Irving a Taylor v. Minister of National Revenue, [1982] CTC 2845, 82 DTC 1829

The Chairman:—The appeal of Irving A Taylor is from reassessments with respect to the 1978 and 1979 taxation years by which the Minister disallowed the deduction of alimony payments in the amounts of $16,075 and $8,550 respectively made by the appellant to Janet Anderson.

Facts

The facts, while unusual, are not in dispute. On August 26, 1961 Janet Anderson married William Witty II. On November 7, 1969 she was granted a divorce from Witty by authorities in Mexico. The parties agreed that the divorce obtained in Mexico was legally invalid and was not recognized in the United States nor in Canada.

On November 8, 1969 the appellant, as I understand it, went through a marriage ceremony with Janet Anderson in the State of Louisiana, USA, although William Witty was alive and was, according to US and Canadian law, her legal husband. After residing in North Carolina, the appellant and Janet Anderson took up residence in Thunder Bay in the Province of Ontario in 1974.

On June 2, 1977 the appellant commenced an action in the Supreme Court of Ontario, seeking the annulment of his purported marriage to Janet Anderson.

On August 4, 1977 Janet Anderson commenced a divorce action against the appellant and the Supreme Court of Ontario ordered the appellant to pay Janet Anderson an amount of $950 a month as interim alimony, effec- tive September 1, 1977. In accordance with the order of the Supreme Court of Ontario, the appellant paid to Janet Anderson amounts of $16,075 in 1978 and $8,550 in 1979.

The trial of the appellant’s action seeking annulment of his marriage with Janet Anderson took place in June and July of 1979. On December 27, 1979 the Supreme Court of Ontario declared the marriage a nullity by reason of a prior existing marriage.

Submissions:

The appellant’s submission briefly is that once a de facto marriage has been established the courts, for purposes of interim alimony and disbursements, will not usually inquire into the legal validity of the marriage. He concludes that the circumstances that existed at the time the alimony payments were made are the governing circumstances and the appellant therefore made the payments in accordance with paragraph 60(b) of the Income Tax Act, SC 1970-71-72, c 63, as amended, and the deductions should be allowed.

The respondent contends that Janet Anderson was at no time the spouse or former spouse of the appellant and while the alimony payments may have been made pursuant to an order of a competent tribunal, they were not made to the appellant’s spouse or former spouse within the meaning of paragraph 60(b) of the Act.

Findings:

As pointed out by counsel for the appellant, the terms “spouse” or “former spouse” are not defined in section 248 of the Income Tax Act but subsection 73(1.2) does, for purposes of subsection 73(1), define them. I cannot however accept that the definition of “spouse” or “former spouse”, used specifically with respect to the inter-vivos transfer of property of a spouse, can or should be used in relation to the application of paragraph 60(b) of the Act, notwithstanding the general rules on the interpretation of Statutes. Nor can I accept that paragraph 60(b) of the Act can in any way be considered as a penal clause when the least onerous of two interpretations must be chosen, as suggested by counsel for the appellant.

Paragraph 60(b) of the Act permits, under very specific conditions, the deduction of alimony and other maintenance payments. The Courts have interpreted the required conditions of the section restrictively but, to my knowledge, the question of defining the term “spouse” or “former spouse” for purposes of paragraph 60(b) of the Act has never before arisen.

Counsel for the respondent, in support of his contention that Janet Anderson was never the spouse or former spouse of the appellant; that paragraph 60(b) of the Act is not applicable and the alimony payments are not deductible, read extensively from D Mendes da Costa’s book (Vol II) “Studies in Canadian Family Law”. He pointed out clearly the essential difference that exists between a decree of divorce and a Court order declaring that a marriage is null and void.

There can be no doubt on the basis of the facts that Janet Anderson was found by the Supreme Court of Ontario not to have been at any time the legal or de jure spouse of the appellant. The evidence is however, that, for a period of some eight years, she was his de facto spouse, following what was supposed to have been a marriage ceremony. While the words, “spouse” or “former spouse” are not defined in the Income Tax Act, there is no section which prohibits the inclusion of a de facto spouse in interpreting paragraph 60(b) of the Act.

The appellant, in making interim alimony payments to Janet Anderson, was complying with an order of a competent tribunal. If, as stated by counsel for the appellant, the Supreme Court of Ontario, for purposes of interim alimony, does not inquire into the validity of the marriage once a de facto marriage has been established, would the Board, in taxing the said payments, be justified in interpreting the undefined word “spouse” in paragraph 60(b) of the Act in a way other than does the tribunal which orders the payment of interim alimony? I do not think so.

Counsel for the appellant, in support of his statement cited the words of LaCourciére, J of the Ontario Supreme Court, RFL Vol 4, at 160 in the case of Davis v Davis:

With the utmost respect for the order made by the learned Senior Master, it is my conclusion on the authorities that once a de facto marriage has been acknowledged and established, alimony will be awarded pendente lite; the determination of the parties’ rights de jure is not a relevant consideration on the application for interim alimony. The authorities for that proposition are numerous and I need only refer to Barnet (MacKay) v Barnet, [1934] OR 347, [1934] 2 DLR 728, where the following statement was made by Macdonnel J A speaking for the Ontario Court of Appeal at p 353:

“In the case at bar there is no question about the relationship of the parties de facto. Whatever may be de jure the position of the plaintiff, she admittedly has de facto the status of wife, resulting not from some frivolous association nor from what is popularly called a ‘common law marriage’ but from years of cohabitation following an apparently regular form of marriage. Until the Court has determined her rights de jure (and it may be found that she is the defendant’s wife in every sense) there is no reason why she should not be allowed alimony in the usual way.”

While the tax issue must be decided according to the Income Tax Act, the Board cannot, in my view, in interpreting the word “spouse” in paragraph 60(b) of the Act, ignore as a fact of this appeal, the basis on which the Ontario Supreme Court granted the interim alimony. At the time the appellant was ordered to pay alimony to Janet Anderson, a de facto marriage existed between the couple and while the Ontario Supreme Court on December 27, 1979 may have declared the de jure aspect of the marriage null and void, Janet Anderson nevertheless was the de facto spouse or former spouse of the appellant in 1978 and 1979 and, as such, was granted the interim alimony by a competent tribunal. In the absence of a clear definition of the word “spouse” or “former spouse” with respect to alimony payments, I do not believe the Board should look beyond the above facts in interpreting paragraph 60(b) of the Act.

The decision will go allowing the appeal and the matter referred back to the Minister for reassessment on the basis that the monthly amounts paid by the appellant to Janet Anderson in 1978 and 1979 were alimony paid by order of a competent tribunal to a spouse or former spouse, within the meaning of paragraph 60(b) of the Act.

Appeal allowed.