Healy v. The Queen, 79 DTC 5060, [1979] CTC 44 (FCA)

Urie, J:—This is an appeal from a Judgment of the Trial Division wherein the respondent’s appeal from a decision of the Tax Review Board was allowed. As a result, the respondent’s assessment for tax of the appellant’s income for the 1973 taxation year disallowing the deduction of the appellant’s claim for meals while working at Fort Erie, Ontario, was restored.

The relevant facts may be briefly stated. The appellant at all material times resided in the Municipality of Metropolitan Toronto and was employed by the Ontario Jockey Club (hereinafter called the Club) as a money room division head and, from time to time, as a money room captain, in the pari-mutuel operations of his employer. He had been so employed for some twenty-five years prior to the trial in March, 1978. At all material times, the appellant was a member of the Mutuel Employees Association, Local 528, Service Employees International Union and as such his employment was subject to a collective bargaining agreement dated January 1, 1973.

The Ontario Jockey Club’s head office was, in 1973, and still is located in Rexdale, a part of the Municipality of Metropolitan Toronto. It operates six race tracks, including two in Metropolitan Toronto, namely, Woodbine and Greenwood and one at Fort Erie, Ontario, a municipality approximately 100 miles from Metropolitan Toronto. The Club holds two thoroughbred race meets each year at each of the tracks mentioned. The appellant was assigned by the Club to work at different times in the year at each of the three tracks. In 1973, he worked at Fort Erie from April 15 to May 13 and from July 18 to September 1. While at Fort Erie he lived in a motel. He received no allowance or reimbursement from the Club for his travelling expenses to and from Fort Erie nor for the cost of accommodation and meal expenses incurred while he was in Fort Erie.

For the 1973 taxation year, the appellant deducted from his income the costs of transportation, accommodation and meals, incurred by him while he worked at Fort Erie. His claim for deduction of his transportation and accommodation expenses under paragraph 8(1 )(h) of the Income Tax Act was allowed by the Minister of National Revenue, but his claim for the deduction of $504.00 for meal expenses was disallowed as not falling within the exception in subsection 8(4) of the Act. The quantum of the meal expense incurred was not disputed. The Tax Review Board sustained the appellant’s appeal but the Trial Division reversed this decision and restored the assessment. It is from that judgment that this appeal is brought.

One of the other facts which should be mentioned is that while the Club has the right to determine where and when the employees covered by the collective agreement will work from time to time, a list, called an assignment list, is furnished to the Union if it requests it, and is posted by the union at each of the tracks to inform the employees of their work assignments. The evidence also discloses that the employees’ salaries are paid from the Club’s head office in Toronto and are delivered by courier to the employees at whichever track they may be working. Disciplinary matters are handled initially at the tracks but final disposition of such matters is the responsibility of a senior officer at head office.

Paragraph 8(1)(h) and subsection 8(4) of the Income Tax Act, SC 1970-71-72, c 63 read as follows:

(h) Travelling expenses.—where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of his employment away from his employer’s place of business or in different places,

(ii) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of the duties of his office or employment, and

(iii) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraph 6(1)(b)(v), (vi) or (vii), not included in computing his income and did not claim any deduction for the year under paragraph (e), (f), or (g),

amounts expended by him in the year for travelling in the course of his employment;

(4) Meals. An amount expended in respect of a meal consumed by an officer or employee shall not be included in computing the amount of a deduction under paragraph 1(f) or (h) unless the meal was consumed during a period while he was required by his duties to be away, for a period of not less than twelve hours, from the municipality where the employer’s establishment to which he ordinarily reported for work was located and away from the metropolitan area, if there is one, where it was located.

The learned trial judge, after reviewing the evidence and ascertaining the dictionary meaning of “ordinarily” made the following finding:

In the view I have of the facts, it was a matter of regular occurrence, normal and not exceptional for the defendant to carry out his duties during the racing season as required by his employer at at least two, if not three, different places, that is to say, at Toronto and at Fort Erie or at the Greenwood, Woodbine and Fort Erie racetracks. I conclude, therefore, that the defendant’s situation fell within the meaning of paragraph 8(1)(h) and that he was entitled to a deduction in respect of his expenses of travelling in the course of his employment. Moreover such expenses would, I think, ordinarily include, but for the effect of subsection 8(4), the cost of his meals while at Fort Erie in the course of his duties.

In subsection 8(4), the word “ordinarily” is part of the phrase “where the employer’s establishment to which he ordinarily reported for work was located”. In this context it modifies the expression “reported for work” and has the effect of narrowing what the phrase would include if the word were not there. The expression “reported for work” itself refers, I think, to the daily attendance by an employee for work. To give the word “ordinarily” its meaning, it appears to me to be necessary to conceive of and identify the establishment of the employer to which the employee “as a matter of regular occurrence”, “usually” or “normally” reported for work.

When this has been done, the wording of the subsection makes it necessary to go a step further and ascertain the municipality in which that establishment is located.

In the present case there were, in my view, not one but three establishments of the Jockey Club to which the defendant in the course of the racing season usually, normally and as a matter of regular occurrence reported for work, that is to say, the Woodbine, Greenwood and Fort Erie racetracks, depending in each case, on the race meetings being held and the track to which the defendant was assigned. On the facts I am unable to see any valid basis for distinguishing, for present purposes, any one of the three tracks from the others and I am unable to reach the conclusion that any one of them alone was or that any two of them together were the establishment where the defendant ordinarily reported for work to the exclusion of the other or others.

I agree with the learned trial judge, and, of course, the respondent does not disagree, that the appellant falls squarely within the provisions of paragraph 8(1)(h) and was thus entitled to deduct his travelling expenses. However, with great deference, I disagree with his conclusion that subsection 8(4) precludes the appellant from deducting the cost of his meals while at Fort Erie in the course of his duties.

On the evidence, it is clear that:

(a) the head office of the Club (the employer), in 1973 and at the time of trial, was in the Municipality of Metropolitan Toronto;

(b) the employer from that head office assigned the employment schedules of its employees, disciplined them and paid them;

(c) the appellant, who resided in the Municipality of Metropolitan Toronto, having been assigned his employment schedule by his employer, the Club, in 1973 worked approximately two-thirds of his working time in establishments operated by the Club in the Municipality of Metropolitan Toronto;

(d) when the appellant worked at the Club’s establishment in Fort Erie he was entitled to deduct his accommodation and travelling expenses pursuant to paragraph 8(1 )(h) of the Act since he was ordinarily required to carry on the duties of his employment in different places.

From all of the above, it logically follows, in my view, that clearly the municipality in which the appellant usually worked was the Municipality of Metropolitan Toronto. In that municipality, the employer had two establishments to which the appellant usually reported for work, depending upon which of the two was operating at the relevant time. In 1973 that usual reporting was interrupted while he worked in another of the employer’s establishments outside of Toronto, at Fort Erie, as part of his duties, for a period representing approximately one-third of his working time in that year. That, as I see it, was not “the municipality where the employer’s establishment to which he ordinarily reported for work’’ was located. It was simply one of the “different places” at which he was required to work by virtue of the nature of his employment. On the facts of this case, it seems to me that, indisputably, the Municipality of Metropolitan Toronto was the municipality in which was located the establishments to which the appellant usually or commonly reported for work.

The question thus becomes—does that view of the appellant’s employment situation in 1973 bring him within subsection 8(4) for the purpose of deduction of his meal expenses in the computation of his taxable income? I believe that it does. The Shorter Oxford English Dictionary defines “Ordinarily”, inter alia, as

in most cases, usually, commonly

Substituting, then, the word “ordinarily” for the expressions “commonly” and “usually” which are used in the analysis of the appellant’s employment Situation in the immediately preceding paragraphs, clearly leads to the conclusion that the appellant qualifies for the meal expense deduction unless the fact that there are two establishments in this base employment municipality affects the result. In my opinion, it ought not to. On any logical view of it, the purpose of the section is to first find the municipality where an employee usually reports for work and then to find whether or not he is entitled to meal expense deduction for having, in the course of his employment, to be away from that municipality for more than twelve hours. On that view of the section, it matters not whether there is only one or there are several establishments in the “base” municipality. The Interpretation Act,* [1] subsections 3(1) and 26(7), permits such a logical interpretation without the necessity of holding, as the learned trial judge held, that both the words “municipality” and “establishment” must be read in the plural since, in the context of subsection 8(4) as I read it, a contrary intention, within the meaning of subsection 3(1), does appear.

Where the learned trial judge erred, I respectfully suggest, was in finding that

In subsection 8(4), the word “ordinarily” is part of the phrase “where the employer’s establishment to which he ordinarily reported for work was located”. In this context it modifies the expression “reported for work” and has the effect of narrowing what the phrase would include if the word were not there. The expression “reported for work” itself refers, I think, to the daily attendance by an employee for work.

I think, on the contrary, that the expression “reported for work” when used with the word “ordinarily” applying the dictionary meaning of it, refers to the reporting in a larger sense, not a narrower one, namely, “in most cases” or as a general rule. To so interpret the words is consonant with what I think is necessary for the interpretation of subsection 8(4) which is to read it together with paragraph 8(1)(h).

The objective of paragraph 8(1 )(h) is to enable employees who are required by their employment to work from time to time away from the places at which they usually work, to deduct their out-of-pocket expenses in so doing. Subsection 8(4) is designed to prevent abuses in the application of paragraph 8(1)(h) but not to prevent the legitimate deduction of expenses properly incurred while working at different places. As I see it, the rather restrictive interpretation adopted by the trial judge would unfairly detract from the overall objective of the sections.

For all the above reasons, I would allow the appeal and refer the assessment here in issue back to the Minister of National Revenue for reassessment allowing the deduction by the appellant of his meal costs in 1973 amounting to $504. The appellant should be entitled to his costs of the appeal as well as the costs at trial as awarded to him by the judgment of the Trial Division.

MacKay, DJ:—I agree with the Reasons and conclusions of my Brother Urie.