Child Maintenance Claims: Can a Payor Claim Legal Fees as a Tax Deduction?
Interesting case out of the Tax Court this month: in Trignani v. Canada, [2010] T.C.J. No.141, the court determined that a man who had joint custody of his child but who was paying net maintenance to the children’s mother, was entitled to write of those legal expenses he incurred to pursue his child support claims. In this case, the appellant, Mr. Trignani, was pursuing sole custody of his child, which the court determined to be a bona fide claim.
After the parties’ separation July 2000, they entered into an agreement in August 2000 providing for joint custody and for Mr. Trignani to pay maintenance. The parties filed against each other in spring 2001, each claiming sole custody and child maintenance. The Ontario Superior Court of Justice pronounced a consent order in April 2001 that the parties have equal time with the child (the mother’s access to be supervised) and Mr. Trignani was to pay child support. Notwithstanding this order, for the next five years, Mr. Trignani had the child in his care for the majority of the time.
The court order was was varied in 2006 by Minutes of Settlement which provided for joint custody and for Mr. Trignani to pay child maintenance which appears to have been a set off between his and the appellant’s guideline income obligations.
The tax court held that, despite interim agreements reached by the parties between 2001 and 2006, Mr. Trignani at all material times had a live claim for child support and sole custody. The fact that he agreed to a settlement in 2006 which provided that he pay net maintenance to the respondent did not detract from the viability of his claim prior to that point and did not extinguish his right to claim the monies expended on pursuing his child support claim as a tax deduction.
In cases where joint custody is sought or where sole custody is a reasonable consideration, the tax considerations raised in Trignani v. Canada should be considered when deciding whether to claim child maintenance. This case could have far reaching implications. It remains to be seen whether the decision will be appealed and how the decision will be woven by lower courts into the fabric of Canadian family law.
Posted: May 19th, 2010 under Case Analysis, Child Support.
Tags: agreements, child maintenance, Child Support, deduct, deduction, Divorce, minutes of settlement, tax, Trignani, Trignani v. Canada
Dividing the Grape Juice
You like wine. Who doesn’t? You’ve got a nice collection going, cellared under pristine conditions, perfectly cooled and humidified. And now you and your spouse are splitting up. Wither the wine? How do the courts deal with something that is equal parts collection and food?
While meant to be drunk (clearly), bottles of sought-after wine can command remarkable prices. The values of those bottles can and do constantly shift based upon the providence of the wine (ie. how it has been stored) its age and popularity. How then can a court value a collection and divide it up?
The British Columbia courts have taken more than one position on this issue. In Forzley v. Forzley, 1998 CanLII 5511 (BC S.C.), the court roughly estimated the value of the wine collection and reapportioned other assets to compensate for the parties’ relative interests.
In Hodgkinson v. Hodgkinson, 2003 CarswellBC 2461, the court came to the conclusion that the parties’ collection, “… has no market value. It cannot be resold (Liquor Control and Licensing Act, R.S.B.C. 1996, c.267, s.38).” (at para.38) In her reasons for judgement, Mme. Justice Dillon found at para. 45 that, “Because there was no market value for the wine cellar and because it apparently cannot be sold, I conclude that the wine cellar will be distributed in specie.” “The plaintiff has had the benefit of the cellar for two years without accountability. The defendant, therefore, will have first choice of 24 bottles, followed by the plaintiff’s choice of 24 bottles, and so on. Equality of these choices is based only upon fluid ounces and not value. Each party will have to do their own homework to decide what to choose. ”
In both cases, the court was cognizant of the benefit derived by the party living above the cellar and compensated the other party for assets which may have been guzzled.
For many people, wine is not just a drink and few collect solely for financial reasons. The decision in Hodgkinson appears to take this into account. Given that appraisals will never capture the personal essence of this kind of collection, an in specie division may be the best solution.
Posted: May 14th, 2010 under Case Analysis, Property Division.
Tags: Divorce, Forzley, Hodgkinson, propery division, valuation, wine
This Post is not Privileged
Privileged communication is defined in the in the law.com dictionary as “statements and conversations made under circumstances of assured confidentiality which must not be disclosed in court”. It has been established that the phrase “Without Prejudice”, written at the head of correspondence identifies it as being privileged. It is a far too little known fact, however, that the simple act of typing the words “Without Prejudice” at the top of a letter does not endow it with the magical power of invisibility. You will, for example, inevitably be disappointed if you write those words at the head of an insulting letter to your erstwhile spouse expecting that letter to be omitted from evidence. A document is not privileged because you label it as such. Rather, the privilege relates to the character of the document. This means that not all letters labeled “Without Prejudice” are as advertised. It also means that some letters are privileged without being branded.
The law of privilege is well reviewed in the Alberta case of Leonardis v. Leonardis, 2003 CarswellAlta 940. There are three major types of privilege that parties to a family action might encounter: The first is privilege enjoyed by communication relating to legal advice between solicitor and client. This is most clearly embodied in correspondence between a lawyer and her client. The second is the privilege attached to documents that have been created primarily to further litigation. A little less defined than the first, this applies to such documents as expert reports. The third type of privilege attaches to communications in furtherance of settlement, including verbal and written discussions, offers and proposals.
The first two forms of privilege belong to the one party in the litigation partaking in the communication or obtaining the documentation. The third form, however – that of settlement communication – belongs to both the parties. This means that while the privilege of an expert report can be waived by a party wanting to use that report in court, the privilege attached to settlement negotiations can only be waived by both parties.
Because labeling something “Without Prejudice” does not change its privilege status, make sure you know what that status is before you mail the letter or hit the send button.
Posted: May 11th, 2010 under Case Analysis, Procedure.
Tags: Leonardis, Priviledge, without prejudice
Anonymizing Orders and Pleadings
By its nature, the court system is intended to be open to the public, with information about litigants available to everyone. The court is presumed to be open to the public. However, sometimes clients wish a little more privacy for any number of reasons and ask how that might be accomplished.
The most common way to maintain some privacy in a court action is to amend the style of cause (Name vs. Name) by substituting the parties’ initials instead of their full names. Unfortunately, there is no particular rule of court or legislation that permits this as of right. Instead, there are three ways this is done.
First, a judge or master can unilaterally make the decision to substitute initials. This is uncommon, but in family cases involving sensitive issues, may be ordered. Second, both parties can agree to substitute initials for names. This is the most common manner in which pleadings are amended.
Finally, the party wishing to be anonymous in the eyes of the public may bring an application before the court. Before directing the use of initials, the court must be satisfied that the party’s interest in privacy outweighs the court’s interest in preserving openness and freedom in the courts. It is not enough that a party might be embarrassed by allegations or testimony made in the course of the litigation. The concerns must be stronger. For example, if there would be a deleterious effect on the party’s livelihood or reputation, it may be sufficient.
An example of the court considering the issue of anonymity can be found in D. v. D., 2008 BCSC 306
As a cautionary note, an application to substitute initials in the style of cause should be brought as soon as it is practicable and certainly before any damaging information or statements are disclosed through the pleadings in the matter.
Posted: May 3rd, 2010 under Procedure.
Tags: 2008 BCSC 306, Anonymizing Pleadings, D. v. D., Initials
