A-206-78
Thomas Healy (Appellant)
v.
The Queen (Respondent)
Court of Appeal, Heald and Urie JJ. and MacKay
D.J.—Toronto, January 10; Ottawa, January 12,
1979.
Income tax — Income calculation — Deductions — Cost of
employee's meals while travelling away from employer's base
municipality for more than twelve hours claimed as deduction
— Employee working two-thirds of working time at employ
er's establishments in base municipality, and one-third at
establishment in other municipality — Whether or not
employee entitled to deduct cost of meals — Income Tax Act,
S.C. 1970-71-72, c. 63, s. 8(1)(h),(4) — Interpretation Act,
R.S.C. 1970, ç. I-23, ss. 3, 26(7).
This is an appeal from a judgment of the Trial Division
allowing respondent's appeal from a decision of the Tax Review
Board. Appellant, an employee of a Toronto-based organization
with places of business both inside and outside Metropolitan
Toronto, worked approximately two-thirds of his working time
at its race tracks within Metropolitan Toronto, and the remain
ing third at its race track in Fort Erie. The issue is whether or
not appellant is entitled to deduct the cost of meals claimed as
part of his expenses for travelling in the course of his employ
ment. As a result of the Trial Division's decision, respondent's
assessment for tax of appellant's income for the 1973 taxation
year disallowing appellant's claim for the deduction for meal
expenses while working at Fort Erie had been restored.
Held, the appeal is allowed. Fort Erie was not "the munici
pality where the employer's establishment to which he ordinar
ily reported for work" was located. Fort Erie was simply one of
the "different places" at which he was required to work by
virtue of the nature of his employment. That view of appellant's
employment situation brings him within section 8(4). The
expression "reported for work" when used with the word
"ordinarily" applying the dictionary meaning of it, refers to
reporting in a larger sense, not a narrower one, namely, "in
most cases" or as a general rule. Substituting the word
"ordinarily" for the words "commonly" and "usually" leads to
the conclusion that the appellant qualifies for the meal deduc
tion and the fact that there are two establishments in his base
municipality does not affect the result. The purpose of the
section is first to find the municipality where the employee
usually reports for work and then to find whether or not he is
entitled to meal expense deduction for having to be away from
that municipality for more than twelve hours in the course of
his employment. On that view of the section, it matters not
whether there is only one or whether there are several establish
ments in the "base" community.
INCOME tax appeal.
COUNSEL:
J. L. McDougall for appellant.
W. Lefebvre and C. G. Pearson for respond
ent.
SOLICITORS:
Fraser & Beatty, Toronto, for appellant.
Deputy Attorney General of Canada for
respondent.
The following are the reasons for judgment
rendered in English by
URIE J.: This is an appeal from a judgment of
the Trial Division [[1979] 1 F.C. 81] wherein the
respondent's appeal from a decision of the Tax
Review Board was allowed. As a result, the
respondent's assessment for tax of the appellant's
income for the 1973 taxation year disallowing the
deduction of the appellant's claim for meals while
working at Fort Erie, Ontario, was restored.
The relevant facts may be briefly stated. The
appellant at all material times resided in the Mu
nicipality of Metropolitan Toronto and was
employed by the Ontario Jockey Club (hereinafter
called the Club) as a money room division head
and, from time to time, as a money room captain,
in the pari mutuel operations of his employer. He
had been so employed for some twenty-five years
prior to the trial in March 1978. At all material
times, the appellant was a member of the Mutuel
Employees Association, Local 528, Service
Employees International Union and as such his
employment was subject to a collective bargaining
agreement dated January 1, 1973.
The Ontario Jockey Club's head office was, in
1973, and still is located in Rexdale, a part of the
Municipality of Metropolitan Toronto. It operates
six race tracks, including two in Metropolitan
Toronto, namely, Woodbine and Greenwood and
one at Fort Erie, Ontario, a municipality approxi
mately 100 miles from Metropolitan Toronto. The
Club holds two thoroughbred race meets each year
at each of the tracks mentioned. The appellant was
assigned by the Club to work at different times in
the year at each of the three tracks. In 1973, he
worked at Fort Erie from April 15 to May 13 and
from July 18 to September 1. While at Fort Erie
he lived in a motel. He received no allowance or
reimbursement from the Club for his travelling
expenses to and from Fort Erie nor for the cost of
accommodation and meal expenses incurred while
he was in Fort Erie.
For the 1973 taxation year, the appellant
deducted from his income the costs of transporta
tion, accommodation and meals, incurred by him
while he worked at Fort Erie. His claim for deduc
tion of his transportation and accommodation
expenses under section 8(1)(h) of the Income Tax
Act was allowed by the Minister of National Reve
nue, but his claim for the deduction of $504 for
meal expenses was disallowed as not falling within
the exception in section 8(4) of the Act. The
quantum of the meal expense incurred was not
disputed. The Tax Review Board sustained the
appellant's appeal but the Trial Division reversed
this decision and restored the assessment. It is
from that judgment that this appeal is brought.
One of the other facts which should be men
tioned is that while the Club has the right to
determine where and when the employees covered
by the collective agreement will work from time to
time, a list, called an assignment list, is furnished
to the Union if it requests it, and is posted by the
Union at each of the tracks to inform the
employees of their work assignments. The evidence
also discloses that the employees' salaries are paid
from the Club's head office in Toronto and are
delivered by courier to the employees at whichever
track they may be working. Disciplinary matters
are handled initially at the tracks but final disposi
tion of such matters is the responsibility of a senior
officer at head office.
Sections 8(1)(h) and 8(4) of the Income Tax
Act' read as follows:
' S.C. 1970-71-72, c. 63.
8. (1) ...
(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)(6)(v),
(vi) or (vii), not included in computing his income and did
not claim any deduction for the year under paragraph (e),
(/), or (g),
amounts expended by him in the year for travelling in the
course of his employment;
(4) An amount expended in respect of a meal consumed by
an officer or employee shall not be included in computing the
amount of a deduction under paragraph 1(/) or (h) unless the
meal was consumed during a period while he was required by
his duties to be away, for a period of not less than twelve hours,
from the municipality where the employer's establishment to
which he ordinarily reported for work was located and away
from the metropolitan area, if there is one, where it was
located.
The learned Trial Judge, after reviewing the
evidence and ascertaining the dictionary meaning
of "ordinarily" made the following finding [at
pages 84-85]:
In the view I have of the facts, it was a matter of regular
occurrence, normal and not exceptional for the defendant to
carry out his duties during the racing season as required by his
employer at at least two, if not three, different places, that is to
say, at Toronto and at Fort Erie or at the Greenwood, Wood
bine and Fort Erie racetracks. I conclude, therefore, that the
defendant's situation fell within the meaning of paragraph
8(1)(h) and that he was entitled to a deduction in respect of his
expenses of travelling in the course of his employment. More
over such expenses would, I think, ordinarily include,, but for
the effect of subsection 8(4), the cost of his meals while at Fort
Erie in the course of his duties.
In subsection 8(4), the word "ordinarily" is part of the
phrase "where the employer's establishment to which he ordi
narily reported for work was located". In this context it modi
fies the expression "reported for work" and has the effect of
narrowing what the phrase would include if the word were not
there. The expression "reported for work" itself refers, I think,
to the daily attendance by an employee for work. To give the
word "ordinarily" its meaning, it appears to me to be necessary
to conceive of and identify the establishment of the employer to
which the employee "as a matter of regular occurrence",
"usually" or "normally" reported for work.
When this has been done, the wording of the subsection
makes it necessary to go a step further and ascertain the
municipality in which that establishment is located.
In the present case there were, in my view, not one but three
establishments of the Jockey Club to which the defendant in
the course of the racing season usually, normally and as a
matter of regular occurrence reported for work, that is to say,
the Woodbine, Greenwood and Fort Erie racetracks, depend
ing, in each case, on the race meetings being held and the track
to which the defendant was assigned. On the facts I am unable
to see any valid basis for distinguishing, for present purposes,
any one of the three tracks from the others and I am unable to
reach the conclusion that any one of them alone was or that any
two of them together were the establishment where the defend
ant ordinarily reported for work to the exclusion of the other or
others.
I agree with the learned Trial Judge, and, of
course, the respondent does not disagree, that the
appellant falls squarely within the provisions of
section 8(1)(h) and was thus entitled to deduct his
travelling expenses. However, with great defer
ence, I disagree with his conclusion that section
8(4) precludes the appellant from deducting the
cost of his meals while at Fort Erie in the course of
his duties.
On the evidence, it is clear that:
(a) the head office of the Club (the employer),
in 1973 and at the time of trial, was in the
Municipality of Metropolitan Toronto;
(b) the employer from that head office assigned
the employment schedules of its employees, dis
ciplined them and paid them;
(c) the appellant, who resided in the Municipal
ity of Metropolitan Toronto, having been
assigned his employment schedule by his
employer, the Club, in 1973 worked approxi
mately two-thirds of his working time in estab
lishments operated by the Club in the Munici
pality of Metropolitan Toronto;
(d) when the appellant worked at the Club's
establishment in Fort Erie he was entitled to
deduct his accommodation and travelling
expenses pursuant to section 8(1)(h) of the Act
since he was ordinarily required to carry on the
duties of his employment in different places.
From all of the above, it logically follows, in my
view, that clearly the municipality in which the
appellant usually worked was the Municipality of
Metropolitan Toronto. In that municipality, the
employer had two establishments to which the
appellant usually reported for work, depending
upon which of the two was operating at the rele
vant time. In 1973 that usual reporting was inter
rupted while he worked in another of the employ
er's establishments outside of Toronto, at Fort
Erie, as part of his duties, for a period representing
approximately one-third of his working time in
that year. That, as I see it, was not "the municipal
ity where the employer's establishment to which he
ordinarily reported for work" was located. It was
simply one of the "different places" at which he
was required to work by virtue of the nature of his
employment. On the facts of this case, it seems to
me that, indisputably, the Municipality of Met
ropolitan Toronto was the municipality in which
was located the establishments to which the appel
lant usually or commonly reported for work.
The question thus becomes—does that view of
the appellant's employment situation in 1973 bring
him within section 8(4) for the purpose of deduc
tion of his meal expenses in the computation of his
taxable income? I believe that it does. The Shorter
Oxford English Dictionary defines "ordinarily",
inter alia, as "In most cases; usually, commonly".
Substituting, then, the word "ordinarily" for the
expressions "commonly" and "usually" which are
used in the analysis of the appellant's employment
situation in the immediately preceding paragraphs,
clearly leads to the conclusion that the appellant
qualifies for the meal expense deduction unless the
fact that there are two establishments in his base
employment municipality affects the result. In my
opinion, it ought not to. On any logical view of it,
the purpose of the section is to first find the
municipality where an employee usually reports
for work and then to find whether or not he is
entitled to meal expense deduction for having, in
the course of his employment, to be away from
that municipality for more than twelve hours. On
that view of the section, it matters not whether
there is only one or there are several establish
ments in the "base" municipality. The Interpreta
tion Act, sections 3(1) and 26(7), permits such a
logical interpretation 2 without the necessity of
holding, as the learned Trial Judge held, that both
the words "municipality" and "establishment"
must be read in the plural since, in the context of
section 8(4) as I read it, a contrary intention,
within the meaning of section 3(1), does appear.
Where the learned Trial Judge erred, I respect
fully suggest, was in finding [at pages 84-85] that
In subsection 8(4), the word "ordinarily" is part of the
phrase "where the employer's establishment to which he ordi
narily reported for work was located". In this context it modi
fies the expression "reported for work" and has the effect of
narrowing what the phrase would include if the word were not
there. The expression "reported for work" itself refers, I think,
to the daily attendance by an employee for work.
I think, on the contrary, that the expression
"reported for work" when used with the word
"ordinarily" applying the dictionary meaning of it,
refers to the reporting in a larger sense, not a
narrower one, namely, "in most cases" or as a
general rule. To so interpret the words is conso
nant with what I think is necessary for the inter
pretation of section 8(4) which is to read it to
gether with section 8(1)(h).
The objective of section 8(1)(h) is to enable
employees who are required by their employment
to work from time to time away from the places at
which they usually work, to deduct their out-of-
pocket expenses in so doing. Section 8(4) is
designed to prevent abuses in the application of
section 8 (1) (h) but not to prevent the legitimate
deduction of expenses properly incurred while
working at different places. As I see it, the rather
restrictive interpretation adopted by the Trial
Judge would unfairly detract from the overall
objective of the sections.
2 Interpretation Act, R.S.C. 1970, c. I-23.
3. (1) Every provision of this Act extends and applies,
unless a contrary intention appears, to every enactment,
whether enacted before or after the commencement of this
Act.
26. ...
(7) Words in the singular include the plural, and words in
the plural include the singular.
For all the above reasons, I would allow the
appeal and refer the assessment here in issue back
to the Minister of National Revenue for re-assess
ment allowing the deduction by the appellant of
his meal costs in 1973 amounting to $504. The
appellant should be entitled to his costs of the
appeal as well as the costs at trial as awarded to
him by the judgment of the Trial Division.
* * *
HEALD J.: I concur.
* * *
MACKAY D.J.: I agree with the reasons and
conclusions of my brother Urie.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.