Date: 20021118
Docket: A-884-97
Neutral citation: 2002 FCA 450
CORAM: DESJARDINS J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
BETWEEN:
LUDCO ENTERPRISES LTD., DAVID LUDMER,
BRIAN LUDMER and CINDY LUDMER
Appellants
and
HER MAJESTY THE QUEEN
Respondent
Dealt with in writing without appearance of parties at
Ottawa, Ontario, on November 18, 2002
Order delivered at Ottawa, Ontario, on November 18, 2002
REASONS FOR ORDER BY: LÉTOURNEAU J.A.
CONCURRED IN BY: DESJARDINS J.A.
DÉCARY J.A.
Date: 20021118
Docket: A-884-97
Neutral citation: 2002 FCA 450
CORAM: DESJARDINS J.A.
DÉCARY J.A.
LÉTOURNEAU J.A.
BETWEEN:
LUDCO ENTERPRISES LTD., DAVID LUDMER,
BRIAN LUDMER and CINDY LUDMER
Appellants
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR ORDER
[1] With respect to this file and three other related appeals (A-885-97, A-886-97 and A-887-97), the appellants have filed a motion for directions as to costs which also contains a demand to extend the time within which such motion may be made pursuant to Rule 403 of the Federal Court Rules, 1998. In this motion for directions, they seek an order:
a) directing the assessment officer to award costs in their favour based on Column IV of Tariff B of the Federal Court Rules, 1998; and
b) allowing fees for a second counsel at the hearing for an amount equal to half the fees awarded for first counsel;
[2] The respondent, Her Majesty the Queen, served with the motion on September 27, 2002, has not appeared on the motion and has made no representations. I shall deal first with the request for an extension of time.
The request for an extension of time
[3] Under Rule 403, a motion for directions to the assessment officer must be made, i.e., served and filed, within 30 days after judgment has been pronounced. The Court possesses the power to extend the time-limit, but failure to act within the prescribed 30 days must be properly justified. This Court has endorsed an extension of time granted by the Trial Division where the right to costs arose only after an appeal to the Supreme Court of Canada, the litigation involved complex and novel issues and no prejudice resulted to the opposing party by reason of the delay: Manitoba Fisheries Ltd. v. The Queen, [1980] 1 F.C. 36, at page 38, affirmed by [1980] 2 F.C. 217 (F.C.A.). This is precisely what happened in the present instance.
[4] The right to claim costs arose on September 28, 2001 when a judgment, for the first time favourable to the appellants, was delivered by the Supreme Court. As a result of that decision, new reassessments of the appellants' tax liability had to be made by Revenue Canada and Revenue Québec. The final reassessments were only received by the taxpayers on July 18, 2002.
[5] In addition, the appellants had to prepare various bills of costs relating to four different appeals before four different courts with respect to a litigation which started in the Tax Court of Canada in 1988. The appellants submit that persons involved in the early part of the process had to be contacted, supporting evidence had to be collected, detailed and thorough lists of all fees, costs and disbursements had to be prepared: all this endeavour was time consuming.
[6] The litigation lasted 14 years. After perusal of the record and having sat on the appeal, I am satisfied that it was a complex case, involving numerous witnesses and experts as well as intricate and novel issues of national interest. I am also satisfied that the respondent suffers no prejudice by reason of the delay. In these circumstances, it is appropriate to grant the request for an extension of time.
The merits of the motion for directions to the assessment officer
[7] This Court has discretion under Rule 400 to derogate from the general principle established in Rule 407, namely that, unless otherwise ordered by the Court, costs are to be awarded in accordance with column III of the table to Tariff B. Rule 400(3) provides a non exhaustive list of factors that the Court may take into account in exercising its discretion. I have already mentioned the importance and complexity of the issues which were greater than the average importance and complexity envisaged under Column III of Tariff B. Indeed, the Canadian Bankers Association, the Canadian Chamber of Commerce, the Canadian Institute of Public Real Estate Companies, the Toronto Stock Exchange, the Comité des gouverneurs of the Montreal Exchange, the C.D. Howe Institute and the Investment Funds Institute of Canada all expressed their views as to the national importance of the issue raised by the proceedings and the adverse impact that the law, as decided by the Tax Court of Canada and the Federal Court, Appeal and Trial Division, would have had on Canadian capital markets: see in the Motion Record, at pages 51-71, the affidavits of William B.P. Robson, Senior Policy Analyst at the C.D. Howe Institute; Barbara G. Stymiest of the Canadian Institute of Chartered Accountants; Warren Law, Vice-President Corporate Affairs and General Counsel of the Canadian Bankers Association; John Mountain, Vice-President, Regulation of the Investment Funds Institute of Canada; Michael Brooks, Executive Director of the Canadian Institute of Public Real Estate Companies; Luc Bertrand, président du Comité des gouverneurs de la Bourse de Montréal; the letter of Nancy Hughes Anthony, President and Chief Executive Officer of the Canadian Chamber of Commerce.
[8] The appellants were entirely successful before the Supreme Court of Canada and were granted costs throughout. The amounts claimed and recovered in their proceedings were substantial. They were allowed a deduction, previously refused, for an incurred interest cost of 6 millions while being imposed on a capital gain of 9.2 millions generated by a borrowed sum of 6.5 millions. Moreover, on May 16, 1997, more than two weeks before the beginning of the hearing on the merits in the Trial Division of this Court, the appellants had made an offer of settlement in writing which was refused by the respondent.
[9] The volume of work required from counsel in this litigation was substantially more than the amount of work normally involved in an appeal before us. The hearing before the Tax Court of Canada lasted 10 days. Ten witnesses were heard and over 360 exhibits were filed. The exhibits were contained in 19 volumes totalling more than 4000 pages. The hearing also generated 10 volumes of transcripts comprising 2,231 pages. The Books of Authorities, consisting in seven volumes, referred to 145 cases and articles of doctrine. Seven witnesses were heard before the Trial Division of this Court and the hearing on the merits went on for 11 days. In our Court, three days were devoted to the appeal based on an appeal record comprising 5,960 pages. The appellants' submissions were contained in a 106-page memorandum of facts and law. These figures illustrate the volume of work generated throughout by the importance and complexity of the issues.
[10] For these reasons, I have come to the conclusion that the appellants deserve increased costs for their appeals. However, as the appeals were heard together, I would allow a single set of costs, including expert costs.
[11] Consequently, I would allow the appellants' demand for an extension of time and their motion for directions as to costs. I would direct the assessment officer to assess and tax the appellants' costs in accordance with Column IV of the table to Tariff B of our Rules. I would also direct the assessment officer to allow fees for a second counsel at the hearing before this Court for an amount equal to half the fees awarded for first counsel.
[12] Copies of these reasons are also to be filed in files A-885-97, A-886-97 and A-887-97.
"Gilles Létourneau"
J.A.
"I concur
Alice Desjardins J.A."
"I agree
Robert Décary J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
DOCKETS: A-884-97, A-885-97, A-886-97, A-887-97
STYLE OF CAUSE: Ludco Enterprises Ltd. et al. v. Her Majesty the Queen
MOTION DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS FOR ORDER: LÉTOURNEAU J.A.
CONCURRED IN BY: DESJARDINS J.A.
DÉCARY J.A.
DATED: November 18, 2002
WRITTEN REPRESENTATION BY:
Guy Du Pont FOR THE APPELLANT
SOLICITORS ON THE RECORD:
Davies Ward Phillips & Vineberg LLP FOR THE APPELLANT
Montreal, Quebec
Morris Rosenberg FOR THE RESPONDENT
Deputy Attorney General of Canada