Tax Court of Canada Judgments

Docket: 2003-1332(IT)I

BETWEEN:

CHRISTINE RICHARD,

Appellant,

et

HER MAJESTY THE QUEEN,

Respondent.

Appeals heard on September 11, 2003 at Ottawa, Ontario

Before: The Honourable Judge Lucie Lamarre
Appearances:
For the Appellant:	The Appellant herself
Counsel for the Respondent:	Nicolas Simard

____________________________________________________________________

JUDGMENT

          The appeals from the determinations by which the Minister of National Revenue refused the Appellant a goods and services tax ("GST") credit and the Canada child tax benefit under sections 122.5 and 122.6 of the Income Tax Act for the 2000 and 2001 base taxation years are dismissed.

Signed at Ottawa, Canada, this 24^th day of October 2003.

"Lucie Lamarre"

J.T.C.C.

Translation certified true

on this 25^th day of March 2004.

Gerald Woodard, Translator

Citation: 2003CCI774

Date: 20031024

Docket: 2003-1332(IT)I

BETWEEN:

CHRISTINE RICHARD,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Lamarre, J.

[1]      These are appeals from determinations by the Minister of National Revenue (the "Minister"), by which it was ruled that the Appellant had received overpayment in the form of a goods and services tax ("GST") credit for the 2000 and 2001 taxation years and the child tax benefit for the 2000 and 2001 base taxation years. The Minister's determinations were made on the basis that the adjusted and modified income that must be taken into account in calculating the GST credit and child tax benefit, pursuant to sections 122.5 and 122.6 of the Income Tax Act ("Act"), must include Robert Dumont's income. The definitions of "adjusted income" and "qualified relation" in subsection 122.5(1) and of "adjusted income" and "cohabiting spouse" in section 122.6 read as follows:

SECTION 122.5: Definitions.

          (1) The following definitions apply in this section.

"qualified relation" - "qualified relation" of an individual, in relation to a month specified for a taxation year, means the person, if any, who, at the beginning of the specified month, is the individual's cohabiting spouse or common-law partner

History: S. 122.5(1), the definition "qualified relation" was amended by S.C. 2002, c. 9, s. 38(1), applicable to amounts that are deemed to be paid during months specified for the 2001 and subsequent taxation years. S. 122.5(1), the definition "qualified relation" formerly read:

" 'qualified relation' - 'qualified relation' of an individual for a taxation year means the person who, at the end of the year, is the individual's cohabiting spouse or common-law partner (within the meaning assigned by section 122.6)."

S. 122.5(1), the definition "qualified relation", was amended by S.C. 2000, c. 12, Sched. 2, s. 1(z.10), applicable January 1, 2001, coming into force on July 31, 2000. S. 122.5(1), the definition "qualified relation" formerly read:

"adjusted income" - "adjusted income" of an individual, for a taxation year in relation to a month specified for the taxation year, means the total of the individual's income for the taxation year and the income for the taxation year of the individual's qualified relation, if any, in relation to the specified month, both calculated as if no amount were included in respect of any gain from a disposition of property to which section 79 applies

History: S. 122.5(1), the definition "adjusted income" was amended by S.C. 2002, c. 9, s. 38(1), applicable to amounts that are deemed to be paid during months specified for the 2001 and subsequent taxation years. S. 122.5(1), the definition "adjusted income" formerly read:

           "(1)       Definitions. In this section,

'adjusted income' - 'adjusted income' of an individual for a taxation year means the total of all amounts each of which would be the income for the year of

(a)     the individual, or

(b)     the individual's qualified relation for the year

if no amount were included in respect of a gain from a disposition of property to which section 79 applies in computing that income."

SECTION 122.6: Definitions.

          In this subdivision

"cohabiting spouse" - "cohabiting spouse" of an individual at any time means the person who at that time is the individual's spouse or common-law partner and who is not at that time living separate and apart from the individual and, for the purpose of this definition, a person shall not be considered to be living separate and apart from an individual at any time unless they were living separate and apart at that time, because of a breakdown of their marriage or common-law partnership, for a period of at least 90 days that includes that time;

History: S. 122.6, the definition "cohabiting spouse" was amended by S.C. 2000, c. 12, Sched. 2, s. 1(z. 1) and 9(h), applicable to the 2001 and subsequent taxation years, . . .

"adjusted income" - "adjusted income" of an individual for a taxation year means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual's cohabiting spouse or common-law partner at the end of the year if no amount were included in respect of a gain from a disposition of property to which section 79 applies in computing that income;

History: S. 122.6, the definition "adjusted income" was amended by S.C. 2000, c. 12, Sched. 2, s. 1(z. 11), applicable to the 2001 and subsequent taxation years, . . .

[2]      The Minister adopted the position that Robert Dumont was the Appellant's common-law partner during the periods at issue for the purposes of calculating adjusted income, which is being contested by the Appellant.

[3]      The facts on which the Minister based his decision are as follows:

[translation]

1. The Notice of Appeal admits the following facts:

(a) that the Appellant and Robert Dumont had a child [the first name and date of birth of the child shall be kept confidential. The first name shall simply be replaced with X]; and

(b) that the Appellant also has a child [the first name and date of birth of the child shall be kept confidential. The first name shall simply be replaced with Y].

[...]

8. In making the reassessment of the CCTB [Canada Child Tax Benefit] for the 2000 and 2001 "base taxation years" and the reassessment of the goods and services tax credit for the 2000 and 2001 base taxation years, the Minister assumed, inter alia, the following facts:

(a) the facts listed and admitted in paragraph 1 of the Reply to the Notice of Appeal;

(b)             during the 1999 taxation year until approximately June 2000, the Appellant and Robert Dumont lived together at 66 Du Ravin-Bleu in Hull; [admitted]

(c) the Appellant and Robert Dumont acquired a property together on June 28, 2000 at 56 Isabelle Street in Hull (the "marital home"); [admitted]

(d) the Appellant and Robert Dumont have lived together since approximately June 28, 2000 at the marital home; [admitted]

(e) for the periods being appealed, the Appellant received, in her name, the Hydro-Québec and Bell Canada bills for the marital home; [admitted]

(f) there is no indication that the structure of the marital home was modified to permit the Appellant and Robert Dumont to live separately; [admitted]

(g) for the periods being appealed, the Appellant and Robert Dumont together shared the parental responsibilities for their son, X; [admitted]

(h) for the periods being appealed, the Appellant benefited from Robert Dumont's dental and medication insurance; [admitted]

(i) during the periods being appealed, the Appellant and Robert Dumont were not separated;

(j) the Appellant is deemed to be Robert Dumont's common-law partner for the 2000 and 2001 base taxation years;

(k) the Appellant's and Robert Dumont's income constitutes adjusted income; and

(l) the Appellant must include net family income [adjusted income] in the calculation of the goods and services tax credit and the "adjusted income" in the calculation of the child tax benefit.

[4]      The only matter at issue is to determine whether or not Robert Dumont was the Appellant's spouse during the 2000 and 2001 taxation years.

[5]      The terms "spouse" and "common-law partner" are defined as follows in subsection 252(4) of the Act (applicable in 2000) and subsection 248(1) of the Act (applicable in 2001):

4252(4)3

History: S. 252(4) was repealed by S.C. 2000, c. 12, s. 141(12), applicable to the 2001 and subsequent taxation years . . . formerly read:

« (4) Idem. In this Act,

(a) words referring to a spouse at any time of a taxpayer include the person of the opposite sex who cohabits at that time with the taxpayer in a conjugal relationship and

(i)        has so cohabitated with the taxpayer throughout a 12-month period ending before that time, or

(ii)      would be a parent of a child of whom the taxpayer would be a parent, . . .

and, for the purposes of this paragraph, where at any time the taxpayer and the person cohabit in a conjugal relationship, they shall, at any particular time after that time, be deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship; . . . "

S. 248(1)

"common-law partner" - "common-law partner", with respect to a taxpayer at any time, means a person who cohabits at that time in a conjugal relationship with the taxpayer and

(a) has so cohabited with the taxpayer for a continuous period of at least one year, or

(b) would be the parent of a child of whom the taxpayer is a parent, . . . and, for the purposes of this definition, where at any time the taxpayer and the person cohabit in a conjugal relationship, they are, at any particular time after that time, deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship.

History: S. 248(1), the definition "common-law partner" was added by S.C. 2000, c.12, s. 139(2), applicable to the 2001 and subsequent taxation years.

[6]      The Appellant, an information officer with the ministère du Revenu du Québec since 1991, explained that she had had a first child, Y, before meeting Robert Dumont. Mr. Dumont came to live with the Appellant when her son, Y, was still young. They shared an apartment for a period of approximately 11 years, during which time her son, X, was born. The Appellant claims that, in November 1999, they ended their conjugal relationship and she allegedly took steps with the Office municipal d'habitation de Gatineau-Hull to find a new 2-bedroom apartment. She was notified on March 3, 2000 that her application had been received (Exhibit A-1). According to the Appellant, Mr. Dumont took steps to purchase a property.

[7]      In March 2000, the Appellant's oldest son, then aged 15, began to exhibit behavioural problems. He quit school, began associating with groups of juvenile delinquents and committed mischief and assaults between May 2, 2000 and January 10, 2001 (Exhibit A-2).

[8]      In light of this situation, the Appellant realized that her oldest son would not accept to move into a 2-bedroom apartment with her. She then asked Mr. Dumont if she could move with him to a new house, much larger, that they had purchased together in June 2000. They had purchased the property together for $97,000 after obtaining a mortgage of $89,687 (Exhibit I-1). The Appellant and Mr. Dumont are jointly and severally liable for repayment of the mortgage loan. The property is a bungalow with a basement, in which the Appellant's oldest son has a room and bathroom. According to the Appellant's testimony, Mr. Dumont has a bedroom upstairs and the other upstairs bedroom is for their son, X.

[9]      The Appellant allegedly moved into the basement on a sofa bed. According to her testimony, she prepared her children's meals and ate with them in the living room. Mr. Dumont prepared his own meals and ate in the dining room, which was reserved for him. He allegedly used the barbecue only for himself. She stated that she shopped for herself and her children. He did his own shopping and might go to the convenience store for things that were needed in the house. When they shared food, they carefully calculated what was owed by one or the other.

[10]     The Appellant stated that she did the laundry, including that of Mr. Dumont, if any. Mr. Dumont stated that he did his own laundry.

[11]     The Appellant stated that only she did the cleaning. Mr. Dumont stated that they both did the cleaning. The Appellant stated that she has a boyfriend who she sees every Friday evening. She stated that she sleeps at his house and comes home on Saturday afternoon. Mr. Dumont stated that he does not have a new girlfriend, but goes out regularly on Saturday evenings. He might not come home those nights. The Appellant no longer attends family activities with Mr. Dumont's friends. Annick Labelle, a friend of the former couple, testified. She stated that she and her husband had continued to have outdoor activities with Mr. Dumont and his son, but that the Appellant no longer joined them.

[12]     All stated that friends might come over to the Appellant and Mr. Dumont's home and that, if the Appellant was there, she would join them at mealtime.

[13]     The Appellant does not take part in celebrations with Mr. Dumont's family and it would seem that the opposite also holds true.

[14]     The Appellant explained that she agreed to live in such a situation for the sake of the children, for whom she wished to ensure a safe home. The Appellant and Mr. Dumont stated that they had not had sexual relations since 1999. It was only in 2002, following the audit by the Canada Customs and Revenue Agency ("CCRA"), that the Appellant changed the beneficiaries of her insurance policies to her children. Mr. Dumont had been the beneficiary since 1998 and she had not thought to make the change until 2002. At the time when the change was made in December 2002, Mr. Dumont was still listed as common-law partner and beneficiary on the life insurance taken out by the Appellant (Exhibit I-4). Nor did the Appellant have a will and it was only in 2002, at the time of the same audit, that she realized the importance of having one to protect her children.

[15]     Mr. Dumont had the same attitude. He had not thought to change the beneficiary of his pension fund until the CCRA audit. During the years at issue and still today, the Appellant is the beneficiary.

[16]     In order to determine whether or not two people are living in a conjugal relationship, the majority of the Supreme Court of Canada in M. v. H., [1999] 2 S.C.R. 3, at pages 50-51, endorsed the factors identified by the Ontario District Court in Molodowich v. Penttinen (1980), 17 R.F.L. (2d) 376, (which factors have been occasionally taken up by the Federal Court of Appeal and this Court[1]) as follows:

          Molodowich v. Penttinen (1980), 17 R.F.L. (2d) 376 (Ont. Dist. Ct.), sets out the generally accepted characteristics of a conjugal relationship.    They include shared shelter, sexual and personal behaviour, services, social activities, economic support and children, as well as the societal perception of the couple. However, it was recognized that these elements may be present in varying degrees and not all are necessary for the relationship to be found to be conjugal. . . . In order to come within the definition, neither opposite-sex couples nor same-sex couples are required to fit precisely the traditional marital model to demonstrate that the relationship is "conjugal".

          Certainly an opposite-sex couple may, after many years together, be considered to be in a conjugal relationship although they have neither children nor sexual relations. Obviously the weight to be accorded the various elements or factors to be considered in determining whether an opposite-sex couple is in a conjugal relationship will vary widely and almost infinitely. . . . Courts have wisely determined that the approach to determining whether a relationship is conjugal must be flexible. This must be so, for the relationships of all couples will vary widely. In these circumstances, the Court of Appeal correctly concluded that there is nothing to suggest that same-sex couples do not meet the legal definition of "conjugal".

[17]      In the case at bar, not only do the Appellant and Mr. Dumont live together, but they are co-owners and share all expenses. The purchased the property together in June 2000, while the Appellant claims that she had not been in a conjugal relationship with Mr. Dumont since November 1999. They kept the furniture that they had together. They have a child together and care for him. As regards their child, the three sometimes do activities together (Mr. Dumont gave the example of a recent activity with the Scouts). During the years at issue, the Appellant still benefited from Mr. Dumont's dental and medication insurance. During those same years, Mr. Dumont was the beneficiary of the Appellant's insurance policy and the Appellant was the beneficiary of Mr. Dumont's pension fund. No financial institution or insurance company seems to have been advised of any change to the Appellant and Mr. Dumont conjugal relationship.

[18]      Furthermore, there are certain contradictions in the testimonies. The Appellant stated that she did the cleaning alone, while Mr. Dumont stated that he also helped in this task. The Appellant stated that she did Mr. Dumont's laundry, while he stated that he did his own laundry. In my opinion, these little details, together with the aforementioned elements, show that the Appellant and Mr. Dumont still consider themselves, to some degree, to be in a conjugal relationship.

[19]      It is true that the Appellant stated that she has a new boyfriend who she sees on Friday nights. I note, however, that this boyfriend was not present in the Court to confirm this situation. Ms. Labelle stated that the Appellant no longer takes part in Mr. Dumont's social activities. However, she admitted that when everybody gathers at the Appellant and Mr. Dumont's home, the Appellant joins them. In addition, Ms. Labelle, who goes to the Appellant and Mr. Dumont's home often, could not confirm that the Appellant was living in the basement.

[20]      In my opinion, the arrangement as described by the Appellant seems very improbable. In Légaré v. The Shawinigan Water and Power Co. Ltd., [1972] C.A. 372, the Quebec Court of Appeal stated the following at pages 373-374:

. . . But courts are not required to believe witnesses, even when they are not contradicted by other witnesses. Their version may be improbable as a result of circumstances revealed by the evidence or the rules of simple common sense. . .

[21]      In the case at bar, I find it hard to believe that, since June 2000, the Appellant lives in the basement on only a sofa bed and that she eats all her meals in the living room, leaving the dining room to Mr. Dumont. I also find it hard to believe that Mr. Dumont barbecued only for himself and not for the others in the house, but when friends were in, the Appellant could join them. Such an arrangement might work for a short time if they were truly no longer living in a conjugal relationship, but it seems suspicious for such a long period, which seems to be going on forever, particularly as the Appellant is equally sharing all household expenses (as she has now for 14 years with Mr. Dumont), and it is difficult to believe that she would agree to live in much worse conditions than Mr. Dumont.

[22]      The Appellant bore the burden of proving, on the balance of probabilities, that she was not living with Mr. Dumont in a conjugal relationship in 2000 and 2001. I am of the opinion that the Appellant did not succeed in proving that. Furthermore, I do not at all find the Appellant's story credible. Certain gaps in the evidence (such as failure to advise the various institutions of the change in conjugal status, the absence of important witnesses that might have given weight to the Appellant's version, and the improbability, in light of the equal financial responsibility of the Appellant and Mr. Dumont, of the situation described regarding their lifestyle during the years at issue and that continues) make me doubt the credibility of the Appellant and Mr. Dumont.[2] Furthermore, in light of the various factors indicated by the courts, I feel that the evidence before me instead shows that the Appellant and Mr. Dumont have certainly adopted a lifestyle much different that the standard for couples, but nonetheless remain in a conjugal relationship within the meaning of the Act. As stated by the Supreme Court of Canada in M. v. H., supra, the relationships of all couples will vary widely and the weight to give to the various elements to be taken into consideration in determining if a couple is in a conjugal relationship can vary greatly from one particular situation to another.

[23]      In the context of the case at bar, apart from the matter of the credibility of the Appellant and Mr. Dumont, I am of the opinion that there are sufficient elements in the evidence to conclude that, in 2000 and 2001, she was Mr. Dumont's common-law partner.

[24]      The appeals are dismissed.

Signed at Ottawa, Canada, this 24^th day of October 2003.

"Lucie Lamarre"

Lamarre, J.

Translation certified true

on this 25^th day of March 2004.

Gerald Woodard, Translator

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