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Citation: 2003TCC457
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Date: 20030728
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Docket: 2002-3348(IT)I
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BETWEEN:
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JAMES D. TOTTEN,
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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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____________________________________________________________________
For the Appellant: The Appellant himself
Counsel for the Respondent: Anne Jinnouchi
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Calgary, Alberta, on May 28, 2003)
Miller J.
[1] Mr. James Totten appeals by way of
informal procedure, the assessment of his 2000 taxation year by
the Minister of National Revenue (the Minister), in which the
Minister denied a medical expense of $15,125. This amount was
incurred as part of the construction of Mr. Totten's
principal residence to accommodate Mr. Totten's
requirements arising from the progressive degenerative disease of
multiple sclerosis (MS). Mr. Totten maintains the expenses
qualify pursuant to paragraph 118.2(2)(l.21), of the
Income Tax Act (the Act). The Minister maintains
they do not.
[2] At the outset, I wish to comment
that Mr. Totten presented as a thoroughly reasonable, sincere,
credible individual who has been afflicted by a devastating
disease and is dealing with it with commendable courage and
strength. He left me with the impression that he was painting as
accurate a picture as possible of the situation, even when it was
evident his responses might be construed as being in the
Respondent's favour.
[3] In March 1992, Mr. Totten
experienced some neurological symptoms causing him to see his
family doctor. The doctor made an early diagnosis of probable MS.
Upon referral in 1993 to Dr. Sanat Mukherjee, a neurologist,
he determined that should his symptoms continue, a diagnosis of
MS could be considered. His symptoms did, indeed, continue. By
December 1995, Dr. Mukherjee determined the brain lesions
were more numerous and a diagnosis of MS was confirmed. For three
years, Mr. Totten sought treatment both from the medical
profession, as well as through homeopathic therapy. As he put it,
he believed he could defeat the disease through sheer willpower.
Regrettably, that was not meant to be. The neurologist advised in
2000 he had to adopt a more aggressive treatment, which meant
taking the drug beta interferon, a drug which could produce some
harsh side effects. Mr. Totten described his feelings at this
point as losing the battle for his body and, therefore, he
accepted the more aggressive treatment.
[4] During 2000, he was working with a
builder to build a new home. It was apparent to him, from his
physician's advice, from the MS Society, from other patients
with MS, and from his extensive reading, that modifications were
required in the home. His family doctor wrote in August of 2000
on a prescription form:
James has been diagnosed with progressive multiple sclerosis.
It is expected he will need to incorporate wheelchair access and
other lifestyle modifying aids in his home.
After an acute adverse drug reaction in early 2001, Dr.
William Murphy, a neurologist, wrote:
Mr. Totten has a chronic neurological disease which will
require some physical adjustments within his home.
[5] By the summer of 2001, tests
proved more than 50 brain lesions despite the treatment
Mr. Totten was undergoing. Dr. Murphy ordered Mr. Totten to
be put on maximum dosages of interferon. Dr. Murphy later
confirmed Mr. Totten has a severe neurological disease that will
not improve with time resulting in prolonged mobility
impairment.
[6] Construction of the new home
continued throughout 2001 and Mr. Totten moved in, in 2002. In
2002, Mr. Totten's family doctor confirmed the need for air
conditioning and also handicapped toilets and issued
prescriptions for those aids.
[7] While Mr. Totten was able to walk
in 2000, 2001 and 2002 he would progressively require some
assistance, either with a cane, handrails, or personal support.
He indicated the disease has affected his optic nerves. His
balance was impaired - even in the old residence, that is before
his move in 2002. He had fallen downstairs several times, as well
as falling in the bathtub.
[8] The nature of the expenses at
issue is as follows:
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Wider passage doors
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$1,680
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Design and construction of an elevator shaft
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$6,400
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Dugout to create walk-out access in the basement
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$3,400
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Wider stairs
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$ 115
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Air-conditioning unit rough-in
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$ 815
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Window size for egress and viewing
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$1,480
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Appropriate kitchen and vanity design
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$1,235
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[9] With respect to the elevator
shaft, Mr. Totten consulted with Otis Elevator and arrived at the
most functional and appropriate design. Mr. Totten suggested the
wider doors and stairs, the basement access, air conditioning,
the window adjustments, and the kitchen and vanity adjustments
were all of immediate benefit to him when he moved in 2002.
[10] Mr. Totten argued most eloquently and
passionately about his eligibility for these expenses to be
considered medical expenses. He addressed each of the
requirements of paragraph 118.2(2)(l.21) as follows.
[11] Firstly, with respect to the
requirement that he lacks normal physical development, he pointed
to the copies of the scans, which indicated the many white
lesions. This is not the normal physical development of the
brain. It is a disease which Mr. Totten defined as a
deviation of the body from health or normality.
[12] Secondly, with respect to the
requirement of a severe and prolonged mobility impairment, he
recognized that if he lacked normal physical development, he
would not have to prove the severe prolonged impairment, but he
argued he could qualify under either heading.
[13] He referred to Dr. Murphy's
prognosis that his disease will not improve with time, resulting
in prolonged mobility impairment. He also relied on his family
doctors' reports confirming that he falls on a regular basis
and another time confirming that he demonstrates gait
instability.
[14] With respect to the requirement that
the costs were incurred to enable access, mobility, or
functionality, Mr. Totten posed the simple question: What other
possible purpose could I have had? Mr. Totten pointed out that
several expenses were not claimed. For example, no thresholds
between rooms, hardwood or tile floors, extra railings, glass
deck railings and additional washrooms.
[15] Counsel for the Respondent indicated
there were only two requirements from paragraph
118.2(2)(l.21) that were at issue. First, whether Mr.
Totten either lacks normal physical development or has a severe
and prolonged mobility impairment. Second, whether the costs at
issue were, indeed, incremental costs incurred to enable him to
gain access to or to be mobile or functional within the home.
[16] With respect to the severe and
prolonged mobility impairment, the argument was that in 2000 and,
indeed, in 2002 when Mr. Totten moved into his new residence, he
could still walk, albeit, occasionally with help. This was not
the level of impairment to which the section was aimed.
[17] Further, with respect to the lack of
normal physical development, notwithstanding comments from both
Russell v. Canada[1] and Motkoski v. Canada,[2] Respondent's
counsel suggested that the onslaught of MS was not a lack of
normal physical development.
[18] In connection with the issue of
incremental costs to enable access, mobility, or functionality,
Crown counsel argued that the requirement the costs be
incremental meant that they must pertain to Mr. Totten's
ability at that time. If he could access a property or be mobile
or functional within the dwelling without those costs, then they
should not be considered incremental costs. She argued that as
the costs related to possible future needs, such costs could not
be construed as incremental costs.
[19] In analyzing the situation, it is
appropriate to set out the legislation at issue. Section 118.2(1)
reads, in part:
118.2(1)For the purpose of computing the tax payable under
this Part by an individual for a taxation year, there may be
deducted an amount determined by the formula
A(B - C) - D
where
A is the
appropriate percentage for the year;
B is the
total of the individual's medical expenses ...
(b) ...
within any period of 12 months ending in the year;
[20] Paragraph 118.2(2)(l.21)
reads:
118.2(2) ... a medical expense of an individual is an amount
paid
...
118.2(2)(l.21) for reasonable expenses, relating
to the construction of the principal place of residence of the
patient who lacks normal physical development or has a severe and
prolonged mobility impairment, that can reasonably be considered
to be incremental costs incurred to enable the patient to gain
access to, or to be mobile or functional within, the
patient's principal place of residence.
That is the legislation we are dealing with. So there are a
number of requirements.
[21] First, the expenses must be paid within
any period of 12 months ending in the year. That condition is
met. Second, the expenses must be reasonable. Again, there is no
dispute on that point. Third, the expenses must relate to the
construction of Mr. Totten's principal residence. Again,
that condition is met. Fourth, the expenses must be those of a
patient who either lacks normal physical development or has a
severe and prolonged mobility impairment.
[22] In addressing this requirement, I
repeat comments that I made in Motkoski[3] where I agreed with Judge
Hershfield's view in Russell[4] that there is no legal or
medical definition of normal physical development. It should be
given a liberal, large meaning. Further, in dealing with medical
expenses generally, the Court should give the most equitable and
large interpretation compatible with the attainment of the
legislation's object. Is it the object of the medical expense
provisions to permit someone like Mr. Totten, with a severe
debilitating disease such as MS, to deduct reasonable expenses
incurred on a timely basis to cope with the progressive
deterioration in his body? Yes, absolutely. I have no hesitation
in finding that lesions on the brain are a physical problem.
Development of an organ cannot be limited to only the early
stages of life. As long as we live, our brain is progressing down
a path that we all hope will be normal. The development of
lesions on the brain is not normal. I find as a fact that Mr.
Totten lacked normal physical development. It is unnecessary,
therefore, for me to consider the second arm of the fourth
requirement - that is, whether he has a severe and prolonged
mobility impairment.
[23] I turn then to the final requirement -
were those costs "incremental costs incurred to enable Mr.
Totten to gain access to or be mobile or functional in his
home"? That is the crux of this case.
[24] Counsel for the Minister argued that
the significance of the word incremental in paragraph
118.2(2)(l.21) had to do with the state of the
patient's immediate requirements. That is, there was only an
incremental cost if it pertained to the incremental needs of the
patient at that time. The word had to be read in the context of
cost to enable access mobility or functionality. She pointed out
that there was no reference in paragraph (l.2), a section
that deals with renovations or alterations to a home, as some
proof of this interpretation. Frankly, I do not follow that
reasoning. Incremental means relating to an increase, an
addition, or augmentation. This suggests to me that incremental
adds the element of additional cost over some standard cost. So,
by way of example, in building a new home, there will always be a
front doorway and a range of cost for such a standard doorway.
The cost of building a doorway that is wider with special
handrails and perhaps a ramp leading up to it would be additional
costs or incremental costs, which costs could presumably readily
be identified by contractors in contrast to the standard doorway
cost. This is what I take to mean incremental. Without that word,
any doorway would qualify as a cost to enable the patient to gain
access. So why is the term incremental not used in the section
dealing with renovations, could be the Crown's argument. I
would suggest because, again, following the doorway example, with
a renovation, the doorway is already there. Any cost to renovate
is by its very nature an additional cost. The situation of an
alteration to an existing residence does not demand the
"incremental" adjective for that provision to work. But
starting from scratch with the construction of a new home does
require the use of the term incremental.
[25] Viewed in this light, are the costs in
issue incremental costs? They certainly are. Are they incurred to
enable access, mobility, and functionality? I interpret the
Crown's argument that because the issues of access, mobility,
and functionality are more future requirements than immediate
requirements, the costs do not qualify. This is too restrictive
an interpretation in which provisions are to be interpreted
liberally and compassionately. The words "to enable the
patient to gain access to or be mobile or functional in" go
to the purpose for which the costs are incurred. I agree fully
with Mr. Totten. Why else did he incur those costs? For the very
reason laid out in the legislation. He knows, his doctors know,
other MS patients know the inevitability of this disease. To
interpret this provision so restrictively as to deny someone like
Mr. Totten with the foresight and brutal reality of his condition
a deduction of expenses legitimately incurred to deal with that
condition is to deny the very object of these medical expenses.
It would lead to the absurd result that Mr. Totten would have to
wait until his disease totally crippled him and then incur much
greater expenses for alterations. No. The legislation is not to
be read in that manner. Mr. Totten's purpose in
incurring those costs was to enable access, mobility, or
functionality that would, based on all the medical evidence he
received, arise due to the ravages of his disease. This qualifies
those expenses as medical expenses.
[26] Having made that finding, and although
unnecessary, I wish to add that, apart from the elevator shaft, I
am satisfied that all expenses went to Mr. Totten's
immediate needs for functionality within the home.
[27] I allow the appeal and refer the matter
back to the Minister for reconsideration and reassessment on the
basis that Mr. Totten is entitled to the additional $15,125 as
medical expenses in the 2000 taxation year. I also award costs to
Mr. Totten of $200 for any and all incidental disbursements
incurred by him in pursuing his appeal.
Signed at Ottawa, Canada, this 28th day of July, 2003.
Miller J.
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