Case U43

Members:
P Gerber SM

Tribunal:
Administrative Appeals Tribunal

Decision date: 16 February 1987.

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Dr P. Gerber (Senior Member)

In this case, the applicant has a long history of chronic low back pain and sciatica. To relieve his pain, he is in the habit of taking substantial quantities of pain killing tablets and sedatives. Some time in 1984 - the exact date is not recorded - his family doctor, Dr H Tuo Oh, advised him to acquire a spa pool and on 9 July 1984 he issued the applicant with a certificate which stated, inter alia, that "(the applicant) is in persistent pain and it is medically essential for him to have the spa with hydrojets at home to help alleviate his pain". This certificate was attached to the applicant's 1984 tax return.

2. The issue in this application is whether the cost of acquiring and installing such a pool at his home on or about 21 June 1984 is rebatable as a concessional expenditure pursuant to sec. 159P of the Tax Act.

3. The evidence disclosed that the spa pool - a "Grecian `De Luxe"' model - was installed in the applicant's backyard after a hole had been excavated, a water/cement mix base laid and the shell placed on top of the wet cement base. This enabled the shell to be levelled before the mix had set. The shell was fitted with plumbing pipes which connect to a one-horsepower pump. It was conceded that, once installed and set, the shell could not be removed as a unit without damaging it and the piping to which it is connected. In short, it became a "fixture". Several photographs were tendered which show details of the installation, including the timber surrounds and tiling of the adjacent grounds (the cost of which is not included in the claim) and reinforce the assumption that, apart from the pump and an "HC 50 Filter", the unit could not be removed without destroying its function.

4. For present purposes, the relevant section provides:

"159P(1) An amount paid by the taxpayer in the year of income as medical expenses in respect of himself... shall, for the purposes of section 159N, be treated as a rebatable amount in respect of that year of income.

...

(4) In this section -

• ...
• `medical expenses' means payments -
  • ...
  • (d) for therapeutic treatment administered by direction of a legally qualified medical practitioner;
  • ...
  • (f) in respect of a medical or surgical appliance (not otherwise specified in this definition) prescribed by a legally qualified medical practitioner;"

5. A preliminary point arose as to the admissibility of a further medical certificate from Dr H Tuo Oh, dated 9 December 1986, a certificate clearly brought into existence for purposes of the hearing. The respondent objected to its admissibility in reliance on reg. 39(1)(b) of the Regulations under the Income Tax Assessment Act 1936, which provided that a Board of Review (now deceased) may receive a document without formal proof, "not being a document which has been brought into existence solely for the purpose of the review". In fairness to the respondent, the objection was not pressed and resulted from a question posed by me as to whether that regulation has survived the transition of jurisdiction from Boards of Review to this Tribunal. I accepted the tender in reliance on sec. 33(1)(c) of the Administrative Appeals Tribunal Act, which enables the Tribunal to inform itself on any matter in such manner as it thinks appropriate. The Tribunal is not bound by the strict rules of evidence. I am satisfied that when Boards of Review came to their untimely end, reg. 39 was interred with them. Hic jacet.

6. Turning to the law, the respondent asserted that the cost of this spa pool did not qualify as a "medical expense", as defined, for a whole host of reasons, all of which were amply supported by decisions of Boards of Review on facts indistinguishable from those presently before me. Firstly, it was argued, because this spa pool had become a fixture, it had thereby ceased to qualify as a "medical appliance" within the meaning of sec. 159P(4)(f). This argument has consistently found favour with Boards of Review; cf. Case D63,
72 ATC 385; Case P40,
82 ATC 184; Case Q41,
83 ATC 195 (Mercier's case); Case Q115,
83 ATC 595 and Case R9,
84 ATC 159.

7. In Case Q115 (supra) the Board, after an exhaustive analysis of the law, approached the problem via the Macquarie and Oxford English Dictionaries, looking up such words as

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ATC 316

"appliance" and "prescribe". The Board concluded that once it is found that a spa pool "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)" (at p. 599). With the utmost respect, I am not persuaded by that ratiocination. No reason is offered why a fixture cannot be a medical appliance or why it loses its characteristic once it is embedded in the soil. On the assumption that sec. 159P is remedial and designed to provide some modest relief by way of rebate for taxpayers who suffer an illness or disability and who incur "medical expenses" as defined, it seems to me that this intention is defeated by a method of interpretation which relies on a word-by-word analysis derived from the Oxford English Dictionary. I am satisfied that the mere fact that this spa pool is affixed to the soil is not a relevant criterion as to whether or not it qualifies as a "medical appliance". I would respectfully echo the words of Lord Macnaughten in
Leigh v. Taylor (1902) A.C. 157 where, at p. 162, his Lordship noted that "the mode of annexation is only one of the circumstances of the case, and not always the most important - and its relative importance is probably not what it was in ruder or simpler times". In other words, the test whether an appliance is "medical" relates to its function, not whether it happens to be embedded in concrete. No single Board of Review decision offered a persuasive explanation why the test whether something is an "appliance" should be resolved by rules relating to title as between life tenant and remainderman.

8. In Case Q115 it was held, in the alternative, that even if the spa pool in that case qualified as a "chattel", it still did not meet the test as a "medical appliance", in reliance on the reasoning which found favour with Mr Pape (Member) in Case P40 (supra) where he stated (at p. 191):

"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'."

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ATC 317

With the greatest of respect, I find this reasoning even less persuasive. Unlike Mr Pape, I am not able to derive the genus "artificial aids" from the section taken as a whole. The fact that para. (e) of the section includes hearing aids and artificial limbs, and para. (g) refers to spectacles, hardly justifies cutting down the wide definition of para. (f) ("in respect of a medical or surgical appliance (not otherwise specified in this definition) prescribed by a legally qualified medical practitioner").

9. In the result, and with the greatest humility, I have reluctantly concluded not to follow the reasoning which Boards of Review have adopted "in ruder or simpler times".

10. I therefore approach the problem de novo and ask myself: can a spa pool of a kind which is found in many homes and blocks of units, and used for purposes other than therapeutics, constitute a "medical appliance" merely because it has been prescribed by a medical practitioner? Hydrotherapy has a long history. It was used by the Romans as a form of therapy. It was a particularly fashionable form of treatment prescribed by German doctors earlier this century and well-to-do Europeans made an annual pilgrimage to the various fashionable spa resorts "to take the waters"; the poor took bicarbonate of soda. It is not part of my function to evaluate the effectiveness of a spa pool for chronic sciatica. It is sufficient that the applicant's doctor saw fit to prescribe it. I accept that this spa pool was installed for the sole purpose of alleviating the applicant's back pain and so reduce the dosage of his medication. It appears to have been effective. It was installed according to a doctor's specifications in the sense that the usual five jets were reduced to four in order to provide additional pressure. It is to my mind quite beside the point that the appliance may have other uses - so have bathroom scales, which are surely medical appliances if prescribed as part of a medically supervised weight reduction program.

11. I now turn to the remaining arguments advanced on behalf of the respondent. It was submitted that even if I were to find that the spa pool was a "medical appliance", it had not been "prescribed" as required by the Act. This argument was based on the fact that the medical certificate was dated after the spa pool had been installed (the spa pool was installed on 21 June and the certificate dated 9 July). No cross-examination was directed to this aspect and I have no evidence before me whether the applicant had discussed a spa installation with his doctor before 9 July. If the respondent wants to take such a point, he must raise it in cross-examination, the more so where an applicant is unrepresented. Failing to ascertain the relevant facts while the applicant is in the witness box and then - after the evidence has closed - seeking to rely on the onus of proof provisions to the applicant's detriment is a singularly unmeritorious manner of conducting a hearing where the sole issue is whether or not a rebate is allowable. I find on the probabilities that the spa pool was installed on the recommendation of the applicant's doctor, and thus "prescribed" within the meaning of the section. I respectfully adopt the words of Mr Fairleigh Q.C. when he noted in Case L62,
79 ATC 490:

"I hold that the medical practitioner prescribes the appliance if he recommends its use, and there is no need for that recommendation to be in writing"

(at p. 493).

12. The only point that causes me some concern is the fact that the invoice for the spa pool is made out in the joint names of the applicant and his wife. For good measure, the matrimonial home is jointly owned. This was sought to be explained on the basis that, as the applicant was unemployed, his wife, as the breadwinner, acted as guarantor. Although I raised this point with the applicant, it was taken no further in cross-examination. In the circumstances, the explanation - such as it is - stands uncontradicted and is credible. If the applicant is entitled to his rebate, it follows that he gets the benefit of the entire cost on the basis that it is a medical expenditure "paid by the taxpayer in the year of income".

13. In the circumstances, the argument developed by the applicant, viz. that he is entitled to succeed under para. (d) in the alternative, need not be considered. However, in the event of this matter going on appeal, I will content myself with observing that it is difficult to see how the acquisition of a spa pool can qualify as "therapeutic treatment administered by direction of a legally qualified medical practitioner".

14. Finally, and purely for the benefit of an appellate tribunal, if I am wrong in rejecting

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ATC 318

the "fixture" argument, the applicant would be entitled to succeed to the extent of the demountable pump and filtration equipment, the cost of which I find came to $1,120.

15. The decision under review is set aside and the applicant's objection upheld.