Date: 20010810
Docket: 2000-1748-IT-I;
2000-2109-IT-I
BETWEEN:
BERNARD GAGNÉ,
LUCIE TRUDEL,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Judgment
P. R. Dussault, J.T.C.C.
[1]
These appeals were heard on common evidence under the
Court's informal procedure.
[2]
Bernard Gagné is appealing a determination of child
tax benefit in respect of his son,
Félix-Léonard, for the 1996, 1997 and 1998
base taxation years. In making the determination, the Minister of
National Revenue (the "Minister") adjusted the amount
of the benefit and reduced it to zero.
[3]
Mr. Gagné is also appealing assessments in which the
Minister refused to allow him the equivalent-to-spouse tax credit
in respect of his son, Félix-Léonard, for the
1996, 1997 and 1998 taxation years.
[4]
Lucie Trudel is appealing a determination of child tax benefit in
respect of her sons David and Samuel for the 1996, 1997 and 1998
base taxation years. In making the determination, the Minister
adjusted the amount of the benefit and reduced it to zero.
[5]
Ms. Trudel is also appealing the assessments for the 1996, 1997
and 1998 taxation years in which the Minister disallowed the
equivalent-to-spouse tax credit.
[6]
Finally, Ms. Trudel is appealing two determinations by the
Minister that she was ineligible for the goods and services tax
("GST") credit in respect of the 1996 and 1997 taxation
years.
[7]
In making these determinations and assessments, the Minister
assumed that Mr. Gagné and Ms. Trudel lived in a
common-law relationship in 1996, 1997 and 1998. Consequently,
when net family income is taken into account, the two appellants
are ineligible for the child tax benefit and Lucie Trudel is
ineligible for the GST credit. The Minister's refusal to
allow either appellant the equivalent-to-spouse tax credit is
based on the fact that each appellant was living with a
common-law spouse during the years at issue.
[8]
In respect of Lucie Trudel, the facts assumed by the
Minister for the purposes of the assessments and determinations
are set out in subparagraphs 12(a) to (e) of the Reply to the
Notice of Appeal. Those subparagraphs read as follows:
[TRANSLATION]
12.
In issuing and maintaining the notices of reassessment, the
notices of child tax benefit and the notices of redetermination,
the Minister assumed, inter alia, the following facts:
(a)
the appellant and Bernard Gagné lived in the
same residence at 1088 rue de Corbon in Boucherville during the
years at issue and still live in the same residence;
(b)
the Boucherville residence does not contain two separate dwelling
units;
(c)
through an audit by the Minister, the following information was
compiled;
(i)
the appellant and Bernard Gagné admitted that they
had earlier lived together as common-law spouses, and the
appellant has lived in the residence at 1088 rue de Corbon
in Boucherville since July 1992,
(ii)
when Bernard Gagné worked in Sainte-Foy
(from October 1992 to April 1994), he kept his Rue de Corbon,
Boucherville, mailing address,
(iii)
the appellant admitted before Denis Durocher, J. of the Superior
Court in 1993 that she was seeing a friend with whom she planned
to live in Québec,
(iv)
Bernard Gagné returned in April 1994 to live at 1088
rue de Corbon in Boucherville,
(v)
notwithstanding Bernard Gagné's claim that his
relationship with the appellant had been broken off, he has
accepted, from April 1994 to the present, living in the same
residence with his and the appellant's children,
(vi) the
appellant has accepted living with her children in the
Boucherville residence despite the fact
that Bernard Gagné's son has had behavioural
problems,
(vii)
financial responsibilities were shared during the years at issue,
and
(viii) property and
resources were shared during the years at issue;
(d)
the appellant had three children from a relationship
with Tony Bergamo;
(e)
the Minister considered that the appellant
and Bernard Gagné lived in a common-law
relationship during the 1996, 1997 and 1998 taxation years, which
led to the following adjustments:
(i)
refusal to allow the appellant the equivalent-to-spouse tax
credit for the 1996, 1997 and 1998 taxation years,
(ii)
in computing the child tax benefit for the 1996, 1997 and 1998
base taxation years, taking the net family income into account
reduced the annual child tax benefit amount to zero:
|
1996
1997
1998
Appellant
38,078
29,033
41,691
Bernard
Gagné
45,877
52,258
53,926
83,955
81,291
95,617
|
(iii)
for the 1996 and 1997 taxation years, taking the net family
income into account resulted in the appellant's being
ineligible for the GST tax credit payments.
[9]
With respect to Bernard Gagné, the facts assumed by
the Minister for the purposes of the assessments and
determinations are set out in subparagraphs 8(a) to (e) of
the Reply to the Notice of Appeal. They are essentially the same
as those found in subparagraphs 12(a) to (e) of the Reply to
the Notice of Appeal in the case of Lucie Trudel, subject to
the following two variations:
(1)
subparagraph 8(d) reads as follows:
[TRANSLATION]
from a relationship with Sylvie Vachon the appellant
had two children, including a boy named
Félix-Léonard who was born in 1982;
2)
there is no subparagraph equivalent to subparagraph 12(e)(iii)
found in the Reply to the Notice of Appeal in the case of Ms.
Trudel.
[10]
Subparagraphs (c)(i) and (c)(v) to (c)(viii) are denied by the
appellants.
[11]
Ms. Trudel and Mr. Gagné both testified. Louise
Girard testified for the respondent.
[12]
Ms. Trudel began with an account of the circumstances of her
meeting Mr. Gagné. In 1988, Ms. Trudel separated de
facto from her husband; she retained custody of her three
children. In 1989, one of Ms. Trudel's children contracted
leukemia, and she made frequent use of a babysitter who was
available day and night so that she could take care of her sick
child. Mr. Gagné, who was unmarried, also had two
children for whom he was having child care provided by the same
person. That was when the appellants got to know each other and
became friends, but they did not date. At that time, Ms.
Trudel's son was hospitalized and she had to take leave from
work for two years. The two appellants' children saw one
another frequently and Ms. Trudel said that she and Mr.
Gagné also began to see each other because he showed her a
great deal of friendship and tenderness. She said that, at the
time, she confused love and friendship. Thus, when the time came
for her to decide whether to renew her lease, she agreed to Mr.
Gagné's suggestion that she move in with him. She
moved on June 26, 1992, to live with Mr. Gagné.
[13]
Ms. Trudel said she realized that what she had thought was
love was in reality not love. She then became aware that there
were significant differences in their lifestyles, particularly
because of her numerous visits to the hospital. Mealtimes and
family discipline were also different. Moreover, while
recognizing that Mr. Gagné had many good qualities, she
spoke of his instability with regard to employment, which she
found unacceptable.
[14] Indeed,
shortly after Ms. Trudel moved in with him, Mr. Gagné
found himself without a job and had to look for employment
outside Boucherville. In October 1992, he accepted a job in
Ste-Foy near Québec and left the house to take up
his new duties. For Ms. Trudel, leaving Boucherville would not be
an easy matter in view of the medical follow-up being provided
for her son at the Maisonneuve-Rosemont hospital and also
because he needed home schooling. The fact that the babysitter
lived nearby was another important factor. Although she seems to
have considered following Mr. Gagné to Québec, Ms.
Trudel, who was then experiencing some problems with her former
spouse, said she opted for stability and security. Thus, she
decided to continue to live in Boucherville with her children in
Mr. Gagné's house where she now occupied the master
bedroom by herself. Mr. Gagné had put the house up
for sale, however, and returned there [TRANSLATION] "from
time to time." Ms. Trudel said that she was there to
receive potential purchasers and that she was paying rent at the
time.
[15] In
April 1994, Mr. Gagné lost his job again and
returned to live in his house at Boucherville. Ms. Trudel said
that Mr. Gagné's daughter then decided to go to
live with her mother, thus freeing up a bedroom in the house. It
is not known exactly who occupied that bedroom from then on.
Following discussions with Mr. Gagné, Ms. Trudel
decided to continue to live in the house. She felt at home there
because she paid rent and her share of the household expenses,
including electricity and cable expenses, for example. Otherwise,
she said, she took care of her own children, did not share other
expenses with Mr. Gagné and did not take advantage of
any financial benefits that he may have been able to give her.
All in all, according to Ms. Trudel, household expenses were
shared, with each person being on his own regarding all other
expenses, such as motor vehicle expenses, for example.
Ms. Trudel said that she also did the grocery shopping for
herself and her children and that she kept a monthly record of
the meals eaten by Mr. Gagné and his children, so
that each appellant paid his share of the food expenses.
[16]
Ms. Trudel also spoke of an agreement signed with Mr.
Gagné for renting his house after his return to
Boucherville in 1994. An agreement that was apparently signed on
January 3, 1995, is in fact attached to her Notice of Appeal. It
provided that [TRANSLATION] "the rental payable will be 50%,
or one half, of the mortgage payment and will vary if there is a
change in the mortgage payment over the years." The
agreement also provided for 90 days' notice in the event the
house was sold and for the Trudel family's right to continue
to live in the house on the same terms for a period of one year
in the event of Mr. Gagné's death.
[17]
Ms. Trudel also stated that the rent she was paying now was
not as high as what she used to pay, since the mortgage payments
had decreased and Mr. Gagné had agreed that she could
in fact pay less rent in view of her limited resources.
Furthermore, Mr. Gagné admitted that he had never
reported the rent in his income tax return.
[18] The
appellants shared expenses for the services of a house cleaner as
well as electricity, telephone and cable expenses. The
furnishings were what each had owned before moving in together in
1992. The appellants also acknowledged that they had bought a
washing machine and a dryer together since they both used those
appliances. Ms. Trudel had sold hers and
Mr. Gagné's had to be replaced.
[19] Both
Ms. Trudel and Mr. Gagné maintained they were
independent and had no spouse. They described themselves as being
housemates, with each taking responsibility for his own family
expenses. Ms. Trudel said that she did not have a special
relationship with anyone. Mr. Gagné said he had
friends of both sexes. He mentioned no special relationship.
However, the appellants admitted that they had gone out together
on occasion although they said they had also gone out with other
persons. According to their testimony, they had taken some trips
with their respective children, but rarely both families
together. A trip by the two families to the Gaspé area was
mentioned. Ms. Trudel also referred to another trip that she made
alone with Mr. Gagné to Detroit, San Francisco,
Vancouver and Banff. Her airline ticket was allegedly paid for
through the air miles accumulated by Mr. Gagné, who
travelled a great deal. Otherwise, she had paid her share of the
expenses for that trip. Ms. Trudel also said that they might have
spent an occasional weekend together at Mr. Gagné's
parents' cottage, for example. The appellants initially
preferred not to answer the question of whether they had had
sexual relations. Ms. Trudel later altered her position and
admitted that they had, but only on rare occasions. According to
her, this would have happened perhaps once a year, after a
birthday dinner for example.
[20] After the
hearing, the appellants, with the consent of counsel for the
respondent, forwarded to the Court bank books and bank
statements, personal banking records and grocery bills. A number
of these documents concerned years other than those at issue.
However, in a personal banking record marked [TRANSLATION]
"Lucie Trudel - Nov. 95 @ July 96", which
actually appears to cover the period from November 1995 to July
1997, one can see entries of regular payments every two weeks,
sometimes made directly to Mr. Gagné and sometimes to
the Canadian Imperial Bank of Commerce (CIBC) as a mortgage
payment. Those documents show, for example, that Ms. Trudel
made payments of $254 every two weeks until February 1997, and
$226.93 thereafter. The payments then went down to
$208.56 and then up to $222.33 in 2000 and 2001. Although it
is clear that each appellant had his own bank account, one cannot
fail to notice that Mr. Gagné seems to have
personally paid many expenses, including some personal expenses
of Ms. Trudel's for which she subsequently reimbursed him by
cheque.[1] I will
simply add here that such financial arrangements seem to extend
far beyond the mere payment of rent and the sharing of household
expenses one would see in the case of housemates.
[21] As for
the food bills, they are current and do not relate to the years
at issue. They have simply been accumulated in an envelope on
which is indicated the number of meals eaten daily by each
appellant and their children. In her testimony, Ms. Trudel
explained that each of them thus contributed to the food budget
based on that fairly rough calculation of their respective
consumption.
[22] Louise
Girard, a team leader (Child Tax Benefit) with the Canada Customs
and Revenue Agency, testified for the respondent. Her file notes
concern her conversations with Ms. Trudel and
Mr. Gagné. They confirm the initial relationship
between the appellants, the departure of Mr. Gagné in
1992, his return in 1994, and the cohabitation and common use of
the house space by the two families. Ms. Trudel apparently
stated, however, that Mr. Gagné slept in what she
described as his office, which was not mentioned at the hearing.
Ms. Trudel also disclosed to Ms. Girard that she paid
rent to Mr. Gagné and half of the electricity,
telephone and cable expenses. The same was true for the services
of a house cleaner, which were provided every two weeks. Ms.
Trudel also referred to the joint purchase of a washing machine
and dryer. She said that she was usually the one who took care of
the grocery shopping. Meals were not necessarily eaten together.
However, if Mr. Gagné and his children were present
at a mealtime, they all ate together and costs were shared.
Occasional outings to a restaurant or the movies with or without
the children were also mentioned.
[23] As for
Mr. Gagné's return in 1994 and their subsequent
relationship, Ms. Trudel said that she had made a place for
herself in the house during those years and that the children had
been more accepting of the situation ever since she and
Mr. Gagné had ceased living in a conjugal
relationship. Ms. Trudel also said that she was not involved
in any [TRANSLATION] "love relationship"and that she
did not know what the situation was with Mr. Gagné in
that regard.
[24] As for
Mr. Gagné, he apparently said that he stayed with his
parents in Longueuil from November 1997 to June 1998, while his
son attended a school in that city. He explained that he returned
to Boucherville on weekends or went to his parents' home
north of Montreal. However, he did not provide any evidence in
support of those statements. At the hearing, this fact was
mentioned, but no specific dates or detailed explanations were
provided.
[25]
Ms. Girard concluded that the appellants, who cohabited,
were living in a conjugal relationship because there was sharing
of financial responsibilities and of property and resources.
Analysis
[26]
Subsection 252(4) of the Income Tax Act[2] (repealed by S.C. 2000, c. 12, s.
141(2), applicable to the 2001 and subsequent taxation years)
defined the term "spouse" as follows for the years at
issue:
252(4) In this Act,
(a) words referring to a spouse at
any time of a taxpayer include the person of the opposite sex who
cohabits at that time with the taxpayer in a conjugal
relationship and
(i)
has so cohabited with the taxpayer throughout a 12-month period
ending before that time, or
(ii)
would be a parent of a child of whom the taxpayer would be a
parent, if this Act were read without reference to paragraph
(1)(e) and subparagraph (2)(a)(iii)
and, for the purposes of this paragraph, where at any time the
taxpayer and the person cohabit in a conjugal relationship, they
shall, at any particular time after that time, be deemed to be
cohabiting in a conjugal relationship unless they were not
cohabiting at the particular time for a period of at least 90
days that includes the particular time because of a breakdown of
their conjugal relationship.
[27] The
notion of de facto spouse flows then, according to this
definition, from that of "conjugal relationship", which
was considered by Judge Lamarre Proulx in Milot v.
R., [1996] 1 C.T.C. 2247; original French version [1995]
A.C.I. no 412 (QL). Referring to the analysis of
Knoppers, Bernard and Shelton, Les personnes et les
familles, Tome 2, Les éditions Adage,
Judge Lamarre Proulx states, at page 2250 (para. 11), that
"cohabitation is fundamental in a conjugal relationship and
in conjugal conduct. That conduct may be determined through
sexual relations, emotional and intellectual exchange, financial
support and common knowledge." On this issue, the judge
refers more particularly, at page 2250 (para. 12), to the
analysis of Payne and Payne who, in Introduction to Canadian
Family Law, Carswell, 1994, review the seven factors stated
by the Ontario District Court in Moldowich v. Penttinen
(1980), 17 R.F.L. (3d) 376. The same factors were again
considered in Lavoie v. Canada, [2000] 2 C.T.C. 2137;
original French version [1999] A.C.I. no 688 (QL).
[28] At pages
38 and 39 of their analysis, Payne and Payne itemize these
factors as follows:
Not all arrangements whereby a man and a woman live together
and engage in sexual activity will suffice to trigger
statutory support rights and obligations.28 As was
observed by Morrison J.A., of the Nova Scotia Court of
Appeal :
I think it would be fair to say that to establish a common law
relationship there must be some sort of stable relationship which
involves not only sexual activity but a commitment between the
parties. It would normally necessitate living under the same
roof with shared household duties and responsibilities as
well as financial support.29
More specific judicial guidance as to what constitutes
cohabitation or a conjugal or marriage-like relationship is
found in a judgment of the Ontario30 District Court,
wherein Kurisko D.C.J. identified the following issues as
relevant:
1.
Shelter
(a) Did the parties live under the same roof?
(b) What were the sleeping arrangements?
(c) Did anyone else occupy or share the available
accommodation?
2.
Sexual and Personal Behaviour:
(a) Did the parties have sexual relations? If
not, why not?
(b) Did they maintain an attitude of fidelity
to each other?
(c) What were their feelings toward each
other?
(d) Did they communicate on a personal level?
(e) Did they eat their meals together?
(f) What, if anything, did they do to assist each other with
problems or during illness?
(g) Did they buy gifts for each other
on special occasions?
3.
Services:
What was the conduct and habit of the
parties in relation to:
(a) preparation of meals;
(b) washing and mending clothes;
(c) shopping;
(d) household maintenance; and
(e) any other domestic services?
4.
Social:
(a) Did they participate together or
separately in neighbourhood and community activities?
(b) What was the relationship and conduct of each
of them toward members of their respective families and how did
such families behave towards the parties?
5.
Societal:
What was the attitude and conduct of the community toward
each of them and as a couple?
6.
Support (economic):
(a) What were the financial arrangements between
the parties regarding the provision of or contribution
toward the necessities of life (food, clothing, shelter,
recreation, etc.)?
(b) What were the arrangements concerning the
acquisition and ownership of property?
(c) Was there any special financial
arrangement between them which both agreed would be
determinant of their overall relationship?
7.
Children:
What was the attitude and conduct of the parties
concerning the children?
As Kurisko D.C.J. further observed, the extent to which each
of the aforementioned seven different components will be
taken into account must vary with the circumstances of each
particular case.
__________
28 See Jansen v.
Montgomery (1982), 30 R.F.L. (2d) 332 (N.S. Co. Ct.).
29 Soper v. Soper (1985),
67 N.S.R. (2d) 49, at 53 (C.A.).
30 Molodowich v. Penttinen
(1980), 17 R.F.L. (3d) 376, at 381-382 (Ont. Dist. Ct.). See also
Gostlin v. Kergin (1986), 3 B.C.L.R. (2d) 264, at 267-268
(C.A.).
[29] In M.
v. H., [1999] 2 S.C.R. 3, the Supreme Court of Canada
endorsed the factors listed in Moldowich, specifying at
pp. 50-51 that "these elements may be present in varying
degrees and not all are necessary for the relationship to be
found to be conjugal". At page 51, the Court added the
following:
Certainly an opposite-sex couple may, after many years together,
be considered to be in a conjugal relationship although they have
neither children nor sexual relations. Obviously the weight to be
accorded the various elements or factors to be considered in
determining whether an opposite-sex couple is in a conjugal
relationship will vary widely and almost infinitely.
[30] In the
case at bar, the appellants admitted that they had previously
lived in a conjugal relationship in 1992. After an absence of
approximately one and a half years, Mr. Gagné
returned to live with Ms. Trudel in his Boucherville house where,
during the years at issue, they cohabited, with their respective
children, with the exception of Mr. Gagné's
daughter who apparently went to live with her mother. The
appellants claim that their relationship changed at that time and
that they no longer lived in a conjugal relationship. According
to them, they were each independent, and Ms. Trudel was only a
tenant while Mr. Gagné was the landlord. The evidence
however reveals a common living arrangement for two families that
went well beyond what each states to have been the case. First,
the appellants shared household expenses on a fifty-fifty basis,
although they maintained that what was involved was only an
agreement concerning the rent that Ms. Trudel undertook to pay.
In actual fact, Ms. Trudel paid half of the mortgage payments and
Mr. Gagné indeed agreed to her paying a lesser amount
inasmuch as the payments had decreased because of the reduction
in interest. According to Ms. Trudel, he agreed to this
arrangement because of her limited resources. The space was used
by the two families and the furnishings consisted of what each
had owned before they lived together. The appellants also
purchased together some household appliances, namely, a washing
machine and a dryer. This was certainly a case of sharing of
resources and of a degree of financial support on the part of
Mr. Gagné with respect to the amount of
"rent" he required from Ms. Trudel.
[31] With
regard to food, it was Ms. Trudel who did the grocery shopping
and prepared the meals, first of all for herself and her family.
However, Mr. Gagné and his children, when they were
there, ate their meals with Ms. Trudel and her family.
Mr. Gagné reimbursed Ms. Trudel on a pro rata basis
for what he consumed. Again, this involves pooling resources and
sharing expenses.
[32] The
personal bank statements also show many payments made by Ms.
Trudel to Mr. Gagné, either in reimbursement of
expenses he incurred for her and her children, or in payment of
her share of certain expenses. In a blended family to which each
partner comes with his own offspring, I do not find it unusual
that they should share expenses for accommodations and food on a
fifty-fifty or a pro rata basis and that each parent should
remain primarily responsible for other expenses specific to
himself or his children. In order for people to be considered to
be living in a conjugal relationship, it is not necessary that
the sharing be absolute and equal in every respect.
[33] Taking
into account the cohabitation, the use of space and furniture by
the two families, the joint purchase of some household
appliances, the fact that some meals were eaten together and
housing and food expenses were shared, the exchange of services
and the financial arrangements for purchases (Ms. Trudel paid for
the groceries and was then reimbursed, and the same was true of
Mr. Gagné in respect of other common expenses or
personal expenses of Ms. Trudel and her children), it cannot be
concluded that each family operated individually and
independently, as Ms. Trudel stated was the case.
[34] If to
that are added the trips, the weekends and the joint outings to
the movies and the restaurant, even if they occurred only
occasionally, it becomes even harder to find that the appellants
were not living in a conjugal relationship. And, since it must be
mentioned, the fact that they continued to have sexual relations,
even if very infrequently, during the years at issue, definitely
does not support such a conclusion. The length of the
relationship is also a factor worthy of note.
[35] To be
sure, it is difficult in the case at bar to pin down the true
nature of the relationship maintained by the two appellants.
However, I do not think that they have produced sufficient
evidence to satisfy me on a balance of probabilities and in the
light of the factors considered heretofore by the courts that
they were not living in a conjugal relationship during the years
at issue. Therefore, they must be considered as spouses during
the 1996, 1997 and 1998 taxation years and base taxation
years.
[36] The
appeals are accordingly dismissed.
Signed at Ottawa, Canada, this 10th day of August 2001.
"P. R. Dussault"
J.T.C.C.
Translation certified true on this 28th day of November
2001.
[OFFICIAL ENGLISH TRANSLATION]
[OFFICIAL ENGLISH TRANSLATION]
2000-1748(IT)I
BETWEEN:
BERNARD GAGNÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence with the
appeals of
Lucie Trudel (2000-2109(IT)I)
on April 26, 2001, at Montréal,
Quebec, by
the Honourable Judge P. R. Dussault
Appearances
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Annick Provencher
JUDGMENT
The appeals from the assessments made under the Income Tax
Act for the 1996, 1997 and 1998 taxation years are
dismissed.
The appeal from a determination of child tax benefit in
respect of the 1996, 1997 and 1998 base taxation years is
dismissed.
The whole in accordance with the attached Reasons for
Judgment.
Signed at Ottawa, Canada, this 10th day of August 2001.
J.T.C.C.
Translation certified true
on this 28th day of November 2001.
Erich Klein, Revisor
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