2017 QCCA 1409, 2017 QCCA 1409

Unofficial English Translation Dufour c. Agence du revenu du Québec 2017 QCCA 1409 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-025869-165 (705-22-015331-158) MINUTES OF THE HEARING DATE: September 15, 2017 CORAM: THE HONOURABLE MARIE-FRANCE BICH, J.A. MANON SAVARD, J.A. ROBERT M. MAINVILLE, J.A. APPELLANT LOUIS DUFOUR ON HIS OWN BEHALF RESPONDENT COUNSEL AGENCE DU REVENU DU QUÉBEC Mtre MARTINE BERGERON (Revenu Québec) On appeal from a judgment issued January 6, 2016 by the Honourable Richard Landry, Court of Quebec, District of Joliette. NATURE OF THE APPEAL: Taxation – Act respecting prescription drug insurance – Retired member of the Canadian Armed Forces.

Clerk: Robert Osadchuck Courtroom: Pierre-Basile-Mignault HEARING 16:00 Hearing continued from September 12, 2017. The parties were excused from attendance. Judgment rendered – see page 3. Robert Osadchuck Clerk PER CURIAM JUDGMENT [ 1 ] The appellant is a retired veteran of the Canadian Armed Forces who receives a disability payments.

Being of the opinion that the Veterans Health Care Regulations [1] (“Regulations”) entitles him to the same benefits as those provided for in the basic plan set out in the Act respecting prescription drug insurance [2] (“ ARPDI ”), the appellant submits that he is exempt from the annual premium.

As such, he contests the notices of assessment produced by the Respondent for the years 2010 and 2011. [ 2 ] The Court of Quebec, District of Joliette (the Honourable Richard Landry) dismissed the appellant’s appeal from these notices of assessment, [3] giving rise to this appeal. * * * [ 3 ] The ARPDI , which came into force in 1997, ensures basic coverage for prescription drugs.

The Act requires all eligible persons to be covered by prescription drug insurance [ translation ] “either by adhering to the public plan or, for example, by becoming a member of a private insurance group through an employer, a union or a professional order.” [4] The public plan is administered by the Régie de l’assurance maladie du Québec (“RAMQ”). [ 4 ] No one questions that, pursuant to s. 5 ARPDI , the appellant is eligible for coverage under the basic plan.

Section 10 of this same Act sets out that an eligible person must pay any applicable annual premium or assessment “unless exempted by the Act / sauf exonération prévue par la loi ”. [ 5 ] The respondent concedes that the applicant would have been exempted from paying the premium if the benefits he receives under the Regulation were at least equivalent to those provided in the ARPDI basic plan ( s. 37.7 (

a) of the Act respecting the Régie de

l’assurance maladie du Québec [5] ). [ 6 ] However, the respondent submits that this is not the case for the years in dispute since the appellant’s plan was, in some ways, a [ translation ] “supplement to the basic plan”. Relying on an administrative

interpretation from the representative of Veterans Affairs (“the administrative

interpretation”) as well as oral representations of RAMQ, the respondent considers that only medication directly related to the disability for which the appellant receives a disability award will be automatically reimbursed. Any other medications, relating to a medical condition other than the known disability, will not be covered unless not covered by a provincial prescription drug plan. [ 7 ] Although silent in this respect, the administrative

interpretation upon which the respondent relies seems to be more aptly based on s. 3(4) of the Regulation , which reads as follows:

PART I Health Care Benefits Treatment Benefits 3

(4) The following clients are eligible to receive treatment benefits in Canada, for any health condition, to the extent that those benefits are not available to them as a member or former member of the Canadian Forces nor available as an insured service under a provincial health care system : … [Emphasis added.]

PARTIE I Avantages pour soins de santé Avantages médicaux 3

(4) Les clients ci-après sont admissibles à des avantages médicaux au Canada, quelle que soit l’affection, dans la mesure où ils ne peuvent les obtenir en qualité de membre ou d’ancien membre des Forces canadiennes ou au

titre de services assurés dans le cadre du régime d’assurance-maladie d’une province : […] [ 8 ] In the respondent’s eyes, the ARPDI is an integral component of Quebec’s health insurance plan and must, as a result, be considered as falling within the meaning of “an insured service under a provincial health care system” for the purposes of the Regulation .

As such, given the [ translation ] “supplemental” nature of the plan the appellant benefits from with respect to certain medications (those not linked to his disability), the plan does not offer benefits [ translation ] “at least equivalent to” those offered by the basic plan.

The appellant should not then be exempted from paying the annual premium. [ 9 ] The heart of the debate between the parties thus rests upon the scope of the benefits the appellant received pursuant to the Regulation , more specifically s. 3(4), during the years at issue. * * * [ 10 ] As the first instance judge highlighted, the premium that an eligible person must pay for the basic plan set out in the ARPDI is presumed to be valid, under s. 1014 of the Taxation Act . [6] [ 11 ] The rules relating to this presumption of validity and to the burden of proof incumbent upon the parties are well-established. [7] The taxpayer, here the appellant, must “demolish” the presumption by presenting prima facie evidence that the presumption is incorrect.

In the face of such evidence, the tax authorities, here the respondent, must establish the validity and accuracy of the assessment. [ 12 ] With respect, the Court is of the view that the judge should have concluded that the appellant had presented this prima facie evidence that the notices of assessment were inaccurate. [ 13 ] It is established that the appellant receives benefits from an insurance plan that covers medication. He confirms that he received reimbursement for medication, without ever having been refused coverage. He also filed the Regulation , which, as the first instance judge noted, is subject to

interpretation. According to the appellant, he is fully covered by s. 3(4) of the Regulation (reproduced at paragraph [7], supra ), while Quebec’s health insurance plan only covers medication administered in hospital. The first instance judge held, instead, that the [ translation ] “coverage offered [was] supplemental” insofar as it was [ translation ] “subsidiary to the coverage offered by the provincial plan” (para. 42): [ translation ] [43] It is debatable whether the words “insured service” also include prescription drug insurance.

Given the interdependence of provincial laws respecting health insurance and prescription drug insurance, it must be that an “insured service” includes prescription drug insurance. [ 14 ] This

interpretation of “a provincial health care system / régime d’assurance-maladie d’une province ” is not without its difficulties – which the judge did not address. Indeed, the

interpretation retained by the judge is to the effect that the protection offered by s. 3(4) of the Regulation would be different depending on the residence of the beneficiary: to be admissible for reimbursement for all medication, regardless of the ailment, a veteran who resides in Quebec would be forced to pay annual premiums for the basic plan and thus, to spend a sum of money, while the veteran who resides in a province where there is no legislation similar to the ARPDI would be entitled to such benefits pursuant to the Regulation , at no extra cost.

At first glance, differential treatment on the basis of residence in the application of a federal regulation is shocking and one might easily imagine measures that could be put in place to mitigate such differences. [ 15 ] But, in any case, the Regulation refers to “an insured service under a provincial health care system” which, in the strict sense (that is to say in the sense of the Canada Health Act [8] ) does not, in Quebec, cover medication administered outside of a hospital

environment. In the view of the Court, the Regulation , together with the appellant’s testimony that his plan has always covered all of his medication, was sufficient to “demolish” the presumption insofar as it established, prima facie , that the [ translation ] “facts upon which the assessment relies are wrong.” [9] [ 16 ] Thus, the respondent was required to [ translation ] “rebut this prima facie evidence with evidence supporting the assessment established by presumption.” [10] However, the respondent’s evidence to this effect was insufficient. [ 17 ] The evidence was essentially based on hearsay.

The tax audit officer in charge of the appellant’s file specified that she had tried, without success, to confirm the scope of the appellant’s coverage with those responsible for the program at Veterans Affairs and the Blue Cross, which administers the plan. Her conclusion as to the [ translation ] “supplemental” nature of the plan is therefor based on [ translation ] “information from RAMQ” to the effect that [ translation ] “veterans with the Blue Cross were getting supplemental insurance”.

The second witness, the objection officer, indicated that she had gotten the same information from the [ translation ] “RAMQ liaison officer”. Who provided [ translation ] “such information” and on what basis are unknown. Whether such information is applicable to the appellant in the years at issue (2010-2011) also remains unanswered, as does the question of whether the benefits administered by the Blue Cross are the same for all beneficiaries or whether, on the contrary, there are distinctions on the basis of a beneficiary’s status.

Finally, the text of the plan administered by the Blue Cross and which covers the appellant is also missing (is it limited to the text of the Regulation or does it set out additional clauses, notably with regard to the conditions prevailing in each of the provinces?). Testimony from those responsible for administering the plan which covers the appellant would have been necessary to establish the relevant facts upon which the assessments were made. These witnesses, however, were not heard. [ 18 ] As for the administrative

interpretation argued by the ARQ, we note that it in no way addresses the difficulties raised by the assertion that the plan provided by the Regulation is supplemental in nature and, given the author did not testify, it also constitutes hearsay, which is insufficient to demonstrate the validity of the assessments. [ 19 ] Consequently, given the absence of a preponderance of evidence establishing that the assessments are well-founded, the appeal must be granted and the assessments annulled. [ 20 ] This being the case, it is unnecessary to decide the appellant’s verbal application to present fresh evidence.

FOR THESE REASONS, THE COURT: [ 21 ] GRANTS the appeal with legal costs; [ 22 ] SETS ASIDE the first instance judgment and issues the judgment that should have been issued at first instance on January 6, 2016: ▪ GRANTS the appellant’s appeal, with legal costs; ▪ VACATES the assessments MM016830C03 and MR062601C01, dated March 6, 2014, with respect to the assessments for Quebec’s prescription drug insurance plan. [ 23 ] DECLARES moot and therefore DISMISSES without costs the appellant’s verbal application to present fresh evidence. MARIE-FRANCE BICH, J.A. MANON SAVARD, J.A. ROBERT M. MAINVILLE, J.A.