John Silburn v. Minister of National Revenue, [1985] 2 CTC 2071, 85 DTC 463

Christie, ACJTC:—This appeal relates to the appellant’s 1980 taxation year. The issue is whether in computing his income for that year he is entitled to deduct $2,459.08, being expenses incurred by him on returning from Italy to Brockville, Ontario.

The appellant is a civil engineer and at all times relevant to this appeal was a teaching master at St Lawrence College of Applied Arts and Technology in Brockville. He was granted sabbatical leave from his duties at that institution from September 1, 1979 to August 31, 1980, during which time he received 60 per cent of his regular salary. In 1979 he attended the University for Foreigners at Perugia, Italy, from October to mid-December when the language course he was taking terminated. He studied Italian in order to enable him to do the other things for which he went to Italy. These other things are set out in this portion of paragraph 8 of the statement of facts attached to his notice of objection:

1. Attended workshops under the auspices of ICCROM (International Centre for the Conservation and Restoration of Monuments). ICCROM is a service organization of UNESCO. It should be noted that the University of Rome required that the participants, although not students of the university, had to pay tuition fees to avail themselves of the university’s student facilities, ie labs, libraries etc (time expended approximately 2-3 hours daily.

2. Lectured to the University of Rome students enrolled in the Master of Architecture (Restoration). No remuneration was received for this service as the taxpayer was on loan from St Lawrence College.

3. Inspected various restoration projects throughout Italy.

4. Worked with architects on design and restoration of a 14th century monastery (no remuneration). Worked with engineers on stabilization of 10th century mosque in North Yeman. Advised ICCROM on stability of their accommodations which were under repair and actively participated in various other projects.

To the foregoing may be added these additional facts. The purpose of the journey to Italy was to enable the appellant to obtain additional expertise in the restoration of buildings. When he departed for Italy and while there, the severance of his ties with Canada and in particular with Brockville was what would be reasonably expected to accomplish the purposes of his journey. Under the terms of the grant of the sabbatical, the appellant was required to return to St Lawrence College upon its termination. He rented his home in Brockville with the intention of returning to it at the completion of his sabbatical. He continued to maintain a bank account at Brockville. While he was away the appellant’s home was destroyed by fire, but it was subsequently rebuilt and occupied by him and his family.

Among the statutory provisions cited to the Court in whole or in part are paragraphs 62(1)(a) and (b), subsection 62(2), paragraph 63.1(b) and paragraphs 250(1 )(c) and (d) of the Income Tax Act (“the Act”).

62.(1) Where a taxpayer

(a) has, at any time,

(i) ceased to carry on business or to be employed at the location or locations, as the case may be, in Canada at which he ordinarily so carried on business or was so employed, or

(ii) ceased to be a student in full-time attendance at an educational institution in Canada that is a university, college or other educational institution providing courses at a post-secondary school level,

and commenced to carry on a business or to be employed at another location in Canada (hereinafter referred to as his “new work location’’), or

(b) has, at any time, commenced to be a student in full-time attendance at an educational institution (hereinafter referred to as his “new work location’’) that is a university, college or other educational institution providing courses at a post-secondary school level,

and by reason thereof has moved from the residence in Canada at which, before the move, he ordinarily resided on ordinary working days (hereinafter referred to as his “old residence”) to a residence in Canada at which, after the move, he ordinarily so resided (hereinafter referred to as his “new residence”), so that the distance between his old residence and his new work location is not less than 40 kilometres greater than the distance between his new residence and his new work location, in computing his income for the taxation year in which he moved from his old residence to his new residence or for the immediately following taxation year, there may be deducted amounts paid by him as or on account of moving expenses incurred in the course of moving from his old residence to his new residence, to the extent that. . .

(2) Where a taxpayer would, if subsection (1) were read without reference to paragraph (a) thereof and

(a) if the reference therein to "moved from the residence in Canada at which”

were read as a reference to "moved from the residence at which”, or

(b) if the reference therein to "to a residence in Canada at which” were read as a reference to "to a residence at which”,

be entitled to deduct an amount by virtue of that subsection in computing his income for a taxation year, that amount may be deducted in computing his income for the year.

63.1 Where a taxpayer is deemed by section 250 to be resident in Canada throughout a taxation year or during a part of a taxation year, in applying sections 60, 62 and 63 in respect of him during the period when he is so deemed to be resident in Canada, the following rules apply:

(b) subsection 62(1) shall be read without reference to the words "in Canada”.

250. (1) For the purposes of this Act, a person shall, subject to subsection (2), be deemed to have been resident in Canada throughout a taxation year if

(c) he was, at any time in the year,

(i) an ambassador, minister, high commissioner, officer or servant of Canada, or

(ii) an agent-general, officer or servant of a province,

and he was resident in Canada immediately prior to appointment or employment by Canada or the province or received representation allowances in respect of the year.

(d) he performed services, at any time in the year, in a country other than Canada under a prescribed international development assistance program of the Government of Canada and he was resident in Canada at any time in the 3 months’ period preceding the day on which such services commenced.

It is the position of the appellant that during his sabbatical he was “a servant of a province” within the meaning of subparagraph 250(1 )(c)(ii), ie a servant of the Province of Ontario, which is the equivalent of saying that he was a servant of the Crown in right of Ontario. Whether he was is to be determined by the common law in conjunction with the pertinent Ontario legislation. In Canadian Imperial Bank of Commerce v Monette; Board of Governors of Algonquin College of Applied Arts and Technology, [1972] 1 OR 407 it was held that the Board of Governors of Algonquin College is an agent of the Crown in right of Ontario and as such was excluded from the provisions of the Small Claims Court Act regarding garnishment of wages. In coming to this conclusion Matheson, Co Ct J relied on three decisions of the Ontario Labour Relations Board. These decisions turn on a number of cases pertaining to the meaning of Crown agency at common law* [1] and on section 14a of the Department of Education Act, RSO 1960, c 94 as amended by Statutes of Ontario 1965, c 28, s 1.t [2] Section 14a provided, inter alia, for the establishment of colleges of applied arts and technology and the creation of a board of governors for each college. The boards are corporations. The conclusion that the Board of Governors of Algonquin College is an agent of the Crown in right of Ontario is based on the degree of governmental control over it that exists by reason of the provisions of section 14a and regulations made thereunder. In arriving at his decision, Matheson, Co Ct J also referred to section 1 of the Crown Agency Act of Ontario which provides:

In this Act "Crown Agency” means a board, commission, railway, public utility, university, manufactory, company or agency owned, controlled or operated by Her Majesty in right of Ontario, or by the Government of Ontario, or under the authority of the Legislature or the Lieutenant Governor in Council.

By Statutes of Ontario 1972, c 114, s 2, Statutes of Ontario 1971, c 66 was amended in respect of collective bargaining by persons employed by a Board of Governors of a College of Applied Arts and Technology in which “employer” was defined as “the Crown in right of Ontario”. This amendment was repealed by Statutes of Ontario 1975, c 75, but my deduction is that this was done because of the enactment of The Colleges Collective Bargaining Act, Statutes of Ontario 1975, c 74 (now RSO 1980, c 74) under which the Ontario Council of Regents for Colleges of Applied Arts and Technology enters into collective agreements on behalf of the boards of governors of these colleges, who are the employers, and the employee organization representing persons employed as academic or support staff by such boards. The two enactments of 1975 were assented to on the same date. This is mentioned only because counsel for the respondent cited Statutes of Ontario 1972, c 114 and 1975, c 75, at the hearing for the purpose, as I understand it, of questioning the validity of the conclusion in the Canadian Imperial Bank of Commerce case regarding the Algonquin Board being a Crown agency. I do not regard these amendments concerning collective bargaining as affecting the conclusion respecting Crown agency of the Court in the Canadian Imperial Bank of Commerce case.

In T Eaton Company Limited v David P Andrews and Esther Andrews; Fanshawe College of Applied Arts and Technology, Garnishee, an unreported judgment pronounced on March 13, 1984, by Mr Justice O'Driscoll on an appeal to the Divisional Court of Ontario, it was held that Fanshawe College is an agent of the Crown in right of Ontario. Presumably his Lordship more particularly meant that the Board of Governors of Fanshawe College is a Crown agency because it is the corporate entity that would be the employer of the debtors in the garnishee proceedings before him. O'Driscoll, J however disagreed with the conclusion in Board of Governors of Algonquin College that the provisions of the Small Claims Court Act did not apply. He said:

In my view, this application by way of appeal should be dismissed. Because of the earlier litigation in which it was successfully sued for paying on a garnishment, Fanshawe College has shown up and taken the position before the Small Claims Court that it was a Crown Agency under the Crown Agency Act, RSO 1980, c 106, and therefore section 25 of the Proceedings Against the Crown Act, RSO 1980, c 393, shielded it from execution or attachment.

It would appear to me that Fanshawe College’s position is only partially correct. There appears to be no doubt that a reading of the Colleges and Universities Act, RSO 1980, c 272, constitutes a college a Crown Agency within the statute of the same name. However, it is my view that a Crown Agency is not shielded by section 25 of the Proceedings against the Crown Act [3] because section 25 only applies to "the Crown" which is defined in section 1(b) as Her Majesty the Queen in right of Ontario.

In the context of these proceedings, I respectfully adopt the words of Saunders, J speaking for a unanimous Divisional Court: Jessome v Ontario Housing Corporation (1981) 31 OR (2nd) 305 at 308.* [4]

The legislation applicable to the creation of the Board of Governors of Algonquin College and Fanshawe College is also applicable to the creation of the Board of Governors of St Lawrence College which is the appellant's employer. I agree that the appellant’s employer was an agent of the Crown in right of Ontario. It follows that he must be regarded as having been a servant of the Crown in right of Ontario in 1980: Strachan v The Queen, [1973] CTC 416; 73 DTC 5343 per Heald, J at 418 et seq (DTC 5345 et seq).

It is the position of the appellant that if subsection 62(1) is read with the appropriate omission of the words "in Canada” in accordance with paragraph 63.1(b) because the appellant was deemed by subparagraph 250(1) (c)(ii) to have been resident in Canada throughout 1980, he is within the scope of subsection 62(1).

For a change of residence to be within subsection 62(1) it must be from the residence at which, before the move, the taxpayer ordinarily resided on ordinary working days to a residence at which, after the move, he ordinarily so resided. It is the contention of the respondent that the appellant was not ordinarily resident in Italy in 1980. In support of this counsel referred to a number of authorities and relied in particular on the judgment of the Supreme Court of Canada in Thomson v MNR, [1946] CTC 51; 2 DTC 812. In this case the Supreme Court considered the meaning of the phrase "ordinarily resident” in paragraph 9(a) of the Income War Tax Act which provided:

9. There shall be assessed, levied and paid upon the income during the preceding year of every person

(a) residing or ordinarily resident in Canada during such year

Mr Justice Estey said at 70 (DTC 813):

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.

Mr Justice Rand said at 64 (DTC 815):

The expression “ordinarily resident” carries a restricted signification, and although the first impression seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to mean residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.

He added this at 64 (DTC 816):

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.

These statements by their Lordships would appear to exclude the notion of the appellant having had his ordinary residence in Italy. As always, however, in giving consideration to what was said by the judges in Thomson, regard must be had to the context in which the phrase "ordinarily resident” appeared in that case. The legislative scheme of the provisions previously quoted from the Act is different from what was before the Supreme Court in Thomson. The scheme under consideration deals with the deductibility of moving expenses by different classes of taxpayers under a number of differing circumstances including a move by a taxpayer from a place in Canada to another place in Canada; from a place in Canada to a place outside of Canada and from a place outside of Canada to a place in Canada. The rather stringent tests of "ordinary residence” in Thomson might well be applicable as a general rule to cases where a taxpayer ceases to be employed at the location in Canada at which he was ordinarily so employed and by reason thereof has moved from his "old residence” to his "new residence” in Canada within the meaning of subsection 62(1). To my mind however it does not necessarily follow that the same tests are applicable to possible moves by other taxpayers. It is notorious that persons of the kind described in paragraphs (c) and (d) of subsection (1) of section 250 go abroad with a fixed intention of returning to the place from whence they departed after the completion of a task or assignment in a foreign country related to their employment by Canada or a province. They continue to maintain strong social and economic ties with Canada, including in a great many cases such things as the renting of their homes during their absence and the maintaining of bank accounts in Canada. For some of the persons described in paragraphs 250(1 )(c) and (d) living abroad in the course of their employment can be a regularly repetitive thing while for others it can be an occasional thing and for others an exceptional occurrence. For example, the pattern of existence of foreign service officers with the Department of External Affairs is generally one of regular postings to other countries interspersed by regular intervals in Canada. On the other hand individuals represent Canada or a province abroad on a few occasions for a period of several months or a few years. For some it is a once in a lifetime experience.

In The Queen v Reeder, [1975] CTC 256; 75 DTC 5160, the defendant, a life-long resident of Canada, took employment in March 1972 with Michelin Tire Manufacturing Company of Canada Ltd. As part of a training program he was required to work at a Michelin plant in France. One of the issues was whether the defendant was "not resident in Canada” within the meaning of section 114 of the Act between March 29 and December 1, 1972. The first was his date of departure for France and the second was the date of his return to Canada. Mr Justice Mahoney of the Federal Court — Trial Division held that the defendant was resident in Canada throughout 1972. In coming to this conclusion he said at 261 (DTC 5163); “I am satisfied that had the defendant been asked, while in France, where he regularly, normally or customarily lived, Canada must have been the answer.” I expect that if persons described in paragraphs 250(1)(c) and (d) were asked when abroad where they regularly, normally or customarily lived, the answer of a very significant percentage would correctly be Canada. Nevertheless such persons who regard their normal or customary habitation as Canada must in my opinion be viewed as entitled to deduct moving expenses if the deductibility of these expenses by the combined effect of sections 62, 63.1 and 250 is to have the realistic and practical consequences which Parliament presumably intended. This involves accepting that those persons must be looked upon as having been “ordinarily resident” abroad within the meaning of subsection 62(1) even though they do not meet the criteria normally associated with that phrase. While in Thomson Mr Justice Rand said that the expression “ordinarily resident” carries a restricted signification vis-a-vis “residing”, I regard certain general observations he made about “residing” as applicable to a considerable extent to “ordinarily resident”. He said at 63 (DTC 815):

The gradation of degrees of time, object, intention, continuity and other relevant circumstances, shows, I think, that in common parlance “residing” is not a term of invariable elements, all of which must be satisfied in each instance. It is quite impossible to give it a precise and inclusive definition. It is highly flexible, and its many shades of meaning vary not only in the contexts of different matters, but also in different aspects of the same matter. In one case it is satisfied by certain elements, in another by others, some common, some new.

Considering the facts of this case in relation to the words “ordinarily resident” in their context leads me to the conclusion that the appellant was ordinarily resident in Italy in 1980. He was in a special class of persons for whom deductibility of moving expenses has been provided and he was in Italy for purposes directly related to his employment. There was a sufficient and sustained severance of his ties with Canada to enable it to be said that his place of ordinary residence had shifted from Canada during the year under review.

Other issues were raised at the hearing, none of which lead me to a different conclusion. For example, could a master and servant relationship be considered to have been in existence between the appellant and the College while he was on sabbatical leave? In the supplementary to the Oxford English Dictionary this is said with respect to the word sabbatical: “Designating a period of leave from duties granted to university teachers at certain intervals (ordinarily every 7 years) for the purpose of study and travel”. On the other hand the uncontradicted testimony of the appellant, which I accept, is that while he was in Italy he remained “under instruction” and subject to the “direction” of the College at Brockville.

The appeal is allowed and the matter is referred back to the respondent for reconsideration and reassessment on the basis that the appellant is entitled to deduct moving expenses in his 1980 taxation year in the sum of $2,459.08.

The appellant is entitled to party and party costs if he has incurred any.

Appeal allowed.