William Charun v. Minister of National Revenue, [1983] CTC 2681, 83 DTC 623

Rip, TCJ [ORALLY]:—This is the appeal of William Charun and the Minister of National Revenue.

The issue in this appeal is whether the appellant, Mr William Charun, must include in his income for 1980, the sum of $2,651.90 received by him by virtue of his employment in accordance with paragraph 6(1 )(b) of the Income Tax Act (“Act”) or if pursuant to paragraph 6(6)(a) of the Act, he is not to include such sum in his income.

Mr Charun is a boilermaker and in 1980 was employed by Canadian Energy Services Limited. At all times relevant to this appeal, the appellant was married and maintained a self-contained domestic establishment (“ordinary place of residence”) in Vancouver, British Columbia.

Sometime in 1980, Mr Charun’s employer instructed him to perform duties at a job site in Woodfibre, British Columbia across Howe Sound from Squamish, British Columbia.

The appellant was a member of the Boilermakers’ Lodge 359 (“Boilermakers”). Under a collective agreement between the Boilermakers and the Employers Association, when an employee is required to work away from the City of Vancouver, the employer has the discretion to determine whether the job is a “Daily Commuting Job” or an “Out of Town Job”.

Mr Charun’s employer determined the job in Woodfibre to be a Daily Commuting Job. Under the terms of the collective agreement, Mr Charun was entitled to receive a travel expense in respect of the Woodfibre job only for each mile travelled in his passenger car, assuming he took his car, from the centre of the Lions Gate Bridge to the job site, a total of 35 miles, and returned each day.

He was not entitled to a travel allowance between his home and middle of the Bridge.

Had the employer determined the job to be an out of town job, the collective agreement called for the employer to provide or pay for transportation to the site and return, and pay the employee a subsistence allowance of $40 per day while he worked on the site.

The 35-mile trip from the middle of Lions Gate Bridge to Woodfibre is not travelled “as the crow flies”. The trip to Woodfibre had to be made in two stages, by road from Vancouver to Squamish and from Squamish to Woodfibre by ferry across Howe Sound.

A good portion of the road trip is along what was referred to during the trial as the “Whistler Road” described as winding, hilly and at times treacherous.

The stage of the trip by road would take approximately one hour. The ferry part of the trip was approximately one-half hour. Thus Mr Charun faced commuting travel of three hours a day in less than ideal travel conditions.

Originally the appellant was sent to Woodfibre for a two-week job, but ultimately the job was extended to approximately eight weeks. The appellant worked at his job for 12 hours a day, seven days a week during this period. Because of the travel time, travel conditions and the length of his shift, Mr Charun decided to forego the daily travel and instead obtained lodgings for the duration of his Woodfibre job at a hotel in Squamish; apparently there were no boarding facilities in Woodfibre. He also obtained his meals in Squamish. He would either eat in Squamish or take the provisions with him to Woodfibre to eat.

The appellant paid for the lodgings and meals out of his own pocket. Notwithstanding that the appellant’s employer determined the job to be a Daily Commuting Job, the employer gave Mr Charun the option of claiming an amount equal to the mileage allowance, as provided for in the collective agreement as if he actually travelled each day from Vancouver to Woodfibre, or a subsistence allowance as if he had an Out of Town Job. The appellant calculated what he would receive from each allowance and determined that he would be entitled to a greater amount by claiming a mileage allowance. Included in this mileage allowance was one hour’s wages per day for the one hour he would have spent on the ferry travelling to and from Woodfibre. Mr Charun naturally opted for the amount equal to the mileage allowance which incidentally was greater than the amount he actually expended in Squamish for room and board.

Section 6 of the Act provides that certain amounts received from an employer are to be included in an employee’s income. For example, paragraph 6(1)(a) of the Act provides that the employee is to include in income the value of board, lodging and any other benefits of any kind he may have received or enjoyed through the year in respect of or in the course of or by virtue of an office or employment.

However, paragraph 6(6)(a) of the Act provides that:

6 (6) Notwithstanding subsection (1), in computing the income of a taxpayer for a taxation year from an office or employment, there shall not be included any amount received or enjoyed by him in respect of, in the course of, or by virtue of his office or employment that is the value of, or an allowance (not in excess of a reasonable amount) in respect of expenses incurred by him for,

(a) his board and lodging at

(i) a special work site, being a location at which the duties performed by him were of a temporary nature and from which, by reason of distance from the place where he maintained a self-contained domestic establishment (in this subsection referred to as his “ordinary place of residence”) in which he resided, he could not reasonably be expected to return daily to his ordinary place of residence, or

(ii) a location at which, by virtue of its remoteness from any established community, the taxpayer could not reasonably be expected to establish and maintain a self-contained domestic establishment,

in respect of a period while he was required by his duties to be away from his ordinary place of residence, or to be at the location, for a period of not less than 36 hours; or. ..

The respondent’s position as I understand it, is that what Mr Charun received from his employer was not an allowance for board and lodging, but merely a transportation allowance. Therefore, the appellant does not fall within the exemption contained in paragraph 6(6)(a) of the Act. And since the appellant did not incur expenses for actual transportation (save for his first and last trip to and from Woodfibre), neither was he entitled to a transportation allowance; he also failed to come within the exemption provision of paragraph 6(6)(a) of the Act.

The appellant states that he should be entitled to the exemption granted by paragraph 6(6)(a) of the Act because had he not taken up boarding and lodging in Squamish, but had commuted instead, it would be almost impossible to function as a person. The appellant would have had to leave home at 5:45 in the morning, travel to Squamish to arrive at the ferry terminal by 7:00 am, travel by ferry for 30 minutes, then work from about 7:45 am for 12 hours. In the evening, he would have had to get the ferry back to Squamish and then drive back home, arriving at approximately 9:30. He then would have had about eight and a half hours for sleep and relaxation before he was off again. The appellant claims that the only commonsense thing to do was to obtain board and lodgings at Squamish.

It is clear Mr Charun incurred expenses for board and lodging at Squamish. His employer was obligated to grant him an allowance. That the method of calculating the allowance paid to Mr Charun was based on what he would have received had he travelled each day to and from the job site in accordance with the Daily Commuting Job provisions in the collective agreement, would not in and by itself disentitle the appellant from taking advantage of the provisions of paragraph 6(6)(a) of the Act so long as the allowance is not in excess of a reasonable amount. And there has been no evidence that such allowance is in excess of a reasonable amount.

It is quite clear that Mr Charun’s employer paid him an allowance for board and lodging. Had the allowance been for transportation only, Mr Charun would have received only what he was entitled to. That is an allowance for 70 miles only. That is his original trip to Woodfibre and his return to Vancouver.

Obviously, Mr Charun and his employer chose to ignore the method of payment called for in the collective agreement and substituted a mutually acceptable method of calculating the allowance. In fact, Mr Charun was receiving an allowance for room and board.

This, however, unfortunately does not settle the matter. One is forced to ask whether to be successful in his appeal, Mr Charun must establish that he could not reasonably be expected to return daily from Woodfibre to his ordinary place of residence “by reason of distance”, between Woodfibre and Vancouver, not the duration of the trip between Vancouver and Woodfibre.

I have previously referred to Mr Charun’s schedule in respect of his work and the difficulty he would have had in travelling back and forth between Vancouver and Woodfibre.

In Lumsden v CIR, [1914] AC 877 at 892, Lord Haldane said,

It is no doubt true that there are cases of construction where the natural meaning of the words of a statute is rejected, and another meaning not expressed by the words taken in their ordinary sense is read in. That occurs where the context and scheme of the statute required that this should be done in order that the language of the statute as a whole may be read as consistent.

But a mere conjecture that Parliament entertained a purpose which, however natural, has not been embodied in the words it has used if they be literally interpreted, is no sufficient reason for departing from the literal interpretation.

I might add, Mr Justice Gibson referred to Viscount Haldane’s comments in the appeal of A F Walls v The Queen, [1976] CTC 501; 76 DTC 6309, at 504 [6312].

Viscount Haldane added at 896-97 that,

The duty of the judges in construing statutes is to adhere to the literal construction unless the context renders it plain that such a construction cannot be put on the words. This rule is especially important in cases of statutes which impose taxation.

In my view, it is not mere conjecture, but reasonable to interpret the phrase “by reason or distance” with the other words of subsection 6(6) of the Income Tax Act to mean more than only the space lying between Mr Charun’s ordinary place of residence and Woodfibre. This appeal is not to be decided simply by answering the question, “How far is far?”. One must pay heed to the purpose of this exemption section which is to permit employees working away from their ordinary place of residence for a temporary period, who incurring certain expenses of room and board because of the difficulty of returning home on a daily basis, not to include in income allowances paid to them by their employer for expenses such employee would not have ordinarily been expected or required to incur.

In my view, any reasonable man faced with over one hour of travel over a route that is treacherous at more than several points, a work shift of 12 hours, the basic need to relax for just an hour a day, would have done what Mr Charun did. Rather than commute daily to work and back, he would find board and lodging at the special worksite. [1]

For purposes of determining the phrase “by reason of distance” in subparagraph 6(6)(a)(i) of the Act one must give weight not only to the length of the trip from a distance point of view, but also one must consider the hours of work the employee is required to perform in carrying out his duties, the type of roadway he must travel each day, the time of day he must travel and the general physical and mental health of the taxpayer.

A literal and strict interpretation of the phrase “by reason of distance” would not be consistent with the intent of subsection 6(6) of the Act and with the reality of certain employment situations.

I find therefore that the appellant comes within the exemption provisions of subsection 6(6) of the Act and that no amount of the allowance paid to him by his employer is to be included in income pursuant to subsection 6(1) of the Income Tax Act.

The appeal is therefore allowed.

Appeal allowed.