Gustafson v. The Queen, docket 98-1358-IT-I (Informal Procedure)

Date: 19990430

Docket: 98-1358-IT-I

BETWEEN:

BARBARA GUSTAFSON,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for judgment

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

[1] The appellant appeals from an assessment of income tax for the 1996 taxation year. In computing her income tax liability for the 1996 taxation year, the appellant claimed, in calculating the medical expense tax credit, medical expenses which included the amount of $10,184.00 in respect of extra costs incurred in the original construction of a new residence of the appellant in order to make the new residence wheelchair accessible because her husband, Paul Gustafson, is a quadriplegic and has been confined to a wheelchair since 1984. The Minister of National Revenue disallowed the claim for a medical expense on the basis it was payment for revisions to a proposed dwelling prior to it having been built and therefore the resulting cost was not a medical expense pursuant to subsection 118.2(2) of the Income Tax Act (the "Act"). Therefore, the appellant was not entitled to a medical expense tax credit under subsection 118.2(1) of the Act.

[2] The parties agreed an Agreed Statement of Facts be filed which reads as follows:

"1. Paul Gustafson is the spouse of Barb Gustafson.

2. Paul is a quadriplegic, confined to a wheel chair since 1984, and therefore suffers from a severe and prolonged mobility impairment.

3. In 1996 Paul and Barb contracted with Ehrenburg Homes Ltd. to build a new home for them at 323 Budz Terrace, Saskatoon, Saskatchewan, which was built at a total cost of $129,756.00, excluding the cost of the lot.

4. In consultation with Ehrenburg, Paul and Barb had certain revisions and changes made to the design of the house in order to make the home more accessible and functional for Paul.

5. Paul and Barb incurred extra costs as a result of having these revisions and changes made to the plans for their new home, including:

(a) Larger garage to allow room for lift from van $2,900.00

(b) Extra cost for cabinets from standard package $2,350.00

(c) Concrete jog in basement for lift $ 145.00

(d) Extra interior shelving done at different levels $ 345.00

(e) Electrical changes switch installed in cabinets $ 60.00

(f) Spring latches installed on all exterior doors $ 120.00

(g) Cost to customize marble shower and plumbing $ 530.00

(h) Extra framing needed for backing in shower, etc. $ 50.00

(i) Flooring costs for changes to standard package $1,659.00

(j) Passage sets inside and out lever handle changes to standard

package $ 150.00

(k) Cost to design and leave access hole for lift area $ 400.00

(l) Window wells on the exterior due to lowering grade of the

house $ 350.00

(m) Extra cost for doors to have commercial sills on the

bottom $ 150.00

(n) Cost to design larger hallways $ 150.00

(o) Cost for larger doors throughout all of house $ 200.00

(p) Door from master to deck for fire escape $ 250.00

(q) Plumbing higher toilet, and placing lever handles

on taps $ 225.00

(r) Ramp installed in garage $ 150.00

TOTAL    $10,184.00

6. Paul and Barb paid these extra expenses to Ehrenburg Homes Ltd. in 1996.

7. Barb claimed these expenses as a medical expense under Section 118.2(2) of the Income Tax Act (Canada) on her 1996 Income Tax Return.

8. These expenses have been disallowed by Revenue Canada on the basis that revisions to the design of a dwelling prior to it being built do not qualify as a medical expense under Section 118.2(2)(l.2).

9. Expenses in the amount of $61.00 claimed as medical expenses were not proven by filing receipts with the Minister;

10. Expenses in the amount of $10,184.00 claimed as medical expenses were in respect of extra costs incurred in the construction of a new residence of the Appellant in order to make the new residence wheel chair accessible;"

[3] The submissions of Counsel for the appellant presented to the Court during oral argument were also summarized in a written brief and I reproduce relevant portions as follows:

"5. Section 118.2 of the Act provides that an individual, in computing their tax payable for the taxation year, may deduct a medical expense credit. Medical expenses are defined under section 118.2(2). Section 118.2(2)(l.2) provides that a medical expense is an amount paid:

"for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe or prolonged mobility impairment, to enable the patient to gain access to, or to be mobile and functional within, the dwelling;"

6. Paul Gustafson is an individual who suffers from a severe and prolonged mobility impairment. In 1996, Paul and his spouse, Barb Gustafson, contracted with a home builder to design and construct a dwelling which would be more accessible to Paul and enable Paul to be more functional and mobile within the dwelling. In having these revisions and changes performed, Paul and Barb incurred $10,184.00 in expenses which Barb sought to claim as a medical expense on her 1996 income tax return. The Minister disallowed these expenses as they were incurred in constructing a new house and therefore not allowable expenses under Section 118.2(2)(l.2).

7. It is submitted that it is inappropriate for the Minister to read the word "existing" into section 118.2(2)(l.2) so as to restrict the eligibility of otherwise reasonable expenses to those incurred on renovating or altering an existing dwelling. Expenses incurred in altering or renovating a dwelling to enable the patient to gain access to, or to be mobile and functional within, the dwelling should be allowable expenses under 118.2(2)(l.2) whether or not these expenses were incurred in constructing a new house or modifying an existing house.

A. Ordinary Meaning Rule

8. In the text Driedger on the Construction of Statutes, 3rd ed., Toronto: Butterworths, 1994, the author discusses the application of the Ordinary Meaning Rule (at page 7):

"As understood and applied by modern courts, the Ordinary Meaning Rule consists of the following propositions.

1. It is presumed that the ordinary meaning of a legislative text is the intended or most appropriate meaning. In the absence of a reason to reject it, the ordinary meaning prevails.

2. Even where the ordinary meaning of a legislative text appears to be clear, the Courts must consider the purpose and scheme of the legislation, and the consequences of adopting this meaning. They must take into account all relevant indicators of legislative meaning.

3. In light of these additional considerations, the Court may adopt an interpretation in which the ordinary meaning is modified or rejected. An interpretation however must be plausible; that is, it must be one the words are reasonably capable of bearing."

9. Further, at Page 9, the author states:

"The ordinary meaning of words is a fact over which the Courts have only limited control. As official interpreters, Courts have the power to fix the "intended" or legally correct meaning of words, but they cannot fix the conventions and practices on which the ordinary meaning depends. These exist independently of the individuals who use them; by definition, they depend on the shared understandings of large numbers of users. In this limited sense, the meaning derived from linguistic conventions is objective and capable of functioning as a constraint in statutory interpretation."

10. In Vantyghem v. Canada, [1998] T.C.J. No. 1103, Rip T.C.J. considered the objetive meaning of "renovations or alterations to a dwelling". At paragraph 13, Rip T.C.J. stated that:

"A modification to a home may include a very wide range of changes so long as there is no substantive change to the home. The use of a broad and inclusive term like "modification" in the published budget statement and the technical notes suggest a broad and inclusive interpretation of the terms "alterations" and "renovations" in paragraph 118.2(2)(l.2)."

11. Further, at paragraph 15, Rip T.C.J. stated as follows:

"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"."

12. Paragraph 56 of Interpretation Bulletin IT-519R provides as follows:

"In the case of an individual who lacks normal physical development or who has a severe and prolonged mobility impairment, reasonable expenses relating to renovations or alterations to the individuals dwelling can be claimed as medical expenses under paragraph 118.2(2)(l.2). To qualify, these expenses must be paid to enable the individual to gain access to the dwelling or be mobile and functional within it. Included in this category are reasonable expenses for necessary structural changes, such as:

(a) the purchase and installation of outdoor and indoor ramps where stairs impede the individuals mobility;

(b) the enlarging of halls and doorways to allow the individual access to the various rooms of the dwelling; and

(c) the lowering of kitchen or bathroom cabinets to allow the individual access to them.

The types of structural changes that could be eligible are not restricted to the above examples. "Reasonable expenses" pertaining to a particular structural change may include payments to an architect or a contractor."

13. It is submitted that the objective usage of "renovations or alterations to a dwelling" is broad enough to include design changes to the building prior to its construction. As noted in the above interpretation bulletin, "reasonable expenses" may include payments to an architect or a contractor. It is therefore reasonable to infer that a taxpayer would assume that reasonable expenses in relation to alterations or renovations to a dwelling under construction would not be excluded as an eligible expense under section 118.2(2)(l.2).

14. It is submitted that it would be unreasonable to interpret section 118.2(2)(l.2) so that an illusory distinction is made between those mobility impaired persons who alter a dwelling during construction and those mobility impaired persons who alter an existing dwelling. Further, it is submitted that it would be unreasonable to interpret section 118.2(2)(l.2) such that an alteration made to a dwelling in the construction stage is not a deductible medical expense while the same alteration made after a dwelling is completed would be a deductible medical expense. Rather, the focus should be on whether the alteration or renovation was done "to enable the patient to gain access to, or to be mobile and functional within, the dwelling".

[4] Counsel for the respondent submitted the language of the legislation was clear and the expense must relate to renovations or alterations to a dwelling which can only be interpreted as consisting of an existing structure used for habitation by the person - or their spouse - and cannot include costs incurred as a result of revisions to plans and drawings of a building at the design stage even though these changes are incorporated in the new residence during actual construction.

[5] The relevant provision of the Act - paragraph 118.2(2)(l.2) that defines the type of medical expense claimed by the appellant, reads as follows:

"(l.2) for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling;"

[6] The French version of the same provision reads:

"(l.2) pour les frais raisonnables afférents à des rénovations ou transformations apportées à l'habitation du particulier, de son conjoint ou d'une personne à charge visée à l'alinéa a) - ne jouissant pas d'un développement physique normal ou ayant un handicap moteur grave et prolongé - pour lui permettre d'avoir accès à son habitation, de s'y déplacer ou d'y accomplir les tâches de la vie quotidienne."

[7] As referred to earlier while setting forth the submissions of Counsel for the appellant, Judge Rip of the Tax Court of Canada considered this provision in Vantyghem, supra. In considering the nature of the relevant provision of the Act within the overall context of the medical expense provisions generally, Judge Rip - at paragraph 19 of his judgment - stated:

"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. [See Note 3 below] Every enactment should "be given such a fair, large and liberal construction and interpretation as best ensures the attainment of its objects". [See Note 4 below] 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.

Note 3: See Radage v. R., 96 D.T.C. 1615 (T.C.C.) and Noseworthy v. R., 96 D.T.C. 3235 (T.C.C.).

Note 4: Interpretation Act, R.S., c I-21, s. 12."

[8] In Robert C. Johnston v. Her Majesty The Queen (A-347-97 and A-348-97) 98 DTC 6169, the Federal Court of Appeal approved of the statement of Judge Bowman, Tax Court of Canada in Radage v. R [1996] 3 C.T.C. 2510 where - at p. 2528 - he wrote:

"The legislative intent appears to be to provide a modest relief to persons who fall within a relatively restricted category of markedly physically or mentally impaired persons. The intent is neither to give the credit to every one who suffers from a disability nor to erect a hurdle that is impossible for virtually every disabled person to surmount. It obviously recognizes that disabled persons need such tax relief and it is intended to be of benefit to such persons."

[9] In Johnston, supra, Létourneau J.A. - at page 6171 - stated:

"Indeed, although the scope of these provisions is limited in their application to severely impaired persons, they must not be interpreted so restrictively as to negate or compromise the legislative intent."

[10] It is obvious that in Vantyghem, supra, Judge Rip was dealing with the installation of a hot tub within an existing dwelling and found that it could fall within the plain meaning of the word "renovation". In the within appeal, there was no existing house or dwelling and the costs incurred were as a result of modifying the design of the house the Gustafsons were intending to have constructed for them in order to make it more accessible and functional for Paul Gustafson. This is, of course, the most cost-efficient time to make required design changes in order to facilitate the intended result rather than undertaking costly modifications to an existing structure. One does not have to be an expert in these matters to know that renovations and alterations to an existing building, in order to accomplish a particular purpose, are always more expensive - double, triple or more - than the cost of including those special features in the initial design and then carrying out construction in accordance with those plans.

[11] While the submission of Counsel for the appellant - on a practical level - has merit I cannot see how I can depart from the plain, ordinary meaning of the language used in the relevant provision. It is apparent the legislative intent is to provide some relief against certain expenses relating to renovations or alterations of a dwelling which, in my view, can only be read as referring to an existing building, residence, home, house, place or dwelling. One cannot alter or change a thing - without changing the thing itself - unless that thing exists. One cannot renovate - in the sense of renewing or restoring - unless the subject of such endeavor has previously existed in a state now about to be changed in a material respect. The French version does not contemplate any recognition of expense except as it relates to a "habitation" which connotes a house or place of residence. The words, "rénovation" and "transformation" are defined as follows:

"Rénovation n.f. ... 2. Remise à neuf. = modernisation, 1.restauration. Rénovation d'une salle de spectacles, d'un hôtel. Travaux de rénovation. Rénovation d'un vieux quartier, d'un immeuble insalubre. = réhabilitation. CONTR. Décadence

Transformation n.f. – 1375; lat. transformatio 1. Action de transformer, opération par laquelle on transforme."

(Le Nouveau Petit Robert dictionnaire)

[12] One can only transform that which has form. Therefore, one can transform a plan or design - in a pre-emptive manner - of a residential unit in order to ensure the building can accomplish the purpose contemplated by the legislation but that kind of activity and resultant expense is not covered by the legislation. It is apparent there was never any intent it be included in any recognition of medical expense under paragraph 118.2(2)(l.2). In light of the facts in the within appeal, Parliament should, perhaps, undertake an amendment to recognize the reasonable and cost-effective relationship between additions, installations and modifications to a proposed residence foreseen at the planning stage rather than merely approving certain expenses incurred after the fact. 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.

[13] The jurisprudence does not permit judges to change the Income Tax Act by amending existing provisions or to draft and insert new ones in order to achieve what is - in a particular case - an equitable result and that is what I would be doing in the within appeal if I were to allow it.

[14] The appeal is dismissed.

Signed at Sidney, British Columbia, this 30th day of April 1999.

"D.W. Rowe"

D.J.T.C.C.