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Docket: 2003-2840(IT)I |
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BETWEEN: |
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NORMA DORIS MCKINLEY, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
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Appeals heard on January 5, 2004 at Vancouver, British Columbia
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Before: The Honourable Justice L.M. Little |
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Appearances: |
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Agent for the Appellant: |
Martin R. McKinley |
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Counsel for the Respondent: |
Raj Grewal |
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JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 2001 and 2002 taxation years are allowed, with costs, and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 9th day of February 2004.
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"L.M. Little" |
Little, J.
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Citation: 2004TCC50 |
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Date: 20040209 |
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Docket: 2003-2840(IT)I |
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BETWEEN: |
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NORMA DORIS MCKINLEY, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Little, J.
A. FACTS:
[1] The Appellant is 88 years of age.
[2] The Appellant received a Disability Tax Credit ("DTC") in the 1999, 2000 and 2001 taxation years.
[3] In the early part of the year 2000 the Appellant was admitted to Inglewood Private Hospital in West Vancouver ("Inglewood"). Inglewood is a long time care private hospital.
[4] The Appellant moved from Inglewood to Hawthorn Park Retirement Community ("Hawthorn Park") in December 2000. In the 2001 and 2002 taxation years the Appellant resided at Hawthorn Park.
[5] Hawthorn Park is a Residential Complex containing 113 residential units located in Kelowna, British Columbia.
[6] Hawthorn Park is designed for seniors who require assistance for all activities of daily living. Barbara Goertzen, R.N., Manager of Resident Services, testified that Hawthorn Park provided the following services:
- nursing services as required;
- 24-hour emergency response;
- monitoring of health care needs;
- full recreation program.
[7] While the Appellant was residing in Hawthorn Park in the year 2000 and 2001, the following amounts were paid to Hawthorn Park on her behalf per month:
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- Fee for services provided - Fee for medication assistance morning and evening, assistance bathing, pendant monitoring and blood sugar testing - Meds - Housekeeping services Total amounts paid per month |
$950.00
$525.00 $395.00 $50.00 $1,920.00 |
[8] In December 2003 the Appellant moved to Orchard Manor, a full care retirement facility, that is adjacent to Hawthorn Park.
[9] When the Appellant's income tax return was prepared for the 2001 taxation year medical expenses of $38,576.00 were claimed ($33,514.00 of this amount was paid to Hawthorn Park).
[10] When the Appellant's income tax return was prepared for the 2002 taxation year medical expenses of $30,137.00 were claimed ($29,464.00 of this amount was paid to Hawthorn Park).
[11] On January 20, 2003 the Minister of National Revenue (the "Minister") issued a Notice of Reassessment for the 2001 taxation year and reduced the medical expenses to $5,062.00 by disallowing the amount of $33,514.00 that was paid to Hawthorn Park.
[12] On August 5, 2003 the Minister issued a Notice of Reassessment for the 2002 taxation year and disallowed $30,137.00 of the medical expenses that were claimed.
[13] By Reassessment dated July 28, 2003 the Minister allowed the Appellant to deduct $10,000.00 as a medical expense for attendant care and allowed the Appellant a DTC.
[14] By Reassessment dated September 5, 2003 the Minister allowed $11,433.00 as medical expenses ($10,000.00 for attendant care and $1,433.00 for other medical expenses) and allowed the Appellant a DTC.
B. ISSUE:
[15] Is the Appellant entitled to claim any medical expenses in excess of the amounts allowed by the Minister?
C. ANALYSIS:
[16] Dr. David Martin of West Vancouver was the Appellant's family doctor from 1996 to 2001. (As noted, the Appellant moved to Hawthorn Park in December 2000.) In a letter dated December 11, 2003 Dr. Martin said:
To Whom It May Concern:
Re: Norma McKinley
DOB: January 10, 1916
This woman was a patient of mine from 1996 to 2001. She moved from a long-term care facility in West Vancouver to a similar facility in Kelowna.
Before she left West Vancouver she was completely dependent on the hospital staff. She was unable to bathe herself, dress herself, nor administer own medications. This included capillary blood sugars and dosing insulin to manage her diabetes.
Since then, my information is that she has deteriorated markedly. She is now blind and has severe dementia.
She is completely dependent upon nursing and auxiliary staff for all activities of daily living. She would not survive without the daily care.
[17] Counsel for the Respondent argued that the Appellant is not entitled to deduct any amount in excess of the amounts allowed by the Minister since the fees paid to Hawthorn Park were not on account of full time care in a nursing home as described in paragraph 118.2(2)(b) of the Act.
[18] The evidence presented to the Court indicated that the Appellant received intermittent or part-time care of approximately two hours per day while at Hawthorn Park, i.e. she did not receive "full-time care".
[19] Counsel for the Respondent argued that Hawthorn Park would not qualify as a "nursing home". The argument of counsel for the Respondent with respect to nursing homes is supported by a number of Court decisions.
[20] During the hearing, Martin R. McKinley, the Appellant's son and agent argued that paragraph 118.2(2)(e) of the Act would entitle the Appellant to deduct the expenses that have been disallowed by the Minister.
[21] Paragraph 118.2(2)(e) of the Act reads as follow:
(2) For the purposes of subsection (1), a medical expense of an individual is an amount paid
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(e) 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;
[22] As Dr. Martin noted in his letter:
(The Appellant) "is completely dependent upon nursing and auxiliary staff for all activities of daily living. She would not survive without the daily care."
[23] As noted above the Appellant is legally blind, suffers from diabetes and dementia and is unable to walk.
[24] Pages D-6, D-7 and D-8 of Exhibit A-1 constitute a Tax Credit Certificate dated September 10, 2003, which state in part:
Re: Norma Doris McKinley
Answer the following questions as they apply to your patient's impairment.
1. Can your patient see?
(answer) No.
2. Can your patient walk?
(answer) No.
4. Can your patient perceive, think, and remember?
(answer) No.
6. Can your patient feed or dress himself or herself?
(answer) No.
Has your patient's marked restrictions in a basic activity of daily living, blindness, or need for life-sustaining therapy lasted, or is it expected to last, for a continuous period of at least 12 months?
(answer) Yes.
If yes give the date:
Your patient became markedly restricted or blind, or the life-sustaining therapy began -
(answer) 2001, 10
Diagnosis
Legally blind
Dementia
As a qualified person, I certify that to the best of my knowledge the information given in Part B is correct and complete.
Dr. Irene C. Bergh
[25] Based on the testimony of Barbara Goertzen and the other evidence submitted, Hawthorn Park would qualify as an "institution or other place" as referred to in paragraph 118.2(2)(e) of the Act.
[26] In determining whether paragraph 118.2(2)(e) would be applicable I have considered the following Court decisions:
1. Dungan v. R., [2003] 3 C.T.C. 2156 ["Dungan"], is a case on point with an almost identical fact pattern. In that case the taxpayer lived in a facility that was not a licenced nursing home. The taxpayer claimed a non-refundable medical expense credit for $26,009.00, the amount paid to the facility over one taxation year. The Court referred the assessment back to the Minister for reassessment based on the finding that the amount in question was a medical expense within the meaning of paragraph 118.2(2)(e) of the Income Tax Act. In coming to its conclusion the Court stated, at paragraph 12:
12. In Title Estate v. R., the Minister denied the deceased Appellant the deduction of $71,361.60, which had been paid by the Appellant in respect of his stay in an uncertified nursing home. The estate of the Appellant appealed to the Tax Court of Canada. Judge Bell allowed the appeal by focusing on the requirements of paragraph 118.2(2)(e) of the Act. One of the requirements present in paragraph 118.2(2)(e) is the certification that the Appellant requires the assistance offered by the institution. Judge Bell concluded that the letter by the Appellant's physician stating "This person requires supervised setting since January 31, 1995 due to medical illness. This person requires a 24-hour companion." was sufficient to meet this requirement. However, the Federal Court of Appeal overturned the decision of the Tax Court. Sharlow J.A., speaking for the Federal Court of Appeal, stated:
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 the handicap. The certificates in this case are simply too vague to meet that requirement.
Justice Hamlyn concluded, at paragraphs 13 and 14:
[13] In this case the Appellant's Peterborough medical doctor certified the Appellant had osteoarthritis and early dementia and whose walking, mental functions and elimination activities were severely restricted by reason of the impairments (Exhibit A-1). The evidence shows Peterborough Manor in 1998 was a retirement home that provided, amongst other things, 24-hour emergency response, medication supervision, bathing and hygiene supervision and assistance, regular nutritionally balanced meals, mobility assistance, nurse call system and a staffed nursing station. In Exhibit R-3, the Appellant's medical doctor states that Peterborough Manor was an institution that provided the care she needed and the supervision she required because of her progressively worsening medical problems.
[14] I conclude, therefore, the expense of $26,009.00 was an amount paid for the care of the Appellant while at Peterborough Manor. The Appellant was certified by a medical doctor that by reason of her diagnosed physical and mental handicap, she required the facilities and personnel specially provided by Peterborough Manor for the care of those residents suffering from the handicaps suffered by this Appellant.
2. In Barsch v. Canada, [2001] T.C.J. 428 ["Barsch"], one of the issues Justice Rip discusses is whether there was proper certification as required per paragraph 118.2(2)(e). He stated:
[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.
. . .
[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(l)(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 [See Note 17 below] 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.
[27] Justice Rip also referred Justice Bowman's decision in Radage v. The Queen, 96 DTC 1615 in which Justice Bowman determines that under certain circumstances legislation needs to be interpreted humanely, at paragraphs 35 to 37:
[35] Finally, I refer to the reasoning of Bowman J., as he then was, in Radage v. The Queen:
(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, [1995] T.C.J. No. 239, 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 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.
[28] I am satisfied from the evidence that was presented, the memoranda of Dr. Martin and the Certificate of Dr. Bergh that Hawthorn Park provides the facilities that the Appellant requires.
[29] In my opinion the expenses claimed by the Appellant should be allowed under paragraph 118.2(2)(e) of the Act.
[30] The appeals are allowed, with costs.
Signed at Vancouver, British Columbia, this 9th day of February, 2004.
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"L.M. Little" |
Little, J.
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CITATION: |
2004TCC50 |
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COURT FILE NO.: |
2003-2840(IT)I |
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STYLE OF CAUSE: |
Norma Doris McKinley and Her Majesty the Queen |
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PLACE OF HEARING: |
Vancouver, British Columbia |
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DATE OF HEARING: |
January 5, 2004 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice L.M. Little |
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DATE OF JUDGMENT: |
February 9, 2004 |
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APPEARANCES: |
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Agent the Appellant: |
Martin R. McKinley |
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Counsel for the Respondent: |
Raj Grewal |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |