2002-1780(IT)I
BETWEEN:
KAYE HIRTLE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on October 29, 2002, at Halifax, Nova Scotia, by
the Honourable Judge E.A. Bowie
Appearances
For the Appellant: The Appellant herself
Counsel for the Respondent: Christa Mackinnon
JUDGMENT
The appeals from the determinations made under the Income Tax Act for the 1999 and 2000 base years are allowed and the determinations are vacated.
The Appellant is entitled to her costs.
Signed at Ottawa, Canada, this 29th day of January, 2003.
|
"E.A. Bowie" |
J.T.C.C.
Date: 20030129
Docket: 2002-1780(IT)I
BETWEEN:
KAYE HIRTLE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bowie J.
[1] This appeal is brought from a child tax benefit notice of redetermination, which was issued by the Minister of National Revenue to the Appellant on October 10, 2001. By that notice the Minister determined that the former spouse of the Appellant, Dean Collicutt, was the primary caregiver to their two children for the months of November 2000 to September 2001, and was therefore the person entitled to receive the child tax benefit for them under section 122.61 of the Income Tax Act (the Act). That notice also assessed the Appellant, under section 160.1 of the Act, to recover overpayments of the benefit said to have been paid to her between November 2000 and September 2001, totalling $4,551.61.
[2] There may be more than one notice and more than one assessment. Since the decision of the Federal Court of Appeal in Gerhart v. The Queen[1] struck down subsection 176(1) of the Act, this Court seldom sees the Notice of Assessment or other document which evidences the Minister's decision that is the subject matter of the appeal. In the present case, neither party made the notices exhibits. When I remarked on this during the hearing, counsel for the Respondent offered to provide them after the hearing, and the Appellant agreed that this should be done. Unfortunately, the Minister was only able to provide a reconstruction from computerized records. These proved to be totally incomprehensible to me.
[3] The Appellant and Dean Collicutt lived together with their two children until October 31, 2000. The Appellant was the children's primary caregiver during that period, and so she was entitled to receive the child tax benefit under section 122.6 of the Act.The Appellant and Mr. Collicutt had a joint bank account, and at her direction the Minister paid the benefit to the credit of that account each month. When they separated at the end of October 2000, the children remained with Mr. Collicutt. The Appellant does not dispute that from that time forward he was the primary caregiver, and so was the person entitled to receive the benefit payments. Her appeal is therefore only against the assessment under section 160.1 requiring her to repay $4,551.61.
[4] After the Appellant and Mr. Collicutt separated, the monthly benefit payments continued to be deposited to their joint account. However, it is quite clear from the evidence that the Appellant did not make any withdrawal from that joint bank account after November 2, 2000. She testified that after that time she no longer had a bank card for the account, and could not access it. Ms. Bremner, a customer service supervisor from the Scotia Bank, testified that as it was a joint account, the Appellant remained entitled to access the account as long as it remained open, but that in fact the last transactions made with her card were two withdrawals totalling $80.00, both shown as having occurred on November 2, 2000. Her card, according to the bank's records, was cancelled on October 31, 2000. The evidence clearly establishes that after the beginning of November 2000, the Minister continued to deposit the benefit payments for the two children of the Appellant and Mr. Collicutt to the joint account, that the Appellant did not access the account, and considered herself to be unable to, and that she and Mr. Collicutt both considered the account, including the monthly credits of the benefit, to belong to Mr. Collicutt exclusively.
[5] The Reply to the Notice of Appeal sets out the facts relied on by the Minister in assessing the Appellant at paragraph 5.
5. In so assessing the Appellant, the Minister relied on, inter alia, the following assumptions of fact:
a) the Appellant and her former spouse, Dean Collicutt ("Former Spouse"), separated on or about October 2000 (the "Separation");
b) the Appellant and her Former Spouse had 2 children of the marriage: Damon, born July 24, 1996 and Danita, born October 18, 1999;
c) after the Separation, the children resided with their father, the Appellant's Former Spouse;
d) after the Separation, the children's father was the primary caregiver;
e) prior to the Separation, the Appellant was receiving the Child Tax Benefit for Damon and Danita, the two qualified dependants;
f) after the Separation, the Appellant continued to receive the Child Tax Benefit for the two qualified dependants until September 2001 inclusive; and
g) the Minister established the Appellant's overpayment of Child Tax Benefits as follows:
base year 1999:
received from November 2000 to June 2001 inclusive: $3,019.41
base year 2000:
received from July 2001 to September 2001 inclusive: $1,532.20
Total overpayment assessed: $4,551.61
Subparagraph (g) is, of course, not an assumption of fact underlying the assessment, although it is a useful statement of the manner in which the assessment was computed. The other assumptions are admitted by the Appellant to be true, except for (f). The Appellant says that she did not receive any benefit payment after the separation on October 31, 2000, and the evidence establishes that she did not. She has therefore successfully rebutted the key assumption on which the assessment is based.
[6] Counsel for the Respondent based her argument largely upon an alleged failure of the Appellant to comply with the requirement of subsection 122.62(4).
Where during a particular month a person ceases to be an eligible individual in respect of a particular qualified dependant (otherwise than because of the qualified dependant attaining the age of 18 years), the person shall notify the Minister of that fact before the end of the first month following the particular month.
The Appellant's evidence with respect to this issue was that she did not personally notify the Minister of her separation from Mr. Collicutt, but that she raised the matter of notification with her lawyer, who told her that it had been taken care of. The lawyer, understandably, was not available to testify. I say understandably, because the Appellant could not possibly have known from the Deputy Attorney General's Reply to the Notice of Appeal that notification under subsection 122.62(4) would become an issue at the hearing of her appeal. No assumption of failure to notify was pleaded; nor is there any allegation of it elsewhere in the Statement of Facts. The only issues raised in Part B of the Reply are:
... whether the Appellant was the eligible individual in respect of the qualified dependants for the period from November 2000 to September 2001 inclusive and whether the Minister correctly assessed the recovery of the overpayment for the base years 1999 and 2000.
In Part C - Statutory Provisions, Grounds Relied On and Relief Sought - there is no mention at all of section 122.62 of the Act, nor is there any suggestion that the Respondent will take the position at the hearing that the Appellant had failed to comply with the requirements of that section. In these circumstances, the Appellant could hardly be expected to require her lawyer to travel from Mahone Bay to Halifax to attend the hearing in order to give evidence as to an issue that had not been raised in the Reply. Although it is hearsay, I accept the Appellant's evidence that the required notice had been given.
[7] In Cleuziou v. Canada,[2] Judge Lamarre Proulx had to consider the Minister's assessment of an overpayment in a similar fact situation. The benefit cheques were issued to the mother of the eligible dependants. She and her husband separated in March 1991. The children remained in their father's custody, and for the next two years, he received the cheques for the benefit that were sent in her name, and dealt with them under a power of attorney that she had executed in his favour in 1989. He deposited the cheques to her account, and withdrew funds from it for his own purposes. The Minister was not notified that the mother had ceased to be the eligible individual. Judge Lamarre Proulx held that the mother was not liable to repay these benefit amounts, as they had not been received by her, but by her husband. The same is true of the present case. The amount of $4,551.61, which the Minister has assessed against the Appellant, in this case was never received by her; it was received and used by Mr. Collicutt. The Appellant's appeal is therefore allowed and the assessment of the Appellant under section 160.1 is vacated. She is entitled to her costs.
[8] I am told by counsel that Mr. Collicutt has made an application to receive the benefit in his own name as the eligible individual in respect of these two children, and that as a result the Minister has now paid the benefit to him in respect of the period between November 2000 and September 2001, for which he has assessed the Appellant for an overpayment. If that is so, then my judgment leaves the Minister in the position that he has made an overpayment, not to the Appellant but to Mr. Collicutt. I repeat what I said in the case of Eremity v. The Queen,[3] being released today. The Minister has section 174 of the Act available to her to obtain a determination as to the entitlement to the benefit, and the liability to repay an overpayment, in this type of case. If, in circumstances where there are obviously competing claims, the Minister chooses to make a retroactive payment to one parent without first hearing from the other, and without invoking section 174, then she has only herself to blame if she makes a payment to a claimant who is not entitled to it.
Signed at Ottawa, Canada, this 29th day of January, 2003.
|
"E.A. Bowie" |
J.T.C.C.
COURT FILE NO.: 2002-1780(IT)I
STYLE OF CAUSE: Kaye Hirtle and
Her Majesty the Queen
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: October 29, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge E.A. Bowie
DATE OF JUDGMENT: January 29, 2003
APPEARANCES:
For the Appellant: The Appellant herself
Counsel for the Respondent: Christa Mackinnon
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm: --
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada