[1] The respondent Rhonda Ray suffers from myalgic encephalomyelitis, chronic fatigue and immune dysfunction syndrome, multiple chemical sensitivity, and fibromyalgia. To treat those conditions, her physicians prescribed vitamins, herbs, organic and natural foods, and bottled water. In 1999, Ms. Ray spent $6,555 for those substances, and she claimed a medical expense tax credit for those expenditures. Her claim was disallowed, but she appealed successfully to the Tax Court under the Tax Court of Canada Rules (Informal Procedure), SOR/90-688): Ray v. Canada, [2002] T.C.J. No. 500 (QL). The Crown has applied for judicial review of that decision.

[2] Ms. Ray's claim for the medical expense tax credit is based on paragraph 118.2(2)(n) of the Income Tax Act, R.S.C. 1985, c. 1 (5^th supp), which reads as follows:

(2) For the purposes of subsection 118.2(1), a medical expense of an individual is an amount paid

...

(2) Pour l'application du paragraphe (1), les frais médicaux d'un particulier sont les frais payés:

...

(n) for drugs, medicaments or other preparations or substances (other than those described in paragraph 118.2(2)(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 ...

n) pour les médicaments, les produits pharmaceutiques et les autres préparations ou substances -- sauf s'ils sont déjà visés à l'alinéa k) -- qui sont, d'une part, fabriqués, vendus ou offerts pour servir au diagnostic, au traitement ou à la prévention d'une maladie, d'une affection, d'un état physique anormal ou de leurs symptômes ou en vue de rétablir, de corriger ou de modifier une fonction organique et, d'autre part, achetés afin d'être utilisés par le particulier, par son époux ou conjoint de fait ou par une personne à charge visée à l'alinéa a), sur ordonnance d'un médecin ou d'un dentiste, et enregistrés par un pharmacien ...

[3] The heart of the decision of the Tax Court Judge is found at paragraphs 16, 17, 18 and 22 of his reasons:

[16] In the case at hand, the facts and evidence sufficiently establish that the items in issue, organic foods and bottled water, are "medications" falling under 118.2(2) because without them, the Appellant would be robbed of being a functioning and productive member of society. To quote Judge Teskey [in Frank v. Canada, [2001] T.C.J. No. 416 (QL)], the items are "required to sustain the life of the Appellant".

[17] In any event, the medications in the case at hand, prescribed by a doctor and purchased outside of a pharmacy, cannot possibly be recorded by a pharmacist. This impossibility leads me to conclude that requirement is not necessary for items that have been prescribed by doctors and which truly cure the patient and render him or her capable of living a normal life again.

[18] Going back to Judge Teskey's question in Frank, "Can I ignore 'as recorded by a pharmacist'", I would answer that question with a "yes". I qualify that "yes" with that this can only occur in very special circumstances. ...

. . .

[22] My answer to the question, "Can I ignore 'recorded by a pharmacist'" was "yes" but I qualified that "yes". Specifically, my qualification mirrors that of Judge Miller in [Pagnotta v. Canada, [2001] T.C.J. No. 582 (QL)] at paragraph 30:

I wish to be clear that this is not intended to be an open invitation to taxpayers whose lifestyle includes a regimen of vitamins to rely on paragraph 118.2(2)(n) for obtaining a credit on the basis that such costs constitute medical expenses. This is limited to the rare situation of a taxpayer suffering severe medical problems, attempting to relieve those problems through a variety of treatments recommended by a number of medical practitioners.

[4] The basis of the Crown's application for judicial review is that the Tax Court Judge erred in his interpretation of the phrase "as recorded by a pharmacist" in paragraph 118.2(2)(n). The Crown argues that those words limit the scope of paragraph 118.2(2)(n) to substances dispensed by a pharmacist under the legally mandated procedure for prescription drugs, which requires the keeping of certain records. If the Crown is correct, Ms. Ray is not entitled to the tax relief claimed, because all of the substances in issue were purchased off the shelf.

[5] The legal issue in this case has been considered many times by the Tax Court. In all of those cases, except the one now under review, the phrase "as recorded by a pharmacist" was considered to be an essential element of paragraph 118.2(2)(n): see Poesiat Canada, [2003] T.C.J. No. 503 (QL); Lajeunesse-Lebel v. Canada, [2002] T.C.J. No. 46 (QL); Claussen Estate v. Canada, [2003] T.C.J. No. 15 (QL); Bekker v. Canada, [2002] T.C.J. No. 670 (QL); Lundrigan v. Canada, [2002] T.C.J. No. 160 (QL); Melnychuk v. Canada, [2002] T.C.J. No. 84 (QL); Noaille v. Canada, [2001] T.C.J. No. 603 (QL); Bishoff v. Canada, [2001] T.C.J. No. 597 (QL); Mauro v. Canada, [2001] T.C.J. No. 415 (QL); Banman v. Canada, [2001] T.C.J. No. 111 (QL); Mantha v. Canada, [1999] T.C.J. No. 500 (QL); Williams v. Canada, [1997] T.C.J. No. 1346 (QL); Mongillo v. Canada, [1994] T.C.J. No. 831 (QL).

[6] To similar effect is the following obiter dictum in the decision of Justice Rothstein, speaking for the Court in Dunn v. Canada, [2002] F.C.J. No. 1816 (QL), at paragraph 6:

[6] Although we do not need to decide the point, it would appear that the requirement that medications be recorded by a pharmacist may be to limit the entitlement to payments for medications that are only available upon prescription as opposed to over the counter or other medications. In this case the Tax Court Judge found that the medications provided were not available through regular pharmacies or other medical supply sources and upon our review of the record, it is certainly not obvious that the medications prescribed were prescription drugs.

[7] Even in Pagnotta and Frank, the two cases cited in the quoted portion of the Tax Court decision under review, the phrase "as recorded by a pharmacist" was held to be an essential element of paragraph 118.2(2)(n). However, in those cases the recording requirement was held to be satisfied by pharmacist's sales slips or invoices.

Standard of Review

[8] Counsel for Ms. Ray argues that this Court should defer to the interpretation of paragraph 118.2(2)(n) adopted by the Tax Court Judge because the Tax Court is a tribunal with special expertise in income tax law, and because the decision under review was rendered under the informal procedure. This Court has rejected similar submissions in at least two cases. The most recent is Her Majesty the Queen v. Potash Corporation of Saskatchewan, 2003 FCA 471, in which Justice Malone, writing for the Court, said this at paragraph 17:

[17] PCS argues that the expertise of the Tax Court of Canada in matters of income tax law justifies deference to the Tax Court on such questions, including the interpretation of the Act. This argument is based on the pragmatic and functional approach to the determination of standard of review of administrative decisions, as developed in a line of cases that includes Pushpanathan v. Canada, [1998] 1 S.C.R. 982, Law Society of New Brunswick v. Ryan, 2003 SCC 20 and Dr. Q v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19. I must reject this argument. The Tax Court of Canada is not an administrative tribunal. It is a court of record pursuant to section 3 of the Tax Court of Canada Act, R.S.C. 1985, c. T-2 (a superior court of record since July 2, 2003, the date of the coming into force of section 60 of the Courts Administration Service Act, S.C. 2002, c. 80). The Supreme Court of Canada, in its many discussions on the question of standard of review, has never suggested that the pragmatic and functional approach applies to appeals from trial courts.

[9] The other case is Jastrebski v. Canada (C.A.), [1994] 3 F.C. 466, in which Justice Linden, writing for the Court, said this at paragraphs 16 and 17 [my emphasis]:

[16] Section 18.24 [of the Tax Court of Canada Act] grants this Court the power to review these informal Tax Court decisions on the same basis as it reviews the decisions of other federal boards, commissions or other tribunals, the grounds of which include where they "erred in law in making the decision." While there may be reasons for treating questions other than errors of law differently, I can see no reason to limit the scope of review in cases such as this. No legislative direction requires us to do so. There is no policy which should impel this Court on legal questions to differentiate the standard of review for the Tax Court in cases that are appealed after a regular trial from those which seek review after employing the informal procedure. Quite the contrary; it seems to me that the standard of review should be the same, unless strong reasons exist for adopting a different approach.

[17] The legal issues involved in both situations of review are the same, the decision-making body being appealed from is the same and the supervising court is the same. The only difference is the new informal procedure. Whereas it might make sense in some situations, in cases such as these, it would make no sense to have two different standards of review, depending only on the procedure utilized. The legislation being interpreted in these cases is tax legislation, where consistency is particularly necessary. This Court could not allow conflicting decisions of Tax Court judges under the informal procedure on matters of law to stand, even though the legislation indicates that such decisions are not to be "treated as a precedent for any other case." (See section 18.28 [as enacted idem], Tax Court of Canada Act.) The doctrine of curial deference should not be employed to achieve such a dysfunctional result. Correctness, therefore, is the standard of review to be applied in cases where the informal procedure has been employed in the Tax Court, where the basis for the complaint is error of law.

[10] The Supreme Court of Canada has rendered many decisions dealing with the standard of review in different contexts. Some of those decisions came after Jastrebski. I do not propose to comment on those cases. However, I am satisfied from reviewing them that they cast no doubt on the proposition from Jastrebski that decisions of the Tax Court on questions of law are to be reviewed on the standard of correctness, regardless of the procedure under which the decision was made. It follows that the decision under review in this case cannot stand if it is wrong in law.

Meaning of the words "recorded by a pharmacist"

[11] In my view, the Tax Court Judge erred in law when he concluded that the words "as recorded by a pharmacist' in paragraph 118.2(2)(n) could be ignored. I understand why he felt that those words represented an unjustifiable impediment to tax relief for Ms. Ray. Like the Tax Court Judge, I sympathize with Ms. Ray. However, it is not open to this Court, or the Tax Court, to disregard statutory requirements imposed by Parliament, even if they are difficult to rationalize on policy grounds. It is for Parliament alone to determine whether the words "as recorded by a pharmacist" should be removed from paragraph 118.2(2)(n).

[12] In my view, it is reasonable to infer that the recording requirement in paragraph 118.2(2)(n) is intended to ensure that tax relief is not available for the cost of medications purchased off the shelf. There are laws throughout Canada that govern the practice of pharmacy. Although the laws are not identical for each province and territory, they have common features. Generally, they prohibit a pharmacist from dispensing certain medications without a medical prescription, and they describe the records that a pharmacist is required to keep for medications dispensed by prescription, including information that identifies the prescribing person and the patient. There is no evidence that pharmacists anywhere in Canada are required to keep such records for the substances in issue in this case.

[13] I cannot accept the suggestion that, in the case of a medication that is prescribed by a physician but is purchased at a pharmacy off the shelf, a sales slip or invoice from the pharmacist would be a sufficient "recording" to meet the statutory requirement. A record in that form cannot meet the apparent function of the recording requirement. There must be a record kept by the pharmacist in his or her capacity as pharmacist. That necessarily excludes substances, however useful or beneficial, that are purchased off the shelf.

[14] Nor do I think it relevant to the interpretation of paragraph 118.2(2)(n) that a physician may dispense prescription medicines, and even sell them, without breaching any legislation applicable to pharmacists. It appears that a patient who purchases prescription medications from a physician may not be entitled to a medical expense tax credit because there would be no recording by a pharmacist: see Dunn (cited above). Some may consider that to be an unfair or inappropriate result. Perhaps it is, but that cannot justify an interpretation of paragraph 118.2(2)(n) that ignores the words "as recorded by a pharmacist".

[15] Counsel for Ms. Ray has cited Gibson v. Canada, [2001] F.C.J. No. 1758 (QL) (F.C.A.) and Hamilton v. Canada, [2002] F.C.J. No. 422 (QL) (F.C.A.), two decisions of this Court that adopted the "compassionate construction" of the medical expense and disability tax credit provisions of the Income Tax Act. Both of those cases involved statutory provisions that expressly or by necessary implication required a factual determination of the degree to which a person was affected by a particular illness or physical disability. The Tax Court Judge in this case has interpreted paragraph 118.2(2)(n) as though the application of its closing words, "as recorded by a pharmacist", may vary depending on the severity of the patient's condition, so that if the condition is sufficiently severe, the words may disappear altogether. He has, in effect, added an extra-statutory condition to paragraph 118.2(2)(n). Neither Gibson nor Hamilton mandates such an approach.

Conclusion

[16] I conclude that Ms. Ray is not entitled to a tax credit for the $6,555 she paid in 1999 for vitamins, herbs, organic and natural foods, and bottled water. The Crown's application for judicial review should be allowed, the judgment of the Tax Court should be set aside, and this matter should be remitted to the Tax Court for judgment in accordance with these reasons. Despite the success of the Crown's application, Ms. Ray is entitled to her reasonable and proper costs of this application pursuant to section 18.25 of the Tax Court of Canada Act.

______________________________

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-593-02

STYLE OF CAUSE: Her Majesty The Queen v. Rhonda Ray

PLACE OF HEARING: Toronto, Ontario

DATE OF HEARING: December 16, 2003

REASONS FOR JUDGMENT: Sharlow J.A.

CONCURRED IN BY: Stone J.A.

Sexton J.A.

DATED: January 5, 2004

APPEARANCES:

Ms. Catherine Letellier de St. Just

Mr. Joel Oliphant

FOR THE APPLICANT

Mr. John Legge

Mr. William Sharpe FOR THE RESPONDENT

SOLICITORS OF RECORD:

Catherine Letellier de St. Just

Joel Oliphant

Toronto, Ont.

FOR THE APPLICANT

Mr. John Legge

Toronto, Ont. FOR THE RESPONDENT

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