Totten v. The Queen

Totten v. The Queen Court (s) Database Tax Court of Canada Judgments Date 2003-07-28 Neutral citation 2003 TCC 457 File numbers 2002-3348(IT)I Judges and Taxing Officers Campbell J. Miller Subjects Income Tax Act Decision Content Citation: 2003TCC457 Date: 20030728 Docket: 2002-3348(IT)I BETWEEN: JAMES D. TOTTEN, Appellant, and HER MAJESTY THE QUEEN, Respondent. ____________________________________________________________________ For the Appellant: The Appellant himself Counsel for the Respondent: Anne Jinnouchi ____________________________________________________________________ REASONS FOR JUDGMENT (Delivered orally from the Bench at Calgary, Alberta, on May 28, 2003) Miller J. [1] Mr. James Totten appeals by way of informal procedure, the assessment of his 2000 taxation year by the Minister of National Revenue (the Minister), in which the Minister denied a medical expense of $15,125. This amount was incurred as part of the construction of Mr. Totten's principal residence to accommodate Mr. Totten's requirements arising from the progressive degenerative disease of multiple sclerosis (MS). Mr. Totten maintains the expenses qualify pursuant to paragraph 118.2(2)(l.21), of the Income Tax Act (the Act). The Minister maintains they do not. [2] At the outset, I wish to comment that Mr. Totten presented as a thoroughly reasonable, sincere, credible individual who has been afflicted by a devastating disease and is dealing with it with commendable courage and strength. He left me with the impression that he was painting as accurate a picture as possible of the situation, even when it was evident his responses might be construed as being in the Respondent's favour. [3] In March 1992, Mr. Totten experienced some neurological symptoms causing him to see his family doctor. The doctor made an early diagnosis of probable MS. Upon referral in 1993 to Dr. Sanat Mukherjee, a neurologist, he determined that should his symptoms continue, a diagnosis of MS could be considered. His symptoms did, indeed, continue. By December 1995, Dr. Mukherjee determined the brain lesions were more numerous and a diagnosis of MS was confirmed. For three years, Mr. Totten sought treatment both from the medical profession, as well as through homeopathic therapy. As he put it, he believed he could defeat the disease through sheer willpower. Regrettably, that was not meant to be. The neurologist advised in 2000 he had to adopt a more aggressive treatment, which meant taking the drug beta interferon, a drug which could produce some harsh side effects. Mr. Totten described his feelings at this point as losing the battle for his body and, therefore, he accepted the more aggressive treatment. [4] During 2000, he was working with a builder to build a new home. It was apparent to him, from his physician's advice, from the MS Society, from other patients with MS, and from his extensive reading, that modifications were required in the home. His family doctor wrote in August of 2000 on a prescription form: James has been diagnosed with progressive multiple sclerosis. It is expected he will need to incorporate wheelchair access and other lifestyle modifying aids in his home. After an acute adverse drug reaction in early 2001, Dr. William Murphy, a neurologist, wrote: Mr. Totten has a chronic neurological disease which will require some physical adjustments within his home. [5] By the summer of 2001, tests proved more than 50 brain lesions despite the treatment Mr. Totten was undergoing. Dr. Murphy ordered Mr. Totten to be put on maximum dosages of interferon. Dr. Murphy later confirmed Mr. Totten has a severe neurological disease that will not improve with time resulting in prolonged mobility impairment. [6] Construction of the new home continued throughout 2001 and Mr. Totten moved in, in 2002. In 2002, Mr. Totten's family doctor confirmed the need for air conditioning and also handicapped toilets and issued prescriptions for those aids. [7] While Mr. Totten was able to walk in 2000, 2001 and 2002 he would progressively require some assistance, either with a cane, handrails, or personal support. He indicated the disease has affected his optic nerves. His balance was impaired - even in the old residence, that is before his move in 2002. He had fallen downstairs several times, as well as falling in the bathtub. [8] The nature of the expenses at issue is as follows: Wider passage doors $1,680 Design and construction of an elevator shaft $6,400 Dugout to create walk-out access in the basement $3,400 Wider stairs $ 115 Air-conditioning unit rough-in $ 815 Window size for egress and viewing $1,480 Appropriate kitchen and vanity design $1,235 [9] With respect to the elevator shaft, Mr. Totten consulted with Otis Elevator and arrived at the most functional and appropriate design. Mr. Totten suggested the wider doors and stairs, the basement access, air conditioning, the window adjustments, and the kitchen and vanity adjustments were all of immediate benefit to him when he moved in 2002. [10] Mr. Totten argued most eloquently and passionately about his eligibility for these expenses to be considered medical expenses. He addressed each of the requirements of paragraph 118.2(2)(l.21) as follows. [11] Firstly, with respect to the requirement that he lacks normal physical development, he pointed to the copies of the scans, which indicated the many white lesions. This is not the normal physical development of the brain. It is a disease which Mr. Totten defined as a deviation of the body from health or normality. [12] Secondly, with respect to the requirement of a severe and prolonged mobility impairment, he recognized that if he lacked normal physical development, he would not have to prove the severe prolonged impairment, but he argued he could qualify under either heading. [13] He referred to Dr. Murphy's prognosis that his disease will not improve with time, resulting in prolonged mobility impairment. He also relied on his family doctors' reports confirming that he falls on a regular basis and another time confirming that he demonstrates gait instability. [14] With respect to the requirement that the costs were incurred to enable access, mobility, or functionality, Mr. Totten posed the simple question: What other possible purpose could I have had? Mr. Totten pointed out that several expenses were not claimed. For example, no thresholds between rooms, hardwood or tile floors, extra railings, glass deck railings and additional washrooms. [15] Counsel for the Respondent indicated there were only two requirements from paragraph 118.2(2)(l.21) that were at issue. First, whether Mr. Totten either lacks normal physical development or has a severe and prolonged mobility impairment. Second, whether the costs at issue were, indeed, incremental costs incurred to enable him to gain access to or to be mobile or functional within the home. [16] With respect to the severe and prolonged mobility impairment, the argument was that in 2000 and, indeed, in 2002 when Mr. Totten moved into his new residence, he could still walk, albeit, occasionally with help. This was not the level of impairment to which the section was aimed. [17] Further, with respect to the lack of normal physical development, notwithstanding comments from both Russell v. Canada[1] and Motkoski v. Canada,[2] Respondent's counsel suggested that the onslaught of MS was not a lack of normal physical development. [18] In connection with the issue of incremental costs to enable access, mobility, or functionality, Crown counsel argued that the requirement the costs be incremental meant that they must pertain to Mr. Totten's ability at that time. If he could access a property or be mobile or functional within the dwelling without those costs, then they should not be considered incremental costs. She argued that as the costs related to possible future needs, such costs could not be construed as incremental costs. [19] In analyzing the situation, it is appropriate to set out the legislation at issue. Section 118.2(1) reads, in part: 118.2(1)For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted an amount determined by the formula A(B - C) - D where A is the appropriate percentage for the year; B is the total of the individual's medical expenses ... (b) ... within any period of 12 months ending in the year; [20] Paragraph 118.2(2)(l.21) reads: 118.2(2) ... a medical expense of an individual is an amount paid ... 118.2(2)(l.21) for reasonable expenses, relating to the construction of the principal place of residence of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, that can reasonably be considered to be incremental costs incurred to enable the patient to gain access to, or to be mobile or functional within, the patient's principal place of residence. That is the legislation we are dealing with. So there are a number of requirements. [21] First, the expenses must be paid within any period of 12 months ending in the year. That condition is met. Second, the expenses must be reasonable. Again, there is no dispute on that point. Third, the expenses must relate to the construction of Mr. Totten's principal residence. Again, that condition is met. Fourth, the expenses must be those of a patient who either lacks normal physical development or has a severe and prolonged mobility impairment. [22] In addressing this requirement, I repeat comments that I made in Motkoski[3] where I agreed with Judge Hershfield's view in Russell[4] that there is no legal or medical definition of normal physical development. It should be given a liberal, large meaning. Further, in dealing with medical expenses generally, the Court should give the most equitable and large interpretation compatible with the attainment of the legislation's object. Is it the object of the medical expense provisions to permit someone like Mr. Totten, with a severe debilitating disease such as MS, to deduct reasonable expenses incurred on a timely basis to cope with the progressive deterioration in his body? Yes, absolutely. I have no hesitation in finding that lesions on the brain are a physical problem. Development of an organ cannot be limited to only the early stages of life. As long as we live, our brain is progressing down a path that we all hope will be normal. The development of lesions on the brain is not normal. I find as a fact that Mr. Totten lacked normal physical development. It is unnecessary, therefore, for me to consider the second arm of the fourth requirement - that is, whether he has a severe and prolonged mobility impairment. [23] I turn then to the final requirement - were those costs "incremental costs incurred to enable Mr. Totten to gain access to or be mobile or functional in his home"? That is the crux of this case. [24] Counsel for the Minister argued that the significance of the word incremental in paragraph 118.2(2)(l.21) had to do with the state of the patient's immediate requirements. That is, there was only an incremental cost if it pertained to the incremental needs of the patient at that time. The word had to be read in the context of cost to enable access mobility or functionality. She pointed out that there was no reference in paragraph (l.2), a section that deals with renovations or alterations to a home, as some proof of this interpretation. Frankly, I do not follow that reasoning. Incremental means relating to an increase, an addition, or augmentation. This suggests to me that incremental adds the element of additional cost over some standard cost. So, by way of example, in building a new home, there will always be a front doorway and a range of cost for such a standard doorway. The cost of building a doorway that is wider with special handrails and perhaps a ramp leading up to it would be additional costs or incremental costs, which costs could presumably readily be identified by contractors in contrast to the standard doorway cost. This is what I take to mean incremental. Without that word, any doorway would qualify as a cost to enable the patient to gain access. So why is the term incremental not used in the section dealing with renovations, could be the Crown's argument. I would suggest because, again, following the doorway example, with a renovation, the doorway is already there. Any cost to renovate is by its very nature an additional cost. The situation of an alteration to an existing residence does not demand the "incremental" adjective for that provision to work. But starting from scratch with the construction of a new home does require the use of the term incremental. [25] Viewed in this light, are the costs in issue incremental costs? They certainly are. Are they incurred to enable access, mobility, and functionality? I interpret the Crown's argument that because the issues of access, mobility, and functionality are more future requirements than immediate requirements, the costs do not qualify. This is too restrictive an interpretation in which provisions are to be interpreted liberally and compassionately. The words "to enable the patient to gain access to or be mobile or functional in" go to the purpose for which the costs are incurred. I agree fully with Mr. Totten. Why else did he incur those costs? For the very reason laid out in the legislation. He knows, his doctors know, other MS patients know the inevitability of this disease. To interpret this provision so restrictively as to deny someone like Mr. Totten with the foresight and brutal reality of his condition a deduction of expenses legitimately incurred to deal with that condition is to deny the very object of these medical expenses. It would lead to the absurd result that Mr. Totten would have to wait until his disease totally crippled him and then incur much greater expenses for alterations. No. The legislation is not to be read in that manner. Mr. Totten's purpose in incurring those costs was to enable access, mobility, or functionality that would, based on all the medical evidence he received, arise due to the ravages of his disease. This qualifies those expenses as medical expenses. [26] Having made that finding, and although unnecessary, I wish to add that, apart from the elevator shaft, I am satisfied that all expenses went to Mr. Totten's immediate needs for functionality within the home. [27] I allow the appeal and refer the matter back to the Minister for reconsideration and reassessment on the basis that Mr. Totten is entitled to the additional $15,125 as medical expenses in the 2000 taxation year. I also award costs to Mr. Totten of $200 for any and all incidental disbursements incurred by him in pursuing his appeal. Signed at Ottawa, Canada, this 28th day of July, 2003. "Campbell J. Miller" Miller J. CITATION: 2003TCC457 COURT FILE NO.: 2002-3348(IT)I STYLE OF CAUSE: James D. Totten and Her Majesty the Queen PLACE OF HEARING Calgary, Alberta DATE OF HEARING May 27, 2003 REASONS FOR JUDGMENT BY: The Honourable Judge Campbell J. Miller DATE OF JUDGMENT June 5, 2003 APPEARANCES: For the Appellant: The Appellant himself Counsel for the Respondent: Anne Jinnouchi COUNSEL OF RECORD: For the Appellant: Name: N/A Firm: N/A For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada [1] [2001] T.C.J. No. 442. [2] [2003] T.C.J. No. 82. [3] supra. [4] surpa.