The Queen v. Taylor, 84 DTC 6234, [1984] CTC 244 (FCTD)

Cattanach, J:—These are appeals from a decision of the Tax Review Board dated December 3, 1982 whereby appeals by the late Irving A Taylor, who died at Houston, Texas in October 1982, from assessments to income tax made by the Minister of National Revenue for the taxpayer’s 1978 and 1979 taxation years, were allowed.

In computing his income for these taxation years the taxpayer claimed deductions in the respective amounts of $16,075 and $8,550 as alimony paid pursuant to an order of a competent tribunal made payable on a periodic basis to his spouse pursuant to paragraph 60(b) of the Income Tax Act applicable to the 1978 and 1979 taxation years.

The Minister in assessing the taxpayer disallowed the deductions so claimed as not falling within paragraph 60(b) in that the payments were not made by the taxpayer to his “spouse” within the meaning of that word as used in that paragraph of the Act then in force.

As I appreciate the basis upon which the Chairman of the Tax Review Board, as that tribunal was known at that time, allowed the taxpayer’s appeals from the assessments made by the Minister and referred the assessments back to the Minister for reassessment it was that monthly payments of alimony made by the taxpayer pursuant to the Court order were made to his “de facto” spouse or former spouse and were accordingly made to his “spouse or former spouse” within the meaning of those words as used in paragraph 60(b).

In paragraph 4 of the statement of claim it is alleged as follows:

4. In assessing Irving A Taylor for the 1978 and 1979 taxation years, the Minister of National Revenue disallowed the deduction referred to in paragraph 3. In doing so he assumed, amongst others, the facts referred to in paragraphs 5 to 14.

Paragraphs 5 to 14 of the statement of claim, thus recite the facts assumed by the Minister (and possibly others) in disallowing the deductions claimed by the taxpayer and assessing accordingly.

In paragraph 2 of the statement of defence the defendant responded as follows:

In reference to Paragraph 4 of the Plaintiffs Statement of Facts set forth in the Statement of Claim, the Defendant has no knowledge of any assumptions made by the Minister of National Revenue in reaching his decision to disallow the deductions therein referred to.

In R W S Johnston v MNR, [1948] SCR 486; [1948] CTC 195; 3 DTC 1182, Rand, J delivering the judgment of the majority said at 489 [202]:

Every such fact found or assumed by the assessor or the Minister must be accepted as it was dealt with by those persons unless questioned by the Appellant.

He concluded the paragraph 39 beginning by saying the oft-quoted classic words:

but the onus was his (the appellant’s) to demolish the basic facts upon which the taxation rested.

In the present instance the assumptions on which the Minister based the assessments appealed from were set forth as well as the possibility of others.

The relevance of this pleading was commented on in MNR v Pillsbury Holdings Limited, [1965] Ex CR 676; [1964] CTC 294; 64 DTC 5184 where it was said at 686 [302]:

The respondent (in this instance the defendant) could have met the Minister’s pleading that, in assessing the respondent, he assumed the facts set out in paragraph 6 of the Notice of Appeal by:

(a) challenging the Minister’s allegation that he did assume those facts,

(b) assuming the onus of showing that one or more of the assumptions was wrong, or

(c) contending that, even if the assumptions were justified, they do not of themselves support the assessment.

(The Minister could, of course, as an alternative to relying on the facts he found or assumed in assessing the respondent, have alleged by his Notice of Appeal further or other facts that would support or help in supporting the assessment. If he had alleged such further or other facts, the onus would presumably have been on him to establish them. In any event the Minister did not choose such alternative in this case and relied on the facts that he had assumed at the time of the assessment.)

A taxpayer is entitled to know the assumptions made by the Minister at the time of assessment because the onus is his to demolish those assumptions.

Here the defendant alleges in paragraph 4 of his defence that he “has no knowledge of any assumptions made by the Minister of National Revenue’’ in reaching his decision to disallow the claims for deductions.

It is abundantly clear, and it cannot be otherwise, that an assessor, in order to make an assessment of a taxpayer’s income, the liability to tax thereon and the amount of that tax, must make certain assumptions of fact and communicate those assumptions to the taxpayer at the time of the assessment.

The allegation in the statement of defence that the defendant has no knowledge of the assumptions made by the Minister puts in question the facts found or assumptions made by the Minister and is susceptible of the interpretation that the Minister made no assumption of facts as is presently alleged that he did.

There is no impediment to the Minister basing an assessment on facts or assumptions other than those upon which the assessment was based and so alleging but in that event the onus is upon the Minister to establish those allegations (see Tobias v The Queen, [1978] CTC 113; 78 DTC 6028).

Upon those circumstances being brought to the attention of counsel for the parties at the outset of the trial counsel for the defendant admitted that the Minister had made the assumptions that were alleged and counsel for the plaintiff admitted that no other assumptions were made nor are being relied upon and amended the statement of defence by deleting paragraph 2 therefrom which was so ordered.

Counsel for the plaintiff accepted and admitted as a fact that the taxpayer when he went through a form of marriage with Janet Anderson did so in good faith and was unaware that the antecedent marriage between Janet Anderson and William Witty II had not been dissolved by a divorce in Mexico by the law of North Carolina where the parties were domiciled and likewise was unaware that the form of marriage went through by him and Janet Anderson in Louisiana was not recognized as valid by the laws of North Carolina.

Subject to that qualification as to bona fides which does not alter the circumstances the facts are admitted as being those alleged in paragraphs 5 to 14 of the statement of claim.

There is no question whatsoever that the taxpayer paid interim alimony which was ordered to be paid by the Master on November 7, 1977 following application therefor by Janet Anderson or Taylor following upon the petition made by her dated August 4, 1977 for a decree of divorce launched in the Supreme Court of Ontario and that he was obligated to do so failing which he would be liable to being held in contempt of court.

In Lumbers v MNR, [1943] Ex CR 202; [1943] CTC 281; 2 DTC 631, Thorson, P said at 211 [290]:

It is a well established rule that the provisions of a taxing Act must be construed strictly.

He elaborated in the succeeding paragraph by saying:

A taxpayer cannot succeed in claiming an exemption from income tax unless his claim comes clearly within the provisions of some exempting section of the Income Tax Act: he must show that every constituent element necessary to the exemption is present in his case and that every condition requested by the exempting section has been complied with.

Reverting to the language of paragraph 60(b) of the Income Tax Act there is no question that all constituent elements necessary to the exemption in this instance except the crucial issue between the parties and that is whether the taxpayer paid alimony to “his spouse or former spouse’’.

The word “spouse” is not defined in the general interpretation section of the statute but subsection 73(1.2) for the purposes of subsection 73(1), “spouse” and “former spouse” are defined as including “a party to a void or voidable marriage, as the case may be”.

Subsection 73(1) deals with the transfer of capital property of a taxpayer to a “spouse” or “former spouse”.

Prima facie the same words in different parts of the same statute should be given the same meaning unless there is a clear reason for not doing so.

Such a clear reason here exists. The definition of the words “spouse” and “former spouse” in subsection 73(1.2) is made expressly applicable to the interpretation of those words in subsection 73(1) only and for no other purpose.

That being so and since the word “spouse” has no technical meaning and does not relate to some particular subject of art or science it is to be understood in the statute in the same way as it is understood in the common language, that is to say a word of popular meaning must be taken in its popular sense.

It is a well known rule of courts of law words should be taken to be used in their ordinary sense, unless the context clearly dictates otherwise, and resort may be had to dictionaries to ascertain their ordinary meaning.

Counsel for the appellant referred me to the definition of the word “spouse” as a noun in the Shorter Oxford Dictionary which 1s:

(1) A married woman in relation to her husband; a wife.

and with equal logic as:

(2) a married man in relation to his wife; a husband.

As a verb “spouse” is defined as:

To join in marriage or wedlock.

To complete the exercise the word “wife” is defined as:

A woman joined to a man by marriage; a married woman.

Conversely the word “husband” is defined as:

A man joined to a woman by marriage

and so too a married man.

Blackstone has said in his maxims that “by marriage, the husband and wife are one person in law” most likely applicable in his time.

The common theme in those definitions is the joinder of a man and a woman in marriage. Marriage means the joinder in wedlock and the ceremony by which two persons are made man and wife. Wedlock is the condition of being married Or matrimonial union in the legal sense.

Thus marriage is the union of one man and one woman to the exclusion of all others and each party to the union is a “spouse”.

Paragraph 10 of the statement of claim alleges, and it is admitted, that the taxpayer, Irving A Taylor, “commenced an action in the Supreme Court of Ontario for a declaration that his purported marriage to Janet Anderson (in the State of Louisiana on November 8, 1969 at which time both parties thereto were residents of the State of North Carolina and the marriage was not recognized in that State) was void”. The words in brackets have been inserted. This, succinctly put, is an action for a declaration of nullity.

That action was litigated before Mr Justice Maloney who gave judgment on December 6, 1979 the operative paragraphs of which read:

1. THIS COURT DOTH ORDER AND DECLARE that the marriage between the Plaintiff and the Defendant which was solemnized at the City of New Orleans, in the State of Louisiana, one of the United States of America on the 8th day of November, 1969 is a nullity by reason of the prior subsisting marriage of the Defendant.

2. AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE the marriage between the Plaintiff and the Defendant which was solemnized at the City of New Orleans, in the State of Louisiana one of the United States of America on the 8th day of November 1965 be and the same is hereby declared to be void.

The first paragraph is the declaration of nullity and the reason therefor and the second paragraph is, in addition, an adjudication that the purported “marriage” was void.

It is not specifically stated that the “marriage” was void ab initio but in my view that is not necessary to so state because, as is stated in the declaration of nullity in the first paragraph the marriage is a nullity by reason of a prior subsisting marriage from which it follows that the second marriage is bigamous and therefore automatically void.

If a marriage is merely voidable and action is taken to void the marriage it is declared void ab initio.

The fact that the word marriage is not preceded and modified by the adjective “purported” lent significance to the contention of counsel for the defendant that there had been a “de facto” marriage. That contention I do not accept.

Of much greater significance however is the contention following on the facts in paragraphs 11 and 12 of the statement of claim.

On August 7, 1977 Janet Anderson began an action in the Supreme Court of Ontario for a decree of divorce from Irving A Taylor.

On November 7, 1977 she obtained an order requiring Irving Taylor to pay interim alimony to her.

That is the order with which the taxpayer complied and sought to deduct the interim alimony so paid in computing his taxable income for his 1978 and 1979 taxation years.

The operative portion of the order simply states that:

IT IS ORDERED that the Respondent (and by that is meant the taxpayer herein) shall pay to the Petitioner the sum of $950.00 per month as and for Interim Alimony with effect from September 1st, 1977.

(The words in brackets are mine)

As a consequence of the order requiring the taxpayer to pay interim alimony to Janet Anderson in the proceeding for a decree of divorce counsel for the defendant contends before me, as he successfully contended before the Chairman of the Tax Review Board, whose decision is hereby under appeal, that a de facto marriage existed between the couple and accordingly Janet Anderson was the de facto spouse of the taxpayer in 1978 and 1979 (the taxation years in question) and because of the lack of a clear definition of the word “spouse” in the Income Tax Act, the word bears that meaning in paragraph 60(b) thereof, that is to say, a de facto spouse.

As I appreciate the principle, well established and propounded by authorities, which actuated the learned Master in giving the order that he did it is that the allotment of alimony pendente lite depends upon the marital relationship of the parties existing de facto.

That this should be so makes eminent common sense. In matrimonial causes, including a suit for nullity as well as a petition for divorce, the parties by their mutual acts and course of conduct have clothed the order with the reputation of being a wife or husband as the case may be and the husband has initiated, assuming the male to be the aggressor, or in any event has sanctioned that state of affairs to exist and to continue to exist as a consequence of which the grant of interim alimony is but a perpetuation of that status, quasi-status though it may be.

An illustration to like effect predicated upon the doctrine of holding out or ostensible authority even though a marriage is null and void and is therefore to all intents and purposes a “non-marriage” and produces none of the legal incidents of matrimony nevertheless so long as the parties live together as man and wife in a common household the putative wife can pledge the “husband’s” credit as if she were his legal wife.

This is predicated upon the presumption founded upon the mere fact of a cohabitation and that presumption applies with equal force when a man lives with a woman to whom he is not married if he allows her to pass as his wife.

Where there has been a ceremony of marriage followed by cohabitation the validity of the marriage is presumed but being a presumption it can be rebutted by decisive evidence to the contrary.

The general rule is abundantly clear that in a matrimonial cause, including a suit for nullity, when a de facto marriage is acknowledged or proven interim alimony will be awarded pending the determination of the rights of the parties de jure.

Thus Macdonnell, J A was prompted to say in Barnet v Barnet, [1934] 2 DLR 728 in the matter of the application of a wife de facto for interim alimony

Until the Court has determined her rights de jure (and it may be found that she is the defendant’s wife in every sense) there is no reason why she should not be allowed alimony in the usual way.

The wife had brought an action for a declaration that the marriage she had entered into was null and void because the husband had assured her that a prior marriage he had entered into had been dissolved by divorce which it had not.

I would therefore add to the words in the above quotation that Macdonnell, JA enclosed in brackets the words “or that she was not”. It would make no difference to the award of alimony in the usual way.

As has been previously indicated because the definition of a “spouse” in 73(1.2) as therein extended to include a party to a void or voidable marriage is limited exclusively to subsection 73(1) it is not applicable as defining the word spouse for the purposes of other sections of the Statute where that word appears. That being so, as also previously indicated the meaning of the word is to be taken as that attributed to it in common parlance and that is to be taken as a party to matrimonial union in the legal sense.

The award of interim alimony to a de facto wife is predicated upon a quasistatus created by circumstances and for limited purposes but the grant of interim alimony is not decisive as to the legal status.

Thus then resort must be had to the consequence of a void or voidable marriage and the status of the parties thereto.

In the present instance the taxpayer, who was the “husband”, commenced an action for a declaration of nullity.

The wife countered by commencing an action for divorce.

Divorce is based on a cause arising after a valid marriage has come into existence (eg, adultery and other grounds now added).

A decree of nullity is based on a cause existing at the time of the marriage ceremony (eg, a prior existing marriage, the parties were within the prohibited degrees of consanguinity or insanity).

A decree of divorce dissolves the marriage upon the decree absolute.

A decree of nullity either (1) declares that there never was a valid marriage, or (b) dissolves the marriage with retroactive effect.

The first declaration follows upon the marriage being void ab initio and the second follows upon the marriage being voidable.

In the first case the marriage is regarded as not having taken place and the decree of nullity is merely declaratory of that circumstance.

In this instance there is an impedimentum dirimens which is an impediment to marriage not removed by solemnization of the rite but continues in force and makes the marriage null and void.

In the second case where the marriage is voidable a marriage comes into being on solemnization of the rite with all its consequences even though it be sinful but the marriage is, on a decree of nullity being made, wiped out completely as if it had never existed and with retroactive effect.

This second case is an impedimentum impediens as contrasted by an impedimentum dirimens and is where the parties are prevented from marrying — such as lack of parental consent — but if the parties avoid that obstacle and go through a solemnization ceremony the marriage is valid with all its consequences and held as such by every court until a decree annulling the marriage has been pronounced by a court of competent jurisdiction. The marriage can only be annulled at the instance of one of the parties and at the moment a decree of nullity is pronounced then there is no marriage and there never has been a marriage.

The difference in substance was expressed by Lord Greene, MR, when he said in De Reneville v De Reneville, [1948] P 100 at 111:

. . .a void marriage is one that will be regarded by every court in any case in which the existence of the marriage is in issue as never having taken place and can be so treated without the necessity of any decree annulling it.

A voidable marriage is one that will be regarded by every court as a valid subsisting marriage until a decree annulling it has been pronounced by a court of competent jurisdiction.

In the present instance the meaning to be attributed to the word “spouse” as used in paragraph 60(b) of the Income Tax Act applicable to the 1978 and 1979 taxation years is as the word is used in the common language and that meaning is a party to a marriage.

Therefore the existence of the marriage is in issue in this appeal.

The common grounds of nullity are:

(1) a prior existing marriage;

(2) the parties are within the prohibited degrees of consanguinity or affinity;

(3) insanity at the time of marriage;

(4) lack of consent induced by fraud, force and the like;

(5) impotence, and

(6) where the parties are not respectively male and female.

The list is for the purpose of illustration and is not intended to be exhaustive.

Here the marriage between the taxpayer and Janet Anderson was void ab initio by reason of a prior existing marriage between Janet Anderson and William Witty II which had not been validly dissolved.

This is confirmed by the declaratory judgment given by Mr Justice Maloney on December 6, 1977 and recorded on December 27, 1979.

Janet Anderson, who was a party with Irving A Taylor to a ceremony of marriage was already married and either party is entitled to a decree of nullity ex debito justitiae. A court has no discretion to refuse the decree.

As I have indicated before the existence of a previous marriage (as is here the case) is an absolute nullity. The marriage is void ab initio and the decree is purely declaratory. There would have been no impediment to the taxpayer contracting a subsequent legal marriage and if he had that wife would have been his legal “spouse” from which it follows that Janet Anderson was not.

Even if the marriage had not been void but merely voidable, which is not the case in my view, then the second operative portion of the judgment of Mr Justice Maloney whereby the marriage between Janet Anderson and Irving A Taylor solemnized on November 9, 1979 was declared to be void would have retroactive effect to that date.

With respect to a voidable marriage Pennycuick, J said in Re Rodwell (Dec’d), [1969] 3 WLR 1115 at 1119:

The position is that the moment the decree of nullity becomes absolute (and this I take to be upon pronouncement) then in the eyes of the law she has never been married.

(Again the words in brackets are mine)

For the foregoing reasons I find it impossible to say that Janet Anderson had ever been married to the taxpayer from which it follows that she was not his “spouse” within the meaning of that word as used in paragraph 60(b) of the Act.

I cannot refrain from expressing concurrence in the submission made by counsel for the defendant that there is an apparent inequity when he paid interim alimony to Janet Anderson which he was obligated to do by a valid court order to which failure to comply would render him liable to contempt and yet he is precluded from claiming that amount so paid as a deduction for income tax purposes.

The complete answer is in the stock expression that there is no equity in a taxing statute. A taxing statute shall receive the same interpretation as any other statute.

The principle expressed in Partington v Atty-Gen (1869), LR 4 HL 100 is that if the person sought to be taxed comes within the letter of the law then he must be taxed no matter how great the hardship or the inequity may appear to be to the judicial mind. There must be adherence to the word of the statute.

Confirmation of the correctness of the construction which I have concluded must be ascribed to the meaning of the word “spouse” in paragraph 60(b) in the Income Tax Act, applicable in 1978 and 1979 taxation years, can be found in the remedial action which Parliament has taken in providing an extended definition of the word “spouse” applicable to paragraph 60(b) by the enactment of section 130, chapter 140, SC 1980-81-82-83 and by applying the rule in Hey don's case, (1584), 3 Co Rep 7a to that subsequent legislation.

When any case may be doubtful upon a statute four things can be gleaned by Heydon’s case (supra at fo 7b) which are to be discerned and considered:

(1) the state of the law before the enactment,

(2) what was the mischief and defect which the prior existing law did not provide,

(3) what remedy Parliament provided to cure the defect, and

(4) the true reason for the remedy.

Then the office of all judges shall be to make such construction as shall suppress the mischief, advance the remedy, suppress subtle inventions and evasions for continuance of the mischief and to add force and life to the cure and remedy according to the true intent of the makers of the Act, pro bono publico.

In order to ascertain the true rule of construction to find the meaning of a term in a statute I can think of no better rule to apply than the well known rule in Heydon’s case and to repeat what Lindley, MR said in Re Mayfair Property Co, [1898] 2 Ch 28 at 35:

In order to properly interpret any statute it is as necessary now as it was when Lord Coke reported Heydon’s Case to consider how the law stood when the statute to be construed was passed, what the mischief was for which the old law did not provide, and the remedy provided by the statute to cure that mischief.

Subsection 252(3), as enacted by the legislation indicated above extending the meaning of “spouse” and “former spouse”, reads,

252.(3) For the purposes of paragraphs 56(l)(b) and (c), 60(b) and (c) and 146(16)(a), sections 56(1) and 60(1) and subsection 73(1) “spouse” and “former spouse” includes a party to a voidable or void marriage, as the case may be.

Parliament must have become apprised of the want of equity or justice in precluding a party to a void or voidable marriage from deducting interim alimony ordered to be paid by that party in the amounts paid as ordered in computing taxable income.

That was the mischief which this legislation remedied and it was remedied by extending the definition of spouse to include a party to a void or voidable marriage.

Had the contrary been the case there would be no need to provide a cure to the law as it previously existed. It was remedial legislation and not merely clarification.

Unfortunately for the defendant in this appeal the remedial legislation permitting a party to a void or voidable marriage to deduct for income tax purposes interim alimony ordered by a court to be paid is applicable to the 1982 and subsequent taxation years and does not avail the defendant.

For the foregoing reasons the appeals are allowed but, in the circumstances, without costs to Her Majesty.