Citation: 2011TCC428
Date: 20110915
Docket: 2010-3389(IT)I
BETWEEN:
MAURICE NAULT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Webb, J.
[1]
The issue in this
appeal is whether the Appellant is entitled to claim a tax credit pursuant to paragraph
118(1)(b) of the Income Tax Act (the “Act”) for 2008 in
relation to P.N. who is a son of the Appellant. In particular the issue is whether
the Appellant has established that he is the only person who is entitled to
claim this tax credit in relation to P.N. for this year
[2]
Paragraph 118(1)(b)
of the Act provides, in part, as follows:
118. (1) For the purpose of computing the tax payable under this
Part by an individual for a taxation year, there may be deducted an amount
determined by the formula
A × B
where
A is the appropriate percentage for the year, and
B is the total of,
…
(b) in the case of an individual who does not claim a deduction for
the year because of paragraph (a) and who, at any time in the year,
(i) is
(A) a person who is unmarried and who does not live in a common-law
partnership, or
(B) a person who is married or in a common-law partnership, who
neither supported nor lived with their spouse or common-law partner and who is
not supported by that spouse or common-law partner, and
(ii) whether alone or jointly with one or more other persons,
maintains a self-contained domestic establishment (in which the individual
lives) and actually supports in that establishment a person who, at that time,
is
(A) except in the case of a child of the individual, resident in Canada,
(B) wholly dependent for support on the individual, or the
individual and the other person or persons, as the case may be,
(C) related to the individual, and
(D) except in the case of a parent or grandparent of the individual,
either under 18 years of age or so dependent by reason of mental or physical
infirmity,
…
[3]
In Geddes v. The
Queen, [2000] 2 C.T.C. 2577, Justice Porter stated as follows:
24 In the
final analysis, I adopt the approach taken by Hamlyn, J. in the case of Issac
v. Her Majesty the Queen, [1994] 95 D.T.C. 859 (T.C.C.) where he
said:
I conclude from the case at law and from a reading of the paragraph that
the phrase "at any time in the year" can be intermittent periods
during the year, and that the phrase "wholly dependent" can relate to
those intermittent periods. Thus in any period during the year where a person
is wholly dependent on the taxpayer and the other paragraph 118(1)(b)
elements and other requirements are present, the taxpayer is entitled to the
"equivalent-to-married" credit.
25 In my
view, the child Kyle was totally dependent upon his father, the Appellant,
during the time he spent with him during the taxation years 1994, 1995 and
1996. These were more than visits. The child lived with his father during these
times. The father maintained a year-round accommodation for the child in his
home. He attended to all his living needs whilst the child was with him. The
child was wholly dependent upon the Appellant during those periods. The statute
does not limit the length of the period. It says "at any time in the
year". Thus, the Appellant is entitled to the credits for the years in
question.
[4]
As a result it is
possible that a child could be wholly dependent for support on one person
during part or parts of a year and be wholly dependent for support on another
person during another part or parts of the same year. Subsection 118(4) of the Act
provides in part as follows:
(4) For the purposes of subsection (1), the following rules apply:
…
(b) not more than one individual is entitled to a deduction under
subsection (1) because of paragraph (b) or (b.1) of the description
of B in that subsection for a taxation year in respect of the same person or
the same domestic establishment and where two or more individuals otherwise
entitled to such a deduction fail to agree as to the individual by whom the
deduction may be made, no such deduction for the year shall be allowed to
either or any of them;
[5]
Therefore if two
individuals should each satisfy the requirements in relation to a claim for a
tax credit pursuant to paragraph 118(1)(b) of the Act for a
particular taxation year in relation to one particular person, then unless
those two individuals can reach an agreement with respect to which one of them
will claim the credit, neither one of them will be permitted to claim the
credit.
[6]
The Appellant and
Margaret Bonekamp were married in 1987. They have seven children and they
separated in 1998. When they separated Margaret Bonekamp moved out of the
house and the children moved with her. The children would spend time with the
Appellant but they primarily resided with Margaret Bonekamp. Neither party
questioned or raised any issue with respect to whether the Appellant or
Margaret Bonekamp satisfied the conditions as set out in the opening part of
paragraph 118(1)(b) or in subparagraph 118(1)(b)(i) of the Act.
It is more likely than not that the Appellant and Margaret Bonekamp each
satisfied these conditions. The focus of the hearing was on the conditions as
set out in subparagraph 118(1)(b)(ii) of the Act.
[7]
The particular person
for whom the Appellant is attempting to claim the credit as provided in
paragraph 118(1)(b) of the Act is P.N., who is a son of
the Appellant and Margaret Bonekamp. P.N. would have been 15 years old at the
beginning of 2008, which is the relevant taxation year in this appeal.
[8]
The Appellant clearly
stated during his testimony that P.N. lived with him throughout 2008. The
following is an excerpt from his testimony:
And one of the children stayed with me from 2000 on and
the other ones came periodically, I'd say, for a period of three years. And [P.N.],
the one that we're questioning now, was with me from October 2006 to October
2009, except for two months in 2009 where he stayed at my daughter's place and
I brought the groceries and everything over there, supporting him. Then he
come back in at home, then finally moved back in with his mom.
[9]
The following is an
excerpt from the questions and answers provided during the cross-examination of
the Appellant:
Q So you're saying, okay, [P.N.] left Margaret's
and came to live with you in 2006?
A Yes.
Q So just to bring us back, the year at issue
we're speaking of today is 2008.
A Yes.
Q In 2008 you're saying that [P.N.] lived with
you the whole time?
A Completely.
Q … did [P.N.] live with Margaret around 2008?
A I don't believe he went back even for any
weekends. In 2009 though I know that he did, but I can't -- I would say no in
2008, but because it's a while back, I'm -- I would say no. I don't want to be
lying under oath here, so --
…
A All I'm saying is that he lived with me and,
as far as I know, he had ties with his mother and everything like that, but he
just chose to come … home and live at home.
Q So he never -- again so living with you means
100 percent, every night spent at your house?
A Yes. So let's say if -- I would say if he did
sleep at his mother's in 2008, not more than five nights, if that happened.
[10]
According to the
Appellant’s testimony P.N. spent five nights or less at Margaret Bonekamp’s
house in 2008. This testimony directly conflicts with the testimony of Margaret
Bonekamp. The following is an excerpt from the questions that were posed and
the answers that were provided during Margaret Bonekamp’s direct examination by
counsel for the Respondent:
Q Again we're speaking about the child [P.N.]
and the year 2008. In 2008 where did [P.N.] live?
A With me.
Q Can you explain or --
A At 26 Bay Caron in St. Georges.
Q Did [P.N.] live with you primarily?
A Yes.
…
Q But let's say during the school year, who,
during the week who did he live with?
A Well, definitely from January to August he
lived with me, and then August to about November or so, the majority of the
time he did stay with his dad. That's hunting season.
Q Okay. So would you agree that it seemed to be
a joint custody --
A H'mn, h'mn.
Q -- situation?
A H'mn, h'mn.
Q When he was with you, were you responsible to
take care of all of [P.N]'s needs when he was there?
A Absolutely, yes.
Q In terms of did you provide meals for him?
A Yes.
Q Looked after anything he needed?
A Yes, meals -- sorry.
…
Q Could you estimate in the year 2008 how many
total days or in terms of fractions how many, how much time he was with you and
how much time he was with his father?
A I would say approximately two-thirds with me
and a third with his father.
[11]
Clearly the testimony
of the two witnesses cannot be reconciled. It is impossible for [P.N.] to have
spent five nights or less with Margaret Bonekamp in 2008 and, in the same year,
to also have spent two-thirds of his days (and presumably his nights) with
Margaret Bonekamp. The assumption that was made in the Reply was that [P.N.]
resided with each parent in 2008.
[12]
In Wiens v. The
Queen, 2011 TCC 152, I reviewed the decision of Justice L’Heureux-Dubé
of the Supreme Court of Canada
in Hickman Motors Ltd. v. Her Majesty the Queen, [1997] S.C.J. No. 62, and the
subsequent decision of the British Columbia Court of Appeal in Northland Properties Corp. v. British Columbia, 2010 BCCA 177, 319 D.L.R. (4th) 334. As I had stated
in Wiens, it seems to
me that the conclusion to be drawn is simply that the Appellant has the initial
onus of proving on a balance of probabilities (i.e. that it is more likely than
not), that any of the assumptions that were made by the Minister in assessing
(or reassessing) the Appellant with which the Appellant does not agree, are not
correct.
[13]
Therefore the Appellant
had the onus to establish on a balance of probabilities that the assumption
that P.N. resided with each parent in 2008 was incorrect. In my opinion the
Appellant has failed to satisfy this onus.
[14]
P.N. had lived with
Margaret Bonekamp from the time of the separation in 1998 to 2006. At the time
of the separation P.N. would have been five years old. The Appellant could not
identify any significant change or reason to explain why in 2006 P.N. would
have ceased to live with his mother (with whom he would have lived, without his
father living in the same house, from the time he was five years old until he
was thirteen years old) and for the next three years, live only with his father,
except for the two months in 2009 when he was living with his sister. It seems
unlikely that this would have occurred in the absence of any rationale
explanation.
[15]
In relation to the onus
of proof, Justice Rothstein, writing on
behalf of the Supreme Court of Canada, in F.H. v. McDougall, [2008] 3 S.C.R. 41 stated that:
(4)
The Approach Canadian Courts Should Now Adopt
40 Like
the House of Lords, I think it is time to say, once and for all in Canada, that
there is only one civil standard of proof at common law and that is proof on a balance
of probabilities. Of course, context is all important and a judge should not be
unmindful, where appropriate, of inherent probabilities or improbabilities or
the seriousness of the allegations or consequences. However, these
considerations do not change the standard of proof. …
…
44 …. As Lord Hoffmann
explained in In re B at para. 2:
If a legal rule requires a fact to be proved (a "fact in
issue"), a judge or jury must decide whether or not it happened. There
is no room for a finding that it might have happened. The law operates
a binary system in which the only values are zero and one. The fact either
happened or it did not. If the tribunal is left in doubt, the doubt is resolved
by a rule that one party or the other carries the burden of proof. If the party
who bears the burden of proof fails to discharge it, a value of zero is
returned and the fact is treated as not having happened. If he does discharge
it, a value of one is returned and the fact is treated as having happened.
In my view,
the only practical way in which to reach a factual conclusion in a civil case
is to decide whether it is more likely than not that the event occurred.
45 To
suggest that depending upon the seriousness, the evidence in the civil case
must be scrutinized with greater care implies that in less serious cases the
evidence need not be scrutinized with such care. I think it is inappropriate to
say that there are legally recognized different levels of scrutiny of the
evidence depending upon the seriousness of the case. There is only one legal
rule and that is that in all cases, evidence must be scrutinized with care by
the trial judge.
46 Similarly,
evidence must always be sufficiently clear, convincing and cogent to satisfy
the balance of probabilities test. But again, there is no objective standard to
measure sufficiency. In serious cases, like the present, judges may be faced
with evidence of events that are alleged to have occurred many years before,
where there is little other evidence than that of the plaintiff and defendant.
As difficult as the task may be, the judge must make a decision. If a
responsible judge finds for the plaintiff, it must be accepted that the
evidence was sufficiently clear, convincing and cogent to that judge that the
plaintiff satisfied the balance of probabilities test.
47 Finally
there may be cases in which there is an inherent improbability that an event
occurred. Inherent improbability will always depend upon the circumstances. As
Baroness Hale stated in In re B, at para. 72:
Consider the famous example of the animal seen in Regent's Park. If it is
seen outside the zoo on a stretch of greensward regularly used for walking
dogs, then of course it is more likely to be a dog than a lion. If it is seen
in the zoo next to the lions' enclosure when the door is open, then it may well
be more likely to be a lion than a dog.
48 Some
alleged events may be highly improbable. Others less so. There can be no rule
as to when and to what extent inherent improbability must be taken into account
by a trial judge. As Lord Hoffmann observed at para. 15 of In re B:
Common sense, not law, requires that in deciding this question, regard
should be had, to whatever extent appropriate, to inherent probabilities.
It will be for
the trial judge to decide to what extent, if any, the circumstances suggest
that an allegation is inherently improbable and where appropriate, that may be
taken into account in the assessment of whether the evidence establishes that
it is more likely than not that the event occurred. However, there can be no
rule of law imposing such a formula.
(5)
Conclusion on Standard of Proof
49 In the
result, I would reaffirm that in civil cases there is only one standard of
proof and that is proof on a balance of probabilities. In all civil cases, the
trial judge must scrutinize the relevant evidence with care to determine
whether it is more likely than not that an alleged event occurred.
(emphasis added)
[16]
It seems to me that,
with no rationale explanation, it was improbable that P.N. would have ceased to
live with Margaret Bonekamp in 2006 and commenced to live exclusively with the
Appellant for the next three years. As a result it seems to me that the
Appellant would need more than simply his testimony which was in direct contradiction
to the testimony of Margaret Bonekamp. In particular, it seems to me that
[P.N.], who would have been 15 years old at the beginning of 2008 and 18 years
old as of the time of the hearing, would know whether he was living with his
father or his mother or both in 2008. The Appellant chose to not call P.N. as a
witness as he did not want to place him in the middle of this dispute.
Unfortunately, failing to call P.N. as a witness means that the Appellant has
failed to satisfy his onus of proof to establish that P.N. only lived with him
in 2008.
[17]
It seems to me that
P.N. would be wholly dependent for support on the Appellant during the period
when he was living with the Appellant and wholly dependent for support on
Margaret Bonekamp during the period when he was living with her. Neither parent
paid any amount as support to the other parent in 2008. Since the
Appellant has not established that P.N. only lived with the Appellant (and was
wholly dependent only on the Appellant) in 2008, both the Appellant and
Margaret Bonekamp would be entitled to claim the tax credit in relation to P.N.
for 2008. It was clear that the Appellant and Margaret Bonekamp do not agree with
respect to which one of them would make the claim for the tax credit. As a
result, neither one of them is entitled to claim the tax credit as provided in
paragraph 118(1)(b) of the Act for 2008 as a result of the
provisions of paragraph 118(4)(b) of the Act.
[18]
The Appellant had also
claimed an additional credit pursuant to paragraph 118(1)(b.1) of the
Act in respect of P.N. However this credit would only be available to
the Appellant if he could also claim
the credit under paragraph 118(1)(b) of the Act in respect
of P.N. Since the Appellant is not entitled to claim the credit under
paragraph 118(1)(b) of the Act in respect of P.N., the Appellant
is not entitled to claim the credit under paragraph 118(1)(b.1) of the Act
in respect of P.N.
[19]
As a result the
Appellant’s appeal is dismissed, without costs.
Signed at Ottawa, Canada, this 15th day of September, 2011.
“Wyman W. Webb”
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