Date: 20021009
Docket: A-174-01
Toronto, Ontario, Wednesday, the 9th day of October, 2002
CORAM: DESJARDINS J.A.
ISAAC J.A.
MALONE J.A.
BETWEEN:
DOREEN WILLIAMS
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
JUDGMENT
This appeal is dismissed with costs.
"Alice Desjardins"
___________________________
J.A.
Docket: A-174-01
Neutral citation: 2002 FCA 380
CORAM:DESJARDINS J.A.
ISAAC J.A.
MALONE J.A.
BETWEEN:
DOREEN WILLIAMS
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto,
Ontario on Wednesday, October 9, 2002)
[1] This is an appeal from a judgment by Tax Court Judge D. Hamlyn (the Judge) rendered on July 24, 2000 and reported as 2000 D.T.C. 2340. The appellant's appeal was allowed in part but the sum of $204,700.00 assigned to Doreen Williams by Ronald Williams, her husband (the "Assigned Sum") was referred back to the Minister of National Revenue for reassessment based on the Judge's conclusion that this amount constituted a transfer without consideration, taxable in the appellant's hands within the meaning of subsection 160(1) of the Income Tax Act (the "Act").
[2] The purpose of subsection 160(1) is to prevent taxpayers from avoiding the collection of taxes owed by transferring their assets to their spouse or other related persons (see Medland v. R., [1999] 4 C.T.C. (FCA) at page 300.
[3] Before the Tax Court of Canada, the parties proceeded with a partial agreed statement of facts as well as oral evidence from the appellant. The appellant's husband did not testify as to his intentions in transferring the Assigned Sum or at all. The Assigned Sum was the salary of the appellant's husband which was paid at his direction into the appellant's own bank account without passing through his hands. This was a circumstance which the Judge concluded was suspicious leading to alternative possibilities as to Mr. Williams' intent. The Judge concluded, on the evidence presented, that the payments were in reality a quantification of convenience based on a lifestyle between spouses living together with adequate independent means to meet their individual needs. In effect, the transfers were not made to satisfy Mr. Williams' lawful support obligations and as a consequence the Assigned Sum was transferred without lawful consideration.
[4] Various grounds of appeal were advanced in support of the appellant's submissions that the payments that constituted the Assigned Sum were made in satisfaction of Mr. Williams' lawful obligation to support his wife to the level of her accustomed standard of living under the Family Law Act, R.S.O., 1990, c-F.3,; thus falling outside the scope of subsection 160(1). These include the misapprehension of facts by the Judge, ignoring evidence as well as a legal error in determining that there was a transfer of property made without consideration.
[5] Based on the recent judgment of the Supreme Court of Canada in Housen v. Nikolaisen, [2002] S.C.C. No. 33 (QL), this Court must review errors of law on a correctness standard while errors relating to facts and factual conclusions are to be reviewed on a standard of palpable and overriding error.
[6] Notwithstanding the able submissions of Mr. Farano, counsel for the appellant, we are all satisfied that Judge Hamlyn committed no palpable and overriding errors in his assessment of the facts and in reaching the factual conclusions that he did. His conclusion that the transfers by Mr. Williams was not specifically in satisfaction of his obligation under theFamily Law Act is amply supported by the evidence that:
(i) The Assigned Sum was transferred to an account in the sole name of the appellant, rather than to a joint account, despite the fact that the couple had a joint account which was set up at their bank's insistence to handle mortgage payments on the principal residence and cottage.
(ii) Mr. Williams directed that his salary cheques were to be payable to his wife rather than himself;
(iii) Mr. Williams did not make payments to third parties on account of the household expenses as these expenses were paid by the appellant; and.
(iv) The appellant had complete control and discretion over the funds in her own account once the transfers were made.
[7] Furthermore, on the documentary evidence provided by the appellant, it was open to the Judge to conclude that the expenditures went beyond what one would normally perceive to be average household expenses.
[8] We are also satisfied that no legal error was committed in assessing Mr. Williams' lawful support obligations to the appellant in the context of either section 30 of the Family Law Act or subsection 160(1) of the Income Tax Act.
[9] The appeal will be dismissed with costs.
"B. Malone"
J.A.
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET:A-174-01
STYLE OF CAUSE:DOREEN WILLIAMS
Appellant
- and -
HER MAJESTY THE QUEENRespondent
DATE OF HEARING:TUESDAY OCTOBER 8, 2002
PLACE OF HEARING:TORONTO, ONTARIO
REASONS FOR JUDGMENT
OF THE COURT BY:MALONE J.A.
DELIVERED FROM THE BENCH AT TORONTO, ONTARIO ON TUESDAY, OCTOBER 8, 2002.
DATED:WEDNESDAY OCTOBER 9, 2002
APPEARANCES BY:Mr. Ronald J. Farano /Ms. Arlene O'Neill
For the Appellant
Ms. Carol Calabrese
For the Respondent
SOLICITORS OF RECORD:Mr. Ronald J. Farano
Ms. Arlene O'Neill
Department of Justice
130 King Street West, Suite 3400, Box 36
Toronto, Ontario
For the Appellant
Ms. Carol Calabrese
Scotia Plaza, Suite 3100
40 King Street West, Toronto, Ontario
M5H 3Y2
For the Respondent
FEDERAL COURT OF APPEAL
Date: 20021009
Docket: A-174-01
BETWEEN:
DOREEN WILLIAMS
Appellant
- and -
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
OF THE COURT