William T. Betz v. Her Majesty the Queen, [1987] 1 CTC 329, 87 DTC 5223

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.

It was heard immediately following another appeal in front of me: Moore v. The Queen, [1987] 1 C.T.C. 319. The facts and evidence on some points were somewhat similar. But the witnesses giving the testimony were not the same. Some of the same legal arguments and many of the same legal authorities, given in the Moore case, were canvassed, once more, before me.

The plaintiff taxpayer is a school principal in the School Division of St. James-Assiniboia No. 2. I shall refer to his employer as the School Division. For his 1978 taxation year, he claimed, as deductions from income, travelling expenses of $250. The expenses were based on the use, by the plaintiff, of his personally owned automobile to carry out various duties, said to be required in the course of his employment.

The plaintiff founds his claim in 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 he falls squarely within the provisions of the paragraph.

The defendant agreed the amounts claimed were expended in the course of the plaintiffs employment as a principal.

It was not agreed he otherwise fell within the provisions of subparagraph (i). It was also in dispute whether he was required to pay the travelling expenses under his contract of employment [subparagraph ii) ].

Subparagraph (iii) was not in issue. The plaintiff was not in receipt of any allowances there described.

There were only two witnesses: the plaintiff, and one Kenneth Stefanson, a former principal, and later a superintendent in the School Division.

They were excellent witnesses. Their evidence was careful and credible. The defendant did not call any witnesses.

The plaintiff became a teacher in the school division in 1958. He became a principal in 1973. In 1978, he was the principal of Stevenson-Brittania school in the school division. The grades were from kindergarten to Grade 9.

The plaintiff was a member of the Manitoba Teachers' Society. There was a collective agreement in force, in 1978, between the School Division and the St. James-Assiniboia Teachers' Association No. 2. The latter was the bargaining agent, and negotiator for, the Manitoba Teachers’ Society.

The hierarchy in the School Division, in 1978, was as follows. There was an elected board of trustees. Acting for the board, on the executive side, was the director of education. He was the chief executive officer. Under him, were a number of superintendents, and assistant superintendents.

The school principals answered to particular superintendents, and to the director of education.

The 1978 collective agreement did not, as in the Code of Rules in the Moore case, set out the duties and functions of a principal.

The plaintiff and Stefanson agreed a principal was charged with the total responsibility for the school, including the supervision and administration of the staff, and the carrying out of the programs of the board of trustees.

Prior to, and including 1978, the duties and functions of principals increased. The plaintiff was expected to take an active part in the community surrounding the school. This meant dealing with parent-teacher organizations, parent groups, and other community groups interacting with the school.

Principals were expected to attend and support extra-curricular pupil activities. The plaintiff gave examples of such attendances. Mr. Stefanson said the School Division expected its principals to be highly visible at that type of event; principals were the leaders; they were expected to show support for the staff and children engaged in those activities.

The plaintiff testified it was part of his duties to attend many meetings with his peers. Some were regular ones called by the superintendents. Others were as a member of committees set up by the School Division. Mr. Stefanson said principals were expected to attend all the regular meetings scheduled or called by the superintendents; they were expected, as well, to serve on committees, and attend those meetings.

Mr. Stefanson said failure to attend these various types of meetings, failure to attend the community type meetings (or a poor performance in respect of them), would result in feedback to the School Division. This could result in an unfavourable appraisal assessment, and ultimately lead to no further promotion, or types of demotion.

The evidence, on these matters, was very similar to the evidence I heard in the Moore case.

Many of the duties and functions I have outlined involved the plaintiff leaving his school premises, and going to the School Division offices, or to other places, for the meetings, or other activities.

The plaintiff used his own car to travel to those places. He testified, and Stefanson agreed, travel by his own car was the only practical method of transportation. Public bus routes were unsatisfactory and time-consuming. Taxi service was erratic at times, and, in any event, too costly.

I agree.

The plaintiff, in 1978, kept a mileage log of his travels for these duties. He described practically all of the ones listed. Mr. Stefanson was familiar with a great number of the attendances. He had been a principal before, and during part of, 1979. In that same year he went into the superintendents' department, where he still is. He testified all these meetings and attendances were practically compulsory, in many cases, by the division. In the other cases, they were expected of the plaintiff and others.

I translate all this evidence as indicating duties that were demanded of the plaintiff by his employer. As in The Queen v. Patterson, [1982] C.T.C. 371; 82 D.T.C. 6326, the plaintiff was required, as a matter of regular occurrence, to carry out some of his duties away from his school premises.

The plaintiff has, to my mind, clearly established the travelling he did, and the expenses incurred, fall within subparagraph (i) of the statute.

I think the real issue, in this case, between the plaintiff and the defendant, is in respect of subparagraph (ii). Was the plaintiff, under his contract of employment, required to pay the travelling expenses incurred in the performance of his duties?

The collective agreement, and the plaintiff’s teacher contract (Exhibit 7), are silent about this requirement. There are no clauses, such as those referred to in the Moore case: 4.03 and 2.19.

The defendant contended the plaintiff is governed here by the collective agreement; it is silent on the matter; the plaintiff must find the requirement in that contract; Rozen v. The Queen, [1986] 1 C.T.C. 50; 85 D.T.C. 5611 is distinguishable because there was no collective agreement or written contract; The Queen v. Cival, [1983] C.T.C. 153; 83 D.T.C. 5168 (F.C.A.) applies: in that case, there was a collective agreement silent on the payment requirement, and the court found the provisions of paragraph 8(1)(h) had not been met.

I do not agree with the defendant's submissions.

A collective agreement is a contract. Just because something is not spelled out, does not mean it cannot be implied from the conduct and practice of the parties. The duties of principals are not set out in this contract. Counsel for the defendant conceded the duties need not have been set out in a written document. Yet, it is said, the requirement of payment of the expenses must be so set out in writing, in this case, to come within subparagraph (ii).

That submission cannot, as a matter of logic, stand.

Nor can it as a matter of law. I refer to the case of Sim v. Rotherham Metropolitan Borough Council, [1986] 3 All E.R. 387 and Winnipeg Teachers' Association v. Winnipeg School Division, [1976] 2 S.C.R. 695; 59 D.L.R. (3d) 228. I make the same observations, in respect of those decisions, as I did in the Moore case.

Both the plaintiff and Mr. Stefanson testified it was understood between the parties to the collective agreement that travelling expenses, incurred by principals, could not be recovered from the employer. The teachers' representatives and the employer were ad idem on that.

The plaintiff had, at one time, been on a negotiating committee. The point had come up. The employer refused to make any concession. Mr. Stefanson concurred. He added that principals were paid higher salaries. They were expected to pay their own travelling expenses.

That evidence was objected to by the defendant.

For the same reasons, as in the Moore case, I ruled it admissible.

Here, there was, to my mind, from a practical business point of view, implied terms of the plaintiff’s contract: he would have to carry out duties away from his school; that would require travel; he would have to pay any travelling expenses incurred.

In my reasons in the Moore case, I referred to the Rozen decision. I repeat what I said there in dealing with, and adopting, that decision.

I do not think it necessary to, once more, here set out my comments. Nor to include the lengthy excerpts from the reasons for judgment of my colleague, Strayer, J.

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

The appeal is allowed.

The reassessment of the Minister, dated December 28, 1979, is referred back for reassessment, on the basis the plaintiff is entitled to a deduction from income, for 1978, of $250.

The plaintiff will recover his costs of this appeal.

Appeal allowed.