Brulé,
T.C.J.
[ORALLY]:
—This
is
an
appeal
against
income
tax
assessments
for
the
years
1982
and
1983
in
which
the
Minister
of
National
Revenue
disallowed
claims
for
legal
expenses
made
by
the
appellant.
Briefly,
the
facts
involved
the
marital
separation
by
the
appellant
and
his
wife
and
the
resulting
right
to
receive
the
Family
Allowance
on
behalf
of
the
children.
During
the
marriage,
the
appellant
included
the
receipt
of
these
payments
in
his
tax
returns,
being
income
received
by
him.
After
the
couple
separated,
although
no
formal
separation
was
executed,
the
wife
informed
the
Department
of
Health
and
Welfare
of
her
new
address
and
the
Family
Allowance
cheques
were
sent
to
her.
The
husband,
who
is
the
appellant
here,
took
the
matter
into
court
to
re-establish
his
right
to
these
payments.
He
was
successful
and
the
legal
fees
incurred,
some
in
each
of
the
taxation
years
under
appeal,
were
deducted
from
income,
claiming
that
this
was
allowable
under
paragraph
18(1
)(a)
of
the
Income
Tax
Act.
In
his
reply
to
the
notice
of
appeal,
the
Minister
basically
agreed
with
the
facts
as
set
out
herein,
but
based
his
assessments
on
the
following
premises:
(1)
the
legal
fees
incurred
were
with
respect
to
a
divorce
action;
(2)
the
right
to
receive
Family
Allowance
is
provided
by
statute;
and
(3)
the
legal
expenses
incurred
by
the
appellant
were
not
incurred
for
the
purpose
of
gaining
or
producing
income
from
a
business
or
property.
In
evidence
it
was
obvious
that
the
first
premise
by
the
Minister
was
entirely
wrong,
as
the
appellant
was
not
involved
with
a
divorce
action,
but
with
a
custody
matter.
The
Supreme
Court
of
Ontario
awarded
custody
of
the
children
to
the
appellant,
which
step
was
necessary
for
him
to
re-establish
his
right
to
the
Family
Allowance.
All
the
legal
services
provided
to
the
appellant
involved
this
matter
and
these
are
the
amounts
he
claimed
in
the
two
years.
There
is
no
argument
over
the
quantum
of
the
fees.
Counsel
for
the
Minister
said
that
what
the
appellant
sought
was
a
court
order
respecting
custody
of
the
children,
and
therefore,
the
legal
expenses
were
not
deductible.
He
further
suggested
that
on
the
basis
of
the
Income
Tax
Act
and
the
Family
Allowances
Act
the
appellant
still
could
receive
the
payments.
As
an
alternative
argument,
it
was
suggested
that
the
appellant
had
to
go
to
Court
to
establish
a
new
right,
and
on
the
basis
of
the
case
of
The
Queen
v.
Dr.
Beverley
A.
Burgess,
[1981]
C.T.C.
258;
81
D.T.C.
5192,
legal
fees
for
this
purpose
are
not
deductible.
The
appellant
admitted
that
going
to
court
did
result
in
the
custody
order,
but
that
such
a
ruling
was
necessary
to
be
able
to
claim
the
Family
Allowance
without
any
contestation
by
his
wife.
He
further
argued
that
going
to
court
was
not
to
establish
a
new
right,
but
to
preserve
a
right
which
existed.
In
support
of
his
argument,
he
directed
the
Court
to
the
case
of
Gladys
(Geraldine)
Evans
v.
M.N.R.,
[1960]
C.T.C.
69;
60
D.T.C.
1047,
a
decision
of
the
Supreme
Court
of
Canada.
A
right,
he
maintained,
is
included
in
the
definition
of
“property”
in
subsection
248(1)
of
the
Income
Tax
Act.
The
legal
expenses
to
obtain
the
court's
approval
to
custody
were
necessary
to
re-establish
the
right
to
the
Family
Allowance
and
the
only
reason
for
going
to
court.
Admittedly,
this
was
accomplished
by
the
custody
order.
From
the
evidence
presented,
custody
of
the
children
was
not
and
is
not
a
problem.
The
court
action
was
a
means
to
an
end,
that
being
to
confirm
his
right,
not
to
bring
a
new
one
into
existence.
This
being
the
case,
I
find
that
the
legal
fees
are
deductible
as
claimed,
and
therefore,
the
appeal
is
allowed.
Party
and
party
costs,
if
any,
will
be
allowed
to
the
appellant.
Appeal
allowed.
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