Date: 20050125
Docket: A-282-04
Citation: 2005 FCA 35
CORAM: DÉCARY J.A.
NADON J.A.
SEXTON J.A.
BETWEEN:
IRVIN KEW
Appellant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Vancouver, British Columbia on January 25, 2005.
Judgment delivered from the Bench at Vancouver, British Columbia on January 25, 2005.
REASONS FOR JUDGMENT OF THE COURT BY: SEXTON J.A.
Date: 20050125
Docket: A-282-04
Citation: 2005 FCA 35
CORAM: DÉCARY J.A.
NADON J.A.
SEXTON J.A.
BETWEEN:
IRVIN KEW
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Vancouver, British Columbia on January 25, 2005)
[1] This is an appeal from the decision of the Tax Court of Canada in which the Judge dismissed the Appellant's appeal with respect to the deductibility of alimony and maintenance and also with respect to disallowed investment interest charges. The latter issue was not appealed to this Court.
[2] The Appellant and his former spouse, in 1988 entered into a separation agreement which obligated the Appellant to pay
a) child support payments of $150 per month per child, totalling $450 per month;
b) half of the private school fees for the two sons;
c) all mortgage payments for the matrimonial home;
d) half of the cost of insuring the matrimonial home; and
e) half of the cost of the property taxes for the matrimonial home.
[3] The separation agreement also entitled the former spouse to receive $10,000 from the Appellant's share of the equity in the matrimonial home upon sale thereof.
[4] The Appellant fell into arrears with respect to his obligations under the separation agreement and the former spouse calculated she was owed $31,233.17 in support arrears for the period 1988 to 1995.
[5] In 1995 the former spouse offered to pay the Appellant $31,663 to buy out his interest in the matrimonial home and in addition offered to waive
a) her right to free residence in the matrimonial home, which required the Appellant to make mortgage payments on the matrimonial home;
b) her right to unpaid maintenance and other amounts accumulated over a period of eight years;
c) any right to demand interest on the maintenance or other arrears;
d) her right to future child maintenance, estimated to be $16,500;
e) her right to other payments set out in the separation agreement such as property taxes and insurance; and
f) the right to a payment of $10,000 from the proceeds of the sale of the matrimonial home, as set out in the separation agreement.
[6] She was not willing to waive her right to a $10,000 payment in respect of the Appellant's equity in the matrimonial home.
[7] The Appellant rejected the offer and as a result of further negotiations the parties agreed that the former spouse would pay the Appellant $51,000 in return for his equity in the home.
[8] Under the agreement, the Appellant was relieved of his obligation to pay past arrears for support of the wife and children and also was relieved of any obligation to pay support in the future. The former spouse also gave up
a) her right to free residence in the matrimonial home, which required the Appellant to make mortgage payments on the matrimonial home;
b) her right to unpaid maintenance and other amounts accumulated over a period of eight years;
c) any right to demand interest on the maintenance or other arrears;
d) her right to future child maintenance, estimated to be $16,500;
e) her right to other payments set out in the separation agreement such as property taxes and insurance; and
f) the right to a payment of $10,000 from the proceeds of the sale of the matrimonial home, as set out in the separation agreement.
[9] The Appellant then claimed the arrears of support for his wife and children as a deduction from his income in the 1995 tax year which was disallowed by the tax department.
[10] The Appellant appealed to the Tax Court of Canada which dismissed his appeal.
[11] The Tax Court Judge found that the transfer of the equity in the former matrimonial home of the Appellant to his former spouse was done to satisfy a variety of debts, only part of which may have been maintenance arrears. The Tax Court Judge said "it is impossible to discern how much of the payment if any, was periodic sums" for maintenance.
[12] We are unable to conclude that the Tax Court Judge made a palpable and overriding error in so finding. The onus was on the Appellant to satisfy the Court that the amount claimed by him was for arrears of maintenance and this he failed to do.
[13] There are certain other aspects of the Tax Court judgment with which we do not agree relative to his characterization of the conveyance of the matrimonial home by the Appellant to his former spouse.
[14] Specifically, those findings were
a) that the conveyance of his interest in the matrimonial home by the Appellant to the former spouse could not represent payment of maintenance because she had no discretion as to the use of the amount received;
b) that because the conveyance of the matrimonial home represented a lump sum payment, this was not deductible because it was not a periodic payment.
[15] However, these findings of the Tax Court Judge do not affect his finding that the Appellant had failed to prove that the conveyance of the home represented payment of the arrears of maintenance claimed by the Appellant.
[16] The appeal will therefore be dismissed with costs.
(Sgd.) "J. Edgar Sexton"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-282-04
STYLE OF CAUSE: Irvin Kew v. Her Majesty the Queen
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: January 25, 2004
REASONS FOR JUDGMENT : (Décary, Nadon & Sexton JJ.A.)
RENDERED FROM THE BENCH BY: Sexton, J.A.
DATED: January 25, 2004
APPEARANCES:
Mr. Kim Johnson FOR THE APPELLANT
Mr. Victor Caux FOR THE RESPONDENT
SOLICITORS OF RECORD:
Barrister/Solicitor FOR THE APPELLANT
Victoria, British Columbia
Mr. John H. Sims, Q.C. FOR THE RESPONDENT
Deputy Attorney General for Canada