Date:
20061123
Docket:
A-588-04
Citation:
2006 FCA 384
CORAM: LÉTOURNEAU
J.A.
PELLETIER
J.A.
MALONE J.A.
BETWEEN:
GREGORY J.
WHELAN
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Saskatoon,
Saskatchewan, on November 23, 2006)
LÉTOURNEAU
J.A.
[1]
This
is an appeal from a decision of a judge of the Tax Court of Canada which
dismissed the appellant’s appeals from reassessments made under the Income
Tax Act, R.S.C. 1985 (5th Supp.), c. I as amended (Act),
for the 2001 and 2002 taxation years. In so doing, he confirmed the minister’s
disallowance of deductions made by the appellant in respect of child support
payments. A summary of the facts is necessary to a proper understanding of the
issue.
[2]
The
appellant and his former spouse, Diane Whelan, are the parents of five
children. Pursuant to a written agreement dated August 31, 1993, the appellant
agreed to pay to his former spouse a lump sum of $1,200 per month as child
support. On November 27, 1997, a judgment of the Saskatchewan Court of Queen’s
Bench awarded custody of the eldest child to the appellant while the former
spouse retained custody of the four other children. The amount of the child
support payment remained the same. The judgment contained the following terms:
The appellant:
shall pay to… DIANE KIM
WHELAN, as maintenance for the four children of the marriage, the sum of
$1200.00 per month, commencing the first day of December, 1997, and continuing
on the first of each month for so long as the children remain children of the
marriage within the meaning of the Divorce Act. These child
maintenance payments are tax deductible to the Petitioner [Gregory Whelan] and
are to be included as income to the Respondent [Diane Whelan].
(Emphasis added)
[3]
On
November 24, 2000, Laing J. of the Saskatchewan Court of Queen’s Bench (as he
then was) ordered that the 1997 judgment be amended by replacing the
above-cited paragraph with the following found in the Appeal Book, at tab 8:
ORDER
UPON hearing counsel for the
Applicant and the Respondent and having read the Affidavits filed by the
parties hereto, and the pleadings and proceedings had and taken in the within
action and upon being satisfied that the only reason that the amounts were
included in the original Judgment was simply through inadvertence; I am
satisfied the child support payments were intended to continue according to the
terms of the Agreement of August 31, 1993 and that the Judgment should reflect
this intention.
THEREFORE IT IS ORDERED THAT:
1. Pursuant to
Queen’s Bench Rule 343A, the Judgment in the within matter dated November 27,
1997 be amended to substitute the following paragraph 2(d):
2(d). The parties acknowledge and
recognize a child support agreement entered into between them and dated August
31, 1993 which agreement was to have taken effect January 28, 1993 which
provided that the Petitioner was to make child support payments on the first
day of each month for so long as the children remain children of the marriage
within the meaning of The Divorce Act. The parties acknowledge that all
payments made since January 28, 1993 have been made pursuant to the provisions
of that agreement and their intention that payments will continue in accordance
with that agreement. This Judgment does not amend any of the child support
provisions of that agreement.
(Emphasis added)
[4]
Notwithstanding
the Queen’s Bench judgment that expressly stated that there was no amendment to
any of the child support provisions of the 1993 agreement between the parties,
the Tax Court judge found that the 1997 judgment changed the annual amount per
child from $2,880 to $3,600 although the annual lump sum of child support paid
by the appellant remained the same. From such finding, he concluded that the
1997 judgment created a “commencement day” within the meaning of paragraph
56.1(4)(b) of the Act. The paragraph reads:
|
56.1.
…
(4)
The definitions in this subsection apply in this section and section 56.
"child
support amount" means any support amount that is not identified in the
agreement or order under which it is receivable as being solely for the
support of a recipient who is a spouse or common-law partner or former spouse
or common-law partner of the payer or who is a parent of a child of whom the
payer is a natural parent.
"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.
|
56.1
[…]
(4)
Les définitions qui suivent s'appliquent au présent article et à l'article
56.
«
date d'exécution » Quant à un accord ou une ordonnance:
a) si l'accord ou l'ordonnance est établi après
avril 1997, la date de son établissement;
b) si l'accord ou l'ordonnance est établi avant
mai 1997, le premier en date des jours suivants, postérieur à avril 1997:
(i)
le jour précisé par le payeur et le bénéficiaire aux termes de l'accord ou de
l'ordonnance dans un choix conjoint présenté au ministre sur le formulaire et
selon les modalités prescrits,
(ii)
si l'accord ou l'ordonnance fait l'objet d'une modification après avril 1997
touchant le montant de la pension alimentaire pour enfants qui est payable au
bénéficiaire, le jour où le montant modifié est à verser pour la première
fois,
(iii)
si un accord ou une ordonnance subséquent est établi après avril 1997 et a
pour effet de changer le total des montants de pension alimentaire pour
enfants qui sont payables au bénéficiaire par le payeur, la date d'exécution
du premier semblable accord ou de la première semblable ordonnance,
(iv)
le jour précisé dans l'accord ou l'ordonnance, ou dans toute modification s'y
rapportant, pour l'application de la présente loi.
[…]
«
pension alimentaire pour enfants » Pension alimentaire qui, d'après l'accord
ou l'ordonnance aux termes duquel elle est à recevoir, n'est pas destinée
uniquement à subvenir aux besoins d'un bénéficiaire qui est soit l'époux ou
le conjoint de fait ou l'ex-époux ou l'ancien conjoint de fait du payeur, soit
le père ou la mère d'un enfant dont le payeur est le père naturel ou la mère
naturelle.
|
(Emphasis added)
[5]
Only
subparagraphs 56.1(4)(b)(ii) and (iii) are potentially relevant to the
facts in issue.
[6]
With
respect, we believe that the interpretation given by the judge to paragraph
56.1(4)(b), and especially to subparagraphs (ii) and (iii), is neither
supported by the legislative text nor the facts of the case. In our view, the
judge went beyond the legislative intent in re-writing subparagraphs (ii) and
(iii), so as to assess the child support terms on a per child basis while the
two subparagraphs respectively refer to a bulk amount or the total amount of
child support. Nothing in the provision requires or justifies the conclusion
reached by the judge.
[7]
First,
both subparagraphs refer to a change to the amount payable to the recipient,
not to amounts payable per child: see Callwood v. R., 2005 D.T.C. 1253
(T.C.C.), paragraph 24, reversed on appeal on other grounds; Callwood v.
Canada, 2006 FCA 188. The total amount payable to the recipient was not
changed in this case and the parties to the agreement clearly indicated that it
was their intention not to change the total child support amount payable to the
recipient. The parties’ intention was judicially recognized by Laing J. of the
Saskatchewan Court of Queen’s Bench. He specifically stated that “this judgment
does not amend any of the child support provisions of that agreement”. [The
August 31, 1993 agreement.] Effect should have been given to the clear and
plain wording of subparagraphs (ii) and (iii) as well as to the parties’
intention not to change or vary the 1993 agreement. In addition, the text of
the agreement was consistent with the wording of these two subparagraphs.
[8]
The
judge found support for his position in an interpretation that he gave to the
word “child” in the expression “child support amount” used in subsection
56.1(4). In Diane Kim Whelan v. The Queen, 2002-32(IT)I, a case
involving the former spouse of the appellant and decided in the absence of the
appellant who was not made a party to the proceedings, the judge ruled as follows:
Subsection 56.1(4) refers to “amounts”. The
Court interprets the word “amounts” to refer to monthly payments which are
usual in such support Orders and which are made on a calendar year basis.
However, subsection 56.1(4) refers to a total of individual “child” support
amounts…
In the Court’s view, subsection 56.1(4) must be
read by individual “child”.
[9]
The
learned judge appears to draw, from the singular term “child” used with
reference to “child support”, the conclusion that the determination of whether
an agreement has been changed is to be made with reference to annual payments
with respect to each individual child.
[10]
The
use of the singular in relation to the word “child” is of no consequence in
subsection 56.1(4). As a conventional rule of drafting embodied in the Interpretation
Act, R.S.C. 1985, c. I-2, subsection 33(2), “words in the singular include
plural, and words in the plural include the singular”. Besides, the French
version of subsection 56.1(4) uses the plural and refers to “pension
alimentaire pour enfants” (emphasis added). The expression “child
support” is rather a term of art used to make reference to payments made in
support of one or many children.
[11]
The
practical consequence of this decision under appeal is to effect a change to a
support amount paid for children when there is, in fact, no such change to the
amount and a clear intention of the parties to the agreement to specifically
not change the amount. The change, although non-existent, is indeed found to
exist on the basis of factors external to the expressed intention of the
parties. Thus the death of a child would bring a change to the child support
amount as would inflation, although the amount or the total amount of the child
support payment remains the same. External factors of this kind, according to
the interpretation given to subsection 56.1(4) by the judge, would bring about
a “commencement day” within the terms of that subsection. We have not been
convinced that this is what a plain reading of the provision and of the terms
of the agreement signed by the parties in this case warrants.
[12]
For
these reasons, the appeal will be allowed with costs and the decision of the
Tax Court of Canada will be set aside. The reassessments made against the
appellant for the taxation years 2001 and 2002 will be vacated and the matter
referred back to the minister for reconsideration and reassessment on the
following basis:
For the taxation years 2001 and 2002, the
appellant’s child support amount paid to his former spouse is deductible from
the appellant’s income in these taxation years.
We are grateful for the assistance of counsel
both of whom conducted themselves in accordance with the highest standards of
the profession.
“Gilles Lètourneau”
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