The appellant accepted an offer of employment but the employer cancelled the contract before the appellant was obliged to provide services.
The parties settled for $400,000.
The Minister of National Revenue assessed the damages as a taxable 'retiring allowance'.
The Tax Court of Canada set aside the assessment, finding the damages were not a retiring allowance nor income from employment.
The Federal Court of Appeal overturned the trial judge's findings of fact on apportionment and held the damages were taxable as income from employment.
The Supreme Court of Canada allowed the appeal, holding that the Federal Court of Appeal erred in overturning the trial judge's findings of fact.
The Court further held that the damages were not a 'retiring allowance' because the appellant had not yet commenced employment, and they were not taxable under the general provision of s. 3(a) of the Income Tax Act.
