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Citation: 2004TCC417
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Date: 20040615
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Docket: 2003-45(IT)I
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BETWEEN:
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STEPHEN C. LEONARD,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Campbell J.
[1] This appeal is from a
re-determination made by the Minister of National Revenue (the
"Minister") that for the base taxation years 1997,
1998, 1999 and 2000, the Appellant was not the "eligible
individual" with respect to his son, Jesse, and was
therefore not entitled to the child tax benefit (the
"CTB") for these periods.
[2] The Appellant and Kimberley
Sweezey are the parents of Jesse born December 15, 1995. It is
not in dispute that Jesse was a qualified dependent for these
years within the meaning of section 122.6 of the Income Tax
Act (the "Act"). The Appellant and Ms.
Sweezey had an "on again - off again" tumultuous
relationship but never resided together. Ms. Sweezey testified
that the Appellant spent a lot of time at her residence but in
essence the evidence would indicate that throughout the years in
question, he resided with his parents at 6674 Sheldon
Street, Niagara Falls. Ms. Sweezey resided at four or five
different addresses throughout this period. Their relationship
ended in early 1997.
[3] Ms. Sweezey applied for the CTB in
early 1996 in respect to Jesse. She received the CTB until the
year 2000. In May 2000 the Appellant applied for the CTB and in
November 2000 the Minister determined that the Appellant was
entitled to the benefit in respect to these years. Accordingly
the Minister re-determined that Ms. Sweezey was not
entitled to the CTB and was in receipt of an overpayment for
these years. On October 19, 2001, the Minister
re-determined that the Appellant was not entitled to the
CTB based on the assumptions, that at all relevant times,
Jesse's primary residence was with Kimberley Sweezey and not
the Appellant and that she was the primary caregiver of Jesse. As
a result the Minister determined that the Appellant received
overpayments of CTBs and was required to repay $5,119.54.
[4] The Appellant appealed this
re-determination and based his argument primarily on the basis
that Jesse physically resided with him at his parents address at
Sheldon Street during these years, that the court orders did not
reflect the actual living arrangements for Jesse, and that
Jesse's primary caregiver was the Appellant as demonstrated
by sport registrations, documentation from schools, dental and
doctor appointments, living arrangement documentation, receipts,
photos, newspaper clippings and activity schedules. Some of the
exhibits were authored by individuals not present and therefore
the Respondent had no opportunity to cross-examine. Some of the
other exhibits related to events occurring outside the relevant
years, particularly in respect to Ms. Sweezey's conduct. For
these reasons the Respondent objected to many of the
documents.
[5] It is the Respondent's
position that the Minister properly re-determined that Ms.
Sweezey, and not the Appellant, is the eligible individual and
therefore entitled to the CTB for the relevant years.
The Issue:
[6] The only issue before me is
whether the Appellant is the eligible individual in respect to
Jesse during the relevant years, the 1997 to 2000 base taxation
years.
The Evidence In Respect To The Appellant's
Position:
[7] The Appellant gave evidence and
called his wife, Allison Leonard, his father, John Leonard,
and Fiorina Stranges to testify on his behalf.
[8] The Appellant testified that he
resided at his parents' residence on Sheldon Street during
all of the period in question. He stated that for the majority of
the time Jesse resided with him at Sheldon Street and that he had
his own bedroom. He referred to three different court orders. The
first court order, a consent order, dated October 4, 1996,
placed Jesse in the joint custody of both parents with the
principal residence with the mother and reasonable access to the
father. The second order, dated September 28, 1998, was an
interim order which set out specific visitation privileges to the
Appellant. The third order, dated September 11, 2000, which
issued on consent, ordered a family study to be completed and
continued the second interim order. The Appellant's evidence
was that these orders did not reflect the actual living
arrangements, as they existed for Jesse at the time. He stated
that in addition to weekends Jesse also resided with him at
Sheldon Street three to four days during the week for the
majority of the time. He testified that the mother was only
interested in taking Jesse when she knew Family Services were
intending to visit the home and expected Jesse to be there.
[9] The Appellant introduced a number
of exhibits which included dental receipts and records, medical
appointment documents, recreational schedules, newspaper route
contract, baptismal documents, report cards, school homework and
other miscellaneous receipts and records. These exhibits were
intended to support his evidence that he was the primary
caregiver for Jesse and looked after feeding him, clothing him,
overseeing his medical and dental necessities, as well as school
assignments, and sporting activities and attending to his
hygienic needs. He admitted in cross-examination that it was the
mother who decided where Jesse would attend kindergarten and
school, but stated it was due to the wording of the court
orders.
[10] The Appellant's wife, Allison
Leonard, testified that she met the Appellant in June 1998 and
they started dating in January 1999. She never resided with the
Appellant at Sheldon Street. They married in 2002. She first met
Jesse in April 1999. Although she had no knowledge
concerning Jesse in 1997 or 1998, she did state that in 1999 she
worked the night shift and after each shift ended, she would go
to the Appellant's residence on Sheldon Street. Her evidence
was that in 1999 and 2000 Jesse resided at Sheldon Street with
his father for approximately 75% to 85% of the time, spending
weekends and three to four days during the week with the
Appellant. She stated she was aware of the court orders giving
the Appellant weekend access only but that in fact Jesse was with
his father most of the time. When asked on cross-examination if
Jesse physically resided with the Appellant, she responded in the
affirmative that Jesse spent nights at Sheldon Street with his
father. In addition she testified that the Appellant was the
primary caregiver of Jesse in 1999 and 2000. She stated that 50%
of the time he or his parents would pick Jesse up from school or
drop him off. She gave evidence that it was generally the
Appellant who escorted Jesse to school and sporting activities
and that she often accompanied the Appellant and Jesse to
activities.
[11] The next witness to give evidence on
behalf of the Appellant was Fiorina Stranges, who owned and
operated a restaurant located in Niagara Falls until August 2000.
She stated that she knew both the Appellant and Jesse's
mother, Kimberley Sweezey. She had known Sweezey since 1999;
she stated that in 1999 and 2000, she observed Sweezey at the
restaurant with a young girl (her daughter from another
relationship) but never a young boy. When she eventually
discovered that Sweezey had a son, she asked her where he was and
was told in July 2000 that he was with his father. Other than
this statement she could not confirm anything further respecting
Jesse's situation.
[12] The last witness called by the
Appellant was his father, John Leonard. Mr. Leonard
confirmed that his son resided at his residence at Sheldon Street
during the relevant periods. He stated that Jesse resided 80% to
90% of the time with the Appellant at Sheldon Street where he had
his own bedroom with attached playroom. He indicated that in
spite of the court orders, Jesse normally stayed at Sheldon
Street with the Appellant for entire weeks and that there would
be two or three week periods in which the child did not see his
mother. He confirmed the Appellant's evidence that Jesse
resided at Sheldon Street except for those periods when the
mother demanded the child, which on almost every occasion
preceded a court date or family services visit.
[13] Mr. Leonard's evidence was that he
considered himself "the secondary caregiver" of Jesse,
with the Appellant, the primary caregiver. He stated that among
other things he bought food, diapers and medicine for Jesse,
picked him up and dropped him off at school, attended his
activities, coached his soccer team and took him to play parks.
He also stated, as the Appellant did, that most of Jesse's
friends were at Sheldon Street. He stated that he was aware of
several police intervention reports but said he himself was
actually the one who, on at least one occasion, refused to return
Jesse after the child was found alone at the mother's
residence. Mr. Leonard played a number of home videos during the
hearing which showed interactions of Jesse with the Appellant and
his family. This footage was dated and commenced on January 26,
1997 and concluded on March 11, 1998. Respondent counsel on
cross-examination pointed out that most of the dates on the
footage referred to a Friday or a Sunday.
The Evidence In Respect to the Respondent's
Position:
[14] Respondent relied on two witnesses,
Jesse's mother, Kimberley Sweezey and a child protection
worker, Melanie Lepp.
[15] Sweezey's evidence was that Jesse
had always resided with her at her various addresses during this
period, with the Appellant having access on weekends. She stated
she would sometimes agree to additional access when the Appellant
requested it. With respect to the first order in 1996, Family
Services requested that she file for this order. According to her
evidence, before the order they reconciled and agreed to joint
custody. Because of the very tumultuous nature of their
relationship, both before and after their break-up, police were
involved on numerous occasions. In summary it was her evidence
that Jesse spent no more than 10 days per month with his father
and that for a period of two to three months in the summer of
2000 when she was hospitalized she did not allow any access by
the Appellant. She also stated that the Appellant's witness,
Fiorina Stranges, was mistaken respecting the date of the
conversation she referred to as she was hospitalized in July of
2000. She also stated she never had her son with her at
Stranges' restaurant because she only went on Fridays when
Jesse would be with the Appellant.
[16] It was also her evidence that she was
Jesse's primary caregiver during these base taxation years.
She testified that she attended to feeding and clothing Jesse as
well as his medical and dental requirements. She also stated she
was responsible for Jesse's hygiene and toilet training as
well as his enrolment in kindergarten. She also stated that she
attended school field trips and that Jesse had friends at her
residence. She did acknowledge that the Appellant did take Jesse
to some of the medical and dental appointments.
[17] The second witness was
Melanie Lepp, a child protection worker, who commenced work
with the Family Services Niagara Department in March 2001 and at
the same time assumed responsibility for the Sweezey file. She
became involved because of an alleged incident involving a
cigarette burn to Jesse, which was reported by the Appellant when
he took Jesse to the hospital. Her evidence was based on the
historical records kept by prior workers at Family Services of
numerous short-term interventions respecting Jesse in 1997, 1998,
1999 and 2000. These interventions were prompted by contact from
the Appellant or concerned neighbours of Sweezey. She reviewed
the legislative duty and practices of such interventions. She
admitted that she had no personal knowledge of the file prior to
March 2001 and more specifically no personal knowledge of where
Jesse resided or who his primary caregiver was during the
relevant period. She indicated the records of other workers
referred to Sweezey as the primary caregiver.
Relevant Statutory Provisions:
[18] The statutory definition of the term
"eligible individual" is found in section 122.6 of
the Act. It states in part:
"eligible individual" in respect of a qualified
dependant at any time means a person who at that time
(a) resides
with the qualified dependant,
(b) is the
parent of the qualified dependant who primarily fulfils the
responsibility for the care and upbringing of the qualified
dependant,
. . .
(h)
prescribed factors shall be considered in determining what
constitutes care and upbringing.
The presumption in favour of the female parent referred to in
paragraph (f) of section 122.6 does not apply
where more than one notice requesting the CTB is filed with the
Minister under section 112.62. In other words this presumption
does not apply because both parties have applied for the CTB.
[19] Regulation 6302 of the Income Tax
Regulations sets out the "prescribed factors" referred
to in paragraph 122.6(h), which are to be considered in
determining what constitutes care and upbringing of a qualified
dependant. It reads:
6302. For the purposes of paragraph (h) of the
definition of "eligible individual" in section 122.6 of
the Act, the following factors are to be considered in
determining what constitutes care and upbringing of a qualified
dependant:
(a) the
supervision of the daily activities and needs of the qualified
dependant;
(b) the
maintenance of a secure environment in which the qualified
dependant resides;
(c) the
arrangement of, and transportation to, medical care at regular
intervals and as required for the qualified dependant;
(d) the
arrangement of, participation in, and transportation to,
educational, recreational, athletic or similar activities in
respect of the qualified dependant;
(e) the
attendance to the needs of the qualified dependant when the
qualified dependant is ill or otherwise in need of the attendance
of another person;
(f) the
attendance to the hygienic needs of the qualified dependant on a
regular basis;
(g) the
provision, generally, of guidance and companionship to the
qualified dependant; and
(h) the
existence of a court order in respect of the qualified dependant
that is valid in the jurisdiction in which the qualified
dependant resides.
[20] Section 122.61 sets out the formula for
calculating the amount of benefits payable by creating a deemed
overpayment by an eligible individual entitled to the CTB. This
obliges the Minister to make CTB payments to that person.
[21] If the Appellant is found not to be the
eligible individual as a result of this appeal, the Minister is
entitled to collect the overpayment.
[22] The onus of course is on the Appellant
to disprove the Minister's assumptions on a balance of
probabilities.
Analysis:
[23] Both parents of Jesse have claimed the
CTB and both individuals are claiming to be the "eligible
individual". However, as pointed out by Justice Bonner
in Lauder v. Canada, [2002] T.C.J. No. 278 at paragraph
9,
There can be only one eligible individual in relation to a
qualified dependant for a particular period.
The Appellant has claimed the CTB for the entire period of
time in each of the base taxation years. I am not being asked to
decide who is entitled to the credit for a period of time in each
of these years. As Respondent counsel described it "this is
an all or nothing dispute".
[24] To be an eligible individual for the
CTB, an individual must among other things reside with the
qualified dependent and be the parent of that qualified dependent
who primarily fulfils the responsibility for the care and
upbringing of the qualified dependent. On the facts before me I
must determine which parent that is.
[25] I find on those facts presented to me
it was the Appellant. The evidence of the Appellant and Ms.
Sweezey was diametrically opposed in almost every relevant
aspect. If I had only these two witnesses before me I would have
to determine this issue almost exclusively on a finding of
credibility, having regard to the factors listed in Regulation
6302. However, I had three witnesses called by the Appellant to
support his evidence and one witness, additional to
Ms. Sweezey, called by the Respondent, as well as three
court orders and an array of exhibits, some relevant and some
not.
[26] I place very little reliance on Melanie
Lepp's evidence, not because she was not a credible witness,
but simply because her entire evidence was based on hearsay. She
did not become involved with the file until 2001, well after the
period at issue and by her own admission she had no personal
knowledge of Jesse's residence during this period or who the
primary caregiver may have been. Her only knowledge was obtained
by reviewing Family Services records.
[27] Respondent suggested that even if I
accepted the veracity of the intervention dates by Family
Services at Ms. Sweezey's residence but not the truth of the
incidents themselves, this would strongly support the
Respondent's position. There were three interventions in
1997, two in 1998, three in 1999 and two in 2000. The evidence
supports that the child did not spend 100% of his time with
either parent. I do not believe that it is extraordinary
considering the facts that Family Services may have been involved
ten times over a four-year period. The Appellant's evidence
was that he called on a number of these occasions while his
father John Leonard called on at least one occasion while Jesse
was at his mother's residence. I do not accept these
interventions as pointing the arrow one way or the other. They in
no way suggest that Jesse resided primarily with his mother or
that she was the primary caregiver. They simply suggest a problem
in the Sweezey household during those periods when Jesse was at
his mother's place of residence.
[28] Respondent counsel suggested that
Sweezey's evidence was supported by a number of documentary
exhibits. These documents were primarily: three court orders,
Exhibit R-6, a letter dated August 1998, by Sweezey's lawyer,
Exhibit R-7, Notice of Application of the Appellant
dated September 2000, Exhibits R-3, R-5 and R-10, being three
police reports, Exhibit A-1, Tab 9, Transcript of Proceedings,
dated January 2002, and video footage shown by the
Appellant's father.
[29] The first court order was in 1996 while
Jesse's parents were still in the throes of the relationship.
It gave both parties joint custody and established in 1996 that
the physical residence for Jesse was to be at Ms. Sweezey's
home. The next order was an interim one establishing specific
access for the Appellant in 1998, while the third order in 2000
was again an interim one which continued the 1998 order and
contemplated a trial date to be arranged. Exhibits R-6 and R-7
involve the Appellant's attempts to change his access to
Jesse. I accept his evidence, supported by his father's
evidence, that these documents did not reflect the reality of
Jesse's actual living arrangement. The Appellant stated that
he was advised in 1996 by his solicitor that it was better to
have joint custody in these circumstances and that he was later
advised that on these interim applications, it was not the time
or the court level to request custody changes.
[30] The court orders are one of the many
factors I am to consider. And while I have weighed the orders and
the other documentary evidence submitted by Respondent counsel I
cannot ignore the credible evidence provided by
Allison Leonard and John Leonard. They corroborated the
Appellant's evidence, both in respect to Jesse's
residence and as to which parent was the primary caregiver. I am
not overlooking this documentary evidence but I prefer the
substance of what I heard in court over the form of the various
documents. I do accept that the reality of Jesse's living
arrangements were not reflected in the array of paperwork before
me. The Appellant was knowledgeable respecting all aspects of
Jesse's care and habits as only a parent with more than
weekend access would be. Both John Leonard and Allison Leonard
corroborated almost every aspect of his testimony. John Leonard
clearly and explicitly testified that Jesse was living at his own
residence on Sheldon Street approximately 80% to 90% of the time.
He described his own involvement in Jesse's care and referred
to himself as a "secondary caregiver". He stated that
it was a normal occurrence for Jesse to be at Sheldon Street
through the weekend until Wednesday or Thursday. Allison Leonard
again supported the evidence of both the Appellant and John
Leonard when she testified that the Appellant had Jesse 75% to
80% of the time in 1999 and 2000. Both individuals were
straightforward and credible and I have every reason to believe
what they told the Court while under oath. While Respondent
counsel suggested the dates of some video clippings in 1997 and
1998 were on weekends and therefore indicated weekend access only
at John Leonard's residence, I do not accept that this
in any way tips the scales in favour of Ms. Sweezey here.
[31] Throughout the hearing, there were
continuous displays reflecting the extreme bitterness and
acrimony that existed between Jesse's parents. To some
extent, both parents fulfil the responsibilities set out in
paragraphs (a) to (g) of Regulation 6302, depending
on where Jesse physically happened to be. However I conclude that
the evidence supports that Jesse resided the majority of the time
in each of these years with his father at John Leonard's
residence on Sheldon Street and that the Appellant was
Jesse's primary caregiver. This is bolstered by the evidence
of both John Leonard and Allison Leonard. In fact the evidence
would indicate that financially John Leonard supplied most of the
resources as the Appellant either attended university or had no
steady employment during this period. On a balance of
probabilities, and considering all of the evidence before me, I
accept that the Appellant assumed the greater degree of
responsibility for Jesse than did Ms. Sweezey.
[32] The appeals are allowed, without costs,
and the determination is referred back to the Minister for
re-determination on the basis that the Appellant is entitled to
the CTB in respect to the 1997, 1998, 1999 and 2000 base taxation
years.
Signed at Ottawa, Canada, this 15th day of June 2004.
Campbell J.
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