Gilles F Derrien v. Minister of National Revenue, [1980] CTC 2848, 80 DTC 1751

M J Bonner:—This is an appeal from an assessment of income tax for the appellant’s 1977 taxation year. A claim made by the appellant for a deduction pursuant to paragraph 8(1)(g) of the Income Tax Act was denied by the Minister .. as (sic) the taxpayer was not required by his employment duties to travel away from the metropolitan area where his employer’s establishment to which he reported for work was located in accordance with the provisions of paragraph 8(1 )(g) of the Act.”

The appellant is the master of a tugboat. He resides in Richmond, British Columbia. He is employed by Hodder Tugboat Co Ltd. That company maintained an establishment to which the appellant regularly reported for work at Sea Island in the Municipality of Richmond. There he boarded his tug and proceeded to one or the other of two points at sea in order to pick up a boom of logs.

The northerly pick-up point was situated about one mile off the mouth of the north branch of the Fraser River. From that point the logs were towed along the said north branch to a drop off point in the river at Sapperton Bar, opposite Fraser Mills. There the boom was dropped off. Fraser Mills is an area of the Municipality of Coquitlam. The southerly pick-up point was at Sand Heads, approximately five miles from shore, just off Roberts Bank. From there the booms were towed up the main arm of the Fraser River to the same drop off point. After drop off the tug proceeded back to the Sea Island base. Each trip took about thirteen hours. Starting times were irregular because the trips were timed to take advantage of tidal currents in the river. The appellant did not go ashore between the beginning and end of any trip.

The respondent, in argument, relied heavily on the fact that at no time during the course of the trips described did the appellant and his boat venture outside the boundaries of the Greater Vancouver Regional District (hereinafter called the “GVRD”). Those boundaries extended to the west as far as the centre of the Strait of Georgia, thus encompassing very large areas of water.

In addition to the evidence of the appellant summarized above, evidence was given by Peter Michael George, a witness called by the respondent. Mr George holds a senior planning position with GVRD and has impressive qualifications as an urban planner. He testified that the Province of British Columbia is divided into regional districts. The GVRD, which is, in effect, a federation of municipalities forming a fourth level of government, has operated since 1967. Its functions involve responsibility for parks, solid waste disposal, sewers, water supply, labour relations, hospitals and public transit. The area between Sea Island and Fraser Mills is a continuous urban area comprising five municipalities. Surrey and Delta also were, in Mr George’s opinion, part of the same urban region from the viewpoint of a planner.

On cross-examination Mr George stated that about two-thirds of the geographic area of the GVRD was not populated. The unpopulated area comprises the mountains to the north of North Vancouver and West Vancouver and a large area of water. The inclusion in the GVRD geographic area of large parts of the Straits of Georgia appears to have little practical effect, having regard to the ambit of the areas of responsibility of that organization.

In my view a solution to the problem raised by this appeal cannot be found, as the respondent would have it, by simply observing that the appellant’s daily trips began, ended and did not extend beyond the geographic boundaries of the GVRD, an area which, according to the respondent, was the metropolitan area. Equally, the solution cannot be found, as the appellant would have it, by rigid application of a definition of “metropolitan” alleged to have been adopted by the respondent. That definition, the appellant said, was “Metropolitan: the surrounding populated area integrated with a municipality”. The appellant pointed out that his trips took him well out in the Strait of Georgia, which was obviously an unpopulated area.

Paragraph 8(1 )(g) of the Income Tax Act reads:

8.(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:

(g) where the taxpayer was an employee of a person whose principal business was passenger, goods, or passenger and goods transport and the duties of the employment required him, regularly,

(i) to travel, away from the municipality where the employer’s establishment to which he reported for work was located and away from the metropolitan area, if there is one, where it was located, on vehicles used by the employer to transport the goods or passengers, and

(ii) while so away from such municipality and metropolitan area, to make disbursements for meals and lodging,

amounts so disbursed by him in the year to the extent that he has not been reimbursed and is not entitled to be reimbursed in respect thereof;

At first blush this provision appears to use inexact words in the pursuit of uncertain objectives. The extent of a metropolitan area is, as illustrated by this appeal, not always easy to determine. The word “away” raises the question: “How far?”

In argument, counsel for the respondent placed considerable reliance on the decision of the Federal Court in Alger F Walls v Her Majesty the Queen, [1976] CTC 501; 76 DTC 6309. None of the definitions referred to by Gibson, J, in his reasons for judgment can be of much assistance in reaching a solution here. That case is simply authority for the proposition that no part of the City of Detroit falls within the metropolitan area, if there is one, in which the City of Windsor is located. It certainly does not decide that when part of the travelling takes place on water, where most common municipal services are unavailable, the trip necessarily involves travelling away from the relevant metropolitan area. On the other hand, it is obvious that despite the absence of a resident population on a body of water located within what everyone would recognize as a metropolitan area, that body need not necessarily be regarded as lying outside the metropolitan area.

In my view the solution becomes apparent when paragraph 8(1)(g) is read as a whole within its statutory context. The approach of the Income Tax Act to deductions from salary or wages in the process of computing income from office or employment is generally restrictive. In this regard reference should be made to subsection 8(2) of the Act. The exceptions in subsection 8(1) are not to be regarded as having been inserted capriciously. The exception made for transport employees by paragraph 8(1 )(g) recognizes that the nature of the work often involves substantial trips away from the area where such employees live and report for work. Such trips impose a burden of expense for meals and lodging not borne by the ordinary worker who can sleep and eat, at least most of the time, at home. The “while so away’’ qualification and the use of the word “and” in the phrase “disbursements for meals and lodging” tend to support this conclusion. The cost to the ordinary worker of food and shelter is a personal expense. The cost to a transport worker of meals and lodging necessitated by travel in the course of his duties is much more directly related to the income earning process.

When paragraph 8(1 )(g) is read as a whole within its context it will be seen that some of the dictionary definitions of “travel”, such as “to go from one place to another”, are inappropriate. When paragraph 8(1)(g) refers to travelling away from a municipality and its metropolitan area it contemplates journeys of such substantial distance and duration as to require disbursements for both meals and lodging. It does not encompass all cases in which a taxpayer goes from a place inside the metropolitan area to a place just outside it.

In this case the appellant’s claim was limited to disbursements for meals alone. It is unnecessary to decide whether the appellant’s trips took him beyond the boundary of the metropolitan area in which Sea Island is located. The trips could not be said to involve travel away from that metropolitan area within the meaning of paragraph 8(1)(g). The appeal is therefore dismissed.

Appeal dismissed.