Dunn v. The Queen, docket 2001-1628-IT-I (Informal Procedure)

Date: 20020118

Docket: 2001-1628-IT-I

BETWEEN:

GINNIE DUNN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

Rowe, D.J.T.C.C.

[1]            The appellant claimed the sum of $17,189.93 as medical expenses for the 1998 taxation year but the Minister of National Revenue (the "Minister") disallowed $5,484.00 of said amount on the basis that certain medications, substances and preparations - regarded as health and therapeutic supplements - purchased from the offices and clinics of a physician, dentist and naturopath were not eligible medical expenses pursuant to subsection 118.2(2) of the Income Tax Act (the "Act") because they were not expenditures for the purchase of prescribed drugs as recorded by a pharmacist within the meaning of paragraph 118.2(2)(n) of the Act.

[2]            Virginia (Ginnie) Dunn testified she is a realtor residing in Quesnel, British Columbia. In 1998, she became very ill and sought treatment from a medical doctor, a dentist and a naturopath. The medications prescribed for her by these medical professionals were not available through regular pharmacies or other medical supply sources. The appellant stated that her physician - Dr. Loewen M.D. - treated her for a serious abscess and infection in the maxilla of her head which could have become life-threatening. The particular condition was described in the undated letter filed as Exhibit A-1. The appellant also referred to another undated letter written by Dr. Loewen - Exhibit A-2 - in which Dr. Loewen stated it was not unusual for a licensed physician to dispense medications - particularly in communities where there was no pharmacist and the medications - whether or not they were issued pursuant to a prescription - could be recorded by the physician instead of a licensed pharmacist. In addition to receiving treatment from Dr. Loewen, the appellant also consulted her dentist - Dr. Ara Elmajian D.D.S. - and a description of her condition and the treatment undertaken was contained in a letter - dated March 20, 2001 - and filed as Exhibit A-3. In said letter, Dr. Elmajian stated he was authorized to dispense medications and remedies - including the ones utilized in the treatment of the appellant - and indicated these substances were not stocked in regular pharmacies. The cost of certain homeopathic drops was billed as a separate item on accounts issued to - and paid by - the appellant. The appellant stated she was also treated by Dr. Eugene Pontius, N.D. - a naturopathic physician - and in a letter (Exhibit A-4) - dated April 9, 2001 - issued at the request of the appellant, Dr. Pontius indicated therein that there is legislative mandate for naturopathic physicians to dispense medications. The appellant referred to a copy of a letter - Exhibit A-5 - dated August 8, 2000, directed to The Honourable Michael Farnworth, Minister of Health for the Province of British Columbia. The appellant stated she had received said letter from Dr. Brian Martin - President of the College of Naturopathic Physicians of British Columbia - and it had included an attached current list of substances for use by registered naturopathic practitioners. The appellant stated that when certain medications were prescribed to her by Dr. Pontius, she accepted he had the right to do so within the course of treatment being provided.

[3]            In cross-examination, the appellant agreed she had been allowed to claim nearly $12,000 in medical expenses during the 1998 taxation year. She identified a sheet with attached receipts - Exhibit R-1 - on which she had listed expenditures for medicines and treatments, a copy of which had been provided to Canada Customs and Revenue Agency (CCRA). She explained that the notation on some receipts indicating payment was for "health supplements" or "therapeutic supplements" had been made by the physician's receptionist. The appellant pointed to certain items on the sheet - marked in green highlighter - as the ones disallowed by the Minister. Another sheet with attached receipts - Exhibit R-2 - was identified by the appellant as a document having been prepared by her and sent to CCRA in which proof of purchases and descriptions of various substances were set forth in detail. Many were described merely as "therapeutic supplements". Accounts from Dr. Elmajian - in relation to a homeopathic remedy - and Dr. Pontius - for certain medications - were filed as Exhibit R-3. The appellant stated that none of the items purchased by her - and used in the course of her treatment - were available in pharmacies or health stores.

[4]            The appellant submitted that pursuant to section 75 of the British Columbia Pharmacists, Pharmacy Operations and Drug Scheduling Act, RS Chap. 363 (Pharmacists Act) nothing contained in said Pharmacists Act prevented any practitioner from directly dispensing a drug to the practitioner's patient. She referred to the dictionary definitions of "drug" and submitted they clearly embraced the sort of substances and medications that she had been prescribed by the various medical professionals, all of whom satisfied the definition of medical practitioner as defined by subsection 118.4(2) of the Act. The appellant submitted that all of the substances claimed by her as a medical expense were properly prescribed by licensed and authorized medical professionals and since there was no other source for the particular medications - including regular pharmacies staffed by a licensed pharmacist - the requirement in the relevant provision of the Act that the purchase - by her - of drugs, medicaments or other preparations or substances be recorded by a pharmacist was prohibitive and contrary to the spirit and intent of the legislation.

[5]            Counsel for the respondent submitted the particular provision of the Act pertaining to medical expenses was clear and concise and indicated Parliament had chosen to include the requirement that any purchase of qualified substances be recorded by a pharmacist in addition to the condition that the medications were for the use of the patient and had been prescribed by an individual meeting the definition of medical practitioner or a dentist. In the within appeal, counsel submitted the substances, although utilized in the course of the appellant's treatment for a serious and painful condition, were not recorded by a pharmacist and the fact that a licensed physician can dispense a drug directly to a patient - without running afoul of the Pharmacists Act - does not transform that physician into a pharmacist for the purpose of the Act. Counsel for the respondent advised the Court that his research indicated no regulations were in effect - in 1998 - pursuant to section 10 of the Naturopaths Act, RS Chapter 297 - which would have permitted the appellant's naturopathic medical practitioner to prescribe or administer drugs and that without authority flowing from said regulations, none could otherwise be prescribed. Counsel further advised there had been regulations in place - prior to 1998 - but at some point they were no longer in force.

[6]            The relevant portion of the provision of the Act is as follows:

118.2(2) Medical expenses - For the purposes of subsection (1), a medical expense of an individual is an amount paid

(a)            to a medical practitioner, dentist ... in respect of medical or dental services provided to a person ... in the taxation year in which the expense was incurred:

...

(n)            for drugs, medicaments or other preparations or substances ... manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder, abnormal physical state, or the symptoms thereof or in restoring, correcting or modifying an organic function, purchased for use by the patient as prescribed by a medical practitioner or dentist and as recorded by a pharmacist; (emphasis added)

[7]            There is no issue in the within appeal as it pertains to the above provision except as it relates to the requirement that the drugs, medications, preparations or substances prescribed by the appellant's physician, dentist and naturopathic physician be recorded by a pharmacist. The position of the Minister is that the only appropriate interpretation of "pharmacist" is to consider it as referring to an individual licensed pursuant to the Pharmacists Act.

[8]            The appellant relied on the decision of Judge Teskey - Tax Court of Canada - in Frank v. Her Majesty the Queen 2001 CarswellNat 1492. In that case, Judge Teskey was confronted with the submission of counsel for the respondent that paragraph 118.2(2)(n) of the Act required the drug in question to have been a prescription drug and that the purchase had to be recorded by a pharmacist. Judge Teskey held that vitamins and supplements could be considered as drugs, medicaments, or other preparations or substances within the meaning of the paragraph because they were prescribed by a physician and were required to sustain the taxpayer's life. At paragraph 9 - and following - of his judgment - delivered orally - Judge Teskey stated:

9.              The question to me is can I ignore, "as recorded by a pharmacist".

10.            The evidence is that the Appellant buys her vitamins and supplements through a process that can be done by phone, it is more economical than going to a drug store or a health food store, easier for her. She gave evidence that she talked to a druggist and the druggist said oh yes I can record it. And what does the statute mean by those words, "as recorded by a pharmacist?" They must mean something broader than a "prescription" drug. A pharmacist just making a note of vitamins and supplements sold doesn't make sense.

11.            "Recorded" by a pharmacist could be the pharmacist's purchase or sales slips. Both are recordings by the pharmacist.

[9]            In the case of Mauro v. Her Majesty the Queen, 2001 CarswellNat 1498, Judge Mogan - Tax Court of Canada - considered paragraph 118.2(2)(n) of the Act in the context of an appeal concerning medical expenses in which many of the required indicia of the provision were at issue. However, in relation to the requirement of recording by a pharmacist, Judge Mogan at paragraph 11 stated:

The evidence in this appeal is clear that the nutritional supplements were not prescribed by a medical practitioner nor was the use of them recorded by a pharmacist.. (emphasis is mine)

[10]          There is no doubt that a broad and liberal interpretation of the provisions pertaining to medical expenses has been pursued by the courts and recent decisions of the Tax Court of Canada have permitted individuals to claim - as a medical expense - the cost of renovating a house - prior to starting construction - on the basis that common sense dictated the particular relief should not be available only in the case of renovation or alteration to an existing dwelling. One of these cases was Hillier v. Her Majesty the Queen, 2000 DTC 2145. In that matter, Bowman A.C.J.T.C. considered the appeal of a taxpayer who was required to construct a new home which would be free of environmental and other problems that caused her daughter's medical condition. Commencing at paragraph 12 of his judgment, Judge Bowman stated:

[12]          Here, the respondent argues that I should read into paragraph (l.2) immediately before "dwelling" the word "existing". I do not think that such an addition is warranted, nor do I think that it assists in the attainment of the object of the legislation. (Bank of England v. Vagliano Brothers, [1891] A.C. 107 at 120.) To add a word to the statute that is not there puts a restriction on the plain meaning of the word "dwelling" that is, if anything, antithetical to what paragraph (l.2) is designed to do. Here, a dwelling is being constructed for the patient. As construction progresses changes are made or incorporated to meet the special needs of the patient. These changes make the building different from what it would be if it were being built for someone that did not have Lauren's medical condition. That in my view is a reasonable interpretation of "alterations" — a progressive alteration as construction proceeds. It is only the cost of these departures from the norm that the appellant is claiming — not the entire cost of the house.

[13]          I was referred to a decision of Rowe, D.J.T.C. in Gustafson v. R., (98-1358(IT)I) of April 30, 1999 in which he dismissed an appeal from an assessment that denied as a medical expense, the extra expenses of revisions to plans to a new home resulting from the needs of the appellant's spouse, a quadriplegic. He referred to a decision of Rip, J. in Vantyghem v. R., [1999] 2 C.T.C. 2157. In that judgment, Rip, J. said at page 2162:

14             The Shorter Oxford defines the verbs "alter" and "renovate" in the following manner:

                alter. 1. To make otherwise or different in some respect, without changing the thing itself. 2. To become otherwise, to undergo some change...

                renovate: 1. To renew. 2. To renew materially; to repair; to restore by replacing lost or damaged parts; to create anew.

15             The plain meaning of the word "alteration" would seem to include almost any kind of change. Thus, the word "alter" appears to be broad enough to encompass installations. Furthermore, the fact that the words "alterations" and "renovations" are used disjunctively in paragraph 118.2(2)(l.2) encourages reading the terms in a manner that would not make either superfluous. One may reasonably read "alterations" to include changes in addition to those already covered by the word "renovation". An installation may be an "alteration" that is not simply a "renovation".

[Footnote omitted.]

And at page 2163:

19             The medical expense and disability tax credit provisions in the Act should be interpreted in its most equitable and liberal manner compatible with the attainment of the object of those provisions and Parliament's intent in enacting the provisions. Every enactment should "be given such a fair, large and liberal construction and interpretation as best ensures the attainment of its objects". Where it is not unreasonable to hold, in the particular circumstances of a case, that an amount paid by a taxpayer can be described as a medical expense, one should examine if the amount so paid qualifies as a medical expense pursuant to subsection 118.2(2) of the Act.

20             The word "alterations" in paragraph 118.2(2)(l.2) includes "installations"; this is an interpretation that a typical person would find to be reasonable having regard to Mrs. Vantyghem's plight.

[Footnotes omitted.]

[14]          I find the approach of Rip, J. very helpful. All alterations or renovations involve in some degree the creation of something new. I see no reason why this should not, in the context of this legislation, involve the creation of a new structure where there must be changes and additions to conventional plans to incorporate special features necessary to accommodate the medical needs of a particular person. This conclusion is consistent with that reached by Bowie, J. in Michael George v. The Queen, 98-1697(IT)I and by Beaubier, J. in Harold Rosen v. The Queen, 1999-2043(IT)I. In both of these cases the additional costs of modifying the construction of a new house for medical reasons were allowed as deductions under paragraph 118.2(2)(l.2).

[15]          The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is entitled to a deduction under paragraph 118.2(2)(l.2) of the Income Tax Act in the amount of $29,754. The appellant is entitled to his costs, if any.

[11]          As noted, I had taken the opposite approach in Gustafson,supra, on the basis that while it was desirable to afford the relief sought because it made more sense to allow the expense of altering the plans to a proposed residence rather than building the house and then undertaking the alterations dictated by the existing medical condition - I considered myself constrained by the strong, clear language of the provision that - in its specificity - was not out of context with the entire section dealing with medical expenses. At paragraph 12 of that judgment, I commented, as follows:

               

...Clearly, Parliament was looking at the usual situation where individuals or their spouses would suffer a disability while living in an existing home and the new disability would then require that renovations or alterations be made to the dwelling. Apart from tax considerations, it would have been foolish for the Gustafsons to have proceeded to construct their new home knowing it was not satisfactory - in the sense of being incapable of meeting the special needs of the appellant's husband - and, upon completion of construction, to undertake, forthwith, the necessary modifications in order to make it not only accessible but capable of permitting him to be as mobile and functional within the dwelling as possible considering the restrictions imposed by his disability. When one looks at the relevant provisions of subsection 118.2(2) of the Act, there is an inordinate degree of specificity contained in many of the following paragraphs (a) through to (q). It is apparent a great deal of attention was paid to recognizing certain expenses which would be incurred for specific reasons under particular circumstances. Parliament went so far as to permit - at paragraph (k) of the section - an injectable liver extract or vitamin B12 to be recognized as a medical expense but only if prescribed by a medical practitioner in the course of treating the specific disease of pernicious - as opposed to ordinary - anaemia.

[12]          Returning to the specific issue of the requirement that the qualifying substances be "recorded by a pharmacist" - in addition to having been prescribed by a medical practitioner - I refer to the recent decision of Miller, T.C.J. in Pagnotta v. Her Majesty the Queen, 2001 CarswellNat 1887. In considering said requirement, Judge Miller - at paragraph 30 - stated:

                The fifth criteria is something of a stumbling block for the Appellant and that is the requirement that the substances prescribed be "recorded by a pharmacist". The Appellant urged that I follow the Lawlor and Tanguay decisions and find that the "and" in the phrase "prescribed by a medicalpractitioner and as recorded by a pharmacist" be read disjunctively and not conjunctively. The expression read disjunctively in those cases is in a context quite different from the one before me. To suggest that I can ignore the requirement of a pharmacist recording goes beyond compassionate interpretation and renders the legislation completely meaningless. There is no ambiguity that there is a requirement for the pharmacist to do something; there is perhaps some ambiguity in what is meant by recorded. I am not however prepared to ignore the requirement of a pharmacist. The Appellant relied heavily on the recent decision of Judge Teskey in the Frank case, where he asked the same question. He did not ignore the words either, but instead, having found substances had been prescribed by a medical practitioner, found that "recorded" could be the pharmacist's purchase or sales slip. This is a broad interpretation of the requirement and can only be justified by circumstances which cry out for a compassionate approach. I find the Appellant's situation is just that. Three doctors agree that a combination of treatments was the only way the Appellant could garner some relief. That some substances in this treatment acquired from a pharmacist can be eligible medical expenses and some not is too strict an interpretation on this paragraph. However, the substances must still be acquired through a pharmacist. There is simply no way around that requirement. Until the Government of Canada, through initiatives such as the development of a regulatory frame-work for natural health products, makes the necessary legislative changes, I must apply, albeit liberally, the requirement that substances be recorded by a pharmacist. As Chinese herbs, nutraceuticals and vitamins become regulated, it is easy to foresee that our tax laws will be amended accordingly. Until then, I can only find that those substances acquired from a pharmacy can fall within the meaning of paragraph 118.2(2)(n). Under no interpretation can I find that the herbs, vitamins and nutraceuticals supplied by Dr. Aung directly and by Supplements & More qualify as being recorded by a pharmacist. The expenses incurred of $344.73 at Nutrition Plus Pharmacy and $188.56 at Kripps Pharmacy Ltd. do however qualify for the reasons I have given and I allow the appeal to that extent. I wish to be clear that this is not intended to be an open invitation to taxpayers whose lifestyle includes a regimen of vitamins to rely on paragraph 118.2(2)(n) for obtaining a credit on the basis that such costs constitute medical expenses. This is limited to the rare situation of a taxpayer suffering severe medical problems, attempting to relieve those problems through a variety of treatments recommended by a number of medical practitioners. In such a case as the one before me the objective of the paragraph appears to be met by a liberal interpretation.

[13]          As for the requirements of a licensed pharmacist in the Province of British Columbia, sections 14 and 15 of the Pharmacists Act set forth the necessary qualifications and conditions that must be possessed and satisfied prior to an individual becoming registered as a pharmacist and thereafter entitled to use certain designations. The legislation is extensive and provides for the establishment of a College of Pharmacists, registration procedures, the licensing of pharmacy operations, and provisions concerning the conduct of its members, including the right to administer discipline in accordance with procedures established in the legislation. The fact that - pursuant to section 75 of the Pharmacists Act - nothing in the remainder of that legislation is to be construed as preventing a practitioner (as defined) from directly dispensing a drug to the practitioner's patient does not mean the practitioner will - without more - be entitled to attend the annual Pharmacists Ball or to carry out a wider range of professional services within that particular discipline. The relevant provision - paragraph 118.2(2)(n) of the Act - is not concerned with any exemption granted by the Pharmacists Act in relation to the act of directly dispensing a drug to a specific patient by a medical practitioner. However, it does require that substances prescribed by a medical practitioner - defined by the Act - be recorded by a pharmacist. In my opinion, the medical practitioners attending to the care of the appellant in the within appeal were not pharmacists within the ordinary meaning of the word nor as that term was intended to be used in the context of the provision in question. It is not unreasonable for Parliament to have desired to control the extent of allowable medical expenses by requiring that any purchase of qualifying substances be recorded by a pharmacist. It will probably be an issue in another appeal but I tend to agree with the approach taken by Judge Teskey in Frank,supra, in that a record made by a licensed pharmacist of medications prescribed to the patient by a medical practitioner - even though not prepared, dispensed or supplied within that licensed pharmacy - would seem to satisfy the requirements of the provision which - in my view - cannot be read disjunctively. The alternative is to recognize - as a medical expense - every drug, medicament, preparation or other qualifying substance prescribed by a medical practitioner to a patient - home-made red wine, perhaps - notwithstanding that its issuance and delivery bypasses the mechanism insisted upon by Parliament, simply that the drugs, medicaments, etc., as prescribed, be recorded by a pharmacist.

[14]          Notwithstanding the recent approach taken in pursuit of a broad and liberal approach to these medical expense provisions, I do not see any need to exercise my jurisdiction in a manner tantamount to amending the Act by striking out the requirement that drugs, medicaments, or other preparations or substances, as prescribed, be recorded by a pharmacist or to subject that well-known professional designation to any redefinition. The language is clear and unambiguous and, unlike the situations in those cases involving renovations to dwellings, discussed earlier, does not lead to a bizarre result.

[15]          The appellant presented a capable and cogent argument and there is substance in her position but I take the approach that any modification to the relevant specific, comprehensible provision must be undertaken by the legislative branch.

[16]          The appeal is hereby dismissed.

Signed at Sidney, British Columbia, this 18th day of January 2002.

"D.W. Rowe"

D.J.T.C.C.

COURT FILE NO.:                                                 2001-1628(IT)I

STYLE OF CAUSE:                                               Ginnie Dunn and H.M.Q.

PLACE OF HEARING:                                         Prince George, British Columbia

DATE OF HEARING:                                           October 25, 2001

REASONS FOR JUDGMENT BY:                      the Honourable Deputy Judge D.W. Rowe

DATE OF JUDGMENT:                                       January 18, 2002

APPEARANCES:

For the Appellant:                                                 The Appellant herself

Counsel for the Respondent:              Victor Caux

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

2001-1628(IT)I

BETWEEN:

GINNIE DUNN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on October 25, 2001, at Prince George, British Columbia, by

the Honourable Deputy Judge D.W. Rowe

Appearances

For the Appellant:                                The Appellant herself

Counsel for the Respondent:                Victor Caux

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is dismissed in accordance with the attached Reasons for Judgment.

Signed at Sidney, British Columbia, this 18th day of January 2002.

"D.W. Rowe"

D.J.T.C.C.