Miles Estate v. The Queen, docket 98-1797-IT-I (Informal Procedure)

Date: 19990902

Docket: 98-1797-IT-I

BETWEEN:

THE ESTATE OF FREEMAN MILES,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Agent for the Appellant: Carol A. Miles

Counsel for the Respondent: Susan Wong

Reasons for Judgment

(delivered orally from the Bench in Calgary, Alberta, on March 29, 1999)

Margeson, J.T.C.C.

[1] This was a very interesting case, to be sure. Some day down the road they will put definitions in the Income Tax as to what a nursing home is and what a full time attendant is and what attendant care is, but in the meantime the Court has to interpret the income tax on the basis of what it says and each case on the basis of the evidence.

[2] The matter before the Court at this time is the Estate of the late Freeman Miles represented by its executor and trustee, the daughter and Her Majesty the Queen, 98-1797 Income Tax, Informal.

[3] The sole question before the Court is whether or not the appellant estate is entitled to a deduction in the amount of $21,635.00 which was claimed as medical expenses for the l995 taxation year.

[4] The section of the Income Tax Act which is applicable in this case is 118.2 and more specifically, 118.2 (2)(b).

[5] It boils down in this particular case to whether or not the amount of money which is sought to be deducted was paid as a medical expense, and was paid as

"...remuneration for one full time attendant (other than a person who, at the time the remuneration is paid, is the individual spouse or is under eighteen years of age)."

or

"On, or for the full time care in a nursing home of, the patient in respect of whom an amount would, but for paragraph 118.3 (1) (c), be deductible under section 118.3" ..........

[6] Was it remuneration for one full time attendant or for full time care in a nursing home or as

(b.1) "...remuneration for attendant care provided in Canada to the patient if. (i) the patient is a person in respect of whom an amount may be deducted under s.118.3" ........

Evidence

[7] In this particular case there was some evidence given by way of documents as to the nature of the place where the late Freeman Miles was resident before he went to the hospital.

[8] It was agreed that we are dealing with the taxation year l995 and not l996.

[9] Exhibit A-1 was a letter from Dr. Brennan which was admitted subject to weight and cross-examination.

[10] That letter itself is to some extent revealing because it is directed to Carol Miles and it says,

"I am writing in response to your January 25th, l999 letter sending you copies of the chart for your father."

[11] There is no doubt that he was of the opinion that Mr. Miles needed some further care and he said that he required the care of a place like Melville Heights after his hospital discharge. It sets out some of the problems that he had such as Type 2 Diabetes, Diabetic Amyotrophy, Transient Ischemia Attacks and Ischemic Heart Disease. He also indicates that it provided 24 hour assistance to residents that would assist her father in monitoring blood sugar and blood pressure readings.

[12] It also pointed out that Mr. Miles had some difficulty with balance and ambulation although he wasn't bed-ridden. The evidence given by the daughter confirmed that he was unable to prepare meals or manage his laundry and these facilities were provided for him. Later on he had difficulty with memory, in feeding and dressing activities and this necessitated increased dependence on such a facility as Melville Heights.

[13] That was a very general letter from the doctor as to some of the problems that the deceased had, but it certainly doesn't fulfill the requirements of 118 (2) (b) or (b.1) and one has to look to other evidence to satisfy those requirements. The letter doesn't talk about attendant care and it doesn't talk about a nursing home, it just refers to the name of the place.

[14] Then we have exhibit A-2 which is a letter from Melville Heights itself which says,

"This is in response to your request for the amount of rent paid by your late father in l996."

[15] And, then they say,

"The amount from January to March was $5,376.00 for apartment number 304 and from April to September, apartment number 410 (moved to apartment with view) the amount was $12,048.00, totalling $17,424.00 for the year."

[16] It obviously refers to the amount as being rent and it says,

"As you know when your father took up residence here he came directly from the hospital and throughout his time with us we supplied daily 24 hour support, monitored his blood sugar, administered his medications and of course his evening meal was provided each day."

[17] That is a further indication that he took advantage of some of the services provided at the Care Institute, but it certainly doesn't meet the requirements of 118.2 (2) or (b.1).

[18] The preliminary autopsy report does not assist the Court to any extent nor does the autopsy report. It was after the fact and doesn't assist the Court in interpreting what type of care he was receiving at the relevant time.

[19] Exhibit A-5 is a discharge summary from the Halifax Infirmary Building. It describes in detail the nature of the treatment received while the patient was there terminating with a reference to the autopsy report.

[20] Exhibit A-6 is the Discharge Report dated May 10 of l994 which was sent to Dr. Brennan. It sets out the history of the problems associated with this particular patient as did Exhibit A-7 from the Queen Elizabeth Sciences Centre.

[21] Exhibit A-8 is a price list, so to speak, from the facility itself which talks in terms of suites, much like an apartment facility would. It refers to the cost of different types of suites and lists the services provided in the monthly rent. It speaks only in terms of monthly rent and not in terms of breaking down the amount into attendant care or full time care including the availability of 24-hour emergency medical services.

[22] R-1 is a coloured brochure setting out the facility at Melville Heights. It is a very attractive brochure obviously meant to attract clientele. It does not describe itself as a nursing home, a medical attendant or attendant care facility or, as I said, a nursing home. It sets it out as,

"Halifax's retirement residence overlooking the northwest arm for comfort, security and worry-free leisure living."

[23] Again it sets out the nature of the facility, the services that were provided; 24-hour staffing, transportation, recreation, coordinator, building landscaping, mid-day dining and Sunday brunch, housekeeping, linen change, utilities and concierge service. It describes the building in detail. The important part of it is that it refers to itself as a retirement residence, rather than a nursing care facility.

[24] Exhibit R-2 was a letter to Freeman Miles back in l996 with respect to the payments made in l995, with which the Court is concerned here. It reads,

"This is a letter in response to your request for the amount of rent paid by you for the year l995."

[25] It sets out the total amount as $21,244 for the year and that is all that it says. Those are the amounts in question here.

[26] The daughter who testified on behalf of the estate said that her father needed this care because it was due to his deteriorating health. His wife had died and he had serious problems. She was in Calgary in May of '94 and received a call from him. He was living alone in his house. He was 76 years of age. He was in the Victoria General Hospital. By the time she returned home "he was in bad shape". He couldn't walk. She wanted to get him back on his feet. The social worker at the hospital met with her and they agreed that he could not look after himself. They were looking at a one to two year wait for a nursing home facility.

[27] She advertised the house for sale and decided to try and obtain some facility that was satisfactory to her father. Her intentions were at all times, well meaning. She located Melville Heights. It provided 24 hour a day nursing care. In response to a question asked by the Court, she said that that meant a nurse and not a doctor's care, but nursing care that was available to him on a 24 hour basis. He certainly took advantage of some of those care facilities that were provided, such as the evening meal and laundry service. They monitored his blood sugar, gave medication to him and he stayed there until his death.

[28] It was important to her that medical staff were available in the sense of a 24 hour nursing staff. When he became sick the residence called emergency service and took him to a hospital. There was no evidence that any further medical attention could have been provided to him. This was basically a 24-hour nursing service.

[29] On cross-examination she said that she looked at one other facility, the Argyle, but it was not satisfactory. What she selected was what she referred to as "a middle-of-the-road care facility", somewhere between the most expensive and the least expensive and it seemed to be an appropriate place for a gentleman having these problems.

[30] He had the financial means to stay there. She looked at brochures and they did not refer specifically to the amount of medical care that was available. She wasn't aware that the facility provided an additional medical service package that might be purchased by residents if they wanted to do so.

[31] She had no other receipts except for Exhibit R-2 to show what the money was spent for which is sought to be deducted here. This receipt refers to rent but she said that it was a medical requirement that he be there.

Argument on behalf of the Respondent

[32] Counsel for the respondent said that the appropriate section is 118.2(2) of the Income Tax Act. The inference from the terms "full time attendant", "attendant care" and "nursing facility" suggest something other than what was provided at this facility. The inference from the evidence here is that a great deal of independent living was expected from the residents or the tenants.

[33] Exhibit R-2 itself refers to the rent. There is no break down for medical services, no break down setting out that it was for a full time attendant or that it was for attendant care. There is insufficient evidence to bring it within the provisions of Section 118 of the Income Tax Act.

[34] She referred to the decision of, Bowie, J. which as of yet has not been published. The facts are quite similar, according to her. In case number 97-0477 Judge Bowie disallowed the claim as medical expenses in spite of the fact that an 80 year old resident in Calgary produced in evidence a statement from the facility showing that she had expended $30,000.00 at the facility for the year in question. It was found not to be a nursing home. All that was dealt with in that particular case was the issue of attendant care.

[35] The receipt itself set out $15,000 for rent and $15,000 for attendant care services. Everybody in the facility paid for the attendant care facilities. A registered nurse was on staff and a practical nurse during the day and some practical nurses during the night. There was also a fee for the provision of medications.

[36] The Court decided that the person was disabled under section 118.3 and that many of the residents had impediments but the Court found that the break-down provided in the receipt itself was not sufficient. No portion of it was described as being paid for attendant care within the Income Tax Act. The learned trial judge apparently drew an unfavourable inference against the appellant because there was a lease which had been entered into which was not provided to the Court and it should have been.

Analysis and Decision

[37] The Court is satisfied here that the appellant has provided all documents in her possession which would help the Court in interpreting the section of the Act.

[38] This case is very similar in some respects to the case above, except that in this particular case there is no break-down of the amount paid at all. The amount is specifically referred to as rent and all of the correspondence suggests that it was rent even though some of the brochures refer to medical facilities or care that can be provided.

[39] Counsel gave a dictionary definition of "attendant care" and it doesn't help too much to interpret the section. It says,

"To attend, to wait on, to serve. Attendant is a person employed to wait on others or provide a service, waiting on, serving. Care, process of looking after or providing for someone, something, provision, what is needed for help and protection, looked after, an older sick person."

[40] In the case that was referred to, as in this case, one might provide a portion of the money for attendant care or it might be for a full time attendant or for other than a full time attendant. It need not be all one or the other but where you have a document that refers to it as "rent" and nothing in it that suggests attendant care, it is difficult to conclude that the amount of money that was paid was, on the face of it, paid for anything except rent.

[41] As per the relevant section:

"As remuneration for one full time attendant."

[42] There can be no doubt in the Court's mind that what was paid here was not payment for one full time attendant. The section then goes on to say,

"Or for the full time care in a nursing home."

[43] What was paid for here was not for full time care in a nursing home. There is no question that part of that money or a significant portion of it was paid for rent and that is what the documents indicate.

[44] There is no doubt that the occupant had an apartment of his own and obviously a very nice apartment and he was able to look after himself, come and go as he pleased except when he had to be attended to. It provided some services by the nursing staff. He had to have his meals prepared for him. There is no indication that he had to be fed or anything of that nature so obviously he had some degree of independence.

[45] In a case of this nature, it is incumbent upon the appellant to establish on a balance of probabilities what the payment was for. Therefore, there must be a breakdown in the receipt to show what portion was for attendant care.

[46] If the Court was satisfied that the evidence established on a balance of probabilities that there was attendant care then there would have to be a break-down as to what portion of it was for attendant care because the Court is satisfied that not all the money paid was for attendant care, if any of it was. We do not have such a break-down here. In this case the Court is not satisfied that any portion was for attendant care.

[47] With respect to "full time attendant" the Court is satisfied that the expenditure was not for a full time attendant in a nursing home. On the question of whether it was a nursing home, the Court has some real question about that too.

[48] The Court reluctantly and unfortunately has to find that the appellant has not discharged the burden of establishing, on the balance of probabilities, that the

Estate is entitled to deduct the amount that it sought to deduct. Consequently the Court will have to confirm the Minister's assessment and dismiss the appeal.

Signed at Ottawa, Canada, this 2nd day of September, 1999.

"T.E. Margeson"

J.T.C.C.