Date: 20030107
Docket: 2001-4595(IT)I
BETWEEN:
NAOMI KRAMER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bowman, A.C.J.
[1] These appeals are from assessments
made under the Income Tax Act for the appellant's 1997
and 1998 taxation years. The issue is whether the amounts of
$16,744 and $18,819 respectively are to be included in her income
for those years as support payments under
paragraph 56(1)(b) of the Income Tax Act.
[2] The appellant and her former
husband, Mendel Kramer, married on March 23, 1987 and they
had two children born in 1986 and 1988 respectively. The spouses
separated on November 28, 1994.
[3] On November 21, 1994 the
appellant moved in the Superior Court of Quebec for a judgment of
the court for a number of things, including custody of the
children, use of the matrimonial home, use of the family car, the
payment by the husband of an alimentary allowance of $2,500 per
month, and the payment of a number of expenses relating to the
matrimonial home.
[4] The matter was not heard because
on November 28, 1994 the parties entered into a consent
agreement, described as a "consent to interim
measures". The agreement dealt with a number of matters,
including custody of the children, access to the children,
possession of the house and use of the family car and
alimony.
[5] Clause 5 dealt with the
support payments, as follows.
The Defendant shall pay alimony for one minor children and the
Plaintiff in the sum of $1,425.00 monthly, on the first day of
each month at the Plaintiff's residence, in advance.
[6] The appellant contends that I
should draw some inference from the access provisions about the
temporary nature of the agreement and I therefore reproduce
clauses 1, 2 and 3 of the agreement.
1. The
Plaintiff shall have custody of the minor children, Yeshaya and
Eliazer.
2. The
Defendant shall have access to the children as follows up to and
including 12 December 199
a) one (1) day
each weekend from 8:00 A.M. until 9:30 A.M. the following
morning.
b) Monday and
Wednesday evenings from 5:00 P.M. to 9:00 P.M.
3. After 12
December 1994 the Defendant shall have access to one children as
follows:
a) one (1) day
each weekend from 8:00 A.M. until 9:30 A.M. the following
morning;
b) Tuesday and
Thursday evenings, from 5:00 P.M. to 9:00 P.M.;
c) from 2
January to 9 January 1995 either for the entire period or during
the days (the Plaintiff will have the children exclusively from
23 December 1994 to 1 January 1995);
d) the first
Passover Seder, from 13 April 2:30 P.M. until 14 April 1994, 3:30
P.M.;
e) from 24
February, 5:00 P.M. until 26 February 9:00 P.M., 1995.
[7] I note that in the second line of
clause 2 the last digit in the date seems to have been cut
off in the photostat which was made on exhibit. I have not seen
the original but I assume the missing number is 4.
[8] In any event, the handwritten
agreement, which was drafted by the parties' lawyers, after
it was signed, was taken to a "Greffier
spécial", who placed the following stamp on the first
page of the motion, and signed it.
Le 28
novembre 1994
Requête accordée.
Entérine et déclare exécutoire
le consentement intérimaire signé le 28 novembre
1994
pour valoir jusqu'au 17 janvier 1995.
[illegible]
Greffier spécial
[9] The procès verbal
(Exhibit A-1) signed by a Greffier spécial on
November 28, 1994 contains the notation
Requête continuée en salle 2.17 le 17 janvier
1995.
[10] Evidently no one told Mrs. Kramer
of the new hearing date of January 17, 1995 and it seems no
one turned up, or at all events Mrs. Kramer did not, and the
notice of motion contained the following further notation
Hon. Juge Israel Mass JCS
le 17 janvier 1995
Ads Sine Die [illegible]
[and a signature]
[11] I gather from this that nothing
happened and the matter was simply adjourned sine die.
[12] Payments seem to have been made but
apparently not regularly because on May 24, 1996 the
appellant, through another lawyer, applied for a "bref de
saisie-arrêt après jugement" against the
husband and the college where he worked.
[13] The evidence is not clear what further
steps were taken pursuant to this writ, but the Direction de la
perception automatique des pensions alimentaires, evidently a
branch of the Direction générale des contribuables
of the Quebec Ministry of Revenue ("La Direction"),
became involved and the support payments were made through that
office.
[14] It seems that the application of the
writ of seizure on May 24, 1996 prompted La Direction to
look into the matter and on March 3, 1999 La Direction wrote
to Mrs. Kramer as follows.
Subject: File closed
We wish to advise you that your file was reviewed further to
the filing of a statement of non-payment of support with the
office of the Superior Court.
Your file indicates that the judgment rendered on November
28th 1994, was valid until January 17th 1995 as indicated by the
special bailiff.
Consequently, the Minister of Revenue has to interrupt the
support payments.
[15] This surprising piece of news led
Mrs. Kramer to conclude that if there was no obligation on
Mr. Kramer after January 17, 1995 to make the payments
she should not have had to include them in her income.
[16] She applied for a refund for 1995, 1996
and 1997 and did not include any payments in her income for 1998.
She received the refunds. The CCRA then reassessed
Mr. Kramer and disallowed the deduction of the payments for
1997 and 1998. He objected and subsequently appealed to the Tax
Court of Canada. The Department of Justice must have agreed with
him because his appeals were allowed on consent.
[17] The CCRA then went back and reassessed
Mrs. Kramer for 1997 and 1998 to include the payments in her
income. Hence these appeals. She was not reassessed for 1995 or
1996 presumably because the years were statute barred.
[18] To finish the picture on 19 April
2000 the Honourable Mr. Justice Marx of the Superior Court
of Quebec rendered a judgment of divorce based on a consent to
judgment. In his judgment he made the following declaration:
Declares that the defendant paid alimentary support for the minor
children Eliazer and Yeshaya from November 28, 1994 to March 15,
1999 in virtue of both an Agreement and a Judgment dated November
28, 1994.
[19] One may, I believe, safely start from
the premise that where paragraph 56(1)(b) speaks of a
written agreement it is implicit that it be a valid and
enforceable written agreement. Certainly we have what on its face
purports to be a written agreement signed by both parties. The
appellant's position is however that the words "pour
valoir jusqu'au 17 janvier 1995" written on the notice
of motion and signed by the Greffier spécial means that
its effect ceases on January 17, 1995 as assumed by La
Direction in its letter of March 3, 1999.
[20] For support payments to be covered by
paragraph 56(1)(b) they must be paid pursuant to a
written agreement or a court order. The notation made by the
Greffier spécial may well have given to the agreement the
effect of a court order and that effect was to last until
January 17, 1995 when the matter was to come before the
court. When no one appeared on January 17, 1995 the matter
was adjourned sine die. Obviously both parties considered
themselves bound after that date. It is true the effect of the
court order expired on January 17, 1995 but the written
agreement continued in full force. The appellant's position
was presented with great skill by Ms. Angela Veitch
and Mr. Jean-Nicolas Prévost. Where I am however in
respectful disagreement with them is the effect of the notation
signed by the Greffier spécial. It gave the agreement the
force and effect of an order of the court until January 17,
1995. It did not cause the agreement to be any the less an
agreement or change it from an agreement into an order so that on
the expiry of the order on January 17, 1995 nothing
remained. The expiry of the effect of the ratification was that
compulsory execution no longer was possible. The agreement
continued to exist and to have effect under the law of Quebec.
The Code civil reads:
1378. A contract is an agreement of wills
by which one or several persons obligate themselves to one or
several other persons to perform a prestation.
...
1385. A contract is formed by the sole
exchange of consents between persons having capacity to contract
...
...
1458. Every person has the duty to honour
his contractual undertakings.
...
1590. An obligation confers on the creditor
the right to demand that the obligation be performed in full,
properly and without delay.
[21] In Droit de la famille
québécois by Justice Jean-Pierre
Senécal, paragraph 35-190, p. 3,524, the
following appears:
... la validité d'une convention entre les
conjoints ne dépend nullement de son homologation par le
tribunal. ... À cet égard, soulignons
qu'il ne faut pas confondre la validité d'une
convention avec ses possibilités d'exécution:
même si une convention non homologuée peut
créer certains problèmes (puisque pour
exécuter il faut un jugement), ce n'est pas à
dire que la convention n'est pas valable, l'une des
parties pouvant, en fait, être contrainte d'y donner
suite par jugement lorsque nécessaire.
[22] It follows that the payments were made
pursuant to a written agreement which had not terminated.
[23] I shall mention briefly a point which I
raised in argument and it is the effect of the declaration of
Justice Marx on April 19, 2000 which I quoted above.
According to the Federal Court of Appeal in Dale et al. v. The
Queen, 97 DTC 5252, an order of a superior court is
not susceptible of lateral attack, on grounds of jurisdiction or
otherwise. In Dale the Nova Scotia court on an ex
parte application retroactively amended the letters patent of
a corporation that at the time to which the order was effective
was a Prince Edward Island company. If an ex parte order
of a Nova Scotia court can have retroactive and extra-territorial
effect then it seems incontrovertible that effect must be given
to the declaration of the Quebec Superior Court on April 19,
2000.
[24] It follows that I must dismiss the
appeals. The payments were made pursuant to a written agreement
and must be included in the appellant's income for 1997 and
1998.
[25] If there ever was a case for at least
the waiver of interest under the Minister's discretionary
powers pursuant to the fairness package this is it. The appellant
acted in good faith upon the letter of March 3, 1999 from La
Direction. She applied for and received a refund. As a result of
a consent judgment in favour of her husband to which she was not
a party the CCRA seeks to recover the amount refunded to her. The
least the Minister can do is to waive the interest under
subsection 220(3.1) of the Income Tax Act if not the
tax under the Financial Administration Act.
[26] The appeals are dismissed.
Signed at Toronto, Canada, this 7th day of January 2003.
A.C.J.
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