A W Prociuk (orally: January 27, 1975):
1 The appellant, William Edward Horkins, QC, appeals from the respondent's reassessment dated May 10, 1973, and confirmed on February 21, 1974, in respect of the 1971 taxation year, wherein the deduction of the sum of $5,000 claimed by the appellant as alimony payments made to his former wife, Marion C Horkins, was disallowed on the ground that the said payments were not made pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written separation agreement within the meaning of paragraphs (l) and/or (la) of subsection 11(1) of the Income Tax Act as it was then in force.
2 After filing his reply to the notice of appeal, the respondent, hereinafter referred to as “the Minister”, applied to the Tax Review Board on August 26, 1974 pursuant to subsection (1) of section 174 of the Income Tax Act for determination of the question:
... whether the whole or any part of the payments in the amount of $5,500 alleged to have been made in 1971 by William Edward Horkins to Marion C Horkins is:(a) by virtue of either paragraph (l) of subsection (1) of Section 11 or paragraph (la) of subsection (1) of Section 11 deductible by William Edward Horkins in computing his income for 1971 and
(b) by virtue of either paragraph (d) of subsection (1) of Section 6 or paragraph (da) of subsection (1) of Section 6 to be included in computing income for 1971 by Marion C Horkins.
3 Pursuant to an order of the Tax Review Board dated October 4, 1974, appropriate notices of the hearing have been served on the parties concerned for the determination of the said question, and for disposition of the above appeal accordingly, at the current sittings of the Board in Toronto.
4 At the commencement of the hearing, learned counsel for the appellant William E Horkins advised the Board that the appellant was not contesting the issue in respect of the sum of $1,500, which represents the sum of $500 paid by the appellant to his wife prior to the commencement of proceedings for interim alimony by way of notice of motion plus the $1,000 which he paid pursuant to a decree absolute some time in the year 1972. This left the sum of $4,000 in issue being the total of five payments $800 each for the months of June, July, August, September and October of 1971 to Marion C Horkins prior to a decree absolute, dated November 15, 1971 made by the Honourable Mr Justice Stark of the Supreme Court of Ontario.
5 Accordingly, the question is amended to substitute “$4,000” for the amount of $5,500 originally set out therein.
6 Marion C Horkins has not been reassessed by the Minister of National Revenue, and therefore she has not appealed. She was represented by counsel on her behalf before the Board.
7 Briefly, the facts are as follows: (1) Marion C Horkins commenced an action against her husband, William Edward Horkins, for divorce and alimony in the Supreme Court of Ontario. (2) On April 20, 1971 her solicitors filed a notice of motion in that action for interim alimony of $1,000 per month (see Exhibit A-1). (3) On June 4, 1971, pursuant to the provisions of Rule 386(3) of the Rules of Practice of the Province of Ontario, William Edward Horkins filed a notice of submission in the said Court to make payments of $800 monthly (see Exhibit A-2). (4) There appears to have been some discussion and negotiation by the solicitors for each party as to the quantum of the said interim alimony, but no agreement was reached. (See, in particular, affidavit of Robert Patrick Armstrong, former counsel for Marion C Horkins in the divorce proceedings, filed as Exhibit A-5 on behalf of Marion C Horkins; and in particular, Exhibits A and B annexed thereto, Exhibit A being a letter from the solicitors of Marion C Horkins; and Exhibit B being a copy of the appellant's answer in the divorce proceedings.) (5) William E Horkins did make payments to Marion C Horkins pursuant to his notice of submission in the total sum of $4,000 as stated earlier. (Exhibit A-4 is a photocopy of the cancelled cheques representing the said payments.)
8 Learned counsel for the appellant William E Horkins submitted that such payments were made pursuant to a written agreement which, he stated, is a factual separation agreement when all the above documents are put together.
9 He further submitted that Rule 386 in the circumstances of this case is an order. The rule in question appears under the heading of “Interim Alimony Rule 386 (1), (2), (3), (4), (5) and (6)” and reads as follows:
386. (1) In rules 386 to 388 interim alimony shall be deemed in a matrimonial cause to include monies payable by way of alimony or an alimentary pension by either spouse for the maintenance of the other and monies payable for the maintenance of the children of the marriage pending the hearing and determination of the petition.
(2) In an alimony action or in a matrimonial cause, the defendant may, at any time before being served with notice of motion for interim alimony, give notice in writing that he submits to pay the interim alimony and interim disbursements, as demanded by the plaintiff in the endorsement of the writ or in the petition for divorce, and in that case no motion for interim alimony shall be made until there has been a default in payment, and in case of default, affidavits being filed verifying the endorsement and notice and the default, an order for payment of the sum demanded shall be issued on praecipe. (Amended, OReg 285/71, s 10.)
(3) The defendant may give notice in writing that he submits to pay such less sum as he deems proper and names in his notice.
(4) Where a notice has been so served and the plaintiff accepts the amount therein mentioned as sufficient, the defendant shall pay thereafter the sum so offered as interim alimony, and no order for interim alimony shall be made until there has been default in payment.
(5) Where a notice has been so served, the plaintiff's interim disbursements may be taxed without order.
(6) Where the plaintiff does not accept the amount offered and upon motion for interim alimony it is found that the sum so offered is reasonable, and the defendant pays to the plaintiff the sum so offered, no order for interim alimony shall be made until there has been default in payment.
10 It was open to Marion C Horkins to proceed further with her motion for an order for interim alimony, which course she did not take and no order for interim alimony was made.
11 Counsel for Marion C Horkins submitted there was no written separation agreement between the parties, and pleadings filed in the divorce action by the respective solicitors do not constitute such an agreement. Unless there are authorities contrary to that proposition of which I am not aware, I am in agreement with that submission.
12 As to the submission that Rule 386 by itself constitutes an order, or an equivalent of an order, of the court of competent jurisdiction herein when no further proceedings are taken following the filing of a notice of submission, I must confess that I encountered considerable difficulty in arriving at a decision in this regard. While the provisions of the said Rule are, obviously, for the purpose of preventing unnecessary and costly litigation in interlocutory matters, there appears to be no jurisprudence to indicate that it can be construed as a court order or decree without the actual issuance of same by the court on application by any party entitled thereto.
13 Accordingly, the question is determined on the basis that no part of the said $4,000 is deductible by the appellant William E Horkins in the taxation year 1971 pursuant to the provisions of paragraph 11(1)(l) or (la) of the Income Tax Act and it follows that no part of the said $4,000 is to be added to the income of Marion C Horkins in the said taxation year pursuant to paragraphs (d) or (da) of subsection 6(1) of the said Act.
14 The appeal of the appellant William Edward Horkins is dismissed.
Email this Content