Ringham v. The Queen, docket 1999-3247-IT-I (Informal Procedure)

Date: 20000412

Docket: 1999-3247-IT-I

BETWEEN:

MARVIN C. RINGHAM,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Bowman, A.C.J.

[1] This appeal is from an assessment for the appellant's 1997 taxation year. The Minister of National Revenue, by that assessment, refused to allow to the appellant $13,569.81 claimed by him as moving expenses under section 62 of the Income Tax Act. This amount consists of a real estate commission of $12,775.80 and legal fees of $794.01 incurred in connection with the sale of his residence at 71 Tiffany Place, Kanata, Ontario ("Tiffany Place"). These expenses were incurred in 1995. Counsel for the respondent did not contend that they were claimed in the wrong year and agreed that if the move from Tiffany Place was not completed until 1997 that is the year in which they should be claimed.

[2] The facts are these: Mr. Ringham is a professional engineer who had worked for 27 years for Transport Canada. He received an offer from a firm of consulting engineers, Marshall Macklin Monaghan Ltd. ("MMM") to work on a project in Budapest, Hungary. He accepted the offer and retired from the Government of Canada on October 28, 1995. His wife was a high school teacher in Ottawa. It was intended that she would complete the school year and join him in Budapest.

[3] The plan was that he would work out of the Thornhill office of MMM for a short period of time until he moved to Budapest.

[4] Mr. and Mrs. Ringham sold Tiffany Place and rented a condominium from a friend at 36 Robson Court, Kanata ("Robson Court"). The rental was on a month to month basis, with no lease, terminable on one month's notice because it was anticipated that Mr. Ringham would be moving imminently to Budapest. They moved some of their household effects into Robson Court on November 18, 1995 and put some in storage.

[5] Commencing in November 1995 Mr. Ringham started working out of the Thornhill office of MMM, and travelling back to Kanata on the weekends. During the week he stayed in a hotel in Thornhill, the Holiday Inn. The sale of Tiffany Place closed on December 1, 1995. Mr. Ringham continued to commute between Thornhill and Robson Place and to stay in the Holiday Inn.

[6] A delay in the anticipated project in Budapest and Mr. Ringham's move to that city occurred in February 1996 and continued throughout most of 1996. Mr. Ringham continued to commute between the Holiday Inn in Thornhill and Robson Court except when he was sent to other parts of the world by MMM on other projects.

[7] In November 1996 MMM confirmed that the delay in the Budapest project was indefinite and on January 1, 1997 Mr. Ringham started working full time at the MMM office in Thornhill. He continued to commute between the Holiday Inn and Robson Court.

[8] On February 1, 1997 he moved into a permanent residence at 20 Harding Blvd, Richmond Hill ("Harding Boulevard"). The expense of the move ($3,446) was allowed by the Minister in 1997.

[9] What remains is the expense of $13,569.81 referred to above relating to the sale of Tiffany Place. It is not disputed that the amounts were spent, or that they are moving expenses within the meaning of subsection 62(3).

[10] The essential difference between the appellant and the respondent is this: the respondent says that there were two moves:

(i) from Tiffany Place to Robson Court;

(ii) from Robson Court to Harding Boulevard.

[11] According to the respondent the costs relating to the sale of Tiffany Place are connected with the first move and that does not qualify under subsection 62(1) because the distance from the "old residence" (Tiffany Place) and the new work location (Thornhill) is not 40 kilometres greater than the distance from the "new residence" (Robson Place) to the new work location.

[12] The appellant's position is that there was realistically only one move — from Tiffany Place to Harding Boulevard.

[13] I agree with the appellant. The respondent's position does not take into account the unusual situation in which the appellant found himself as the result of the delays in, and ultimate abandonment of, the Budapest project. Robson Court was a temporary pied-à-terre, a way-station. It was never regarded by Mr. Ringham as his ordinary residence. He kept some of his furnishings in storage and he did not unpack many of the boxes which he stored at Robson Court. It is true he changed his mailing address to Robson Court but I do not regard this as determinative.

[14] It is not in my view realistic to say that he was "ordinarily resident" at Robson Court. He was expecting to move at any time to Budapest and kept himself in readiness for that move. It would make about as much sense to say that he was ordinarily resident in the Holiday Inn in Thornhill. He seems to have spent more time there than at Robson Court.

[15] After all, it took Odysseus ten years to get home to Ithaca from Troy, with numerous sojourns along the way. No one would ever suggest that notwithstanding his protracted stay with Circe on the island of Aeaea he was ever ordinarily resident there.

[16] Counsel referred to the leading case of Thomson v. Minister of National Revenue, [1946] C.T.C. 51 (S.C.C.). That case has stood far over half a century as the ultimate authority on the meaning of ordinarily resident. It does not however deal with the situation where a person on his way from an old residence to a new one is forced to stay temporarily but longer than anticipated in a place that cannot realistically be regarded as his ordinary residence.

[17] In this case there was only one move, from Tiffany Place to Harding Boulevard, with a somewhat longer than anticipated detour through Robson Court and that move was completed in 1997.

[18] The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is entitled to deduct an additional $13,569.81 in computing his income for 1997 under section 62 of the Act.

[19] The appellant is entitled to his costs, if any, in accordance with the tariff.

Signed at Ottawa, Canada, this 12th day of April 2000.

"D.G.H. Bowman"

A.C.J.