Citation: 2006TCC1
Date: 20060103
Docket: 2004-913(IT)I
BETWEEN:
DENIS DU CAP,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
and
SUZANNE PELLETIER,
Added Party.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] The case at bar involves appeals in respect of the 2000, 2001 and 2002 taxation years. At issue is whether the amounts paid by the Appellant were paid under a fully valid divorce judgment.
[2] An order was issued on January 11, 2005, under section 174 of the Income Tax Act (the "Act") joining Suzanne Pelletier to the appeals of the Appellant.
[3] The reasons for appeal, as stated in the Notice of Appeal, are as follows:
[TRANSLATION]
-PRINCIPLE
Non-retroactivity of the Act:
...
-TERRITORIALITY AND JURISDICTION
Judgment of the Court of Alberta is invalid in respect of the part concerning the non-taxation of support payments.
Jurisdiction is retained in Quebec because the principle of territoriality of the Divorce Act, which is subject to the federal legislation governing support payments, is overridden, as the federal legislator has expressly ceded this right in respect of child support payments to the province of Quebec.
The provincial legislator has retained in its transitional provisions the tax regime in respect of support payments for cases filed with the Court BEFORE the entry into force of the new act regarding support payments in May 1997.
...
-TAXATION
In view of the legislative provisions and judgments handed down in Quebec, and specifically the decision by Judge Corriveau on May 12, 1997, it was expressly decided in this particular case that the jurisdiction of the Superior Court of Quebec, in respect of the adjuncts to the divorce, which override the payment of taxed support payments in respect of the judgments handed down by Hubert Walters J. and Marcel Simard J. of the Superior Court, which, moreover, have never been suspended or annulled. These orders of the Superior Court of Quebec are still in force and executory.
[4] The facts on which the Minister of National Revenue (the "Minister") based his reassessments are set out at paragraph 2 and 7 of the Reply to the Notice of Appeal (the "Reply") as follows:
[translation]
2. In filing his income tax returns for the 2000, 2001 and 2002 taxation years, the Appellant claimed the amount of $7,200 for each of the taxation years as support payments or other allowance payable periodically.
...
7. In establishing reassessments for the 2000, 2001 and 2002 taxation years, and confirming them, the Minister assumed the same facts, namely:
(a) the Appellant and Suzanne Pelletier were married on May 13, 1983;
(b) two children were born of the union of the Appellant and Suzanne Pelletier:
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(i)
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Maxim, born in 1987;
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(ii)
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Cédric, born in 1990;
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(c) On March 10, 1993, an interim order was issued by the Honourable Judge Hubert Walters of the Superior Court of Quebec which stipulated, among other things, that the Appellant would pay Suzanne Pelletier support payments in the amount of $600 monthly for herself and her two children;
(d) Suzanne Pelletier has always included, pursuant to the order dated March 10, 1993, in her income calculation, the amount received as income from support payments or another allowance payable periodically, in respect of each of the taxation years from 1993 to 1996, and for the months of January to April inclusive in respect of the 1997 taxation year;
(e) after April 1997, Suzanne Pelletier never considered the amount of $600 received monthly as income from support payments;
(f) the Appellant, for his part, has always claimed an annual deduction, since the 1993 taxation year, in calculating his income, as support payments or another allowance payable periodically;
(g) the Appellant and Suzanne Pelletier were living apart during the taxation years at issue;
(h) a divorce judgment dated April 21, 1997, was issued between the Appellant and Suzanne Pelletier and took effect on the thirty-first day following the date of the judgment;
(i) following the divorce judgment of the Alberta Court of Queen's Bench dated April 21, 1997, issued by the Honourable Judge J.C. Hawco, the Judge ordered the following, among other provisions:
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(i)
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Suzanne Pelletier received custody of the two children,
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(ii)
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Denis Du Cap was ordered to pay Suzanne Pelletier a monthly amount of $300 for each child, as support for the children, in the following terms:
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"It is ordered:
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That the Respondent shall pay to the Petitioner for the maintenance of the infant children of the marriage the sum of three hundred ($300.00) dollars per child per month, tax free in contemplation of the Federal Guidelines, commencing on the 1st day of May, 1997, and a like payment due and payable on the first day of each and every month thereafter until ... ";
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(j) the Minister is of the opinion that the commencement date of the child support payments, under the divorce judgment of the Alberta Court of Queen's Bench dated April 21, 1997, is May 1, 1997, since that is the date stipulated in the divorce judgment;
(k) the Minister determined that the amount of $7,200 paid by the Appellant to Suzanne Pelletier in respect of each of the taxation years 2000, 2001 and 2002, is not deductible as a maintenance or other allowance payable periodically, in the calculation of his income.
[5] Paragraph 2 and subparagraphs 7(a) to 7(c), 7(f) and 7(g) were admitted. The application of the divorce judgment, in respect of the change in the support payments, was denied. Subparagraphs 7(j) and 7(k) were denied.
[6] Evidence was submitted but there was no testimony.
[7] The judgment of Walters J. of the Superior Court of Quebec dated March 10, 1993 mentioned at paragraph 7(c) of the Reply (above), was tabled as Exhibit A-1. The following are the relevant passages:
[translation]
...
In the context of divorce proceedings, the Petitioner has submitted a request for provisional measures involving a number of conclusions on which agreement has been reached, leaving only a decision in respect of the support claimed for the two minor children, of whom she has custody, since she is self-supporting.
...
We must take into consideration the fact that the parties, who have almost identical incomes, must contribute on the same basis to the needs of the children, not forgetting the tax considerations. After analysing the respective financial situation of each party, we have established the amount of support at $600 per month.
...
ORDERS the respondent to pay to the Petitioner for herself and for her minor children MAXIM and CEDRIC, support payments in the amount of $600 per month, to be deposited to the bank account of the Petitioner with effect from the date of the hearing of the petition, namely January 15, 1993.
[8] A judgment of this nature allowed support payments to be deducted in calculating the income of the Appellant and required the inclusion of the same amount in the calculation of the income of the Added Party.
[9] The judgment of Simard J. of the Superior Court of Quebec dated September 14, 1994, mentioned in the Notice of Appeal, was filed as Exhibit A-2. I will cite the relevant passages:
[translation]
...
The Defendant requests a reduction in the support payments of $600.00 a month for his two children, ...
The Petitioner, for her part, requests an increase in the support payments on the grounds that the cost of living is now higher in Alberta.
...
ORDERS the Respondent to pay to the Petitioner for herself and for her minor children MAXIM and CEDRIC, support payments of $600 per month, to be deposited to the bank account of the Petitioner with effect from the date of the hearing of the petition, namely January 15, 1993.
[10] A Divorce Judgment and Corollary Relief Order was handed down in Alberta on April 21, 1997 (Exhibit I-1):
4. IT IS ORDERED:
THAT the Respondent shall pay to the Petitioner for the maintenance of the infant children of the marriage the sum of Three Hundred ($300.00) Dollars per child per month, tax free in contemplation of the Federal Guidelines, commencing on the 1st day of May, 1997, and a like payment due and payable on the first day of each and every month thereafter until each respective child attains the age of eighteen years or becomes self-supporting or married, whichever occurs firstly; provided however, that if a child continues his/her education beyond the age of eighteen years, the said payments for that child shall continue until the child attains the age of twenty-one years, or until the child discontinues his/her education, whichever occurs first.
[11] It should be noted that the divorce judgment orders the payment of child support beginning on May 1, 1997.
[12] As of May 1, 1997, which is the date given in the divorce judgment of the Alberta Court, Ms. Pelletier ceased to include the amount of support paid by Mr. Du Cap in the calculation of her income.
[13] The judgment of Judge Corriveau of the Quebec Superior Court (Family Division) mentioned in the Notice of Appeal, dated May 12, 1997, was filed as Exhibit A-3. I will cite the following passage:
[translation]
The case law has established that in some cases, the consent of the adverse party is required for a discontinuance. For example, the case law
"does not recognize the right to withdraw unilaterally from a writ or a judgment that conferred rights on the opposing party ... [1983].Sup. Ct. 1138, [1988] R.F.L. 216
The case law also refuses to recognize the right to abandon a petition in order to avail oneself of the provisions of new legislation. [1990] R.J.Q. 2115 (C.A.)
Suzanne Dallaire abandoned her divorce proceedings in Quebec in order to resume the same proceedings in Alberta, whereas the evidence shows that the part of the country to which Suzanne Dallaire, who is a member of the Canadian Forces, is most connected is the Province of Quebec. All her relatives are still there and, in accordance with the judgment of the Honourable Simard J., she agreed to move to Alberta for a few years only, with the intention of returning to Quebec subsequently. As far as the Court is concerned, the only purpose of the abandonment is to obtain from another Court conclusions that are different from those obtained in Quebec or to avoid the need for the Respondent to travel for the purposes of her case. The Court cannot accept either case.
The Superior Court of Quebec remains seized with the petition for divorce submitted by Suzanne Dallaire and her abandonment is set aside and declared null.
[14] Although the date of its judgment is subsequent to that of the judgment of the Alberta Court, the Judge did not seem to be aware that the divorce judgment had already been handed down by that Court. He pronounced only on the unilateral waiver by Suzanne Dallaire [Pelletier].
[15] Mr. Du Cap filed an appeal against the divorce judgment, but did not pursue his appeal. On July 22, 1998, the Albert Court of Appeal handed down a judgment and declared (Exhibit I-4):
...
THIS MATTER having come before the Honourable Mr. Justice J.A. BERGER, at the City of Edmonton this day, and having heard what was alleged by Counsel for both parties:
1. IT IS ORDERED AND ADJUDGED that the appeal herein is struck. The Respondent, Suzanne Dallaire, is entitled to costs.
...
[16] This judgment was countersigned by Counsel for both parties on February 8, 1999, with the notation "approved as the judgment made".
[17] A judgment by Silcoff J. of the Quebec Superior Court, dated May 9, 2005, was filed as Exhibit I-3. I will cite the following passages:
[translation]
[2] On April 30, 1997, the Honourable G.C. Hawco of the Alberta Court of Queen's Bench, issued a divorce judgment (the "Divorce Judgment").
[3] Initially, the Defendant filed an appeal against the Divorce Judgment, but subsequently abandoned his appeal. On February 8, 1999, the Alberta Court of Appeal issued a judgment and stated:
IT IS ORDERED AND ADJUDGED that the appeal herein is struck. The Respondent, Suzanne Dallaire, is entitled to costs.
[4] The judgment of the Court of Appeal was approved and countersigned by Counsel for both parties.
[5] The Divorce Judgment ordered the Defendant to pay to the Petitioner, for the benefit of his minor children, support in the amount of $600 per month.
[18] The partial validity of the divorce judgment of the Alberta Court does not appear to have been raised before Judge Silcoff. The Judge acknowledges the judgment in its entirety in his own judgment and no doubts are expressed regarding the validity of the portion of the judgment concerning support payments.
Arguments
[19] Counsel for the Appellant referred to a decision by the Quebec Court of Appeal in C.P. v. C.B., Droit de la famille - 713 (SOQUIJ) (Q.C.A.), [1990] A.Q. No. 1433 (QL):
[translation]
Must a party be allowed to abandon a petition for divorce filed before May 15, 1989 for the purpose of filing a new petition for divorce, thereby subjecting the spouses to the new Act to favour economic equality between spouses (Act 146 of 1989 - now become c. 55 of the Statutes of Quebec 1989), thereby defeating the purpose of section 42, paragraph 3, which states that the provisions concerning the new family patrimony:
...
I conclude that the abandonment by the Appellant cannot be allowed, because there existed a legal situation under which the rights of the other party were sufficiently acquired, and that the abandonment would result in the loss of some of these rights acquired by the Respondent in the instant case (the reverse might also be true). In respect of the grounds of abuse of procedure, there are no grounds to consider this in view of my conclusion with regard to the abandonment.
[20] He asserts that one party cannot unilaterally abandon a petition for divorce and that the judgment of Simard J. confirmed this position.
[21] Counsel for the Added Party asserts that the divorce judgment is valid in its entirety, that it was countersigned and accepted by the parties and that Silcoff J. took it as the final valid document regarding support payments and that it should be given full effect.
[22] Counsel for the Respondent referred to a decision by the Federal Court of Appeal in Dangerfield v. Canada, [2003] F.C.A. No. 1930 (QL), in order to assert that the date on which an order given in a judgment takes effect may be subsequent to the date of the judgment.
[23] The following are the relevant passages:
... 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.
...
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 dates for different parts of the diverse orders they devise. Some orders 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.
Conclusion
[24] Under the Divorce Act, a judgment handed down pursuant to that act is valid throughout Canada. The Appellant failed to pursue his appeal with the Court of Alberta and on February 8, 1999, the Alberta Court of Appeal struck the appeal. This judgment by the Appeal Court was approved and countersigned by Counsel for both parties. A judgment of a Court acquires the authority of res judicata in respect of everything that it has considered, unless there has been, in the meantime, an appeal or a withdrawal procedure. Thus, the divorce judgment handed down by the Court of Alberta on April 21, 1997, is valid and this Court must give it its full effect.
[25] This judgment handed down on April 21, 1997, ordered the payment of child support beginning on May 1, 1997. The effective date is indeed May 1, 1997, since this is the date specified in the judgment in accordance with the definition of the "effective date" stipulated at paragraph 56.1(4) of the Act. This date may be subsequent to the date of the judgment as was ruled in Dangerfield, supra.
[26] In consequence, the Appellant cannot deduct child support in calculating his income and the Added Party is not required to include it in the calculation of their income. The appeal by the Appellant is dismissed.
Signed at Ottawa, Canada, this 3rd day of January 2006.
"Louise Lamarre Proulx"
Translation certified true
on this 26th day of June 2006
Monica F. Chamberlain, Reviser
