Date: 20080926
Docket: A-435-07
Citation: 2008 FCA 286
CORAM: DESJARDINS
J.A.
NOËL
J.A.
TRUDEL
J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
and
DEBBIE SCOTT
Respondent
REASONS FOR JUDGMENT
TRUDEL J.A.
Overview
[1]
This is an
appeal from the decision of Madam Justice Campbell (the judge) of the Tax Court
of Canada delivered orally on June 26, 2007, [2007 TCC 610] that allowed an
appeal from the reassessment of the Minister of National Revenue (the Minister)
made under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the “Act”)
for the 2002 taxation year and referred the reassessment back to the Minister
for reconsideration and reassessment.
[2]
The appeal
to the Tax Court was allowed on the basis that the respondent was entitled to
claim the cost of the tuition fees paid to Rothesay Netherwood School
(“Rothesay”) as a medical expense pursuant to paragraph 118.2(2)(e) of
the Act. Hence, the within appeal.
Legislative
framework
[3]
Paragraph
118.2(2)(e) of the Act provides:
|
Medical
expenses
(2)
For
the purposes of subsection 118.2(1), a medical expense of an individual is an
amount paid
…
(e) for the care, or the care and training, at a school,
institution or other place of the patient, who has been certified by
an appropriately qualified person to be a person who, by reason of a physical
or mental handicap, requires the equipment, facilities or personnel
specially provided by that school, institution or other place for the
care, or the care and training, of individuals suffering from the handicap
suffered by the patient;
[Emphasis added]
|
Frais médicaux
(2) Pour
l’application du paragraphe (1), les frais médicaux d’un particulier sont les
frais payés:
[…]
e) pour le
soin dans une école, une institution ou un autre endroit — ou le soin et la
formation — du particulier, de son époux ou conjoint de fait ou d’une
personne à charge visée à l’alinéa a), qu’une
personne habilitée à cette fin atteste être quelqu’un qui, en raison
d’un handicap physique ou mental, a besoin d’équipement, d’installations
ou de personnel spécialisés fournis par cette école ou institution ou à
cet autre endroit pour le soin — ou le soin et la formation — de particuliers
ayant un handicap semblable au sien;
[Je
souligne]
|
[4]
The
requirements that the taxpayer has to meet in order to claim expenses under
paragraph 118.2(2)(e) are set out in Collins v. Canada [1998]
T.C.J. No. 396 at paragraph 20 as follows:
1.
The taxpayer must pay an amount for the care or care and training
at a school, institution or other place.
2.
The patient must suffer from a mental handicap.
3.
The school, institution or other place must specially provide to the
patient suffering from the handicap, equipment, facilities or personnel for the
care or the care and training of other persons suffering from the same
handicap.
4.
An appropriately qualified person
must certify the mental or physical handicap is the reason the patient requires
that the school specially provide the equipment, facilities or personnel for
the care or the care and training of individuals suffering from the same
handicap.
Issues
[5]
The first
two requirements were not disputed before the Tax Court and are not at issue
before this Court.
[6]
The third
and fourth requirements were the focus of the parties at trial and constitute
the main issues on appeal, which are:
1.
Is
Rothesay a school that specially provided to the respondent’s son equipment,
facilities or personnel for the care or care and training of other persons
suffering from the same handicap?
2.
Was the respondent’s
son certified as someone who, by reason of his mental or physical handicap,
required the special equipment, facilities or personnel provided by Rothesay?
Standard of
Review
[7]
These
issues being questions of mixed fact and law, the judge’s conclusions will stand
absent a palpable and overriding error: Housen v. Nikolaisen, 2002 SCC
33 at paragraph 36.
Facts
[8]
The salient
facts that were considered by the judge in her reasons can be summarized as
follows:
- The respondent’s
son was diagnosed with several learning disabilities in Grade 3. These
disabilities include Attention Deficit Disorder (ADD), auditory processing
disorder, obsessive compulsive disorder, as well as associated behavioural
issues (2007 TCC 610 based on the certified transcript of reasons
[Reasons], page 3 at lines 15-25 and page 5 at lines 7-17).
- Although the respondent’s
son coped well from Grade 3 to Grade 6, he had problems completing
homework and had serious social issues. In Grade 7, he underwent different
programs to help him adjust and was prescribed medication for his
obsessive compulsive behaviours. These measures, far from being
successful, had a number of adverse effects (Reasons, page 4 at lines
1-7).
- After
consulting teachers, the parents and students, as well as her son’s paediatrician
(Dr. Zelman), the respondent decided to enrol her son in Rothesay.
Rothesay was known for its smaller class size and success with students
with disabilities similar to those of her son. According to the respondent
Rothesay provided the essential daily and nightly structure as well as
control for the behaviour of her son (Reasons, page 5 at lines 1-6).
- The respondent
claimed the cost of tuition fees at Rothesay in the amount of $12,900 as a
deductible medical expense in respect of her 2002 taxation year. The
Minister reassessed the respondent on the basis that the amount claimed
was not a deductible medical expense pursuant to paragraph 118.2(2)(e)
of the Act.
First Issue
[9]
I
now turn to the first issue: Is Rothesay a school contemplated by paragraph
118.2(2)(e) of the Act?
[10]
The third of the Collins factors requires Rothesay to be a
school that specially provided to the student equipment, facilities or
personnel for the care or the care and training of other persons suffering from
the same handicap.
[11]
To satisfy this requirement, first of all, the respondent’s
son must have a specific need. Second, the expenses of Rothesay must be inextricably
tied to this specific need resulting from his disability: Lister v. Canada,
2006 FCA 331 at paragraph 15. Third, Rothesay must be
an institution that is capable of addressing the need of a group with
disabilities similar to those of the respondent’s son.
[12]
The judge heard from three witnesses. These witnesses were the respondent,
Dr. Zelman who was qualified as an expert witness, and Mr. Kitchen, the head of
the school at Rothesay. The three witnesses commented on various aspects of
education at Rothesay in general, as well as on the ways in which the respondent’s
son had benefited from that school.
[13]
The evidence revealed that Rothesay is a
university prep school catering to any student who meets the criteria for
admission, that is:
a)
the
student wants to attend school;
b)
the
student is committed to try to the best of his or her ability in everything he
or she does; and
c)
the
student works hard academically and "finds the success to graduate through
the school" (transcript, pages 47-48);
[14]
All
students have access to the same services and the tuition fees are the same for
all. The school’s focus is not on the provision of medical services and it
does not specially provide equipment, facilities or personnel for the care of
students with particular needs such as those of the respondent’s son.
[15]
The type of institution that provides
special care for the purposes of paragraph 118.2(2)(e) was addressed by
this Court in Lister (ibid.).
In Lister, where it was held that the test is one of purpose, our Court
disallowed the deduction of expenses for a seniors’ residence on the basis that
provision of medical services was incidental to accommodation services
provided by the residence.
[16]
On behalf of the Court, my
colleague, Madam Justice Sharlow, wrote at paragraph 18:
(…) However,
given the context of subsection 118.2(2), an organization that functions mainly
as a provider of residential accommodation should not fall within the scope of
paragraph 118.2(2)(e) merely because it incidentally provides some
medical services to its residents.
[17]
For
reasons that remain nebulous, the decision of our Court in Lister was
not presented to the judge. Considering the record, I believe the judge would
have concluded differently had she had the benefit of our Court’s
interpretation of subsection 118.2(2) in Lister.
[18]
The fact
that some of the services offered to the general student body were beneficial
to the respondent’s son and other students with special needs is insufficient
to bring Rothesay within the ambit of the provision under study.
[19]
This being
said, I will address the remaining issue.
Second
Issue
[20]
The issue
is whether Dr. Zelman made a recommendation with respect to Rothesay that
amounts to certification within the meaning of subsection 118.2(2)(e) of
the Act.
[21]
In her
oral reasons, the judge states:
Dr. Zelman
had prior knowledge of Rothesay as a destination for individuals with learning
and behavioural problems. His knowledge was gained at medical conferences and
from discussions with other doctors and parents. It is clear from his evidence
that he endorsed Rothesay as an appropriate learning centre with the
capabilities to adequately address and assist with Matthew’s problems and
mental handicaps.
He confirmed
his diagnosis of attention deficit disorder and associated behavioural issues
and according to his expert testimony he considered that Matthew could benefit
from this type of structured setting. He stated that Rothesay had a reputation
in the medical community for assisting and dealing with individuals with learning
disabilities and on this basis he recommended it to the Appellant.
In this vein,
I believe he was certifying or representing this school to the Appellant or
vouching that this school could benefit Mattew based on the school’s track
record in the medical community. Of course, I do not believe he could
guarantee it as an absolute cure all to the Appellant any more than he could
recommend another program at another school or medication that would
guarantee a resolution to Matthew’s issues. [Emphasis added] (Reasons, at page 14, lines 1-24)
…
I accept the
expert evidence of Dr. Zelman and conclude that his recommendation of Rothesay
to the Appellant qualified as his certification of the school as a positive
potential for assisting in, not curing, Matthew’s disabilities to enable
him to develop the social and academic skills to be, as Mr. Kitchen stated, the
best he can be within those limitations. [Emphasis added] (Reasons, at page 15, lines 14-21)
[22]
As stated
by the judge at page 13 of her reasons, there is no requirement that
certification be in a particular format.
[23]
However
there must be true certification: one which specifies the mental or physical
handicap from which the patient suffers, and the equipment, facilities
or personnel that the patient requires in order to obtain the care or training
needed to deal with that handicap: Title Estate v. Canada [2001] F.C.J.
No. 530 at paragraph 5.
[24]
While the
judge was in a unique and privileged position to weigh the evidence before her,
based on a careful review of the transcript against the standard set out in Title
Estate above, I find no evidentiary support for her conclusion on
certification.
[25]
The
transcript reveals the following:
- For herself, the
respondent testified to the effect that she heard of Rothesay through a mutual
friend (transcript, page 26, lines 4-5) and that she discussed the school with
Dr. Zelman before her initial visit to the school (transcript, page 30, lines
4-5). Finally, after viewing the school and much discussion with Ms. Turnbull
[admissions officer] it was decided to enrol her son (transcript, page 31,
lines 6-7).
- As for Dr. Zelman,
he diagnosed the respondent’s son in 1996 with Attention Deficit Disorder and
suggested at that time that the child be tested for other learning issues by
the School Board, school consultant or the psychologist to the School Board
(transcript, page 12, lines 12-16). This was done.
- The expert witness
also stated that children like the respondent’s son would have great difficulty
in school and was familiar with schools in the Maritimes that would be
beneficial for children like the respondent’s son (transcript, page 14, lines
3-4 and lines 16-18).
- Dr. Zelman
discussed Rothesay with the respondent as one of the learning possibilities in
Atlantic Canada (transcript, page 15, lines 1-5). He was aware of the school
from its reputation, websites, conferences and discussions with other paediatricians
with particular focus on development, adding that Rothesay would be one of the
schools that they "certainly talk about" (transcript, page 16, lines
9-15).
[26]
Finally,
it is worth noting the last question that the respondent asked Dr. Zelman in
direct examination and the answer:
Q. In
your professional opinion, would you recommend [Rothesay] as a suitable school
setting for the treatment of [my son’s] learning and behaviour disorders due to
the teacher/student ratio, more accessibility to teacher assistance, improved
organization and study habits through daily meetings with his advisor and his
Grade 12 prefect.
A. Very
much so.
[27]
In my
view, the affirmative answer to the question "Would you recommend"
does not amount to certification. Furthermore, this recommendation of Dr.
Zelman with respect to Rothesay appears to have been made ex post facto
before the Tax Court.
[28]
As the
record stands, I notice that Dr. Zelman did not express a formal expert opinion
to the respondent at any time before her filing of the income tax return for
the given year in which she claimed the tuition fees as a medical expense
deduction. For the purpose of paragraph 118.2(2)(e) of the Act,
certification is clearly a pre-condition to qualifying for a disbursement as a
medical expense.
[29]
At the
hearing in appeal, the respondent concedes that prior to her claim she never
directly asked Dr. Zelman for certification although she believes that he would
have provided it had he been asked. The fact is that certification was never
obtained.
Conclusion
[30]
Therefore,
I find that the judge made a palpable and overriding error in concluding that
the respondent met the third and fourth requirements set out in Collins,
supra, in order to be able to claim the cost of tuition as a medical
expense under paragraph 118.2(2)(e) of the Act.
[31]
I would
allow the appeal, set aside the judgment of the Tax Court, and render judgment
on the basis that the notice of reassessment dated November 1st,
2004 was validly issued. Since this matter came before us pursuant to the
informal procedure, and the appeal is that of the Crown, the respondent is
entitled to her reasonable and proper costs in accordance with section 18.25 of
the Tax Court of Canada Act, R.S.C. 1985, c. T-2.
"Johanne
Trudel"
“I
concur
Alice
Desjardins J.A.”
“I
concur
Marc
Noël J.A.”
Email this Content