Tax Court of Canada Judgments

Date: 20010627

Docket: 2000-4629-IT-I

BETWEEN:

DONALD BARTSCH,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Rip, J.

[1]            Mr. Donald Bartsch appeals from an assessment of tax for 1998 which denied him a non refundable tax credit resulting from purported medical expenses incurred for the benefit of his son, Davin. The appellant claims that Davin received "care and training", within the meaning of paragraph 118.2(2)(e) of the Income Tax Act ("Act"), from the Child Welfare Department of Alberta while confined to a provincial institution in 1989 due to his mental disability. Payments the appellant made to the Alberta Government as a result of his son's confinement at the institution are medical expenses, according to the appellant.

[2]            Davin Bartsch was 15 years of age in 1998. He was diagnosed by Dr. S. Matthews to suffer from a severe oppositional defiant disorder, a chronic organic neurophysiological disorder. Davin was subject to rages, aggression and destruction and anti-social behavior, among other problems. He could not be contained safely at home; he was a threat to the safety and well-being of his younger sister. Dr. Matthews wrote on a Medical Information Form on June 12, 1998 that Davin "requires a very strict structured consistent setting with outlets for physical activity."

[3]            Prior to September 23, 1998, Davin was residing in a Catholic Social Services Group Home. Catholic Social Services could not handle him. At the behest of Ms. Mary Baird, a social worker with the Alberta Government looking after Davin and acting with the authority of the Child Welfare Director of Alberta, Davin was apprehended on that day pursuant to section 17 of the Child Welfare Act of Alberta[1] and taken to the Yellowhead Youth Centre ("Centre") in Edmonton, a provincially funded secure treatment institution. Davin's behavior, according to Ms. Baird, was out of control posing a risk to himself and others.

[4]            Davin was admitted to a secure treatment unit at the Centre by the Alberta Family and Social Services Department. Placement in a secure treatment was to allow for short term crises management and assessment in a highly structured, safe environment. A secure unit is a locked building designed to meet the needs of children experiencing significant emotional, behavioral or psychiatric distress. According to material distributed to parents by the Centre, the units are staffed by trained child care counsellors 24 hours a day.

[5]            Soon after a child is admitted to a secure treatment centre, the child appears in Family Court at which time the social worker explains to the judge why confinement was necessary and, if necessary, why further confinement is required. This was done by Ms. Baird.

[6]            Pursuant to application made by Ms. Baird, Judge R.S. Fowler of the Provincial Court of Alberta, on October 2, 1998, issued the following orders:

that Davin be confined in a secure treatment institution for a period of 22 days terminating on October 23, 1998 ("Secure Treatment Order");

that the Child Welfare Director be the guardian of Davin for a period of six months ("Temporary Guardianship Order"), and

Mr. Bartsch pay for the maintenance of Davin to the Director of Maintenance Enforcement of Alberta, the monthly sum of $400 commencing on November 1, 1998.

The reasons for the orders (i) and (ii) were that:

Davin suffered from a mental or behavioral disorder,

Davin was in a condition presenting a danger to himself or others,

it was necessary to confine Davin in order to remedy or alleviate the disorder, and

with respect to the Temporary Guardianship Order,

David was in need of protective services; and

Davin's survival, security or development may not be adequately protected if he remains with his guardian, that is his parents.

[7]            On October 21, 1998, Ms. Baird applied to renew the Secure Treatment Order since "the child psychiatrist and psychologist are recommending a further period of confinement to stabilize behavior."

[8]            After October 22, 1998 Davin continued to be confined to the Centre, but not in a locked unit. A child may stay in such a facility for three years. During the time Davin was at the Centre in 1998 his education continued by means of an individualized program plan by Edmonton Public Schools and the Centre's school. He also underwent a psychological assessment on October 1, 1997 and eight psychiatric consultations during the period September 28, 1998 to November 16, 1998.

[9]            While at Catholic Social Services, Davin periodically visited the family home. Home visits stopped once he was apprehended. However, his parents visited him at least weekly at the Centre, gave him money for clothing and entertainment and also bought him gifts for his birthday, Christmas and special occasions. The appellant also paid for his medical prescriptions.

[10]          Ms. Baird explained that the purpose of a guardianship order is to place the child under the control and custody of the Director of Child Welfare so that the child may be provided with the necessities of life. The guardianship order is not meant to affect the relationship between the child and the parents, which is considered important, she added. The parents continue to be the child's guardian but the Director has the final say, she explained. Parents may provide the child with extra money, clothing and support but the Director wants to be aware of this extra support.

[11]          The Centre, Ms. Baird explained, is funded by the Ministry of Family and Social Services. Children with emotional behavior problems who are at risk to themselves or others are placed in the Centre. Employees of the Centre are trained to work with these children. Psychiatrists and psychologists also assess the children at the Centre.

[12]          The cost of maintaining a child at the Centre, according to Ms. Baird, is $200 a day. The Department asks parents to assist financially. All money received from the parents go to the provincial government to "offset the costs" at the Centre. The money is commingled with the province's general funds.

[13]          Respondent's counsel made four arguments in support of the assessment:

The payments in issue are more properly described as maintenance or support payments rather than "an amount paid for the care, or the care and training" of Davin within the meaning of paragraph 118.2(2)(e) of the Act;

Davin is not a dependant of the appellant within the meaning of the Child Welfare Act of Alberta and the Act;

The facts at bar do not fit into paragraph 118.2(2)(e); and

No proper certificate within the meaning of paragraph 118.2(2)(e) has been made by an appropriately qualified person that Davin, by reason of his mental handicap, requires the facilities or personnel provided by the Centre.

[14]          Subsection 118.2(1) of the Act provides for a medical expense tax credit based on a formula that includes the total of an individual's medical expenses within any period of 12 months ending in the year. Medical expenses are described in subsection 118.2(2) of the Act. Included among medical expenses in paragraph 118.2(2)(e) is an amount paid

for the care, or the care and training, at a school, institution or other place of the patient, who has been certified by an appropriately qualified person to be a person who, by reason of a physical or mental handicap, requires the equipment, facilities or personnel specially provided by that school, institution or other place for the care, or the care and training, of individuals suffering from the handicap suffered by the patient;

[15]          In the facts at bar there is no doubt that the appellant paid an amount. There is also no issue before me that the Centre is "a school, institution or other place." There is also no issue that Davin suffered from a mental disability in 1998. These allegations were not seriously challenged by the respondent. The question before me, however, is whether the amount paid was a medical expense, more specifically, an amount paid for the care, or the care and training of Davin at the Centre.

[16]          In Rannelli v. M.N.R.,[2] my late colleague Judge Sobier considered the meaning of the term "care" in former subparagraph 110(1)(c)(vi) [replaced by current paragraph 118.2(2)(e)]. Sobier J. adopted an "object and spirit" approach in interpreting the word "care", and concluded that it denoted "not custodial but of a nurturing or solicitous nature."[3] In Rannelli, even though the children did not reside at the private school in question, the school was found to have provided "care" to the children within the meaning of former subparagraph 110(1)(c)(vi).

[17]          In Anka v. Canada,[4] Judge Bonner considered paragraph 118.2(2)(e) and clarified that "the words ‘care or care and training' are used in the context of a definition of a medical expense and that they take colour from that context."[5] In the appeal at bar, pursuant to a court order, Davin was not only cared for at the Centre for the months that the maintenance payments relate to, he actually resided there. However, were the payments in question made for "care" that Davin "received as a patient" for his mental handicap?

[18]          Davin was at the Centre in order to receive care and training "as a patient". Davin was ordered by the Provincial Court to be confined in a secure treatment institution in order to receive treatment to remedy or alleviate his mental disorder. The Provincial Court was satisfied that Davin's case met the conditions required for granting a Secure Treatment Order under subsection 42(3) of the Child Welfare Act. More specifically, the Court found that Davin: (a) is suffering from a mental or behavioral disorder; (b) presents a danger to himself or others; (c) and it is necessary to confine Davin in order to remedy or alleviate the disorder. Since Davin was ordered to a secure treatment institution so that he could receive treatment to remedy or alleviate his disorder, it follows that he was there "as a patient".

[19]          The respondent's counsel argued that the payments the appellant was required to make were maintenance or child support payments and not payments "for the care, or the care and training" of Davin. Counsel cited subparagraph 29(4)(a)(iii), sections 39 and 93 of the Child Welfare Act.[6] Subparagraph 29(4)(a)(iii) and section 39 refer to a person making payments for the maintenance of the child; section 93 refers to payment for the "care and maintenance" of the child. Maintenance payments are not medical expenses. Also, counsel argued, since the money paid by the appellant went into the general funds of the province and not directly to the Centre, the funds could not be said to have been paid to the Centre for Davin's care.

[20]          The fact that the payments in question are for maintenance does not preclude them from being medical expenses. Under subsection 2(2) of the Maintenance Order Act of Alberta,[7] "maintenance" includes "medical aid". Moreover, in R. v. Brooks,[8]Walkem J. articulated that, for purposes of section 215 of the Criminal Code, the term "necessaries of life" includes medical aid. Lastly, in Barker v. The Queen,[9] Garon, J., as he then was, considered the term "maintenance" for purposes of subsections 56.1(2) and 60.1(2) of the Act, and reaffirmed that "maintenance" includes medical treatment. He stated at paragraph 22:

Maintenance is defined in The Dictionary of Canadian Law, by Daphne A. Dukelow and Betsy Nuse, in part as follows: "Pecuniary support including support or alimony to be paid to someone who is not a spouse. [...] Includes shelter, clothing, nursing support, medical treatment, necessary training, instruction and transportation."

[21]          The question remains whether the payments were made for the care and training that Davin received at the Centre. Although the payments were paid to the Director of Maintenance Enforcement, they related to Davin receiving treatment for his mental disorder at the Centre. Subsection 42(1) of the Child Welfare Act specifies that the Director of Child Welfare may only apply for a secure treatment order if the child is subject to a temporary or permanent guardianship order. The temporary guardianship application made by the Director and granted by the Provincial Court was required in order for Davin to receive treatment for his mental disorder at a secure treatment institution. Section 79 of the Child Welfare Act provides that an order of the Court under the Child Welfare Act directing a person to make a financial contribution towards the maintenance of a child may be enforced under the Maintenance Enforcement Act.[10] The Maintenance Enforcement Act provides the Director of Maintenance Enforcement with enhanced creditor rights and enforcement powers in respect of maintenance orders. Therefore, with respect to maintenance orders issued pursuant to the Child Welfare Act, the Director of Maintenance acts as a collection and enforcement agent as mandated by the Child Welfare Act and the Maintenance Enforcement Act. Accordingly, in this case, the appellant made the maintenance payments to the Director of Maintenance who was acting as a collection and enforcement agent. The maintenance payments, nevertheless, related to Davin requiring treatment for his mental disorder at the secure treatment institution that he was ordered to under the Child Welfare Act.

[22]          Davin is the appellant's child. Thus, within the meaning of the word "dependant" in subsection 118(6) of the Act, Davin would be a dependant of the appellant if at any time in 1998 he was dependant on his father for support. The respondent's position, however, is that Davin was dependant on the Child Welfare Director, his guardian, the person who had control and custody of him when the payments in issue were made.

[23]          In The Queen v. Robichaud,[11] Marceau J. interpreted the word "support" for purposes of former subsection 109(1) [replaced by subsection 118(1)]. He stated at page 5267:

In my view, the English word "support" and the French corresponding phrase "subvenir aux besoins" necessarily convey the meaning of being a source of subsistence, sustenance or living. He who is supported by another, be it totally or only partially, is a dependant of the other, i.e. derives his or some of his means of subsistence from the other.

[24]          If Davin derived any means of subsistence from the appellant, then he would have been dependant on the appellant for support wholly or partially. The appellant made maintenance payments so that Davin would be cared and provided for at the Centre. As a result of the maintenance payments made by the appellant, it is fair to say that Davin derived his or some of his means of subsistence from the appellant. Thus, Davin was dependant on the appellant for support.

[25]          In Keyes v. M.N.R.,[12] however, my colleague Judge Bonner considered a case where a taxpayer claimed deductions under former paragraph 109(1)(d) [replaced by paragraph 118(1)(b)] for dependant children. In that case, Bonner J. concluded that the existence of a parent child relationship, and the fact that the taxpayer provided food and shelter to his children during access, were not enough to construe the children as being dependant on the taxpayer for purposes of former paragraph 109(6)(a).

[26]          Unlike the case in Keyes, the appellant is providing more to Davin than merely food and shelter during access times. The appellant is subsidising, albeit in a modest way, Davin to be cared and provided for at the Centre. During the year he also paid for Davin to receive care at other institutions, and provided support and a home to Davin when Davin was not attending any school or other institution. The evidence more than suggests that Davin's continued and constant source of support, financial and moral, has been the appellant and his wife, and that Davin has relied on this support. This is a clear indication that a relationship of dependency exists between Davin and the appellant. I also note that Keyes (as well as Robichaud) deal with former paragraph 109(1)(d) of the Act [current paragraph 118(1)(b)] which requires that a related individual is "wholly dependant" for support of a taxpayer, whereas for purposes of this appeal, subsection 118(6) only requires that a related individual be "dependant" for support of a taxpayer, which is a lower threshold.

[27]          Davin was dependant for support on the appellant in 1998. He was also a "patient" at the Centre, an institution or other place, for purposes of subsection 118.2(2).

[28]          The next issue is whether, in accordance with paragraph 118.2(2)(e) of the Act, Davin has been certified by an appropriately qualified person to be a person who, by reason of his mental handicap, requires the facilities or personnel specially provided by the Centre for the care and training of individuals suffering from the handicap suffered by Davin.

[29]          Counsel for the respondent argued that no certificate exists that complies with the requirements of paragraph 118.2(2)(e). However, the totality of the evidence indicates that three appropriately qualified persons have certified that Davin suffers from a mental handicap, and requires treatment at a secure treatment institution.

[30]          In Title Estate v. The Queen,[13] Sharlow J. considered what must be specified in a certificate for purposes of paragraph 118.2(2)(e). She stated at paragraphs 2 and 5:

[2] Paragraph 118.2(2)(e) requires a certificate that the patient is "a person who, by reason of a physical or mental handicap, requires the equipment, facilities or personnel specially provided" (by the place to which the expense is paid) for the care or training of individuals suffering from that handicap.

. . .

[5] In our view, a certificate under paragraph 118.2(2)(e) must at least specify the mental or physical handicap from which the patient suffers, and the equipment, facilities or personnel that the patient requires in order to obtain the care or training needed to deal with that handicap.

[31]Dr. Matthews, Judge Fowler and Ms. Baird were "appropriately qualified persons" for purposes of paragraph 118.2(2)(e). Under the laws of Alberta, Dr. Matthews, Judge Fowler, and Ms. Baird were authorized in 1998 to certify that Davin suffered from a mental handicap and required treatment at a secure treatment institution. I assume that in 1998 Dr. Matthews was a registered medical practitioner under the provisions of the Medical Profession Act[14] and therefore was authorized to certify that Davin suffered from oppositional defiant disorder and that he "requires a very strict, structured, consistent setting". As a Provincial Court Judge in 1998, Judge Fowler was authorized by virtue of section 21.2 of the Provincial Court Act[15] to order that Davin be required to be confined at a secure treatment institution so that he may receive treatment to remedy or alleviate his mental disorder. Ms. Baird was a Child Welfare Worker in 1998, employed in connection with the administration of the Child Welfare Act pursuant to subsection 94(3) of the same act. Ms. Baird was authorized to attest on the prescribed form[16] required to make an application for a secure treatment order, that Davin suffered from a mental disorder and that it was necessary to confine Davin in a secure treatment institution in order to remedy or alleviate the disorder. Accordingly, Dr. Matthews, Judge Fowler and Ms. Baird were "appropriately qualified persons" for purposes of paragraph 118.2(2)(e).

[32]          In the case at bar, Dr. Matthews, certified on a medical form, dated January 12, 1998, that Davin suffered from severe oppositional defiant disorder and recommended that Davin requires a very strict, structured, consistent setting. Dr. Matthews specified the mental handicap from which Davin suffered. Hence, the first requirement articulated by Sharlow J. in Title Estate regarding certification for purposes of paragraph 118.2(2)(e), has been met.

[33]          In the medical form, Dr. Matthews stated that Davin requires a very strict consistent setting. As well, Ms. Baird, in her Notice of Application for Secure Treatment Order, dated September 25, 1998, attested that Davin suffered from a mental or behavioral disorder, that there was a risk of harming himself or others, and that it was necessary to confine Davin in a secure treatment institution in order to remedy or alleviate the disorder. Paragraph 1(1)(u) of the Child Welfare Act states that a "secure treatment institution" means an institution prescribed by the Minister of National Revenue ("Minister") as a secure treatment institution. Schedule 2 of the Child Welfare Act General Regulation[17] lists eight secure treatment institutions in Alberta, one of which is in Edmonton: Yellowhead Youth Centre, where Davin was admitted. Paragraph 43(2)(a) of the Child Welfare Act states that the person in charge of the secure treatment institution shall be responsible for ensuring that the child ordered to the institution is provided with the diagnostic and treatment services that the child is in need of "in accordance with the standards prescribed in the regulations". Thus, the equipment, facilities or personnel at a structured treatment institution are regulated under the laws of Alberta. As a result, when Ms. Baird, under the authority granted to her by the Child Welfare Act, applied for an order for Davin to receive secure treatment at a secure treatment institution, her reference to such an institution was sufficiently specific as to the "equipment, facilities or personnel specially provided by that..., institution for the care and training of individuals suffering from the handicap suffered by the patient". Thus, the second requirement articulated by Sharlow J. in Title Estate regarding certifications for purposes of paragraph 118.2(2)(e), has been met.

[34]          In sum, the evidence as a whole indicates that Dr. Matthews, Ms. Baird and Judge Fowler are all "appropriately qualified persons" that have certified that Davin requires, by reason of his mental handicap, the equipment, facilities or personnel specially provided by a secure treatment institution, for the care and training of Davin for the handicap he suffers.

[35]          Finally, I refer to the reasoning of Bowman J., as he then was, in Radage v. The Queen:[18]

(a) The legislative intent appears to be to provide a modest amount of tax relief to persons who fall within a relatively restricted category of markedly physically or mentally impaired persons. The intent is neither to give the credit to everyone who suffers from a disability nor to erect a hurdle that is impossible for virtually every disabled person to surmount. It obviously recognizes that disabled persons need such tax relief and it is intended to be of benefit to such persons.

(b) The court must, while recognizing the narrowness of the tests enumerated in sections 118.3 and 118.4, construe the provisions liberally, humanely and compassionately and not narrowly and technically. In Craven v. The Queen, 94-2619(IT)I, I stated:

The application of the inflexible tests in section 118.4 leaves the court no room to apply either common sense or compassion in the interpretation of the disability tax credit provisions of the Income Tax Act - provisions that require a compassionate and commonsense application.

In my view I stated the test unduly narrowly in that case. I have heard many disability tax credit cases since that time and my thinking has evolved. [...] If the object of Parliament, which is to give to disabled persons a measure of relief that will to some degree alleviate the increased difficulties under which their impairment forces them to live, is to be achieved the provision must be given a humane and compassionate construction. Section 12 of the Interpretation Act reads as follows:

Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.

(c) If there is doubt on which side of the line a claimant falls, that doubt should be resolved in favour of the claimant.

[36]          I agree with my colleague McArthur J. in Bryce v. The Queen[19] that notwithstanding Bowman J. was referring to the deductibility of disability tax credits in section 118.3, his reasons apply equally to the case at bar.

[37]          A liberal, humane and compassionate interpretation of paragraph 118.2(2)(e) requires that doubt should be resolved in favour of the appellant.

[38]          The appeal is allowed, with costs, if any. The matter will be referred back to the Minister for reconsideration and reassessment on the basis that the $400.00 he paid to the Director of Maintenance Enforcement of Alberta is a medical expense.

Signed at Ottawa, Canada, this 27^th day of June 2001.

"Gerald J. Rip"

J.T.C.C.

COURT FILE NO.:                                                 2000-4629(IT)I

STYLE OF CAUSE:                                               Donald Bartsch and Her Majesty The Queen

PLACE OF HEARING:                                         Edmonton, Alberta

DATE OF HEARING:                                           May 10, 2001

REASONS FOR JUDGMENT BY:      The Honourable Judge G. Rip

DATE OF JUDGMENT:                                       June 27, 2001

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              Scott McDougall

COUNSEL OF RECORD:

For the Appellant:                                                

Name:                                                     

                For the Respondent:                             Scott McDougall

                                                                                                Counsel

                                                                                                Department of Justice (Edmonton)

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2000-4629(IT)I

BETWEEN:

DONALD BARTSCH,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on May 10, 2001 at Edmonton, Alberta, by

the Honourable Judge Gerald J. Rip

Appearances

For the Appellant:                                The Appellant himself

Counsel for the Respondent:                Scott McDougall

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is allowed, with costs, if any, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the sum of $400.00 paid by the appellant in each of November and December 1998 to the Director of Maintenance Enforcement of Alberta pursuant to the order of the Provincial Court of Alberta, dated October 2, 1998, is a medical expense.

Signed at Ottawa, Canada, this 27^th day of June 2001.

"Gerald J. Rip"

J.T.C.C.

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