[OFFICIAL ENGLISH TRANSLATION]
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Citation: 2004TCC551
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Date: 20040901
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Docket: 2002-2240(IT)I
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BETWEEN:
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PIERRE GAGNON,
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Appellant,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
(Delivered orally from the bench on May 30,
2003, at Québec, Quebec, and revised at Ottawa, Canada, on
August 31, 2004.)
Paris J.
[1] The Appellant has instituted an
appeal from the reassessments dated February 22, 2002, for
his 1998, 1999 and 2000 taxation years and from the initial
assessment dated May 13, 2002, for his 2001 taxation year.
By those assessments, the Minister of National Revenue disallowed
the Appellant the deduction, in computing his income, of the
amounts of support that he had paid to his former spouse. Those
amounts were $7,410 in 1998, $7,706 in 1999, $7,996 in 2000 and
$8,196 in 2001.
[2] The first point at issue is
whether the Appellant paid the support pursuant to a judgment
rendered by the Superior Court of Quebec on April 3, 1987,
or to a second judgment of that same Court dated October 11,
1988.
[3] Under paragraph
60(c.1) of the Income Tax Act, support payments
made pursuant to an order made by a competent tribunal after
February 10, 1988, and before 1993 are deductible in
computing the payer's income. However, payments made pursuant
to an order made by a competent tribunal before February 11,
1988, are deductible only if the payer and the recipient made an
election to that effect, which is not here the case.
[4] The two Superior Court judgments
in question were filed as Exhibits I-9 and
I-10, and an agreement entered into by the Appellant and
his former spouse on August 30, 1988, was filed as
Exhibit I-11.
[5] Under the first judgment, the
Appellant was required to pay his former spouse support of
$447,61 a month for his daughter for a period of one year
starting on November 1, 1986 and $385 a month thereafter.
The judgment also established the Appellant's temporary
visiting rights in respect of his daughter.
[6] The second judgment confirmed an
agreement entered into by the Appellant and his former spouse.
The relevant part of the second judgment reads as follows:
[TRANSLATION]
Certifies the agreement of the parties dated August 10,
1988, RATIFIES and DECLARES IT BINDING to stand as if each of its
clauses were here stated at length and ORDERS the parties to
comply therewith.
[7] The preamble to the agreement even
states the circumstances of the first judgment and the fact that
the parties had resorted to conciliation and that they had come
to an agreement, the terms of which extend over three pages.
[8] For the most part, the
stipulations of the agreement concern the question of the
Appellant's access to his daughter, but paragraph 2
provided that his former spouse would have custody of their
daughter and paragraph 5 stated that the Appellant was to
pay his former spouse support of $385 a month.
[9] The Appellant contends that the
judgment of October 11, 1988, stated his obligation to pay
his former spouse support and also determined his right of access
to his daughter. In his view, the second judgment had the effect
of entirely replacing the first judgment of April 3, 1987,
rather than making certain amendments to it.
[10] He pointed out that the first judgment
provides that:
[TRANSLATION]
This order shall remain in effect until the parties have come
to an agreement amending the above terms and conditions.
[11] And the Appellant emphasized that the
agreement into which he entered with his former spouse on
August 30, 1988, addressed the question of the support he
was to pay, and did so not only in its preamble, but also in its
very conditions.
[12] Indeed, paragraph 5 states:
[TRANSLATION]
The Respondent shall remit to the applicant on the first day
of each month support in the amount of $385 for the benefit and
support of his minor daughter Sarah, which support shall be
indexable every year in accordance with the Act.
[13] Counsel for the Respondent claims that
the obligation established by the first judgment to pay support
was not amended by the second. He contends that the fact that the
preamble to the agreement of August 30 refers to the
Appellant's existing support obligation and the fact that the
preamble was incorporated into the agreement leads to the
conclusion that the source of the obligation has not changed,
that that source was still the first judgment.
[14] Counsel for the Respondent argues that
Ms. Dubord's testimony that the parties had agreed by
the agreement of August 30, 1988, to resolve only the
question of visiting and access rights supports the position that
the agreement and the second judgment did not amend the primitive
obligation respecting support.
[15] Counsel for the Respondent referred to
this Court's decision in Hill v. The Queen,
[1993] T.C.J. No. 317, in which the Appellant objected to
the inclusion of certain amounts of support in her income. Until
June 27, 1990, the Appellant had received support of $225 a
month, which was not taxable. On June 27, 1990, a new order
was made increasing the support to $450 a month. The Court in
that case had to decide whether the new order of June 27 had
the effect of eliminating the entitlement to child support that
flowed from the previous orders or whether it increased the
amount payable without disturbing the basic foundations of the
previous orders.
[16] Judge Rowe held that, since, by
the new order, the Court had ordered payment of a certain amount,
the entire amount was payable pursuant to the new order, not only
the portion representing an increase in maintenance. The amount
fixed in the new order had the effect of creating a new right and
obligation respecting the amount stated. A new order concerning
the same subject or matter as a previous order is considered as
having replaced the previous order and subsequently becomes the
legal basis of the obligation.
[17] In the instant case, the second
judgment of the Superior Court represents a new support order,
even though the amount of the obligation remained at the same
level as previously. Starting on October 11, 1988, support
was paid pursuant to that judgment.
[18] In my view, this finding also follows
from the fact that the parties to the agreement of
August 30, 1988, exhaustively addressed the questions of
custody, access rights and support instead of merely seeking
amendments to the previous judgment.
[19] With respect to the 2001 taxation year,
counsel for the Respondent contends that, in view of the fact
that the Appellant's daughter had reached the age of 18 in
December 2000, he no longer had any obligation to pay support. He
bases that argument on paragraph 5 of the agreement of
August 30, 1988, to which the Court refers above.
[20] Counsel for the Respondent claims that
support was payable provided that the Appellant's daughter
was a minor and that the obligation terminated on her eighteenth
birthday.
[21] I am not satisfied that the use of the
word "minor" in paragraph 5 reflected an intention
of the parties to limit the payment of support in that
manner.
[22] Lastly, the evidence shows that the
Appellant saw himself under an obligation to pay the support
amounts even after his daughter had reached her majority.
Ms. Dubord did not testify on this subject.
[23] Thus, with regard to the parties'
intent, the evidence does not support the Respondent's
argument, and I conclude from it that the obligation to pay
support continued in 2001.
[24] For all these reasons, the appeal is
allowed, with costs.
Signed at Ottawa, Canada, this 1st day of September 2004.
Paris J.
Certified true translation
Colette Dupuis-Beaulne
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