Date: 20020501
Docket: 2001-1695-IT-I
BETWEEN:
MARNI DANGERFIELD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Judgment
Hershfield, J.T.C.C.
[1]
This is an appeal in respect of the Appellant's 1999
taxation year.
[2]
The Respondent reassessed the Appellant by including in her
income child support payments of $3,182.00 received by her in the
year in respect of her daughter Kirsten. Such amount had not been
included by her but had been deducted by Kirsten's father
who had made such payments in the year.
[3]
There was an Agreed Statement of Facts filed with the Court at
the outset of the hearing that narrowed the issue in this matter
to whether a judgment of the Court of Queen's Bench (Family
Division) Winnipeg Centre ordering the subject child support
payments was "made" on April 21, 1997 (or on a later
date after April 30, 1997) and, if it was made on April 21, 1997,
whether it was made with a commencement day, for the purposes of
the Income Tax Act (the "Act"), of May
1, 1997. If it was "made" on April 21, 1997 without a
specified "commencement day" for the purposes of the
Act of May 1, 1997, the support payments would, as
asserted by the Respondent, be taxable and the appeal would fail;
otherwise, the appeal would be allowed.
FACTS
[4]
Since the facts are for the most part not in issue, I will only
summarize them to the extent required in order to deal with the
issue as set out above.
[5]
Although Kirsten, born in 1991, was the natural child of the
Appellant and Paul John Mountney, the Appellant and Mr. Mountney
have never been married and had ceased to cohabit in March 1992.
There were no child support orders before or since the order that
is the subject of this appeal.
[6]
In February 1997, the Appellant seeking relief from Mr. Mountney,
filed a petition in the said Court of Queen's Bench. The
petition sought an order for custody, child support, financial
disclosure and costs as well as a declaration of parentage. The
relief sought was pursuant to provincial legislation that the
petition cited as The Family Maintenance Act (F.M.A.), The
Queen's Bench Rules (Q.B. Rules) and The Queen's
Bench Act.
[7]
Mr. Mountney was living in British Columbia at the time of the
petition. The petition, in the form provided for under the Q.B.
Rules, served on Mr. Mountney advised that the petition
included a claim for child support and confirmed that a failure
to answer the petition could result in the claim being granted.
The petition did not refer to, nor did it make any request for
any special relief in respect of the income tax consequences
associated with the child support being sought.
[8]
Prior to filing the petition, the Appellant's then legal
representative wrote to Mr. Mountney in December 1996 and
requested payment of child support in the amount of $250.00 per
month effective January 1, 1997. The letter states the amount
requested was based on Federal Government guidelines pursuant to
the implementation of new child support laws as of May 1, 1997
and would not be deductible by him or taxable to the
petitioner.
[9]
The Petition was heard on April 21, 1997. Mr. Mountney was not
present. The judge was provided with exhibits that included the
above-noted letter to Mr. Mountney in December 1996 and
correspondence from Mr. Mountney (which, according to the
transcript of proceedings, indicated he was intending to appoint
Manitoba counsel) but the latter correspondence was not included
with the book of agreed facts submitted in the case at bar nor
was other correspondence (included as exhibits at the hearing
considering the petition) that might have shed light on why Mr.
Mountney was unrepresented at the hearing. The agreed facts do
state that Mr. Mountney was served with notice of the
proceedings, that he did not file an Answer to the petition and
did not attend to oppose any relief sought. As noted, the
petition itself made no mention of a commencement day for tax
purposes.
[10] A copy of
the transcript of the proceedings was included with the Agreed
Statement of Facts. The following is taken from that
transcript:
MS. KATZ (Counsel for the petitioner): ...We are seeking the
support in the amount of $250 per month, to commence May 1st, and
with payments through court commencing May 1st, payable on the
first day of each and every month.
THE COURT: I confess I have a problem with the commencement date;
and it's only because the new guidelines and -
MS. KATZ: Yes.
THE COURT: -- regulations indicate that I have to have an
astonishing amount of information before I can make an order.
MS. KATZ: Under the new -
THE COURT: Yes.
MS. KATZ: Yes, but this is a matter under the -
THE COURT: Under F.M.A.?
MS. KATZ: -- F.M.A.
THE COURT: All right.
MS. KATZ: So I don't think we have that problem.
THE COURT: Well, then I don't have a problem with that at
all. How nice. Okay.
MS. KATZ: That takes care of that problem that we're all
-
THE COURT: That does take care of that problem.
MS. KATZ: -- going to be having.
THE COURT: There will be a declaration of paternity. There will
be an order of sole custody. There will be an order of child
support in the amount of $250 a month commencing May 1st.
There will be an opportunity for Mr. Mountney to have this matter
brought back for a review of child support following his
disclosure of all his financial information, which, in the
circumstances, will include information about his wife's
income.
Maintenance will be payable, I assume, through Maintenance
Enforcement?
MS. KATZ: Yes.
THE COURT: Okay. There will be a Part VI order under F.M.A.
Anything else?
MS. KATZ: No, that's it. Thank you, My Lady.
THE COURT: Thank you
(PROCEEDINGS CONCLUDED)
[11] The
judgment of the Court was prepared by the Appellant's
counsel and signed by the Deputy Registrar on May 5, 1997. The
front page of the judgment is dated April 21, 1997 which,
according to the form of judgments used by the Queen's Bench
of Manitoba, is the date the judgment was made. The judgment
makes no mention of a commencement day for tax purposes. The only
provision of the judgment that is arguably relevant is the
support payment provision which reads as follows:
(c) The Respondent pay to the Petitioner for the support of
the said child, the sum of $250.00 per month, payable on the
first day of each and every month, commencing May 1, 1997;
[12] As I will
elaborate on later in these Reasons, unlike the Rules of the Tax
Court of Canada, the Q.B. Rules provide that the date an order or
judgment is "made" is the date it is pronounced which
the Respondent asserts is the date the order was spoken by the
judge which in this case was April 21, 1997. No argument was made
at the trial of the case at bar that no order or judgment was
actually uttered on April 21. To the contrary, the Agreed
Statement of Facts provided that the judgment in question was
"pronounced April 21, 1997 and signed May 5, 1997".
However, after reserving my decision and noting that the
transcript evidenced that the judge did not herself purport to
utter a judgment (using the future tense "There will be an
order of child support in the amount of $250.00 a month
commencing May 1st") and that there were
particulars yet to be penned in ("payable on the first day
of each and every month"), I reconvened the parties on
February 14, 2002 and read draft reasons for judgment of the case
at bar based on the preliminary finding that a judgment had not
been pronounced or made by the Court of Queen's Bench until
it was signed in May 1997. I advised the parties that I did not
regard myself as bound by the agreement of the parties that the
judgment was pronounced on April 21, 1997 as it was a mixed
question of law and fact. However, considering that the parties
had not addressed the question of the tense and completeness of
the statements of the judge on April 21, I invited submissions on
the question before finalizing my judgment.
[13] At the
request of counsel for the Respondent, a telephone conference
hearing took place on March 1, 2002 at which time a motion was
brought by the Respondent to introduce a further exhibit (a
disposition sheet) dealing with the entry of the judgment
asserted to have been pronounced in April 1997. I indicated that
since I had raised this new issue, I would allow such additional
evidence. The Appellant's counsel acceded to my order
permitting the entry of this further exhibit as part of a written
submission. That is, issues of attestation and opportunities for
cross-examination were effectively waived by the Appellant much
as if this exhibit had been initially included in the book of
agreed facts.
[14] The
disposition sheet is dated April 21, 1997 and purports to be
signed by the judge on that date. The sheet, amongst other
things, notes child support of $250.00 per month commencing May
1, 1997. The type of action is marked as F.M.A. and reference to
"Part VI" is made in respect of the child support
payment. There is a note on the disposition sheet that there will
be an opportunity for Mr. Mountney to have child support reviewed
following financial disclosure.
THE POSITION OF THE PARTIES
[15] The
following Q.B. Rules were referred to by the parties:
59.01 An order is effective from the date on which it
is made, unless it provides otherwise.
1.04.1 In these rules,
(a) a reference to the date an order or judgment is
"made", "given" or "granted" is
deemed to be a reference to the date the order or judgment is
pronounced; and
(b) a reference to the date an order or judgment is
"entered" is deemed to be a reference to the date the
order or judgment is signed.
59.02(1) Every order shall, at the time made, be
endorsed on a disposition sheet, and the disposition sheet shall
be signed by the judge or officer making the order, unless
(a) the order itself is signed by the judge or officer making
it; or
(b) the circumstances make it impractical to do so.
...
59.03(3) An order shall be in Form 59A (order) or 59B
(judgment) and shall include,
(a) the name of the judge or officer who made it;
(b) the date on which it was made; and
(c) a recital of the particular necessary to understand the
order, including the date of the hearing, the parties who were
present or represented by counsel and those who were not, and any
undertaking made by a party as a condition of the order.
[16] I also
note that the introductory note to Q.B. Rule 59 describes how
written forms of orders (including judgments) are to be prepared
after decisions have been rendered. In most cases, judges or
other judicial officers are required to record or endorse their
decisions in writing on the file at the time that the order is
made but the successful party is required to prepare a draft of
the formal order. Orders are then submitted to the Registrar for
signature.
[17] As to the
date when an order or a judgment is pronounced, counsel for the
Respondent said there were no Manitoba cases on point but
referred to the case of May Estate v. M.N.R., [1989]
T.C.J. No. 713. At page 9 of that case, this Court cites page
1025 of R31C Can. Abr. (2nd):
6804. The principle which makes the order, whenever drawn up
and entered, to bear date on the day when it is pronounced by the
Court conforms with the whole theory of judicial procedure, the
theory is that the cogent and binding effect of the order beings
immediately from the time when the order is pronounced by the
lips of the Judge...
[18]
Accordingly, counsel for the Respondent argues that the
"made" date of the subject Queen's Bench judgment
is the date it was uttered from the lips of the judge and
endorsed on the disposition sheet both of which occurred on April
21, 1997.
[19] The
relevance of the "made" date of the subject judgment of
the Court of Queen's Bench is that pursuant to paragraph
56(1)(b) of the Act, child support payments are
excluded from the recipient's income only if under an order
the "child support amount" became receivable "on
or after its commencement day" which includes the
"made" date of the order provided that date is after
April 1997. Paragraph 56(1)(b) excludes amounts
received on or after a commencement day by use of a formula that
excludes an amount described in clause "B" of that
paragraph. That clause reads as follows:
B
is the total of all amounts each of which is a child support
amount that became receivable by the taxpayer from the particular
person under an agreement or order on or after its commencement
day and before the end of the year in respect of a period that
began on or after its commencement day, and
...
[20] It is
clear that if there is no "commencement day" of an
order, no amount can be receivable under that order that is
"on or after its commencement day". This Court has
consistently applied this construction of paragraph
56(1)(b).[1]
[21]
"Commencement day" is defined in subsection 56.1(4)
of the Act as follows:
"commencement day" at any time of an agreement or
order means
(a) where the agreement or order is made after April
1997, the day it is made; and
(b) where the agreement or order is made before May
1997, the day, if any, that is after April 1997 and is the
earliest of
(i) the day specified as the commencement day of the agreement
or order by the payer and recipient under the agreement or order
in a joint election filed with the Minister in prescribed form
and manner,
(ii) where the agreement or order is varied after April 1997
to change the child support amounts payable to the recipient, the
day on which the first payment of the varied amount is required
to be made,
(iii) where a subsequent agreement or order is made after
April 1997, the effect of which is to change the total child
support amounts payable to the recipient by the payer, the
commencement day of the first such subsequent agreement or order,
and
(iv) the day specified in the agreement or order, or any
variation thereof, as the commencement day of the agreement or
order for the purposes of this Act.
[22] Counsel
for the Respondent argues that the "made" date of the
subject order being before May 1997 is not a "commencement
day" and, further, argues that pursuant to this definition,
there is no other "commencement day" in respect of
the subject order so that the child support amounts are not
excluded from the Appellant's income under paragraph
56(1)(b) of the Act.
[23] Counsel
for the Appellant argues that the Q.B. Rules should not be
determinative of the "made" date of the subject order
for the purposes of the Act and that the made date should
be the date it has effect. Alternatively, relying primarily on
the date that the payments commence under the order, the
Appellant argues that there is effectively a "commencement
day" specified for the purposes of the Act in the
subject order, namely May 1, 1997. Having concluded that the
"made" date of an order for the purposes of the
Act is the date it is made as determined by the Rules of
the Court that made it, I suggest that the Appellant's best
case comes down to the following three arguments: (1) the family
court judge must be taken to have provided for an effective date
of her order of May 1, 1997 and that has the affect of changing
the "made" date pursuant to Rule 59.01 to May 1,
1997; or (2) the family court judge must be taken to have
provided for an effective date of her order of May 1, 1997 with
the purpose of constituting May 1, 1997 as the
"commencement day" pursuant to subparagraph
(b)(iv) of the definition of "commencement
day"; or (3) even if the effective "made" date
of the order is not properly regarded as May 1, 1997, the
commencement date of the child support payments being May 1, 1997
should, in the circumstances of this case, be treated as the
"commencement day" pursuant to
subparagraph (b)(iv) of the definition of
"commencement day". Each and all of these arguments
is pursued in a context that the Appellant asserts makes it clear
that the judge and the parties all understood and intended there
to be a commencement day for the purposes of the Act of
May 1, 1997 as they all understood and intended that the child
support payments were not to be taxable to the recipient
Appellant and that the order should not be taken as deficient in
giving effect to this circumstantially clear state of
affairs.
ANALYSIS
[24] Q. B.
Rule 1.04.1 prescribes that an order is "made" when
it is pronounced and the May Estate case is sufficient
authority, in my view, to confirm a finding that the
pronouncement date of an order or judgment is the date it is
spoken or uttered from the mouth of the judge. Any other finding
would disrupt the interaction of the applicable provisions of the
Q. B. Rules referred to and set out above and would seem to fly
in the face of the overall scheme of those Rules as they deal
with the making and issuance of judgments and orders by the Court
of Queen's Bench in Manitoba. For example, pursuant to
subsection 59.02(1) of those Q.B. Rules, an order is to be
endorsed by the judge making it on a disposition sheet "at
the time made". I accept that the disposition sheet bearing
the date "April 21, 1997" was signed by the judge on
that date. According to the Q.B. Rules, such endorsement further
evidences that the order must have been made on that date since
the endorsement is to be made at the time the order is made. Even
if the utterance from the judge's mouth on April 21, being
in the future tense, does not yet constitute an order made at
that time, the signing of the disposition sheet on that date is
sufficient to fix the "made" date of the order as
April 21. Further, Q.B. Rule 59.03(3) provides that the
order shall include the name of the judge who made it and the
date on which it was made. The particular judge and that date
(April 21, 1997) appear on the front page of the subject
judgment.
[25] The
Appellant's counsel argues that the made date or
pronouncement date of the order should be when it takes effect,
which in this case is May 1, 1997. He argues that there is no
aspect of the order that needs to be effective prior to that
date; everything in respect of the order moves forward from that
date.
[26] The Q.B.
Rules do not support this argument. Firstly, there is no reason
to assert that an order cannot have an earlier "made"
date, even if not effective until after the made date, and
secondly, the subject order cannot likely be said to have a later
effective date just because the only aspect of it that is date
sensitive, namely the first payment date for child support
payments, is a future date. The start date of a monthly payment
requirement under the order does not fix the effective date of
the order itself. In any event, the "made" date
governs in this case which is not the same date as when an order
takes effect. The "made" date of the subject order is
April 21, 1997. That is the end of the matter, then, unless there
is a "commencement day" under subparagraph
(b)(iv) of the definition of "commencement
day". That subparagraph provides that the
"commencement day" is the day, if any, after April
1997, that is "specified" in the order, or in a
variation thereof, as the "commencement day" of the
order "for the purposes of this Act". The
Respondent argues no such day is "specified" in the
order "for the purposes of" the Act or at
least not expressly specified.
[27] The
Appellant counsel's second argument seeks to draw a
necessary inference from the effective date argument which is
that since nothing happens under the order until May, 1997 and
since all the parties including the judge intended or understood
that the tax consequences to flow from the order were that the
child support payments were not to be taxable to the recipient,
there is a commencement day effectively specified in the order
for the purposes of the Act. Put another way, the
Appellant argues that Q.B. Rule 59.01 permits, in the
circumstances, recognition of an effective commencement day of
the order as of May 1, 1997 for tax purposes even though the
order does not expressly say that and even though the Act
makes no reference to the "effective date" of an
order for tax purposes. This approach has merit but relies in
this case on too many inferences having to be drawn. If I accept
that a date can be "specified" in the order by virtue
of its intended effective date then this appeal might
succeed provided I also found that such intended effective
date was intended to ensure that the payments under the
order were not taxable to the recipient pursuant to the post
April 1997 child support regime embraced by the Act. This
would be to find that there was an effective date for tax
purposes that was meant to be the "commencement day"
of the order without that terminology being used. While this is
an attractive approach to giving effect to apparent intentions,
it is not one that readily fits within the express terms of the
Act and not one that can, in my view, be used where the
party relying on the approach not only has to rely on a series of
inferences but has failed to establish that they are in fact
necessary inferences. There is in the case at bar no necessary
inference that the order was intended to have an effective date
of May 1. The payment commencement date alone draws no
such necessary inference. The order does not specify an effective
date or mention tax consequences. The judge asked about a
"commencement day" and was told one was not required.
If she had been properly informed of the need for a commencement
day we can only speculate as to what she would have done as
nowhere in her order does she refer to the tax treatment of the
child support payments. While the letter to the child's
father said the child support payments were to be tax free to the
recipient, that letter was not referred to by the judge in the
transcript of proceedings. Further, that letter said payments
were to commence January 1997 and was thereby wrong in the tax
consequences it purported to describe.[2] It seems everyone was being
misinformed and to draw necessary inferences from such
circumstances is dangerous at best. I would be attracted to this
approach if the judge had expressly said anything that confirmed
her intent or understanding that the payments ordered were to be
tax free payments under the new tax regime for child support. If
she had intended this result and would not be inclined to put
responsibility for achieving it on counsel who drafted the signed
order, I suggested to counsel for the Appellant that the better
forum to pursue a just result in this case might have been to go
back to that judge who made the order. This was apparently not
pursued.
[28] As to the
third argument of the Appellant's counsel, it requires me
to find that the payment commencement date of the child support
payments should be taken as the commencement day of the order
"specified" for the purposes of the Act. It
was argued that there was a presumption that commencing the
payments on May 1 would bring it into the new system which I
accept was the Appellant's intention. I accept the
probability that Appellant's then counsel thought the
payment commencement date being May 1, 1997, was sufficient to
meet the requirements of the Act to bring the Appellant
into the new system and that she believed the judge in making the
order was making a new system order. It is even possible that the
judge thought this was the case as well in spite of having been
dissuaded from pursuing questions on the commencement day issue.
[3] This is not
sufficient however to cause this Court to read in words in an
order that the Act requires to be specified in the order
itself. Further, subparagraph (b)(ii) of the definition of
"commencement day" speaks of the day on which the first
payment is made under a varied order as the "commencement
day". This focus on the first payment date is absent in both
paragraph (a) and subparagraph (b)(iv) of the
definition of "commencement day". Such change in focus
must be taken as intentional. Accordingly, the date support
payments commence cannot be taken to be a "commencement
day" in respect of the order itself under subparagraph
(b)(iv) of the definition of "commencement
day".
[29] Once the
disposition sheet was signed by the judge, I have little doubt
the judgment ordering the support payment was complete. I have
been shown nothing in the Q.B. Rules to suggest otherwise. That
counsel had yet to draft the judgment and that the court
registrar was required to approve the judgment (order) so drafted
does affect either its "made" date or effective date.
While the Q.B. Rules to which I was referred do not suggest what
might happen if the order was sought to be enforced (say on May
1st) prior to the date it was in proper form and
finally signed, the practicalities of enforcement of the order is
a separate procedural step which cannot determine the date it was
made. That is, when an order might be enforced on its terms has
no bearing on the determination of a "commencement
day" under the Act. Even if the payments under the
order could not be required to be made until after the order was
signed and entered pursuant to
Q.B. Rule 1.04.1(b) on May 7, 1997, there is
still no commencement day of the order itself. That there may
have been no receivable under the order until May 7 does not mean
that the subject payments were not receivable on that day (May 7)
under an order made on April 21.
[30] I am not
unmindful that the new regime which makes child support payment
receipts tax free is there to help custodial parents such as the
Appellant in this case. If the proceedings before the Queen's
Bench were concerned with scheduled payment requirements under
that regime (which they were not) then it would be clearer that
the tax treatment afforded under that regime should apply. In
that case the order likely would have expressly dealt with the
commencement day of the order for the purposes of the Act
or necessary inferences to that effect could more readily be
drawn. However, as it is, the provisions of the Act deny
the new regime to the Appellant in this case.
[31]
Accordingly, the appeal is dismissed.
Signed at Ottawa, Canada, this 1st day of May 2002
"J.E. Hershfield"
J.T.C.C.
COURT FILE
NO.:
2001-1695(IT)I
STYLE OF
CAUSE:
Marni Dangerfield and
Her Majesty the Queen
PLACE OF
HEARING:
Winnipeg, Manitoba
DATE OF
HEARING:
December 18, 2001
REASONS FOR JUDGMENT BY: the
Honourable Judge J.E. Hershfield
DATE OF
JUDGMENT:
May 1, 2002
APPEARANCES:
Counsel for the Appellant: Thor Hansell
Counsel for the
Respondent:
Angela Evans
COUNSEL OF RECORD:
For the
Appellant:
Name:
Thor Hansell
Firm:
Aikins, MacAulay & Thorvaldson
Winnipeg, Manitoba
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-1695(IT)I
BETWEEN:
MARNI DANGERFIELD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on December 18, 2001 at Winnipeg,
Manitoba, by
the Honourable Judge J.E. Hershfield
Appearances
Counsel for the
Appellant:
Thor Hansell
Counsel for the
Respondent:
Angela Evans
JUDGMENT
The
appeal from the assessment made under the Income Tax Act
for the 1999 taxation year is dismissed in accordance with
the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 1st day of May 2002.
J.T.C.C.
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