Even if the separated husband of the taxpayer was obliged to pay the taxpayer child support at a rate of $3,000 per month, rather than the $2000 per month that he was actually paying, so that arrears were accumulating at a rate of $1,000 per month, a lump sum payment $36,000 made by him to her pursuant to minutes of settlement dated December 16, 1996 that stated that such sum would be paid retroactively in respect of a twelve month period, was not includable in her income under s. 60(b), or deductible by him under s. 56(1)(b). Although the Sills case (85 DTC 5096) stood for the proposition that an obligation to pay an amount on a periodic basis maintained that periodic character even if several such amounts were paid late in a single sum, there was insufficient support that the lump sum was intended to be for arrears of child support and the fact that it was referred to as being "retroactive" indicated that the minutes of settlement were intended to create a new legal obligation rather than to pay arrears of child support. Sharlow J.A. stated (at p. 5370):
"In my view, a written agreement or court order cannot be interpreted as obliging a person to pay arrears of child support unless, at the time the written agreement or court order is made, there is (1) an express or implied recognition of a pre-existing obligation to pay child support for a prior period, (2) an express or implied recognition of a complete or partial or partial breach of that obligation, resulting in arrears of child support, and (3) an obligation set out in the written agreement or court order to pay the arrears in whole or in part."