Citation:
2005TCC217
Date:
20050421
Docket: 2004-2569(IT)I
BETWEEN:
GERMAIN RIOUX,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] Germain Rioux has
appealed income tax assessments for 2001 and 2002 by which the Minister of
National Revenue denied his claims to deduct amounts paid to his former spouse
as an alimentary allowance in accordance with paragraph 60(b) of
the Income Tax Act ("Act").
[2] The appellant’s agent
has agreed that the following facts assumed by the Minister in making the
assessments are true:
a) The appellant and his ex-spouse Hélène
Salvail married on September 2, 1983;
b) There are two children of their marriage:
Guillaume, born December 15, 1985; and Jasmin, born
March 23, 1988;
c) The parties have lived separate and apart
since July 1, 1998;
d) On October 27, 1999, a judgment for
interim relief was issued ordering the appellant to pay support in the amount
of $109 per week for the benefit of the child and an alimentary allowance of
$141 per week for the benefit of the spouse;
e) A judgment varying the interim relief was
issued on April 25, 2000, by which it was agreed that until the ex-wife found a
place to live, the appellant would have custody of the children and would pay
his ex-spouse an alimentary allowance of $250 per week for her benefit;
f) On April 28, 2000, a judgment was
rendered confirming the motion to vary the interim relief of
April 25, 2000;
g) Since July 1, 2000, the ex-wife has
had a place to live and has resumed the joint custody arrangement respecting
the children;
h) A divorce judgment was rendered on
April 29, 2002, ordering the appellant, commencing May 1, 2002, to pay
support for the children in the amount of $547.84 per month and an alimentary
allowance for the spouse in the amount of $1,300 per month.
[3] In her reply to the
notice of appeal, the respondent refers to paragraphs 56.1(4), 60.1(4) and
60(b) of the Act and states that the Minister is justified
for refusing the deduction claimed by the appellant. Nowhere in her reply,
however, does the respondent offer a specific reason for the refusal. At trial,
respondent’s counsel said the reason was that in 2001 and until
April 29, 2002 there was no amount payable as an alimentary allowance
by the appellant to his former wife under an order of a competent tribunal or
under a written agreement.
[4] Respondent’s counsel
argued that the judgment of April 25, 2000 nullified the judgment of October
27, 1999. Once the former spouse found a place to live on July 1, 2000 the
judgment of April 28, 2000 no longer had any effect; the judgment became caduc
and there was neither an agreement nor a judgment ordering the appellant to pay
to his wife an alimentary allowance. Both the original judgment of October 28,
1999 and the judgment of April 28, 2000 had ceased to have any effect.
Therefore any payments made by Mr. Rioux to his ex‑wife in 2001 and until
April 29, 2002, the date of the judgment in divorce, were not made pursuant to
an order of a competent tribunal or a written agreement and are not deductible
by him in computing his income.
[5] Mr. Rioux’s agent
argued that the Agreement of April 25, 2000 and the judgment of April 28, 2000
constituted a temporary measure to provide for a temporary change in the former
spouse’s living arrangements and that once she found living accommodations, the
judgment of October 27, 1999 again took effect. Payments made to her by the
appellant after July 1, 2000, were made pursuant to the judgment of October 27,
1999. This, he argued, was confirmed by a letter dated December 21, 2000 from
the Ministère du Revenu du Québec, Directeur général de la capitale et des
régions, to Mr. Rioux which informed him
that he must [TRANSLATION] "pay directly to the Ministère du Revenu, for
the benefit of the alimentary creditor, the amount of $256.25 per week, which
represents the amount of your alimentary allowance, endorsed in accordance with
the Civil Code of Québec and that the payment is effective January 16,
2001." In my view, this letter proves nothing. In fact, in another letter
from the Ministère du Revenu de Québec, Germain Rioux was informed that the
amount he paid to the Ministère du Revenu du Québec for the year 2001 was not
necessarily the amount that he would have to deduct in computing his income.
[6] The issue before me
is based on the intention of the appellant and his former wife when they signed
the agreement of April 25, 2000. In Gagné v. The Queen, Desjardins J.A. of the Federal Court
of Appeal adopted the thoughts of Baudouin J.A.:
10 It is settled law, in Quebec civil
law, that if the common intention of the parties in an agreement is doubtful,
the judge [TRANSLATION] "must try to find what the parties truly intended
by their agreement" (Jean-Louis Baudouin, Les Obligations, 4th Ed.,
1993, Les Éditions Yvon Blais, p. 255). The judge must [TRANSLATION]
"place greater weight on the real intention of the contracting parties
than on the apparent intention, objectively manifested by the formal
expression" (p. 255), and he must ascertain the effect that the parties
intended the contract to have (p. 256). To do so, the judge must have a overall
picture of the parties' intention, which calls for an analysis of all of the
clauses in the contract in relation to one another (p. 258). If there is any
remaining doubt as to the parties' real intention, the judge may [TRANSLATION]
"examine the manner in which the parties conducted themselves in relation
to the contract, in their negotiations, and most importantly their attitude after
entering into the contract, that is, the manner in which the parties have
interpreted it in the past..."
[7] Unfortunately Mr.
Rioux's former wife did not testify. In appeals such as this one I am reluctant
to accept self‑serving testimony that is not corroborated by independent
evidence. This is an appeal under the informal procedure and I would have been
prepared to consider exchange of letters between lawyers, for example, that
would support Mr. Rioux's position that the agreement of April 25, 2000
was a temporary arrangement until the former Mrs. Rioux found a place to
reside. This agreement was ratified by a judgment of the Superior Court on
April 28, 2000 that is silent as to the effect of the judgment on the
previous judgment of October 27, 1999. There is no mention in the judgment of
April 25, 2000 (or relevant agreement) that the judgment of October 27, 1999
would again be in full force once the appellant's former spouse found a
residence.
[8] The Quebec Court of
Appeal considered the effect of a modification of an agreement for alimentary
position in M.N.K. c. N.N. in
which Vallerand J.A. wrote as follows:
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[TRANSLATION]
The misunderstanding is due to the fact that an
entirely new determination is being called a variation. Obviously, there is
no way to vary something that is entirely unknown for the moment (in the case
at bar, the judgment which, after coming before the Court of Appeal, will be considered
the original judgment concerning the allowance.) But our Court has held, and subsequently
reaffirmed, that a judge entertaining a motion to vary an alimentary
allowance must first determine whether there has been a substantial change in
the parties' circumstances. If there has been, the judge must consider the
question de novo and not be limited to making a proportional
adjustment, or, in other words, a variation. The reason for this is as
follows. To the extent that it made a determination respecting an uncertain
future, the judgment fixing the allowance is in some way a conditional
judgment (it is unimportant whether the condition is considered suspensive or
resolutory) which will only be lawful so long as the circumstances of the
parties have not changed. When those circumstances have changed, the judgment
no longer lawfully applies to the future, except that it has the authority of
a judgment that is still in force. When dealing with a new motion to
"vary", the Court, based on the change of circumstances, will
consider the prior judgment expired ("caduc") and therefore
without any remaining effect from a legal point of view. And the presumably
pending appeal against the first judgment will only apply to the period between
the date of the first judgment and the date of the judgment declaring it
expired. Consequently, once the "condition" has occurred and the judgment
is declared expired from a legal point of view, the "varying" judge
will make a new determination, not a variation, based on the parties'
circumstances as established before him. In short, the parties' situations
either have or have not substantially changed, and if they have, a new
allowance must be determined based on the circumstances established before
the "varying" judge and without regard to the previous judgment,
whether or not it has been appealed.
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An example should illustrate how this principle is
applied in practice. Let us assume that the debtor of a large allowance has
lost all his resources. Must he wait for the outcome of the appeal against
the judgment establishing the amount of his allowance? That is to say, must
he wait to be able to ask for his obligation to be extinguished, and, in the
meantime, risk becoming a delinquent debtor subject to the headaches of
execution, including examinations, seizures and perhaps even a contempt
finding, when the law says that he owes nothing, because he is nonetheless
prevented from asserting in court his right to owe nothing? I think not. The
principle applies to cases where no amount is owed, but it is equally
applicable where lesser amounts, and, naturally, greater amounts, are owed.
(Emphasis added.)
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[9] In Gagné, the
Federal Court of Appeal was of a similar view:
[15] It is obvious, in the circumstances, that all of the financial
arrangements stipulated in the agreement were premised on the future and
uncertain sale of the family residence and not on a predetermined date. The
agreement was binding on the parties as long as the condition stipulated did
not materialize. This is how the parties themselves understood and performed
the agreement.
[16] . . . That is not the situation in this case. On
the contrary, the support in dispute was paid pursuant to an initial written
agreement, which was in fact ratified by a court order, until a second
agreement replacing the first one, and also ratified by court order, was
entered into.
[10] The appeals must
therefore be dismissed.
Signed at Ottawa, Canada, this 21st
day of April 2005.
"Gerald J. Rip"
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