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Case Q115

Judges:
KP Brady Ch
JE Stewart M
DJ Trowse M

Court:
No. 2 Board of Review

Judgment date: 25 November 1983.

K.P. Brady (Chairman), J.E. Stewart and D.J. Trowse (Members)

The question for decision in this reference is whether expenses, amounting to $4,276, incurred by the taxpayer in the year of income ended 30th June 1980, in the construction of a thermo tub at his residence, constitutes ``medical expenses'' within the meaning of that term as defined in sec. 159P(4) of the Assessment Act so as to qualify the expenses as a rebatable amount for the purposes of sec. 159N of that Act. For present purposes the relevant parts of the definition are as follows:

```medical expenses' means payments

  • ...
  • (d) for therapeutic treatment administered by direction of a legally qualified medical practitioner;
  • ...
  • (f) in respect of a medical... appliance... prescribed by a legally qualified medical practitioner;
  • ...''

2. The taxpayer objected to the Commissioner's disallowance of his claim on the following grounds:

``The omission from my concessional expenditure of the [thermo] tub, which is required for the health reasons of my wife.

By the letter attached from my wife's medical practitioner, a long term hydrotherapy is required due to an accident to her neck.

As there is some doubt as to what is classed as `To what consists a medical appliance', I wish to again point out -

  • (a) Firstly, the accident has confined my wife's movements, with a disability of 20%, reducing her income capacity to only light duty.
  • (b) The cost of the treatment paid commercially, would be far in excess of the initial outlay of the tub.
  • (c) The [thermo] tub was installed on advice from her doctor, and is used for that reason. (It was not installed for pleasure.)
  • (d) By reference to (Case L62,
    79 ATC 490) prescribed evidence has been supplied.

    ATC 596

  • (e) On reading (Case P27,
    14 T.B.R.D. 138) manual car controls - chair lift (Case D37,
    72 ATC 210) wigs (Case F23,
    74 ATC 120; Case F24,
    74 ATC 125 and Case F25,
    74 ATC 130) and also swimming pool (Case D63,
    72 ATC 385) I feel further consideration should be given to my claim, as this is a special medical requirement.''

3. The letter dated 30th October 1979 (which was not addressed to anyone) from the taxpayer's wife's (whom we shall call Mrs. D) medical practitioner, reads as follows:

``This is to certify that Mrs. [D] has been recommended long term hydrotherapy to her chronic neck condition following a severe injury to her cervical spine.''

4. Following upon the Commissioner's disallowance of the taxpayer's objection, the taxpayer requested that the decision be referred to a Board of Review for review. At the hearing of the reference before us, the taxpayer represented himself and gave evidence under oath. His wife also gave evidence. The Commissioner was represented by one of his officers and called as a witness a senior executive associated with the thermo tub known under a tradename that we will refer to as ``Y''.

5. The amount of $4,276 in issue was calculated as follows: 

                                                                            $
      Cost of supplying and installing wooden thermo tub "Y"
        with heater, filter and electric pump.                            2,570
      Cost of additional clamps, extra piping, etc.                          30
      Cost of decking and its assembly around "Y" decking
        was needed to ensure ease of entry into "Y" by Mrs. D.              625
      Cost of erecting a fence around decking to ensure
        privacy.                                                            405
      Installation costs for work undertaken by electrician.                367
      Estimated cost of electric power used in operating
        "Y" in year in issue.                                               209
      Payment to electricity authority concerning the
        upgrading of power supplied to the residence.                        70
                                                                          -----
                                                                          4,276
                                                                          -----

6. Other particulars of some relevance for present purposes, relating to the physical properties of ``Y'', its location and related costs, were obtained from the witnesses and are set out in summary form as follows:

  • (i) ``Y'' and associated structures were located on the taxpayer's residential property in close proximity to the bedroom occupied by Mrs. D.
  • (ii) ``Y'' was 1.8 metres (6 feet) in diameter and 1.2 metres (4 feet) in height.
  • (iii) ``Y'' was of redwood construction; when empty it weighed between 104-118 kilograms (230-260 pounds); when filled with water it weighed more than 3 tonnes; assuming proper maintenance, its life was estimated to be between 20 to 30 years.
  • (iv) Because of its weight and requirements concerned with drainage and ventilation, ``Y'' was placed on a reinforced concrete support four inches in depth; the cost of the support is not known. However, it does not form part of the taxpayer's claim. A new support is required for each new position in which ``Y'' might be placed for further use.
  • (v) ``Y'' was assembled off-site and transported by trailer to the taxpayer's residence for installation; installation also called for plumbing and electrical work to be undertaken.
  • (vi) the functions of the pump, filter and heater, interconnected by a series of pipes that, in turn, are connected to ``Y'', are to inject air into the water to provide

    ATC 597

    turbulence or agitation and to pump the water from the bottom of ``Y'', recirculating it through the filtration unit for cleanliness, and then back into the heater which, in turn, supplies the heated water back into ``Y''.
  • (vii) Decking was prepared off-site and assembled on-site.
  • (viii) An entertainment area, incorporating cobblestone bricks and some lawn, was established adjacent to ``Y'' and its decking so as to improve the overall appearance of the area. The cost of the work undertaken in that connection, and materials, amounted to $822. Extra sand cost $10. However, those costs were not included as part of the taxpayer's claim.
  • (ix) If ``Y'' were to be moved from its present location it would require the following actions to be taken as preliminary steps for that purpose -
    • (a) The dismantling of the decking by a carpenter.
    • (b) Either the disconnecting of all the plumbing or the cutting of all the piping by a plumber.
    • (c) Either the breaking of ``Y'' into pieces or, if keeping it in its assembled form, turning it on its side and rolling it; if the latter action were taken, it would be necessary to remove part of the boundary fence to the property to provide an opening wide enough through which ``Y'' could be rolled.

7. Mrs. D is fully qualified as a general and midwifery nurse. She holds a Diploma of Applied Science - Nursing and has almost completed her degree in that course. She was involved in a motor car accident on 14th May 1976 and sustained a severe neck injury which resulted in a permanent disability of 20%. Since the accident and surgery that followed shortly afterwards, she has required neck and arm manipulation by physiotherapists to restore the use of an arm and to alleviate pain caused by pressure on a nerve. It appears that treatment by physiotherapists was quite intensive in the first year or so and that it consisted mainly of exercises and manipulation that were undertaken, first, at home, and after several months, at a medical clinic or a hospital where Mrs. D worked. Whilst the evidence is obscure, it appears that hydrotherapy was discussed between Mrs. D and physiotherapists attending her at various times, and also with her personal physician as early as 1976. It also appears that hydrotherapy was later included at the discretion of her physiotherapists as part of her treatment, although not on a regular basis.

8. However, it seems that as more and more time was devoted to full time employment and study in connection with the degree course mentioned earlier, Mrs. D was deprived of opportunities for suitable exercise that continued to be necessary from time to time. As already indicated, she was aware, because of her nursing and personal experience, of the therapeutic benefits to be derived from hydrotherapy. With the passing of time, she became conscious of advantages in terms of time-saving that she could obtain if a hydrotherapy facility were established at her home. Therefore, when the product referred to earlier as ``Y'' became available on the market in the latter part of 1979, Mrs. D (in consultation with her husband), after considering other similar products, entered into negotiations for its purchase. A deposit of $700 was paid on 6th October 1979 and the unit was installed and ready for use on 2nd November 1979.

9. As indicated earlier, Mrs. D's personal physician provided her with the letter dated 30th October 1979 certifying that long-term hydrotherapy had been recommended as part of her treatment. However, from Mrs. D's evidence it appears that, although hydrotherapy had been discussed with her physician and possibly with her medical and nursing colleagues, it was her physiotherapist who determined the circumstances in which hydrotherapy would be resorted to, rather than her physician or other medically qualified persons. In any event, the physician's letter of certification is at best equivocal as to who made the recommendation. The letter does not assert in any authoritative or specific way (in a manner that might be expected where a course of treatment is prescribed by a physician) that hydrotherapy was prescribed by him. The physician was not called as a witness so that we had no opportunity to hear his explanations in the matter. The letter does

ATC 598

not of itself provide a basis for concluding that ``Y'' was familiar to the physician, that it would, in his opinion, fulfil all the requirements associated with the hydrotherapeutic treatment recommended and that, therefore, he had recommended the use of that particular tub (``Y'') for that purpose.

10. However, it seems that Mrs. D made frequent use of ``Y'' during the first 12 months or so after its installation and that the exercises carried out in it were beneficial. Since then, however, she has used it less frequently, averaging about twice a week. Apart from helping his wife enter and leave ``Y'' (when required), the taxpayer and their three children have also used it on occasions for their personal enjoyment.

11. In addition to advising on the dimensions and attributes of ``Y'', the company's executive gave us to understand that ``Y'' did not have any particular features that would distinguish it from other similar tubs sold to the public at large. Whilst he was aware that special tubs for hydrotherapy purposes had existed for many years, he gave us to understand that ``Y'' was not designed specifically for those purposes. ``Y'' was, in fact, used by many people (including himself) for relaxation purposes only, although it would be possible, he thought, to use it for therapeutic purposes. The executive advised that, although he had been approached on several occasions in the matter, his firm had not in fact produced a specific tub with those purposes in mind. It is understood that neither Mrs. D's physician nor any other medically qualified person has examined the firm's products (in particular ``Y'') for the purposes of determining their capabilities for use as hydrotherapy tubs or as tubs that might be used for hydrotherapeutic purposes.

12. Before us, the taxpayer limited his submissions in support of his claims to the question of whether the payments in issue were made ``in respect of a medical... appliance... prescribed by a legally qualified medical practitioner'' (sec. 159P(4) para. (f) of the definition of ``medical expenses''). However, before proceeding to examine that question we would, in the interests of completeness, observe that, in our opinion, the payments were not made in respect of ``therapeutic treatment administered by direction of a legally qualified medical practitioner'' for the purposes of para. (d) of that definition. Quite clearly, in our opinion, the payments were not made in relation to the administering of therapeutic treatment but rather in the purchase and installation of a tub, its accessories and surrounds, whether or not it might be said on the evidence (which we do not accept) that use of the tub by Mrs. D constituted ``therapeutic treatment'' that was ``administered by direction of a legally qualified medical practitioner''. Therefore, whilst it might be said on one view that a wide interpretation of the taxpayer's grounds of objection might permit submissions to be put in relation to para. (d), they could not, in our opinion, lead to a conclusion that the taxpayer's claims could be allowed under that paragraph.

13. We turn now to what appear to be the substantive issues raised by the taxpayer in relation to para. (f), and to that end set out below meanings of the words ``appliance'', ``apparatus'' and ``prescribe'' that were obtained by the taxpayer from the Shorter Oxford English Dictionary (3rd ed.) and the Macquarie Dictionary, which he tendered for our information:

``Shorter Oxford English Dictionary (3rd ed.)

  • Appliance:
    • 1. Compliance; subservience - 1603 *
    • 2. The action of applying - 1561
    • 3. A thing applied as a means to an end; apparatus - 1597
  • Apparatus:
    • 1. The work of preparing; preparation - 1722
    • 2. The things collectively in which preparation consists, and by which its processes are maintained; equipment, material, machinery; material appendages or arrangements - 1628
    • 3. esp. The mechanical requisites for scientific experiments or investigations 1727; The organs by which natural processes are carried out 1718; materials for the critical study of a document 1727.

      ATC 599

  • Prescribe:
    • 1. trans. To write first or beforehand - 1653
    • 2. To write or lay down as a rule or direction to be followed; to appoint, ordain, direct, enjoin. const. to or dative. 1535. b. absol or intr. to lay down a rule; to dictate, appoint, direct. Of a law or custom: to be of force. - 1716.
    • 3. Med. trans. To advise or order the use of (a medicine, etc.) with directions for the manner of using it - 1581.

The Macquarie Dictionary

  • Appliance:
    • 1. An instrument, apparatus or device, esp. one operated by electricity and designed for household use.
    • 2. The act of applying; application
  • Prescribe:
    • 1. To lay down, in writing or otherwise, as a rule or course to be followed.
    • 2. Med. to designate or order for use, as a remedy or treatment.... to designate remedies or treatment to be used.''
  • * This date, and others specified, indicate the earliest known meanings of the words defined.

14. The taxpayer's submissions were based upon the ordinary dictionary meanings of words to the effect that ``Y'' was an ``appliance'' for the purposes of para. (f) because it was ``a thing applied as a means to an end'' and was ``an instrument, apparatus or device'' that was ``operated by electricity and designed for household use''. Therefore, the submission continued, having regard to the certification by Mrs. D's physician and other medical advice referred to earlier, which satisfy the ordinary dictionary meanings of the word ``prescribed'' in the sense of ``to advise or order the use of'', ``Y'' assumes the attribution of ``medical'' so as to qualify it as a ``medical appliance'' for the purposes of para. (f).

15. Unfortunately for the taxpayer, however, the Commissioner, whilst inferring that those submissions might have some superficial attraction, does not accept them for reasons which, in substance, are that the taxpayer's analysis of the meanings of the words ``medical... appliance'' are not sound as to principle and that, in any event, his conclusions are based upon an incorrect appreciation of the facts. In the alternative, the Commissioner contends that an amount of $1,030, being the cost of decking ($625) and privacy fence ($405), does not satisfy the statutory description of a ``medical... appliance'' and should therefore be deducted from the amount of $4,276 that might otherwise satisfy that description. However, in the view which we hold, it is not necessary to consider the alternative submission and we make no further reference to it.

16. If it be correct to regard ``Y'', its accessories and surrounds (particularly its reinforced concrete support) as interdependent and as being in the nature of an entirety, and the evidence suggests that its use by Mrs. D was dependent upon that being so, it should be regarded for all practical purposes, in our opinion, as a permanent fixture, that is, as something which is intended to remain in a fixed position on a permanent basis or, at least, for an indefinite period of time. On the view, therefore, that ``Y'' is part and parcel of the land and improvements on it, it could not be regarded as a separate chattel (i.e. a movable possession; any piece of property other than real estate or a freehold) and therefore, in ordinary parlance, as an appliance for the purposes of para. (f). Similar views concerning the status of improvements, where they become part of realty, are contained in the reasons for decision of Board of Review No. 3 (as then constituted) in Case D63, 72 ATC 385, where it was held that a swimming pool and the apparatus enabling it to be used as a hydrotherapy tank, became part of the realty and so could not be said to be a medical or surgical appliance. Similar views are also to be found in the reasons for decision of Board of Review No. 1 in Case Q41 (Mercier),
83 ATC 195 (and the reasons in Case P40,
82 ATC 184 referred to in that case), where it held that an inground hydrotherapy pool and its

ATC 600

enclosures, became part of the realty and therefore could not be described as an ``appliance''.

17. However, if ``Y'' and its accessories should be regarded as a chattel for present purposes, and therefore as an appliance in ordinary parlance, it still could not, in our opinion, fulfil the requirements of being a ``medical appliance'' for the purposes of para. (f). In this matter we would, with respect, adopt as our reasons in the present case, the reasons of Mr. B.R. Pape (Member) in Case P40 (supra) where, at p. 191, para. 12 to 14, inclusive, of his reasons, he states that:

``12. A reading of this definition reveals that it refers to the following types of `appliances', artificial teeth (para. (b), (c)); artificial limb (or part of a limb); artificial eye or hearing aid (para: (e)) and spectacles (para. (g)(ii)). All of these articles, in my opinion, have a common characteristic in that they are chattels. However more specifically they have the common characteristic of being artificial aids to function or capacity albeit that an artificial eye may be said to be cosmetic. Paragraph (f) of the definition of medical expenses refers to `a medical or surgical appliance (not otherwise specified in this definition)'. It is the words of the section which must elucidate its intention, and in my opinion the word `appliance' is to be construed in the context of this definition to mean artificial aids, in other words artificial aids, to a person's ability to carry out a normal life when in fact he suffers from some disability - see
Holmes v. Bradmill Industries Ltd. (1971) W.C.R. (N.S.W.) 97. To construe para. (f) in any other way is to ignore that it is cognate with the other paragraphs of the definition. Because, in my opinion, the various articles referred to in para. (b) and (c), (e) and (g)(ii) of the definition of medical expenses constitutes a distinct genus or category, the ejusdem generis rule of construction can be invoked - see Craies on Statute Law 7th ed. at pp. 178-182. Accordingly the word appliance `will not include anything of a class superior to that to which these particular words belong'. That class being `artificial aids'.

13. In my opinion the hydrotherapy pool is not properly capable of being classified as an artificial aid within the meaning of para. (f). Its function was to enable the taxpayer's wife to administer hydrotherapy treatment to herself by carrying out exercises devised by a physiotherapist who treated her. Such a facility allowed therapeutic treatment to be carried out in the taxpayer's home. The hydrotherapy pool was in my opinion the means of administering treatment rather than acting as an artificial aid to ameliorate the taxpayer's physical movement.

14. Whilst I am in agreement with the conclusion reached by the No. 3 Board of Review in Case D63, 72 ATC 385 which rejected a claim for a hydrotherapy pool on the grounds that it was a fixture, I am of the view that for a payment to be eligible under para. (f) the evidence must show that the `appliance' is an artificial aid to function or capacity. It is the possession of this attribute which is in my opinion determinative of whether the payment is `in respect of a medical or surgical appliance'.''

18. In this matter we also draw support from the reasons for decision of Board of Review No. 2 (as then constituted) in Case P29,
14 T.B.R.D. 143, for the conclusion that the installation of ``Y'' for medical reasons and its use for those purposes does not of itself qualify it as a ``medical appliance''. In Case P29 it was decided that an air-conditioning unit used to relieve bronchial asthma was not a ``medical or surgical appliance'' for the purposes of former sec. 82F(3) of the Act, which corresponds in so far as is relevant for present purposes to para. (f) of sec. 159P(4) here under consideration. Attention is drawn, in particular, to the following extract which appears at p. 144:

``It is not sufficient for a taxpayer to show that a physician has prescribed an appliance to be used for medical or surgical ends. That would be implicit without more in the requirement that the appliance be prescribed. The section requires that the appliance be a medical or surgical appliance, that is an appliance which is manufactured as or distributed as or generally recognised to be an article or thing intended to achieve a medical or surgical end. An example which readily

ATC 601

comes to mind is a hypodermic needle. Perhaps it can be said of all appliances within the class that they were intended to be employed for medical or surgical ends before ever they come into the hands of the ultimate user. If it satisfies this test an appliance is properly described as a medical or surgical one although it may in fact serve ends other than those mentioned. Conversely an appliance which is used for those purposes does not because of that use only fall within the category of medical or surgical appliances.

The air-conditioning unit with which the Board is concerned was of a type intended to operate in rooms and offices to add to the comfort of the occupants and would be properly described as a household or commercial appliance. Even though it was installed by the taxpayer for medical reasons and its operation improved his health it cannot be described in ordinary parlance as a medical appliance. At best it is a household appliance operated for medical reasons.''

19. We would add by way of comment that, in our opinion, the phrase ``an appliance which is manufactured as or distributed as or generally recognised to be an article or thing intended to achieve a medical or surgical end'' provides a test that is substantially the same as that propounded by Mr. Pape where he indicates that ``to be eligible under para. (f), the evidence must show that the `appliance' is an artificial aid to function or capacity'' so as to assist or improve ``a person's ability to carry out a normal life when in fact he suffers from some disability''. Both of the above tests are, in our opinion, compatible. They are also compatible with various decisions of Boards of Review where claims for wigs, etc., have been allowed (see taxpayer's notice of objection at para. 3(e)); we see those decisions as being in substance the practical application of the tests applied in Cases P29 and P40. However, decisions concerning wigs, etc., can readily be distinguished on their facts from those in the present case, and therefore we make no further reference to them.

20. We have already examined the evidence concerning the question of whether ``Y'' and its use was prescribed by a legally qualified medical practioner. We find as a fact that it was not. Whilst we accept that Mrs. D discussed hydrotherapy, and possibly also the use of ``Y'' for that purpose, with her medical associates, we do not consider that those discussions, in so far as we are aware of them, could fall within the ordinary meaning of the word ``prescribed'' in para. (f) for the purposes of the definition of ``medical expenses''. Also, as indicated earlier, even if it could be said that the discussions did amount to being a prescription for the purposes indicated, they could not, in any event, convert by that process alone what was essentially not a ``medical appliance'' into an appliance of that kind for the purposes of the definition. Similar considerations apply, in our opinion, to any prescription concerning ``Y'' that might, contrary to the evidence revealed to us, be attributed to the actions and words of Mrs. D's physician. We would add that if, contrary to our view, the physician's letter dated 30th October 1979 could be construed as prima facie falling within the meaning of the word ``prescribed'', its true nature would nevertheless fall short of the requisite meaning, in our opinion, because it amounted to no more than an endorsement on an ex post basis of the purchase of ``Y'' that was subject to a contract entered into on, or before, the payment of the deposit on 6th October 1979.

21. Finally, we would add that, in our opinion, no part of the estimated cost of electric power used in operating ``Y'' in the year in issue could qualify as a permissible claim because ``Y'' was not a ``medical... appliance'' the use of which gave rise to the payment for the expenses incurred.

22. For the above reasons, we would uphold the Commissioner's decision on the objection and confirm the assessment in issue.

Claim disallowed


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