The Assistant Chairman:—This is the appeal of Patrick D McTaggart- Cowan from an income tax assessment in respect of the appellant’s 1968 taxation year.
The appellant, who is presently the Executive Director of the Science Council of Canada, was at the time pertinent to this appeal the President of Simon Fraser University.
In September 1963 the appellant accepted the appointment as the first President of Simon Fraser University. It was the appellant’s understanding that his appointment was to continue until his retirement age. However, there was no formal contract of employment and the minutes of the Board of Governors do not specify the duration of the appellant’s appointment.
There arose a growing disagreement between the Board of Governors and the chairman of the Board, on the one hand, and the President and the Deans of the Faculties on the other, as to how the University should be administered. On May 31, 1968, at a meeting of the Board at which the appellant was present, and after a further disagreement, the appellant was dismissed as President of Simon Fraser University by the Board of Governors and was forbidden to have any further contact with the University. The Board of Governors offered to pay the appellant $25,000 (one year’s salary) which the appellant refused. Having received legal advice, the appellant claimed $90,000 but the Board of Governors refused to pay him any more than one year’s salary, ie $25,000. Of this sum the appellant received $14,583.31 in 1968 which was included in computing his income for that year, to which the appellant objected on the grounds that the amount received was for damages and should not be taxable. Damages claimed by the appellant are based on the fact that his understanding was that his appointment as President of the University was to continue until his retirement age—which arrangement was not complied with and, secondly, that in 1968, after being away almost five years from his profession of “meteorology” it would take him some two years of study to become once again proficient in his profession. The appellant claims that in 1968 he was no longer employable as a meteorologist and could not get another university appointment.
The important facts of this appeal are that the appellant on the advice of his legal adviser, did not sue the university for damages but did accept the equivalent of one year’s salary.
Under the circumstances of this appeal, it would be most difficult, if not impossible, for anyone to hold that the appellant’s appointment as President of Simon Fraser University was, by contract, to continue until his retirement age. No legally valid commitment was made by the Board of Governors as to the duration of the appellant’s appointment. In the absence of such a stipulation in the appellant’s contract of employment, it was well within the rights of the Board of Governors to dismiss the appellant for any reason without there being a breach of contract on its part which might give rise to the claiming of damages.
Though one may understand and sympathize with the difficult circumstances in which the appellant found himself after May 1968, these difficulties cannot be considered as damages for which the Board of Governors could be held legally responsible and, more important, they are not the reasons for which the Board of Governors paid the appellant the equivalent of one year’s salary. In my opinion the facts of this appeal indicate clearly that the Board of Governors, because of its disagreement with the appellant, decided to dismiss the latter on the spot and pay him a certain amount in lieu of “notice of termination of employment” which was considered to be reasonable. The receipt of such an amount is not on account of damages but falls squarely within the general taxation rule of section 3. It comes within the meaning of “other remuneration”, subsection 5(1), and within the meaning and intent of section 25 of the Income Tax Act.
I conclude, therefore, that the amount of $14,583.31 received by the appellant in 1968 was properly included in computing the appellant’s income for that year.
The appeal is dismissed.
Appeal dismissed.