Phyllis Moore v. The Queen, 87 DTC 5217, [1987] 1 CTC 319 (FCTD)

Collier, J. [Orally]:—This is an appeal from a decision of the Tax Court of Canada. For all practical purposes, it is a new trial.

The plaintiff taxpayer is a Winnipeg school principal. For her 1980 taxation year, she claimed, as deductions from income, travelling expenses of $1,885.51. There was an error in the calculation. The amount has now been re-calculated at $2,211.47. The expenses were based on the use, by the plaintiff, of her personally owned automobile to carry out various duties said to be required in the course of her employment.

The plaintiff founds her claim on paragraph 8(1)(h) of the Income Tax Act:

Deductions

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:

(h) where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of his employment away from his employer’s place of business or in different places,

(ii) under the contract of employment was required to pay the travelling expenses incurred by him in the performance of the duties of his office or employment, and

(iii) was not in receipt of an allowance for travelling expenses that was, by virtue of subparagraph 6(1 )(b)(v), (vi) or (vii), not included in computing his income and did not claim any deduction for the year under paragraph (e),

(f) or (g),

amounts expended by him in the year for travelling in the course of his employment;

It was agreed the plaintiff must show she falls squarely within the provisions of the paragraph.

In 1980, the plaintiff was the principal of Laura Secord Elementary School, on Wolseley Avenue, in Winnipeg, Manitoba. Her employer was the Winnipeg School Division No. 1. I shall refer to the employer as the School Division.

At the apex of the School Division was an elected board of trustees: on what I might term the management side, was a superintendent of schools. He was the chief executive officer of the School Division, answerable to the Board. Under him at the time in question, were officials, designated as superintendents, and assistant superintendents. At one point, from 1973 to at least 1979, the hierarchy under the superintendent of schools was three area-superintendents.

One witness, James Cooper, was an area superintendent from 1973 to 1979.

I digress, at this point, to make these observations. The plaintiff gave evidence. Charles R. Brown and John W. Carroll, both school principals in the School Division, also testified. Those four witnesses were impressive. Their evidence was given carefully and, in my assessment, honestly. Their testimony was not challenged by any evidence from the defendant.

I accept, and rely, on the evidence of the plaintiff, Brown, Carroll, and Cooper.

The plaintiffs normal place of business was her school. That was where she carried out a good deal of her duties as principal.

There was a collective agreement in effect, in 1980, between the School Division and the Winnipeg Teachers' Association No. 1 of the Manitoba Teachers' Society. It was negotiated annually, although if neither party gave notice to terminate or to seek amendment, the agreement could be extended for a further term.

The only other written document, dealing with employment, was a teachers’ contract signed by the plaintiff on September 1, 1956. The Code of Rules, in force at any time, became part of her contract.

The plaintiff was, at the material times, a member of the Winnipeg Teachers' Association. It was the organization which negotiated the collective agreements for teachers, principals, and others employed by the School Division.

The plaintiff first became a school principal in 1967. She worked, in that position, at other schools in the division, until going to Laura Secord in 1979.

The duties of principals are set out in section 3.1 of the Code of Rules and Regulations. The section itself does not purport to be exhaustive; the word "include” is used. The witnesses were unanimous in saying the list of powers and duties was not, in fact, exhaustive. Many other duties, not specified in the collective agreement or code, were required or expected of them by their employer.

That this is so, is corroborated by the appraisal procedures used for “School Administrator Performance Appraisal” (Exhibit 6). This particular exhibit is dated May 29, 1981. I am satisfied, on the evidence, the criteria set out at pages 3 and 4 of the Exhibit, were substantially the same, and used, in 1980.

The plaintiffs detailed and careful record of trips she made in her own car fall into a number of categories.

The group marked A were meetings held at the school, in the evenings. The travel distances logged were 608 kilometres. The plaintiff would normally go home after the school day, then return to the school, in the evening. She testified these meetings were with parents, parent groups, or community groups. They were held in the school itself, or in a community centre on the school grounds. The evidence of the witnesses is, that in 1980, and for some years prior, the School Division required greater emphasis and effort be directed to the role of the school and its services in relation to the parents of the pupils in the community where the school was located, the taxpayers in that community, and the community support organizations in the area.

All this meant involvement by the principal. I am satisfied, on the evidence, this involvement was required and expected of principals. Cooper, the area superintendent, so testified. These meetings or attendances were, in my view, carried out in the course of the plaintiff’s employment.

They were not, as contended by the respondent, for the "convenience” of the plaintiff.

The meetings and discussion attendances claimed for, were only for those in the evening. No claim was advanced for any held during normal hours at the school grounds. Obviously, many meetings, to be worthwhile and successful, had to be in the evenings. If anyone's "convenience” was a factor, it was the convenience of parents and others who could not take part in these activities during normal school hours, because of their own work and other commitments.

I continue with the other categories of travel listed by the plaintiff. The group listed as B were attendances at various meetings away from Laura Secord school. The travel distance claimed was 256 kilometres. Some of these meetings were regular ones of principals, called by the Superintendent. Many others were meetings of committees of which the plaintiff was a member. The committees were usually set up by the Superintendent. Principals were asked from time to time to sit on them.

*l reject the suggestion, advanced in cross-examination by the defendant, participation in these committees, dealing with particular matters, was voluntary. The effect of the testimony of the witnesses is to the contrary. Principals were asked, and expected, to serve on committees when requested: Consistent refusal, or refusal without good reason, would, according to the witnesses, have adversely affected a principal’s performance appraisal.

I shall refer, later, to the consequences of that.

Sometimes, the monthly meetings called by the Superintendent were, because of limitations of space, held at a school auditorium rather than at the School Division offices. The travelling recorded by the plaintiff under Group C was in respect of six of those meetings: the claim is for 72 kilometres.

Group D listed travelling done by the plaintiff to the University of Manitoba for various purposes. I accept her evidence. I find these trips were for matters expected of her, or any other principal in the division, for the proper discharging of their duties and functions. The plaintiff recorded, under this head, 756 kilometres of travel.

The final list is Group E. In it are described, in some detail, 128 trips where she travelled by car. The kilometres logged were 5,142. Those trips covered a variety of matters. A number of them, but not nearly all, were explained in chief and cross-examination. That is not meant as a criticism. The plaintiff had testified as to the various kinds of duties and tasks, carried out by her, and requiring travel to places other than her school. The trips in Group E, were either from her home or the school. Generally speaking, they illustrated, as examples, those duties described.

The plaintiff frequently attended at other places, where pupils from her school were participating in competitions with other schools, or participating in what might be termed extracurricular activités. Occasionally, she took some children in her car. Speed skating races, choir performances, a visit to the Canadian Broadcasting Corporation were just some illustrations.

The purpose of all these attendances was to show visible support, as school principal and leader, to the pupils, the teaching staff involved, and to the other schools, if any of those were involved.

The plaintiff, and the other two principals, said all of these things were expected of them. They felt them to be part of their employment, even if many of the examples given were not specifically outlined in writing in any agreements. Mr. Cooper said he, as a superintendent, accepted and encouraged those activities by principals.

Two particular items of travel expenses claimed were the subject of controversy.

The first was in respect of trips made to and from Portage la Prairie. They were in respect of the Manitoba Principals’ Conference held there in October of 1980. The plaintiff was a member of the housing and accommodation committee. She made a trip to that city in March to meet with the conference planning committee. There were two other trips made, one in August and one in September. They were in her capacity as a committee member participating in the organization of the October conference. She also attended the actual conference. She got there and returned by using her automobile.

Some question was raised as to whether those particular trips were in her function as a principal, or as a member of a professional association. As I see it, they were a combination of both: principals were expected, by the employer, to attend those conferences. The funding for the costs of the conference came from the employer. Accommodation, meals, et cetera came out of those moneys. Travel allowances, or expenses, were not included.

The Portage la Prairie travel arose, in my view, out of the plaintiff’s employment; it was a duty or activity, in effect, required of her in the course of her work.

The second matter of controversy was in respect of an outdoor field trip by some of her school’s pupils to a camp in Ontario. The plaintiff travelled by car there in July 1980 to inspect the site for suitability. The pupils, and a few teachers, went there in September for the trip. They were transported by hired bus. The plaintiff followed, a day later, in her car. I accept the plaintiff’s evidence as to the necessity and reasons for this travel. The inspection of the proposed site was, to me, a practical necessity. Her attendance at the trip was twofold. Once more to lend visible support to the pupils and staff. Additionally, to have her car available if any emergencies, such as sudden illness of a child, arose.

These two claims for deduction, if otherwise covered by paragraph 8(1)(h) were, to my mind, reasonable and were the carrying out of duties in the course of employment.

I turn now to the submissions of the parties.

I should say, at the outset, all these cases under this paragraph of the statute depend essentially on their own particular facts.

The concluding words of paragraph (h) require any amounts expended for travelling must be in the course of the taxpayer's employment.

I have already dealt with certain items said by the defendant not to have been incurred in the course of the plaintiff’s employment.

Certain other items, in respect of “union meetings”, were said not to have been expended in the course of employment; they were somehow excluded or dealt with in the collective agreement. There was no evidence before me as to the precise nature of these matters, other than their mention in the list of trips filed as part of Exhibit 1.

The plaintiff testified all trips listed were, in her view, part of her employment duties. I have accepted her evidence. The submission, re the "union meetings" trips, fails.

I turn now to subparagraph (i) of paragraph 8(1)(h).

The taxpayer must show, in order to lawfully deduct amounts expended, he or she was required to carry on the duties away from their employer's place of business.

In The Queen v. Healy, [1978] C.T.C. 355; 78 D.T.C. 6239, Thurlow, A.C.J., defined “ordinarily” as “a matter of regular occurrence". Cattanach, J. in The Queen v. Patterson, [1982] C.T.C. 371; 82 D.T.C. 6326 referred, with approval, to that definition. He found Patterson's employer required the employee's attendance at various places to carry out his duties; the duties were carried out "as a matter of frequent and regular occurrence".

The Patterson case is quite similar to the present case. The taxation year was 1978. Patterson was a school principal. His employer was the same employer as the plaintiff’s in this case. Much of the travelling done by Patterson, to carry out his duties, were for the same purposes and functions as described by the plaintiff in the present case.

I return to this case.

The defendant contended, as I understood it, the plaintiff had not shown she was required to travel in the carrying out of the duties listed; there was nothing in the collective agreement, or her teacher's contract, requiring this; and that, even if she were expected to attend meetings away from her school.

A collective agreement is a contract. As with most contracts of employment, not everything is always spelled out. Many terms are implied, merely taken for granted, or happen, over a period of time, by practice or custom.

The following court decisions, in my opinion, support that general point of view. They happened to involve disputes over contractual arrangements with teachers and employers. In both cases, the court found the contracts were silent on the particular matters in issue. It was found, nevertheless, there were implied terms:

Winnipeg Teachers’ Association v. Winnipeg School Division, [1976] 2 S.C.R. 695; 59 D.L.R. (3d) 228 per Martland, J. at 715 (D.L.R. 243). Martland, J. agreed with Laskin, C.J. on this issue. See Laskin, C.J. at pages 705-6 (D.L.R. 235-36). The Chief Justice dissented on another ground.

Sim v. Rotherham Metropolitan Borough Council, [1986] 3 All E.R. 387 (Ch.D.) 392, 402-405, 407.

In the present case, it was an implied term the plaintiff would be required to attend at other places to carry out her duties; it was a matter of experience, history, and implication, she would have to travel to carry out those particular duties. The evidence is unanimous, and to my mind overwhelmingly sensible, the only practical way was to travel by personal automobile.

If she had not carried out all the duties described earlier, or if she had not travelled away from her school premises, she would likely have received unfavourable performance appraisals. The plaintiff and her witnesses testified to this likelihood. Poor appraisals could lead to several things: no promotion, demotion in the sense of transfer to a smaller and less important school, or downgrading to classroom teacher.

In Hoedel v. The Queen, [1986] 2 C.T.C. 419; 86 D.T.C. 6535 (F.C.A.), there was evidence that a Regina constable, in the canine division, was said to be required to take his police dog with him at most times, apart from duty hours. The constable sought to deduct travel expenses for transporting the animal. The trial judge had found there was no written requirement, or satisfactory oral contract, that this was part of the constable’s duties. The Court of Appeal’s view is at pages 422-23 (D.T.C. 6537-38):

With every deference to the trial judge, I do not think this conclusion was open to him on this record. The uncontradicted evidence of the appellant and of Sergeant Forbes, his superior officer, makes it perfectly clear, in my view, that it was mandatory for the appellant to take the dog along with him when he was off- duty. The rationale for this provision, according to Sergeant Forbes, was . . to better socialize the dog”. He explained that the socialization of the dog began during a 12-week training course. It was necessary to continue the socialization program following completion of the course. The witness characterized this program as a continuing process, the object being to teach the dog to respond to his trainer better by eliminating a “pack instinct” or a “pack environment”. At page 84 of the case, Sergeant Forbes stated unequivocally, that transportation of the dog during off-duty hours was a condition of the appellant being a member of the C.D. I am unable to agree with the view of the trial judge that since non- compliance with this condition would not result in disciplinary action, it was, in reality, only a minor matter and therefore not a condition of employment. The evidence is all to the contrary. Sergeant Forbes said that non-compliance with the provision would likely result in a bad work performance evaluation which could affect a member's future in the police force for years to come.

This is surely a very serious matter with highly undesirable consequences for the employee concerned. When this evidence is coupled with the evidence summarized, supra, relating to the importance of the dog accompanying the member at all times, I fail to see how it is possible to conclude that the condition in issue is not a “requirement” of the appellant’s duties of employment. I also think the evidence establishes that the condition is one which is ordinarily and regularly “required”. I would add, moreover, that even if, as the trial judge held, the requirement to transport the dog was something which, if he failed in its performance “‘would not be questioned by way of disciplinary action but rather in the yearly evaluation of his work performance in the C.D.” (Case p. 48), it by no means follows that such transport was not a duty of his employment. On the contrary, if an employee's failure to carry out a task can result in an unfavourable assessment by his employer, it would seem to me that such a circumstance is compelling evidence that the task in issue is a duty of employment.

I apply the reasoning in respect of unfavourable assessments to the evidence here, as to the effect of poor performance appraisals. Further, as I see it, the parties to the agreements, in this case, envisaged some employees using their own cars. Two contentious clauses specifically refer to use of private automobiles: Clauses 4.03 and 2.19. The parties to this suit disagree as to the application of those clauses to principals.

I shall later deal with those two provisions.

The fact that some principal, at some time, may not have had a private automobile is immaterial. He was required to travel away from his school. The method of travelling was not spelled out. He could make his own way, by his own means.

I have no difficulty in finding the plaintiff Moore has brought herself within subparagraph (i) of the statutory provisions. She was required, as a matter of regular occurrence, to carry out, or discharge, some of her professional duties and responsibility away from her employer's place of business.

I turn now to the evidence and submissions on subparagraph (ii) of paragraph (h).

The defendant submitted the plaintiff was not required, under her contract of employment, to pay the travelling expenses in issue. It was said, for the defendant, there is nothing in the written documents setting out any such requirement; the plaintiff was entitled to claim payment from her employer.

The defendant relies particularly on clause 2.19, one of two clauses I have earlier referred to. I shall first set out clause 4.03 of the collective agreement:

4. Allowances For Teachers Not in Administrative And Supervisory Positions

Allowances payable to each teacher in addition to the Basic Salary shall, as may be applicable, include the following:

4.03 Allowance For Travel

A teacher who is required by the Division to use his own motor vehicle will be paid an allowance in accordance with the Division’s scale of car allowance for employees. A teacher who serves in two different schools in one day will be paid a trip allowance of not less than 53¢ per trip.

Clause 2.19 of the Code of Rules and Regulations is as follows:

Section 2.19 — Transportation of Employees

Necessary and approved transportation required in the performance of the duties of any employee shall be at the expense of the Board. Any employee who uses his own automobile for such transportation shall be entitled to reimbursement at a rate specified by the Board.

The defendant submitted: principals were employees of the Board; under 2.19, the plaintiff was entitled to be reimbursed by her employer for the amounts expended by her in travel.

The plaintiff testified she had never applied to the Board for reimbursement. It was her understanding clauses 2.19 and 4.03 did not apply to principals.

The witnesses Brown, Carroll and Cooper had all been involved, at one time, in negotiations leading to collective agreements. They all testified it was understood the two clauses did not apply to principals; the parties had proceeded on that basis for some years prior to, and including, 1980.

The defendant objected to the admissibility of any evidence contradicting or impeaching the clauses, citing what is usually termed the “parol evidence rule”.

I overruled the objection.

The general rule, referred to, operates to exclude evidence sought to add to, modify, vary, or contradict a written document or contract. It is usually resorted to when a particular contract is in suit between the parties to it.

There are many exceptions to the rule.

Where the parties are agreed, in their conduct, on the meaning of contractual provisions, a court will usually adopt the interpretation accepted by the parties. (See Canadian Encyclopedic Digest — Western (3rd ed.) vol. 7, p. 401.) Where there is a third party, such as the Minister of National Revenue here, one or both parties to the actual contract, as is the situation here, may adduce evidence to show the meaning ascribed by the particular parties, even though it may appear to vary or modify some provisions. (See Salter v. M.N.R., [1947] C.T.C. 29; 2 D.T.C. 918 at 920 (Exch. Ct.) at 35-36.) For obiter, on the right of strangers to challenge the validity or terms of a contract, see Rosenblat v. The Queen, [1975] C.T.C. 472; 75 D.T.C. 5274.

I accept the evidence that the parties excluded principals from 2.19. There was testimony the teacher representatives had once or twice sought a modification to include principals, or a separate provision dealing with principals. The employer would not make any concessions. But both parties negotiated on the basis of their mutual understanding, or agreement, the clauses did not apply to principals.

The evidence was that the parties considered the clauses applied only to “itinerant” teachers, such as French teachers, or music teachers, who might have to teach at two or more different schools on a given day.

The remaining question, clauses 4.03 and 2.19 aside, is whether the plaintiff was required to pay the travelling expenses in issue.

The defendant contended the collective agreement, forgetting the two clauses earlier referred to, was silent; the plaintiff must prove she was required to travel, and required to pay the expenses.

I have already found there was a duty to carry out the functions in issue, and, if necessary to do so, to travel. That included, as I see it, a requirement the plaintiff pay the travelling expenses she incurred.

The decision of my colleague, Strayer, J., in Rozen v. The Queen, [1986] 1 C.T.C. 50; 85 D.T.C. 5611, is very much in point. The plaintiff was a chartered accountant. First a student, then admitted. He was required by his employer to travel to clients’ offices. He claimed, as deductions, car ex- penses he had paid. There was no express provision for payment by the employer of those particular expenses. Strayer, J., described the situation and his conclusions at page 52 (D.T.C. 5613):

Clear evidence was given by both witnesses, and I accept it, that it was the expectation of the employer that persons in the position of the plaintiff would use their own car for the purposes of going to work at clients’ offices. Not only is this the most practical means of getting themselves and their files to clients’ offices in a timely manner, but it is also thought to be most in keeping with their professionalism . . . The Manager of Personnel Administration said that if an auditor did not have a car or was no longer able or willing to use it, the firm would probably dismiss him.

In the absence of any evidence to the contrary, I have concluded that the plaintiff was indeed required to use his automobile in order to do his job and that he was responsible for the costs of operating his automobile. This was basically an implied term of his contract and one which is apparently common with such auditors employed by accountancy firms: see Mackin v. M.N.R., [1982] C.T.C. 2431; 82 D.T.C. 1408 (T.R.B.). No provision whatever was made for his employer reimbursing him for expenses incurred for use of his car within Vancouver. The fact that there was some reimbursement, based on a mileage rate fixed by the employer, with respect to out-of-town use does not prevent the taxpayer’s automobile expenses from being within subparagraph 8(1)(h)(ii): See Faubert v. M.N.R., [1979] C.T.C. 2723; 79 D.T.C. 641; (T.R.B.); Oval v. The Queen, [1981] C.T.C. 392 at 399, 81 D.T.C. 5311 at 5316-17 (F.C.T.D.) (reversed on other grounds by the Federal Court of Appeal [1983] C.T.C. 153; 83 D.T.C. 5168). I believe this situation can be distinguished from that in Cival, supra where the Federal Court of Appeal held that the taxpayer was not obliged to use his own automobile in his work as a payroll auditor for the Department of National Revenue. The Court there held that nothing in the contract of employment obliged him to use his car even though provision was made for mileage allowance where he did use it. It was held that this was at most a “unilateral contract”: that is, he did not have to use his car but if he did use it then he was entitled to be paid mileage. In the present case the employee did not have the option if he was to do his job properly.

I believe also that subparagraph 8(1)(h)(ii) can be interpreted somewhat more broadly. Even if the plaintiff were not specifically required to use his car, he was required to pay his travelling expenses incurred by him in the performance of his duties and this would also bring him within the subparagraph. The evidence was clear that to do his job the plaintiff had to go to the offices of a variety of clients. No provision was made for reimbursement for transportation for getting to those offices except with respect to those outside of Vancouver where at least car mileage was allowed. If an employee is obliged to travel to do his work and his employer is not prepared to pay the exact and total cost of transportation, then he must come within the requirements of subparagraph 8(1 )(h)(ii). This question was not under consideration before the Federal Court of Appeal in Cival. On this basis, it is not really very important whether the plaintiff here was obliged to use his car or not: he was obliged to get himself and his papers to the firm’s clients and there was no arrangement, at least in the circumstances relevant to this case, whereby the employer undertook to pay the total transportation costs. [Emphasis added.]

I apply the Rozen reasoning to this case.

The plaintiff was required to perform duties calling for travel. She in fact travelled, and incurred expenses. She paid the expenses incurred. It was an implied term of her contract she do all those things.

I agree also with my colleague’s comments in distinguishing the Cival case. I further endorse his broader interpretation of subparagraph (ii), as set out in the last paragraph of his reasons for judgment.

The plaintiff has, in my opinion, satisfied the provisions of the subparagraph.

Subparagraph (iii) is not in issue. She was not in receipt of any allowances as there described.

The appeal is allowed.

The reassessment of the Minister, dated May 6, 1982, is referred back for assessment, on the basis the plaintiff is entitled to a deduction from income, for 1980, of $2,211.47.

The plaintiff will recover her costs of this appeal.

Appeal allowed.