Nicola Terrigno v. Her Majesty the Queen, [1996] 3 CTC 2801 (Informal Procedure)

Christie J.T.C.C.: — These appeals are governed by the informal procedure prescribed under section 18 and following sections of the Tax Court of Canada Act.

In computing his tax payable for 1988 to 1993 inclusive the appellant deducted an amount determined under subsection 118.3(1) of the Income Tax Act (the “Act”). In reassessing the appellant’s liability to income tax for those years the Minister of National Revenue (the “Minister”) disallowed the deductions. The appellant objected, but the reassessments were confirmed. These appeals followed.

At trial counsel for the respondent informed the Court that the appeals regarding 1988, 1989, 1990 should be allowed on the ground that the reassessments were made after the expiration of the three-year period prescribed under subsection 152(4) of the Act. Judgment shall issue accordingly in respect of those years.

The wording of subsections 118.3(1) and 118.4(1) applicable to the years 1991, 1992, 1993 is as follows:

118.3(1) Where (a) an individual has a severe and prolonged mental or physical impairment,

(a.l) 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), and

(c) no amount in respect of remuneration for an attendant, or care in a nursing home, in respect of the individual, is included in calculating a deduction under section 118.2 (otherwise than because of paragraph 118.2(2)(b.l)) for the year by the individual or by any other person,

for the purposes of computing the tax payable under this Part by the individual for the year, there may be deducted an amount determined by the formula

A x $4,118

where A is the appropriate percentage for the year.

118.4(1) For the purposes of subsection 6(16), 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.

The Notice of Appeal reads:

I confirm receipt of a letter from the Toronto North Tax Services, dated November 8th, 1995, wherein my claim for Disability Tax Credit for 1988 to 1993 was denied.

I continue to believe that I do qualify for this Tax Credit. I cannot perform basic daily functions without the use of aids and I have forwarded reports from both my doctors and specialists that describe my medical state. This letter will therefore, serve as a notice of an informal appeal to the Tax Court of Canada.

If further information is required, please feel free to contact me or my doctors. Your consideration in this matter is greatly appreciated.

Paragraphs 1 to 6 of the Reply to Notice of Appeal read:

1. He admits that by Notification of Confirmation by the Minister dated November 8, 1995 that the Appellant was notified that his claims for non- refundable tax credits in respect of disability amounts in the 1988, 1989, 1990, 1991, 1992 and 1993 taxation years were denied.

2. He denies any other allegations of fact stated in the Notice of Appeal.

3. In computing taxes payable for the 1988, 1989, 1990, 1991, 1992 and 1993 taxation years, the Appellant claimed non-refundable tax credits in the amounts of $550.12, $556.24, $565.59, $700.06, $719.61 and $719.61 respectively in respect of disability amounts of $3,236.00 (ie: $3,236.00 x 17% $550.12), $3,272.00 (ie: $3,272.00 x 17% = $556.24), $3,327.00 (ie: $3,327.00 x 17% $565.59), $4,118.00 (ie: $4,118.00 x 17% $700.06), $4,233.00 (ie: $4,233.00 x 17% $719.61) and $4,233.00 (ie: $4,233.00 x 17% = $719.61) respectively.

4. In assessing the Appellant for the 1988, 1989, 1990, 1991, 1992 and 1993 taxation years, Notices of Assessment thereof dated June 13, 1989, May 8, 1990, July 2, 1991, June 23, 1992, May 31, 1993 and May 19, 1994 respectively, the Minister of National Revenue (the ‘Minister’) allowed the non- refundable tax credits in respect of a disability amount as claimed by the Appellant.

5. In reassessing the Appellant for the 1988, 1989, 1990, 1991, 1992 and 1993 taxation years, concurrent Notices of Reassessment thereof dated January 12, 1995, the Minister disallowed the non- refundable tax credits in respect of a disability amount.

6. In so reassessing the Appellant, the Minister made the following assumption of fact:

(a) in the 1988, 1989, 1990, 1991, 1992 and 1993 taxation years, the Appellant was not suffering from a severe and prolonged mental or physical impairment the effects of which were such that the ability of the Appellant to perform a basic activity of daily living was markedly restricted.

The appellant’s testimony-in-chief was very brief. He said he needed help to put on his socks and shoes. It is something he cannot do without assistance from his wife. Also he cannot walk without a cane. He was injured on September 23, 1987. At that time he was employed in the construction business as a labourer. He has been in receipt of workmen’s compensation since the accident. In cross-examination the appellant was asked about the disability tax credit certificate dated May 31, 1994 signed by his family physician Dr. R.S. Talangbayan. The doctor was asked these questions and gave these answers:

Part B Continued Yes No

1. Does your patient have a prolonged impairment?:

2. Does your patient have a severe impairment?

3. Do the effects of this impairment markedly restrict your patient’s ability to perform one or more basic activities of daily living, even with the use of appropriate aids, assistance, medication, or therapy?

4. Vision Is your patient legally blind (bilateral visual deficit or visual acuity of 20/200 or less after correction in best eye, or 20 degrees or less visual field in the best eye)?

5. Speaking Can your patient with or without medical devices speak so as to be understood in a quiet setting with another individual who knows your patient? If the answer is no, describe the assistance needed. Exclude language differences.

6. Hearing Is your patient deaf or hard of hearing to the extent that he or she, even with the use of aids, cannot hear so as to understand a spoken conversation in a quiet setting with another individual who knows the patient? If the answer is yes, please provide an audiogram for the year(s) being claimed.

7. Walking Can your patient walk 100 metres on level ground (1 block) without an aid or another person’s help? If the answer is no, please explain.

Can your patient walk 100 metres on level ground (1 block) with an aid? If the answer is yes, describe the aids or assistance used.

8. Bowel & bladder Does your patient have control of elimination? If the answer is no, describe the type of assistance needed and the frequency.

9. Feeding & dressing (a) Can your patient drink from a cup? (b) Can your patient use utensils to feed? (c) Can your patient dress upper body? (d) Can your patient dress lower body? If the answer to (a), (b), (c) or (d) is no, describe the type of assistance needed and the frequency.

10. Mental functions Is your patient able to perceive, think and remember? If no, can your patient: (a) do personal care (eating/dressing) without supervision? (b) manage personal affairs?

11. Other disabling impairments Please name, and attach pertinent medical information. [Spinal Stenosis Degenerative Disc Disease]

12. Having read the information on this form, in your opinion has your patient a prolonged impairment that is severe enough to markedly restrict all or almost all of the time, his or her ability to perform one or more basic activities of daily living, even with the use of appropriate aids?

The appellant was not present when the form was completed. He left it at Dr. Talangbayan’s office and picked it up the next day. The appellant challenged a number of the answers. He said that he sometimes drops cups (Q. 9(a)) because his right hand shakes. He has the same difficulty with utensils (Q. 9(b)). Rehabilitative therapy has been of no real assistance.

The appellant said the answer to Q. 9(c) about whether he could “dress lower body” is incorrect. His inability to dress the lower part of his body was worse at a time close to the accident. He could not then perform this function at all and he has difficulty now. With reference to the first answer under Q. 7 about whether the appellant could walk 100 metres on level ground without an aid or another person’s help the appellant said that Dr. Talangbayan had answered the questions on the form when the appellant was not there; that the doctor had said that he was confused; that he also said he could not remember and the doctor apologized to the appellant. The cross-examination concluded with this exchange between counsel for the respondent and the appellant:

Q. The next question in that section, section 7, Can your patient walk 100 metres on level ground, that’s one block, with an aid? Was that correct in 1991 to 1993?

A. I’ve always walked with a cane.

Q. So, you can’t walk without the cane.

A. No.

Q. You can walk with the cane.

A. Yes, I can walk with a cane but not for long.

Q. Can you walk for a block?

A. I can walk but I have to stop continuously. I have to stop continuously.

Q. Has your ability to walk deteriorated over time?

A. Certainly.

Q. How much worse is it now than it was in 1991?

A. As I’m repeating, when you are getting older it’s getting worse than before.

Q. Can you describe your house for us?

A. How is the house composed of?

Q. Yes. First of all, what I’m asking you about is the house that you lived in from 1991 to 1993.

A. It’s a bungalow.

Q. How many rooms in this bungalow?

A. Six.

Q. In 1991 to 1993 were you able to walk with the use of a cane from your bedroom to the kitchen?

A. With a cane, yes.

Q. And in 1991 to 1993 could you walk from the living room to the washroom in your house?

A. Always with a cane, yes.

Q. So, you could walk around your house, get around your home, with your cane?

A. Yes, always because they are little distance.

Q. I’d like to go back to the feeding and resting again very, very briefly. Have you looked into any aids at all that you can use to help you in feeding yourself and in dressing your lower body?

A. I tried everything but I can’t do anything.

Mr. Calabrese: I have no further questions, Your Honour.

The appellant placed in evidence as Exhibit A-l five documents. They are dated as indicated.

1. February 3, 1995: is a report on a CT Scan of the appellant’s lumbar spine. It was prepared by Dr. H. Grosman of the Department of Radiology and Diagnostic Imaging, Wellesley Hospital, Toronto. His findings are:

There appeared to be fairly accelerated degenerative changes in the posterior facet joints at L4-5 and LS-SI bilaterally. There were also changes of degenerative disc disease at every level, particularly LS-Sl.

There is bony encroachment of the right intervertabral foramen between L5 and SI. This may be causing some symptoms.

There is a congenitally small canal present, and with the bulging annulus at L4-5 and L3-4, there is relative acquired spinal stenosis at these two levels.

A CT myelogram may be helpful in sorting this out.

2. August 10, 1995: is a memorandum prepared by Dr. Talangbayan addressed to whom it may concern pertaining to the appellant. It reads:

This is to certify that the above-named patient has been totally disabled for any gainful employment since 1987 due to gradually deteriorating low back pain radiating to right leg.

Repeated CT scan of the lumbar spine on February 03, 1995 showed bulging annulus at L4-5 and L3-4, resulting spinal stenosis, bony encroachment of the right intervertebral foramen between LS and SI, and a fairly accelerated degenerative changes in the posterior facet joints at L4-5 and LS-Sl bilaterally. There were also changes of degenerative disc disease at every level, particularly LS-S 1.

Mr. Terrigno will be reassessed by Dr. Virgin, an orthopaedic surgeon, on September 05, 1995 for his worsening condition, and will possibly have to go for CT myelogram.

The prognosis is extremely poor, given the nature of his illness which is undoubtedly deteriorating with age.

3. September 12, 1995: is a letter to Dr. Talangbayan from Dr. W.J. Virgin that was dictated but not read by the sender. It reads:

Thank you for sending Nick Terrigno. I saw this patient some years ago, about the time of his accident in 1987. Thank you for your note about this patient and for the copy of the Wellesley Hospital report. He represents one of the more grossly disabled persons who have done construction over the years. Posterior facet joints show changes at L4-5 and LS—Sl with degenerative disc disease and there is DDD at every level of the lumbar spine, particularly LS-Sl. I adjusted his brace but I note that he had great difficulty rising from the chair using his cane. He also has some evidence of a small canal with bulging of the annulus at L4-5 and L3-4 with stenosis at these two levels. He does not have good sleep at all so I suggest that you try him on Elavil 50 mg at bedtime to see if this won’t let him rest better. If he rests better then he may get better but not better to the point where he could think of going back to work. He is now 59 years of age and I think his days in the labour field are totally finished.

4. January 9, 1996: a prescription form signed by Dr. Talangbayan

reads:

The above-named patient continues to be totally disabled from any gainful employment. At present he requires the assistance of another person when dressing up, as well as on ambulating.

5. March 11, 1996: is another disability tax credit certificate signed by Dr. Talangbayan. It reads:

Describe medical diagnosis relevant to the impairment and describe the restriction and aids used:

Lumbar Spinal Stenosis Lumbar DDD + bulging annulus Reactive depression; R shoulder O.R.

1. Vision Is your patient able to see, using corrective lenses if necessary? (Visual acuity of 20/200 or better in either eye, and 20 degrees or more visual field in the best eye, after correction.)

2. Walking Is your patient able to walk, using an aid if necessary? (For example, at least 50 metres on level ground.)

3. Speaking Is your patient able to speak so as to be understood in a quiet setting, using an aid if necessary? (Exclude language differences.)

4. Mental functions Is your patient able to think, perceive, and remember, using medication or therapy if necessary? (For example, can manage personal affairs or do personal care without supervision.)

5. Hearing Is your patient able to hear so as to understand a spoken conversation in a quiet setting, using an aid if necessary? (Exclude language differences)

6. Feeding and dressing (a) Is your patient able to feed himself/herself, using an aid if necessary? (b) Is your patient able to dress himself/herself, using an aid if necessary?

7. Elimination Is your patient able to control and personally manage bowel and bladder functions, using an aid if necessary? (For example, has uncomplicated ostomy or uses a catheter.)

8. Has the impairment lasted, or is it expected to last, for a continuous period of at least 12 months?

9. Is the impairment severe enough to restrict the basic activity of daily living identified above, all or almost all of the time, even with the use of appropriate aids, devices, medication, or therapy?

The only other witness to testify at trial was the appellant’s wife, Giuseppina Terrigno. Again, the evidence-in-chief was very terse. In answer to questions put by the appellant the witness said that she had to help him dress; that she has to cook for him and that she drives him when he goes for therapy. In cross-examination it was established that the appellant and his wife live at their daughter’s home. Both the daughter and the wife have full time employment. The appellant is left alone from 9 to 5 on working days. His lunch is prepared for him. Mrs. Terrigno has to help the appellant put his socks and pants on. Luxton v. R., [1996] 3 C.T.C. 2449 (T.C.C.), also involved claims for a disability tax credit. This is said in the reasons for judgment:

The nature of the relevant provisions of the Act indicate to me that the disposition of appeals involving claims for a disability tax credit must depend on their own particular facts. The onus is on the appellant to establish on a balance of probability that the reassessment is in error....

In Parsons v. R., [1996] 3 C.T.C. 2672 (T.C.C.), Bowie T.C.J. said with reference to subsections 118.3(1) and 118.4(1) that in order for a taxpayer to qualify for a disability tax credit he must meet rigorous requirements. “Parliament intended the deduction to be available only to individuals who suffer from the most extreme disabling conditions.” He went on to add: “I also agree with Judge Bowman’s opinion (in Lawlor) that the legislation should be interpreted ‘with a degree of compassion and understanding that achieves the objective of this section’.” The section referred to is section 118.4 of the Act.

To my mind the appellant has not met the “rigorous requirements” of the applicable legislation. With reference to Exhibit A-l these points are noted. While I accept the findings of Dr. Grosman they are of no significant assistance in determining these appeals. Dr. Talangbayan’s memo of August 10, 1995 refers to the appellant being totally disabled for gainful employment since 1987 and concludes that the prognosis is extremely poor. In his letter of September 12, 1995 Dr. Virgin refers to having seen the appellant about the time of his accident in 1987 and concludes: “He is now 59 years of age and I think his days in the labour field are totally finished”. Dr. Talangbayan’s note of January 9, 1996, speaks of the appellant being totally disabled from any gainful employment.

With reference to the last three mentioned documents it is to be borne in mind that under paragraph 118.4(1 )(d) of the Act the activity of working is expressly excluded as a basic activity of daily living.

The wording of the questions in the disability tax credit certificate signed by Dr. Talangbayan on May 31, 1994 are not the same throughout as the wording of the questions in the certificate signed by him on March 11, 1996. Nevertheless it will be seen that his answers about the basic activities of daily living pertaining to walking and feeding and dressing are contradictory to a considerable degree. These are the basic activities of daily living with which these appeals are concerned.

My conclusion on the whole of the evidence is that the appellant has not established on a balance of probabilities that the reassessments regarding 1991, 1992, 1993 are in error. It follows that these appeals cannot succeed.

The appeals for 1988, 1989, 1990 are allowed and these matters are referred back to the Minister for reconsideration and reassessment on the basis that the appellant is entitled to non-refundable tax credits in the amounts of $550.12, $556.24, $565.59, respectively. The appellant is entitled to no other relief. Appeal allowed in part.