Her Majesty the Queen v. Thomas E Little, [1974] CTC 678, 74 DTC 6534

Cattanach, J:—This is an appeal by Her Majesty the Queen from a decision of the Tax Review Board dated June 14,1973.

in computing his income for his 1970 year the defendant sought to deduct the sum of $845.25 which sum represents a claim for 483 meals at $1.75 each consumed by him in the circumstance to be outlined. In assessing the defendant as he did the Minister of National Revenue disallowed that claim as a deduction. The Board allowed the defendant’s appeal and held, in effect, that the amount claimed by the defendant as a deduction was properly deductible. The present appeal by Her Majesty results from that decision.

There is no dispute between the parties as to the amount of the deduction claimed by the defendant. It is agreed between the parties, in conformity with the facts, that the amount in controversy does not exceed $2,500.

Subsection 178(2) of the Income Tax Act [as amended by 1970-71-72, C 63] reads:

178. (2) Where, on an appeal by the Minister other than by way of crossappeal, from a decision of the Tax Review Board, the amount of tax that is in controversy does not exceed $2,500, the Federal Court, in delivering judgment disposing of the appeal, shall order the Minister to pay all reasonable and proper costs of the taxpayer in connection therewith.

It follows that, regardless of the success on this appeal, there shall be an order directing the Minister to pay all reasonable and proper costs of the defendant.

The defendant maintained his residence in Moose Jaw, Saskatchewan where he resided with his family and he was employed, at all relevant times, by the Canadian Pacific Railway (hereinafter for convenience referred to as CPR).

Originally he had been employed as a fireman but in 1970 he became qualified and was promoted to a locomotive engineer. While there is no direct evidence on the matter it is logical to infer that the occupation of a locomotive engineer is more desirable and higher paid than that of fireman.

Because of the defendant’s promotion it followed that his seniority was at the very bottom of the rosier for engineers. Assignments to work for engineers (as well as for other train crew members) was on the strict basis of seniority. The more senior engineers would in all likelihood bid for and be assigned the more desirable jobs, taking into account the subjective preference of each individual engineer who would bid first for the job he preferred.

It was established that the most sought-after jobs generally were in order of preference (1) the passenger pool, (2) the freight pool, (8) the spare board and (4) yard tramp.

The first job is operating locomotives on passenger trains running out of centres controlled by the Moose Jaw division, the second freight trains, the third is a roster of engineers available to operate locomotives on passenger or freight trains if need arises and the fourth is operating a locomotive in a railway yard where such yards exist.

It is customary for all engineers, regardless of their seniority, to “bid” for all jobs but those with the lower seniority had no or very little expectation of getting the preferable assignments which were given to the more senior engineers. That is the code that was rigidly followed by the employer and union representatives were present to see that this code was meticulously applied.

The assignments for trains running out of Moose Jaw were made by the locomotive foreman who was resident in Moose Jaw. All such assignments were recorded in an Engineers’ Bulletin Book.

The bids for jobs are made twice a year and are entered in a bid book. The assignments are made from that book and entered into the bulletin book.

The Moose Jaw foreman, as well as controlling the assignment of work to Moose Jaw also controls the assignment of work to Swift Current, Outlook, Estevan and North Portal. There are railway yards in Moose Jaw, Swift Current and Estevan.

The bulletin books, in which the work assignments are recorded, are posted and available for inspection by the persons affected thereby in each of the centres mentioned.

An engineer who is assigned work not in accordance with his preference need not accept hat work but if he does not accept the assignments made to him he is not paid and if he consistently refuses to accept assignments he would be discharged. Further an engineer may book off a job as being unfit. By this is meant that he is ll and thereby unable to perform the work but his next assignment, when his temporary incapacity is concluded, will be the job assigned to him when he booked off.

The defendant, because of his low seniority, was assigned the less desirable job, which is that of operating the yard engine. As I have said the evidence establishes that there are yards in Moose Jaw, Swift Current and Estevan.

The yard engineer operates a locomotive within the yard, spotting railway cars, and moving them about the yard as may be required. There are three 8-hour shifts per day one of which a yard engineer works and he normally works for five days a week. His duties do not require him to operate a locomotive outside the confines of the yard to which he has been assigned. He does not operate a locomotive from the municipality in which the yard is situate to another municipality when he is assigned to yard duty.

During his 1970 taxation year the defendant was assigned to yard duty in Swift Current for 161 days.

The defendant’s custom was, when he was assigned to yard duty in Swift Current, to drive in his private automobile from his home in Moose Jaw, sign in for duty in Swift Current, perform his duties there for five days then drive back to Moose Jaw at the conclusion of his duties to spend the weekend at home. While in Swift Current he was provided with sleeping accommodation by his employer in a bunk house at no cost to him. However his employer did not provide the defendant with meals and it is the cost of those meals while the defendant was on yard duty in Swift Current which the defendant seeks to deduct in computing his income for the taxation year in question.

The deduciibility of the expenses in question falls to be determined upon the interpretation of subsection 11(7) of the Income Tax Act which reads:

11. (7) Notwithstanding paragraphs (a) and (h) of subsection (1) of section 12, where a 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,

(a) 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

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

amounts so disbursed by him in a taxation year may be deducted in computing his income for the taxation year to the extent that he has not been reimbursed and is not entitled to be reimbursed in respect thereof.

It was agreed by counsel that the CPR had an establishment in Moose Jaw and one in Swift Current.

In my view the question to be determined is whether the defendant reported for work at his employer’s establishment in Moose Jaw, as contended by the defendant, or if he reported for work at his employer’s establishment in Swift Current.

During the time that the defendant was assigned to yard duty in Swift Current he performed his work there. He did not perform work in Moose Jaw.

It is true that the assignment of work to the defendant was done by the locomotive foreman in Moose Jaw, but that is equally true of the assignment of work to an engineer resident in Swift Current. On being assigned to work in Swift Current the defendant presented himself there at the appointed time. He signed in there and when his duties were completed he signed out. He received orders as to his specific duties in the yard at Swift Current from the yard foreman there.

In my opinion it is abundantly clear from the facts that even though the assignment to work which the defendant received emanated from the locomotive foreman in Moose Jaw nevertheless, on receiving an assignment for yard duty in Swift Current, the defendant reported for work at his employer’s establishment in Swift Current. While so engaged in yard duty at Swift Current the nature of the defendant’s duties there did not require him to travel away from Swift Current on vehicles used by the employer to transport goods or passengers. It follows that the defendant is not entitled to deduct as expenses the cost of meals incurred by him while on yard duty at Swift Current in computing his income for his 1970 taxation year.

Accordingly the appeal by Her Majesty is allowed and the assessment made by the Minister is restored. As I pointed out at the outset the defendant is entitled to his taxable costs in accordance with subsection 178(2) of the Income Tax Act.