
amount
is
a
payment
of
capital,
regardless
of
the
wording
used
in
the
agreement,
if
the
payments
are
to
made
over
a
short
time
only.
As
noted
above,
a
lump
sum
payment
does
not
meet
the
requirement
that
the
payments
be
periodic
in
order
to
be
deductible.
However,
lump
sums
payable
by
instalments,
as
in
the
present
case,
have
been
considered
to
be
periodic
in
nature.
It
is
a
question
of
degree
as
to
whether
the
instalment
payments
have
been
made
on
a
regular
basis,
and
that
the
entire
context
of
the
order
or
agreement
pursuant
to
which
the
payments
are
made
must
be
considered
in
making
this
determination.
This
is
clear
from
the
decision
in
M.N.R.
v.
Hansen,
[1967]
C.T.C.
440;
67
D.T.C.
5293
(Ex.
Ct.).
In
this
case
the
husband
had
agreed
to
pay
the
sum
of
$20,000
for
the
support
and
maintenance
of
his
wife,
of
which
$6,000
was
payable
immediately
and
$14,000
by
monthly
instalments
of
$100.
The
Court
ruled
that
the
monthly
payments
were
deductible.
Jackett,
P.
stated
as
follows
at
446
(D.T.C.
5297):
Finally,
I
reject
the
contention
that
paragraph
7
provides
for
a
“lump
sum
payment"
of
$20,000
and
that
the
monthly
payments
in
question
are
merely
payments
on
account
of
that
lump
sum.
Quite
the
contrary,
in
my
view,
paragraph
7
provides
for
a
number
of
payments
totalling
$20,000
and
the
monthly
payments
in
question
are
some
of
the
payments
so
provided
for.
A
reference
to
the
words
of
the
paragraph
makes
it
quite
clear.
It
says,
"the
Husband
agrees
to
pay
the
Wife
the
sum
of.
.
.
$20,000
.
.
.
as
follows",
and
then
it
sets
out
the
actual
payments
that
are
to
be
made.
The
real
question
is,
of
course,
whether
the
payments
are
made
pursuant
to
a
provision
for
payment
on
a
periodic
basis
and,
in
my
view,
paragraph
7(2),
pursuant
to
which
the
payments
in
question
were
made,
is
precisely
that.
[Emphasis
added.]
It
is
significant
that
Jackett,
P.
seemed
to
base
his
decision
on
the
fact
that
the
payments
were
made
periodically.
He
did
not
deal
expressly
with
the
fact
that
the
payments
would
terminate,
but
seemed
to
be
content
to
hold
that
section
7,
considered
in
the
context
of
the
whole
agreement,
had
the
primary
purpose
of
providing
for
the
maintenance
of
the
wife.
Later
cases
were
to
examine
other
factors
in
order
to
determine
if
the
payments
were
in
substance
alimony
or
a
payment
in
consideration
of
the
renunciation
of
marital
rights.
The
fact
that
the
instalment
payments
in
this
case
were
not
all
for
an
equal
amount
does
not
necessarily
mean
that
the
payments
cannot
be
considered
to
have
been
made
on
a
periodic
basis:
No.
427
v.
M.N.R.
(1957),
17
Tax
A.B.C.
264;
57
D.T.C.
291
(T.A.B.).
In
McKimmon
v.
The
Queen,
[1986]
2
C.T.C.
2359;
86
D.T.C.
1752
(T.C.C.);
revd
[1988]
2
C.T.C.
71;
88
D.T.C.
6296
(F.C.T.D.);
revd
[1990]
1
C.T.C.
109;
90
D.T.C.
6088,
the
taxpayer
was
ordered
pursuant
to
a
decree
nisi
to
pay
his
former
wife
lump
sum
maintenance
of
$130,000
and
periodic
maintenance
of
$115,000
in
four
annual
instalments
of
$25,000
and
a
final
instalment
of
$15,000.
These
payments
were
subject
to
interest,
were
secured
by
a
mortgage
on
the
taxpayer's
company's
property,
and
in
the
event
of
default
the
principal
would
be
payable
at
the
option
of
the
recipient.
The
taxpayer
attempted
to
deduct
the
payments,
but
the
Minister
disallowed
the
deductions.
On
appeal
to
the
Tax
Court,
the
assessment
was
upheld,
the
court
holding
that
the
payments
were
not
deductible
because
they
were
granted
to
the
wife
in
full
and
final
satisfaction
of
all
the
claims
against
her
husband.
Once
the
payments
were
made,
the
taxpayer
was
released
from
any
further
liability
to
his
former
wife,
and
therefore
the
payments
could
not
be
regarded
as
periodic.
On
appeal
to
the
Federal
Court,
Collier,
J.
allowed
the
taxpayer's
appeal.
He
found,
based
on
a
construction
of
the
decree
nisi,
that
the
primary
purpose
of
the
payments
was
to
make
arrangements
for
the
support
of
the
taxpayer's
former
wife,
and
that
the
payments
were
to
recur
at
fixed
times
so
as
to
constitute
periodic
payments.
The
fact
that
the
decree
nisi
set
out
a
specific
sum
to
be
paid
did
not,
of
itself,
preclude
a
finding
that
the
payments
were
periodic
in
nature.
In
this
case,
it
is
considered
significant
by
the
Minister
that
the
agreement
provides
that
the
instalment
payments
were
to
be
paid
to
Naomi
Cohen
even
in
the
event
of
the
death
of
the
plaintiff.
There
is
authority
that
such
a
provision
is
inconsistent
with
the
characterization
of
the
payments
as
alimony.
In
Veliotis
v.
The
Queen,
supra,
Pratte,
J.
quoted
from
the
judgment
of
Cattanach,
J.
in
M.N.R.
v.
Trottier,
[1967]
2
Ex.
C.R.
268;
[1967]
C.T.C.
28;
67
D.T.C.
5029,
at
37
(D.T.C.
5034):
Alimony
or
maintenance
continues
through
the
joint
lives
of
the
husband
and
wife
but
terminates
upon
the
death
of
either.
If
Mrs.
Trottier
had
died
during
the
currency
of
the
second
mortgage
the
payments
under
the
second
mortgage
would
continue
to
be
payable
to
her
assignee,
if
she
had
assigned
it,
and
otherwise
to
her
heirs,
executors
and
administrators
in
accordance
with
a
covenant
in
the
indenture
to
that
effect.
It
follows
that
the
periodic
payments
cannot
be
classified
as
payments
for
maintenance.
In
Pisony
v.
M.N.R.,
supra,
the
taxpayer
agreed
in
a
divorce
settlement
to
pay
his
former
wife
$25,000
in
instalments
of
$5,000
for
five
years.
The
taxpayer's
attempt
to
deduct
this
amount
as
maintenance
was
disallowed
by
the
Minister.
The
Tax
Review
Board
upheld
the
assessment.
Relying
on
Trottier,
supra,
the
Board
stated
that
there
was
nothing
in
the
agreement
to
support
a
finding
that
the
taxpayer
was
only
obligated
to
pay
the
instalments
during
the
joint
lifetime
of
the
former
spouses.
The
Board
also
found,
based
on
the
wording
of
the
agreement
that
the
payment
was
a
"once
and
for
all
maintenance
award”,
and
"in
full
satisfaction
of
all
her
past,
present
and
future
claims
for
maintenance”,
that
the
payment
was
more
in
the
nature
of
a
capital
payment
in
discharge
of
the
husband's
obligation
to
the
wife,
rather
than
a
continuing
obligation
for
maintenance.
The
same
argument
was
made
in
the
present
case
by
the
Crown,
based
on
the
final
settlement
clause
in
the
separation
agreement.
A
similar
conclusion
as
to
whether
the
payments
were
periodic
or
not,
or
should
be
characterized
as
a
capital
payment
for
the
discharge
of
all
marital
rights
was
made
in
The
Queen
v.
Dorion,
[1981]
C.T.C.
136;
81
D.T.C.
5111
(F.C.T.D.).
The
taxpayer
was
required
to
pay
his
wife
the
sum
of
$20,000
in
five
equal
annual
instalments.
Décary,
J.
relied
on
a
decision
of
the
Quebec
Court
of
Appeal
in
a
related
matter
that
the
$20,000
represented
payment
in
full
of
all
amounts
the
wife
could
claim
under
the
marriage
contract.
He
stated
as
follows
at
137
(D.T.C.
5112):
A
payment
of
alimony
or
an
allowance
for
maintenance
is
linked
to
the
duration
of
the
life
of
the
creditor
or
debtor
or
to
the
period
of
time
during
which
the
alimony
or
allowance
is
necessary
for
the
recipient
and
can
be
paid
by
the
debtor.
In
such
a
case
the
alimony
or
allowance
cannot
be
a
total
fixed
amount
payable
by
instalments
up
to
the
amount
of
$20,000
over
a
period
of
five
years
as
in
the
case
at
bar,
as
the
consideration
for
alimony
or
an
allowance
is
the
need
of
the
creditor,
whereas
here
the
consideration
is
the
waiver
of
benefits
resulting
from
the
marriage
contract.
(See
also
Gagné
v.
M.N.R.,
supra.)
In
Leclair
v.
M.N.R.,
[1982]
C.T.C.
2715;
82
D.T.C.
1755
(T.R.B.),
the
taxpayer
agreed
to
pay
his
former
wife
a
lump
sum
of
$17,000
over
four
years.
The
Board
found
that
the
payment
was
in
substance
alimony,
as
the
evidence
revealed
that
the
purpose
of
the
payments
was
to
re-establish
the
former
spouse
in
the
workplace,
and
that
this
is
often
a
factor
in
the
negotiation
of
alimony
settlements
that
are
paid
over
a
limited
time.
The
Board
noted
that
there
were
no
other
elements
present
in
the
agreement
that
would
change
the
nature
of
the
obligation
from
one
of
limited-time
support
to
one
inconsistent
with
its
characterization
as
alimony,
such
as
a
clause
that
would
make
the
payment
of
the
amounts
a
debt
owed
by
the
estate
of
the
husband.
Here,
it
is
the
wife's
uncontradicted
and
credible
evidence
that
she
spent
all
of
the
money
as
and
when
it
was
received.
There
was
no
money
used
for
tuition
or
fees
on
training
or
educational
courses
to
enable
her
to
become
gainfully
employed.
Her
first
interview
resulted
in
a
job
and
she
trained
“on
the
job”
so
no
fee
or
tuition
was
necessary.
Conclusion
Based
on
the
foregoing,
the
payments
by
the
plaintiff
in
this
case
are
not
alimony.
While
the
payments
appear
to
be
periodic
in
the
sense
of
being
paid
over
a
period
of
time,
the
agreement
contains
provisions
that
make
the
obligation
to
pay
inconsistent
with
an
allowance
for
maintenance,
which
is
usually
intended
to
be
in
the
nature
of
a
periodic
allowance
for
the
needs
of
the
recipient
spouse:
Veliotis,
supra.
The
obligation
was
designed
to
survive
the
parties,
and
the
finality
clause
in
the
agreement
is
an
acknowledgement
of
a
capital
payment
in
consideration
of
the
renunciation
of
rights,
although
it
is
clearly
not
the
only
possible
interpretation.
It
would
have
been
useful
for
the
plaintiff's
case
if
there
were
evidence
led
that
established
that
the
payment
was
made
to
re-establish
his
former
spouse
as
in
Leclair,
supra.
Based
on
the
construction
of
the
agreement,
the
appeal
is
dismissed.
With
respect
to
the
argument
that
the
Crown
is
estopped
from
arguing
that
the
maintenance
is
not
deductible
because
of
its
previous
representations
in
the
case
of
Naomi
Cohen,
the
case
of
Gibbon
v.
The
Queen,
[1977]
C.T.C.
334;
77
D.T.C.
5193,
makes
it
clear
that
the
Minister
or
other
subordinate
of
the
Crown
cannot
by
any
conduct
or
representation
bar
the
Crown
from
enforcing
a
statute
where
there
had
previously
been
a
failure
to
apply
the
law.
Estoppel
cannot
override
the
law
of
the
land.
Accordingly
the
action
will
be
dismissed
with
costs
to
the
defendant.
Appeal
dismissed.