McGaugh v. R., [1999] 2 CTC 2908

Bowman T.C.J. (orally):

This appeal is from an assessment for the 1995 taxation year whereby the Appellant was denied a medical expense credit for the cost of hardwood flooring and a vapour barrier as a medical expense under paragraph 118.2 of the Income Tax Act. Subsection 118.2(1) permits a credit for a percentage of an individual’s medical expenses computed in accordance with a formula set forth in that subsection.

Subsection 118.2(2) defines medical expenses for the purposes of Subsection (1). The relevant portion of that definition is found in paragraph

(1.2) as:

...an amount paid for reasonable expenses relating to renovations or alterations to a dwelling of a 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.

The facts are these: In 1986 to 1992 Mrs. McGaugh, a nurse, was employed at Camp Hill Hospital where she was exposed to chemical contaminants disseminated through the ventilation, heating and air conditioning system. Approximately 700 of the 1100 employees were affected, and today there are still about 90, including Mrs. McGaugh, who continue to suffer the disastrous effects of what appears to have been a human error in the insertion of anti-corrosive chemicals in the system. The hospital has since been demolished. The Province of Nova Scotia has accepted full responsibility for what can only be described as a major environmental disaster. For a period of time, Mrs. McGaugh received worker’s compensation payments and has been allowed a medical disability tax credit under Section 118.3 of the Income Tax Act. I mention this fact because the Appellant put some emphasis on it, but it is not determinative of the issue that must be decided here. It does however illustrate the long term and serious nature of her disability.

The medical effects of her disability, which were attributable to her exposure to the anti-corrosive chemicals, were pervasive and devastating and have affected profoundly, and continue to affect, every aspect of her life and that of her husband, who have courageously endeavoured to adjust their lives and deal with this debilitating medical problem. She wears a mask 90% of the time. In testifying she wore a cloth mask that resembles a surgical mask. During the testimony of her husband she put on a more elaborate device that resembled a gas mask of the type issued in Britain during the Second World War.

I shall endeavour to list some of the symptoms.

• sinus problems.

• pulmonary problems.

• gastro-intestinal problems.

• sores inside her mouth.

• difficulty in understanding conversation.

• inability to concentrate.

• mental confusion.

• inability to think or do simple mathematical applications (notwithstanding a high mathematical ability before the accident).

• extreme fatigue.

• deterioration of her immune system.

• severe muscle and joint pain.

• allergy to scented products, including perfumes and detergents.

• allergy to tobacco smoke.

• serious restrictions in the type of food she could eat. She had to find organically grown foods and foods, including meat and eggs, with no chemical additives.

• skin irritations.

I mention these. There may be others.

She consulted a physician, Dr. Roy Fox, a specialist in environmental diseases with the Environmental Health Clinic in Nova Scotia. He prescribed the alterations of her house that are in issue in this appeal. Although Dr. Fox was not called as a witness, I allowed his two letters in evidence on the basis of the decision of the Federal Court of Appeal in Ainsley v. R. (May 26, 1997), Doc. A-610-96 (Fed. C.A.). Dr. Fox’s letters read as follows -- the first letter is dated February 13th, 1997:

To Whom It May Concern: Re: Darlene McGaugh.

I am writing on behalf of this patient who has been seen in consultation at the Environmental Health Centre. This patient became extremely ill working at Camp Hill Hospital with environmental illness. This illness is manifest by respiratory problems with reactive airways disease, as well as immune dysfunction and heightened sensitivity or allergies to a wide variety of environmental triggers including dust, mould, pollens and chemicals. As a result of these problems, we made specific recommendations to her, which included purchasing and installing an air filter to the efficiency of a Hepa Filter, as well as re- moving chemicals. In addition, to reduce the dust and dust mite population, to remove all carpeting and to install hardwood flooring. Because of this patient’s mould sensitivities and the problem with mould contamination in her house, we advised her that her house needed to be assessed properly and remedial action to include installation of a vapour barrier to prevent mould build-up and to improve the air quality within the home.

I wish to emphasize that these changes were medically prescribed. I have reviewed the income tax act and note appendix part LVl l sub-section C. 1 would cover the requirement for the provision of the air filtration. I note that further on page 14 of your document IT-519R under new paragraph 38 and under new paragraph 56 should cover the cost of renovations etc. 1 wish to emphasize that the renovations and alterations were done because the person had a severe and prolonged impairment of normal function, in that they were unable to tolerate most environments outside the home and needed to live within an extremely clean environment. When the air quality was improved, the patient improved and became more mobile and more independent at home. Yours sincerely, Roy A. Fox.

His second letter is shorter. It’s dated March 3rd, 1999 and it says:

To Whom It May Concern: Re: Darlene McGaugh.

This lady has environmental sensitivities. In order for her to be able to function independently at home and look after herself, I prescribed in October of 1994 that she remove the carpets from her house and replace them with hardwood floors, and that she purchase a vapor barrier to ensure that she has clean air. If you require further information, please let me know. Yours sincerely, Roy A. Fox.

Originally Mr. and Mrs. McGaugh constructed a “safe room” in the top story of the house. It had hardwood floors, and all carpets were removed. Walking on broadloom carpets released chemicals that brought on some or all of the symptoms described above.

Being confined to one room on the top floor for most of the time was unacceptable and on the basis of Dr. Fox’s advice all broadloom was replaced and hardwood flooring was installed throughout the house except where ceramic tile was installed.

Also, the family house was built on open earth and the mould from under the house brought on the same allergic reactions. A vapour barrier, consisting of plastic, gravel, another layer of plastic and a layer of styrofoam, was installed in the crawl space under the house. This was described by Robin Barrett, Chief Consultant with an organization “Healthy Homes.” His letter, which was adduced in evidence, reads - it’s dated March 2, 1999:

Attention: Ms. Darlene McGaugh.

The isolation of the mould under a house requires an airtight barrier. This is due to the fact that air currents in a building rise from the lowest to the highest level drawing pollutants from below a building into the house. (In building science this is known as the ‘Stack Effect’.) The mould spores are transported form the earth on these rising air currents.

Providing an appropriate barrier to isolate the home from moulds commonly found in the ground can be done in a number of ways, but the two most common are:

1. Excavate under the home and put a proper foundation under it, or,

2. Create a barrier between the soil and the home which prevents the movement of pollutants (mould from the soil) into the house. This is commonly done with a vapour barrier.

The sole benefit of the second method is that it separates what is under the house from the building and its occupants. The first method is effective and also increases the useable space in the house. Both methods have been recommended by research published by Canada Mortgage and Housing Corporation (CMHC).

If moulds under a home are a problem, the most cost effective way to prevent them from entering the home is to seal the ground or the base of the home with an airtight membrane such as a vapour barrier. Sincerely, Robin Barrett, Chief Consultant, Healthy Homes Consulting.

I find as a fact that the installation of the hardwood flooring and the vapour barrier was a direct result of Mrs. McGaugh’s medical condition and would not have been done had it not been necessary to counteract that condition.

The cost of these installations was as follows:

These costs are not disputed. The cost of an air filter of 721.50 was accepted by the Department of National Revenue at an earlier stage and is not in issue.

The question is a narrow one: Was the installation of the hardwood flooring a reasonable expense relating to renovations or alterations of a dwelling of Mrs. McGaugh who

had a severe and prolonged mobility impairment

to enable her to be

mobile or functional within the dwelling.

The reasonableness is not questioned; nor is the fact that Mrs. McGaugh had a severe and prolonged impairment. Was that impairment a “mobility” impairment. Of course it was. She could not move about the house so long as it had broadloom and had mould spores in it. She had to remain confined in a room on the third floor. It is difficult to conceive of a more apt way to describe her impairment than a mobility impairment. In order to be able to move about the house and function in it, or in French “accomplir les tâches de la vie quotidienne” the installations were necessary.

This case is virtually identical to that decided by my colleague Rip J. in Williams v. R., [1998] 1 C.T.C. 2813 (T.C.C.) where the Appellant who, as it happened, suffered the same medical problem as that of Mrs. McGaugh as the result of precisely the same environmental disaster at Camp Hill Medical Centre. On the advice of Dr. Fox she installed hardwood flooring in her home. Judge Rip allowed her appeal and said at page 2819:

In the appeal at bar it is clear to me that Ms. Williams’ mobility permitting her to perform daily activities in her home in 1994 was severely restricted and that the installation of hardwood flooring was necessary to enable her to be mobile and functional within her home as to perform a daily activity within that dwelling, that is to walk from room to room with relative ease within the house; she should be able to /ive in the house. Accordingly, in my view, the expenses relating to the acquisition and installation of the hardwood flooring ought to be allowed.

I am in complete agreement with his reasoning and his conclusion.

The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the cost of the hardwood flooring and the vapour barrier are medical expenses within the meaning of Section 118.2 of the Income Tax Act in respect of which she is entitled to the medical expense credit under that section.

The Appellant is entitled to her costs.

Appeal allowed.