Yakubu v. R., [1998] 1 CTC 2649

Christie A.C.J.T.C.:

This appeal is governed by the informal procedure provided for under section 18 and following sections of the Tax Court of Canada Act. The year under review is 1992.

The Notice of Appeal reads:

TAKE NOTICE THAT YASSIF YAKUBU (S.I.N. 507 086 015) appeals to the court from Revenue Canada rulings (relevant documents enclosed) pertaining to spousal support deductions for the 1992 taxation year.

As evident from their communications to me, they would recognize only court ordered support payments and as my case did not meet that particular criterion, it was rejected. My consultations however suggested that this was rather restrictive and unusually stringent. It was the opinion of experts that evidence of contractual agreement between the couple for such payments could also be permissible.

I elect to have the informal procedure provided by section 18.1 to 18.28 of the Tax Court of Canada Act apply to this appeal.

It is unnecessary for the purpose of these reasons to reproduce the documents that were enclosed.

The opening paragraph and paragraphs 1 to 7 of the Reply to the Notice of Appeal read:

In reply to the Notice of Appeal for the 1992 taxation year, the Deputy Attorney General of Canada says:

A. Statement of Facts

1. Except as expressly admitted hereinafter, he denies all the facts alleged in the Notice of Appeal.

2. He admits the authenticity of the copy of the Revenue Canada letter dated November 16, 1995, attached to the Notice of Appeal.

3. He admits the authenticity of the copy of the Tax Court of Canada Order dated November 28, 1996, attached to the Notice of Appeal.

4. In computing income for the 1992 taxation year, the Appellant deducted the amount of $6,700.00 (the ‘Amount’) as alimony or maintenance payments.

5. In assessing the Appellant for the 1992 taxation year, by Notice of Assessment mailed on August 17, 1995, the Minister of National Revenue (the ‘Minister’) disallowed the deduction of the Amount.

6. In confirming the assessment for the 1992 taxation year, the Minister made the following assumptions of fact:

(a) the alimony or maintenance payments claimed by the Appellant for the 1992 taxation year were in respect of his alleged common-law spouse who the Appellant alleged resided in Ghana during the 1992 taxation year;

(b) the Appellant has failed to provide documentation to support the Amount allegedly contributed by the Appellant to his common-law spouse during the 1992 taxation year;

(c) the Amount was not paid by the Appellant to his common-law spouse on account of alimony or maintenance pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written agreement.

B. Issues to be Decided

7. The issue is whether the Amount is deductible by the Appellant in computing his income for the 1992 taxation year.

At trial the appellant sought to have two documents admitted in evidence. They are, first, copy of a statutory declaration by his former common-law spouse Mariama Abu declared on September 1, 1995 at Accra, Ghana stating receipt by her of Canadian dollars from the appellant and, second, a letter dated February 10, 1991 from his brother in Accra relating that the elders had met and resolved that support payments of $300.00 per month should be made by the appellant to Mariama Abu “until she is self sustainable”. Counsel for the respondent objected to the acceptance of this evidence because there was no opportunity to cross-examine the authors regarding what was alleged. The inability to cross-examine is regarded as an essential pillar for the exclusion of hearsay at common law:

R. v. Streu, [1989] 1 S.C.R. 1521 (S.C.C.) per Sopinka J. delivering the judgment for the Court at p. 1529:

The rationale underlying the exclusion of hearsay evidence is primarily the inherent untrustworthiness of an extra-judicial statement which has been tendered without affording an opportunity to the party against whom it is adduced to cross-examine the declarant: This rationale applies equally in both criminal and civil cases.

I have in the past on at least two occasions rejected the kind of evidence objected to. In Cox v. Minister of National Revenue (1985), 85 D.T.C. 320 (T.C.C.) the value of certain property was in issue. The appellants relied on three documents in this regard. They are described in this way in the reasons for judgment:

(i) A letter dated September 4, 1981, addressed ‘To Whom it May Concern’ and signed by Mr. H.M. Rhodes, R.R. 1, Innisfail, Alberta. The letter expresses an opinion regarding the value of certain land to which these appeals relate. Mr. Rhodes is said to have been a municipal councillor at the time the letter was written. The land is located in that municipality.

(ii) A letter dated February 15, 1978, addressed to the appellant, Robert Cox, reminding him of payment due in the sum of $220 for an appraisal of land to which these appeals relate. The letter is signed by Gordon C. Hodgen who describes himself as: ‘Candidate Member of the Appraisal Institute of Canada’. Attached to the letter is a single sheet of paper entitled ‘Appraisal for Parkland Savings & Credit Union’. The document does not fix a numerical value for any land or building described therein. It states that the ‘remaining life’ of the residence is 25 years. This, the appellants say, is in conflict with an appraisal report prepared by Mr. L.H. Downey of Calgary for Revenue Canada.

(iii) A letter dated March 11, 1985, addressed to the appellant, Robert Cox, and signed by Mr. Bill Farr. Attached to the letter is a soil survey report prepared by Mr. Farr. He is described as: ‘Educational Assistant, Olds College, Olds, Alberta, Diploma in agronomy, land resources and classifications’.

This is said at page 321:

The authors of these documents were not called to testify at the hearing. I said then and II repeat now, this type of evidence cannot be assigned any weight for the reason that the respondent was not afforded the opportunity of testing by cross-examination the expertise of the authors of the opinions or what they said in the documents referred to. Subsection 14(2) of the Tax Court of Canada Act states that, notwithstanding the provisions of the Act under which an appeal is made to the Tax Court, it is not bound by any legal or technical rules of evidence in conducting a hearing for the purposes of that Act. I cannot, however, construe this as an unfettered license to disregard the laws of evidence. Indeed I believe that there is a positive duty on the Court to apply those laws if the nature of the subject matter before it for determination is such that in order for justice to be done they should be applied. This is especially true where cross-examination can be vital. Cross-examination is described by Wigmore in his monumental work on the law of evidence as: ‘Beyond any doubt the greatest legal engine ever invented for the discovery of truth’J [1]

In Madigane v. Minister of National Revenue (1988), 89 D.T.C. 37 (T.C.C.) the appellant claimed deductions in 1983 and 1985 relating to eight children living in Zimbabwe. This is said at page 38:

In support of her appeal the appellant seeks to rely on a document that she obtained in Zimbabwe. It is dated 20 May 1987 and is on the letterhead of the Office of the Director of Social Welfare, P.O. Box 8078, Causeway, Zimbabwe. It is addressed “To Whom it May Concern’ and reads:

I am in possession of information that indicates Joyce B. Madigane of Tyne Valley, Prince Edward Island, Canada, has care and control of the following children for the indicated years.

There follows the names of eight persons, the oldest of whom was born on 20 July 1969 and the youngest on 27 May 1980. For each person the indicated years are 1982 to 1985, inclusive. The document goes on:

I confirm that she is totally responsible for financing the household in which the children reside. In addition she is responsible for all expenses including school fees and the like.

Joyce B. Madigane is the guardian of all children indicated above.

Your cooperation and understanding in assisting her will be appreciated.

It is signed by Dawson Douglas Sanyangore MSW, Director of Social Welfare, Registrar of Welfare Organizations, Commissioner of Oaths.

It was held that no useful weight could be attributed to that document because there was no opportunity to test its veracity by cross-examination. Cox was cited in support of this conclusion.

Since then it has been held by the Federal Court of Appeal that the kind of evidence rejected in Cox and in Madigane should be admitted in evidence by the Court. Ainsley v. R. (May 26, 1997), Doc. A-610-96 (Fed. C.A.) was an application for judicial review under paragraph 28(1)(/) of the Federal Court Act of the disposition of an appeal by the Tax Court instituted under what was then the Unemployment Insurance Act and is now the Employment Insurance Act. The issue before the Tax Court had been whether the Minister of National Revenue had properly determined that the applicant was not in “insurable employment” during a specified period of time.

Subsection 18.15(4) and paragraph 18.29(1 )(/?) of the Tax Court of Canada Act provide:

18.15 (4) Notwithstanding the provisions of the Act out of which an appeal arises, the Court, in hearing an appeal referred to in section 18, is not bound by any legal or technical rules of evidence in conducting a hearing for the purposes of that Act, and all appeals referred to in section 18 shall be dealt with by the Court as informally and expeditiously as the circumstances and considerations of fairness permit.

18.29 (1) The provisions of sections 18.14 and 18.15, paragraph 18.18(1)(a), section 18.19, subsection 18.22(3) and sections 18.23 and 18.24 apply, with such modifications as the circumstances require, in respect of appeals arising under

(b) Parts IV and VII of the Employment Insurance Act.

The reasons for judgment in Ainsley were delivered by Stone J.A. They read in part as follows:

The circumstances of the case are somewhat exceptional. At the opening of the hearing, after the applicant was sworn, counsel for the respondent stated at page 4 of the transcript:

Your Honour, the Minister doesn’t have any witnesses except that I was going to cross-examine Mr. Ainsley and possibly the Intervenor.

The Intervenor was the company by whom the applicant claimed to have been employed. However, the respondent called both the owner of that company and its outside bookkeeper.

The applicant, who was not represented by counsel, did not request an adjournment to call as a witness one David Munro, who he now says would have supported his case. The evidence for the respective parties was found by the Tax Court to be in conflict. In the end the learned Deputy Tax Court Judge decided that in the circumstances it was impossible for him to determine which evidence to accept. Instead, he concluded:

It would appear that the evidence that is before me is that which the Minister considered when he made his determination, and if that is the case, in following the Tignish case, I can’t go behind the reasoning of the Minister and therefore, as unsatisfactory as it may be for the Appellant, and probably equally for the Payor and Intervenor, I have to dismiss the appeal.

In ordinary ‘circumstances, this would leave the assumptions pleaded by the respondent in her reply before the Tax Court of Canada, to the effect that the applicant was not in ‘insurable employment’, intact.

The record also shows that the Deputy Tax Court Judge refused to admit into evidence a letter of September 28, 1995 written to the applicant by a lawyer, Ian D.C. McPhail, which he claims lends some support for his assertion that he was in insurable employment. The Deputy Tax Court Judge ruled that the letter could not be admitted in the absence of its author as a witness.

The respondent concedes that the decision of this Court in Tignish is inapplicable in the circumstances. In our view, given that the proceedings below were conducted in an informal way, it was not necessary in order for the letter to be admitted into evidence that its author be called.? Moreover, in the exceptional circumstances described above, the applicant should be given an opportunity before closing his case to call David Munro, who he claims will support his case and who would have been called had he known in good time that the outside bookkeeper was going to be called by the respondent.

The s. 28 application will be allowed, the judgment of the Tax Court of Canada set aside and the matter will be referred back to that Court for redetermination on the basis that the appeal to it be continued for the purpose of admitting the letter of September 28, 1995 addressed to the applicant by Ian D.C. McPhail into evidence and permitting the applicant to call as a witness David Munro in support of his case.^

It does not follow from the fact that documents are entered in evidence as exhibits in the course of a trial that what is said therein by way of statements of fact must necessarily be taken by the Court as being true. Presumably this was the intent of the Court of Appeal in Ainsley. For example in Bottrell v. Bottrell (1996), 26 B.C.L.R. (3d) 364 (B.C. C.A.) the headnote reads in part as follows:

The parties separated after 16 years of marriage. During the marriage, they owned all of the shares of a company which employed them both. After the separation, both parties continued to work for the company for one year until the husband fired the wife. Later the same year, the husband incorporated a new company to carry on the business of the first company. Six years later, the husband brought his petition for divorce. The wife applied for a division of family assets. Her case consisted of her testimony and six books of documents marked by consent as exhibits.

During argument, the wife’s counsel suggested that since the document books had been marked as exhibits and filed by consent, they should be accepted as proof of the truth of their contents.

With respect to the documents filed by the wife, the judge concluded that merely filing documents as exhibits with the consent of the other party did not necessarily mean that all of the statements in them must be taken as true. The wife appealed.

The reasons for judgment of the British Columbia Court of Appeal were delivered per curiam. They concluded thus:

We are not persuaded that the learned trial judge erred in law or misapprehended the evidence before him. The rulings he made, which were the subject of complaint by the appellant, were all matters within the trial judge’s discretion and it has not been shown that in exercising that discretion, he acted on any improper principle. The appellant has shown no basis upon which this Court could properly interfere with the judgment appealed from. The appeal is dismissed with costs.

I admitted as Exhibit A-1 the Statutory Declaration and as Exhibit A-2 the letter received by the appellant from his brother. This was subject to assigning whatever evidentiary weight I considered they deserved in the light of the whole of the evidence. I think this accords with the intention of Ainsley. In making this kind of assignment the circumstance that the statements of fact in a document are pure hearsay is to be taken into account.

The appellant relies on paragraph 60(b) of the Income Tax Act and it reads:

60. There may be deducted in computing a taxpayer’s income for a taxation year such of the following amounts as are applicable:

(b) an amount paid by the taxpayer in the year, pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written agreement, as alimony or other allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the marriage, or both the recipient and children of the marriage, if he was living apart from, and was separated pursuant to a divorce, judicial separation or written separation agreement from, his spouse or former spouse to whom he was required to make the payment at the time the payment was made and throughout the remainder of the year.

It is noted that in his return of income for 1992 in calculating his taxable income the appellant deducted $6,700.00 by way of “Alimony or separation allowance paid”. As already noted the Statutory Declaration was declared on September 1, 1995. Paragraphs 3 and 4 thereof read:

3. That the said Yusif Yakubu has been remitting me since 1992 to date.

4. That so far I have received an amount of 6,000 Canadian Dollars from him on four instalments.

The Statutory Declaration is not evidence that the payments referred to therein were made to Mariama Abu by the appellant pursuant to a written agreement within the meaning of paragraph 60(b). Nor is the letter from the appellant’s brother evidence that the appellant made payments pursuant to a decree, order or judgment of a competent tribunal within the meaning of that paragraph. Whether money that has been paid pursuant to a decree, order or judgment of a competent tribunal is a question of law. In the absence of evidence by a person qualified to give an expert opinion on the law of Ghana, this Court assumes that it is the same as Canadian domestic law: Evidence, Anthony F. Sheppard at para. 643.

Finally, it is noted that in the course of argument, counsel for the respondent pointed out that in respect of taxation years preceding 1993 the designation “spouse” did not as a general rule include common-law spouses. This was changed by the enactment of subsection 252(4) by S.C. 1994, c. 7, Schedule VIII, subsection 140(3). But the amendment was made applicable only after 1992. The purpose and effect of the amendment is succinctly and correctly described in paragraph 28,377a of the Canadian Tax Reporter where it is said:

For 1993 and subsequent years, paragraph 252(4)(a) provides that the term ‘spouse’ includes common-law spouses. Therefore a taxpayer’s spouse includes a person of the opposite sex who is cohabiting with the taxpayer in a conjugal relationship provided they have cohabited throughout a twelve-month period ending before that time. The term ‘spouse’ also includes a person who is a parent of a child of whom the taxpayer is also a parent.

The onus is on the appellant to establish on a balance of probabilities that the assessment is in error. That onus has not been discharged.

The appeal is dismissed.

Appeal dismissed.