Date: 19980107
Docket: 97-1676-IT-I
BETWEEN:
DJAMAL BARHMED,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
TREMBLAY, J.T.C.C.
[1] This appeal was heard at Montréal, Quebec on
November 14, 1997.
Point at issue
[2] According to the Notice of Appeal and the Reply to the
Notice of Appeal the question is whether the appellant, an
engineer, was correct when calculating his income for 1994 and
1995 to deduct the sums of $2,150 and $2,550 respectively as
child care expenses. The respondent disallowed the deduction
because the appellant had not provided among other things
evidence of payments or receipts in due form or the medical
certificate indicating the time for which his wife
Fadela Bélouar would be physically or mentally
disabled.
[3] The appellant has the burden of showing that the
respondent's assessments are incorrect. This burden of proof
results from several judicial decisions, including a judgment of
the Supreme Court of Canada in Johnston v. Minister of
National Revenue.[1]
[4] In the same judgment the Court held that the facts
presumed by the respondent in support of the assessments or
reassessments are also assumed to be true until the contrary is
shown. In the instant case the facts assumed by the respondent
are set out in subparagraphs (a) and (b) of paragraph 4
of the Reply to the Notice of Appeal. Those paragraphs read as
follows:
[TRANSLATION]
4. In arriving at these reassessments the Minister assumed
among other things the following facts:
a. the appellant claimed that during the years at issue he
spent respectively $2,150 in 1994 and $2,550 in 1995 on expenses
for the care of his children Badis and Zakaria; [admitted]
b. as the appellant was unable to provide at the
Minister's request any proof of payments or receipts in due
form or a medical certificate indicating the length of his
wife's physical or mental disability, the amounts claimed as
child care expenses in calculating the appellant's income for
the years at issue are not deductible. [to be explained]
Facts in evidence
[5] The gist of the appellant's testimony was clearly
summarized in the following Notice of Appeal
(Exhibit A-9):
[TRANSLATION]
Further to a telephone conversation of September 30, 1996
with one of your officers (Diane Goulet), I am hereby
bringing my case to your attention. I was quite surprised that
you did not take child care expenses into consideration in my
1994 and 1995 tax returns.
The reasons why I deducted child care expenses for the 1994
return were that my wife was ill and frequently hospitalized
during the weeks following her second pregnancy. Further, after
it she had to again be hospitalized for abdominal pains which
called for surgery. Additionally, this diagnosis of illness and
weakness was confirmed by another physician, Dr. Charbonneau
of the C.L.S.C., who advised that care should be obtained for the
children. In view of this situation, I had no choice but to
obtain care for them. In any case, I discussed the matter a year
ago with one of your officers, who explained to me what had to be
done. I acted accordingly. I have already sent you a letter
explaining everything and the physician’s letter in support
of this deduction. You subsequently sent me a letter telling me
that you had made corrections and everything was in order.
The same situation applied for the 1995 tax return as for
1994: my wife was pregnant for the third time (with twins). The
attending physician (Dr. Skoll of Ste-Justine)
required that she remain in hospital as it was a twin pregnancy
which was risky and she was not supposed to make any effort
(complete exhaustion, great difficulty moving and lack of sleep).
In view of this very difficult situation we had no choice but to
obtain care for the two children.
I would draw your attention to the fact that I feel
bewildered, disappointed and oppressed by this situation, which
is very unpleasant for someone who has no choice but to obtain
day care for the children.
The appellant also explained he was the father of
four children, Badis, born on March 27, 1993, Zakaria,
born on September 14, 1994, and twins (a boy and a girl)
born in 1996.
Exhibits filed
[6] To confirm the foregoing the appellant filed the following
exhibits: Exhibit A-1 - a letter of November 21,
1996 from the obstetrician-gynecologist Amanda Skoll, M.D.,
of the Centre Foeto-Maternel, Hôpital
Ste-Justine:
[TRANSLATION]
Montréal
November 21, 1996
To whom it may concern:
This is to certify that Fadela Belouar had pregnancy
complications in 1994 which made it necessary for her to obtain
care for her child. She gave birth on September 14,
1994.
Additionally, the complications of a twin pregnancy (birth in
March 1996) made it necessary for her to obtain care for her
children in 1995.
Yours truly . . .
[7] As Exhibit A-2, a "medical order"
from Dr. J.L. Charbonneau of the Plateau
Mont-Royal C.L.S.C., dated June 23, 1994, regarding
Fadela Belouar, the appellant's wife:
[TRANSLATION]
This person, the wife of Djamal Barhmed, has attended our
clinic with her son Badis-Anis, born on
27-03-93.
She is currently suffering from external otitis due to great
fatigue since she is to give birth in September 1994.
She apparently needs help with her family since she is alone
here with her husband and child.
Thanking you for your consideration,
J.L. Charbonneau, M.D. 41 200 94/06/23
[8] As Exhibit A-3, a report by Dr. Porlansky
of the St-Léonard C.L.S.C. on the appellant's
wife, whom he saw on September 19, 1996. On her request for
consultation she had mentioned her severe depression and thoughts
of suicide:
[TRANSLATION]
Meeting with A. Brodersen concerning this person; case
discussion: Ms. Belouar is in consultation with
Dr. A. Brodersen.
The latter found that she was suffering postpartum depression:
(1) she began having hallucinations: she sometimes heard the
(six-month-old) twins crying though they were sleeping;
(2) she sometimes had homicidal thoughts of stifling the
children. A neighbour is currently looking after her children:
she has promised to be back at the house by 11:00 a.m.
Agreement: we feel it is essential to have an assessment of
her mental health; we feel urgent referral to
L.-H. Lafontaine is necessary. A. Brodersen will
contact emergency; we will ensure that a homemaker goes to look
after the children until the husband returns from work (at about
7:00 p.m.).
RE: Care of patient
Confirmation homemaker available. Taxi chits given to patient
to get home where she will meet with homemaker and subsequently
go to L.-H. Lafontaine.
4:00 p.m. - Call Sandra Côté,
L.-H. Lafontaine emergency T.S.; possibility of close
treatment; attempt to contact husband at work as patient refused
to give information and wanted to leave. According to
information, husband should be home at about 6:30 p.m.;
information passed on to F. Guilbault for action this
evening.
. . .
Date: 96/09/19 Signed:
[9] As Exhibit A-4, three receipts from Urgence
Santé regarding three occasions on which
Fadela Belouar, while she was grocery shopping or taking a
walk, lost consciousness in the street. The ambulance had to be
summoned and she was taken to the Maisonneuve-Rosemont
hospital.
[10] As Exhibit A-5 a receipt, No. 43990, from
Garderie Rêve d'enfance, 6163 Rue Bélanger
est, St-Léonard, dated September 3, 1995, for
$460 for care for the child Badis Barhmed from
September 7 to December 22, 1994. The appellant told
the Court that the cost of day care was $20 per child per
day.
[11] The appellant explained that she also had to have the
children cared for at home by one Andreana Levistay, a South
American lady who looked after the two children and also
helped the mother, who had to stay in bed, prepared her meals and
so on. It did not occur to him to ask this
Andreana Levistay, whom he paid in cash each time, for a
receipt. However, one Bouassida Nounia stated, in a
statement filed as Exhibit A-6, that she saw the said
Andreana providing day care on several occasions:
[TRANSLATION]
St-Léonard
August 8, 1997
I the undersigned, Bouassida Nounia, certify that on
several occasions I met Ms. Andreana who was providing day
care for the children of my friend Fadela Belouar at her
home in 1995.
In witness whereof this certificate is issued to serve for all
legal purposes. (initials)
Ms. Bouassida-Nounia
6899 Tourraine, St-Léonard
Tel.: 252-0639
[12] One Ms. Lafrance confirmed that when the
appellant's wife was pregnant she could not move. The
physician insisted that she stay in hospital.
[13] As Exhibit A-8 the appellant filed a letter to
Revenue Canada, Taxation on March 29, 1995 concerning his
1994 claim:
[TRANSLATION]
To whom it may concern:
As agreed at my discussion with an officer of Revenue Canada
in Montréal, this is to explain the reasons for my
application for a child care expenses deduction.
The reasons for my applying for this deduction were first that
my wife was ill and often in hospital following the second
pregnancy, and second that after the pregnancy she was
hospitalized for abdominal pains. The attending physicians
required her to stay in hospital, get a lot of rest, and
especially a lot of sleep, and consequently to obtain care for
the child.
[14] In cross-examination the respondent filed as
Exhibit I-1 form T778, titled "Calculation of
Child Care Expense Deductions for 1994". In that form the
appellant claimed $2,150 for child care expenses for Badis and
Zakaria —Garderie Rêve d'enfance and a
person named Kolli Louiza. This Kolli Louiza charged
$30 a day to care for the two children, instead of $40.
Accordingly, in the amount of $2,150 the sum of $460 was paid to
the day care centre for care of Badis for 23 days and the
sum of $1,690 for 56 days for the two children Badis and
Zakaria at home.
[15] As Exhibit I-2, a form similar to the
preceding one, but for 1995, was filed claiming $2,550, that is,
also at the rate of $30 a day instead of $40. The appellant
stressed that he rented a room at the Hôpital
Ste-Justine for his wife and also one for the social
worker.
[16] The respondent also filed as Exhibit I-3 a
letter from the appellant dated February 8, 1997 to
J. Laplante of Revenue Canada:
[TRANSLATION]
Re: Child care expenses (medical certificate)
Dear Madam:
Further to our telephone conversation, I enclose the medical
certificate which you requested to support the child care expense
deduction for the 1994 and 1995 taxation years.
As my wife was ill I had no choice but to obtain day care
(Garderie Rêve d'enfance and a woman named
Kolli Louiza who came to our house to care for the
children). In any case, a year ago I discussed the matter with
one of your officers, who explained to me what had to be done. I
acted accordingly. I have already sent you a letter explaining
everything and the physician's letter in support of this
deduction. You subsequently sent me the statement telling me that
you had made corrections and everything was in order.
I provided the same explanations in the past regarding my file
and the same questions were again put to me every six months
(explanations were provided by letter, by telephone and by a
visit to the Revenue Canada office on
René-Lévesque - Ms. Goulet,
Ms. Beaulieu and others - and they still told me it was all
right).
I would draw your attention to the fact that I feel
bewildered, disappointed and oppressed by this situation which is
very unpleasant for someone who had no choice but to obtain day
care for the children.
I trust you will understand the situation.
Yours truly . . .
[17] The appellant argued that for the 1996 taxation year he
had all the receipts on hand but did not have information for
earlier periods. Thus, he had no receipt from the said
Andreana Levistay.
[18] The appellant further noted that neither he nor his wife
had parents living in Canada. They unsuccessfully tried to obtain
a visa for his own sister (Exhibit A-7).
[19] Section 63 of the Income Tax Act ("the
Act") lays down the conditions for a deduction. According to
the respondent, the appellant did not meet the condition that an
official document be issued certifying a two-week stay in
hospital as provided for in s. 63(2)(b)(iv):
(iv) a person certified by a medical doctor to be a person
who
(A) by reason of mental or physical infirmity and confinement
throughout a period of not less than 2 weeks in the year to
bed or to a wheelchair or as a patient in a hospital, an asylum
or other similar institution, was incapable of caring for
children, or
(B) by reason of mental or physical infirmity, was in the
year, and is likely to be for a long-continued period of
indefinite duration, incapable of caring for
children . . .
except for the conditions regarding payment contained in
s. 63(1):
and the payment of which is proven by filing with the Minister
one or more receipts each of which was issued by the payee and
contains, where the payee is an individual, that individual's
Social Insurance Number, but not exceeding the amount, if any, by
which . . .
[20] As to the official document from a physician regarding
the illness of Fadela Belouar, the appellant's wife, it
appeared from the evidence as a whole that the illness related to
"pregnancy complications", according to
Dr. Amanda Skoll in 1994 (paragraph 6) and in
1995, required that she obtain day care for the children.
Dr. Charbonneau wrote to the same effect (paragraph 7).
Dr. Porlansky of the St-Léonard C.L.S.C.
mentioned her mental deficiencies (paragraph 8). He
recommended an urgent psychiatric examination at the
L.-H. Lafontaine hospital. He said "We will
ensure that a homemaker goes to look after the children until the
husband returns from work", and referred to the possibility
of close treatment at the L.-H. Lafontaine hospital. On her
application for consultation she mentioned thoughts of suicide.
The appellant's wife fainted three times when she went
out and had to be taken to hospital by the Urgence Santé
service (paragraph 9). Moreover, the appellant rented a room
at Ste-Justine not only for his wife but for the social
worker. In my opinion, all these documents show the critical
condition of Ms. Belouar's health following her
pregnancies and later on. To establish the need for day care, the
physicians spoke much more forcefully of her state of health than
of a document certifying that she had spent two weeks in
hospital. It seems to me that this is considering the intent of
Parliament and the object and spirit of the Act and its real
effect, as the Supreme Court of Canada put it in Stubart
Investments Ltd. v. The Queen, 84 DTC 6305.
[21] Regarding the absence of receipts with the
recipient's signature and social insurance number, reference
should be made to Candice Y. Senger-Hammond v.
The Queen, [1996] T.C.J. No. 1609, Court
No. 96-1117(IT)I. This decision was rendered by
Judge Bowman of this Court on December 6, 1996:
To deny deductibility on the basis of a purely mechanical
interpretation would lead to an absurdity (City of
Victoria v. Bishop of Vancouver Island, [1921]
2 A.C. 384). One cannot of course ignore the words of
section 63 quoted above. They must be given some effect, as
Isaac CJ. said in The Queen v. Coopers & Lybrand
Limited, 94 DTC 6541 at 6546 :
But these principles are not invitations to Courts to ignore
other well-accepted rules of construction, such as that which
requires Courts to construe statutes so as "to ascribe some
meaning to each word used by the legislature," Atco et
al. v. Calgary Power Ltd. et al., [1982] 1 S.C.R.
557 at 569.
Nonetheless, their effect must be interpreted in a manner that
is consonant with the object of the legislation. To mechanically
treat the filing of receipts with social insurance numbers as an
inflexible condition precedent to deductibility defeats the
predominant objective of the legislation.
There is much jurisprudence in Canada, the United Kingdom and
the United States in which the question whether provisions in a
statute are directory or imperative has been considered.
Black's Law Dictionary defines "directory" as
follows:
Directory, adj. A provision in a statute, rule of
procedure, or the like, which is a mere direction or instruction
of no obligatory force, and involving no invalidating consequence
for its disregard, as opposed to an imperative or mandatory
provision, which must be followed. The general rule is that the
prescriptions of a statute relating to the performance of a
public duty are so far directory that, though neglect of them may
be punishable, yet it does not affect the validity of the acts
done under them, as in the case of a statute requiring an officer
to prepare and deliver a document to another officer on or before
a certain day.
A "directory" provision in a statute is one, the
observance of which is not necessary to the validity of the
proceeding to which it relates; one which leaves it optional with
the department or officer to which it is addressed to obey or not
as he may see fit. Generally, statutory provisions which do not
relate to the essence of the thing to be done, and as to which
compliance is matter of convenience rather than substance are
"directory," while provisions which relate to essence
of thing to be done, that is matters of substance, are
"mandatory". Rodgers v. Meredith, 274 Ala.
179, 146 So.2d 308, 310.
Under a general classification, statutes are either
"mandatory" or "directory," and, if
mandatory, they prescribe, in addition to requiring the doing of
the things specified, the result that will follow if they are not
done, whereas, if directory, their terms are limited to what is
required to be done. A statute is mandatory when the provision of
the statute is the essence of the thing required to be done;
otherwise, when it relates to form and manner, and where an act
is incident, or after jurisdiction acquired, it is directory
merely.
The first paragraph of the above entry is identical to that in
Jowitt's Dictionary of English Law, (2nd Ed.). I believe that
these passages correctly state the law of Canada as well.
Maxwell on Interpretation of Statutes, 12th Edition, discusses
the matter at pages 314-315:
The first such question is: when a statute requires that
something shall be done, or done in a particular manner or form,
without expressly declaring what shall be the consequence of
non-compliance, is the requirement to be regarded as imperative
(or mandatory) or merely as directory (or permissive)? In some
cases, the conditions or forms prescribed by the statute have
been regarded as essential to the act or thing regulated by it,
and their omission has been held fatal to its validity. In
others, such prescriptions have been considered as merely
directory, the neglect of them involving nothing more than
liability to a penalty, if any were imposed, for breach of the
enactment. "An absolute enactment must be obeyed or
fulfilled exactly, but it is sufficient if a directory enactment
be obeyed or fulfilled substantially."1
It is impossible to lay down any general rule for determining
whether a provision is imperative or directory.2
"No universal rule," said Lord Campbell L.C.,
"can be laid down for the construction of statutes, as to
whether mandatory enactments shall be considered directory only
or obligatory with an implied nullification for disobedience. It
is the duty of Courts of Justice to try to get at the real
intention of the Legislature by carefully attending to the whole
scope of the statute to be construed."3 And
Lord Penzance said: "I believe, as far as any rule is
concerned, you cannot safely go further than that in each case
you must look to the subject-matter; consider the importance of
the provision that has been disregarded, and the relation of that
provision to the general object intended to be secured by the
Act; and upon a review of the case in that aspect decide whether
the matter is what is called imperative or only
directory."4
1 Woodward v. Sarsons (1875)
L.R. 10 C.P. 733, per Lord Coleridge C.J. at
p. 746.
2 But see Montreal Street Rly Co. v.
Normandin [1917] A.C. 170, per Sir Arthur
Channell (requirements re performance of public duty, the
invalidation of which performance would work serious general
inconvenience, usually held directory). Cf.
Maxwell, 11th ed., pp. 362-364;
Cullimore v. Lyme Regis Corporation [1962]
1 Q.B. 718.
3 Liverpool Borough Bank v. Turner
(1860) 2 De G.F. & J. 502, at pp. 507,
508.
4 Howard v. Bodington (1877)
2 P.D. 203, at p. 211.
The essence of section 63 is the deduction of child care
expenses, not the collection of tax from babysitters. The
language of the provision does not support the view that the
filing of receipts is mandatory. For one thing, the word
"shall" is not used.2 Rather it describes a
method of proof, which is clearly formal, evidentiary and
procedural. Indeed, one may usefully compare the words in
section 63 with those in subsection 118.1(2) of the
Income Tax Act, which reads:
(2) -- A gift shall not be included in the total charitable
gifts, total Crown gifts or total cultural gifts of an individual
unless the making of the gift is proven by filing with the
Minister a receipt therefor that contains prescribed
information.
The requirement in subsection 118.1(2) is clearly
imperative. Had Parliament intended that the same effect be given
to the words in section 63 it was quite capable of saying
so.
I think that the words in section 63 requiring the filing
of receipts with the payee's social insurance numbers are
directory rather than imperative, and that the failure to do so
is not fatal to deductibility. This conclusion is consistent with
the wording of the Act and its object.
2 I am therefore not faced with the situation that
arose in The Queen v. Adelman, 93 DTC 5376.
[22] I concur in the view of Judge Bowman. Further,
considering the evidence that Kolli Louiza charged $30 a day
instead of $40, the appellant cannot be blamed for hiring
her.
Decision
[23] The appeal is allowed with costs.
Signed at Québec, Quebec, January 7, 1998.
Guy Tremblay
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 29th day of May
1998.
Mario Lagacé, Revisor
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