Doreen Louise Henson v. Minister of National Revenue, [1985] 2 CTC 2165

Christie, ACJTC [ORALLY];—This appeal relates to the appellant’s 1982 taxation year. The issue is whether in computing her income for that year $7,500 which she received in 1982 from her former husband, Richard J Henson, is to be included.

On July 2, 1981, Mr Justice MacKenzie of the Supreme Court of British Columbia issued a Judgment by Way of Decree Nisi. Paragraphs two to ten inclusive of that document read:

THIS COURT DOTH DECREE AND ADJUDGE that the Petitioner (Respondent by way of Counter-Petition), DOREEN LOUISE HENSON, whose marriage to the Respondent (Petitioner by was of Counter-Petition), RICHARD JAMES HENSON, was solemnized on the 3rd day of June, 1972, at the City of Victoria, in the Province of British Columbia, be divorced from the Respondent (Petitioner by way of Counter-Petition), RICHARD JAMES HENSON, unless sufficient cause be shown to this Court within three (3) months from the date hereof why this Decree should not be absolute.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the matrimonial home situated at 2949 Heath Drive, Victoria, British Columbia, be sold and the net proceeds of sale after payment of any outstanding mortgage, taxes, and real estate commissions be paid into the trust account of Messrs Goult, MeEl- moyle and Wilson and then to be divided equally between the parties.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that from the Respondent’s (Petitioner by way of Counter-Petition) share of the sale proceeds of the matrimonial home the Respondent (Petitioner by way of Counter-Petition) shall pay to the Petitioner the sum of $3,700.00 in full and final settlement of all claims by the Petitioner (Respondent by way of Counter-Petition) for division of assets under the Family Relations Act, SBC 1978.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Respondent (Petitioner by way of Counter-Petition) shall pay to the Petitioner (Respond ent by way of Counter-Petition) by way of maintenance a total sum of $7,500.00, to be paid in four periodic instalments of equal value, the first such instalment being made from the sale proceeds of the matrimonial home and the remaining three instalments to be paid with nine months of the completion of the sale of the matrimonial home.

A ND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Respondent (Petitioner by way of Counter-Petition) shall be the sole legal and beneficial owner of the 1967 Ford Pickup Truck.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Petitioner (Respondent by way of Counter-Petition) shall have the full responsibility for all outstanding loans owed by the parties to the Petitioner's parents and that the Petitioner (Respondent by way of Counter-Petition) shall indemnify and save harmless the Respondent (Petitioner by way of Counter-Petition) for all such loans.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Petitioner (Respondent by way of Counter-Petition) shall have her costs in the amount of $500.00, payable by the Respondent (Petitioner by way of Counter-Petition) from the proceeds of the sale of the matrimonial home.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that pending the sale of the matrimonial home the Respondent (Petitioner by way of Counter-Petition) shall pay to the Petitioner (Respondent by way of Counter-Petition) for her maintenance and support the sum of $600.00 monthly commencing August 1, 1981, and on the first day of each and every month thereafter until the completion of the sale of the matrimonial home.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the parties hereto shall be at liberty to apply for an Order for the sale of the said matrimonial home.

AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the furnishings in the matrimonial home shall be divided between the parties according to list attached to and forming part of this Order.

In reassessing the appellant to include the $7,500 in computing her income for the year under review the respondent relied on paragraph 56(1)(b) of the Income Tax Act. The question which must be addressed to resolve this matter is this: was the $7,500 received by the appellant as an allowance payable on a periodic basis for her maintenance? The appellant is clearly within the other requirements of the paragraph. It will be seen from the fifth paragraph of the Decree Nisi that the amount to be paid by way of maintenance is the fixed sum of $7,500, payable in four equal instalments within a predetermined time frame. Authority exists from which it can be said that this kind of an arrangement is not an allowance payable on a periodic basis for the maintenance of the recipient within the meaning of paragraph 56(1)(b), but is in substance a final, lump-sum maintenance award payable in four instalments and not within the paragraph.

There is, however, a recent decision of the Federal Court — Trial Division which refutes this notion and which I regard as binding on me. I am referring to Hanlin v The Queen, [1985] 1 CTC 54; 85 DTC 5052. In this case a Judgment By Way of Decree Nisi was granted on April 24, 1979, by the Supreme Court of British Columbia to Mrs Hanlin. It provided, inter alia, for certain maintenance payments to be made to Mrs Hanlin in accordance with paragraph numbered “1” of a separation agreement dated April 24, 1979, between her and her then husband. A total of $76,000 was to be paid as follows:

1. The husband agrees to pay to the wife in any event for her maintenance per iodic sums as follows:

(a) on April 24th, 1979, the sum of $18,000.00;

(b) on May 1st, 1979 and on the 1st day of each and every month thereafter to December 1st 1979, the sum of $1,000.00;

(c) on Jnuary 1st, 1980, the sum of $19,000.00;

(d) on February 1st, 1980, and on the 1st day of each and every month thereafter up to December 1st, 1980, the sum of $1,000.00;

(e) on January 1st, 1981, the sum of $17,000.00;

(f) on February 1st, 1981 and on the 1st day of each and every month thereafter up to April 1st, 1981 the sum of $1,000.00.

After reviewing a number of authorities Mr Justice Dubé held that these payments were an allowance payable on a periodic bsis for the maintenance of the recipient thereof within the meaning of paragraphs 60(b) and

(c) of the Act. It will be noted that at 56 (DTC 5054) His Lordship cited, with apparent approval, the judgment of Jackett, P (as he then was) in MNR v Hansen, [1967] CTC 440; 67 DTC 5293. I also regard Hansen as authority contrary to the position of the appellant in the appeal at hand.

In the light of the foregoing the appeal cannot succeed and accordingly it is dismissed.

Appeal dismissed.