Date: 20020702

Docket: 2001-1932-IT-I

BETWEEN:

ROBERT FRASER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Order

Bowie J.

[1]            I heard this appeal under the Court's informal procedure at Edmonton, Alberta. It is from the disallowance by the Minister of National Revenue of the Appellant's claim that in computing his income under the Income Tax Act [1] for the year 1999 he is entitled to deduct an amount paid by him in that year as child maintenance. Mr. Fraser and the mother of his child have never been married, nor have they lived together in a conjugal relationship. After the birth of their child they entered into an agreement under section 6 of the Alberta Parentage and Maintenance Act, [2] and that agreement was filed in the Alberta Court of Queen's Bench.

[2]            Both parties acknowledged at the hearing that the facts of this case are indistinguishable from those in Hewko v The Queen. I am today releasing Reasons for an Order in that case requiring counsel for the Respondent to serve Notice of a Constitutional Question on the provincial Attorneys General to comply with section 57 of the Federal Court Act. [3] A copy of those Reasons is appended hereto. The same constitutional question as to the validity of section 34 of the Maintenance Enforcement Act [4] of Alberta must be addressed in this case, and so I am making an Order in this case in the same terms as my Order in Hewko, for the same reasons. Both cases may then be reopened at the same time to hear submissions as to this issue.

Signed at Ottawa, Canada, this 2nd day of July, 2002.

"E.A. Bowie"

J.T.C.C.

2001-3255(IT)I

BETWEEN:

HOWIE A. HEWKO,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard in part on February 21, 2002, at Edmonton, Alberta, by

the Honourable Judge E.A. Bowie

Appearances

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Margaret McCabe

ORDER

                IT IS HEREBY ORDERED THAT counsel for the Respondent shall serve upon the Appellant and upon the Attorney General for each province a Notice of Constitutional Question in essentially the form of the Notice which is Appendix "A" to this Order, together with a copy of the Reasons for Order, not later than July 31, 2002, and shall file proof of service thereof not later than August 15, 2002.

IT IS FURTHER ORDERED THAT the hearing of this appeal shall be reopened, to be continued by telephone conference at a time to be fixed by the registry.

Signed at Ottawa, Canada, this 2nd day of July, 2002.

"E.A. Bowie"

J.T.C.C.

APPENDIX "A"

COURT

STYLE OF CAUSE

NOTICE OF CONSTITUTIONAL QUESTION

You are hereby advised that the constitutional validity of section 34 of the Maintenance Enforcement Act, R.S.A. 1985, c. M-0.5 (now R.S.A. 2000, c. M-1 s. 41) has been called into question in this proceeding, and that a continuation of the hearing will be convened by telephone conference to hear submissions with respect to that issue. Those Attorneys General who wish to make submissions to the Court as to the validity of this provision should so inform the Court, before August 31, 2002 by letter addressed to:

The Registrar

Tax Court of Canada

200 Kent Street,

Ottawa, ON K1A 0M1

Arrangements for the continuation of the hearing by conference call will be made by the Registry with the parties and those Attorneys General who indicate that they wish to be heard.

The material facts giving rise to this constitutional question are found in the Reasons for Order of The Honourable Judge E.A. Bowie accompanying this Notice.

The legal basis for this constitutional question is [basis of the challenge to be inserted by counsel for the Respondent]

Dated at Edmonton, Alberta this    day of       2002.

_________________________________________________

Counsel for the Attorney General of Canada

[Address for Service]

TO:          The Appellant

The Attorney General of each province

Date: 20020702

Docket: 2001-3255(IT)I

BETWEEN:

HOWIE A. HEWKO,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR ORDER

Bowie J.

[1]            I heard this appeal under the Court's informal procedure at Edmonton, Alberta. It is from the disallowance by the Minister of National Revenue of the Appellant's claim to deduct in computing his income an amount paid by the him as child maintenance in the year 1999, and it raises questions as to the interaction of the Income Tax Act [5]of Canada and the Maintenance Enforcement Act [6] of the province of Alberta (the MEA).

[2]            The facts are straightforward, and not in dispute. The Appellant is the father of a child borne by a person whom I shall simply call the mother. They were never married, nor have they ever lived together in a conjugal relationship. They entered into a written agreement, signed by them both, under section 6 of the Alberta Parentage and Maintenance Act. [7] The Appellant has made the payments that he was required to make under that agreement. In filing his returns for the taxation years 1998 and 1999, he claimed to be entitled to deduct those payments in the computation of his income under the Act. Initially he was assessed on that basis. For 1998 he was reassessed to disallow the payments, and then reassessed to allow them. For 1999 he was less fortunate; he was reassessed only once, and that to disallow the deduction he had claimed. It is from that reassessment that he now appeals.

[3]            It is understatement to say that both the history and the present provisions of the Act governing the right of a taxpayer to deduct maintenance payments are complex. They are in fact mind-numbing. However, for present purposes it is sufficient to say that since the Act first allowed for the deduction of child maintenance payments made by one parent to the other in circumstances where they had never been married or lived together conjugally, one requirement for deductibility has been that the payments be made pursuant to a court order. Under the present version, which governs this case, this requirement appears as part of the definition of "support amount" found in subsection 56.1(4), which is made applicable to section 60 as well. That definition reads:

56.1(4)                     The definitions in this subsection apply in this section and section 56.

"support amount" means an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and

(a)            the recipient is the spouse or former spouse of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage and the amount is receivable under an order of a competent tribunal or under a written agreement; or

(b)            the payer is a natural parent of a child of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province.

For the Appellant to succeed, then, there must be a court order, or else he and the child's mother must be shown to be spouses. I shall return to the latter possibility.

[4]            The Appellant's case rests upon the definition section of the MEA. It provides, so far as is relevant, the following.

Definitions

1(1) In this Act

                ...

(e)            "maintenance order" means an order or interim order of a court in Alberta, a Queen's Bench protection order under the Protection Against Family Violence Act or an Order, other than a provisional order that has not been confirmed, registered under the Reciprocal Enforcement of Maintenance Orders Act that has a provision requiring the payment of maintenance.

1(2)          An agreement entered into under section 6 of the Parentage and Maintenance Act or section 51 of the Income Support Recovery Act is deemed to be a maintenance order under this Act.

1(3)          A maintenance agreement entered into under the Child Welfare Act is deemed to be a maintenance order under this Act.

The MEA makes detailed provisions for the enforcement of maintenance orders by the Director of Maintenance Enforcement, whose office is established by section 4. Section 12 reads:

Enforcement

12(1)        The Director or a creditor may file with the Court of Queen's Bench a maintenance order that is not otherwise filed with the Court and, on being filed, the parts of the maintenance order that relate to maintenance are deemed to be a judgment of the Court of Queen's Bench.

12(2)        If a maintenance order filed under subsection (1) was made by the Provincial Court, the Court of Queen's Bench may from time to time vary the order either by altering the times of payment or by increasing or decreasing the amount, or may temporarily suspend the order as to the whole or any part of the money so ordered to be paid and may again revive the order wholly or in part, as the Court of Queen's Bench considers appropriate.

The agreement in question here was filed with the Alberta Court of Queen's Bench under subsection 12(1). The question before me, put shortly, is whether sections 1 and 12 of the MEA cause an agreement entered into under section 6 of the Parentage and Maintenance Act, and filed under subsection 12(1), to be "an order made by a competent tribunal in accordance with the laws of [Alberta]" for the purposes of the Income Tax Act.

[5]            Counsel for the Respondent referred me to two earlier decision of this Court in which exactly the same issue has been decided. In Fantini v. The Queen,[8]Bowman J. (as he then was) held that the Alberta statute could have no such effect. He said:

... This is not a constitutional matter of legislative competence. It is a simple matter of statutory construction. As James L.J. said in Ex parte Walton; In re Levy, 17 Ch. D. 746 at 756:

When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.

That observation was made in the context of the interpretation of one statute. It applies a fortiori in this case. Here we have the Minister of National Revenue seeking to transpose a provincial statutory fiction into a federal statute. That cannot be done. Of course Parliament could by appropriate language in a federal statute adopt, for the purposes of that statute, a provincial statutory fiction. That is not however what happened here. The point seems self-evident.

I am not unmindful of the decision of the Federal Court of Appeal in Hillis v. The Queen, 83 DTC 5365 where the effect of a deeming provision in a Saskatchewan statute was considered in relation to when an estate became indefeasibly vested. This I think is an illustration of the principle, as stated in Dale v. The Queen, 97 DTC 5252, that the Minister takes legal relationships between subjects as he finds them and they are in most cases governed by provincial law. It does not follow from that case that something that is deemed to be something that it is not for the purposes of a provincial statute can have that artificial meaning apply for the purposes of the Income Tax Act.

In that case, the Appellant was the custodial parent and the recipient of the maintenance payments. Judge Bowman held that she was not liable to include them in her income for the year.

[6]            The same point came before Judge Teskey in Hollands v. The Queen.[9] He took a different view of the matter from Judge Bowman. Referring to the passage from Judge Bowman's reasons for judgment that I have quoted, he said:

I respectfully disagree with this position. By using the phrase "an order made by a competent tribunal in accordance with the laws of a province" in paragraph 56.1(4)(b) of the Act, Parliament has decided to transpose the laws of a province concerning orders into a federal statute. If the laws of a province operate to create a statutory fiction then it is not for the Minister to decide otherwise. The agreement therefore is a court order.

The Appellant before Judge Teskey was the non-custodial parent seeking to deduct the payments that he had made. His appeal too was allowed. Judge Teskey also referred to the Federal Court of Appeal decisions of Hillis v. The Queen[10] and Dale v. The Queen.[11]

[7]            A provincial legislature may, as to subject matters assigned to the provinces by section 92 of the Constitution Act, 1867, deem a thing to be that which in reality it is not. Provided that deeming is not a colourable intrusion upon the legislative field assigned to Parliament, it can be effective for all purposes, if that is what the legislature intends. In such a case, the legal status of the thing deemed is established by the provincial law, for purposes of both federal and provincial statutes. However, as Bowman A.C.J. pointed out in Fantini, the extent to which the deeming applies must be ascertained as a matter of construction of the provincial legislation. It is quite clear, in my view, from both the context and the language of subsection 1(2) of the MEA, that its operation is limited to the confines of that act. First, it is found in a section which deals with definitions. That suggests that its operation is limited to the act in which it is found. Second, the agreement is deemed to be a maintenance order "under this Act". That, too, suggests that the operation of the deeming provision is limited to the purposes of the MEA. Its purpose is to bring an agreement within the expression "maintenance order", which is defined immediately above to mean one of a number of types of orders there referred to, including orders of courts outside the province that have been registered under the Reciprocal Enforcement of Maintenance Orders Act. The MEA creates an office called the Director of Maintenance Enforcement. Its whole purpose is to provide for the enforcement of certain types of court orders by the Director, for the benefit of children, spouses and former spouses who are the beneficiaries of those orders. For that purpose, the Director is given certain powers, and it is only for that purpose that the agreement here in question, as well as agreements made under the Income Support Recovery Act and the Child Welfare Act, are deemed to be within the expression "maintenance order" when it is used in the MEA.

[8]            Does section 12, which deems a maintenance order filed with the Court of Queen's Bench to be a judgment of that Court, have effect beyond the confines of the MEA? I do not believe it does. Standing alone, it might appear to, but it must be read with section 1. If the deeming of the agreement to be a maintenance order is    limited to the purposes of the MEA, then the operation of section 12 on that Order must equally be limited. I conclude, therefore, that the agreement pursuant to which the Appellant made the maintenance payments is not "¼ an order made by a competent tribunal in accordance with the laws of a province ¼" for purposes of the Income Tax Act.

[9]            As I have said earlier, the only other avenue by which the Appellant could bring his payments within the definition of support payments would be to show that he is a spouse, or former spouse, of the mother of his child, to whom he made the payments. Ms. McCabe, counsel for the Respondent, very properly brought section 34 of the MEA to my attention during the hearing. That section reads:

34.            For the purposes of the Income Tax Act (Canada) a spouse includes a person who is required to make periodic payments in respect of maintenance under a written agreement or a maintenance order.

Ms. McCabe did not argue that it was ultra vires, because, she said, it had only come to her attention at the last moment, and there had been no time for her to give the required notice to the Attorneys General of the provinces under section 57 of the Federal Court Act. [12] If I were to give effect to that section, it would have the result of overcoming the requirement of the Income Tax Act that the maintenance payments, to be deductible, must be made pursuant to a court order and not simply an agreement. Obviously, a question as to its constitutional validity arises, and must be dealt with. I am therefore directing that counsel for the Respondent serve on the provincial Attorneys General a notice in the form that is Appendix "A" to my Order. Once the Attorneys General have had notice, the hearing of the appeal will be reconvened by telephone conference to hear submissions as to the validity of section 34 of the MEA. I regret that this will delay the final resolution of this appeal, but in the circumstances, I see no proper alternative.

Signed at Ottawa, Canada, this 2nd day of July, 2002.

"E.A. Bowie"

J.T.C.C.

COURT FILE NO.:                                                 2001-3255(IT)I

STYLE OF CAUSE:                                               Howie A. Hewko & Her Majesty the Queen

PLACE OF HEARING:                                         Edmonton, Alberta

DATE OF HEARING:                                           February 21, 2002

REASONS FOR ORDER BY:                               The Honourable Judge E.A. Bowie

DATE OF ORDER:                                                July 2, 2002

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Margaret McCabe

COUNSEL OF RECORD:

For the Appellant:                

Name:                                N/A

Firm:                  N/A

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

COURT FILE NO.:                                                 2001-1932(IT)I

STYLE OF CAUSE:                                               Robert Fraser & Her Majesty the Queen

PLACE OF HEARING:                                         Edmonton, Alberta

DATE OF HEARING:                                           May 31, 2002

REASONS FOR ORDER BY:                               The Honourable Judge E.A. Bowie

DATE OF ORDER:                                                July 2, 2002

APPEARANCES:

Agent for the Appellant:                     George A. Horne

Counsel for the Respondent:              Mark Heseltine

COUNSEL OF RECORD:

For the Appellant:                

Name:                                N/A

Firm:                  N/A

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-1932(IT)I

BETWEEN:

ROBERT FRASER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard in part on May 31, 2002, at Edmonton, Alberta, by

the Honourable Judge E.A. Bowie

Appearances

Agent for the Appellant:             George A. Horne

Counsel for the Respondent:      Mark Heseltine

ORDER

          IT IS ORDERED THAT counsel for the Respondent shall serve upon the Appellant and upon the Attorney General for each province a Notice of Constitutional Question in essentially the form of the Notice which is Appendix "A" to this Order, together with a copy of the Reasons for Order, not later than July 31, 2002, and shall file proof of service thereof not later than August 15, 2002.

IT IS FURTHER ORDERED THAT the hearing of this appeal shall be reopened, to be continued by telephone conference at a time to be fixed by the registry.

Signed at Ottawa, Canada, this 2nd day of July, 2002.

"E.A. Bowie"

J.T.C.C.

APPENDIX "A"

COURT

STYLE OF CAUSE

NOTICE OF CONSTITUTIONAL QUESTION

You are hereby advised that the constitutional validity of section 34 of the Maintenance Enforcement Act, R.S.A. 1985, c. M-0.5 (now R.S.A. 2000, c. M-1 s. 41) has been called into question in this proceeding, and that a continuation of the hearing will be convened by telephone conference to hear submissions with respect to that issue. Those Attorneys General who wish to make submissions to the Court as to the validity of this provision should so inform the Court, before August 30, 2002 by letter addressed to:

The Registrar

Tax Court of Canada

200 Kent Street,

Ottawa, ON K1A 0M1

Arrangements for the continuation of the hearing by conference call will be made by the Registry with the parties and those Attorneys General who indicate that they wish to be heard.

The material facts giving rise to this constitutional question are found in the Reasons for Order of The Honourable Judge E.A. Bowie accompanying this Notice.

The legal basis for this constitutional question is [basis of the challenge to be inserted by counsel for the Respondent]

Dated at Edmonton, Alberta this      day of            2002.

_________________________________________________

Counsel for the Attorney General of Canada

[Address for Service]

TO:       The agent for the Appellant

The Attorney General of each province