Date: 20031219
Docket: A-336-02
Citation: 2003 FCA 480
CORAM: LINDEN J.A.
BETWEEN:
MARNI DANGERFIELD
Applicant
- and -
HER MAJESTY THE QUEEN
Respondent
Heard at Winnipeg, Manitoba, on November 26, 2003.
Judgment delivered at Ottawa, Ontario, on December 19, 2003.
REASONS FOR JUDGMENT BY: LINDEN J.A.
CONCURRED IN BY: SEXTON J.A.
MALONE J.A.
Date: 20031219
Docket: A-336-02
Citation: 2003 FCA 480
CORAM: LINDEN J.A.
SEXTON J.A.
MALONE J.A.
BETWEEN:
MARNI DANGERFIELD
Applicant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
[1] The main issue in this application is whether a "commencement day" of May 1, 1997 was specified in a judgment of the Manitoba Court of Queen's Bench (the Court) in a family case that included a requirement for the payment of periodic child support to the applicant. If there was such a commencement day properly specified, the applicant need not pay the tax on the support payments which was reassessed for the year 1999. If not, the tax on the support payments must be paid by her.
FACTS
[2] The applicant and Paul Mountney cohabited and had a child together in 1991. They ceased to live together in March 1992. In 1996, the applicant's then counsel contacted Mr. Mountney by letter requesting payment of child support of $250 per month effective January 1, 1997. The letter stated that the amount was based on Federal Guidelines, SOR/97-175, for the implementation of new child support laws and would not be deductible by him, but would be tax-free to the applicant.
[3] In February, 1997, the appellant filed a petition in the Court seeking an order under the Family Maintenance Act, S.M.1977, c. 47, C.C.S.M. c. F20, for custody, child support, financial disclosure and a declaration of parentage. Mr. Mountney, then resident in British Columbia, was advised in the petition that was served on him that a failure to answer it could result in a judgment against him.
[4] The petition was heard on April 21, 1997. Mr. Mountney was not present. The letter to Mr. Mountney described above was included in the evidence presented to Justice Guertin-Riley (the Judge). The Judge orally granted relief as follows:
THE COURT: There will be declaration of paternity. There will be an order of sole custody. There will be an order of child support in the amount of $250 a month commencing May 1st. There will be an opportunity for Mr. Mountney to have this matter brought back for a review of child support following his disclosure of all his financial information, which, in the circumstances, will include information about his wife's income.
[5] As is customary, a Family Disposition Sheet was also signed by the Judge on April 21, 1997, containing these same terms. The formal judgment was prepared later by the applicant's then counsel and was signed by the Deputy Registrar on May 5, 1997. The front page of the judgment was dated April 21, 1997. There were five specific items contained in the judgment, four of which are not relevant to this case. The support payment provision reads as follows:
This Court orders and adjudges....
(c) The Respondent pay to the Petitioner for the support of the said child, the sum of $250.00 per month, payable on the first day of each and every month, commencing May 1, 1997.
[6] In the 1999 taxation year, the applicant received $3,182.00 in child support. She did not include this amount in her income, but Mr. Mountney did deduct this amount from his income on his tax return. The respondent reassessed the applicant. She appealed to the Tax Court, which ruled against her.
ANALYSIS
[7] Following the decision of the Supreme Court of Canada in Thibodeau v. The Queen, [1995] 1 C.T.C. 382, even though the government's right to tax support payments to the recipient was affirmed, it amended the legislation generally to eliminate, inter alia, the need to pay tax on these child support payments pursuant to orders or written agreements after a particular "commencement day". Subparagraph 56.1(4)(b)(iv) of the Income Tax Act, R.S.C. 1985, c. 1 (5th supp.) (the Act) contains the relevant commencement day definition:
| 56.1(4)(b) "commencement day" at any time of an agreement or order means:. . .
(iv) the day specified in the agreement or order, or any variation thereof, as the commencement day of the agreement or order for the purposes of this Act. |
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_56.1(4)(b) date d'exécution: quant à un accord ou une ordonnance: . . .
(iv) le jour précisé dans l'accord ou l'ordonnance, ou dans toute modification s'y rapportant, pour l'application de la présente loi. |
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[8] The problem in this case is that the Court judgment was pronounced on the 21st day of April 1997, it was formally signed on May 5, 1997, and the operation of clause (c) contained in it, dealing with child support, was expressly said to commence on May 1, 1997. There is no doubt that both judgments and orders are treated the same by the Court of Queen's Bench Rules, Man. Reg. 553/88.
[9] It is not contested that the judgment or order, as a whole, was effective on the day it was pronounced, according to Queen's Bench Rule 1.04.1, that is, on April 21, 1997. Nor is it contended that the May 5, 1997 date on which the judgment or order was signed had any significance for this appeal. What is at issue here is whether the part of the judgment or order dealing with child support could have a commencement day different than the April 21 effective date of the entire judgment or order, that is, May 1, 1997, the date specified in the clause dealing with the child support payments.
[10] The Tax Court Judge, who was apparently of the view that the entire order had to have a common commencement day, held that "the date support payments commence cannot be taken to be a 'commencement day' in respect of the order itself under subparagraph (b)(iv) of the definition of commencement day". He further concluded that "there is still no commencement day of the order itself." With all due respect, I disagree. The Tax Court Judge erred in law in coming to this conclusion. While it is necessary that an order for support have a commencement day (see: Pach v. The Queen and Rosenberg, [2003] F.C.A. 363, per Malone J.A.), the language in this order does specify a "commencement day" for the order to pay child support which complies with subparagraph 56.1(4)(b)(iv).
[11] The judgment or order of the Court, dated April 21, 1977, contained several clauses, some of which were individual orders within the overall document entitled "Judgment". As indicated above, the order or judgment begins as follows: "This Court orders and adjudges"... and then lists five particular items (a)-(e). No specific commencement day is specified for the entire order, nor for four of its clauses, dealing with custody and other matters, but clause (c) does contain a specific reference to a day on which the child support payments are to commence, which is particularly relevant for our purposes.
[12] Orders and judgments are often complicated documents dealing with numerous matters. A judgment or order sometimes contains multiple orders within the overall document. Often different parts of orders (and agreements for that matter) must have different effective dates. Consequently, it was legal error to hold that the section in issue requires that there be only one commencement day for all the aspects of a complicated order containing several individual components in order to be able to obtain the advantage of the provision. It is necessary to allow
Judges and the parties to agreements to specify different effective dates or commencement days
for different parts of the diverse orders they devise. Some order or parts thereof are even retroactive. This approach is in harmony with the legislative purpose of the provision to afford some tax relief to the custodial parents of fractured families. Needlessly technical interpretation that deprives custodial parents of tax relief granted to them by Parliament is to be avoided. The related case of Veilleux v. R., [2002] C.A.F. 201 supports this view. In that case, Mr. Justice Létourneau declared:
It seems important to me that a statutory provision not be interpreted so strictly that it hampers Parliament's intention with respect to that provision...
[13] In my view a commencement day for the support payments was specified in this case. This was the clear intention of the Judge who made the order in question. The transcript demonstrates conclusively that the Judge, inter alia, made a separate oral order, as part of the overall judgment rendered on April 21, 1997, that the support payments of $250 per month were to commence on May 1, 1997. There was some doubt expressed about the commencement date issue in the transcript, but it was resolved to the satisfaction of the Judge, who clearly wished to comply with the new legislation by specifying a commencement day that would allow the tax free treatment of the payments to the applicant. This view is reflected in the Family Disposition Sheet signed by the Judge on April 21, 1997, which has a separate entry under "support", which indicates that $250 per month is to be paid "commencing May 1, 1997". The other orders made in this document have no commencement day specified, for it was not necessary to do so for tax or any other purposes.
[14] That there was a commencement day specified is also clear from the documentation demonstrating that the parties intended to specify a commencement day for the child support payments in order to be able to avoid tax on the payments in accordance with the new legislation. The Tax Court Judge obviously understood that the applicant and her counsel intended to do this. In the letter dated December 10, 1996, which was included in the evidence, counsel for the applicant wrote to the father of the child informing him that, under the new law, the applicant "will not have to pay tax on this amount and you will not be permitted to deduct it." The father did not respond to this letter. The father not only did not respond to the letter, but he did not even appear at the hearing, indicating that he was willing to run the risk of the orders that were made against him. If he had any objection to the orders being sought against him he should have taken the necessary steps to defend himself. Paradoxically, however, he later proceeded to deduct the amount of the support payments from his declared income, contrary to the understanding of the applicant, counsel, and presumably the Judge who made the order.
[15] The argument that the provision requires express reference in the agreement or order to the effect that the commencement day is being specified "for the purposes of this Act" is without merit. The jurisprudence is clear that such a technical requirement is unnecessary. The requirement is only that the commencement day be included in the order for the purposes of the Act; the order need not expressly state that it is for the purposes of the Act. It is often perfectly obvious, as it was here, that the date is specified for purposes of the Act, and if it is not, evidence
may be led to that effect, as was done in this case.
[16] The application will be allowed, the Tax Court Judge's decision will be set aside and the appeal of the applicant from the reassessment of her 1999 taxation year will be allowed, with costs both here and below.
"A.M. Linden"
J.A.
"I agree
J. Edgar Sexton J.A."
"I agree
B. Malone J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-336-02
STYLE OF CAUSE: Marni Dangerfield v. Her Majesty the Queen
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: November 26, 2003
REASONS FOR JUDGMENT : LINDEN J.A.
CONCURRED IN BY: SEXTON J.A.
MALONE J.A.
DATED: December 19, 2003
APPEARANCES:
Mr. Thor Hansel FOR THE APPLICANT
Ms. Angela Evans FOR THE RESPONDENT
SOLICITORS OF RECORD:
Aikins, MacAulay & Thorvaldson FOR THE APPLICANT
Winnipeg
Mr. Morris Rosenburg FOR THE RESPONDENT
Deputy Attorney General of Canada