M
J
Bonner:—The
appellant
appeals
from
an
assessment
of
income
tax
for
the
1977
taxation
year.
On
assessment
the
respondent
disallowed
a
deduction
claimed
under
paragraph
60(b)
of
the
Income
Tax
Act
in
respect
of
a
payment
of
$5,000
made
by
the
appellant
to
his
former
wife
pursuant
to
a
decree
nisi
of
divorce.
The
decree
incorporated
by
reference
certain
financial
terms
set
forth
in
minutes
of
settlement.
The
decree
nisi
provided
in
part
as
follows:
4.
AND
THIS
COURT
DOTH
FURTHER
ORDER
AND
ADJUDGE
that
the
Respondent
shall
pay
to
the
Petitioner
a
lump
sum
once
and
for
all
maintenance
award
in
the
sum
of
Forty
Thousand
Dollars
($40,000.00)
on
the
terms
and
conditions
as
evidenced
by
the
agreement
made
between
the
parties
and
filed
as
Exhibit
2
in
these
proceedings.
The
minutes
of
settlement
provided
in
part
as
follows:
3.
The
Respondent
shall
pay
to
the
Petitioner
for
her
support
a
lump
sum
once
and
for
all
maintenance
award
in
the
sum
of
Forty
Thousand
Dollars
($40,000.00)
on
the
following
terms:
(a)
The
Respondent
shall
pay
forthwith
to
the
Petitioner
the
sum
of
Ten
Thousand
Dollars
($10,000.00);
and
(b)
Shall
pay
thereafter
the
sum
of
Five
Thousand
Dollars
($5,000.00)
on
the
first
day
of
November,
A.D.
1977;
and
.
.
.
The
remaining
$25,000
was
payable
by
instalments
of
$5,000
on
the
first
of
November
of
each
of
the
following
five
years.
The
minutes
further
provided:
.
.
.
in
the
event
that
the
Respondent
shall
be
in
default
of
any
payment
for
a
period
in
excess
of
thirty
(30)
days,
then
the
Petitioner
at
her
option
may
call
due
the
balance
due
and
owing.
No
provision
was
made
for
interest
on
the
deferred
portion
of
the
$40,000.
The
sole
issue
in
this
appeal
is
whether
the
payment
made
pursuant
to
paragraph
3(b)
of
the
minutes
of
settlement
was
an
amount
paid
as
an
.
allowance
payable
on
a
periodic
basis
for
the
maintenance
of
the
recipient
thereof
.
.
.”
within
the
meaning
of
paragraph
60(b)
of
the
Act.
The
respondent’s
position
was
that
the
$5,000
was
paid
as
an
instalment;
that
is
to
say
that
it
was
paid
in
discharge
of
an
obligation
to
pay
a
lump
sum
by
fixed
portions
at
fixed
times.
Counsel
submitted
that
paragraph
60(b)
does
not
permit
the
deduction
of
lump
sum
payments.
The
appellant
submitted
that
each
of
the
$5,000
payments
called
for
by
the
minutes
of
settlement
was
a
payment
of
an
“allowance
payable
on
a
periodic
basis”.
The
appellant
relied
upon
the
decision
of
the
Exchequer
Court
of
Canada
in
MNR
v
William
Albert
Hansen,
[1967]
CTC
440;
67
DTC
5293.
In
that
case
the
husband
was,
by
agreement,
under
an
obligation
to
pay
for
the
support
and
maintenance
of
his
wife
“the
sum
of
$20,000”,
of
which
$6,000
was
payable
forthwith
and
$14,000
was
payable
by
equal
consecutive
monthly
instalments
of
$100
each.
The
Court
rejected
a
contention
that
the
agreement
provided
for
a
lump
sum
payment
of
$20,000
and
that
the
monthly
payments
were
merely
instalments.
Jackett,
P
stated
at
446
[5297]:
The
real
question
is,
of
course,
whether
the
payments
were
made
pursuant
to
a
provision
for
payments
on
a
periodic
basis
and,
in
my
view,
paragraph
7(2)
(of
the
agreement),
pursuant
to
which
the
payments
in
question
were
made,
is
precisely
that.
The
decision
in
Hansen
must
be
approached
with
caution.
There
is
nothing
in
the
reasons
for
judgment
which
suggests
that
the
attention
of
the
Court
was
drawn
to
the
earlier
decision
of
the
Court
in
MNA
v
Dorila
Trottier,
[1967]
CTC
28;
67
DTC
5029.
In
that
case
the
question
was
whether
payments
of
$350
per
month
were
deductible
under
paragraph
11
(1)(l)
of
the
former
Act.
The
payments
were
made
pursuant
to
a
mortgage
called
for
by
a
separation
agreement
which
provided:
The
balance
of
Thirty-Three
Thousand
($33,000.00)
Dollars
shall
be
paid
in
equal
consecutive
monthly
instalments
of
Three
Hundred
and
Fifty
($350.00)
Dollars,
including
interest,
commencing
on
the
1st
day
of
October,
1958,
and
on
the
1st
day
of
each
and
every
month
thereafter
until
all
arrears
of
principal
and
interest
monies
hereby
secured
are
fully
paid
and
satisfied.
The
interest
at
the
rate
of
Five
per
cent
(5%)
per
annum
shall
be
calculated
half
yearly,
not
in
advance,
on
the
unpaid
balance
of
principal
outstanding.
Notwithstanding,
anything
written
above
the
interest
shall
not
be
calculated
at
any
time
on
a
principal
sum
greater
than
Twenty-One
Thousand
($21,000.00)
Dollars.
Such
monthly
instalments
when
received
by
the
mortgagee
shall
be
applied
firstly
on
account
of
interest
and
interest
in
arrears,
if
any,
and
secondly,
upon
the
unpaid
balance
of
the
Principal.
The
interest
payable
shall
be
calculated
from
the
1st
day
of
September,
1958.
It
was
argued
that
the
separation
agreement
and
mortgage
were
to
be
read
together
and
that
the
monthly
instalments
were
periodic
payments
for
the
maintenance
of
the
recipient
pursuant
to
a
written
agreement.
That
argument
was
rejected.
Cattanach,
J,
stated:
.
.
.
the
second
mortgage
stands
in
exactly
the
same
position
as
a
promissory
note
or
a
parcel
of
real
property
which
the
respondent
might
have
given
to
his
wife
in
satisfaction
of
his
obligation
to
provide
for
her.
His
Lordship
stated:
Alimony
or
maintenance
continues
through
the
joint
lives
of
the
husband
and
wife
but
terminates
upon
the
death
of
either.
and
The
result
might
be
different
if
paragraph
2
of
the
separation
agreement,
Schedule
D,
were
a
specific
covenant
by
the
respondent
to
pay
to
his
wife
a
sum
certain
by
way
of
periodic
instalments
during
her
lifetime
and
the
second
mortgage
had
been
given
to
Mrs
Trottier
as
collateral
security
for
those
payments.
But
such
is
not
the
case.
The
second
mortgage
was
not
given
by
way
of
collateral
security
but
rather
in
discharge
of
the
respondent’s
obligation
to
support
his
wife.
(Italics
added)
An
appeal
was
taken
to
the
Supreme
Court
of
Canada
([1968]
CTC
324;
68
DTC
5216).
The
Chief
Justice,
speaking
for
the
Court,
expressed
“substantial
agreement
with
the
reasons
of
Cattanach,
J”.
His
Lordship
said
at
327
[5219]:
I
agree
that
these
documents
which
were
prepared
contemporaneously
and
relate
to
the
same
transaction
should
be
read
together;
but,
so
reading
them,
it
appears
that
the
agreement
between
the
parties
was
not
that
the
husband
should
pay
his
wife
a
periodic
allowance
for
maintenance
and
that
his
agreement
to
do
so
should
be
collaterally
secured
by
a
second
mortgage;
it
was
rather
a
release
by
her
of
all
her
claims
for
an
allowance
and
the
giving
by
her
(in
paragraph
4
of
the
agreement)
of
an
irrevocable
power
of
attorney
to
bar
her
dower
in
her
husband’s
lands
in
exchange
for
a
single
consideration,
the
giving
of
the
mortgage
for
$45,000.00.
The
obligation
to
make
the
payments
under
the
mortgage
was
not
dependent
on
the
wife
continuing
to
live.
She
was
free
to
assign
it
at
any
time.
The
giving
of
the
mortgage
was
analogous
to
the
payment
of
a
lump
sum
by
which
once
and
for
all
the
husband
was
released
from
liability
to
support
his
wife.
The
payment
in
question
here
was,
in
my
view,
plainly
an
instalment
of
a
“lump
sum
once
and
for
all
maintenance
award”.
The
$40,000
was,
again
in
the
words
of
the
Minutes,
taken
by
the
former
spouse
“.
.
.
in
full
satisfaction
of
all
her
past,
present,
and
future
claims
to
maintenance”.
I
can
see
no
basis
for
a
finding
that
the
appellant’s
obligation
to
pay
the
instalments
subsisted
only
during
the
joint
lives
of
himself
and
his
former
spouse.
In
the
circumstances
the
payment
cannot
be
found
to
fall
within
paragraph
60(b)
of
the
Income
Tax
Act.
The
appeal
will
therefore
be
dismissed.
Appeal
dismissed.
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