Peter Yaeger v. Minister of National Revenue, [1986] 1 CTC 2282, 86 DTC 1217

Couture, CJ.T.C.C.:— This appeal is in respect of an assessment for the taxation year 1983 having regard to the application of the provisions of subsections 62(1) and 62(3) of the Income Tax Act (the Act) dealing with the deductibility of moving expenses.

The appellant acted on his own behalf and his evidence disclosed the following facts:

He is a major in the Canadian Armed Forces and in 1980 was posted to England for a three-year exchange tour with the Royal Navy, where he and his wife took up residence in Culdrose, Cornwall.

Both the appellant and his wife enjoy horseback riding as a hobby and while in England he purchased a horse in 1981 and a horse trailer in 1982 so that they could pursue their chosen sport. They were both members of the local riding club in England and also of a similar club in Canada.

In 1983 the appellant was posted back to Canada, and he and his wife returned to their home in Kemptville, Ontario, together with their personal effects.

Under the applicable Regulations the Department of National Defence, his employer, paid for some of the costs of moving these effects back to Canada up to a prescribed maximum weight which was less than the total weight of the effects that had to be brought back to Canada. The costs of moving the excess had to be assumed by the appellant.

In computing his income for the taxation year 1983 the appellant claimed as a deduction, under the provisions of subsection 62(1), these excess moving costs which he incurred because of his return to Canada and which were not reimbursed by his employer. The amount so claimed in his income tax return as moving expenses was $8,183.51.

Of the amount of $8,183.51, an amount of $1,038.38 was allowed by the respondent as deductible moving expenses, and the remainder, $7,145.13 was disallowed on the ground it did not qualify as moving expenses within the meaning of this expression as defined in subsection 62(3). Of the amount of $7,145.13, the appellant admitted that $222 was not a moving expense for the purpose of the Act and, therefore, the expenses in issue in this appeal aggregate $6,923.13.

The amount of $6,923.13 is made up of expenses related to the moving of the appellant’s horse and trailer back to Canada and other related expenses such as veterinarian fees, boarding fees, transportation costs etc. They are listed on exhibit A-1 as follows:

The argument submitted by the appellant dealt with the application of the provisions of paragraph (b) of subsection 62(3). His contention was that the horse and trailer which he brought back to Canada were part of his “household effects" referred to in the said paragraph and, therefore, the costs of transporting, boarding and attending his horse together with the costs of transporting his trailer were moving expenses within the meaning of this expression in subsection 62(3), and deductible in computing his income for the taxation year under appeal.

He pointed out that subsection (3) which purports to be a definition of the expression “moving expenses" for the purpose of the Act does not in fact define the said expression but merely recites a list of expenses (some of which would not normally in a strict sense be moving expenses) which are deemed moving expenses for the purpose of subsection 62(1). He added that in his opinion this list of expenses referred to in subsection 62(3) was not meant to be exhaustive but merely descriptive of the kind of expenses that the legislator recognized and acknowledged as moving expenses. He claimed that the use of the word “includes” in the preamble to the subsection confirms this rule and consequently, expenses which are of the same general nature, as those listed in the subsection must also be accepted as moving expenses for the purpose of the subsection.

In support for his interpretation of the word “includes," he referred the Court to the judgment of Collier, J. of the Federal Court — Trial Division, in Marvin R. Storrow v. The Queen, [1978] C.T.C. 792; 78 D.T.C. 6551. His Lordship relying on the judgment of the Privy Council in The King v. B.C. Fir and Cedar Lumber Co. Ltd. [1932] A.C. 441, said at 794 (D.T.C. 6553) regarding the word “includes" as it appears in the said subsection:

Where a definition section uses the word “includes” as it does in ss. 62(3), then the expression said to be defined includes not only those things declared to be included, but such other things “.. . as the word signifies according to its natural import."

As to the expression “household effects" in paragraph 62(3)(b) the appellant stated that he had not been able to find a dictionary definition of that expression itself, but as the composite words of the expression are defined in dictionaries, it was therefore possible to extract from these definitions the proper meaning that should be assigned to it.

His authorities were Webster's Third New International Dictionary of the English Language, Unabridged 1964, and Webster's New 20th Century Dictionary of the English Language, Unabridged, Second Edition 1980.

He submitted that “household," as a noun, means “those who dwell under the same roof and compose a family . . .” or “. . . a social unit composed of those living together in the same dwelling place." (Webster's Third International Dictionary of the English Language, Unabridged 1964).

Household, as an adjective, which is how it is used in the expression “household effects” in paragraph (b) means “.. . of or relating to a household.” So according to his submission by using a combination of these two definitions his suggested meaning for the word “household” as an adjective is: “of or relating to those who dwell under the same roof and compose a family.”

The appellant went through the same exercise with respect to the word “effects” and his source Webster’s New 20th Century Dictionary of the English Language, Unabridged, Second Edition 1980 defines the word as: “belongings, property: as household effects,” which definition he claimed implies that the words belongings, property and household effects are synonymous. Again by joining this definition to the previous one (household) he asserted that the true meaning that must be assigned to the expression “household effects” has to be: “property or belongings of or relating to those who dwell under the same roof and compose a family.” His horse and trailer the appellant submitted fit squarely within this definition.

The submission of counsel for the respondent was that the expression “household effects” in paragraph (b) had to have a much more restricted meaning than the one suggested by the appellant. In support of this contention she reviewed dictionary definitions of certain key words used in the paragraph and in her opinion these definitions led to the conclusion that a horse and a trailer could not form part of the “household effects” of the appellant as this expression is used in paragraph 62(3)(b).

She also brought to the attention of the Court the judgment of the Supreme Court of Canada confirming a decision of the then Exchequer Court in the case of Walter G. Lumbers v. M.N.R., [1944] C.T.C. 67; 2 D.T.C. 652 in which it was held that taxation is the rule and exemption the exception, and, therefore, must be strictly construed.

Counsel referred the Court to a definition of the expression “household effects” in The Random House Dictionary of the English language. The definition reads:

privately owned goods, usually old or used, consisting chiefly of furniture, appliances, etc. for keeping house.

She then quoted to the Court the definition of the word “meubles” in the French version of the paragraph as found in the dictionary Le Petit Robert and defined as:

nom générique des objets mobiles de formes rigides, qui concourent à aménagement de l'habitation, des locaux.

Subsequently, she dealt with the word “aménagement” in the sense used in this definition and its translation in Harrap's New Shorter French and English Dictionary as “. . . appointments (of house), fittings (of office), fixtures (of kitchen).”

Counsel, relying on the provisions of section 8 of the Official Languages Act, suggested that the construction that must be placed on the word “meubles” in the French version has to be one which is most consistent with the English expression of “household effects.” Otherwise, she said, the two versions would not be applied equally in all parts of Canada, and that is contrary to the object and spirit of the Official Languages Act.

She submitted, therefore, that the word “meubles” as it appears in paragraph (b) must mean the same thing as “household effects” in English which according to Random House Dictionary means:

privately owned goods, usually old or used, consisting chiefly of furniture, appliances, etc., for keeping house.

A horse and a horse trailer are not effects, she claimed, which in the common and ordinary understanding of the words one would expect would be used in keeping a house.

Keeping in mind the rules of interpretation of a taxing statute enunciated by the jurisprudence what meaning must be assigned to the expression “household effects” contained in paragraph (b)? Is the true meaning of that expression the one suggested by the appellant whereby the costs of transporting or storing any property owned by him would qualify as moving expenses, or do the words used in the said paragraph invite to a less liberal interpretation of the legislation as proposed by counsel for the respondent whereby only the costs of moving or storing certain type of items or things that are habitually associated with the occupation of a housing unit would qualify as moving expenses?

While dictionary definitions may be of some assistance in ascertaining the true meaning of a word or an expression within a statutory provision caution must be exercised on relying exclusively on such authorities because the legislator in selecting a word or an expression may have purposely intended a broader or more limited meaning than the dictionary definition. To discover the true meaning of a word in a statutory provision it must be considered in its proper context and in its grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament as asserted by E.A. Dreidger in Construction of Statutes 2nd ed., (1983) at page 87.

In my view, in the present situation, the legislator intended a somewhat more restricted meaning of the expression “household effects” than the one suggested by the appellant, and I believe this is clearly demonstrated by the words he has used which serve to circumscribe the type of costs which qualify as moving expenses.

For instance, paragraph (b) refers to “the cost of transporting or storing household effects” (the emphasis is mine) and by using such words it appears clear to me that the legislator did in fact intend to restrict the meaning of the expression household effects to effects that are capable of being transported or stored only. The rules of interpretation of statutes prescribe that words in a statutory provision must be assigned their common and natural meaning, and in my opinion it would be a breach of this rule to suggest or to claim that horses or animals in general are “stored” when referring to their placement in an establishment which provides them with food and shelter. Irrespective of how much one may attempt to expand on the meaning of the word “storing” one could never stretch it enough so that it could be construed as meaning boarding animals.

In my opinion the expression “household effects” which must be attributed a meaning consistent with the context of the whole paragraph, cannot, as submitted by the appellant refer to a horse.

Hope, J. of the High Court of Justice of Ontario held on a motion for the construction of the will of William Lappin, reported in Re Lappin, [1944] O.W.N. 756, held .. . “but as said by Middleton, J. in Re Hard (1916), O.W.N. at 280:

“personal effects” designates articles associated with the person just as “household effects” denotes articles belonging to the house.

The French version of paragraph (b) is also of great assistance in detecting the meaning that the legislator intended for the expression “household effects/' The French version of paragraph 62(3)(b) reads:

Dans le paragraphe (1), “frais de déménagement” comprend toutes dépenses engagées à titre ou au titre

(a) ...

(b) de frais de transport et d'entreposage des meubles du contribuable qui doivent être transportés de son ancienne résidence dans sa nouvelle résidence.

Evidently this is not a literal translation of the English version and freely translated it means:

The cost of transporting and warehousing the furniture of the taxpayer that must be transported from his old residence into his new residence. [Emphasis added.]

In using the word “entreposage" in the French version as the equivalent to “storing/' which literally translated means “warehousing” it reaffirms what I have already said that the legislator did not intend that the expression “household effects" should be construed to mean a horse, or any kind of animal for that matter. The Oxford English Dictionary defines “warehousing": The depositing of goods, etc., in a warehouse under bond or otherwise. The word “goods" in the same dictionary means: “saleable commodities, merchandise, wares (now chiefly applied to manufactured articles)." Even without these definitions the everyday meaning of these two words would never be used with reference to animals and their dictionary definitions emphasizes this point.

Additional weight for the proposition that “household effects" in the context of paragraph (b) cannot be used with reference to animals is provided by the French equivalent of that expression as it appears in the said paragraph as “meubles du contribuable." The word “meubles” is not used in any legal or technical sense and it is translated in Harrap's New Standard French and English Dictionary by “furniture." Again no one in everyday usage would use the word “furniture" when referring to animals.

Finally as a last element of support for the exclusion of animals from the meaning of “household effects” in the context of paragraph (b) its closing words which read: “qui doivent être transportés de son ancienne résidence dans sa nouvelle résidence" are conclusive that the legislator never meant that a horse and a trailer should be considered as “household effects" for the purpose of the application of the paragraph. Effects that must be transported into the new residence as provided by the French version cannot include a horse and a trailer.

For all the above reasons the costs to the appellant of bringing his horse and trailer back to Canada did not qualify as moving expenses within the meaning of subsection 62(1) of the Act and, therefore, were not deductible in computing his taxable income for the taxation year under appeal. The appeal is accordingly dismissed.

Appeal dismissed.