Frederick Mark Reed v. Minister of National Revenue, [1989] 1 CTC 2070, 89 DTC 34

Bonner, T.CJ.:—This is an appeal from assessments of income tax for the 1982 and 1983 taxation years. The issue is whether the appellant is correct in contending that he was not resident in Canada during those years with the consequence that he is not liable to tax under subsection 2(1) of the Income Tax Act. That provision reads as follows:

An income tax shall be paid as hereinafter required upon the taxable income for each taxation year of every person resident in Canada at any time in the year.

The issue is one of fact. The appellant gave evidence in support of his appeal. He testified that he was born in 1961 at Halifax, N.S. He graduated from high school in 1980 with what he described as "grade 12 equivalency". He worked for a time in Alberta and subsequently in Nova Scotia. Early in 1981 he commenced what is called a New Entry Seaman's course. Following completion of that course in May of 1981 he took a job as a seaman with Gypsum Transportation Limited, an organization which he said was registered in Bermuda. That company operates ships which travel between ports in Nova Scotia and ports on the east coast of the United States and the Gulf of Mexico. From May of 1981 to the present the appellant has worked exclusively on ships belonging to the company.

While in Halifax during the period before he joined Gypsum Transportation Limited the appellant lived at his parents' home. When he first joined the ship he said that he took all his worldly possessions with him. They consisted of clothing and a stereo. The appellant stated that he soon became friendly with a man named Curtis Dublin who suggested that the appellant consider living in Bermuda. Mr. Dublin proposed that the two of them make an arrangement to share accommodation consisting of a studio apartment in Pembrooke, Bermuda. The apartment was located just behind Mr. Dublin's grandparents' home. According to the appellant this accommodation sharing arrangement continued until the appellant moved to the Cayman Islands in 1987. The appellant was unable to give precise details as to the frequency and length of his visits to Bermuda. He said only that he was in Bermuda for one week at some time in 1982, in January of 1983 and for one week in August 1983. It is clear that the appellant did not enter or remain in Bermuda as a matter of right. He stated that he used his Canadian birth certificate to enter Bermuda. In order to enter he had to show as well that he held a return ticket. Although Gypsum Transportation Limited had a post office box in Bermuda the visits which the appellant did make to that island were unconnected with his employment. The company’s ships did not call there. The only connection between the appellant and Bermuda appears to have consisted of the shared apartment and the visits thereto. The evidence does not suggest that the appellant had any personal relationships, investments, property or other ties of any consequence to the island. No details were given as to the apartment lease. It is not clear whether the appellant was a party to it.

As a seaman the appellant spent the greatest part of each year on vessels belonging to Gypsum Transportation. He stated that when taking leave he usually signed off ship in Canada and went to visit a few people before leaving the country. Signing off the ship in Canada was, the appellant said, convenient to the company. It would seem that after the appellant went to sea no room was kept for his exclusive use at his parents' Halifax home. The appellant said that at times when on leave he remained in Canada for as long as a few weeks. The appellant said that when taking leave it was his habit to leave his personal possessions on the ship.

The appellant attended school in Canada for further training which led to qualification as a third mate. The course lasted from December 22, 1983 to May 19, 1984. During that period the appellant stayed at his parent's home in Halifax. In connection with training for qualification as a second mate, the appellant again studied at the Nova Scotia Nautical Institute. The course lasted from November 1, 1986 to March 7, 1987. The appellant stated that he will need to return to Canada twice for further training namely for qualification as chief mate and for qualification as a master mariner.

The appellant is a Canadian citizen. He carries a Canadian passport. At all relevant times he held a "continuous discharge book" issued and maintained under section 183 of the Canada Shipping Act, 1970.

The appellant has held a Nova Scotia driver's license since he was 16 years old. He stated that he needs it in order to secure an international driver’s license. He said that he does not pay into the Canada Pension Plan. During 1982 and 1983 he maintained a chequing account with a credit union in Nova Scotia. He stated that he needed the account in order to cash cheques received from his employer. He claims that he now has an account in the Cayman Islands. Late in 1983 he negotiated a loan from the credit union in order to acquire a car. He emphasized that he did not himself buy the car but rather that it was registered in his father's name and was insured as the father's second car.

The appellant's representative submitted that the appellant's residence was in Bermuda during the years in question. In argument he emphasized that:

(a) at no time during the years in question did the appellant maintain a residence in Canada, whether rented or owned. No room was set aside for his exclusive use in his parents' home;

(b) during the years in question the appellant did maintain a residence in Bermuda which he used albeit infrequently;

(c) the appellant’s presence in Canada during the years in question resulted from circumstances beyond the appellant's control, that is to say, the practice of discharging the appellant from his ship for purposes of periods of leave at ports in Nova Scotia and the further fact that the appellant was taking his education in this country;

(d) it was only due to circumstances beyond the appellant's control that he needed to maintain a bank account in Canada;

(e) the appellant kept no personal property in Canada;

(f) the appellant had neither dependants nor close relations in Canada (save for his parents);

(g) Revenue did not "contest" the appellant's status for the years 1984, 1985, 1986 and 1987; and

(h) if the appellant did not reside in Bermuda he resided on the ships on which he worked.

It is useful at the outset to refer to the following passage from the reasons for judgment of Rand, J. in Thomson v. M.N.R., [1946] C.T.C. 51 at 64; 2 D.T.C. 812 at 815:

For the purpose of income tax legislation, it must be assumed that every person has at all times a residence. It is not necessary to this that he should have a home or a particular place of abode or even a shelter. He may sleep in the open. It is important only to ascertain the spatial bounds within which he spends his life or to which his ordered or customary living is related. Ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumstances, but also accompanied by a sense of transitoriness and of return.

But in the different situations of so-called “permanent residence”, "temporary residence”, “ordinary residence", “principal residence” and the like, the adjectives do not affect the fact that there is in all cases residence; and that quality is chiefly a matter of the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living with its accessories in social relations, interests and conveniences at or in the place in question. It may be limited in time from the outset, or it may be indefinite, or so far as it is thought of, unlimited. On the lower level, the expressions involving residence should be distinguished, as I think they are in ordinary speech, from the field of "stay" or "visit".

There can be no doubt that the appellant's ties with any particular place are limited by reason of his occupation. However, the evidence does not indicate that in so far as "ordered and customary living” is concerned the appellant's connection to Canada was less than his connection to Bermuda. In my view Bermuda was, during 1982 and 1983, simply a place which the appellant visited frequently. The appellant had no ties with Bermuda whether of origin, of family, of property or of occupation which would make it likely that the appellant would choose to reside there. There was no evidence that such ties were formed in consequence of his visits. It would seem that the law in Bermuda did not accord to the appellant a status greater than that of a temporary visitor. This is clear from the requirement that the appellant produce a return ticket in order to demonstrate his ability to depart on demand.

The appellant's evidence as to the place or places where he did stay in Canada while on leave was imprecise. He may have had no fixed abode. However, as Rand, J. made clear in the passage previously quoted, a fixed abode is not necessary to a finding of residence. Furthermore the evidence suggests that the appellant did stay at his parents' home occasionally if not habitually. The appellant used the address of that home for purposes of his applications to enrol at the Nautical Institute, for purposes of his driver's license and finally for purposes of his relationship with the credit union. A right of exclusive use of a room at a place is not a prerequisite to residence at that place or in that area.

With respect to the third argument it will be noted that the lives of individuals, and in particular their choices of places of residence, are often influenced by external forces. However, the fact that circumstances such as those arising from employment may influence a choice of residence does not support a conclusion that actual place of residence is to be ignored in favour of desired place of residence. In short the fact that the appellant may have preferred Bermuda to Canada as a place of residence does not indicate that Bermuda was in fact the place of residence.

The fourth argument is irrelevant.

The fifth argument is one not entirely borne out by the evidence. The appellant does not appear to have been encumbered by personal property save for the car. The evidence makes it plain that the appellant bought and paid for the car and simply registered title in his father's name. There is no room for doubt on the evidence that the appellant was in point of fact the beneficial owner of the car.

It is true that the appellant had no dependants in Canada. Equally he had no dependants anywhere else. He did have relatives in Canada, that is to say his parents, and he did have the friends in this country whom he said he visited while on leave.

There was no evidence in support of the next argument. I assume the appellant's representative intended to suggest that the respondent has not assessed the appellant to tax under Part I for the years mentioned. Whether he did or did not has no bearing on the question whether the assessments that were made and are under appeal are correct.

As to the final argument I can not find that a ship, an ordinary freighter upon which a sailor happens to work from time to time, becomes his residence during the periods of work. In my view, the ordinary meaning of the word residence does not encompass such circumstances. In Re Young (1875), 1 T.C. 57, the Scottish Court of Exchequer had occasion to consider a contention that the master of a trading vessel resided on his ship when at sea. At page 59 the Lord President of the Court said "a residence according to the ordinary meaning of the word, must be a residence on shore, a dwelling in a house". The present circumstances are entirely different from those under consideration in Griffiths v. The Queen, [1978] C.T.C. 372; 78 D.T.C. 6286. There the vessel which served as the taxpayer's home appears to have been tied up at the marina in Roadtown when not in use for relatively short local trips. The taxpayer in that case was simply a person who lived in Roadtown using floating accommodations. In my view the evidence shows that the respondent correctly found the appellant to be resident in Canada during the years in question. The appeals will therefore be dismissed.

Appeals dismissed.