T-2465-75
William Edward Horkins (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Collier J.—Toronto, January 13;
Ottawa, January 27, 1976.
Income tax—Calculation of income—Deductions—Wife
claiming interim alimony in divorce petition—Plaintiff sub
mitting to pay lesser amount—Wife accepting—Whether
deductible—Income Tax Act, R.S.C. 1952, c. 148, s.
I I
(1 )(1),(1a)—Rules of Practice (Ontario) 386.
In response to a motion for interim alimony in a divorce
petition filed by his wife, plaintiff submitted to pay $800 per
month, a lesser amount than claimed. His wife accepted such
payment for five months, never pursuing her application. Plain
tiff seeks to deduct this amount from his income as alimony
payments under section 11(l)(1) or (la). The Tax Review
Board upheld the Minister's disallowance, and plaintiff
appealed, contending that his offer of $800 and the acceptance
and payment under Ontario Rule 386 amount to "an order of a
competent tribunal" or is equivalent to such an order pursuant
to section 11(l)(1). The same claim is made with regard to
deductibility under section 11(1)(1a).
Held, the appeal is dismissed. Rule 386 provides for an order
in three situations only: (1) where default occurs after defend
ant has agreed to pay interim alimony; (2) where default occurs
after defendant has offered and plaintiff has accepted a lesser
sum; and (3) where default occurs after hearing of a motion for
interim alimony where plaintiff has refused to accept an
amount offered, but the amount has been held to be reasonable.
However, a defendant who dutifully pays the amount in these
three situations cannot claim a deduction, for there has been no
"order". Under section 11(1)(1), the facts, including an oral
agreement to separate, the exchange of draft separation agree
ments and correspondence, and the acceptance of alimony
cheques and general reference to the payments in a letter,
cannot be construed as an agreement in writing or a written
separation agreement.
INCOME tax appeal.
COUNSEL:
H. E. Fulton, Q.C., for plaintiff.
M. Bonner for defendant.
SOLICITORS:
Campbell, Jarvis, McKenzie & Fulton,
Toronto, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
COLLIER J.: In the calculation of his income tax
for 1971, the plaintiff sought to deduct from
income the sum of $4000' as alimony payments
made to his former wife. The plaintiff contends he
is entitled to do so by the provisions of paragraph
11(1)(l) or paragraph 11(1)(la) of the Income
Tax Act 2 . I set out the two paragraphs:
11. (1) Notwithstanding paragraphs (a), (b) and (h) of
subsection (1) of section 12, the following amounts may be
deducted in computing the income of a taxpayer for a taxation
year:
(1) an amount paid by the taxpayer in the year, pursuant to
a decree, order or judgment of a competent tribunal or
pursuant to a written agreement, as alimony or other allow
ance payable on a periodic basis for the maintenance of the
recipient thereof, children of the marriage, or both the
recipient and children of the marriage, if he was living apart
from, and was separated pursuant to a divorce, judicial
separation or written separation agreement from, his spouse
or former spouse to whom he was required to make the
payment at the time the payment was made and throughout
the remainder of the year;
(la) an amount paid by the taxpayer in the year, pursuant to
an order of a competent tribunal, as an allowance payable on
a periodic basis for the maintenance of the recipient thereof,
children of the marriage, or both the recipient and children
of the marriage, if he was living apart from his spouse to
whom he was required to make the payment at the time the
payment was made and throughout the remainder of the
year;
The Minister of National Revenue disallowed
the deduction. He was upheld by the Tax Review
Board. This appeal followed.
As always, the facts are paramount. The plain
tiff and his wife were married in 1949. In 1967 or
1968 differences arose. The plaintiff left the
matrimonial home. He and his wife did not there
after live together at any time relevant to this
appeal. Over a lengthy period of time husband and
wife tried to reach some agreement on financial,
property and other matters. At first these dealings
Initially the plaintiff claimed a total deduction of $6500.
The Minister allowed $1000. The balance of $1500 claimed
(over the $4000) was not pursued by the taxpayer.
2 R.S.C. 1952 c. 148 and amendments. The equivalent sec
tions in the so-called "new Act" are paragraphs 60(b) and (c).
and negotiations were carried out through lawyers.
There were many draft written agreements passed
back and forth. None were satisfactory, so nothing
was agreed or signed. For a time attempts were
made, particularly on the part of the plaintiff,
directly between husband and wife, to resolve mat
ters. This much is clear. The parties were at all
times separated and living apart. They were
unable to agree on the usual matters following that
mutual decision. The plaintiff, at one stage, threat
ened to move back into the matrimonial home.
Eventually the wife, after pressure of various kinds
by the plaintiff, brought divorce proceedings.
The petition was filed in the Supreme Court of
Ontario on April 19, 1971. In the claim for relief,
the wife asked for interim alimony of $1050 per
month for herself, and $200 interim maintenance
for the only child of the marriage.
On April 20, 1971, pursuant to the Rules of
Court, a motion was launched seeking, among
other things, $1000 per month interim alimony for
the wife
... from the date of the service of the Petition ... to the
trial ....
On June 4, 1971, the plaintiff, in response to the
motion, filed a notice of submission in which he
... submits to pay interim corollary relief in the sum of $800.00
monthly for the support and maintenance of the Petitioner and
the infant son of the marriage.
The notice of submission was apparently given
pursuant to Rule 386 of the Rules of Practice. I set
out the relevant portions:
386. (1) In rules 386 to 388 interim alimony shall be
deemed in a matrimonial cause to include monies payable by
way of alimony or an alimentary pension by either spouse for
the maintenance of the other and monies payable for the
maintenance of the children of the marriage pending the hear
ing and determination of the petition.
(2) In an alimony action or in a matrimonial cause, the
defendant may, at any time before being served with notice of
motion for interim alimony, give notice in writing that he
submits to pay the interim alimony and interim disbursements,
as demanded by the plaintiff in the endorsement of the writ or
in the petition for divorce, and in that case no motion for
interim alimony shall be made until there has been a default in
payment, and in case of default, affidavits being filed verifying
the endorsement and notice and thè default, an order for
payment of the sum demanded shall be issued on praecipe.
[Amended, O. Reg. 285/71, s. 10.1
(3) The defendant may give notice in writing that he submits
to pay such less sum as he deems proper and names in his
notice.
(4) Where a notice has been so served and the plaintiff
accepts the amount therein mentioned as sufficient, the defend
ant shall pay thereafter the sum so offered as interim alimony,
and no order for interim alimony shall be made until there has
been default in payment.
(5) Where a notice has been so served, the plaintiffs interim
disbursements may be taxed without order.
(6) Where the plaintiff does not accept the amount offered
and upon motion for interim alimony it is found that the sum so
offered is reasonable, and the defendant pays to the plaintiff
the sum so offered, no order for interim alimony shall be made
until there has been default in payment.
The wife was paid by the plaintiff, pursuant to
this procedure, five payments of $800 each cover
ing the months of June through October 1971.
These are the amounts which the plaintiff says he
is entitled to deduct in the calculation of his tax
for 1971.
The wife accepted those amounts. The only
evidence before me as to any qualification in
respect of her acceptance is found in a letter
between solicitors (Exhibit 5 to the agreed state
ment of facts). I set out the letter:
EXHIBIT 5
July 22nd, 1971
Siegal, Fogler, Horkins & Greenglass,
Barristers and Solicitors,
372 Bay Street
Toronto, Ontario
Attention: Harold H. Siegal, Esq. Q.C.
Re: Horkins and Horkins
Dear Mr. Siegal:
Further to our discussion at the conclusion of the cross-
examination on July 21st, 1971, I wish to advise you that we
have no record of Mrs. Horkins having received a cheque from
your client in the amount of $800.00 for the month of July. 1
have attempted to contact Mrs. Horkins by telephone but there
was no answer. It is possible that your client may have forward
ed a cheque in the amount of $800.00 directly to her. In the
event that Mr. Horkins has not forwarded a cheque in the
amount of $800.00 to Mrs. Horkins for the month of July, we
would ask that he do so in accordance with our previous
discussion and understanding that our acceptance of any such
payment is entirely without prejudice to any rights we have to
pursue her application for interim alimony.
Yours very truly,
KIMBER, DUBIN, MORPHY & BRUNNER
Per:
The wife in fact did not at any time pursue her
application for interim alimony. In my view, by
her actions she accepted
... the amount therein mentioned ... [the $800 per month in
the notice of submission] ... as sufficient ...
(See Rule 386(4) above.)
The divorce action was heard in October 1971.
A decree absolute was pronounced on November
15, 1971. Corollary relief of $1000 per month
commencing that date was adjudged.
I revert now to paragraph 11(1)(l) of the
Income Tax Act. The plaintiff contends that the
offer of $800 per month, the acceptance by the
wife, and the payments by him (all pursuant to the
procedure set out in Rule 386) amount to an
"order of a competent tribunal" or is equivalent to
such an order. The same submission is put forward
in respect of deductibility under paragraph
11(1)(la).
I have every sympathy for the plaintiff, but I am
unable to construe "order" in the paragraphs in
question as including what went on here. Without
attempting an all-encompassing interpretation, I
think "order" contemplates at least some concrete
pronouncement, decree, or direction of the tribunal
in question. Rule 386, as I see it, provides for an
order in three situations only and at three particu
lar points in time:
(a) where default in payment is made after the
defendant has agreed to pay the interim alimony
demanded in the petition. In such a case, a
motion for interim alimony setting out the
default, is not even necessary. (Rule 386(2).)
(b) where default in payment is made after the
defendant has offered and the plaintiff has
accepted a lesser sum than demanded in a
motion for interim alimony. (Rule 386(4).)
(c) where default in payment is made after the
hearing of a motion for interim alimony where
the plaintiff has refused to accept the amount
offered by the defendant but that amount has
been found to be reasonable. (Rule 386(6).)
None of those situations were, to my mind,
present in this case. I can see a somewhat incon
gruous situation arising. When default occurs in
any one of the three circumstances above outlined,
an "order" can be obtained against the defaulter. If
he then pays pursuant to the order, he could claim
the benefit of paragraphs 11(1)(/) or 11(1)(/a),
whichever was applicable, provided he fell, as well,
within the other requirements of those paragraphs.
On the other hand, the defendant who dutifully
pays the amounts in the three situations outlined,
cannot claim the payments as deductions, because
there is no "order".
Incongruity or unfairness in particular cases
cannot, unfortunately, change the plain words of
the statute. As already indicated, I must reject the
plaintiff's submission on this point.
That disposes completely of the plaintiff's posi
tion in respect of deductibility under paragraph
11(1)(la).
A further contention was advanced in respect of
11(1)(/). It was submitted the payments were
made pursuant to an agreement in writing while
the plaintiff was living apart from his wife and
while he was separated from her pursuant to a
written separation agreement. Counsel urged that
the following facts when put all together amounted
to a written separation agreement pursuant to
which the plaintiff was separated and living apart,
and the payments in question were made pursuant
to a written agreement:
(a) husband and wife had orally agreed to live
separate and apart
(b) written draft separation agreements passed
back and forth between their representatives, as
well as correspondence on the same matters
directly between the parties'. Those documents
and letters, it is said, confirmed in writing the
separation and the living apart.
(c) the acceptance of the alimony cheques by
the wife for the months in question, and the
general reference to the payments in the letter
earlier set out (Exhibit 5 to the agreed state
ment of facts).
In my opinion, no matter how hard one strains
to find in favour of the plaintiff, those facts cannot
be held to be an agreement in writing or a written
separation agreement (or both). They do not, as I
see it, meet the requirements of 11(1)(/).
The appeal must therefore be dismissed. The
assessment by the Minister and the decision of the
Tax Review Board is affirmed. The defendant is
entitled to her costs.
3 None of these documents or letters were, understandably,
produced by the plaintiff in evidence. He gave oral testimony
that they had at one time existed, and as to their general
content.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.