Rowe,
D.J.T.C.C.:—
The
appellant,
Raymond
Douglas
Nelson,
appealed
from
an
assessment
of
income
tax
for
his
1989
taxation
year
whereby
the
respondent
disallowed
the
appellant's
deduction
of
$20,393
in
respect
of
alimony
and
maintenance
purportedly
paid
to
Marion
Lola
Nelson.
In
assessing
the
appellant
in
respect
of
his
1989
taxation
year,
the
Minister
relied
on
certain
assumptions
of
fact,
inter
alia,
that
a
letter
dated
May
12,
1987
sent
to
the
appellant
by
counsel
for
Mrs.
Nelson
setting
out
terms
for
a
proposed
settlement
agreement,
to
which
the
appellant
signed
his
name
at
the
bottom
thereof
and
returned
it
to
said
counsel,
was
not
a
written
separation
agreement
within
the
meaning
of
paragraph
60(b)
or
(c)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
and
that
the
amount
claimed
as
a
deduction
was
not
otherwise
paid
pursuant
to
a
decree,
order
or
judgment
of
a
competent
tribunal.
The
respondent,
by
amended
notice
of
application
pursuant
to
subsection
174(3)
of
the
Income
Tax
Act,
applied
for,
and
on
January
7,1993,
was
granted,
an
order
by
the
Honourable
Chief
Judge
Couture
of
the
Tax
Court
of
Canada
joining
Marion
Lola
Nelson
as
a
party
to
the
appeal
of
Raymond
Douglas
Nelson
from
the
assessment
made
under
the
Income
Tax
Act
for
the
1989
taxation
year
on
the
basis
that
a
determination
of
the
questions
set
forth
in
the
application
will
affect
the
assessment
or
the
proposed
assessment
in
respect
of
Marion
Lola
Nelson
and
as
well
the
assessment
from
which
Raymond
Douglas
Nelson
appealed.
The
questions
in
respect
of
which
the
Minister
of
National
Revenue
requested
a
determination
are:
(a)
is
the
letter
referred
to
in
paragraph
7(a)
a
written
separation
agreement
within
the
meaning
of
paragraph
60(b)
of
the
Income
Tax
Act
(the
"Act");
and
(b)
if
the
answer
to
question
(a)
is
no,
was
the
appellant
required
to
pay
to
Mrs.
Nelson
the
amount
during
the
1989
taxation
year
by
virtue
of
a
decree,
order
or
judgment
of
a
competent
tribunal
or
pursuant
to
a
written
separation
agreement
within
the
meaning
of
paragraph
60(b)
or
(c)
of
the
Act.
A
book
of
documents,
containing
6
tabs,
was
filed
as
Exhibit
A-1.
Filed
as
Exhibit
A-2
is
an
agreed
statement
of
facts
which
is
as
follows:
1.
That
Barbara
M.
Smith
has
been
a
duly
qualified
lawyer
entitled
to
carry
on
the
practice
of
law
according
to
the
laws
of
the
Province
of
British
Columbia
since
1975
and
was
so
duly
qualified
at
all
times
material
to
this
cause.
2.
That
at
all
times
material
to
this
cause
Barbara
M.
Smith
acted
on
behalf
of
the
respondent,
Marion
Lola
Nelson,
as
her
solicitor
and
agent.
3.
That
specifically
Barbara
M.
Smith
was
directed
by
Marion
Lola
Nelson
to
write
the
letter
annexed
herewith
as
Exhibit
"A"
and
dated
May
12,
1987,
to
the
appellant.
4.
Then
that
the
original
of
the
letter
marked
as
Exhibit
"A"
was
delivered
to
the
appellant
was
at
the
time
of
delivery
signed
by
Barbara
M.
Smith,
as
agent
for
Marion
Lola
Nelson.
5.
That
in
May
1987,
the
appellant
returned
a
copy
of
Exhibit
"A"
to
Barbara
M.
Smith
upon
which
he
had
written
"agreed
to
those
terms
listed
in
this
letter"
at
the
foot
thereof
under
which
he
had
signed
his
name.
6.
That
at
all
times
material
to
this
appeal
the
three
children
were
children
of
the
marriage
and
were
in
the
care
and
custody
of
Marion
Lola
Nelson.
7.
That
no
decree,
order
or
judgement
was
made
by
a
Court
of
competent
jurisdiction
that
required
the
appellant
to
pay
Marion
Lola
Nelson
maintenance
in
respect
of
the
year
1989
within
the
meaning
of
paragraph
60(b)
or
(c)
of
the
Income
Tax
Act.
The
letter,
dated
May
12,
1987,
referred
to
in
the
agreed
statement
of
facts
as
Exhibit
"A",
also
at
Tab
1
of
Exhibit
A-1,
reads
as
follows:
May
12,
1987
Mr.
Raymond
Nelson
4935
Maebelle
Road
R.R.
#2
Port
Alberni,
B.C.
V9Y
7L6
Dear
Sir:
Re:
Separation
Agreement
This
is
to
advise
that
I
am
the
Solicitor
for
your
wife
and
have
been
retained
to
act
on
her
behalf
in
order
to
settle
certain
outstanding
family
matters.
To
this
end
she
requests
that
the
two
of
you
enter
into
a
separation
agreement
for
the
purpose
of
settling
once
and
for
all
the
outstanding
rights
and
obligations.
The
separation
agreement
would
contain
the
following
terms:
1.
Separation
An
acknowledgment
by
the
both
of
you
of
the
date
of
separation
and
a
statement
of
your
shared
intentions
to
live
separate
and
apart.
Should
you
reconcile
for
a
period
of
more
than
90
days,
then
the
agreement
is
null
and
void.
2.
Interference
An
undertaking
that
neither
of
you
will
interfere
with
the
other;
either
directly
or
indirectly
in
any
manner
whatsoever.
3.
Custody
of
the
Children
Your
wife
desires
custody
of
the
three
children
of
the
marriage
namely,
Marion
Nadine,
Richard
Ralph
and
Clara
Eileen
with
reasonable
and
generous
access
to
yourself.
She
suggests
that
the
two
of
you
have
joint
guardianship
of
the
children.
She
believes
that
you
desire
her
to
take
care
of
the
children
on
a
daily
basis.
4.
Maintenance
As
you
are
no
doubt
aware
your
wife
has
been
out
of
the
job
force
for
some
years
and
it
would
be
difficult
for
her
to
get
back
to
work
as
a
full
time
teacher
or
to
obtain
other
types
of
employment.
She
has
advised
me
that
your
1986
gross
earnings
were
$41,000,
in
1985
$45,000
and
in
1984
$54,000.
Obviously
1986
is
not
a
good
comparison
year
due
to
the
lengthy
strike.
However,
as
you
are
a
faller
for
Cameron
Division,
MacMillan
Bloedel,
she
guesstimates
that
you
should
be
able
to
earn
at
least
$50,000
this
year.
Rather
than
set
out
a
set
amount,
she
would
like
you
to
pay
her
two-thirds
of
your
net
earnings
per
month.
For
example,
if
you
were
to
gross
$3,500
per
month
your
net
earnings
would
be
$2,400
a
month
or
she
would
receive
approximately
$1,600
per
month
to
be
shared
between
herself
and
of
course
the
three
children.
By
placing
maintenance
on
a
percentage
interest,
this
would
ease
your
burden
during
a
layoff
or
strike
period.
If
you
wish
to
assess
a
per
person
maintenance,
she
requests
at
least
$250
per
child
totalling
$750
and
the
balance
to
herself.
5.
Household
Chattels
She
believes
that
the
chattels
can
be
divided
amicably
between
yourselves.
She
does
require
a
certain
amount
of
the
furniture
as
of
course
she
is
looking
after
four
people
versus
your
one.
If
you
cannot
agree
as
to
the
division
of
chattels
then
she
suggests
that
this
matter
be
referred
to
a
Court
of
competent
jurisdiction.
She
desires
the
1981
Mercury
Cougar
and
wishes
you
to
have
the
1978
Grand
Prix
automobile
which
she
believes
are
of
equal
value.
6.
Pension
She
desires
one-half
of
your
accumulated
I.W.A.
and
Canada
Pension
to
be
paid
to
her
upon
your
entitlement
for
the
same.
She
of
course
will
give
you
one-halt
of
her
Canada
Pension
(as
adjusted
—
if
she
has
one).
7.
Assets
She
desires
that
you
share
equally
the
present
MacMillan
Bloedel
stocks.
Could
you
kindly
provide
me
with
the
information
as
to
the
amount
available
to
date.
8.
Life
Insurance
She
wishes
that
your
Crown
Life
Insurance
payable
through
work
maintain
her
as
spousal
beneficiary
at
least
until
the
children
have
left
home.
As
to
the
children's
life
insurance,
she
wishes
to
be
maintained
however
it
may
well
be
that
neither
of
you
can
afford
such
expense.
If
the
policies
are
to
be
cashed
out
she
desires
that
the
policy
amounts
be
shared
equally.
9.
Debts
She
believes
that
there
are
no
joint
debts
of
the
marriage.
She
desires
that
neither
party
can
incur
debts
on
the
behalf
of
the
other.
10.
Disposition
of
Estates
An
agreement
whereby
each
of
you
relinquish
any
claim
which
you
may
have
to
administer
your
share
in
the
estate
to
the
other.
11.
Family
Residence
She
wishes
exclusive
possession
of
the
rented
home.
12.
Medical
and
Dental
Coverage
She
desires
medical
and
dental
coverage
on
behalf
of
both
herself
and
the
children
until
such
time
as
the
decree
of
divorce
and
thereafter
you
maintain
medical
and
dental
for
the
children
so
long
as
they
are
dependent
upon
the
two
of
you.
I
strongly
suggest
that
you
review
the
contents
of
this
letter
in
front
of
your
own
lawyer.
Please
provide
me
with
your
comments.
Yours
truly,
STOFER,
SMITH
and
COMPANY
PER:
BARBARA
M.
SMITH
BMS/cp
c.c.
Mrs.
Lola
Nelson
Agreed
to
those
terms
listed
in
this
letter
Ray
Nelson
The
appellant,
Raymond
Douglas
Nelson,
testified
he
is
a
resident
of
Qualicum,
British
Columbia
and
is
employed
in
the
logging
industry
as
a
faller.
He
and
Marion
Lola
Nelson
were
married
on
April
30,
1960.
In
May,
1987,
there
were
three
children
of
the
marriage
living
with
Mrs.
Nelson.
He
stated
that
he
and
Mrs.
Nelson
separated
in
December,
1986,
and
have
lived
separate
and
apart
since
that
time.
In
May,
1987
he
received
the
letter
dated
May
12,
1987,
from
Barbara
M.
Smith,
a
solicitor
in
Port
Alberni,
British
Columbia,
representing
Mrs.
Nelson.
Shortly
after
receiving
the
letter,
he
received
a
call
from
Ms.
Smith
and
he
advised
her
at
that
time
that
he
did
not
intend
to
seek
legal
advice
regarding
the
outstanding
family
matters
between
he
and
Mrs.
Nelson.
He
stated
that
he
attended
at
the
law
office
of
Ms.
Smith
and,
in
her
presence,
wrote
on
the
letter
of
May
12,
1987
the
words
"Agreed
to
those
terms
listed
in
this
letter".
Immediately
below
this
phrase,
he
then
signed
his
name
and
handed
the
letter
to
Ms.
Smith.
Thereafter,
he
paid
two-thirds
of
his
net
or
take-home
pay
to
Mrs.
Nelson,
pursuant
to
the
agreement.
On
June
1,1989
he
decided,
without
discussing
the
matter
with
Mrs.
Nelson
or
her
counsel,
to
reduce
the
amount
of
monthly
payments
to
the
sum
of
$1,500
per
month.
Mrs.
Nelson
did
not
agree
to
such
a
reduction
and
on
November
10,
1989,
the
appellant
petitioned
for
divorce.
Mrs.
Nelson
filed
an
answer
and
counterpetition.
On
September
18,
1990,
the
Honourable
Mr.
Justice
Cowan,
of
the
Supreme
Court
of
British
Columbia
ordered
Raymond
Nelson
to
pay
the
sum
of
$400
per
month
for
one
child
together
with
the
sum
of
$1,100
per
month
for
Marion
Nelson.
In
addition,
he
was
ordered
to
pay
to
Marion
Nelson,
arrears
of
maintenance
in
the
sum
of
$4,175,
calculated
from
June
1,
1989
to
and
including
August
1,
1990.
The
order
was
filed
as
Exhibit
A-3.
This
order
appears
to
negate
the
agreed
fact
at
paragraph
7
of
Exhibit
A-2.
The
Nelson's
final
decree
of
divorce
was
issued
on
December
24,
1990.
In
cross-examination
by
counsel
for
the
respondent,
the
appellant
agreed
that
the
letter
of
May
12,
1987
did
not
contain
any
reference
to
the
date
upon
which
he
and
Mrs.
Nelson
had
separated.
Marion
Nelson
did
not
choose
to
cross-examine
Mr.
Nelson
or
to
adduce
any
evidence.
Counsel
for
the
appellant
submitted
that
the
letter
of
May
12,1987
is
clearly
a
separation
agreement
setting
out
several
terms,
to
which
the
appellant,
by
signing
his
name
at
the
foot
of
the
letter,
agreed
with
the
entire
contents
thereof.
Payments
made
by
the
appellant
to
Mrs.
Nelson
were
done
so
pursuant
to
said
agreement
and
were
clearly
deductible.
Counsel
for
the
respondent
submitted
that
the
appellant's
signature
on
the
said
letter
did
not
transform
it
into
a
separation
agreement
as
required
by
the
Income
Tax
Act.
In
addition,
the
payments
related
only
to
an
amount
equal
to
two-thirds
of
the
appellant's
net
income
from
employment
at
MacMillan
Bloedel,
to
be
paid
only,
if
and
when,
he
was
actually
working
for
said
employer.
Further,
the
purported
agreement
did
not
contain
any
agreement
by
the
parties
to
live
separate
and
apart.
Marion
Lola
Nelson
chose
not
to
make
any
submissions.
Subsequent
to
the
hearing
of
the
appeal
and
pending
written
reasons
for
judgment,
counsel
for
the
respondent,
in
keeping
with
the
finest
tradition
of
the
Bar
and
with
the
concurrence
of
counsel
for
the
appellant,
provided
me
with
a
copy
of
the
decision
of
the
Honourable
Judge
Margeson
of
the
Tax
Court
of
Canada
in
Horner
v.
Canada,
[1993]
2
C.T.C.
2022,
93
D.T.C.
707.
In
that
case,
the
appellant
was
the
wife
of
the
payor,
and
she
argued,
inter
alia,
that
the
amounts
received
by
her
pursuant
to
a
document
entitled
as
"inter-
spousal
agreement”
were
not
properly
included
into
income
by
the
respondent
as
they
were
not
paid
pursuant
to
any
agreement
containing
a
clause
requiring
the
parties
to
live
separate
and
apart.
At
pages
2025-27
(D.T.C.
708-10)
of
his
judgment,
the
Honourable
Judge
Margeson
stated:
Appellant's
position:
According
to
the
pleadings,
which
position
was
echoed
by
the
appellant
in
her
testimony
and
argument
before
me,
it
is
contended
that
Exhibit
A-4,
the
agreement,
is
an
Interspousal
Agreement
entered
into
for
the
purposes
of
reconciliation,
not
for
the
purpose
of
separation,
and
as
a
property
settlement.
The
appellant
argues
that
this
is
confirmed
by
the
letter
of
March
29,
1990,
Exhibit
A-3.
Further,
the
agreement
does
not
contain
a
clause
requiring
the
appellant
and
her
spouse
to
live
separate
and
apart
and
that
is
fatal
under
paragraph
56(1)(b)
of
the
Income
Tax
Act
and
subsection
248(1).
The
appellant
takes
the
position
that
a
formal
separation
did
not
take
place
until
the
spring
of
1991
when
the
application
was
made
to
the
Court
of
Queen’s
Bench
requiring
the
spouse
to
pay
maintenance.
Finally,
the
appellant
argues
that
the
agreement
does
not
contain
a
provision
requiring
the
spouses
to
live
separate
and
apart
and
that
indeed
the
spouses
were
not
living
separate
and
apart
as
a
result
of
the
agreement.
The
appellant
says
one
of
the
requirements
of
the
agreement
is
missing;
therefore,
the
payments
were
not
taxable
in
the
hands
of
the
appellant.
Analysis
and
Decision:
The
term
“alimony”
as
defined
in
paragraph
56(1)(b)
of
the
Income
Tax
Act
requires
the
following:
(1)
an
agreement;
(2)
that
an
amount
be
received;
(3)
that
the
amount
be
received
pursuant
to
the
agreement;
(4)
that
the
amount
be
received
for
the
maintenance
of
the
recipient
and/or
children
of
the
marriage;
(5)
that
the
recipient
be
living
separate
and
apart
from
the
payor
at
the
time
that
the
moneys
were
received
and
throughout
the
remainder
of
the
year;
(6)
the
recipient
was
living
separate
and
apart
from
the
payor
pursuant
to
the
agreement.
Subsection
248(1)
broadens
the
term
“separation
agreement"
by
including
under
it
agreements
made
before
or
after
the
marriage
was
dissolved.
This
subsection
in
no
way
limits
the
provisions
of
paragraph
56(1)(b).
There
is
no
real
argument
here
whether
Exhibit
A-4
is
an
agreement.
That
is
certain.
It
is
also
certain
that
an
amount
was
received,
that
the
amount
was
received
for
the
maintenance
of
the
recipient
appellant
and/or
the
children
of
the
marriage,
that
the
recipient
was
living
separate
and
apart
from
the
payor
at
the
time
of
the
payment
and
throughout
the
remainder
of
the
year.
The
only
remaining
issues,
therefore,
are
whether
or
not
the
amount
was
received
pursuant
to
the
agreement
and
if
it
was,
whether
or
not
the
recipient
was
living
apart
from
the
payor
and
was
separated
pursuant
to
the
agreement.
The
appellant's
solicitor,
in
her
pleading
used
the
term
"as
a
result
of
a
written
separation
agreement"
but
the
paragraph
clearly
refers
to
the
word
"pursuant".
The
Shorter
Oxford
Dictionary
defines
"pursuant"
inter
alia
as
"in
accordance
with",
and
the
fifth
edition
of
Black's
Law
Dictionary
defines
"pursuant"
inter
alia
as
"to
execute
or
carry
out
in
accordance
with
or
by
reason
of
something.”
Also,
in
the
course
of
carrying
out,
in
conformance
to,
or
agreement
with,
according
to.”
I
am
satisfied
on
all
the
evidence
before
me
that
the
amount
was
received
pursuant
to
the
written
agreement.
Exhibit
A-4
clearly
spells
out
the
amount
of
the
payment,
what
the
payment
is
for,
when
it
is
to
be
paid,
for
how
long
it
is
to
continue
and
even
refers
to
it
as
maintenance
for
the
children.
I
could
not
reasonably
come
to
any
other
conclusion.
The
most
favourable
interpretation
that
could
be
given
to
the
provisions
of
paragraph
56(1)(b)
insofar
as
the
appellant
is
concerned
would
be
that
it
requires
that
the
recipient
must
have
been
living
separate
and
apart
from
the
payor
at
a
time
of
the
receipt
pursuant
to
the
written
agreement
and
further
that
the
parties
must
have
separated
pursuant
to
the
written
agreement.
A
further
interpretation
could
be
that
the
section
only
requires
that
the
spouses
had
been
separated
and
that
the
payments
were
made
pursuant
to
the
written
agreement
but
that
the
separation
need
not
be
as
a
result
of
the
written
agreement.
If
one
adopted
the
more
restrictive
approach
offered
by
the
appellant
it
would
be
almost
impossible
to
satisfy
both
requirements
in
the
absence
of
such
a
specific
clause
in
the
agreement
or
the
admission
of
the
recipient
that
the
payments
were
made
pursuant
thereto.
I
am
inclined
to
accept
the
less
restrictive
view,
but
even
if
I
am
wrong
in
that,
after
a
proper
review
of
the
evidence,
including
the
viva
voce
evidence
of
the
appellant
herself
and
the
exhibits,
I
can
come
to
no
other
conclusion
than
that
at
the
time
Exhibit
A-4
was
executed
on
April
23,
1990,
that
both
the
husband
and
wife
had
agreed
to
enter
into
this
agreement
as
the
basis
for
governing
their
relationship
thereafter
until
something
changed,
which
was
unlikely.
It
may
have
been
that
there
was
some
glimmer
of
hope
that
reconciliation
might
take
place
between
the
parties,
but
it
was
ever
so
slight.
That
in
itself
does
not
mean
that
they
were
not
separating
in
accordance
with
the
agreement
from
that
point
on,
they
intended
to
live
separate
and
apart
from
that
time
and
the
written
agreement
was
to
govern
the
relationship
between
the
parties
thereafter.
I
am
satisfied
that
the
spouses
had
concluded
that,
that
the
appellant's
accountant
had
concluded
that,
and
if
the
husband
had
not
been
in
the
financial
position
that
he
was
in
and
indeed
had
not
gone
into
bankruptcy
when
he
did
the
spouses
would
not
have
considered
the
facts
to
be
otherwise.
I
am
satisfied
in
the
end
that
the
spouses
were
separated
pursuant
to
the
written
agreement
and
indeed
were
living
separate
and
apart
pursuant
to
the
written
agreement
at
the
time
of
the
receipt
of
the
funds
by
the
appellant.
The
only
remaining
question
is
whether
or
not
the
agreement
must
include
a
clause
requiring
the
parties
to
live
separate
and
apart.
I
can
see
nothing
in
the
relevant
provisions
that
would
lead
me
to
that
conclusion.
However,
the
agreement
in
issue
here
clearly
states
that
the
parties
have
been
living
separate
and
apart
and
everything
that
follows
thereafter
clearly
indicates
that
the
parties
will
continue
to
live
separate
and
apart
and
that
the
executed
agreement
will
regulate
their
relationship.
It
seems
absurd
to
me
that
the
failure
to
include
such
a
statement
in
the
agreement
would
prevent
the
agreement
from
being
considered
to
have
satisfied
all
of
the
requirements
of
paragraph
56(1)(b)
and
to
be
anything
other
than
that
which
it
purported
to
be.
I
have
considered
all
the
cases
referred
to
by
both
parties
but
the
one
that
gives
me
most
difficulty
is
Shapiro
v.
M.N.R.,
[1991]
1
C.T.C.
2112,
91
D.T.C.
227
(T.C.C.),
which
purports
to
require
that
the
agreement
itself
spell
out
that
the
parties
agree
to
live
separate
and
apart.
That
case
can
be
distinguished
from
the
case
at
Bar
in
that
Exhibit
A-4
in
this
case
does
refer
to
the
fact
that
the
parties
were
living
separate
and
apart
since
March
21,
1990,
and
everything
that
follows
thereafter
proclaims
loudly
that
the
parties
intend
to
continue
to
live
separate
and
apart,
and
under
the
terms
of
the
agreement.
The
learned
trial
judge
in
that
case
referred
to
the
case
of
Kapel
v.
M.N.R.,
[1979]
C.T.C.
2187,
79
D.T.C.
199
(T.R.B.),
in
indicating
the
same
requirements.
However,
in
that
case
there
was
no
written
agreement
signed
by
Mrs.
Kapel
and
there
was
nothing
from
which
the
Court
could
conclude
that
she
had
agreed
in
writing
to
live
separate
and
apart.
I
do
not
conclude
that
the
case
of
Kapel,
supra,
stands
for
the
proposition
that
the
agreement
must
specifically
state
that
the
parties
will
live
separate
and
apart
when
the
only
reasonable
interpretation
of
the
agreement
was
that
that
was
their
intention.
The
appellant
put
into
evidence
Exhibit
A-10
which
was
the
Interpretation
Bulletin
IT-118R3
dated
December
21,
1990,
which
puts
forth
the
position
that
the
agreement
must
specifically
state
that
the
parties
have
agreed
to
live
separate
and
apart
from
one
another.
I
am
not
bound
to
accept
such
an
interpretation
and
I
do
not
for
the
reasons
given
above.
Further,
I
do
not
consider
myself
bound
by
the
terms
of
Exhibit
A-7
or
Exhibit
A-8
which
are
the
orders
of
the
Court
of
Queen's
Bench
wherein
the
Court
purported
to
characterize
the
payments
herein
as
nondeductible
by
the
husband
for
income
tax
purposes
and
non-taxable
in
the
hands
of
the
wife
as
income.
For
the
above
reasons
the
appeal
is
dismissed.
In
the
present
appeal,
there
was
an
argument
made
that
the
letter
of
May
12,
1987,
having
been
signed
by
the
appellant
following
the
addition
of
the
words,
"agreed
to
those
terms
listed
in
this
letter"
did
not
constitute
a
written
agreement.
The
letter,
bearing
the
heading,
“Re:
Separation
Agreement"
was
sent
to
the
appellant
by
a
solicitor
acting
on
behalf
of
Mrs.
Nelson
and
was
clearly
for
the
purpose
of
settling
certain
outstanding
family
matters.
The
letter
then
went
on
to
set
out
in
12
separate
numbered
paragraphs
certain
demands
of
Mrs.
Nelson
—
albeit
expressed
in
gentler
language
such
as,"she
desires"
or
"she
wishes"
—
but
requesting
that
he
agree
to
those
terms
in
a
separation
agreement.
In
paragraph
1
of
the
letter,
with
the
heading
"Separation"
the
wording
is
as
follows:
An
acknowledgment
by
the
both
of
you
of
the
date
of
separation
and
a
statement
of
your
shared
intentions
to
live
separate
and
apart.
Should
you
reconcile
for
a
period
of
more
than
90
days,
then
the
agreement
is
null
and
void.
In
paragraph
2
of
the
letter,
under
the
heading,
Interference"
the
wording
is:
An
undertaking
that
neither
of
you
will
interfere
with
the
other,
either
directly
or
indirectly
in
any
manner
whatsoever.
The
letter
also
addressed
the
issue
of
custody
of
the
children
and
maintenance
for
the
children
and
for
Mrs.
Nelson,
either
based
on
a
total
payment
or
assessed
on
a
per
person
basis
but
in
any
event
to
be
an
amount
determined
by
the
calculation
of
two-thirds
of
the
appellant's
net
income
from
his
employment
at
MacMillan
Bloedel.
The
appellant,
despite
the
invitation
contained
in
the
letter
to
consult
his
own
solicitor,
chose
not
to
do
so
and
went
to
the
office
of
Ms.
Smith,
solicitor
for
Mrs.
Nelson.
There,
he
spoke
to
Ms.
Smith,
and
then
wrote
at
the
bottom
of
page
3
of
the
letter
of
May
12,
1987,
the
words
earlier
referred
to
and
signed
his
name.
At
the
time,
the
appellant
was
well
aware
that
he
and
Mrs.
Nelson
had
been
separated
since
December,
1986.
Thereafter,
he
made
payments
to
her
pursuant
to
what
he
considered
was
his
concurrence
with
the
terms
requested
in
the
letter
and
did
so
based
on
a
monthly
amount
equal
to
two-
thirds
of
his
net
earnings.
He
continued
to
make
such
payments
until
June
1,
1989
when
he
decided
to
reduce
the
amount
to
$1,500
per
month
rather
than
to
base
it
on
the
previously
adhered
to
formula.
The
issue
to
be
decided
is
whether
or
not
the
signing
of
the
letter
of
May
12,
1987,
having
regard
to
all
of
the
circumstances,
constituted
a
written
separation
agreement.
I
have
difficulty
viewing
the
signed
letter
as
other
than
a
legitimate
agreement
in
writing.
There
is
no
mandatory
requirement
that
any
individual
retain
a
solicitor
for
the
purpose
of
exchanging
mutual
boilerplate
with
opposing
counsel.
Unlike
the
situation
in
Horner,
supra,
where
Mrs.
Horner
executed
the
interspousal
agreement,
in
the
present
appeal,
Mrs.
Nelson
did
not
sign
the
letter
of
May
12,1987
subsequent
to
the
appellant
having
signified
his
concurrence
with
the
within
terms.
However,
in
my
view
there
was
no
requirement
that
she
do
so.
A
copy
of
the
letter
was
directed
to
her
and
her
solicitor
was
acting
with
her
authority
in
proposing
certain
terms
to
what
was
held
out
to
be
a
separation
agreement,
which
were
accepted
by
the
appellant.
The
appellant
was
prepared,
bY
signing
the
letter
in
the
manner
he
did
and
under
the
circumstance
as
explained
by
him,
to
abide
by
the
terms
contained
therein.
By
doing
so,
he
agreed
the
pre-existing
physical
separation
from
Mrs.
Nelson
would
continue,
only
now
it
would
have
added
to
it
an
acknowledgment
of
permanence
and
formality
attached
to
the
resolution
of
certain
issues
that
were
required
to
be
addressed
as
a
result
of
their
mutual
intention
not
to
live
together
in
the
future.
It
is
clear
from
the
appellant's
evidence
that
the
letter
was
signed
by
him
within
a
few
days
of
May
12,1987
and
nothing
flows
from
the
lack
of
a
specific
date
upon
which
he
attended
at
Ms.
Smith's
office
for
the
purpose
of
signing
the
letter.
By
agreeing
to
the
terms
listed
in
the
letter
he
was,
in
my
opinion,
also
agreeing
that
the
effective
date
of
the
separation
agreement
would
be
May
12,
1987.
Therefore,
any
problems
the
appellant
has
in
this
appeal
do
not
stem
from
the
lack
of
a
written
agreement
as
I
find
the
letter
of
May
12,
1987
and
its
acceptance
in
writing
and
the
affixing
of
a
signature
thereto
by
the
appellant,
was
a
valid
agreement
for
the
purposes
of
the
Income
Tax
Act.
The
next
issue
to
be
determined
is
whether
or
not,
despite
the
existence
of
a
written
agreement,
it
was
one
which
contained
a
provision
requiring
the
spouses
to
live
separate
and
apart.
I
agree
with
the
reasoning
of
Judge
Mar-
eson
in
Horner,
as
earlier
quoted.
There
are
no
circumstances
external
to
the
letter
or
to
the
letter
itself
which
indicate
anything
other
than
the
fact
the
parties
were
separated
and
intended
to
live
separate
and
apart
as
a
result
of
the
agreement.
There
may
well
be
occasions
on
which
it
would
be
necessary
to
spell
out
specifically
such
an
intention.
For
example,
where
one
of
the
spouses
had
habitually
been
absent
from
the
matrimonial
home
and
had
been
sending
funds
to
the
other
for
ongoing
support,
it
would
be
vital
to
establish
some
kind
of
demarcation
which
recognized
that
future
absence
was
attributable
not
to
circumstance
but
to
a
mutual
desire
to
now
live
separate
and
apart.
The
evidence
in
the
present
appeal
satisfies
me
that
the
parties'
conduct
since
December,
1986,
and
subsequent
to
May
12,
1987,
leading
to
their
eventual
divorce
in
December,
1990,
was
at
all
times
consistent
with
parties
to
a
marriage
who
had
mutually
agreed
to
live
separate
and
apart.
The
moneys
paid
by
the
appellant
from
January
1,
1989
to
May
31,
1989
were
based
on
two-thirds
of
his
net
earnings
each
month
from
his
employment
as
a
faller
with
MacMillan
Bloedel.
The
amount
paid
each
month
pursuant
to
the
agreement
of
May
12,
1987
was
therefore
one
that
was
capable
of
being
fixed
in
accordance
with
an
agreed
upon
formula.
The
fact
that
it
was
linked
to
earnings
from
MacMillan
Bloedel
and
also
took
into
account
potential
interruption
of
earnings
from
strikes
or
layoffs,
does
not
in
my
view
mean
that
the
amount
paid
was
not
periodic
in
nature.
However,
an
issue
arises
due
to
the
appellant,
on
June
1,
1989,
unilaterally
deciding
that
he
would
no
longer
abide
by
the
two-thirds
of
net
income
formula
and
instead,
substituting
payments
of
$1,500
per
month.
Did
this
departure
from
the
previous
formula
agreed
to
by
him
as
part
of
the
overall
terms
in
the
May
12,
1987
letter,
effectively
put
an
end
to
that
agreement?
It
seems
to
me
that
the
attempt
by
the
appellant
to
pay
less
than
he
had
previously
agreed
would
be
seen
by
a
Court,
having
competent
jurisdiction,
as
nothing
more
than
a
breach
of
a
term
of
his
contract.
He
was
still
paying
what
he
considered
to
be
maintenance
to
his
wife
and
children
but
at
a
reduced
amount
in
the
specific
sum
of
$1,500
each
month.
There
is
nothing
in
the
evidence
to
suggest
that
he
was
making
the
altered
payments
for
any
purpose
other
than
to
do
so
pursuant
to
the
agreement
of
May,
1987.
Mrs.
Nelson
objected
to
the
reduction
in
the
amount
which
led
to
her
seeking
recommendations
of
the
Master
on
April
24,1990
which
were
later
confirmed
by
a
court
order
in
September
of
1990.
I
conclude,
then,
that
the
agreement
was
still
in
full
force
and
effect
throughout
1989,
despite
him
having
been
in
partial
breach
of
one
of
the
terms.
The
question
requiring
determination
is:
ls
the
letter
referred
to
in
paragraph
7(a)
[of
the
application]
a
written
separation
agreement
within
the
meaning
of
paragraph
60(b)
of
the
Income
Tax
Act.
The
Court's
determination
of
the
question
posed
is:
Yes.
Having
answered
in
the
affirmative,
there
is
no
need
to
deal
with
the
second
question.
The
appeal
is
allowed.
The
appellant
is
entitled
to
costs
on
a
party-party
basis.
Appeal
allowed.
Email this Content