Jim Fraser v. Her Majesty the Queen, [1994] 2 CTC 2356

Teskey J.T.C.C. (orally):— The appellant elected to have his appeal against an assessment for 1991 heard pursuant to the informal procedure.

Issue

The single issue is whether payments made by the appellant to the Royal Bank of Canada pursuant to an interim order of Justice L. A. Kyle of the Court of Queen's Bench dated February 19, 1991, and a judgment of Justice E. A. Scheibel of the same Court dated November 25, 1991.

Facts

There is no dispute as to the facts herein. The order dated February 19, 1991, has the following provision contained therein:

AND IT IS FURTHER ORDERED THAT the respondent (appellant herein) pay spousal maintenance to the respondent in the amount of $397.34 per month by making such payments to the Weyburn Branch of the Royal Bank of Canada against a car loan, relating to a vehicle which the respondent presently has use of.

The word "respondent" appears therein three times in this paragraph. It is obvious to me the second and third time the word "respondent" appears that it should have been the word "petitioner," as the respondent therein was the person who actually made the payments and the petitioner was the person who had the use of the automobile. The judgment dated November 25, 1991, has the following provision contained therein:

The petitioner, James William Fraser, shall pay the respondent, Barbara Anne Jones (Fraser) additional spousal maintenance in the amount of $397.34 per month commencing the month of November 1991 by making such payments to the Weyburn Branch of the Royal Bank of Canada in relation to an existing car loan, such payments to continue month to month until the said car loan is paid in full.

Although "petitioner" and "respondent" in this paragraph is reversed, the names are inserted which clarifies the paragraph. Obviously, both paragraphs were badly drafted and, taken literally, would mean absolutely nothing.

Both the interim order and the final judgment were on consent. The appellant made the payments until the car was paid in full during the year 1992. During pretrial negotiation it was agreed formally that the appellant would get a tax deduction and the wife would pay tax on the payments.

Respondent's position

The respondent argues that these payments are not deductible by the appellant in that: (a) the payments were made to the Royal Bank and not to his spouse, and

(b) the payments are not an allowance within the provisions of subsection 56(12).

Analysis

The operating portion of the definition of “allowance” in subsection 56(12) reads:

. . ."allowance" does not include any amount that is received by a person, referred to in the former paragraphs as “the taxpayer” and in the latter paragraphs as “the recipient", unless that person has discretion as to the use of the amount.

The respondent referred me to three informal decisions of this Court, the first two decisions by my colleague Garon J.T.C.C., namely Assaf v. The Queen (T.C.C.), January 29, 1992 (unreported), and Wornoski v. The Queen (T.C.C.), January 30,1992 (unreported). The third decision by my colleague Sobier J.T.C.C., of Crewe v. The Queen (T.C.C.), September, 1992 (unreported). I am aware that judgments of this Court in the Informal Procedure have no precendential value. I am also aware that the general rule for trial judges, when there are conflicting decisions of the Court, to favour the last in time. In this case, the spouse of the appellant, for whatever reason, wanted the use of the car and required that it be paid for by the appellant herein. I agree with the reason of Sobier J.T.C.C., in Crewe that payments in dispute herein were additional spousal maintenance, were for the benefit of the spouse and she, in essence, directed the payment to be made to the bank. Thus, I am satisfied that these payments in essence were payments to the appellant's spouse or former spouse, and, therefore, fit within the provisions of both paragraph 60(b) and 60(c) of the Act. I interpret the last portion of subsections 56.1(1) and 60.1(2), the provision allows the parties to a separation agreement or a court of competent jurisdiction to deem a payment made pursuant thereto to be an allowance; however, this is not mandatory. It is open to me to determine if the payments made herein fall within the definition of “allowance.” Subsection 56.12 were not before Judge Sobier in Crewe. The operative words in the definition of “allowance” are, “Unless that person has discretion as to the use of the amount.”

The appellant’s spouse knew that she needed as additional maintenance $397.37 per month until the car was paid in full. By directing that the appellant pay this amount she knew that all she was responsible for was normal maintenance costs of operating the car. By her consent to the order and judgment, she had the discretion and exercised it, to direct that these periodic payments that were for her benefit be paid to the Royal Bank. I believe if the order and judgment had been rendered, (that is not on consent but imposed by the Court), and the provisions of subsection 60.1(2) were not used, there would be an entirely different result.

The appeal will be allowed with costs and the matter referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is to be allowed an additional claim for alimony and maintenance paid to his spouse in the year 1991 of $3,973.

Appeal allowed.