BETWEEN:
and
Heard at Saskatoon, Saskatchewan, on November 23, 2006.
Judgment delivered from the Bench at Saskatoon, Saskatchewan, on November 23, 2006.
REASONS FOR JUDGMENT OF THE COURT BY: LÉTOURNEAU J.A.
Docket: A-588-04
Citation: 2006 FCA 384
CORAM: LÉTOURNEAU J.A.
PELLETIER J.A.
MALONE J.A.
BETWEEN:
GREGORY J. WHELAN
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Saskatoon, Saskatchewan, on November 23, 2006)
[1] This is an appeal from a decision of a judge of the Tax Court of Canada which dismissed the appellant’s appeals from reassessments made under the Income Tax Act, R.S.C. 1985 (5th Supp.), c. I as amended (Act), for the 2001 and 2002 taxation years. In so doing, he confirmed the minister’s disallowance of deductions made by the appellant in respect of child support payments. A summary of the facts is necessary to a proper understanding of the issue.
[2] The appellant and his former spouse, Diane Whelan, are the parents of five children. Pursuant to a written agreement dated August 31, 1993, the appellant agreed to pay to his former spouse a lump sum of $1,200 per month as child support. On November 27, 1997, a judgment of the Saskatchewan Court of Queen’s Bench awarded custody of the eldest child to the appellant while the former spouse retained custody of the four other children. The amount of the child support payment remained the same. The judgment contained the following terms:
The appellant:
shall pay to… DIANE KIM WHELAN, as maintenance for the four children of the marriage, the sum of $1200.00 per month, commencing the first day of December, 1997, and continuing on the first of each month for so long as the children remain children of the marriage within the meaning of the Divorce Act. These child maintenance payments are tax deductible to the Petitioner [Gregory Whelan] and are to be included as income to the Respondent [Diane Whelan].
(Emphasis added)
[3] On November 24, 2000, Laing J. of the Saskatchewan Court of Queen’s Bench (as he then was) ordered that the 1997 judgment be amended by replacing the above-cited paragraph with the following found in the Appeal Book, at tab 8:
ORDER
UPON hearing counsel for the Applicant and the Respondent and having read the Affidavits filed by the parties hereto, and the pleadings and proceedings had and taken in the within action and upon being satisfied that the only reason that the amounts were included in the original Judgment was simply through inadvertence; I am satisfied the child support payments were intended to continue according to the terms of the Agreement of August 31, 1993 and that the Judgment should reflect this intention.
THEREFORE IT IS ORDERED THAT:
1. Pursuant to Queen’s Bench Rule 343A, the Judgment in the within matter dated November 27, 1997 be amended to substitute the following paragraph 2(d):
2(d). The parties acknowledge and recognize a child support agreement entered into between them and dated August 31, 1993 which agreement was to have taken effect January 28, 1993 which provided that the Petitioner was to make child support payments on the first day of each month for so long as the children remain children of the marriage within the meaning of The Divorce Act. The parties acknowledge that all payments made since January 28, 1993 have been made pursuant to the provisions of that agreement and their intention that payments will continue in accordance with that agreement. This Judgment does not amend any of the child support provisions of that agreement.
(Emphasis added)
[4] Notwithstanding the Queen’s Bench judgment that expressly stated that there was no amendment to any of the child support provisions of the 1993 agreement between the parties, the Tax Court judge found that the 1997 judgment changed the annual amount per child from $2,880 to $3,600 although the annual lump sum of child support paid by the appellant remained the same. From such finding, he concluded that the 1997 judgment created a “commencement day” within the meaning of paragraph 56.1(4)(b) of the Act. The paragraph reads:
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56.1.
…
(4) The definitions in this subsection apply in this section and section 56.
"child support amount" means any support amount that is not identified in the agreement or order under which it is receivable as being solely for the support of a recipient who is a spouse or common-law partner or former spouse or common-law partner of the payer or who is a parent of a child of whom the payer is a natural parent.
"commencement day" at any time of an agreement or order means
(a) where the agreement or order is made after April 1997, the day it is made; and
(b) where the agreement or order is made before May 1997, the day, if any, that is after April 1997 and is the earliest of (i) the day specified as the commencement day of the agreement or order by the payer and recipient under the agreement or order in a joint election filed with the Minister in prescribed form and manner, (ii) where the agreement or order is varied after April 1997 to change the child support amounts payable to the recipient, the day on which the first payment of the varied amount is required to be made, (iii) where a subsequent agreement or order is made after April 1997, the effect of which is to change the total child support amounts payable to the recipient by the payer, the commencement day of the first such subsequent agreement or order, and (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) Les définitions qui suivent s'appliquent au présent article et à l'article 56.
« date d'exécution » Quant à un accord ou une ordonnance:
a) si l'accord ou l'ordonnance est établi après avril 1997, la date de son établissement;
b) si l'accord ou l'ordonnance est établi avant mai 1997, le premier en date des jours suivants, postérieur à avril 1997: (i) le jour précisé par le payeur et le bénéficiaire aux termes de l'accord ou de l'ordonnance dans un choix conjoint présenté au ministre sur le formulaire et selon les modalités prescrits, (ii) si l'accord ou l'ordonnance fait l'objet d'une modification après avril 1997 touchant le montant de la pension alimentaire pour enfants qui est payable au bénéficiaire, le jour où le montant modifié est à verser pour la première fois, (iii) si un accord ou une ordonnance subséquent est établi après avril 1997 et a pour effet de changer le total des montants de pension alimentaire pour enfants qui sont payables au bénéficiaire par le payeur, la date d'exécution du premier semblable accord ou de la première semblable 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.
[…]
« pension alimentaire pour enfants » Pension alimentaire qui, d'après l'accord ou l'ordonnance aux termes duquel elle est à recevoir, n'est pas destinée uniquement à subvenir aux besoins d'un bénéficiaire qui est soit l'époux ou le conjoint de fait ou l'ex-époux ou l'ancien conjoint de fait du payeur, soit le père ou la mère d'un enfant dont le payeur est le père naturel ou la mère naturelle.
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(Emphasis added)
[5] Only subparagraphs 56.1(4)(b)(ii) and (iii) are potentially relevant to the facts in issue.
[6] With respect, we believe that the interpretation given by the judge to paragraph 56.1(4)(b), and especially to subparagraphs (ii) and (iii), is neither supported by the legislative text nor the facts of the case. In our view, the judge went beyond the legislative intent in re-writing subparagraphs (ii) and (iii), so as to assess the child support terms on a per child basis while the two subparagraphs respectively refer to a bulk amount or the total amount of child support. Nothing in the provision requires or justifies the conclusion reached by the judge.
[7] First, both subparagraphs refer to a change to the amount payable to the recipient, not to amounts payable per child: see Callwood v. R., 2005 D.T.C. 1253 (T.C.C.), paragraph 24, reversed on appeal on other grounds; Callwood v. Canada, 2006 FCA 188. The total amount payable to the recipient was not changed in this case and the parties to the agreement clearly indicated that it was their intention not to change the total child support amount payable to the recipient. The parties’ intention was judicially recognized by Laing J. of the Saskatchewan Court of Queen’s Bench. He specifically stated that “this judgment does not amend any of the child support provisions of that agreement”. [The August 31, 1993 agreement.] Effect should have been given to the clear and plain wording of subparagraphs (ii) and (iii) as well as to the parties’ intention not to change or vary the 1993 agreement. In addition, the text of the agreement was consistent with the wording of these two subparagraphs.
[8] The judge found support for his position in an interpretation that he gave to the word “child” in the expression “child support amount” used in subsection 56.1(4). In Diane Kim Whelan v. The Queen, 2002-32(IT)I, a case involving the former spouse of the appellant and decided in the absence of the appellant who was not made a party to the proceedings, the judge ruled as follows:
Subsection 56.1(4) refers to “amounts”. The Court interprets the word “amounts” to refer to monthly payments which are usual in such support Orders and which are made on a calendar year basis. However, subsection 56.1(4) refers to a total of individual “child” support amounts…
In the Court’s view, subsection 56.1(4) must be read by individual “child”.
[9] The learned judge appears to draw, from the singular term “child” used with reference to “child support”, the conclusion that the determination of whether an agreement has been changed is to be made with reference to annual payments with respect to each individual child.
[10] The use of the singular in relation to the word “child” is of no consequence in subsection 56.1(4). As a conventional rule of drafting embodied in the Interpretation Act, R.S.C. 1985, c. I-2, subsection 33(2), “words in the singular include plural, and words in the plural include the singular”. Besides, the French version of subsection 56.1(4) uses the plural and refers to “pension alimentaire pour enfants” (emphasis added). The expression “child support” is rather a term of art used to make reference to payments made in support of one or many children.
[11] The practical consequence of this decision under appeal is to effect a change to a support amount paid for children when there is, in fact, no such change to the amount and a clear intention of the parties to the agreement to specifically not change the amount. The change, although non-existent, is indeed found to exist on the basis of factors external to the expressed intention of the parties. Thus the death of a child would bring a change to the child support amount as would inflation, although the amount or the total amount of the child support payment remains the same. External factors of this kind, according to the interpretation given to subsection 56.1(4) by the judge, would bring about a “commencement day” within the terms of that subsection. We have not been convinced that this is what a plain reading of the provision and of the terms of the agreement signed by the parties in this case warrants.
[12] For these reasons, the appeal will be allowed with costs and the decision of the Tax Court of Canada will be set aside. The reassessments made against the appellant for the taxation years 2001 and 2002 will be vacated and the matter referred back to the minister for reconsideration and reassessment on the following basis:
For the taxation years 2001 and 2002, the appellant’s child support amount paid to his former spouse is deductible from the appellant’s income in these taxation years.
We are grateful for the assistance of counsel both of whom conducted themselves in accordance with the highest standards of the profession.
“Gilles Lètourneau”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-588-04
(APPEAL FROM A JUDGMENT OF THE TAX COURT OF CANADA DATED OCTOBER 8, 2004, DOCKET NO. 2004-2554(IT)I)
STYLE OF CAUSE: GREGORY J. WHELAN v.
HER MAJESTY THE QUEEN
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: November 23, 2006
REASONS FOR JUDGMENT LÉTOURNEAU J.A.
OF THE COURT BY: PELLETIER J.A.
MALONE J.A.
DELIVERED FROM THE BENCH BY: LÉTOURNEAU J.A.
APPEARANCES:
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FOR THE APPELLANT
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FOR THE RESPONDENT
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SOLICITORS OF RECORD:
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McKercher McKercher & Whitmore LLP Saskatoon, Saskatchewan
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FOR THE APPELLANT
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Deputy Attorney General of Canada Ottawa, Ontario |
FOR THE RESPONDENT
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