Sarchuk,
T.C.C.J.:—Victoria
Privitera
appeals
from
a
reassessment
of
tax
for
her
1984
taxation
year.
In
reassessing
the
respondent
included
in
the
calculation
of
her
income
the
amount
of
$23,690
received
by
her
during
that
year
on
the
basis
that
this
amount
was
paid
to
her
by
Joseph
Privitera
pursuant
to
a
written
separation
agreement
as
alimony
or
other
allowance
payable
on
a
periodic
basis
for
her
maintenance
within
the
meaning
of
paragraph
56(1)(b)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act").
Victoria
Privitera
takes
the
position
that
the
payments
reflect
a
property
settle-
ment
and
are
in
essence
capital
receipts
and
not
taxable
in
her
hands
as
income.
By
way
of
application
dated
April
23,
1990
the
respondent,
pursuant
to
section
174
of
the
Act,
sought
an
order
joining
Joseph
Privitera
as
a
party
to
the
appeal
of
Victoria
Privitera
for
the
determination
of
the
following
question:
Did
Victoria
receive
the
amounts
of
$23,690
in
the
1984
taxation
year,
$26,100
in
the
1986
taxation
year
and
$24,000
in
each
of
the
1987
and
1988
taxation
years
(the
"amounts"),
pursuant
to
a
written
agreement,
as
alimony
or
other
allowance
payable
on
a
periodic
basis
for
the
maintenance
of
herself
within
the
meaning
of
paragraph
56(1)(b)
of
the
Act,
with
the
consequence
that
Victoria
is
to
include
the
amounts
in
the
calculation
of
her
income
and
Joseph
is
permitted
to
deduct
the
amounts
in
the
calculation
of
his
income?
An
order
joining
Joseph
Privitera
was
granted
by
this
Court
on
September
9,
1990
and
the
question
is
now
before
me
for
determination.
Certain
basic
facts
are
not
in
dispute.
Victoria
and
Joseph
Privitera
were
married
December
10,
1971.
At
the
time
of
marriage
Victoria
was
a
widow,
had
one
child
who
was
seven
and
was
in
receipt
of
payments
from
her
late
husband's
estate
amounting
to
$20,000
per
annum.
These
payments
were
to
continue
until
1981.
Joseph
at
that
time
was
involved
in
the
furniture
sales
business.
Victoria
and
Joseph
commenced
living
separate
and
apart
in
December
1977.
Both
retained
counsel
and
following
negotiations
they
executed
a
written
agreement
providing
for
the
final
settlement
of
all
of
the
monetary
claims
whatsoever
arising
between
them
as
a
result
of
the
breakdown
of
the
marriage
(Exhibit
A-4).
Two
clauses
relevant
to
the
issue
before
me
warrant
reproduction
in
full:
24.
Within
five
(5)
days
from
the
date
of
execution
hereof,
the
Husband
shall
make
a
lump
sum
payment
to
the
Wife
of
$100,000;
25.
For
the
purpose
of
the
support
and
maintenance
of
the
Wife,
the
Husband
shall
make
unto
the
Wife
the
following
periodic
regular
payments:
The
sum
of
$2,000
shall
be
paid
to
the
Wife
on
the
first
day
of
each
and
every
month,
commencing
on
the
first
day
of
January,
1981,
and
ending
on
the
first
day
of
May,
1989.
Clause
26
provides
that
the
support
and
maintenance
payments
are
to
be
secured
by
a
collateral
mortgage
payable
on
demand
and
secured
against
the
lands
and
premises
of
Bayfield
Furniture
Mart
Ltd.
(Bayfield)
and/or
Debonaire
Investments
Ltd.
(Debonaire).
As
part
of
the
agreement
Victoria
relinquished
all
her
interest
in
Bayfield,
Debonaire,
Eureka
Investments
Inc.
(Eureka)
and
any
other
corporation
in
which
Joseph
may
have
had
an
interest.
For
his
part
Joseph
agreed
to
convey
to
Victoria
all
of
his
interest
in
the
two
matrimonial
homes
being
240
Rose
Street,
Barrie,
Ontario,
valued
at
$60,000
with
an
equity
of
$44,000
and
condominium
unit
A209
(Olympus
Building),
Broward
County,
Florida
valued
at
$47,000
with
an
equity
of
approximately
$17,000.
In
the
agreement
Joseph
and
Victoria
each
acknowledge
that
they
received
independent
legal
advice,
that
they
understood
their
respective
rights
and
obligations
and
that
the
Agreement
was
signed
voluntarily.
On
July
17,
1978,
shortly
after
the
execution
of
the
agreement,
Victoria
Privitera's
solicitor
Mr.
J.
Herlihy
sent
her
a
reporting
letter
(Exhibit
A-2)
in
which
he
outlined
the
principal
terms
of
the
agreement.
In
particular
he
made
the
following
comments:
4.
Your
husband
agreed
to
make,
and
did
make,
a
lump
sum
payment
to
you
of
$100,000;
5.
Your
husband
further
agreed
to
pay
the
sum
of
$2,000
per
month
on
the
first
day
of
each
and
every
month
commencing
January
1st,
1982
and
ending
May
‘st,
1989.
.
.
Receipt
of
these
payments
by
you
was
deferred
to
1981
because
of
the
mortgage
payable
to
you
from
your
first
husband's
estate,
which
comes
due
in
that
year.
.
.
.
.
.
.
As
we
discussed
the
lump
sum
payment
itself
is
not
taxable,
but
any
interest
earned
by
the
moneys
would
be
taxable.
The
$2,000
per
month
payments,
when
received
will
be
taxable
in
your
hands
as
straight
income.
.
.
.
I
received
a
phone
call
the
other
day
from
Mr.
Tascona,
who
was
concerned
that
paragraph
26
of
the
Separation
Agreement
relating
to
the
mortgage
securing
the
$2,000
a
month
payments
contained
the
words
"mortgage
payable
on
demand”,
since
this
would
give
you
an
immediate
right
to
the
$202,000
if
you
desired
it.
Aside
from
not
being
the
Agreement
we
had
reached,
the
wording
could
also
be
interpreted
so
as
to
characterize
the
mortgage
amount
as
yet
another
lump
sum
payment,
(which
was
also
not
the
intention
of
the
parties).
.
.
.
Both
the
separation
agreement
and
the
reporting
letter
clearly
characterize
the
payments
in
issue
as
amounts
payable
on
a
periodic
basis
for
the
maintenance
of
Victoria
Privitera.
Notwithstanding
that,
Victoria
takes
the
position
that
the
terms
of
the
separation
agreement,
and
in
particular
the
monthly
payments
to
be
made
to
her,
were
premised
on
a
division
of
property
or,
as
she
described
it,
"a
property
settlement",
and
were
not
maintenance
payments.
Joseph,
on
the
other
hand,
maintains
that
the
separation
agreement
and
the
reporting
letter
are
totally
consistent
with
his
understanding
of
the
agreement.
This
is
the
crux
of
the
dispute
between
the
parties.
The
Court
heard
the
testimony
of
Victoria,
her
solicitor
Mr.
Jerald
Herlihy
and
of
Joseph.
Their
evidence,
dealing
as
it
did
with
events
some
of
which
occurred
more
than
20
years
ago
was,
not
surprisingly,
vague
on
many
points
and
contradictory
in
many
aspects.
Each
party's
recollection
of
certain
transactions
and
when
they
occurred
is
different.
Documents
which
might
have
been
filed
to
establish
a
simple
chronology
of
events
(such
as
when
certain
businesses
were
first
incorporated)
were
not
provided.
Furthermore
all
three
witnesses,
and
I
say
this
without
intending
to
reflect
on
the
integrity
of
any
of
them,
are
persons
whose
interests
are
at
stake
and
their
evidence
was
on
occasion
clearly
self-serving.
From
this
welter
of
testimony
I
gather
the
following.
Their
relationship,
business
and
personal,
appears
to
have
commenced
several
years
prior
to
the
marriage.
Debonaire
was
incorporated
to
acquire
land
to
be
leased
to
Bayfield,
a
company
incorporated
to
carry
on
business
as
a
furniture
retailer.
It
is
not
disputed
that
as
at
the
date
of
separation
Joseph
and
Victoria
each
owned
50
per
cent
of
the
issued
shares
of
these
companies
and
each
was
a
director.
Eureka
was
incorporated
for
the
purpose
of
owning
and
racing
horses.
The
parties
also
acquired
certain
other
properties.
The
first
was
a
marital
residence
at
240
Rose
Street,
Barrie,
Ontario
which
Victoria
asserts
was
purchased
with
her
moneys.
The
second
was
a
condominium
in
Florida
which
they
purchased
during
their
marriage.
Title
to
each
property
was
held
by
them
as
joint
tenants.
Both
Victoria
and
Joseph
also
spoke
of
involvement
in
other
property
transactions,
although
none
were
dealt
with
in
any
particular
detail
and
do
not
appear
to
be
more
than
marginally
relevant
to
the
issue
before
me.
It
is
also
not
seriously
open
to
dispute
that
at
all
relevant
times
the
financial
and
administrative
aspects
of
all
of
the
businesses
were
attended
to
primarily
by
Joseph.
By
her
own
admission
Victoria
had
limited
experience
in
business
and
her
involvement
appears
to
have
been
restricted
to
some
basic
bookkeeping
performed
for
Bayfield.
I
turn
now
to
the
testimony
with
respect
to
the
agreement.
1.
Victoria
Privitera:
Victoria
testified
that
at
the
time
of
separation
she
was
financially
independent,
was
still
receiving
$20,000
per
year
from
her
first
husband's
estate
and
that
at
all
times
during
the
marriage
she
was
the
sole
supporter
of
her
son.
Regarding
the
instructions
given
to
her
solicitor
she
said:
"I
didn't
want
any
support
from
Joseph.
I
just
wanted
the
property
settlement
that
I
was
entitled
to.
But
I
wasn't
looking
for
any
alimony
or
any
support."
She
described
her
intentions
with
respect
to
the
assets
as
\
expected
to
get
my
share”
and
"that
the
properties
would
be
divided
equally”.
She
said
she
was
entitled
to
such
a
share
since
she
had
advanced
$50,000
to
Debonaire
in
or
about
1972.
She
was
unclear
as
to
the
treatment
of
the
advance,
but
rejected
a
suggestion
by
counsel
that
it
was
a
loan
to
the
corporation,
saying"
I
put
the
money
into
the
business.”
She
agreed,
however,
that
the
shares
she
received
from
Debonaire
following
her
advance
of
the
moneys
were
intended
to
be
her
security.
With
respect
to
Bayfield
her
evidence
as
to
when
she
acquired
its
shares
is
somewhat
imprecise,
but
it
appears
that
she
did
not
own
shares
until
1975,
some
five
years
after
the
company
was
incorporated.
It
is
unclear
as
to
what
led
to
the
transfer
of
these
shares
to
her.
Victoria
calculated
her
"share
of
the
assets"
to
be
approximately
$350,000.
She
believed,
based
on
information
received
from
both
her
solicitor
and
from
Joseph,
that
Debonaire
was
valued
at
$600,000.
She
therefore
contended
that
the
lump
sum
payment
of
$100,000
and
the
$200,000
in
maintenance
payments
together
represented
50
per
cent
of
the
value
of
Debonaire.
As
to
her
interest
in
Bayfield
Victoria
said,
in
response
to
a
blatantly
leading
question,
that
it
was
a
trade-off
for
Joseph's
equity
in
the
two
homes.
As
I
initially
understood
her,
that
gave
her
the
balance
of
her
“share
of
the
assets".
Then
with
respect
to
Eureka
she
said
“Well,
Eureka
operates
horses
and
one
of
the
horses
was
my
horse
so
I
took
him
but
he
gave
me
the
others
because
they
weren't
racing
anyway.”
She
considered
these
two
horses
to
be
a
part
of
the
"Eureka
settlement,
my
settlement”.
In
response
to
counsel's
question
in
cross-examination,
Victoria
stated
that
she
was
not
aware
that
Eureka
had
a
deficit
of
approximately
$80,000
at
the
time
of
the
separation;
she
conceded
that
Bayfield
was
neither
appraised
nor
evaluated
as
an
ongoing
business,
nor
did
she
appear
to
know
whether
the
Debonaire
appraisal
reflected
any
liabilities.
Regarding
her
execution
of
the
Agreement
Victoria
said:
I
don't
remember
reading
the
contract
that
day
because
I
was
very
upset.
I
might
have
been
explained
[sic]
but
I
don't
remember
reading
it.
But
all
we
ever
talked
about
I
was
going
to
receive
is
the
property
settlement.
It
was
never
mentioned
.
.
.
I
mean,
I
didn't
want
any
support
from
Joseph.
I
just
wanted
my
property
settlement
and
that
was
it.
She
maintained
that
she
never
instructed
her
counsel
to
ask
for
support
or
maintenance
and
explained
her
acceptance
of
the
terms
in
this
manner:
"Because
I
really
didn't
care
what
this
was
called;
I
just
wanted
my
property
settlement;
that
was
it.
But
I’m
sure
I
mentioned
to
Jerry
I
did
not
want
Joseph
to
support
me.”
2.
Jerald
Herlihy:
Mr.
Herlihy
is
a
lawyer
practising
in
Barrie.
He
knew
both
Priviteras
and
had
acted
for
Joseph
in
several
matters.
At
the
time
of
separation
Victoria
sought
to
retain
his
services.
He"confirmed
with
Mr.
Privitera
that
it
was
alright
with
him
that
he
was
going
to
retain
other
counsel”
and
accepted
Victoria's
retainer.
When
asked
what
instructions
he
received
from
her,
Herlihy
responded:
Yes,
her
indication
to
me
was
that
she
just
wanted
out;
she
wanted
to
be
done
with
her
husband;
she
didn't
want
really
any
more
attachments
or
anything
to
do.
And
she
really
didn't
want
support
for
herself,
she
just
wanted
back
what
she
felt
was
owing
to
her
from,
let's
say,
the
various
business
relationships
they
had
been
into
during
the
course
of
the
marriage.
At
another
point
of
time
he
stated
that
his
instructions
were
that
she
had
money
that
should
be
recovered
"from
the
corporation
because
money
from
the
estate
had
been
put
into
the
purchase
of
the
land
for
the
Bayfield
Furniture
Mart
operation”.
He
also
said
that
she
described
other
property
acquisitions
as
transactions
in
which
both
had
been
involved,
she
as
a
contributor
and
he
as
a
businessman,
she
felt
that
she
had
something
coming
to
her
from
that.
I
gather
from
his
testimony
that
these
transactions
predated
the
separation
by
some
period
of
time
and
did
not
substantially,
if
at
all,
enter
into
his
settlement
negotiations
with
Joseph's
solicitor.
It
was
his
recollection
that
he
made
a
very
rough
calculation
of
the
value
of
the
assets
which
if
split
equally
would
have
provided
her
with
a
$350,000
lump
sum
payment.
Asked
why
the
separation
agreement
did
not
reflect
these
instructions
Herlihy
stated
that
it
was
Joseph's
position
that
he
was
unable
to
pay
out
this
amount
as
a
lump
sum
and
that
it
would
have
to
be
paid
over
time.
Clause
25
of
the
agreement,
which
characterizes
the
payments
as
being
made
for
the
purpose
of
the
support
and
maintenance
of
Victoria,
was
acceptable
to
Herlihy
because
he
believed
(on
the
advice
of
a
tax
consultant)
that:
If
the
payments
were
made
periodically,
that
they
would
be
taxable
in
her
hands
regardless
of
the
reason
for
their
being
paid.
And
so
Mrs.
Privitera
went
into
the
Agreement
knowing
that.
And:
Knowing
that
she
was
going
to
have
to
pay
tax
or
having
the
advice,
let
me
put
it
that
way,
that
the
tax,
the
$200,000,
the
$2,000
per
month
payments
would
be
taxable
in
her
hands.
And
I
think
the
expression
of
those
payments
as
being
for
the
support
and
maintenance
of
the
wife
in
the
Agreement
was
something
that
was
there;
it
was
written
probably
by
counsel
for
the
husband
but
it
was
something
that
we
didn't
argue
with
because,
as
far
as
we
understood
it,
the
advice
we
had
received
was
that
that
was
going
to
be
money
that
was
taxable
in
her
hands.
He
stated
that
he
reviewed
the
separation
agreement
with
Victoria
in
detail
before
she
signed
it,
and
that
he
had
advised
her
that
she
would
be
responsible
for
paying
the
income
tax
on
the
monthly
payments
even
prior
to
concluding
the
settlement
negotiations.
His
reporting
letter
to
Victoria
merely
reiterated
his
belief
as
to
the
taxability
of
these
payments.
He
added
that
during
the
negotiations
there
were
a
number
of
discussions
relating
to
the
potential
impact
of
the
Act
on
such
matters
as
the
transfer
of
the
shares
by
Victoria
to
Joseph,
the
transfer
of
the
various
properties
to
her
and
the
potential
for
capital
gains
with
respect
to
the
condominium.
His
reporting
letter
to
Victoria
merely
reiterated
his
belief
as
to
the
taxability
of
these
payments.
In
cross-examination
Herlihy
was
asked
whether
or
not
he
had
requested
interim
support
for
Victoria.
His
answer
was
not
particularly
responsive,
amounting
to
a
comment
that
he
had
no
recollection
of
so
doing
but
that
it
was
something
he
would
ordinarily
do
in
such
circumstances.
3.
Joseph
Privitera:
According
to
Joseph
the
incorporation
of
both
Debonaire
and
Bayfield
predated
the
marriage.
In
1987
he
sold
a
business
and
set
up
Debonaire
as
an
investment
vehicle
for
the
profits
amounting
to
some
$25,000.
He
felt
that
after
15
years
of
selling
furniture
he
was
in
a
position
to
go
into
business
for
himself,
and
to
that
end
located
and
purchased
a
property
on
Bayfield
Street
in
Barrie,
Ontario.
The
purchase
price
was
$50,000
and
the
deposit
came
from
Debonaire.
A
building
was
constructed
and
in
or
about
October
1970
Bayfield
was
incorporated
and
began
operation
as
Bayfield
Furniture
Mart.
It
ran
into
financial
difficulties
almost
immediately
because
it
was
under-financed.
He
said
that
at
some
point
of
time
Victoria
loaned
the
sum
of
$50,000
to
Debonaire
in
order
to
enable
him
to
complete
his
plans
and
to
satisfy
the
bank
that
the
project
was
properly
funded.
Joseph's
initial
recollection
of
the
events
following
the
separation
was
that
shortly
thereafter
he
received
a
call
from
his
solicitor
with
respect
to
a
request
for
interim
support.
As
a
result
he
agreed
to
and
made
monthly
payments
of
$1,000
to
Victoria
from
December
until
the
separation
agreement
was
executed.
Negotiations
continued
during
which
in
a
discussion
with
his
solicitor
he
learned
that
in
addition
to
a
lump
sum
payment
of
approximately
$100,000,
there
would
be
a
requirement
for
"alimony"
payments.
He
then
spoke
to
Victoria
and
offered
to
pay
her
$100,000
and
$500
per
month
as
maintenance.
She
rejected
the
monthly
payment
as
inadequate,
principally
because
it
would
not
enable
her
to
provide
her
son
with
an
education.
He
referred
the
matter
back
to
his
solicitor
who
ultimately
negotiated
the
figure
of
$2,000.
The
decision
to
pay
support
and
maintenance
for
a
100-month
period
was
negotiated
by
Herlihy
and
Joseph's
solicitor
and
Joseph
was
unable
to
explain
the
10-year
limitation.
He
rejected
a
suggestion
by
Victoria's
counsel
that
he
would
have
been
hard-pressed
to
raise
an
additional
lump
sum
payment
of
$200,000.
He
added
that
after
an
agreement
had
been
reached
as
to
the
amounts
to
be
paid
he
was
advised
by
his
solicitor
that
Victoria
wanted
to
defer
receipt
of
the
monthly
payments
so
that
they
would
begin
in
1981.
He
said
that
since
this
did
not
detrimentally
affect
his
position
he
accepted
his
lawyer's
advice.
Joseph
took
exception
to
the
valuations
put
forward
by
Victoria
and
Herlihy.
He
said
the
property
owned
by
Debonaire
had
been
appraised
for
the
purpose
of
providing
his
bank
with
further
information
and
that
the
appraised
value
of
$599,000
was
premised
on
an
assumption
that
the
property
was
free
of
debt
as
at
March
28,
1978.
This
was
not
correct
since
Debonaire
had
liabilities
of
between
$150,000
and
$200,000
secured
by
mortgage.
As
to
Eureka
most
of
the
funds
advanced
to
it
were
his
and
he
owned
all
of
the
shares.
He
maintained
that
the
Agreement
ultimately
reached
with
respect
to
the
assets
took
into
account
the
loan
made
by
Victoria
to
Debonaire
and
took
cognizance
of
the
correct
values
for
the
various
properties.
The
settlement
with
respect
to
the
properties
required
him
to
pay
a
lump
sum
of
$100,000
and
to
transfer
his
interest
in
the
Barrie
and
Florida
properties,
the
Pontiac
station
wagon
and
his
interest
in
Eureka—such
as
it
was
to
Victoria
and
that
in
exchange
she
agreed
to
relinquish
her
shares
in
the
various
companies.
The
monthly
payments
did
not
enter
into
this
portion
of
the
settlement.
4.
Submissions:
Counsel
for
Victoria
argued
that
the
evidence
given
by
his
client
and
Herlihy
supported
a
conclusion
that
notwithstanding
the
terms
of
the
Agreement
the
total
amount
represented
by
the
monthly
payments
and
the
lump
sum
settlement
was
a
property
settlement.
He
argued
that
Victoria
believed
the
businesses
were
worth
a
certain
amount
and
that
her
share
came
to
approximately
$350,000.
This
she
conveyed
to
Herlihy
and
gave
him
instructions
to
settle
on
that
basis.
He
further
argued
that
Victoria
was
not
aware
of
the
significance
of
having
the
amount
of
$2,000
per
month
characterized
as
"support
or
maintenance”,
nor
for
that
matter
did
Herlihy,
given
the
advice
he
received
from
a
tax
expert.
Counsel
relied
on
Canada
v.
Stanley
John
McKim-
mon,
[1990]
1
C.T.C.
109,
90
D.T.C.
6088,
and
said
that
the
following
facts
met
the
criteria
outlined
in
McKimmon:
the
amount
of
additional
payment
made
by
Joseph
to
Victoria
was
not
required
for
maintenance;
the
payment
of
$2,000
far
exceeded
the
amount
required
to
enable
her
to
maintain
her
standard
of
living
and
could
not
be
considered
an
allowance
for
maintenance;
the
pay-
merits
were
for
a
fixed
term;
the
total
of
the
monthly
payments
combined
with
the
lump
sum
and
the
other
property
settlements,
gave
Mrs.
Privitera
exactly
what
she
was
seeking
as
a
property
division,
$350,000.
With
respect
to
the
fact
that
Victoria
would
be
required
to
pay
income
tax
on
the
$2,000
per
month
counsel
stated
“
Well,
in
this
instance
Mrs.
Privitera
was
not
taking
into
account
the
tax
considerations.”
Counsel
for
Joseph
submitted
that
the
issue
is
not
what
Victoria
believed
she
ought
to
have
received
from
her
husband
or
what
her
instructions
to
her
counsel
were.
Rather,
the
issue
concerns
what
agreement
was
actually
reached
between
the
parties,
and
that
was—according
to
counsel—the
monthly
payments
were
specifically
and
unequivocally
for
the
purpose
of
support
and
maintenance.
Counsel
further
submitted
that
where
a
taxpayer
seeks
to
challenge
a
reassessment
by
repudiating
what
she
and
others
have
said
in
an
agreement
reduced
to
writing,
she
must
adduce
evidence
establishing
a
high
degree
of
probability
that
such
attack
on
the
reassessments
is
valid:
Pallan
v.
M.N.R.,
[1990]
1
C.T.C.
2257,
90
D.T.C.
1102
and
Mikulic
v.
M.N.R.,
[1990]
2
C.T.C.
2443,
90
D.T.C.
1829.
Counsel
also
argued
that
Victoria
both
failed
to
object
or
in
any
other
fashion
to
repudiate
the
contract
and
acted
consistently
with
the
agreement
following
its
execution
and
even
subsequently
when
she
says
she
first
became
cognizant
of
the
fact
that
the
payments
were
described
as
support
and
maintenance
and
that
she
was
taxable.
Counsel
also
submitted
that
the
criteria
set
out
in
McKimmon
had
not
been
met.
5.
Conclusion:
The
evidence
adduced
on
behalf
of
Victoria
Privitera
on
the
whole
lacks
the
degree
of
persuasiveness
which
would
enable
me
to
conclude
that
the
payments
in
issue
reflected
a
property
settlement,
were
capital
receipts
and
were
not
taxable
in
her
hands.
I
view
with
some
scepticism
much
of
the
testimony
given
on
her
behalf
as
to
the
manner
in
which
the
tax
consequence
of
receiving
the
monthly
payments
was
considered
and
determined.
Indeed
most
of
her
testimony
in
this
regard
strained
credulity.
To
challenge
the
clear
and
unambiguous
language
contained
in
the
agreement
it
is
incumbent
upon
her
to
provide
the
Court
with
a
sound
evidentiary
basis
for
her
position.
That
simply
has
not
been
done.
The
Court
is
left
to
speculate
as
to
what
assets
were
being
considered,
how
these
assets
were
valued,
how
and
to
what
extent
they
were
encumbered.
I
agree
with
the
submissions
made
by
counsel
for
the
respondent
and
for
Joseph
that
attempts
to
impugn
or
repudiate
the
terms
of
an
agreement
prepared
by
professional
advisers
and
signed
by
the
taxpayer
must
be
supported
by
evidence
which
very
strongly
supports
the
assertions
being
made.
In
Pallan,
Christie,
A.C.J.T.C.
made
the
following
comments
at
page
2264
(D.T.C.
1107):
It
must
be
understood
that
if
taxpayers
create
a
documented
record
of
things
said
and
done
by
them,
or
by
them
in
concert
with
others,
to
achieve
a
commercial
purpose
and
then
seek
to
repudiate
those
things
with
evidence
of
allegations
of
conduct
that
is
morally
blameworthy
in
order
to
avoid
an
unanticipated
assessment
to
tax,
they
face
a
formidable
task.
And
that
task
will
not
be
accomplished,
in
the
absence
of
some
special
circumstance,
an
example
of
which
does
not
occur
to
me,
by
their
oral
testimony
alone.
That
evidence
must
be
bolstered,
by
some
other
evidence
that
has
significant
persuasive
force
of
its
own.
I
hasten
to
add
that
there
is
no
suggestion
of
any
morally
blameworthy
conduct
in
the
case
before
me
nor
can
it
be
said
that
the
attack
on
the
agreement
is
being
made
in
order
to
avoid
an
unanticipated
assessment
to
tax.
Nonetheless,
even
in
such
circumstances
where
a
party
is
asserting
that
the
clear
and
unequivocal
terms
of
an
agreement
do
not
reflect
the
true
nature
of
the
agreement
I
must
consider
whether
evidence
has
been
adduced
other
than
the
taxpayer's
assertions,
that
has
significant
persuasive
force
of
its
own.
As
to
Victoria,
her
assertions
that
she
was
capable
of
being
entirely
self-
sufficient
without
any
maintenance
from
Joseph
does
not
square
with
the
facts.
Her
sole
source
of
income
at
the
time
of
separation
was
the
annual
payment
from
her
late
husband's
estate.
This
was
to
end
in
1981.
She
was
not
on
the
face
of
it
readily
employable
and
had
a
young
son
with
a
number
of
years
in
school
before
him.
Interim
maintenance
was
needed
and
was
paid
by
Joseph.
Although
the
evidence
is
somewhat
tenuous
I
I
find
as
a
fact
that
the
request
for
interim
alimony
came
from
Victoria
through
her
solicitor.
It
was
evident,
as
I
have
noted
previously,
that
Victoria's
recollection
of
events
was
limited.
The
values
she
ascribed
to
the
properties
are
disturbingly
imprecise.
She
admitted
she
had
not
taken
into
account
the
deficit
on
the
books
of
Eureka.
Her
estimate
of
the
value
of
Bayfield
was
entirely
speculative
and
her
valuation
of
Debonaire
was
based
on
an
appraisal
report
which
ignored
substantial
liabilities.
As
to
Herlihy’s
evidence
I
am
of
the
view
that
it
should
be
carefully
scrutinized
and
given
limited
weight.
His
notes,
made
some
13
years
ago,
were
cryptic
and
his
explanations
did
not
inspire
confidence.
Moreover,
given
the
circumstances,
he
cannot
be
considered
an
entirely
impartial
witness
in
these
proceedings.
When
his
testimony
focused
on
his
discussions
with
Victoria
he
was
adamant
that
he
discussed
and
read
each
clause
of
the
agreement
with
her.
On
the
other
hand,
his
evidence
as
to
the
nature
and
extent
of
the
discussions
he
had
with
Joseph's
solicitor
is
sparse
to
say
the
least
and
he
was
unable
to
describe,
except
on
a
most
minimal
basis,
the
negotiations
which
led
to
the
ultimate
settlement.
As
counsel
for
Joseph
noted,
he
certainly
tendered
no
evidence
of
any
worth
that
as
counsel
acting
on
instructions
he
had
effected
a
proposed
settlement
which
regardless
of
form
was
nothing
more
than
a
division
of
assets.
Counsel
for
both
Joseph
and
Victoria
claimed
that
support
for
their
position
could
readily
be
found
by
application
of
the
criteria
found
in
McKimmon
to
the
facts
of
this
case.
The
conclusion
I
have
reached
on
this
basis
is
that
the
monthly
amounts
bear
the
essential
characteristics
of
support
payments
and
do
not
have
the
key
attributes
of
capital
payments.
In
particular,
the
payments
do
not
bear
interest;
the
amount
is
reasonable;
the
payments
relate
to
the
needs
of
the
parties;
and
the
payments
were
not
to
survive
Victoria.
I
am
satisfied
that
the
amount
of
the
monthly
payments
taken
in
the
context
of
the
income
and
living
standards
of
both
payor
and
recipient
are
consistent
with
the
characterization
of
support
payments.
The
agreement
is
valid
and
binding
on
the
parties
and
expresses
in
clear
and
unequivocal
terms
the
agreement
reached.
On
a
balance
of
probabilities
Victoria
has
failed
to
prove
that
a
contrary
agreement
was
reached
or
intended.
For
the
reasons
stated
I
determine
the
question
as
follows:
Victoria
received
the
amounts
of
$23,690
in
the
1984
taxation
year,
$26,100
in
the
1986
taxation
year
and
$24,000
in
each
of
the
1987
and
1988
taxation
years.
(The
amounts)
pursuant
to
a
written
agreement
as
alimony
or
other
allowance
payable
on
a
periodic
basis
for
the
maintenance
of
herself
within
the
meaning
of
paragraph
56(1)(b)
of
the
Act
with
the
consequence
that
she
is
to
include
the
amounts
in
the
calculation
of
her
income
and
Joseph
is
permitted
to
deduct
the
amounts
in
the
calculation
of
his
income.
The
appeal
of
Victoria
Privitera
from
a
reassessment
of
tax
for
her
1984
taxation
year
is
dismissed.
Appeal
dismissed.
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