Date: 20040429
Docket: A-512-03
Citation: 2004 FCA 173
CORAM: STONE J.A.
LÉTOURNEAU J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
and
JAMES DALTON
Respondent
Heard at Halifax, Nova Scotia, on April 29, 2004.
Judgment delivered from the Bench at Halifax, Nova Scotia, on April 29, 2004.
REASONS FOR JUDGMENT OF THE COURT BY: EVANS J.A.
Date: 20040429
Docket: A-512-03
Citation: 2004 FCA 173
CORAM: STONE J.A.
LÉTOURNEAU J.A.
EVANS J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
and
JAMES DALTON
Respondent
REASONS FOR JUDGMENT
(Delivered from the Bench at Halifax, Nova Scotia, on April 29, 2004)
[1] This is an appeal by the Crown from a decision of the Tax Court of Canada, dated October 21, 2003, relating to costs. The Judge had declined to award the Crown costs against James Dalton in an appeal by Beverley Howard, Mr. Dalton's ex-wife, against a reassessment of her income tax liability for the years 1998, 1999, and 2000.
[2] The Crown had added Mr. Dalton as a third party to Ms. Howard's appeal following an application that it had made under subsection 174(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), for the determination of a question of fact that had arisen in the appeal.
[3] Ms. Howard's appeal was allowed by the Tax Court in a decision dated September 12, 2003, on the basis of a finding of fact by the Judge that the signature on an election for child support payments form was that of Mr. Dalton. Because both parties had signed the form, the Minister should not have included in Ms. Howard's income for the years in question the support payments that she had received from Mr. Dalton. Conversely, Mr. Dalton was not entitled to deduct them from his income for tax purposes, as he had been doing.
[4] Prior to the appeal, Mr. Dalton had written letters to the Department of Justice and the Tax Court of Canada denying that the signature on the election for child support payments form was his. Ms. Howard, however, maintained that it was, and that an election had been duly made.
[5] In an attempt to resolve this factual dispute, the Crown requested the Tax Court to determine it pursuant to an application under subsection 174(1). The application was granted. At the hearing before the Tax Court, Mr. Dalton no longer denied that he had signed the form, but testified, instead, that he could not remember if he had signed it.
[6] In making the factual determination requested by the Crown, the Judge stated that the evidence that Mr. Dalton had indeed signed the form was "extremely strong". However, he also said that he believed Mr. Dalton's evidence that he did not remember whether he had signed the form. Ms. Howard's appeal was allowed.
[7] As the successful party in the appeal, Ms. Howard was awarded costs against the Crown, which the Judge fixed at $2,700.00. However, the Judge refused in his discretion to order Mr. Dalton to pay costs to the Crown, because he "did not initiate any proceeding in this Court".
[8] We are all of the view that, in so holding, the Judge erred in law in the exercise of the admittedly broad discretion over costs conferred by Rule 147 of the Tax Court of Canada Rules (General Procedure), SOR/90-503.
[9] In the circumstances of this appeal, the Judge erred by regarding as relevant the fact that the proceeding had not been initiated by Mr. Dalton. While it is true that Mr. Dalton was brought into an appeal initiated by Ms. Howard, she had only been reassessed because Mr. Dalton denied that he had signed the election form. But for these denials, there would have been no appeal by Ms. Howard because the Minister would not have taken the view that she should have included the support payments in her income. In order to resolve the factual issue, Mr. Dalton was necessarily made a party to Ms. Howard's appeal.
[10] On the facts of this case, the Judge should have ordered the Crown to pay the costs of Ms. Howard, as he did, and ordered Mr. Dalton both to reimburse the Crown for the portion of the costs that it had paid to Ms. Howard that were attributable to the section 174 application, and to pay the Crown's own costs in the section 174 application.
[11] For these reasons, the appeal will be allowed and the order of the Tax Court of Canada, dated October 21, 2003, relating to costs will be amended in accordance with these reasons.
"John M. Evans"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-512-03
STYLE OF CAUSE: Her Majesty the Queen v. James Dalton
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: April 29, 2004
REASONS FOR JUDGMENT OF THE COURT
(STONE, LÉTOURNEAU AND EVANS JJ.A)
RENDERED FROM THE BENCH BY EVANS J.A.
APPEARANCES:
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FOR THE APPELLANT
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FOR THE RESPONDENT |
SOLICITORS OF RECORD:
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Deputy Attorney General of Canada Ottawa, ON |
FOR THE APPELLANT
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Charlottetown, PE |
FOR THE RESPONDENT |