Létourneau J.A.:
This is an application for judicial review by two applicants to quash a decision of Judge Tardif of the Tax Court of Canada. Ultimately, the only issue before us was whether Mrs. Laliberté (the applicant) was entitled to deduct, in respect of 1990, 1991 and 1992, the interest paid on a mortgage loan she took out in 1988 when a rental property belonging to her husband, on which she had a second mortgage, was repossessed.
The applicant used $20,000 of the amount so borrowed to repay the first mortgage creditor. However, the $20,000 loaned by the first mortgage creditor to the applicant’s husband in 1986 had been borrowed not to produce income, but to pay legal costs in connection with a civil suit unrelated to the rental property. At the time, the applicant had guaranteed her husband’s loan and stood joint and several surety for the borrower in relation to the lender. Thus, in 1988, when the applicant repaid the $20,000 owed to the first mortgage creditor, she released herself from her obligation as guarantor, so the amount was used for personal purposes, not to produce income.
We are all of the view that the interest deduction claim was rightly refused.
The financial difficulties experienced by the applicants are unfortunate and it is impossible not to sympathize with them. However, the applicable statutory provisions in the case at bar and their interpretation by the courts leave us, like the Judge of the Tax Court of Canada, with no alternative but to dismiss the applicant’s claim. The application for judicial review will be dismissed.
Application dismissed.