Buchanan v. The Queen, docket 2000-1865-IT-I (Informal Procedure)

Date: 20010601

Docket: 2000-1865-IT-I

BETWEEN:

JAMES W. BUCHANAN,

                                                            Appellant,

- and -

HER MAJESTY THE QUEEN,

                                                           Respondent.

TAX COURT OF CANADA

IN RE:    The Income Tax Act

--- Held before Her Honour Judge Campbell of The Tax Court of Canada, in Courtroom Number 3, 9th Floor, Merrill Lynch Canada Tower, 200 King Street West, Toronto, Ontario, on the 1st day of June, 2001.

Reasons for judgment

(Delivered Orally from the Bench at Toronto, Ontario on June 1st, 2001)

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APPEARANCES:

Lembi Buchanan                        Agent for the Appellant

Sointula Kirkpatrick                  Counsel for the Respondent

                     Elsie P. Menezes - Registrar

                      Per:    Kathy Toy (Reporter)

JUDGMENT BY HER HONOUR, ORALLY:

These appeals are in respect to assessments for the 1997 and 1998 taxation years. In computing taxes payable for both taxation years, the Appellant claimed a disability tax credit.

The issue is whether the Appellant is suffering from a severe and prolonged mental or physical impairment within the meaning of sections 118.3 and 118.4 of the Income Tax Act, as amended, for the 1997 and 1998 tax years. Subsection 118.3(1) reads as follows:

"Credit for mental or physical impairment.

Where

(a) an individual has a severe and prolonged mental or physical impairment,

(a.1) the effects of the impairment are such that the individual's ability to perform a basic activity of daily living is markedly restricted,

(a.2) a medical doctor, or where the impairment is an impairment of sight, a medical doctor or an optometrist, has certified in prescribed form that the individual has a severe and prolonged mental or physical impairment the effects of which are such that the individual's ability to perform a basic activity of daily living is markedly restricted,

(b) the individual has filed for a taxation year with the Minister the certificate described in paragraph (a.2)."

I am not going to read into the record (c) part, which deals with the formula.

Subsection 118.4(1) reads as follows:

"For the purposes of subsection 6(16), sections 118.2 and 118.3 and this subsection,

"(a) an impairment is prolonged where it has lasted, or can reasonably be expected to last, for a continuous period of at least 12 months;

(b) an individual's ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living;

(c) a basic activity of daily living in relation to an individual means

(i) perceiving, thinking and remembering,

(ii) feeding and dressing oneself,

(iii) speaking so as to be understood, in a quiet setting, by another person familiar with the individual,

(iv) hearing so as to understand, in a quiet setting, another person familiar with the individual,

(v) eliminating (bowel or bladder functions), or

(vi) walking; and

(d) for greater certainty, no other activity, including working, housekeeping or a social or recreational activity, shall be considered as a basic activity of daily living."

To claim a disability tax credit under subsection 118.3(1), an individual must have an impairment for a continuous 12-month period, or that it be expected to last that long, such that the effect of it would markedly restrict the individual's ability to perform a basic activity of daily living. Then section 118.4 goes on to define the parameters of "markedly restricted" to situations where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is unable (or requires an inordinate amount of time) to perform a basic activity of daily living.

Paragraph 118.4(1)(c) sets out the meaning of a "basic activity of daily living".

The Appellant suffers from bipolar disorder characterized by acute mood swings from mania to depression.

The basis of the Appellant's claim for the disability tax credit is that he is markedly restricted in his ability to think, perceive and remember all or substantially all of the time. The Appellant qualified for a credit from 1990 to 1995.

The Appellant did not testify and was not present at the hearing. His wife, Lembi Buchanan, who has a power of attorney for her husband, testified. Given the evidence of Mrs. Buchanan, it is quite understandable why he was not in court. I believe the best evidence of his mental condition is from his wife who has had the strength and fortitude to reside with this individual over a 30-year period. Even if he had been able to withstand the stress of a court appearance, I am doubtful I would have been able to ascertain his mental state based on a short appearance before me. In many cases an unfavourable inference may be drawn from a failure to testify. I am not prepared to draw such an inference in this case.

The Appellant suffers from bipolar affective disorder, also known as manic depression. Mrs. Buchanan thoroughly outlined her husband's history and condition from their marriage in 1973 to present. She is an articulate, intelligent individual who gave perceptive and insightful evidence in respect to her husband's illness. She was straightforward and frank, and I accept her evidence without hesitation.

The Appellant, who is in his mid-50s, was hospitalized as early as 1966 and received electric shock therapy for severe bouts of depression. In February, 1973 he was diagnosed in New York City with bipolar disorder following a severe episode. He was discovered at this time by workmen on the roof of St. Patrick's Cathedral only partially clothed in frigid weather conditions. As I recall from Mrs. Buchanan's evidence, he had scaled a scaffold to reach the roof after damaging the altar of the cathedral to cleanse it. He proclaimed that he was waiting for a helicopter to take him directly to God.

During another later episode he left for work one morning, and without Mrs. Buchanan's knowledge drove to the airport instead. He had secretly booked a flight from Nova Scotia to Los Angeles to accept an Academy Award for the "good things he had done for mankind" in his capacity as God. He did get to Los Angeles and rented a car, but on his way to the Awards, he was chased by the police who attempted to have him pull over off the highway. At this point the Appellant decided this called for a change of plans and he resolved to forego the Award and drive back to Nova Scotia. The Appellant's wife provided a newspaper account of the police chase which ended after 65 miles at high speeds when the Appellant realized the vehicle was low on fuel. According to Mrs. Buchanan he calmly refused to get out of the car amidst rifles pointed at him, as he felt he might be a hero if the police actually shot him. Again the Appellant was hospitalized in both California and Nova Scotia.

A serious relapse occurred in 1990 when the Appellant believed he was God and had control over the eventual fate of Mrs. Buchanan who had become seriously ill with cancer. Again he was hospitalized and placed in a psychiatric unit on an involuntary basis. There was concern he could cause someone bodily harm after assaulting staff members of the unit, including his doctor. At this time he was convinced there was something sinister in the way his doctor's eyes blinked. Nevertheless, the Appellant sought out legal advice and applied to have his involuntary status reviewed. The status was eventually revoked and he was released. Mrs. Buchanan stated that he has never recovered since this last episode in 1990. Mrs. Buchanan, on the other hand, recovered from cancer, which had been diagnosed as terminal.

After this episode the Appellant lost his ability to concentrate, went on spending sprees, was withdrawn, could not read a newspaper, had trouble sleeping, remained irritable and hostile with mood swings oscillating between acute mania and acute depression. Mrs. Buchanan stated that the use of anti-depressants could actually set off another manic episode. He continued to have severe relapses and at one point in 1993 made successful arrangements to trade in the family vehicle for a Jaguar for his son. A day later he was again hospitalized, although the car salesman had no idea that the Appellant was seriously ill until he spoke with Mrs. Buchanan. After arranging the vehicle trade-in and purchase, the Appellant and his wife attended a dinner party where, again, no one realized except Mrs. Buchanan that he was seriously ill. Mrs. Buchanan was alerted when he spoke to her of his plans to produce a musical. Mrs. Buchanan again made plans to have her husband hospitalized the next day. During this period of hospitalization, the Appellant successfully booked over the phone with a travel agent a vacation to Florida.

In recent episodes, he has used money which Mrs. Buchanan had allocated for food and rent to travel to Washington to see his favourite operas. He has also booked dinner tickets at a price per ticket of $2,500 US When discovered by Mrs. Buchanan it was too late to cancel the purchase. The overspending, which is characteristic of the illness, extends to the charitable donations he makes.

Mrs. Buchanan testified that his inappropriate behaviour and impulsive, irrational actions could be masked sufficiently for him to deal with some facets such as arranging the Jaguar purchase, the Florida holiday, the $5,000 dinner tickets, arranging potential investors for a musical he wanted to produce to successfully revoking his involuntary hospital status. Mrs. Buchanan stated that although his perception of reality is blurred and consequently his thinking distorted, he can deal with some items in a lucid manner, such as properly and secretly arranging a flight from Nova Scotia to California, boarding the flight, making the connections and then renting a car, but all the while travelling to collect an Academy Award in his capacity as God. She stated that to members of the public he can appear functional and lucid while in the throes of a severe episode. She stated that he has an uncanny "knack for masking his symptoms", hiding, as she stated, behind a "facade of normalcy".

There is a blurring between the periods when he is lucid and dysfunctional. She stated that his thought processes and judgment were affected every day, although this might not be readily apparent to those around him or even to his own doctor. The Appellant feels fine every day, but the better he feels the more ill he is becoming. He is vulnerable at any time to a severe relapse which would require hospitalization. Mrs. Buchanan described his disease as one with "continuous symptoms varying in severity". One can never know, she stated, when he is scheming to engage in inappropriate, irrational behaviour.

Dr. Robert Cooke has been the Appellant's psychiatrist since 1993. Between periods of hospitalization he sees him on a regular monthly basis. Dr. Cooke was called by the Respondent to give evidence. It was Dr. Cooke who completed and signed the disability tax credit certificate dated August 20th, 1998. On page 1 of this certificate, Dr. Cooke checked the box which said the Appellant would be permanently markedly restricted and had become so in December of 1990. He went on to check the box entitled "Mental Functions" to indicate how the Appellant was markedly restricted. On page 2, however, of the certificate, the doctor checked the "yes" box to the question: Is your patient able to think, perceive and remember using medication or therapy if necessary? He then went on to answer "no" or to check the "no" box to the question: Is the impairment severe enough to restrict the basic activities of daily living identified above, all or almost all of the time even with therapy and the use of appropriate aids and medication?

The Respondent's argument is that the Appellant does not qualify for the disability credit as he was not suffering from a prolonged mental impairment, the effects of which were such that his ability to perform the basic activity of daily living in respect to thinking, perceiving and remembering was markedly restricted all or substantially all of the time. And secondly, the Respondent argued that even if this Court did not agree with the first line of argument, I had no jurisdiction to allow the appeal in light of the Federal Court's comments and findings in the case of R. v. MacIsaac, [2000] 1 C.T.C. 307 in respect to the certificates by doctors. In that case the Federal Court of Appeal found that the requirement in the Act of such certificates is mandatory and not merely directory. The Court went on to state at page 310, and I quote:

"Simply put, there must be a certificate by the doctor that the individual suffers impairments in the language of these subsections."

The Respondent's final argument was that the Appellant's doctor, Dr. Cooke, had 20 years' experience together with eight years' experience with the Appellant, his patient, and therefore Respondent counsel stated, "we nor the Court can overrule that". I will deal initially with the Respondent's second argument.

Dr. Cooke's evidence was that the Appellant was "impaired by his illness" to the extent that he could not work, that he engaged in anti-social, inappropriate behaviour, experienced unpredictable periods of impaired judgment and impulsive decision-making based on his mental problems. He stated that in a number of areas his ability to think and perceive is impaired. He indicated that he might be able to present well to the public even when quite ill. That while being mentally impaired, he could otherwise function quite well at some level or perform some skill while the remaining thought processes were impaired. Of course the facts presented in this case clearly support this contention. The Appellant was able to convince a car salesman he was purchasing a Jaguar for his son even though the family resources could ill-afford the purchase. He was also able to cleverly and skilfully manoeuver his rented vehicle for 65 miles while being pursued by California police, all while under the belief that he was God about to receive an Academy Award. When his car was low on fuel he knew enough to pull off to the side of the road. He was also able to retain legal counsel and have his involuntary hospital status revoked while finding his doctor's blinking sinister. In other words, he can present himself as quite an intelligent, lucid individual while otherwise being in the midst of irrational and unpredictable behaviour. In fact Dr. Cooke stated that it would be possible for the Appellant to be quite ill and yet even his own doctor would not necessarily recognize it.

However, Dr. Cooke felt the Appellant was not impaired in the basic activities of daily living "as he defined them", and I give emphasis to those words. He stated that "in medical terms such activities referred to personal hygiene, walking upstairs or around the block, feeding himself, carrying on a simple conversation, getting to appointments, driving a car, finding his way home". Dr. Cooke enunciated even more clearly his interpretation of the relevant sections of the Act in a letter dated August the 18th, 1998, addressed to the Appellant, where Dr. Cooke stated:

"The gist of it is that his disability tax credit is intended for persons who are disabled to the point that they need almost continuous supervision and cannot even function independently in the home let alone in the work force." (emphasis added)

He then furthers his preconceived notions and views by attaching a lengthy statement about, as he puts it, "my position on this". In this statement Dr. Cooke concludes:

"In fact, most patients with mood disorders such as depression and bipolar disorder DO NOT qualify for this tax credit, which is intended for persons so severely disabled that they have difficulties with very basic self-care activities ..."

He finishes this statement, as he calls it, with the following:

"I am happy to complete the tax credit form, but most of my patients are going to find that they will not qualify for the tax credit based on the information I provide."

Dr. Cooke is quite obviously on a self-proclaimed mission to prevent patients getting a disability credit that, according to his interpretation of the Act, do not otherwise qualify for the credit. By bringing his own interpretation to these sections and his own preconceived notions of what activities might qualify, his completion of page 2 of the certificate was so coloured by his already formulated views in this area that I will not accept this certificate, as indicative of an independent, unbiased medical opinion. From the facts and the evidence, it is clear, in answering the questions on the form, he clearly held the incorrect view that most individuals with mental impairments did not qualify for the credit and that it was intended instead for those (as he wrote in his correspondence to the Appellant) who had difficulty "feeding themselves, dressing, using the toilet or carrying on a simple conversation". He clearly did not understand that the six items defining a basic activity of daily living, as contained in subsection 118.4(1)(c) are not to be read together, but each activity is treated separately. The word "or" is used in that section. To go on to state in writing that most of his patients will not qualify for the credit based on the information he provides is clear and blatant bias, and for this reason I conclude that he misapprehended his responsibilities in completing the form when he stepped into the shoes of judge and jury. In doing so he not only misinterpreted his role but misinterpreted the relevant sections of the Act as well. I believe the remarks of the Federal Court of Appeal in MacIsaac were not intended to apply to a certificate where there is clear evidence of bias in completing it as well as misinterpretation of the Act.

In Radage v. The Queen, 96 DTC 1615 Associate Chief Judge Bowman of this Court discussed extensively the terms "perceiving, thinking, and remembering". Judge Bowman emphasized the obvious difficulties in attempting any workable definition of these terms and cautioned about their application to the "myriad of mental problems" from which people can suffer. In one of Judge Bowman's conclusions, he stated at pages 1624 and 1625:

"It is easier to recognize either an ability or an inability to perceive, think and remember than to define the terms. One must attempt, on a case by case basis, to identify the type of impairment from which the individual suffers and determine whether that impairment is of such a severity that to grant the tax relief contemplated by sections 118.3 and 118.4 would fall within the object that those provisions envisage.

Each case depends on its own facts and to a degree upon the court's perception of the severity of the problem. If asked "Where do you draw the line?" I can only answer that I draw the line in any given case where my own common sense, based on the evidence and on a compassionate view of what I think Parliament was trying to achieve in section 118.3, tells me to draw it."

He then goes on to enunciate the legal principles upon which he bases his decisions in disability tax credit cases. Judge Bowman briefly defined each term as follows:

"Perceiving: The reception and recognition of sensory data about the external world that conforms reasonably to common human experience.

Thinking: A rational comprehension, marshalling, analysis and organization of that which the person has perceived and the formulation of conclusions therefrom that are of practical utility or theoretical validity.

Remembering: The mental activity of storing perceived data and of retrieving it in a manner that enables the person reasonably to perform the function of thinking."

In the end, Judge Bowman attempted to provide a "sensible, practical and compassionate interpretation on the words that would give effect to the intention of Parliament".

Within the guidelines of this case, I must decide if the Appellant's mental impairment, that is, his ability to perceive, think and remember are so markedly restricted within the Act that he is entitled to the credit. I am satisfied that there is sufficient evidence based on the facts presented to conclude the Appellant's impairment is severe enough to allow the credit. Although the Appellant is certainly able to operate adequately in some areas, his impairment permeates his entire existence. The facts support that while engaged in some seemingly rational activity to an outsider, all other thought processes are otherwise exploding in an array of erratic, bizarre and potentially harmful activities. However, the Appellant's ability to perceive, think and remember, although not non-existent, is of such a severity that his entire life is affected to such a degree that he is unable to perform the necessary mental tasks required to live and function independently and competently in everyday life. I am convinced, from the facts presented, that without the constant supervision, care and support by Mrs. Buchanan, he would be unable to function on his own. Dr. Cooke stated in his certificate that the Appellant is "permanently markedly restricted" in his mental functions." The facts support this and I conclude that the Appellant's condition and resulting behaviour so far exceeds the normal and reasonable ambit that he comes within the otherwise very narrow confines of these sections of the Act. Within the definitions of these terms as provided in Radage, I conclude that the facts fully support a finding that the Appellant is unable to (1) receive and recognize external data that conforms reasonably to common human experience; (2) rationally comprehend, marshall, analyze and organize the perceived data and to consequently formulate conclusions that are of practical utility or theoretically valid; and (3) store and retrieve the perceived data in a manner that enabled him to reasonably perform the function of thinking.

The facts quite clearly demonstrate that the Appellant does not engage in rational, logical, organized thought processes. His judgement does not permit him to function reasonably and independently. It is an obvious case, and in fact he did receive the credit until Dr. Cooke was asked to complete a medical certificate and took it upon himself to interpret or, more appropriately, to misinterpret the Act.

The appeals are allowed and the assessments for 1997 and 1998 are referred back to the Minister for reconsideration and reassessment on the basis that the Appellant is entitled to the disability tax credit pursuant to sections 118.3 and 118.4 of the Act.

My final comments are in respect to Respondent counsel's remarks concerning an undertaking in this matter which was given by him at the time of an adjournment several months earlier. It was quite clear from a transcript of that proceeding that in granting Mr. Simser's request for an adjournment, counsel provided his undertaking to this Court to converse with the Appellant's wife regarding concerns about the evidence. When I asked Mr. Simser at the outset if this had been completed, he not only replied that there had been no communication between the parties but that in any event it was the Appellant's undertaking not his undertaking. The transcript is quite clear that it was Respondent counsel's undertaking which he so blithely ignored. As an officer of the Court, when counsel provides such an express undertaking, it is his duty to comply.

I find the Respondent counsel's attempt to hang the undertaking on the shoulders of the Appellant both reprehensible and misleading. At minimum, I expect counsel to assume responsibility for that which he has not completed rather than deflect the blame to an unrepresented party.

I HEREBY CERTIFY THE FOREGOING

to be a true and accurate

transcription of my shorthand notes

to the best of my skill and ability.

Kathy Toy

Computer-Aided Transcription