A
W
Prociuk
(orally:
November
5,
1975):—The
appellant,
William
George
Burgess,
appeals
from
the
respondent’s
assessment
of
his
income
for
the
taxation
year
1972
wherein
the
respondent
added
to
his
income
the
sum
of
$11,000
which
the
appellant
received
from
his
employer,
Brasso
Datsun
Ltd,
of
Vancouver,
British
Columbia,
on
the
termination
of
his
employment
on
June
30,
1972.
The
appellant
claims
that
this
sum
represents
damages
for
wrongful
dismissal
in
lieu
of
notice
and
is
therefore
a
capital
receipt.
The
facts
are
quite
brief
and
essentially
not
in
dispute.
The
appellant
is
a
chartered
accountant,
having
obtained
his
degree
in
1258
by
articling
with
Clarkson,
Gordon
&
Company
of
Vancouver.
Following
that,
he
was
a
partner
in
his
own
firm
of
chartered
accountants.
Around
1955
he
became
acquainted
with
Henning
Brasso,
president
of
Brasso
Datsun
Ltd,
of
Vancouver,
for
whom
he
did
professional
work
until
about
1969.
In
December
of
that
year
Mr
Henning
Brasso
offered
the
appellant
a
job
as
general
manager
in
charge
of
the
financial
end
of
Brasso
Datsun
Ltd
and
other
related
companies
controlled
by
Brasso.
The
starting
salary
was
of
$24,000
a
year
plus
bonuses
which
totalled
$33,000
in
1970.
The
appellant
accepted
this
offer
as
of
January
1,
1970.
It
was
an
oral
agreement
and
no
definite
period
of
employment
was
stipulated.
His
salary
was
paid
by
Brasso
Datsun
Ltd
though
he
rendered
services
to
other
related
companies
but,
as
he
stated
in
evidence,
there
was
an
inter-company
charge
in
respect
of
those
services.
The
appellant
was
familiar
with
the
structure
of
the
Brasso
group
of
companies
before
he
commenced
his
employment
in
1970
as
he
had
shares
in
some
of
them
from
the
dates
of
their
respective
incorporation
and
he
was
also
instrumental
in
setting
up
the
incorporation
procedure
for
some
of
them.
With
Henning
Brasso
and
Einar
Brasso,
the
brother
of
the
first
Brasso,
he
had
entered
into
what
is
commonly
referred
to
as
a
buy-sell
agreement
where
a
formula
for
the
sale
and
purchase
of
shares
was
agreed
upon
and
each
insured
the
life
of
the
other
for
the
duration
of
the
parties
being
shareholders
in
the
said
companies.
Matters
proceeded
satisfactorily
for
the
next
two
years.
Effective
January
1,
1972
there
was
a
major
reorganization
of
this
inter-corporate
structure
with
a
new
company
having
being
incorporated
under
the
name
of
Brasso
Management
Ltd.
The
appellant
was
appointed
to
the
position
of
executive
vice-
president
of
this
new
company
(see
Exhibit
A-1).
On
March
8,
1971
the
appellant
and
Mr
Henning
Brasso
reviewed
the
entire
structure
and
at
that
time,
for
the
purposes
of
their
buy-sell
agreement
referred
to
earlier,
reappraised
Brasso
Datsun
Ltd
and
increased
its
value
from
$400,000
to
$600,000.
Mr
Brasso
then
left
on
an
extended
European
tour
and
returned
some
time
in
May
of
1972.
Late
in
May
or
early
in
June
the
appellant
and
Mr
Henning
Brasso
held
several
conferences
with
regard
to
the
operations
of
Brasso
Datsun
Ltd
and
related
companies.
It
appears
that
at
least
one
company
took
a
downturn
financially.
The
appellant
states
that
in
his
opinion,
it
was
because
of
the
price
increase
in
cars.
In
any
event,
the
overall
financial
picture
apparently
did
not
sit
well
with
Brasso.
On
or
about
June
13,
1972
after
a
lengthy
conference
with
the
appellant,
Brasso
told
the
appellant
that
his
position
was
being
abolished
as
of
June
30,
1972
and
that
the
appellant’s
job
accordingly
was
terminated.
In
addition,
Brasso
advised
the
appellant
that
six
or
seven
other
executives
were
being
dismissed
or
demoted.
Brasso,
the
appellant
states,
was
himself
going
to
assume
the
position
held
by
the
appellant
up
until
then.
He
was
not
offered
anything
at
that
time
by
way
of
compensation
in
lieu
of
notice.
The
appellant
consulted
his
solicitor
on
or
about
June
26
or
June
27
of
that
year,
and
then
met
with
Brasso
on
June
30,
when
the
matter
of
his
termination
was
discussed
again.
The
appellant
states
that
he
told
Brasso
that
he
wanted
the
equivalent
of
one
year’s
salary
in
lieu
of
notice
and
Brasso
offered
only
one
month’s
salary
as
severance
pay.
After
several
more
meetings,
each
consulting
his
own
solicitor,
an
agreement
was
reached
and
executed
on
or
about
August
29,
1
972,
a
copy
of
which
was
filed
as
Exhibit
A-2
and
which
reads
as
follows:
1.
WHEREAS
Burgess
is
entitled
to
certain
payments
arising
out
of
his
employment
by
Brasso
Datsun
on
the
severance
of
his
employment
with
Brasso
Datsun,
and
Brasso
Datsun
wishes
to
sever
said
employment
and
compensate
Burgess
for
such
payments;
2.
AND
WHEREAS
Burgess
has,
in
the
course
of
his
said
employment,
held
certain
shares
and
has
been
a
director
or
officer
of
certain
companies
in
which
Brasso
is
or
has
been
a
shareholder
and
has
in
some
instances
been
a
majority
shareholder;
said
companies
include
Brasso
Datsun
Ltd,
Brasso
Rent-A-Car
Ltd,
Interauto
Imports
Ltd,
Brasso
Datsun
(Calgary)
Ltd,
Cliff
Cove
Investments
Ltd,
and
Christerll
Investments
Ltd:
3.
AND
WHEREAS
Burgess
and
Brasso,
both
on
his
own
behalf
and
on
behalf
of
the
companies
referred
to
in
paragraph
2
2
hereof
have
had
certain
discussions
with
a
view
to
terminating
Burgess’
said
employment,
shareholdings
and
directorships
or
holding
of
office
on
terms
that
are
mutually
agreeable:
4.
AND
WHEREAS
this
Memorandum
is
entered
into
by
the
signatories
hereto
with
a
view
to
effecting
the
above
purposes;
NOW
THEREFORE
the
undersigned
parties
hereto,
in
consideration
of
their
mutual
covenants
and
other
good
and
valuable
consideration
hereinafter
expressed
agree
as
follows:
(i)
Brasso
Datsun
will
pay
to
Burgess
as
severance
pay
the
sum
of
Eleven
Thousand
($11,000.00)
Dollars
on
August
22nd,
1972,
less
the
sum
of
Three
Thousand
($3,000.00)
Dollars
income
tax
deduction
payable
to
the
Department
of
National
Revenue,
Ottawa,
arising
out
of
same
which
sum
shall
be
deducted
forthwith
by
Brasso
Datsun
and
remitted
forthwith
to
the
Receiver
General
of
Canada
to
the
credit
of
Burgess.
(ii)
Brasso
Datsun
will
pay
holiday
pay
to
Burgess
in
the
full
amount
of
Two
Thousand
($2,000.00)
Dollars
to
cover
the
period
to
July
31st,
1972,
it
being
acknowledged
that
the
income
tax
deduction
referred
to
in
paragraph
(i)
includes
any
income
tax
deduction
applicable
to
the
payment
under
this
paragraph.
(iii)
Brasso
Datsun
agrees
to
pay
at
all
times
up
to
and
including
January
15th,
1973,
or
until
Burgess
shall
be
employed
at
an
employment
with
reasonably
similar
coverage,
whichever
date
shall
be
the
sooner,
one-half
of
all
premiums
on
Burgess
and
his
family
for
Medical
Services
Association
coverage,
Extended
Health
Plan,
and
one-half
of
all
premiums
for
Burgess
and
his
family
for
the
Great
West
Life
Assurance
Co
dental
policy
now
in
effect
on
Burgess
and
his
family,
and
one-half
of
all
premiums
for
the
Great
West
Life
Assurance
Co
group
life
policy
arising
out
of
his
employment
and
now
in
effect
on
the
life
of
Burgess.
(iv)
Brasso
Datsun
agrees
to
pay
Burgess,
upon
submission
of
vouchers,
all
his
gas
and
oil
expenses
and
his
club
expenses
at
the
Hollyburn
Country
Club
and
the
Royal
Vancouver
Yacht
Club
not
as
yet
paid
by
it
to
June
30th,
1972.
(v)
Burgess
agrees
to
pay
Brasso
Datsun
the
following
amounts:
(a)
upon
receipt
of
clear
title
for
the
1972
Ford
Station
Wagon
he
now
has,
Lie
No
KLX
919,
Serial
No
2P7GN143126,
the
sum
of
Four
Thousand
Four
Hundred
($4,400.00)
Dollars
plus
Two
Hundred
Twenty
($220.00)
Dollars
Sales
Tax;
(b)
the
sum
of
Four
Hundred
Forty
($440.00)
Dollars
for
four
season
hockey
tickets
bought
by
Brasso
Datsun
in
Burgess’
name
for
the
1972-73
National
Hockey
League
Games
in
Vancouver,
BC;
(c)
the
amount
owing
by
Burgess
to
Brasso
Datsun
on
his
personal
account
in
an
amount
of
Three
Thousand
One
Hundred
Thirty-Six
Dollars
and
Thirty-Seven
($3,136.37)
Cents
as
of
July
31st,
1972.
(vi)
Burgess
agrees
to
accept
the
net
amount
of
the
payments
set
out
in
paragraphs
(iv)
and
(v)
hereof
in
settlement
of
his
claims
against
Brasso
Datsun,
on
the
severance
of
his
said
employment
and
Brasso
Datsun
agrees
that
it
has
no
further
claim
against
Burgess.
(vii)
Burgess
further
agrees
as
follows:
(a)
to
sell
and
deliver
up
to
Brasso
in
exchange
for
the
payment
to
him
by
Brasso
of
Thirteen
Thousand
Four
Hundred
Eighteen
($13,418.00)
Dollars
his
twenty
(20)
common
shares
in
Brasso
Rent-A-Car
Ltd
and
to
deliver
to
that
Company
his
written
resignation
as
a
director
and
officer
in
the
form
attached
hereto;
(b)
to
sell
and
deliver
up
to
Brasso
in
exchange
for
the
payment
to
him
by
Brasso
of
One
Thousand
Five
Hundred
($1,500.00)
Dollars
his
ten
(10)
common
shares
and
five
thousand
(5,000)
preferred
shares
in
Interauto
Imports
Ltd
and
to
deliver
to
that
Company
his
written
resignation
as
a
director
and
officer
in
the
form
attached
hereto;
(c)
to
sell
and
deliver
up
to
Brasso
in
exchange
for
the
payment
to
him
by
Brasso
of
One
Hundred
One
($101.00)
Dollars
his
one
hundred
one
(101)
common
non-participating
voting
shares
in
Brasso
Datsun
(Calgary)
Ltd
and
to
deliver
to
that
Company
his
written
resignation
as
a
director
and
officer
in
the
form
attached
hereto;
(d)
to
deliver
to
Cliff
Cove
Investments
Ltd
and
Christerli
Investments
Ltd
his
written
resignation
as
a
director
and/or
officer
of
those
Companies
in
the
form
attached
hereto;
(e)
Brasso
agrees
to
make
the
payments
forthwith
to
Burgess
referred
to
in
subparagraphs
(a),
(b),
and
(c)
of
this
paragraph;
(f)
Brasso,
who
is
a
major
shareholder
or
an
interested
shareholder
in
all
the
companies
previously
referred
to
in
this
paragraph,
agrees
that
in
consideration
of
Burgess’
agreement
to
sell
and
transfer,
and
the
said
sale
and
transfer
aforesaid,
that
he
will
forthwith,
and
in
any
event
not
later
than
September
15th,
1972
take
all
such
steps
as
may
be
necessary
to
complete
the
registration
and
transfer
of
all
the
aforesaid
shares
in
the
share
registers
of
all
the
companies
concerned
from
the
name
of
Burgess
to
the
name
of
the
proposed
new
owner
of
the
said
shares;
and
Brasso
further
agrees
to
take
forthwith
all
such
steps
as
may
be
necessary
to
have
Burgess
removed
as
director
and
officer
of
each
and
every
of
the
aforesaid
companies
mentioned
in
this
paragraph;
and
Brasso
further
agrees
that
he
will
take
forthwith
all
such
steps
as
may
be
necessary
to
remove
Burgess
as
a
guarantor
at
the
Bank
of
British
Columbia,
Georgia
and
Burrard,
Vancouver,
BC,
and
the
Traders
Group
Ltd
for
any
of
the
companies
previously
mentioned
in
this
Agreement
including
Brasso
Datsun
and
Brasso
agrees
to
indemnify
and
save
Burgess
harmless
from
any
claims
or
demands
made
against
him
and
arising
out
of
any
guarantee,
guarantees,
or
assurances
given
by
Burgess
in
support
of
monies
or
loans
which
have
been
or
may
be
advanced
to
any
of
the
companies,
or
the
propritorship
referred
to
in
this
Agreement
including
Brasso
Datsun.
Brasso
and
Burgess
further
agree
that
the
agreements
herein
between
them
with
respect
to
any
shares
in
any
of
the
aforementioned
companies
shall
replace
any
previous
agreements
between
them
with
respect
to
purchase
or
sale
of
shares
in
said
companies.
(viii)
Brasso
and
Einar
Brasso
hereby
agree
to
the
said
sales
and
transfers
set
out
tn
paragraph
(vii)
hereof.
(ix)
In
consideration
of
the
sum
of
One
($1.00)
Dollar
now
paid
by
Burgess
to
Einar
Christian
Brasso
and
of
the
mutual
release
by
Burgess
and
Einar
Christian
Brasso
of
any
covenants
contained
in
the
Agreement
hereinafter
referred
to
in
this
paragraph
and
of
other
good
and
valuable
consideration
(receipt
of
all
of
which
is
hereby
acknowledged)
Einar
Christian
Brasso
releases
and
discharges
Burgess
of
and
from
any
and
all
obligations
that
may
be
set
out
or
arise
out
of
a
certain
Agreement
between
them
dated
the
8th
of
December
1969,
a
copy
of
which
is
attached
hereto
and
marked
“A”,
(x)
In
consideration
of
Burgess
selling
to
him
and
transferring
over
his
one
hundred
one
(101)
common
shares
in
the
capital
stock
of
Brasso
Datsun
(Calgary)
Ltd
as
set
out
in
paragraph
(vii)
(c)
hereof,
Brasso
releases
and
discharges
Burgess
from
any
and
all
obligations
that
may
be
set
out
in
or
arise
out
of
a
certain
Agreement
between
them
dated
the
day
of
,
1969,
a
copy
of
which
is
attached
hereto
and
marked
“B”.
(xi)
For
the
consideration
aforesaid
and
in
consideration
of
the
sum
of
One
($1.00)
Dollar
now
paid
by
Burgess
to
each
of
Brasso
and
Einar
Christian
Brasso
and
of
other
good
and
valuable
consideration
(receipt
of
ail
of
which
is
hereby
acknowledged),
Brasso
and
Einar
Brasso
each
release
and
discharge
Burgess
and
Burgess
releases
and
discharges
Brasso
from
all
obligations
that
may
be
set
out
in
or
arise
out
of
a
certain
Agreement
dated
the
12th
of
August
1970,
a
copy
of
which
is
attached
hereto
and
marked
"C"
and
they
further
agree
that
the
said
Agreement
is
revoked
insofar
as
Burgess
may
be
affected
in
any
way
by
mutual
consent
and
that
Burgess
has
no
further
obligations
thereunder
save
and
except
that
pursuant
to
the
terms
set
out
in
paragraph
(vii)
(d)
thereof
that
Brasso
may
in
his
own
name
and
on
his
own
behalf
and
at
his
own
expense
purchase
the
insurance
policy
or
policies
on
his
said
life
set
out
in
paragraph
2
of
the
said
Agreement.
(xii)
Brasso
Datsun
agrees
that
Burgess
shall
have
the
use
of
a
company
car
until
August
22nd,
1972
but
not
thereafter.
(xiii)
Brasso
agrees
that
the
covenants
contained
in
this
Agreement
shall
be
binding
upon
him
personally
and
in
his
capacity
as
the
sole
proprietor
of
Brasso
Management
and
on
behalf
of
Brasso
Management.
(xiv)
All
the
signatories
to
this
Memorandum
of
Agreement
agree
that
everything
herein
contained
shall
be
binding
upon
and
enure
to
the
benefit
of
the
signatories
hereto
and
their
respective
heirs,
executors,
administrators
and
assigns,
Exhibit
A-3
is
a
letter
dated
September
5,
1972
from
the
appellant’s
solicitor
enclosing
a
statement
of
account
for
services
rendered
in
respect
of
Exhibit
A-2,
and
it
reads
as
follows:
Mr
W
Burgess
4734
Rutland
Road
West
Vancouver,
BC
Dear
Mr
Burgess,
Last
week
you
called
us
and
indicated
that
the
agreements
had
been
signed
and
the
matter
was
completed.
We
still
have
some
unsigned
copies
of
the
agreement
on
file
but
presumably
you
will
not
be
requiring
these.
Under
the
circumstances
then,
we
are
enclosing
our
account
as
discussed
and
closing
our
file
in.
this
matter.
TO
PROFESSIONAL
SERVICES
RENDERED
up
to
and
including
the
5th
of
September,
1972
re
Henning
Peter
Brasso,
Brasso
Datsun
Ltd
et
al
In
settlement
of
various
matters
upon
your
leaving
employment
of
Brasso
Datsun
Ltd
and
related
matters,
including
attendance
upon
you
on
June
26th,
27th,
July
7th,
August
3rd,
10th,
17th;
to
extensive
perusal
of
material;
to
telephone
attendance;
to
several
drafts
of
agreement;
to
engrossing
final
lengthy
settlement
agreement;
to
all
other
necessary
matters.
|
TO
OUR
FEE
|
$350.00
|
|
DISBURSEMENTS
|
|
|
Paid
for
photostating
services
|
17.25
|
|
$367.25
|
The
appellant
was
42
years
of
age
at
the
material
time
and
states
that
he
encountered
some
difficulty
in
finding
suitable
similar
employment.
He
states
that
he
felt
the
stigma
of
his
having
been
"fired",
to
use
a
colloquial
expression,
had
a
bearing
and
naturally
caused
him
some
embarrassment
in
each
case.
It
was
also
difficult
to
find
similar
employment
at
a
salary
range
to
which
he
was
accustomed.
He
was
not,
at
that
time,
in
a
position
to
return
to
his
professional
practice.
In
April
of
1973,
some
nine
months
later,
he
accepted
a
position
with
the
Income
Tax
Department
in
Vancouver.
He
is
now
employed
in
his
professional
capacity
by
a
group
of
logging
companies.
About
March
of
1973
the
appellant
states
that
he,
by
chance,
met
another
solicitor,
whom
he
knew,
and
who
advised
him
in
the
course
of
the
conversation
that
the
sum
of
$11,000
which
he
received
pursuant
to
the
agreement
(Exhibit
A-2)
was
not
taxable,
being
damages
for
wrongful
dismissal.
The
appellant
felt
it
necessary
to
have
this
set
out
in
writing
and
so
an
amendment
dated
March
9,
1973
to
the
original
agreement
was
executed
by
the
appellant
and
Brasso.
It
is
filed
as
Exhibit
A-4
and
reads
as
follows:
WHEREAS:
1.
Burgess’
employment
with
Brasso
Datsun
was
terminated
by
Brasso
Datsun
on
June
30th,
1972;
2.
The
Parties
hereto
entered
into
an
Agreement
in
writing
dated
August
29th,
1972,
a
copy
of
which
is
attached
hereto,
which
said
Agreement
provided,
inter
alia,
for
payment
to
be
made
to
Burgess
in
the
amount
of
Eleven
Thousand
($11,000.00)
Dollars.
3.
At
the
time
of
termination,
Burgess
claimed
that
he
was
entitled
to
notice
of
termination
or
damages
in
lieu
thereof.
4.
The
Parties
to
the
Agreement
dated
August
29th,
1972
agreed
that
Burgess
was
entitled
to
damages
in
lieu
of
notice
of
termination.
NOW
THEREFORE
THIS
AGREEMENT
WITNESSETH
that
in
consideration
of
the
sum
of
One
($1.00)
Dollar,
(the
receipt
of
which
is
hereby
acknowledged
by
Burgess
and
Brasso
Datsun
respectively),
the
Parties
hereto
agree
as
follows:
1.
That
the
Agreement
dated
August
29th,
1972
be
amended
to
show
that
the
consideration
for
the
receipt
of
Eleven
Thousand
($11,000.00)
Dollars
by
Burgess
was
Burgess’
forbearance
to
commence
an
action
for
wrongful
dismissal
against
Brasso
Datsun
and
that
Burgess
received
the
sald
Eleven
Thousand
($11,000.00)
as
full
settlement
of
his
claim
for
damages
for
wrongful
dismissal
against
Brasso
Datsun.
With
deference
to
the
able
submission
by
the
appellant’s
counsel,
I
do
not
think
that
Exhibit
A-4
adds
anything
to
the
issue
herein.
A
rose
by
any
other
name
is
still
a
rose.
Since
we
are
concerned
with
a
fiscal
statute,
it
is
necessary
to
determine
whether
this
sum
of
$11,000,
irrespective
of
what
characterization
the
appellant
applies
to
it,
is
income
or
a
capital
receipt
in
his
hands.
The
respondent,
in
his
Reply
to
Notnce
of
Appeal,
relies
on
subsection
6(3)
of
the
Income
Tax
Act
which
reads
as
follows:
6.
(3)
An
amount
received
by
one
person
from
another
(a)
during
a
period
while
the
payee
was
an
officer
of,
or
in
the
employment.
of,
the
payer,
or
(b)
on
account
or
in
lieu
of
payment
of,
or
in
satisfaction
of,
an
obligation
arising
out
of
an
agreement
made
by
the
payer
with
the
payee
immediately
prior
to,
during
or
immediately
after
a
period
that
the
payee
was
an
officer
of,
or
in
the
employment
of,
the
payer,
shall
be
deemed,
for
the
purposes
of
section
5,
to
be
remuneration
for
the
payee’s
services
rendered
as
an
officer
or
during
the
period
of
employment,
unless
it
is
established
that,
irrespective
of
when
the
agreement,
if
any,
under
which
the
amount
was
received
was
made
or
the
form
or
legal:
effect
thereof,
it
cannot
reasonably
be
regarded
as
having
been
received
(c)
as
consideration
or
partial
consideration
for
accepting
me
office
or
entering
into
the
contract
of
employment,
(d)
as
remuneration
or
partial
remuneration
for
services
as
an
officer
or
under
the
contract
of
employment,
or
(e)
in
consideration
or
partial
consideration
for
a
covenant
with
reference
to
what
the
officer
or
employee
is,
or
is
not,
to
do
before
or
after
the
termination
of
the
employment.
In
considering
the
evidence
of
the
appellant
from
the
Exhibits
filed
and
particularly
Exhibit
A-2,
I
am
inclined
to
the
view
that
this
document
falls
within
the
purview
of
the
section
quoted
and,
subject
to
what
I
have
to
say
shortly,
the
respondent’s
assessment
ought
to
be
sustained.
In
the
case
of
Her
Majesty
the
Queen
V
Atkins,
[1975]
CTC
377;
75
DTC
5263,
Mr
Justice
Collier
of
the
Federal
Court
of
Canada,
Trial
Division,
adjudicated
on
the
appeal
by
the
Minister
as
well
as
on
the
cross-appeal
by
the
taxpayer
from
a
decision
of
the
Tax
Review
Board.
The
facts
in
that
case
were
identical
to
the
situation
in
the
present
appeal.
I
find
myself
in
a
position
of
being
unable
to
distinguish
the
instant
appeal
on
the
facts
from
the
Atkins
case.
I
am
of
the
opinion
that
I
am
bound
by
the
judgment
of
the
Federal
Court
and
the
appeal,
accordingly,
is
allowed.
Appeal
allowed.
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