Date:
20030113
Docket:
2002-2889-IT-I
BETWEEN:
ESTATE OF
THE LATE RONALD CLAUSSEN
Appellant
and
HER MAJESTY
THE QUEEN,
Respondent
Reasons
for Judgment
Bowie
J.
[1]
Ms. Jan Claussen appeared before
me as agent representing the estate of her late husband, Ronald
Claussen, in an appeal from an assessment for income tax for the
1999 taxation year. The issue in the appeal is whether Mr.
Claussen was entitled to a tax credit under section 188.2 of the
Income tax Act (the Act) in respect of certain
medical expenses incurred by Ms. Claussen on her own behalf.
Initially, there were a number of items in dispute, but during
the hearing Ms. Claussen informed me that she was now
contesting only two. One was the expenses that she incurred to
travel from Powell River B.C. for the purpose of consultations
with Dr. Chan, a naturopath practicing in Vancouver. The other
item that is in dispute is the amount of $11,810.91 paid by her
for drugs, medicaments or other preparations or substances (the
medication) that were prescribed for her use by Dr. Chan, but
were supplied to her neither by him nor by a pharmacist. After
hearing Ms. Claussen's evidence, counsel for the Respondent very
properly conceded that the travel expenses were a justifiable
item of expense to be allowed under paragraph 118.2(2)(h)
of the Act.
[2]
If the Appellant is to be allowed
a tax credit for the medication then it must be on the basis that
it can be brought within paragraph 118.2(2)(n):
118.2(2)
For the purposes of subsection (1), a medical expense of an
individual is an amount paid
(a)
...
(n)
for drugs, medicaments or other preparations or substances (other
than those described in paragraph (k)) manufactured, sold
or represented for use in the diagnosis, treatment or prevention
of a disease, disorder, abnormal physical state, or the symptoms
thereof or in restoring, correcting or modifying an organic
function, purchased for use by the patient as prescribed by a
medical practitioner or dentist and as recorded by a
pharmacist;
[3]
It is not disputed that the Appellant actually spent the amount
claimed to give rise to the credit, or that the medication was
prescribed by Dr. Chan. The Minister bases the disallowance of
the credit entirely upon the Appellant's inability to show that
the medication was "... recorded by a pharmacist". The
medication in question was in the nature of vitamins and herbal
remedies. Similar medication was sold and administered to the
Appellant by Dr. Chan, and a credit was allowed under paragraph
118.2(2)(a) for medical services, including the cost of
the same medication.
[4]
The expression "... as recorded by a pharmacist" has
attracted considerable judicial attention recently. In Frank
v. The Queen, Teskey J. held that the
requirement was satisfied where the medication was sold to the
patient by a druggist, even though they were not drugs listed for
sale only by prescription. The druggist's purchase or sales slip
was sufficient to satisfy the requirement for recording. In
Pagnotta v. The Queen, Miller J. had to
deal with a claim for a tax credit under paragraph (n)
which arose out of the purchase by the Appellant of herbs and
supplements prescribed by a doctor, some of which were supplied
by pharmacists and some of which were not. None of the items were
drugs listed for sale only by prescription. After a careful
review of paragraph (n), he concluded, following
Frank, that those items purchased from a pharmacy
satisfied the requirement to be registered by a pharmacist, while
those that were purchased elsewhere did not. Judge Miller
acknowledged that this is a liberal interpretation of the
concluding words of paragraph (n), but he considered it to
be warranted in order to meet the objective of the Act.
His decision that medication not sold by a pharmacist cannot
qualify for the tax credit was followed by Rowe D.J. in Dunn
v. The Queen, and by McArthur J. in
Melnychuk v. The Queen, both of whom
would have preferred to allow the credit, but concluded that they
could not because they could not ignore the concluding words of
paragraph (n).
[5]
The only support to be found for the Appellant's position is in
the decision of O'Connor J. in Ray v. The Queen. In that case, like this
one, the medication was prescribed by a doctor, but not obtained
at a pharmacy, and so not registered by a pharmacist. They were
not prescription drugs, but Judge O'Connor found that they were
required to sustain the life of the Appellant. After considering
the decisions of Teskey J. in Frank, of Miller J. in
Pagnotta, and of Rowe D.J. in Dunn, he said at
paragraph 20 of his Reasons:
With respect,
the ambiguity in the provision has resulted in judicial
acrobatics with the purpose of fitting a taxpayer's situation
within the provision. It is my opinion that common sense should
prevail. If the medications are prescribed by a doctor and they
make the difference between life and death or functioning or not
functioning, they should fall under paragraph
118.2(2)(n).
Determination of the question whether ambiguity lurks in a
statute was dealt with recently by Iacobucci J. in the Bell
ExpressVu case. He said:
What, then, in law is an ambiguity? To answer, an ambiguity must
be "real". The words of the provision must be
"reasonably capable of more than one meaning"
(Westminister Bank Ltd. v. Zang, [1966] A.C. 182 (H.L.),
at p. 222, per Lord Reid). By necessity, however, one
must consider the "entire context" of a provision
before one can determine if it is reasonably capable of multiple
interpretations. ...
[6]
I accept that the concluding words of paragraph
118.2(2)(n) of the Act, considered in its context
as part of a series of provisions designed to provide a measure
of relief from the burden of income tax to people who suffer, or
as in this case whose dependants suffer, from illness, is capable
of more than one meaning. Conceivably, it might refer to the
requirement imposed upon a pharmacist who fills a prescription
for a Schedule F drug under the Food and Drug Regulations
to maintain a record of the prescriptions filled. This seems
unlikely, however, as paragraph (n) refers to substances
that would certainly fall outside Schedule F. It might refer to
the requirement under provincial statute law that pharmacists
maintain a record for each patient of the prescriptions filled,
or it might, as the cases I have referred to have found, refer
simply to the recording by the cash register of a sale of a
product falling within the description found in paragraph
(n). However, it must mean something. With due respect to
Judge O'Connor, it is not, in my view, open to this Court
simply to write the words out of the statute because their
meaning is unclear. Iacobucci J. makes it clear in Bell
Express Vu that if ambiguity is found, the Court must then go
on to resolve that ambiguity through external aids to
interpretation and the canons of construction. It is a
fundamental canon of construction that words in a statute not be
rendered nugatory. It is not necessary, however, for me to decide
whether Judges Teskey and Miller were correct in their conclusion
that a sale by a pharmacy is all that is required to satisfy
paragraph (n); I am unable to find that a purchase which
does not involve a pharmacy or a pharmacist can
qualify.
[7]
I would not want to leave this case without expressing my
agreement with the sentiment expressed by Associate Chief Judge
Bowman in a brief oral judgment in Banman v. The Queen, wherein he suggested
that sooner or later the government will have to consider an
amendment to this legislation to extend the tax credit to cover
the natural remedies and alternative forms of treatment that are
becoming prevalent, and are proving to be effective in certain
cases. The present case is demonstrative of the need for some
reform of the law. The Appellant finds herself in the position
that she is permitted a tax credit in respect of the purchase of
certain remedies because they were supplied and administered by
Dr. Chan, but denied a tax credit for the same medication bought
in a retail outlet, because it is not a pharmacy. There is no
suggestion that the medication was not effective; indeed the
opposite seems to be true. The distinction made by the law has no
apparent medical basis. The situation cries out for reform.
However, it is only Parliament that can act; the Court must apply
the law as it is written.
[8]
The appeal will be allowed and the assessment will be referred
back to the Minister for reconsideration and reassessment, but
only to increase the base upon which the tax credit is calculated
by the amount of the travel expenses, which were previously
excluded.
Signed at
Ottawa, Canada, this 13th day of January, 2003.
J.T.C.C.
|
COURT FILE
NO.:
|
2002-2889(IT)I
|
|
STYLE OF
CAUSE:
|
Estate of the late
Ronald Claussen and Her Majesty the Queen
|
|
PLACE OF
HEARING
|
Vancouver, British
Columbia
|
|
DATE OF
HEARING
|
November 27,
2002
|
|
REASONS FOR
JUDGMENT BY:
|
The Honourable
Judge E.A. Bowie
|
|
DATE OF
JUDGMENT
|
January 13,
2003
|
|
Agent for the
Appellant:
|
Jan
Claussen
|
|
Counsel for the
Respondent:
|
Victor
Caux
|
|
For the
Respondent:
|
Morris
Rosenberg
Deputy Attorney
General of Canada
Ottawa,
Canada
|
2002-2889(IT)I
BETWEEN:
ESTATE OF
THE LATE RONALD CLAUSSEN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on November 27, 2002 at Vancouver, British Columbia,
by
the
Honourable Judge E.A. Bowie
Appearances
Agent for
the
Appellant:
Jan Claussen
Counsel for
the
Respondent:
Victor Caux
JUDGMENT
The appeal
from the assessment of tax made under the Income Tax Act
for the 1999 taxation year is allowed and the assessment is
referred back to the Minister of National Revenue for
reconsideration and reassessment on the basis that the Appellant
is entitled to include the travel expenses of Jan Claussen as
claimed under subsection 118.2(2) of the Act.
Signed at
Ottawa, Canada, this 13th day of January, 2003.
J.T.C.C.
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