Beaubier
J.T.C.C.:—This
matter
was
heard
in
Regina,
Saskatchewan
on
June
28,
1994
pursuant
to
the
informal
procedure
of
this
Court.
The
appellant
was
the
only
witness.
The
issue
before
the
Court
is
whether
the
appellant
is
entitled
to
deduct
legal
fees
he
paid
in
1992
on
account
of
a
law
suit
he
brought
against
SaskEnergy
for
wrongful
dismissal
and
for
nine
months’
wages
he
claimed
they
contracted
to
pay
to
him
in
the
event
of
dismissal.
The
dismissal
occurred
in
March
1991.
The
appellant
lost
his
law
suit
and
paid
legal
fees
of
$30,928
in
1992.
His
claim
to
deduct
this
sum
was
not
allowed.
He
appealed.
Paragraph
8(l)(b)
of
the
Income
Tax
Act,
R.S.C.
1952,
c.
148
(am.
S.C.
1970-71-72,
c.
63)
(the
"Act")
provides
for
the
deduction
claimed.
It
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:
(b)
amounts
paid
by
the
taxpayer
in
the
year
as
or
on
account
of
legal
expenses
incurred
by
the
taxpayer
to
collect
or
establish
a
right
to
salary
or
wages
owed
to
the
taxpayer
by
the
employer
or
former
employer
of
the
taxpayer;
In
particular
respecting
this
matter,
the
words
in
(b)
‘to
establish
a
right
to..."
were
added
by
an
amendment
which
was
effective
after
1989.
It
is
these
words
which
create
the
issue
in
this
matter.
The
general
principles
relating
to
the
words
"a
right
to
salary
or
wages"
were
reviewed
by
the
Ontario
Court
of
Appeal
in
Re
Beaton,
25
O.R.
(2d)
614
in
which
section
48
of
the
Bankruptcy
Act,
added
in
1966,
was
in
issue.
The
particular
phrase
in
section
48
which
was
reviewed
extensively
contained
the
words
"is
entitled
to
receive,
any
salary,
wages
or
other
remuneration
from
any
person
employing...the
bankrupt".
At
page
625
Thorson
J.A.,
dissenting,
determined
that
the
entitlement
to
salary
or
wages
referred
to
in
the
Act
was
property
of
a
bankrupt.
The
decision
of
Arnup
J.A.,
for
the
majority,
appears
to
assume
this
principle
to
be
correct.
This
principle
was
confirmed
by
the
Supreme
Court
of
Canada
in
Nowegijick
v.
The
Queen,
[1983]
1
S.C.R.
29,
[1983]
C.T.C.
20,
83
D.T.C.
5041
(see
Dickson
J.
at
page
???
(C.T.C.
???;
D.T.C.
5045).
The
amendment
to
the
Income
Tax
Act
in
question
appears
to
add
two
principles
to
the
subsection
in
question.
The
first
is
that
the
legal
fees
in
question
may
be
for
the
purpose
of
establishing
a
right;
in
other
words
the
litigation
does
not
have
to
be
successful.
The
second
principle
is
that
the
"right"
which
may
be
litigated
is
a
claim
to
an
entitlement
to
salary
or
wages.
Thus,
whereas
formerly
the
subsection
merely
allowed
a
taxpayer
to
deduct
fees
incurred
to
collect
salary
or
wages,
the
amendment
enables
a
taxpayer
to
deduct
fees
incurred
to
establish
an
entitlement
to
salary
or
wages
which
he
or
she
can
then
collect.
Based
upon
the
amendment
to
subsection
8(1),
the
Court
finds
that
the
appellant
is
entitled
to
deduct
the
legal
fees
incurred
on
account
of
his
claim
that
he
had
a
contract
of
employment
which
entitled
him
to
nine
months’
wages
in
the
event
of
dismissal.
But
the
deduction
is
limited
to
the
fees
incurred
in
respect
to
this
issue
alone.
It
does
not
include
the
fees
incurred
in
respect
to
a
claim
for
wrongful
dismissal
and
damages
arising
from
that.
There
is
no
evidence
before
the
Court
as
to
what
portion
of
the
legal
fees
related
to
each
aspect
of
the
unsuccessful
law
suit.
The
responsibility
for
this
failure
lies
with
both
the
appellant
and
the
respondent,
neither
of
whom
brought
these
details
out
in
evidence.
The
only
evidence
is
that
two
issues
were
litigated.
The
result
is
that
the
Court
finds
that
one-half
of
the
legal
fees
incurred,
namely
$15,464,
were
incurred
by
the
appellant
in
litigation,
the
purpose
of
which
was
to
establish
a
right
to
the
nine
months’
salary
or
wages
owed
to
the
taxpayer
by
his
former
employer.
This
matter
is
referred
to
the
Minister
of
National
Revenue
for
reconsideration
and
reassessment
on
the
foregoing
basis.
The
appellant
was
not
represented
by
counsel,
therefore
there
is
no
order
as
to
costs.
Appeal
allowed.
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