Citation: 2010 TCC 322
Date: 20100622
Docket: 2007-537(GST)G
BETWEEN:
COMPASS GROUP CANADA
(BEAVER) LTD.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Jorré J.
Introduction
[1]
“Berwick on the Lake”
describes itself as a premier retirement residence. It is located on a
lakefront setting in Nanaimo, British Columbia.
[2]
Berwick offers both
independent living and licensed care suites.
[3]
Compass is a food
service company that was contracted to cater all the meals, beverages and snacks
at Berwick.
[4]
Compass says that the
supply of these food services to Berwick is an exempt supply for the purposes
of the Goods and Services Tax because Berwick is a “health care facility”. On
the other hand, the Minister of National Revenue takes the position that the independent
living units are not part of a “health care facility” and that,
accordingly, it properly reassessed Compass on the basis that the supply of the
food services to Berwick in respect of the residents of the independent living
units is a taxable supply.,
[5]
The Minister accepts
that the licensed care units are part of a “health care facility” and
reassessed on the basis that the food services provided to Berwick in relation
to the residents of the care units were exempt supplies.
Legislation
[6]
In the Goods and Services
Tax:
“health care facility” means
(a) a facility, or a part thereof, operated
for the purpose of providing medical or hospital care, including acute,
rehabilitative or chronic care,
(b) a hospital or institution primarily for
individuals with a mental health disability, or
(c) a facility, or a part thereof, operated
for the purpose of providing residents of the facility who have limited
physical or mental capacity for self-supervision and self-care with
(i) nursing and personal care under the direction or
supervision of qualified medical and nursing care staff or other personal and
supervisory care (other than domestic services of an ordinary household nature)
according to the individual requirements of the residents,
(ii) assistance with the activities of daily living
and social, recreational and other related services to meet the psycho-social
needs of the residents, and
(iii) meals and accommodation;
In this case the Appellant argues that Berwick falls within
alternative (c) of the definition. There is no suggestion that (a)
or (b) applies.
[7]
Thus, to succeed the
Appellant must demonstrate that the following four conditions are met:
The independent living suite part of
Berwick is operated to provide
1. residents who have limited capacity
for self-supervision and self-care
with:
2. nursing and
personal care under the direction of qualified medical and nursing staff or
other personal and supervisory care (other than domestic services of an
ordinary household nature) according to the individual requirements of the
residents,
3. assistance
with the activities of daily living and social, recreational and other related
services to meet the psycho-social needs of the residents, and
4. meals and
accommodation.
There is no dispute that meals and accommodation are
provided, the fourth condition.
Facts
[8]
The parties tendered a
joint book of documents and the transcript of the examination for discovery of
Patricia Towne.
They also reached an agreement on the following facts:
1. The period in issue
is from January 28, 2001 to August 30, 2002 (the “Period”).
2. The Appellant is a
corporation that provided food management services and meals under a catering
contract to Berwick during the Period.
3. Berwick is located on
Long Lake, in Nanaimo, British Columbia.
4. The Appellant is a
GST registrant . . . .
5. The Appellant did not
collect GST in respect to the services it provided to Berwick during the
Period.
6. By Notice dated June
1, 2005 the Minister of National Revenue (the “Minister”) assessed the
Appellant for GST, inter alia, in respect of the Appellant’s failure to collect
and remit GST on the services the Appellant provided to Berwick. The Berwick
amounts were $32,880 for the period ending August 24, 2001 and $47,516 for the
period ending August 30, 2002.
7. The Appellant
objected . . . .
8. . . .
[and] the Minister confirmed the assessment in respect of the services
provided to Berwick.
9. The Appellant’s head
office is in London, Ontario. The Minister’s review of this file was conducted
out of the Canada Revenue Agency (CRA) London Tax Services Office in Ontario. No auditor visited Berwick. The Minister assessed
the Appellant in part on the basis of telephone interviews and correspondence
with Berwick officials and through telephone interviews with the British
Columbia Ministry of Healthy Living and Sport Community Care Branch regarding
the licensing requirements of adult residential care facilities.
10. Berwick has a total of
160 suites (the “160 Suites”).
11. During the Period, 36
of the 160 Suites were licensed by the Vancouver Island Health Authority
pursuant to the Community Care Facility Act (the “CCFA”)1 as
an adult residential facility – private/non-funded (the “Care Unit”).
12. During the Period, the
remaining 124 suites (the “Residential Units”) of the 160 Suites were not
licensed under the CCFA or any licence other than a business licence.
13. Berwick applied for,
and was granted, a business licence from the City of Nanaimo describing its business premises as having 55 parking spaces, 140,000 square
feet of total floor area and 160 rental units.
14. In addition to the 36
Care Units there is a 37th room located in the same area as the Care
Units. That room is intended for temporary use by tenants of the Residential
Units (“Residential Tenants”).
15. The Minister assessed
the Appellant for additional GST on the basis that 77.5% (a percentage
corresponding to the 124 Residential Units out of the 160 total number of units
operated by Berwick) of Berwick’s operations did not provide its tenants with
the level of medical care required to meet the definition of “health care
facility” as defined by the Act and therefore 77.5% of the Appellant’s
total contract services to Berwick were taxable at the rate of 7%.
16. The Minister accepted
that the Care Units qualified as a health care facility and consequently
allowed that 22.5% (a percentage corresponding to the 36 Care Units out of the
160 total number of units operated by Berwick) of the food services provided by
the Appellant to Berwick were exempt.
17. During the Period, the
Appellant supplied three meals a day plus snacks to all tenants of Berwick.
1 The CCFA was repealed and replaced on May 14, 2004
by the Community Care and Assisted Living Act.
[References omitted.]
[9]
There were five
witnesses: Irene Pelter, a resident of Berwick, Diane Burt (Ms. Pelter’s
daughter), Gerald Gould, another resident of Berwick, and Patricia Towne, the vice-president
of administration of Berwick Retirement Communities.
[10]
I accept the evidence
of the witnesses. There is no real dispute as to the facts. The debate is one
of the proper characterization of the facts in relation to the definition of a health care facility.
[11]
Independent living
units are furnished and decorated by the residents and there are four kinds
available: studios, one bedroom, one bedroom with den and two bedrooms. The
units have either balconies or, on the ground floor, patios. The units have a
kitchenette with a small fridge but no stove. Residents are free to put in a
microwave.
[12]
Independent living
residents choose their unit and rent that specific unit. Berwick cannot decide
unilaterally to move them to a different unit.
[13]
Monthly rental includes
all meals and snacks,
utilities and cable except telephone charges, weekly cleaning of the unit and
weekly washing of towels and linens. It does not include washing of clothes;
several laundry rooms are available for the use of residents.
[14]
Meals are served in the
dining room and residents always have a choice of the main course.
[15]
Residents who drive and
own a car also receive a parking space.
Many residents at Berwick have cars.
[16]
There is also a program
of optional activities and excursions available to the residents. Among other
facilities there is a hobby kitchen, an exercise room with fitness equipment, a
billiards room and a bar with a happy hour on Friday afternoons.
[17]
It is clear that when
Berwick was being conceived, well qualified persons were retained to plan the
building and considerable thought went into the design of the building in order
to facilitate life for seniors. For example, electrical outlets were installed
higher than is normal in order to make it easier to reach them, reinforcement
was built into the walls for towel bars so that they can also be used for
support, hallways have extra lighting and handrails and the layout was designed
to accommodate walkers passing.
[18]
Each unit has a special
phone system and pendant that allows residents to call for assistance in an
emergency. If a resident hits the button on the pendant the phone system
automatically calls a staff member who can speak to the resident; the system
automatically shows the staff member which unit the call is from.
[19]
The phone system is
also used to monitor residents. It has an away button which residents are
supposed to push when they leave Berwick. In addition, residents are supposed
to pick up the phone at night when they go to bed and in the morning when they
get up. This allows Berwick staff to monitor the residents’ presence.
[20]
Staff is trained to
report residents missing meals or activities, falls and other incidents. Cleaning staff is
trained to report signs of possible problems such as incontinence. In some
cases an incident form will be filled out.
[21]
Berwick also has
policies and procedures for such things as safety, infection control and flu
outbreaks.
[22]
Berwick provides emergency
response to residents of the independent living units and determines what steps
should be taken, such as, depending on the circumstances, sending the
individual to the hospital or temporarily transferring them to a care unit.
[23]
From time to time,
physiotherapists, occupational therapists, podiatrists, massage therapists and
persons taking samples for blood tests come to Berwick and are available to
residents. These services are not provided by Berwick and are paid for by the resident
to the particular service provider.
[24]
The average age of
residents is 84 plus and at any given time there are probably two residents in
wheelchairs, half the residents using walkers and others using canes. A
majority of the residents have health issues which may not be acute but may
flare up at any time. Some residents are depressed and some have early stage
dementia. It was not clear to what extent this evidence referred to all Berwick
residents or just those in independent living units.
[25]
Berwick does not accept
persons with severe dementia in either independent living or care units.
[26]
With respect to the
independent living unit residents:
(a) Berwick does not
provide assistance with eating, dressing, grooming, bathing and performing
personal hygiene. It does not store, administer or monitor the taking of
medication nor does it manage the cash or property of residents.
(b) Berwick does not
monitor food intake or adherence to therapeutic diets, provide structured
behaviour management and intervention or provide psycho-social rehabilitative
therapy or intensive physical therapy as described in the definition of
“prescribed services” within the meaning of section 2 of the Community Care
and Assisted Living Regulation
of British Columbia.
(c) Berwick does not keep
medical charts nor does it prepare individualized nursing or care plans.
[27]
Potential residents are
assessed in a very general way to determine whether an independent living unit
or a care unit would be appropriate for them.
Berwick does not require a referral from a doctor or any medical test in
assessing a potential resident nor does Berwick examine medical records;
Berwick may talk to a potential resident’s doctor, but only in specific cases.
[28]
There are no
personalized care or nursing plans for independent living residents.
[29]
The business licence
application to the City of Nanaimo describes the business as “Independent Seniors
Rental Complex” on one line and as “Intermediate Care Facility” on the
following line. The first line reflects the independent living units while the
second refers to the care units.
[30]
The promotional
literature in evidence would not lead anyone to think that that a person living
in an independent living unit was living in what might be commonly thought of
as a health care facility.
[31]
The licensed care units
at Berwick were licensed as a community care facility pursuant to the Community
Care Facility Act
of British Columbia.
[32]
The licensed care units
are grouped together in one part of Berwick.
[33]
Licensed care residents
sign a different tenancy agreement from the one signed by independent living
residents.
The cost is also different to reflect the care received in the licensed units.
[34]
There are three levels
of care available in the care units. It is useful to reproduce part of a
document setting out the three different levels of care:
|
Level
|
Type of Care Provided
|
|
|
|
|
1
|
• Needs
daily supervision, cueing and reminders for activities of daily living, e.g.
bathing, dressing, washing, toileting, walking and eating.
• Is
independent to carry out these activities with reminders and cues.
• Needs
monitoring and supervision of medications and ongoing monitoring of medical
or health problem that is currently stable.
|
|
|
|
|
2
|
• Needs minimal assist
for activities of daily living, e.g. getting set up for bathing, dressing,
washing and toileting, but manages independently once set up.
• May be incontinent
but manages independently.
• Needs monitoring and
supervision of medications and ongoing monitoring of medical or health
problem[s] that fluctuate, e.g. daily blood glucose monitoring, dressing
changes.
• Eats in the small
dining room.
|
|
|
|
|
3
|
• Needs
assistance to complete any or all activities of daily living.
• Is
incontinent and needs assistance to manage.
• Has
treatments such as colostomy or catheters, or oxygen therapy.
• Needs
ongoing monitoring and frequent liaison with physician for medications and
monitoring of medical or health problem(s) that are unstable.
• May
include palliative support.
• Special
diet requirements.
|
[35]
There is only one
registered nurse on duty at a time at Berwick and that nurse is located on the
ground floor at one end of the care unit.
[36]
Residents of the care
units, depending on their condition, have access to all the facilities and
activities at Berwick. For example, if they are well enough they can eat with
everyone else in the dining room.
[37]
Independent living
residents may temporarily move to a care unit.
[38]
This may occur in a
number of ways. For example, someone may feel dizzy and be put under
observation for a couple of hours or someone may return to Berwick after being
hospitalized and need extra care for a period before returning to their own
unit and their regular routine. The first three days a year spent by an
independent living unit resident in a care unit are free of charge. Any
additional time beyond three days is subject to extra charges on a daily basis.
[39]
There is a 37th
unlicensed care unit which may be used for this purpose. Alternatively, if one
of the 36 licensed care units is unoccupied, it may be utilized for a temporary
stay by an independent living resident.
[40]
However, if a care unit
was not available, arrangements would have to be made to send the individual to
another suitable facility either temporarily or permanently.
[41]
Ms. Pelter resides
in an independent living unit. She is in her 80s and appears to have some memory
problems.
She chose her unit and brought her own furniture. She finds her unit to be like
an apartment or condominium.
[42]
She chooses what she
eats at meals and does her own laundry. She looks after taking her own
medication.
When she first came to Berwick she was still driving but she decided to stop
driving after, one day, when she was walking up the hill next to Berwick, she
had a lapse of memory and could not remember where she was going or what she
was doing.
[43]
She participates in
“Pennies for Presents”, a charitable activity whereby residents of Berwick roll
pennies and have raised some $30,000 for children’s charities.
[44]
Ms. Pelter has
stayed in a care unit temporarily and found it more like a hospital room.
[45]
Her daughter, Ms. Burt,
finds it very reassuring that her mother is at Berwick because she knows that
with the monitoring there will be intervention if something happens. In
addition, her mother can function on her own at Berwick with its structured
environment.
[46]
Mr. Gould and his
wife Dorothy live in an independent living unit. They moved to Berwick because
Dorothy found that she was gradually able to do less and less and finally found
she could no longer do things such as grocery shopping and preparing meals.
Dorothy has a number of medical issues and could not live on her own in an
apartment.
[47]
Dorothy used the
services of the care unit on three occasions but never stayed overnight. Mr.
Gould drives and has a car.
Analysis
[48]
For the following
reasons I am unable to conclude that the independent living portion of Berwick
is a “health care facility” within the meaning of the legislation.
[49]
Berwick offers its
independent living residents the following:
(a) residential units that
are like an apartment or condominium apart from having the limited kitchenette
instead of a kitchen,
(b) all meals and weekly
housekeeping,
(c) a program of optional
activities and various facilities,
(d) relatively unobtrusive
monitoring to make sure nothing has gone wrong and
(e) the ability to respond
to emergencies when something goes wrong.
All of this appears to be done and arranged in a
thoughtful way taking into account common needs of seniors while leaving the
residents entirely free to come and go as they wish.
[50]
In addition,
independent living residents know that if their needs change there is the
possibility of moving to a care unit, temporarily or permanently, without
having to move to another facility thereby allowing a relatively high degree of
continuity in the person’s everyday life. Living in a care unit is a separate
and different service. Independent living residents who go temporarily to a
care unit pay additional charges for anything beyond a maximum of three days
per year in a care unit.
[51]
Independent living
residents are free from most household tasks such as cooking, cleaning or
cutting grass, allowing residents who have retired to be free not only from
paid work but from much of the unpaid work in life related to maintaining a
household. For some, it may be, as the Respondent put it, a “lifestyle choice”;
for others, it may have become a necessity.
FIRST CONDITION: Limited capacity for self-supervision
and self-care (aptitude
limitée de l'autocontrôle ou de l'autonomie)
[52]
The first condition in
the definition of a “health care facility” is that the independent living suite
portion of Berwick be operated to provide residents who have limited capacity
for self-supervision and self-care with certain services.
[53]
The
Appellant argued that the limitation need only be either mental or physical. I
agree.
[54]
The Appellant further
argued that the capacities of independent living residents of Berwick can be
limited for many reasons “. . . none the least of which would be the
elderly nature of the residents . . .”.
[55]
The Appellant also argues
that the legislation does not specify any particular degree of limitation.
[56]
I would first note that
while residents typically have medical problems, the evidence was to the effect
that the problems were not normally acute although there is always a risk that
a resident’s medical problems will become acute.
[57]
While the legislation
does not specify in a detailed way the degree of limitation required, the very
words “limited capacity” and “aptitude limitée” clearly indicate that the
limitation must be significant and more than passing.
[58]
Secondly, the
legislation requires that the limitation be with respect to particular
capacities, self-supervision and self-care, and not just any kind of
limitation.
[59]
“Self-supervision” (autocontrôle)
is, as the words indicate, the ability to make oneself the decisions needed to
function in everyday life.
[60]
The Canadian Oxford
Dictionary, second edition, 2004, gives the following definition of
“self-care”:
noun Medicine the practice of activities that are necessary to sustain life and
health, carried out by individuals for themselves.
[61]
The dictionary
definition indicates that the word is used in a medical context. Given that the
context is the definition of a “health care facility” in Schedule V of Part II
of the Goods and Services Tax, a part dealing with health care services, it is
appropriate to consider this definition.
[62]
Given that the
definition relates to that which is necessary to sustain life and health
it is clear that we are dealing with basic activities such as getting up,
getting dressed, eating, washing, taking medication, getting a certain amount
of exercise and interacting with others.,
[63]
There is no evidence
that the medical issues, physical or mental, of most, or even a significant
number, of independent living residents are such that they have limited
capacity for self-supervision and self-care. We only have specific evidence
concerning three residents.
[64]
On the contrary, what
general evidence there is suggests that the residents are actively deciding
what to do and are taking care of themselves. Many are doing more than just
taking care of themselves. They are participating in activities, going on
excursions and doing charitable work.
[65]
Indeed, many are still
driving their cars. It is hard to conceive how those individuals who are still
driving can be said to have limited capacity for self‑supervision and self-care.
[66]
With respect to the
three residents in respect of which we heard evidence, it should first be noted
that nothing in Mr. Gould’s evidence suggested that there were any limits
in his ability to care for or supervise himself.
[67]
Although the evidence
was that he and Dorothy moved because Dorothy tired easily and as a result
could no longer do such things as cooking and the housework, the evidence did
not reveal that she was unable to care for or supervise herself. There was no
suggestion she needed help for such activities as dressing or eating.
[68]
While Ms. Pelter may
need the structured environment at Berwick, not only is she able to take care
of herself but it is quite clear that she is self-directed. For example, her
decision to stop driving shows that she is quite capable of making reasoned
judgments about her own capacity.
[69]
Thus the Appellant has
failed to demonstrate that the independent living portion of Berwick has a
clientele made up of residents limited in their capacity for
self-supervision and self-care. Accordingly the Appellant fails to meet the
first condition and the appeal should be dismissed for this reason alone.
SECOND CONDITION: Nursing and
personal care under the direction of qualified medical or nursing staff or other personal and supervisory
care (other
than domestic
services of an ordinary household nature) according to the individual
requirements of the residents
[70]
The second condition is
that Berwick provide either nursing and personal care or personal and
supervisory care according to individual requirements of the residents. There
is no evidence of Berwick providing personal and supervisory care to independent
living residents in accordance with individual requirements.
[71]
As to nursing and
personal care, the evidence did not suggest it was provided in any continuing
way to independent living residents although there is what one might describe
as an incidental provision
if something happens in determining what action to take such as sending the
person to the hospital, the doctor or the care unit.
[72]
Given that paragraph (c)
of the definition of health care facility requires that the facility be “. . .
operated for the purpose of providing . . .” the residents with “. . .
nursing and personal care . . .” (subparagraph (i)) together with the
other required services, this incidental provision of nursing and personal
services does not fall within the scope of subparagraph (c)(i) of the
definition. The said subparagraph of the definition requires some continuing
personal care whether or not of a medical nature.
THIRD CONDITION: Assistance with
the activities of daily living and social, recreational and other
related services to meet the psycho-social needs of the residents
[73]
The third condition is
that the facility provide assistance with the activities of daily living and other related services to meet the
psycho-social needs of the residents.
[74]
With respect to the third
condition, the Respondent argued that in considering the meaning of activities
of daily living in subparagraph (c)(ii) of the definition of health care
services one should consider the use of the term in other statutes
considering the same subject matter. In support of this, the Respondent cites Soper
v. R., [1997] 3 C.T.C. 242 (FCA), at paragraph 19, where Robertson J.A.
says:
19 In my view, it is not simply a
fortuitous occurrence that subsection 227.1(3) of the Income Tax Act
adopts the same language as found in subsection 122(1)(b) of the Canada
Business Corporations Act, for both statutory provisions relate to the
standard of care to be exercised. Admittedly, the CBCA provision deals
with the standard of care owed to the corporation while the taxation provision
concerns the standard of care owed to the Crown and Canadian taxpayers.
However, that distinction does not serve to nullify the relevance of the
standard set out in the CBCA, if only because of the presumption of
coherence between statutes. That elementary principle of statutory
interpretation is explained by P.‑A. Côté in The Interpretation of
Legislation in Canada, 2nd ed. (Cowansville, Quebec: Les Editions Yvon
Blais Inc., 1991) at 288, 290:
Different enactments of the same legislature are supposedly as
consistent as the provisions of a single enactment. All legislation of one
Parliament is deemed to make up a coherent system. Thus, interpretations
favouring harmony between statutes should prevail over discordant ones, because
the former are presumed to better represent the thought of the legislator.
This presumption of coherence in enactments of the same legislature
is even stronger when they relate to the same subject matter, in pari
materia. Apparent conflicts between statutes should be resolved in such a
way as to re-establish the desired harmony.
. . . . .
To sum up, the presumption of coherence in related legislation
applies particularly to statutes of the same legislature. But it is also
relevant to statutes of different jurisdictions, as one legislature may be
deemed to imitate the form or be consistent with the substance of a statute
enacted by another.
Thus, in order to determine whether the common law standard of care
was modified by statute, it is both appropriate and instructive to consider not
only the due diligence provision set out at subsection 227.1(3) of the Income
Tax Act but also the analogous, and virtually identical, standard of care
provisions found in the Canada Business Corporations Act.
[75]
Specifically the Respondent
argued that one should consider the definition of “basic activity of daily
living” in paragraph 118.4(1)(c) of the Income Tax Act. Paragraph
118.4(1)(c) is used in relation to the determination of the eligibility
for the credit for mental or physical impairment.
[76]
The context in which
the term “activity of daily living” is used is somewhat different. In the Goods
and Services Tax, the question is whether assistance with the activities of
daily living is provided to individuals while, in the income tax context, the
question is individuals’ ability to carry out the activities.
[77]
However, in both cases
the objective appears to be to provide assistance directly, or indirectly in
the case of the Goods and Services Tax,
to persons with certain mental or physical limitations.
[78]
The Excise Tax Act
refers to the “activities of daily living” and the Income Tax Act refers
to the “basic activities of daily living”. The French texts refer to « activités
courantes » and « activités courantes de la vie quotidienne ».
[79]
I am satisfied that the
subject matter is sufficiently close to the subject matter here to consider the
definition in the Income Tax Act as general guidance in determining the
meaning of “activities of daily living” for the purpose of the definition of
“health care facility”.
[80]
Paragraph 118.4(1)(c)
provides that:
(c) a basic activity of daily living in relation to an
individual means
(i) mental functions necessary for everyday life,
(ii) feeding oneself or dressing oneself,
(iii) speaking so as to be understood, in a quiet setting, by
another person familiar with the individual,
(iv) hearing so as to understand, in a quiet setting, another person
familiar with the individual,
(v) eliminating (bowel or bladder functions), or
(vi) walking;
[81]
Given this and the
definition of “health care facility” as a whole, I am satisfied that this
branch of the third condition requires that Berwick provide assistance with
such functions, for example, as eating, getting dressed, washing and making
oneself understood.
[82]
Nothing in the evidence
suggests that any such assistance is provided to independent living residents.
Accordingly the third condition is not met.
Conclusion
[83]
For these reasons, I
have concluded that the Minister was correct in concluding that the individual
living part of Berwick cannot be considered as a “health care facility”. The
appeal will, in substance, be dismissed with costs to the Respondent.
[84]
However, in view of the
discussion between the Court and the parties on the second day of the hearing
relating to input tax credits, I will contact the parties through the registry
as to the form of the judgment.
[85]
Finally, I wish to
thank counsel.
Signed at Ottawa, Ontario, this
22nd day of June 2010.
"Gaston Jorré"
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