Isabelle M. Salisbury v. Minister of National Revenue, [1986] 1 CTC 2202, 86 DTC 1133

Kempo, T.C.J.:—

Part I — Issue

The issue in these appeals is whether the appellant is entitled to deduct travelling costs in her 1980 and 1981 taxation years in going to and coming from the place where she carried on her employment during those years. Both parties relied on paragraph 8(1 )(h) of the Income Tax Act (the “Act”). The Minister disallowed the claim on the basis that the amounts were not expended for travelling in the course of employment and further that the appellant was not, under the contract of employment, required to pay travelling expenses incurred by her in the performance of the duties of her office or employment.

Written submissions and argument were filed by counsel for each party following the hearing.

Part II — Decision

The appeals are dismissed for the following reasons.

Part III — Reasons for Decision

Facts

The essential facts, as are conceded, are as stated in the appellant's argument:

For the two taxation years in issue the taxpayer was employed by a school board, the Hamilton School Board, as a teacher. She then accepted a two year position at a school operated by the Ministry of Education in Milton. It was arranged that the taxpayer would remain on the staff of the Hamilton School Board and be paid by the Hamilton School Board while the Ministry would reimburse the Hamilton School Board for the taxpayer’s salary. The taxpayer was to return to work for the Hamilton School Board and eventually did so. The taxpayer claimed travelling expenses in respect of travel between Hamilton, Ontario and the Ministry’s school which was located in Milton. The amount claimed was $3,053.70 for 1980 and $3,370.36 for 1981. The Minister disallowed the deduction and the taxpayer has appealed to the Tax Board of Canada.

The September 1, 1980 to June 30, 1981 teaching secondment was effected according to the following Agreement between the Hamilton Board of Education and the Ministry of Education, Exhibit A-2:

EXHIBIT A-2

This memorandum of agreement will confirm arrangements made for the secondment of Mrs. Isabelle Salisbury from the Hamilton Board of Education to the Ministry of Education.

Mrs. Salisbury will continue on the staff of the Hamilton Board of Education and will be assigned to the Ministry of Education under the following conditions:

a) The period of secondment will be September 1, 1980 to June 30, 1981 during which time Mrs. Salisbury will undertake assignments as designated by the Ministry of Education.

b) The Hamilton Board of Education will continue to pay Mrs. Salisbury in the usual manner but the Ministry of Education agrees to reimburse the Board for Mrs. Salisbury’s salary and the employer’s share of fringe benefit costs, in accordance with her salary for 1980-81.

The Board is requested to provide salary schedules and the detailed breakdown of the employer’s share of fringe benefits.

Payments will be made as follows: in October, 40%, in February 30% and in May, 30% of the total amount payable. Salary increases arising from contract negotiations will be honoured by the Ministry.

c) In case of illness, the Ministry of Education will grant Mrs. Salisbury up to 20 days sick leave with pay per year. This means that the Ministry will pay the Board for days absent due to illness up to 20 days. Any absence in excess of 20 days per year will not be paid by the Ministry but will be deducted from Mrs. Salisbury's cumulative sick leave credits at the Board.

Note: The Ministry of Education will report absences to the Board.

d) Mrs. Salisbury will receive reimbursement for travel and accommodation expenses while travelling on government business on the same basis as applicable to civil servants who travel on government business. Daily commuting from home to office will not be reimbursed.

e) Relocation expenses will not be paid.

f) Normal school holidays will be observed.

Renewal of the Agreement was made for the September 1, 1981 to June 30, 1982 period on identical terms and conditions.

At the conclusion of the hearing counsel for the Minister advised the Court that, in view of all of the evidence given at the hearing, the matter of the identity of the employer in this case as being the Hamilton School Board would not be contested. As there is ample support for this position in the evidence, I would concur with the reasonableness of this observation and position and I so find.

Mrs. Salisbury had not signed any written contract with the Hamilton School Board or the Ministry of Education concerning her working at the Trillium School. She stated that as she was “on loan” to the Ministry she could not unilaterally terminate the position. She conceded that her decision to work at the Trillium School was voluntary on her part and that it was not a condition of her employment with the Hamilton School Board that she would agree to teach at the Trillium School. The appellant also acknowledged that she was reimbursed by the Ministry for those travelling expenses incurred in accordance with paragraph (d) of her Agreement, Exhibit A-2, supra.

As to the matter of relocation of residence during these periods of time, it was Mrs. Salisbury’s understanding that she was not to be relocated, that relocation expenses would not be paid and that the Ministry of Education had the policy of not doing so if teachers were within a reasonable commuting distance. There is no stipulation in the written Agreement, Exhibit A-2, supra, requiring Mrs. Salisbury to use her motor vehicle in going to and from the Trillium School nor as to where she should live.

For the two-year period in question Mrs. Salisbury was not required to report on a regular basis to the Hamilton School Board. What she did do was to maintain an informal type of contact with people in her department on a resource/advisory basis. She had no duties or responsibilities to a school in the Hamilton School Board district. The Trillium School sent in a monthly attendance report and an annual performance report to the Hamilton School Board.

Statutory Provisions:

The provisions of the Act of application are:

Sec. 8 Deductions allowed.

(1) In computing a taxpayer's income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:

(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 . . .

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

8 (2) General limitation. Except as permitted by this section, no deductions shall be made in computing a taxpayer’s income for a taxation year from an office or employment.

Analysis:

The appellant's position is that under the contract of employment she was required to travel the distance from the Hamilton School Board office to the Trillium School and back, that because her services were on loan such travel was therefore done in the performance of her duties of her office or employment and that the amounts that were expended were therefore for travelling in the course of her employment. Reliance was placed on the decisions of A. G. Zawadowski v. M.N.R., [1982] C.T.C. 2573; 82 D.T.C. 1583 (T.R.B.), Herbert H. Jeromel v. M.N.R., [1984] C.T.C. 2217; 84 D.T.C. 1197 (T.C.C.) and Bauke Weizenbach v. M.N.R., [1981] C.T.C. 2906; 81 D.T.C. 800 (T.R.B.).

It was urged upon the Court that the case of John Charlton v. M.N.R., [1984] C.T.C. 2616; 84 D.T.C. 1420 (T.C.C.) was distinguishable on its facts.

In my view counsel’s attempts to distinguish Charlton on its facts really comes down to his disagreement with Judge Taylor’s findings of fact and his application of the law. The reason for seeking to distinguish the Charlton decision is that its facts are substantially on all fours with those of the case at bar. John Charlton, similarly, had been seconded to the Ministry of Education to teach at the Trillium School, except that is was from the Wellington School Board.

The wording of the Salisbury Agreement differs from that of the Charlton Agreement (see page 2617 (D.T.C. 1421)) of the reported decision at which the Charlton Agreement is reproduced) with respect only to clauses (d) and (e). Clause (d) of the Salisbury Agreement has the added words “[d]aily commuting from home to office will not be reimbursed," otherwise they are identical for our purposes. Clause (e) in both cases is referable to relocation expenses. The difference in the wording of that clause does not, in my opinion, assist Mrs. Salisbury because it was her evidence that relocation expenses would not have been paid in any event if the teacher had lived within a reasonable commuting distance of the Trillium School.

Zawadowski v. M.N.R., supra, was considered by Judge Taylor in Charlton. The cases of Jeromel, supra, and Weizenbach, supra, while not having been considered by Judge Taylor in Charlton, do not help the appellant to any degree because they are distinguishable both on their respective facts and the particular issues raised therein for determination by the Court.

Counsel for the Minister has raised and relied upon the same jurisprudence in the case at bar as with the Charlton case, that is The Queen v. Gerald B. Wright, [1981] C.T.C.14; 81 D.T.C. 5004 (F.C.T.D.), The Queen v. Ervin E. Deimert, [1976] C.T.C. 301; 76 D.T.C. 6187 (F.C.T.D.) and Herman Luks [No. 2] v. M.N.R.,[1958] C.T.C. 345; 58 D.T.C. 1194 (Ex. Ct.). The applicability of the principles in The Queen v. Henry Cival, [1983] C.T.C. 153; 83 D.T.C. 5168 (F.C.A.) was considered at 2620 (D.T.C. 1423) of the Charlton decision.

After perusal and consideration of all of the above jurisprudence it is obvious that Judge Taylor was fully aware of these decisions in reaching his conclusions. No reasons nor justification has been advanced to me in the case at bar that the Charlton decision is distinguishable or alternatively, that the hurdle has been cleared for the justification of a departure from a decision of a judge of the same Court. The nature of such justification has been considered in the cases of Canada Steamship Lines Ltd. v. M.N.R., [1966] C.T.C. 255 at 259; 66 D.T.C. 5205 at 5208; Regina v. Northern Electric Co. [1955] D.L.R. [3] 449 at 466 and John Bertram and Sons Co. Ltd. v. The Queen, [1968] C.T.C. 391 at 400; 68 D.T.C. 5246 at 5253 (Ex. Ct.); [1969] C.T.C. 655 at 660; 69 D.T.C. 5406 at 5411-12 (S.C.C.). It is apt to report the comments of McRuer, C.J.H.C. in Regina v. Northern Electric., supra, at 466 where, in considering what strong reasons would justify a departure from a decision of a judge of the same court or a court of co-ordinate jurisdiction he said:

I think that “strong reason to the contrary” does not mean a strong argumentative reason appealing to the particular Judge, but something that may indicate that the prior decision was given without consideration of a statute or some authority that ought to have been followed. I do not think “strong reason to the contrary” is to be construed according to the flexibility of the mind of the particular Judge.

No such strong reasons exist in the case at bar.

Accordingly, and for the reasons given, the appeals are dismissed.

Appeals dismissed.