Date: 20030129
Docket: 2002-1780(IT)I
BETWEEN:
KAYE HIRTLE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bowie J.
[1] This appeal is brought from a
child tax benefit notice of redetermination, which was issued by
the Minister of National Revenue to the Appellant on
October 10, 2001. By that notice the Minister determined
that the former spouse of the Appellant, Dean Collicutt, was the
primary caregiver to their two children for the months of
November 2000 to September 2001, and was therefore the person
entitled to receive the child tax benefit for them under section
122.61 of the Income Tax Act (the Act). That notice
also assessed the Appellant, under section 160.1 of the
Act, to recover overpayments of the benefit said to have
been paid to her between November 2000 and September 2001,
totalling $4,551.61.
[2] There may be more than one notice
and more than one assessment. Since the decision of the Federal
Court of Appeal in Gerhart v. The Queen[1] struck down
subsection 176(1) of the Act, this Court seldom sees the
Notice of Assessment or other document which evidences the
Minister's decision that is the subject matter of the appeal.
In the present case, neither party made the notices exhibits.
When I remarked on this during the hearing, counsel for the
Respondent offered to provide them after the hearing, and the
Appellant agreed that this should be done. Unfortunately, the
Minister was only able to provide a reconstruction from
computerized records. These proved to be totally incomprehensible
to me.
[3] The Appellant and Dean Collicutt
lived together with their two children until October 31, 2000.
The Appellant was the children's primary caregiver during that
period, and so she was entitled to receive the child tax benefit
under section 122.6 of the Act.The Appellant and Mr.
Collicutt had a joint bank account, and at her direction the
Minister paid the benefit to the credit of that account each
month. When they separated at the end of October 2000, the
children remained with Mr. Collicutt. The Appellant does not
dispute that from that time forward he was the primary caregiver,
and so was the person entitled to receive the benefit payments.
Her appeal is therefore only against the assessment under section
160.1 requiring her to repay $4,551.61.
[4] After the Appellant and Mr.
Collicutt separated, the monthly benefit payments continued to be
deposited to their joint account. However, it is quite
clear from the evidence that the Appellant did not make any
withdrawal from that joint bank account after November 2, 2000.
She testified that after that time she no longer had a bank card
for the account, and could not access it. Ms. Bremner, a customer
service supervisor from the Scotia Bank, testified that as it was
a joint account, the Appellant remained entitled to access the
account as long as it remained open, but that in fact the last
transactions made with her card were two withdrawals totalling
$80.00, both shown as having occurred on November 2, 2000. Her
card, according to the bank's records, was cancelled on October
31, 2000. The evidence clearly establishes that after the
beginning of November 2000, the Minister continued to deposit the
benefit payments for the two children of the Appellant and
Mr. Collicutt to the joint account, that the Appellant did
not access the account, and considered herself to be unable to,
and that she and Mr. Collicutt both considered the account,
including the monthly credits of the benefit, to belong to Mr.
Collicutt exclusively.
[5] The Reply to the Notice of Appeal
sets out the facts relied on by the Minister in assessing the
Appellant at paragraph 5.
5. In so
assessing the Appellant, the Minister relied on, inter
alia, the following assumptions of fact:
a) the
Appellant and her former spouse, Dean Collicutt ("Former
Spouse"), separated on or about October 2000 (the
"Separation");
b) the
Appellant and her Former Spouse had 2 children of the marriage:
Damon, born July 24, 1996 and Danita, born October 18, 1999;
c) after the
Separation, the children resided with their father, the
Appellant's Former Spouse;
d) after the
Separation, the children's father was the primary
caregiver;
e) prior to
the Separation, the Appellant was receiving the Child Tax Benefit
for Damon and Danita, the two qualified dependants;
f) after
the Separation, the Appellant continued to receive the Child Tax
Benefit for the two qualified dependants until September 2001
inclusive; and
g) the
Minister established the Appellant's overpayment of Child Tax
Benefits as follows:
base year 1999:
received from November 2000 to June 2001 inclusive:
$3,019.41
base year 2000:
received from July 2001 to September 2001
inclusive: $1,532.20
Total overpayment
assessed:
$4,551.61
Subparagraph (g) is, of course, not an assumption of fact
underlying the assessment, although it is a useful statement of
the manner in which the assessment was computed. The other
assumptions are admitted by the Appellant to be true, except for
(f). The Appellant says that she did not receive any benefit
payment after the separation on October 31, 2000, and the
evidence establishes that she did not. She has therefore
successfully rebutted the key assumption on which the assessment
is based.
[6] Counsel for the Respondent based
her argument largely upon an alleged failure of the Appellant to
comply with the requirement of subsection 122.62(4).
Where during a particular month a person ceases to be an
eligible individual in respect of a particular qualified
dependant (otherwise than because of the qualified dependant
attaining the age of 18 years), the person shall notify the
Minister of that fact before the end of the first month following
the particular month.
The Appellant's evidence with respect to this issue was that
she did not personally notify the Minister of her separation from
Mr. Collicutt, but that she raised the matter of notification
with her lawyer, who told her that it had been taken care of. The
lawyer, understandably, was not available to testify. I say
understandably, because the Appellant could not possibly have
known from the Deputy Attorney General's Reply to the Notice
of Appeal that notification under subsection 122.62(4) would
become an issue at the hearing of her appeal. No assumption of
failure to notify was pleaded; nor is there any allegation of it
elsewhere in the Statement of Facts. The only issues raised in
Part B of the Reply are:
... whether the Appellant was the eligible individual in
respect of the qualified dependants for the period from November
2000 to September 2001 inclusive and whether the Minister
correctly assessed the recovery of the overpayment for the base
years 1999 and 2000.
In Part C - Statutory Provisions, Grounds Relied On and
Relief Sought - there is no mention at all of section 122.62
of the Act, nor is there any suggestion that the
Respondent will take the position at the hearing that the
Appellant had failed to comply with the requirements of that
section. In these circumstances, the Appellant could hardly be
expected to require her lawyer to travel from Mahone Bay to
Halifax to attend the hearing in order to give evidence as to an
issue that had not been raised in the Reply. Although it is
hearsay, I accept the Appellant's evidence that the required
notice had been given.
[7] In Cleuziou v. Canada,[2] Judge Lamarre
Proulx had to consider the Minister's assessment of an
overpayment in a similar fact situation. The benefit cheques were
issued to the mother of the eligible dependants. She and her
husband separated in March 1991. The children remained in their
father's custody, and for the next two years, he received the
cheques for the benefit that were sent in her name, and dealt
with them under a power of attorney that she had executed in his
favour in 1989. He deposited the cheques to her account, and
withdrew funds from it for his own purposes. The Minister was not
notified that the mother had ceased to be the eligible
individual. Judge Lamarre Proulx held that the mother was not
liable to repay these benefit amounts, as they had not been
received by her, but by her husband. The same is true of the
present case. The amount of $4,551.61, which the Minister has
assessed against the Appellant, in this case was never received
by her; it was received and used by Mr. Collicutt. The
Appellant's appeal is therefore allowed and the assessment of the
Appellant under section 160.1 is vacated. She is entitled to her
costs.
[8] I am told by counsel that Mr.
Collicutt has made an application to receive the benefit in his
own name as the eligible individual in respect of these two
children, and that as a result the Minister has now paid the
benefit to him in respect of the period between November 2000 and
September 2001, for which he has assessed the Appellant for an
overpayment. If that is so, then my judgment leaves the Minister
in the position that he has made an overpayment, not to the
Appellant but to Mr. Collicutt. I repeat what I said in the
case of Eremity v. The Queen,[3] being released today. The Minister
has section 174 of the Act available to her to obtain a
determination as to the entitlement to the benefit, and the
liability to repay an overpayment, in this type of case. If, in
circumstances where there are obviously competing claims, the
Minister chooses to make a retroactive payment to one parent
without first hearing from the other, and without invoking
section 174, then she has only herself to blame if she makes a
payment to a claimant who is not entitled to it.
Signed at Ottawa, Canada, this 29th day of
January, 2003.
J.T.C.C.
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