Griffiths v. The Queen, 78 DTC 6286, [1978] CTC 372 (FCTD)

Collier, J:—The Plaintiff for the 1975 taxation year, filed a return in which he computed his income in accordance with section 114 of the Income Tax Act, RSC 1952, c 148, as amended by SC 1970-71-72, c 63 and further amendments up to and including 1975. This is the so-called “New Act’’. The Minister of National Revenue took the view that the plaintiff did not come within that section. He was re-assessed accordingly. In the Notification of Confirmation, dated January 26, 1977, the Minister stated as follows:

. . . the taxpayer was deemed to be a resident of Canada according to the provisions of paragraph 250(1 )(a) of the Act; the taxpayer did not qualify to be taxed under the provisions of Section 114 of the Act, p 373.

The plaintiff appealed. The defendant, in the defence in this action, adopted the same position as that taken by the Minister. Counsel for the defendant, at the end of the evidence before me and during argument on behalf of the plaintiff, commendably stated the defendant no longer relied on paragraph 250(1 )(a) of the Statute. The paragraph deems someone who “sojourns’’ in Canada for more than 183 days in a taxation year to have been a resident of Canada for that year.

The defendant, however, maintained the position that the plaintiff had not ceased to be a resident in Canada as of November 2, 1975, as asserted by the plaintiff. I do not think by abandoning reliance on paragraph 250(1 )(a) the Minister must be taken to have somehow then conceded section 114 is applicable. The onus is still on the plaintiff to show that section 114 is, in all the circumstances, applicable.

I quote the relevant portion of section 114:

114. Where an individual was resident in Canada during part of a taxation year, and during some other part of the year was not employed in Canada and was not carrying on business in Canada, for the purpose of this Part his taxable income for the taxation year is the aggregate of . . .

It is common ground in this case the plaintiff was resident in Canada until November 2, 1975. The sole issue is: For the remaining part of the year was the plaintiff “not resident’’ in Canada? That question is essentially one of fact. In Beament v MNR, (1952) 2 SCR 486; [1952] CTC 327; 6 DTC 1183, Cartwright, J said at page 494:

It has frequently been pointed out that the decision as to the place or places in which a person is resident must turn on the facts of the particular case.

I therefore turn to the evidence.

The plaintiff is now 59 years old. He is a Canadian by birth. He is still a Canadian citizen. He is married. His wife is almost 66 years old. He and his wife have lived apart since the end of October, 1975. He has two sons, aged 31 and 29. They are married and have children. One lives in Toronto and one in Montreal. His university education was at the University of Toronto and the University of Bonn, in now West Germany. His fields were English and History. He finished his dies shortly before World War II.

After graduation he did, for a while, freelance writing. Then he joined the Canadian Broadcasting Corporation. He remained with that organization until 1957. He continued to write, in a professional sense, while he was there. From 1949, until leaving, he was a senior person in respect of its television operations in Toronto. He and his family lived in that city.

From 1957 to 1961 he was employed by a television network in England. He returned to Canada in 1961. He lived in Ottawa. He became active in Bushnell Broadcasting, the predecessor of Bushnell Communications Limited. He was, in its early years, the general manager. Bushnell was granted a commercial television licence in Ottawa. It was turned down in Toronto. That was the start of what is now known as CTV. By 1975 he was the president and chief executive officer of Bushnell.

He and his wife have lived in four different dwellings in Ottawa. They have always been owned by his wife. The first house was a modest one. He contributed to its purchase. Another house was bought. On its sale, they moved to a townhouse. That was sold. In 1975 they were living in. another townhouse. In all cases the plaintiff provided his wife with funds for upkeep, charges and maintenance. That included taxes and insurance charges whether paid directly or through condominiumstyle assessments.

In 1974, there were attempts by others to acquire control of Bushnell The third attempt was by Standard Broadcasting. It was successful and won approval of the CRTC. The takeover was completed by July of 1975. The plaintiff had, with his previous employer, an employment contract, terminable but renewable, on his 60th birthday. It also had retirement annuity provisions. The new owners wanted a change of management. As a result, the plaintiff’s contract was terminated effective October 15, 1975. A settlement in respect of what amounted to early retirement was reached. The funds were paid into a Canadian registered retirement savings plan. The plaintiff had actually ceased working for the television company before October of 1975.

I turn, for the moment, to another matter. The plaintiff has had, for many years, a passion for sailing. When he lived in Toronto and in England he indulged that activity. When he came to Ottawa in 1961 he joined the Britannia Yacht Club. Over the years he has’ owned several sailboats, not at the same time. He has built three.

His physical home or dwelling, since November 2, 1975, has been a 40-foot ocean-going ketch, the Vo/ante. He ordered the hull for this vessel in 1970. He built, in his free time, the rest of her himself, except for specialized work such as welding. She was finished in 1975. The total cost he estimates at approximately $35,000. He tried to put in on her construction, over the four years, an average of forty hours a week.

From 1961 the plaintiff took winter vacations from Ottawa. At first he went to several places in the Caribbean. In 1969 he went to the island of Tortola in the British Virgin Islands. He ‘described it as “idyllic” with the particular area offering the best sailing in the Caribbean.

When the plaintiff began building the Volante he had in mind his retirement years. He planned to live on the vessel. He had fixed on Tortola as the place.

His wife and he had discussed their respective plans. She hated sailing. Her interests lay in other directions. It had been accepted, but amicably, that when retirement arrived they would go their respective ways and pursue their respective interests.

After his severance from Bushnell, the plaintiff proceeded with his plans. He had made the ketch suitable for ocean sailing. She had been earlier tested in Ottawa waters when she was completed in the summer of 1975. He arranged for the vessel to be land-transported to Annapolis, Maryland for the voyage to Tortola.

In October, 1975 his wife sold the Ottawa townhouse. The new occupants moved in at the end of November. The plaintiff’s wife purchased a smaller apartment in a Toronto condominium. She moved there. She still had a surplus of funds left from the sale of the Ottawa property, after paying for the Toronto property.

The plaintiff accompanied his vessel to Annapolis. He made what arrangements for the voyage were necessary there. He had given away a great deal of his clothes, including all his winter clothes. He had sold three valuable paintings by well known artists. He had sold, as well, a valuable sculpture.

The plaintiff left Canada on November 2, 1975. He sailed from Annapolis. He arrived on the island of Tortola on January 12, 1976. He had friends there. He had written them about his proposed trip.

Since arrival he has lived on his vessel at a marina in Roadtown, Tortola. He also has had a hurricane-proof mooring built in a sheltered bay. He has a mailing address at the marina. He has set up marine telephone facilities. He has a bank account of approximately $15,000.

A large part of his time since he went to the Caribbean has been spent in British Virgin Islands territorial waters. His time is not all spent sailing. The vessel demands constant care and upkeep. He reads a good deal. He is writing a novel. Because of its Canadian background he ultimately hopes to have it published by a Canadian publisher.

Before the plaintiff left Canada he resigned from a private social and dining club he had belonged to, Le Cercle Universitaire. He tendered his resignation to the yacht club, but was persuaded to take a non-resident status.

In November of 1975 the plaintiff had financial assets in Canada. They are set out in Exhibit 5. By far the largest was the Registered Retirement Savings Plan with the Montreal Trust Company, $184,000. Slightly under $20,000 remains with an investment dealer. Bank accounts came to about $11,000. Bank certificates maturing in 1979 had a value of about $35,000. They are held by creditors to secure a debt. He has certain pension and insurance benefits in Canadian sources.

None of these assets were taken to Tortola. The defendant places great reliance on that in contending the plaintiff was in 1975, and still is, resident in Canada. I do not attach any major importance to that fact. I see nothing incompatible with a severance of residence, but the keeping of investments, in this country.

The plaintiff has been back in Canada four times since 1975. He has known Judy LaMarsh for some time. She was, among other things, Chairman of an Ontario Royal Commission investigating the impact of violence depicted in television programming. After the Commission was well under way she requested the plaintiff, at Tortola, to do some research in respect of the organization of television broadcasting. She knew of his experience in the field. The plaintiff came to Toronto for three or four days to discuss the project. He agreed to do it. He did the actual work and writing in Tortola.

The Commission’s report was released in early 1977. The plaintiff returned, again for only a few days, to Toronto for press release purposes. While there, he was requested by the Minister of Communications, Mme Jeanne Sauvé, to consider doing a particular study for her department. He went to Ottawa to discuss it. He had known Mme Sauvé for some years. He agreed to do the work. It required a short visit to European television operators for research. He wrote the study in Tortola. He returned to Ottawa ‘briefly in September, 1977 to de- liver and discuss the study. The plaintiff charged fees for the LaMarsh and Sauve work.

His last visit to Canada, other than for this trial, was for Examination for Discovery in this case.

The plaintiff ended his testimony in chief by stating, in answer to a question, that he does not intend to "come back" to Canada. I took that to mean he does not intend to return to Canada to tive or reside there. He considers his living place to be Roadtown, Tortola, British Virgin Islands.

In determining the issue before me, the stated intention of the taxpayer can only be a minor factor. It is, of course, in the interests of the plaintiff to avow he has severed his residential relationship with this country. That stated intention must be carefully and objectively weighed against all the surrounding facts. I have done so. The plaintiff impressed me as candid and trustworthy. I am satisfied, after considering all the facts, he has indeed, since November 2, 1975, not been "resident in Canada".

For the defendant, the following facts are relied upon in support of an opposite conclusion:

(a) the keeping of fairly substantial assets in Canada.

I have already commented on that.

(b) the absence of any "legal’’ that is,, court endorsed, separation from his wife.

(c) a so-called matrimonial residence in Canada.

(d) the undertaking of two separate projects, for reward, from Canadian sources.

(e) the registration of the Volante in Canada, and the continuance of insurance coverage through an Ottawa agent.

(f) the intention to interest a Canadian publisher in his projected novel.

Those factors taken cumulatively, do not, as I see it, outweigh the other convincing evidence that the plaintiff on November 2, 1975, effectively and permanently (to date at least) put an end to his former Canadian residence.

There is no magic, these days, in a "legal" separation. It has no more effect on residence or non-residence than the kind of amicable oral understanding reached by the plaintiff and his wife. The matrimonial dwelling is not, on the evidence, a joint one. It is for the wife alone. The plaintiff stayed there for one night on one of the trips to Canada. That, to me, indicates the lack of rancor in the separation.

The undertaking of the projects for the LaMarsh Commission and for the Ministry of Communications is, I think, a relatively unimportant factor. The plaintiff did not seek out either project. He was sought out. I again see nothing incompatible with non-residence and doing work for reward for Canadian sources.

The Canadian registration of the vessel is insignificant. Official registration is not available in the British Virgin Islands. I, once more, see nothing incompatible with residence elsewhere and dealing with the same company and agent. The hope of successfully publishing a novel, but doing it in Canada, was satisfactorily explained by the plaintiff. I need not set that out again. i"

The evidence here, in my view, clearly and persuasively establishes the issue in favour of the plaintiff.

The appeal is allowed. The assessment is: referred back to the Minister with a direction that the plaintiff’s taxable income for 1975 is to be computed in accordance with section 114 of the Statute.

The plaintiff is entitled to his costs.