Date: 20000530
Docket: 1999-3017-IT-I
BETWEEN:
BRIAN M. HILLIER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowman, A.C.J.
[1] This appeal is from an assessment for the appellant's 1997 taxation year. The sole issue is whether the amount of $29,949 claimed by the appellant qualifies as a medical expense within the meaning of subsection 118.2(2) of the Income Tax Act. The specific provision under which the appellant claims the amount is paragraph 118.2(2)(l.2) which reads:
(l.2) for reasonable expenses relating to renovations or alterations to a dwelling of the 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 French version reads:
l.2) pour les frais raisonnables afférents à des rénovations ou transformations apportées à l'habitation du particulier, de son conjoint ou d'une personne à charge visée à l'alinéa a) — ne jouissant pas d'un développement physique normal ou ayant un handicap moteur grave et prolongé — pour lui permettre d'avoir accès à son habitation, de s'y déplacer ou d'y accomplir les tâches de la vie quotidienne.
[2] The facts and the quantum of the deduction are not in dispute. The appellant, a chartered accountant, has a daughter, Lauren, now 8 years of age, who suffers from a serious medical condition, Pervasive Development Disorder. When she turned two, she started to experience extreme bouts of discomfort, and writhed in agony on the floor. She experienced respiratory problems. She was (and still is) unable to talk. She could not feed herself. She had a tendency to bite family members.
[3] Her condition is adequately described in a letter of September 23, 1996 from Dr. Roy Fox of Dalhousie University to the Superintendent of the District School Board in Sydney.
This child is a patient of the Environmental Health Clinic. She has been under treatment for some time. I am sure you are well aware of her neurological dysfunction. She has been diagnosed as Pervasive Developmental Disorder at the Izaak Walton Killam Hospital. In addition to this problem, Lauren appears to have widespread sensitivity to a variety of triggers. She has been tested in the Environmental Health Clinic here, as well as in Doris Rapp's office in Buffalo, New York. Testing has revealed sensitivity to foods, mould, inhalants and pollens. Her home environment has been improved, which has allowed her to function at a slightly higher level. She is now undergoing desensitisation treatment, which I am hopeful will allow this child to function at a higher level.
Lauren presents an extremely complex case; there is no doubt in my mind that when exposed to ambient concentrations of chemicals which others can tolerate, Lauren's ability to function deteriorates. She develops imbalance and loss of postural control, she becomes more aggressive and unable to concentrate. For this reason, she will need a special environment in which to learn. She will need a controlled environment, which the family are very familiar with, which will allow her to function at an optimal level. I hope this helps in your decisions about Lauren.
[4] The result was that the appellant was obliged to sell his existing house and build a new one that was free of the environmental and other problems that caused Lauren's condition. Among other things, the house had to be free of formaldehyde, a component of the resins in plywood and glues. The floor had to be ceramic or hardwood, the countertops had to be ceramic tiles. A special HEPA (High Efficiency Particulate Arresting) air filter system had to be installed.
[5] Any substances that created or contained mould, as well as any chemicals or paints had to be avoided. A special classroom had to be built for Lauren, and the school board sent the teacher to her home.
[6] In a letter to the tax authorities, Mr. Hillier described the home as follows:
Modifications to Home:
My daughter "Lauren Hillier" has been diagnosed with Pervasive Development Disorder resulting from problems with her autoimmune system. The resulting impact of this disorder is that Lauren cannot function for an extended period of time outside of a controlled environment.
As a result of the above condition, we were told by Lauren's Doctors that she must be provided with a specially constructed home meeting very exacting specifications. As per these instructions, and in consultation with Robin Barret, P.Eng., of HiQ Developments Limited, we constructed a home for Lauren.
Some of the features of the home are as follows:
* No man-made wood products i.e., plywood, chip board, etc.
* No man-made flooring products.
* No plastics, i.e., had to use metal vapor barrier, metal electrical outlet covers, etc.
* Special air handling system to filter air to operating room standard.
* No combustion inside home i.e., heat source located in separate building & pumped into house.
* Special low temperature heating system to ensure no dust burning in home.
School in Home:
* Classroom to allow Lauren to receive education. Lauren is provided with her own teacher by the Cape Breton Victoria Regional School Board as she cannot tolerate any of the local schools. (Note, the school board is now renovating a special classroom for Lauren at St. Joseph's School in Sydney Mines where it is hoped she will be able to attend.)
[7] Although Mr. Hillier believed that the incremental cost of the alterations to accommodate Lauren's condition was 25%, his claim was conservatively based on an additional cost of 15%, calculated as follows:
Cost of construction
$248,871
Deduct: Land 20,360
Landscaping/patio/pool 42,186
Ventilation system 2,925
GST Housing Rebate 4,540 70,011
178,860
Premium for Special Home 15% 26,829
Ventilation system 100% claimed 2,925
$ 29,754
[8] The background facts that I have set out above are not disputed (the difference between $29,754 in the above calculation and $29,949 claimed is not accounted for but it is not material). Also, no claim was made for the pool although special equipment was required.
[9] The sole issue is whether the words "renovations or alterations to a dwelling of the patient ..." can include the construction of a new home incorporating the special features outlined above. The Crown's position is that the words "renovations or alterations" apply only to alterations or renovations of an existing dwelling.
[10] The purpose of the provision is to afford a measure of relief to persons who require special types of dwelling arrangements because of a severe type of medical disability. In light of its object and purpose it must be interpreted in a manner that best achieves that objective in accordance with section 12 of the Interpretation Act:
Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.
[11] I need not set out again the various interpretative aids to the construction of statutes that have been developed. That has been done before (Glaxo Wellcome Inc. v. The Queen, 96 DTC 1159; aff'd F.C.A. 98 DTC 6638; leave to appeal to S.C.C. denied).
[12] Here, the respondent argues that I should read into paragraph (l.2) immediately before "dwelling" the word "existing". I do not think that such an addition is warranted, nor do I think that it assists in the attainment of the object of the legislation. (Bank of England v. Vagliano Brothers, [1891] A.C. 107 at 120.) To add a word to the statute that is not there puts a restriction on the plain meaning of the word "dwelling" that is, if anything, antithetical to what paragraph (l.2) is designed to do. Here, a dwelling is being constructed for the patient. As construction progresses changes are made or incorporated to meet the special needs of the patient. These changes make the building different from what it would be if it were being built for someone that did not have Lauren's medical condition. That in my view is a reasonable interpretation of "alterations" — a progressive alteration as construction proceeds. It is only the cost of these departures from the norm that the appellant is claiming — not the entire cost of the house.
[13] I was referred to a decision of Rowe, D.J.T.C. in Gustafson v. R., (98-1358(IT)I) of April 30, 1999 in which he dismissed an appeal from an assessment that denied as a medical expense, the extra expenses of revisions to plans to a new home resulting from the needs of the appellant's spouse, a quadriplegic. He referred to a decision of Rip, J. in Vantyghem v. R., [1999] 2 C.T.C. 2157. In that judgment, Rip, J. said at page 2162:
14 The Shorter Oxford defines the verbs "alter" and "renovate" in the following manner:
alter. 1. To make otherwise or different in some respect, without changing the thing itself. 2. To become otherwise, to undergo some change...
renovate: 1. To renew. 2. To renew materially; to repair; to restore by replacing lost or damaged parts; to create anew.
15 The plain meaning of the word "alteration" would seem to include almost any kind of change. Thus, the word "alter" appears to be broad enough to encompass installations. Furthermore, the fact that the words "alterations" and "renovations" are used disjunctively in paragraph 118.2(2)(l.2) encourages reading the terms in a manner that would not make either superfluous. One may reasonably read "alterations" to include changes in addition to those already covered by the word "renovation". An installation may be an "alteration" that is not simply a "renovation".
[Footnote omitted.]
And at page 2163:
19 The medical expense and disability tax credit provisions in the Act should be interpreted in its most equitable and liberal manner compatible with the attainment of the object of those provisions and Parliament's intent in enacting the provisions. Every enactment should "be given such a fair, large and liberal construction and interpretation as best ensures the attainment of its objects". Where it is not unreasonable to hold, in the particular circumstances of a case, that an amount paid by a taxpayer can be described as a medical expense, one should examine if the amount so paid qualifies as a medical expense pursuant to subsection 118.2(2) of the Act.
20 The word "alterations" in paragraph 118.2(2)(l.2) includes "installations"; this is an interpretation that a typical person would find to be reasonable having regard to Mrs. Vantyghem's plight.
[Footnotes omitted.]
[14] I find the approach of Rip, J. very helpful. All alterations or renovations involve in some degree the creation of something new. I see no reason why this should not, in the context of this legislation, involve the creation of a new structure where there must be changes and additions to conventional plans to incorporate special features necessary to accommodate the medical needs of a particular person. This conclusion is consistent with that reached by Bowie, J. in Michael George v. The Queen, 98-1697(IT)I and by Beaubier, J. in Harold Rosen v. The Queen, 1999-2043(IT)I. In both of these cases the additional costs of modifying the construction of a new house for medical reasons were allowed as deductions under paragraph 118.2(2)(l.2).
[15] 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 appellant is entitled to a deduction under paragraph 118.2(2)(l.2) of the Income Tax Act in the amount of $29,754. The appellant is entitled to his costs, if any.
Signed at Ottawa, Canada, this 30th day of May 2000
"D.G.H. Bowman"
A.C.J.