Date: 20001128
Docket: 97-1789-IT-I; 97-1790-IT-I; 97-1833-IT-I; 97-2450-IT-I
BETWEEN:
PATRICIA ANN GRANT, GEORGE GRANT, BRIAN S. MARKELL,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for order
Bowman, A.C.J.
[1] This appeal is from a taxation of costs by the Registrar of this court, Mr. R.P. Guenette.
[2] The appeals of the above taxpayers were heard together on common evidence under the informal procedure of this court on February 4, 2000. Essentially they involved a claim by the appellants to write down the value of certain interests that they held in a number of properties. They contended that the properties were held as inventory and that their value could be written down as a charge against income.
[3] I agreed with them on two properties (Queen Street and Gallery 2000) but not on the Wellington property. There is no need to set out my conclusions further. They are in my reasons for judgment.
[4] In each of the formal judgments I stated that each appellant was entitled to his or her costs on the basis of one set of counsel fees for all three appellants. For example, in the case of George Grant, the disposition of costs read:
The appellant is entitled to his costs on the basis of one set of counsel fees for him, Patricia Ann Grant and Brian S. Markell.
[5] Counsel for the appellants made an appointment for the taxation of costs and for that purpose had a telephone conference call with the Registrar, Mr. Guenette. A total bill of costs of $7,592.87 was submitted, essentially on a solicitor and client basis.
[6] Before Mr. Guenette, Mr. Peddle argued that he was asking for amounts greater than those set out in the informal procedure rules.
[7] Rules 10 and 11 read:
10.(1) Costs on an appeal shall be at the discretion of the judge by whom the appeal is disposed of in the circumstances set out in subsection 18.26(1) of the Act which reads as follows:
"18.26(1) Where an appeal referred to in section 18 is allowed and the judgment reduces the aggregate of all amounts in issue or the amount of interest in issue, or increases the amount of loss in issue, as the case may be, by more than one half, the Court may award costs to the appellant in accordance with the rules of Court."
(2) A judge may direct the payment of costs in a fixed sum, in lieu of any taxed costs.
11. On the taxation of party and party costs the following fees may be allowed for the services of counsel
(a) for the preparation of a notice of appeal, $150
(b) for preparing for a hearing, $200
(c) for the conduct of a hearing, $300 per half day or part thereof, and
(d) for the taxation of costs, $50.
[8] Subsection 18.26(2) of the Tax Court of Canada Act reads:
(2) The Court may, in deciding whether to award costs, consider any written offer of settlement made at any time after the notice of appeal is filed.
[9] Mr. Guenette, quite rightly in my view, stated that he had no authority to award fees beyond those set out in the rules. Paragraphs 3, 4, 5, 6 and 7 of his reasons read as follows:
[3] I indicated that I had no authority to award fees beyond those set out in the Rules. I offered to adjourn the hearing of the taxation of costs, in order to allow Mr. Peddle to bring a motion before the Court to seek costs beyond the Tariff. Mr. Peddle refused, and indicated he would appeal my certificate of costs under section 14 of the Rules.
[4] I therefore allow the following amounts for the services of counsel under section 11 of the Rules:
(a) for the preparation of the notice of appeal $150
(b) for preparation for a hearing $200
(c) for the conduct of a hearing (two half days) $600
(d) for the taxation of costs $ 50
for a total of $1,000.
[5] I allow $50 for witness' fees under section 12.
[6] The Agent for the Respondent agreed to the disbursements claimed, and I allow them for a total of $246.41. The amount claimed for G.S.T. is taxed off.
[7] I have taxed the bill of costs of the Appellants in the amount of $7,592.87, and $1,296.41 is allowed. A Certificate will be issued in that amount.
[10] Mr. Peddle appealed from Mr. Guenette's certificate. He argued that on such an appeal I have the authority to exercise the discretion that I might have exercised in the original award of costs.
[11] Before I deal with that question, I shall comment briefly on some of the other parts of Mr. Peddle's argument.
[12] On June 15, 1999 Mr. Peddle wrote to the Department of Justice as follows:
Further to our meeting of May 11, 1999, please be advised that my clients are prepared to enter into negotiations to settle the aforecaptioned appeals on the following conditions:
(1) Queen Street and Gallery 2000 will be allowed the claimed inventory writedown.
(2) The Wellington Retirement Centre will be reconsidered with respect to claimed allowable business losses.
It is agreed that you will respond to this letter by June 30, 1999.
I trust this is satisfactory.
[13] There is some question whether this is a "written offer of settlement" since it was an offer to "enter into negotiations". The Department of Justice appears to have regarded it as an offer of settlement. Ms. Gilbertson of that Department replied on August 16, 1999 as follows:
Please be advised that the Respondent rejects the offer of settlement contained in your letter of 15th June 1999 with respect to the above-noted appeals.
I will be out of the office until the 7th September but would be pleased to discuss this matter further thereafter.
[14] It should be noted that Mr. Peddle's letter involved a settlement that was, as it turned out, precisely the disposition made by the court.
[15] Mr. Peddle also argued that the court's discretion in awarding costs in the informal procedure could be based upon the criteria set out in subsection 147(3) of the general procedure rules, which reads:
(3) In exercising its discretionary power pursuant to subsection (1) the Court may consider,
(a) the result of the proceeding,
(b) the amounts in issue,
(c) the importance of the issues,
(d) any offer of settlement made in writing,
(e) the volume of work,
(f) the complexity of the issues,
(g) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding,
(h) the denial or the neglect or refusal of any party to admit anything that should have been admitted,
(i) whether any state in the proceedings was,
(i) improper, vexatious, or unnecessary, or
(ii) taken through negligence, mistake or excessive caution,
(j) any other matter relevant to the question of costs.
[16] Although there is no compulsion to do so in the Tax Court of Canada Act or the informal procedure rules, the criteria in subsection 147(3) are sensible guidelines and should be followed in awarding costs in the informal procedure.
[17] In the event that my disposition of this matter is taken to appeal, I can state without hesitation that had I been asked before Mr. Guenette issued his certificate I would have increased the costs awarded to the appellant. The cases were factually complex and involved substantial documentation.
[18] The evidence and argument were completed in one day as the result of counsel's excellent preparation and efficient presentation. Some lawyers could have spun the hearing out into three days.
[19] I would probably have doubled the tariff items, although I would not have awarded solicitor and client costs, as Mr. Peddle has requested.
[20] Unfortunately, I do not believe that it is open to me to do so after the Registrar has issued his certificate. On an appeal from a taxing officer's certificate I must determine whether the taxing officer proceeded upon any erroneous principle. I do not think that Mr. Guenette did.
[21] There is one relatively minor adjustment that I can make. It arises from an ambiguity in my disposition of costs. It is an error for which I have to accept responsibility. When I said that the appellant was entitled to his [or her] costs on the basis of one set of counsel fees for that appellant and the other two appellants I should have made it clear that I was referring only to one set of counsel fees at trial. I was not intending to limit the fees for preparation of the notice of appeal or for preparation of the hearing. Each appellant is therefore entitled to $150 for preparation of the notice of appeal and $200 for preparation of the hearing. This should increase the taxed amount by $700 ([2 x $150] + [2 x $200]) to $1,996.41.
[22] The appeal will be allowed to give effect to that adjustment.
Signed at Ottawa, Canada, this 28th day of November 2000.
"D.G.H. Bowman"
A.C.J.