The Chief Justice (concurred in by Pratte, J and MacKay, DJ) (judgment delivered from the Bench):—For the reasons given by the learned trial judge, I am of opinion that the judgment appealed from is correct.
Having regard to the weight placed by the appellant on the decision of the Trial Division in Quance v The Queen, [1974] CTC 225; 74 DTC 6210, I deem it advisable to state in my own words what I regard as the basic fallacy in the appellant’s position.
Once it is conceded, as the appellant does, that the respondent was dismissed “without notice”, moneys paid to him (pursuant to a subsequent agreement) “in lieu of notice of dismissal” cannot be regarded as “salary”, “wages” or “remuneration” or as a benefit “received or enjoyed by him... in respect of, in the course of, or by virtue of the office or employment”.* Moneys so paid (ie, “in tieu of notice of dismissal”) are paid in respect of the “breach” of the. contract of employment and are not paid as a benefit under the contract or in respect of the relationship that existed under the contract before that relationship was wrongfully terminated. The situation is not altered by the fact that such a payment is frequently referred to as so many months’ “salary” in lieu of notice. Damages for breach of contract do not become “salary” because they are measured by reference to the salary that would have been payable if the relationship had not been terminated or because they are colloquially called “salary”. The situation might well be different if an employee was dismissed by a proper notice and paid “salary” for the period of the notice even if the dismissed employee was not required to perform the norma! duties of his position during that period. Having regard to what I have said, it is clear, in my view, that the learned trial judge was correct in holding that the payment in question did not fall within section 5 of the Income Tax Act as applicable to the taxation year in question.
In so far as section 25 of that Act is concerned, on the facts, it’ cannot be contended with any seriousness that the amount in question can reasonably be regarded as falling within paragraph (i), (ii) or (iii) of that section.
The appellant did not make in this Court the argument made in the Trial Division that the amount in question was a “retiring allowance”.
With reference to the further contention in this Court that the payment was income even if not income from an office or employment, this contention was based upon a line of cases which, in so far as relevant, held that remuneration for services is income. In my view, such authorities have no application to damages for wrongful dismissal.
Finally, I should say that, in my view, the onus of proof on a taxpayer to rebut the assumptions on which the assessment was based cannot assist the appellant inasmuch as there was ample evidence to support the findings of the learned trial judge.
I am of opinion that the appeal should be dismissed with costs.