Date: 20011026

Docket: 2001-1627-IT-I

BETWEEN:

KENNETH CAVALIER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Bowie J.

[1]            This appeal is brought from an assessment for income tax for the 1998 taxation year. By that assessment the Minister of National Revenue denied the Appellant's claim to deduct certain moving expenses under section 62 of the Income Tax Act (the Act). The appeal was heard under the informal procedure. The issue before me is whether a person who moves from a permanent residence to a different residence to work for a limited period of time, and then moves back to his permanent residence, can be said, while at that temporary residence, to be ordinarily resident there. The Appellant claims that he is entitled to deduct the expenses of both moves in computing his income.

facts

[2]            In 1997 the Appellant resided with his wife in a house owned by him in Delta, British Columbia. In the latter half of December that year, he accepted a job to teach for one term at Keyano College in Fort McMurray, Alberta. His contract there ran from January 3, 1998 to April 30, 1998. At the beginning of January the Appellant flew from Vancouver to Fort McMurray, taking with him such clothes and other personal items as he was able to take by airplane. He also sent some personal effects to Fort McMurray by bus.

[3]            Fort McMurray is a remote community, and it has undergone spectacular growth in recent years which has resulted in a chronic housing shortage. While there, the Appellant lived in a residence at the College which was available to both term-appointed faculty and students. His accommodation consisted of a private bedroom, and shared use of bathroom, kitchen and living room facilities. He had to supply his own dishes and cutlery if he wished to use the kitchen facility, but otherwise the premises were furnished. During the four months that he was in Fort McMurray he made several weekend trips back to Delta, where his wife continued to live in his house and work at the University of British Columbia. In March he flew to Vancouver and returned by automobile. At the end of his contract he drove the automobile back to Delta. His wife met him in Edmonton and accompanied him for the remainder of the journey.

[4]            At the time the Appellant left Delta to go to Fort McMurray he had applied to several law faculties for admission as a student, to begin in September 1998. He sent change of address notices to those institutions, but otherwise he left his mail to be delivered at his house in Delta. He also left his bank account in Delta, and used an ATM for his banking needs in Fort McMurray. His house in Delta was subject to a mortgage, the payment on which was $1,000 per month. Prior to 1998, he and his wife had each paid one-half of the monthly payment for the mortgage; the evidence was unclear as to who paid it during the four months that the Appellant was in Alberta.

[5]            Before his teaching term at Keyano College was completed, the Appellant had been accepted at U.B.C. to enter the law faculty in September, and he had obtained a contract to teach for the summer term at Simon Fraser University. I have no doubt that when he left for Alberta in January he hoped and expected that he would return to Delta in May. Before the end of April that had become a certainty. He testified that he could have applied for another term contract at Keyano College, but I infer from his evidence that this was not something that he wanted to do. After his return to Delta the Appellant resumed living, with his wife, in the house that he still owned there.

statutory provisions

[6]            Subsections 62(1) and (3) of the Act reads as follows:

62(1)        There may be deducted in computing a taxpayer's income for a taxation year amounts paid by the taxpayer as or on account of moving expenses incurred in respect of an eligible relocation, to the extent that

(a)           they were not paid on the taxpayer's behalf in respect of, in the course of or because of, the taxpayer's office or employment;

(b)           they were not deductible because of this section in computing the taxpayer's income for the preceding taxation year;

(c)            the total of those amounts does not exceed

(i)       in any case described in subparagraph (a)(i) of the definition "eligible relocation" in subsection 248(1), the taxpayer's income for the year from the taxpayer's employment at a new work location or from carrying on the business at the new work location, as the case may be, and

(ii)      in any case described in subparagraph (a)(ii) of the definition "eligible relocation" in subsection 248(1), the total of amounts included in computing the taxpayer's income for the year because of paragraphs 56(1)(n) and (o); and

(d)           all reimbursements and allowances received by the taxpayer in respect of those expenses are included in computing the taxpayer's income.

...

62(3)        In subsection (1), "moving expenses" includes any expense incurred as or on account of

(a)           travel costs (including a reasonable amount expended for meals and lodging), in the course of moving the taxpayer and members of the taxpayer's household from the old residence to the new residence,

(b)           the cost to the taxpayer of transporting or storing household effects in the course of moving from the old residence to the new residence,

(c)            the cost to the taxpayer of meals and lodging near the old residence or the new residence for the taxpayer and members of the taxpayer's household for a period not exceeding 15 days,

(d)           the cost to the taxpayer of cancelling the lease by virtue of which the taxpayer was the lessee of the old residence,

(e)            the taxpayer's selling costs in respect of the sale of the old residence,

(f)             where the old residence is sold by the taxpayer or the taxpayer's spouse or common-law partner as a result of the move, the cost to the taxpayer of legal services in respect of the purchase of the new residence and of any tax, fee or duty (other than any goods and services tax or value-added tax) imposed on the transfer or registration of title to the new residence, and

(g)           interest, property taxes, insurance premiums and the cost of heating and utilities in respect of the old residence, to the extent of the lesser of $5,000 and the total of such expenses of the taxpayer for the period

(i)        throughout which the old residence is neither ordinarily occupied by the taxpayer or by any other person who ordinarily resided with the taxpayer at the old residence immediately before the move nor rented by the taxpayer to any other person, and

(ii)          in which reasonable efforts are made to sell the old residence, and

(h)           the cost of revising legal documents to reflect the address of the taxpayer's new residence, of replacing drivers' licenses and non-commercial vehicle permits (excluding any cost for vehicle insurance) and of connecting or disconnecting utilities,

but, for greater certainty, does not include costs (other than costs referred to in paragraph (f)) incurred by the taxpayer in respect of the acquisition of the new residence.

The expression "eligible relocation" is defined in subsection 248(1).

"eligible relocation" means a relocation of a taxpayer where

(a) the relocation occurs to enable the taxpayer

(i)       to carry on a business or to be employed at a location in Canada (in section 62 and this subsection referred to as "the new work location"), or

(ii) to be a student in full-time attendance enrolled in a program at a post-secondary level at a location of a university, college or other educational institution (in section 62 and in this subsection referred to as "the new work location"),

(b)           both the residence at which the taxpayer ordinarily resided before the relocation (in section 62 and this subsection referred to as "the old residence") and the residence at which the taxpayer ordinarily resided after the relocation (in section 62 and this subsection referred to as "the new residence") are in Canada, and

(c)            the distance between the old residence and the new work location is not less than 40 kilometres greater than the distance between the new residence and the new work location

except that, in applying subsections 6(19) to (23) and section 62 in respect of a relocation of a taxpayer who is absent from but resident in Canada, this definition shall be read without reference to the words "in Canada" in subparagraph (a)(i), and without reference to paragraph (b);

[7]            In computing his income for 1998 the Appellant deducted $3,369.11 for moving costs, which he calculated in this way:

From Delta B.C. to Fort McMurray Alberta:

                Airfare for 2 persons                                                                                            $ 588.00

                Temporary living expenses near new or old residence

                                15 nights accommodation                                                                       200.00

                                Meals                                                                                                                         210.57

                Cost for cancelling the lease for the old residence                             500.00

                Less reimbursement or allowance not included in income      --

                Total                                                                                                                                        $1,498.57

Fort McMurray Alberta to Delta B.C.:              

                Cost for 2 persons travelling by car                                                   $ 452.57

                Accommodation - 5 nights                                                                                    409.77

                Meals                                                                                                                                         112.30

                Temporary living expenses near new or old residence

                15 nights accommodation                                                                       250.00

                                Meals                                                                                                                         245.95

                Cost for cancelling the lease for the old residence                             400.00

                Less reimbursement or allowance not included in income      --

                Total                                                                                                                                        $1,870.54[sic]

[8]            It became evident during the Appellant's evidence that these moving expenses were considerably inflated beyond the definition of that expression found in subsection 62(3) of the Act. First, there were not two persons being relocated. The Appellant's wife did not move to Fort McMurray. The second airfare, he testified, was paid when he took a one-way ticket to Vancouver in March and drove his car back. Second, the Appellant did not have to, and did not, use any temporary accommodation, either when he moved to Alberta or when he moved back. He simply charged the cost of his first 15 days' rent at the residence at Keyano College, and the meals he ate while in that residence, as temporary living expenses on the eastbound trip, and the first half of his share of the mortgage payment for May, and the cost of his meals taken during those 15 days while living in his own house in Delta, as temporary living expenses on the westbound trip. The Act permits a taxpayer to deduct up to 15 days' expenses for temporary accommodation near, not at, the old or the new residence, to cover those situations where the date of giving up possession of the old residence and the date of gaining possession of the new one do not coincide. The Appellant had no such requirement; he simply seeks to deduct his personal living expenses for a total of one month. Third, the Appellant incurred no cost to cancel a lease in either Delta or Fort McMurray. He simply charged his one-half share of the mortgage payment for January on the house in Delta, and his rent for April in Fort McMurray, under this head. Finally, the Appellant conceded during his evidence that Keyano College had given him a reimbursement for his moving expenses of $1,020 in the form of a loan that was forgiven at the end of his teaching term, and that this amount had not been included in his income. He testified that he believed when he filed his income tax return that this amount had been included in the income stated on his T-4 form from Keyano College, but during the hearing he agreed that in fact it had not been.

[9]            Properly computed in accordance with subsection 62(3), then, the Appellant's moving expenses were:

From Delta to Fort McMurray:

Airfare - one person one way                                                             $ 294.00

From Fort McMurray to Delta:[1]

Automobile expenses                                                                           $ 452.57

Accommodation - 5 nights[2]                                                                    409.77

Meals                                                                                                                         112.30

                Total                                                                                                                        $1,268.64

                Less untaxed reimbursement                                                               1,020.00

                Actual moving expenses                                                                     $ 248.64

issue

[10]          The question, before me is whether the Appellant, when teaching at Keyano College for four months, had his ordinary residence at Fort McMurray, or in Delta? If it was the former then he is entitled to deduct $248.64; if it was the latter, then he did not relocate, and his appeal must be dismissed.

the Charter argument

[11]          Before I deal with the interpretation of section 62 of the Act, I need to address the question of an argument made by the Appellant which is based upon the Canadian Charter of Rights and Freedoms. Counsel for the Respondent referred me to the decision of the Federal Court of Appeal in Nelson v. The Queen,[3] and took the position that I should not hear the Charter argument at all, as the Appellant had failed to serve notice on the provincial Attorneys General, as required by section 57 of the Federal Court Act.[4] In that case the Tax Court Judge gave consideration to an argument based on the Charter, although notice under section 57 had not been given, and, finding the argument to have no merit, dismissed the appeal. On appeal to the Federal Court of Appeal the Appellant did serve the required notices. The Federal Court of Appeal reached the same conclusion as the Tax Court Judge as to the merit of the Charter argument, and so dismissed the appeal. However, in giving the Court's reasons, Sharlow J.A. said:

[7] The Tax Court Judge was correct to conclude that subsection 118(5) precluded Mr. Nelson from claiming the "equivalent to married" tax credit. However, he should not have considered Mr. Nelson's Charter arguments because he did not comply with subsection 57(1) of the Federal Court Act, R.S.C. 1985, c. F-7, which reads as follows:

57.(1) Where the constitutional validity, applicability or operability of an Act of Parliament or of the legislature of any province, or of regulations thereunder, is in question before the Court or a federal board, commission or other tribunal within the meaning of the National Defence Act, the Act or regulation shall not be adjudged to be inalid, inapplicable or inoperable unless notice has been served on the Attorney General of Canada and the attorney general of each province in accordance with subsection (2).

57. (1) Les lois fédérales ou provinciales ou leurs textes d'application, dont la validité, l'applicabilité ou l'effet, sur le plan constitutionnel, est en cause devant la Cour ou un office fédéral, sauf s'il s'agit d'un tribunal militaire au sens de la Loi sur la défense nationale, ne peuvent être déclarés invalides, inapplicables ou sans effet, à moins que le procureur général du Canada et ceux des provinces n'aient été avisés conformément au paragraphe (2).

[12]          As Campbell J. of this Court has recently pointed out,[5] section 57 of the Federal Court Act does not preclude a judge from giving consideration to an argument based on the Charter in the absence of notices being served; it merely provides that, in the absence of such notice, no judgment may be given which impugns a statutory enactment on constitutional grounds. The usual practice of the judges of this Court when they encounter a Charter argument of which the Appellant has not given notice is to hear the argument, and give preliminary consideration to it. If the argument appears to have merit, and if giving effect to it would lead to the invalidation of a statutory provision, then the matter can be adjourned to permit the constitutional point to be argued after the required notice has been given. If the argument has no merit, then the appeal may be disposed of on that basis. This manner of proceeding does not violate section 57 of the Federal Court Act. Moreover, it avoids the two alternative ways of proceeding, both of which are unsatisfactory.

[13]          A considerable number of appeals are brought to this Court in which the Appellants wish to argue that an Act or a regulation is invalid or inoperative. It is their right to make the argument, whether it is destined to fail or not. Section 57 of the Federal Court Act, important though it is, is apparently not well known to the legal community; to the unrepresented litigant, it is practically unheard of. It is unsatisfactory to deprive a taxpayer of the right to rely on the constitution for failure to observe a relatively obscure procedural requirement. It would be unsatisfactory, too, to adjourn the hearing of every appeal before this Court in which an unmeritorious Charter argument is brought forward without the section 57 notices having been given. Nothing in section 57 precludes the present practice; if the Charter argument has merit, the provincial and territorial attorneys will have their say before any law is found to be invalid, inapplicable, or inoperative. If the argument has no merit, the appellant will at least have had the opportunity to be heard. I note, too, that this procedure commended itself to the Federal Court of Appeal, differently constituted, in Langlois v. The Queen,[6] an appeal from the Trial Division. The first two paragraphs of the Court's reasons for judgment read:

It was agreed at the outset of the hearing that if the Court reached the conclusion that the constitutional challenge mounted by the appeal raised serious questions, the matter would be adjourned to allow for full compliance with the mandatory provisions of section 57 of the Federal Court Act, as this Court could not give effect to a request of this nature without special notice of the proceedings first having been served on the attorney general of each province. However, if the Court were unable to find some substance to the appellant's argument, it would naturally have to dismiss the appeal outright.

We allowed the appellant to say everything he wished to say, and took care to analyse his written representations and consult the authorities to which he claimed to refer. Our conviction remained the same, because the appellant, though eloquent, failed to convince us that his arguments were not solely based on misapprehension and misperception of the law.

[14]          This judgment, applying the same procedure which has prevailed for some time in this Court, is more authoritative than the obiter dictum in Nelson. Happily, it also permits unrepresented appellants to advance their constitutional arguments, without needless disruptive adjournments in those many cases where the arguments are doomed from the outset to fail.

[15]          In the present case, the Appellant, a graduate law student, filed a lengthy written argument in which his constitutional arguments were fully set forth. I have read and considered these arguments, and I do not find it necessary to provide an opportunity for the provincial Attorneys General to appear.

[16]          The Appellant submits that to interpret the statute as the Minister has done here offends his rights under sections 6 and 15 of the Charter. The argument, at least so far as section 6 is concerned, is put on the basis that the constitutional protection of mobility rights found there militates in favour of a generous interpretation. However, the Appellant goes on to submit that if I find the Minister's interpretation to be correct then I should, by way of relief, in reliance upon the Charter, rewrite the definition

¼ by the deletion of the words "ordinarily resident" [sic] and the insertion of the words "resident for the purpose of employment" so as to return the provision to its original intent and relieve the Charter infringements.[7]

[17]          The Appellant seeks to invoke subsection 6(2) of the Charter, which reads:

(2)            Every citizen of Canada and every person who has the status of a permanent resident of Canada has the right

                (a)           to move to and take up residence in any province, and

                (b)           to pursue the gaining of a livelihood in any province.

The most generous interpretation of these words could not possibly find in them the right to have the mobility they guarantee subsidized by the public purse through a deduction from income subject to tax.

[18]          It is not entirely clear from the Appellant's written argument, but I assume that he seeks the same remedy if I should give effect to his argument based on section 15 of the Charter. That argument depends upon a perceived discrimination among individuals on the basis of the length of the contract of employment under which they earn their living. This is patently not a personal characteristic, and certainly not even remotely analogous to the enumerated grounds of discrimination set out in section 15. Nor could the distinction, assuming that there is one at all, qualify as discrimination within the meaning assigned to section 15 by the Supreme Court of Canada in Law v. Canada.[8]

[19]          There may be some merit to the argument that section 6 of the Charter should influence the interpretation of the Act. However, section 57 of the Federal Court Act does not speak to the application of the Charter, or any other constitutional instrument, as an aid to interpretation. It deals only with finding that a legislative enactment is invalid, inapplicable, or inoperative.

analysis

[20]          I turn now to the interpretation of section 62 of the Act. In argument I was referred to a number of authorities, but none of them are particularly helpful in the context of this peculiar fact situation. Both parties referred to Thomson v. M.N.R.,[9] which is of course a leading authority on the subject of residence. However the facts there were very different from those before me, and the issue in that case was also different. It dealt with the question whether the taxpayer was ordinarily resident in Canada, and so subject to taxation by Canada on his world income. In the course of his reasons, Estey J. said:[10]

                A reference to the dictionary and judicial comments upon the meaning of these terms indicates that one is "ordinarily resident" in the place where in the settled routine of his life he regularly, normally or customarily lives. One "sojourns" at a place where he unusually, casually or intermittently visits or stays. In the former the element of permanence; in the latter that of the temporary predominates. The difference cannot be stated in precise and definite terms, but each case must be determined after all of the relevant factors are taken into consideration, but the foregoing indicates in a general way the essential difference. It is not the length of the visit or stay that determines the question. ...

One thing is clear from Thomson, however; the meaning of the expression ordinarily resident is far from certain. As Taschereau J. put it in his dissenting reasons:[11]

... these words are very flexible and elastic. They take colour in the context in which they are used, and may have a great variety of meanings according to the subject matter and the purposes of the Legislature, and the courts must consequently attribute to them a signification that will give effect to the legislative will.

[21]          In both Rennie[12] and Hippola,[13] taxpayers sought to deduct moving expenses in circumstances where they had been only a relatively short period in the location from which they moved. In Rennie, the Appellant moved from Montreal to Edmonton in 1981, and from Edmonton to Victoria in 1983. In 1984 he decided to make his home in Victoria, and so sold the house that he still owned in Montreal. He claimed that in 1984 he was entitled to deduct the selling costs as moving expenses. Christie A.C.J. dismissed his appeal from the Minister's refusal to permit this deduction, on the basis that the taxpayer had moved from Montreal to Edmonton in 1981, even though he had not formed the intention to live there permanently, had lived there in a rented house, and had kept his house in Montreal. In Hippola, the taxpayer moved from Navan to Waterloo in 1996, to start a business. He left his family in Navan while he attempted to sell his house there. In 1998, having been unable to sell the house, he moved back to Navan to live in the house with his family and start a business there. After his return to Navan, and before his business had been established, he was offered and accepted a job. Although Hamlyn J. dismissed his appeal because he had not moved to Navan to take that job, it is clear from his reasons that he considered the Appellant to have been ordinarily resident in Waterloo while he was there, even though his family continued to live in the house in Navan.

[22]          I conclude from these cases that in order to be "ordinarily resident" a taxpayer need not have formed the intention to remain permanently, or for any particular length of time, at the new place of residence. Nor need he move all his household effects, or be accompanied by the members of his immediate family.

In Rennie, Christie A.C.J. said this:[14]

While there is judicial authority for the proposition that for some purposes a person may have more than one residence (although only one domicile), I know of no authority that holds that a person can be ordinarily resident in two places at the same time. Nor is there anything in the wording of section 62 that suggests that possibility for the purpose of deducting moving expenses. Indeed what is essentially envisaged by the section is a taxpayer commencing to be employed and by reason thereof moving a prescribed minimum distance with the consequent termination of his then place of ordinary residence and the creation of a new and different place of ordinary residence.

[23]          The purpose of section 62 of the Act is, of course, to encourage mobility in the work force. Canada is a large country, with significant variations in employment patterns, both regionally and seasonally based. Mobility between provinces for the purpose of taking up employment is a right of sufficient value to have been given constitutional protection in section 6 of the Charter. It is therefore appropriate to give a generous interpretation to legislation which encourages mobility in the workforce. It is entirely consistent with the legislative intent that a seasonally unemployed worker in an Atlantic province should have the assistance of section 62 when he seeks work for the winter months in central Canada or the west. The section places no minimum time for which a taxpayer must reside in one place to qualify as being ordinarily resident there. Nor should this raise concern about abuse. Taxpayers are not likely to go flitting about the country simply to claim the deduction of their moving expenses. In any event, the amount that a taxpayer may deduct cannot exceed the income earned from the employment or business that he undertakes at the new location, so there is nothing to gain by touring under the guise of a work-related relocation.

[24]          The settled routine of the Appellant's daily life was, for a four-month period, in Fort McMurray. He slept there, he ate there, and he taught there. His social interaction was, for the most part, there. In ordinary parlance he would be said to be living there, albeit for a limited period of time. His occasional weekend visits to Delta were not made to resume his ordinary daily life there, but to visit his wife for a very temporary period. The fact that he was likely to resume his ordinary residence in Delta in May does not, in my view, detract from the fact that from January to April he had taken up residence in Fort McMurray.

[25]          The appeal is allowed. The assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the Appellant is entitled to a deduction under section 62 of the Act of $248.64.

Signed at Ottawa, Canada, this 26th day of October, 2001.

"E.A. Bowie"

J.T.C.C.

COURT FILE NO.:                                                 2001-1627(IT)I

STYLE OF CAUSE:                                               Kenneth Cavalier and

Her Majesty the Queen

PLACE OF HEARING:                                         Vancouver, British Columbia

DATE OF HEARING:                                           October 4, 2001

REASONS FOR JUDGMENT BY:                      The Honourable Judge E.A. Bowie

DATE OF JUDGMENT:                                       October 26, 2001

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Jasmine Sidhu

COUNSEL OF RECORD:

For the Appellant:                

Name:                                --

Firm:                 --

For the Respondent:                             Morris Rosenberg

                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

2001-1627(IT)I

BETWEEN:

KENNETH CAVALIER,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on October 4, 2001, at Vancouver, British Columbia, by

the Honourable Judge E.A. Bowie

Appearances

For the Appellant:                      The Appellant himself

Counsel for the Respondent:      Jasmine Sidhu

JUDGMENT

          The appeal from the assessment of tax made under the Income Tax Act for the 1998 taxation year is allowed, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the Appellant is entitled to a deduction of $248.64 pursuant to section 62 of the Act.

Signed at Ottawa, Canada, this 26th day of October, 2001.

"E.A. Bowie"

J.T.C.C.

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