Date: 20030206
Docket: T-641-02
Neutral citation: 2003 FCT 128
OTTAWA, Ontario, this 6th day of February, 2003.
The Honourable Mr. Justice MacKay
BETWEEN:
JANDA PRODUCTS CANADA LIMITED
Applicant
and
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR ORDER AND ORDER ON COSTS
[1] The applicant sought judicial review of and an order setting aside the decision of the respondent Minister made by Notice of Reassessment dated 2000-02-22 in relation to taxes claimed under the Excise Tax Act.
[2] Before that application was heard the respondent, acknowledging that the impugned decision may have been based on an erroneous finding of fact and without regard to relevant material, sought an order that the application for judicial review be allowed on consent and the matter be referred for redetermination by the Canada Customs and Revenue Agency ("CCRA"). In the alternative the Minister sought an extension of time to file an application record in response to that filed by the applicant.
[3] The applicant, having sought, over some time, to persuade CCRA officers that it was entitled, on a proper assessment, to a remission of taxes paid and having urged after the reassessment that CCRA again review the matter, all to no avail, opposed the respondent's motion when it came on for hearing in December 2002 in Toronto, Ontario.
[4] After hearing counsel for the parties, on consent I allowed the respondent's application, ordered that the impugned decision be set aside and that the matter be referred to the respondent Minister for reconsideration on terms agreed upon by counsel for the parties.
[5] At the hearing the matter of costs was raised, with the applicant seeking costs on a solicitor and client basis. I indicated that there was no evidence to support an award on that basis. I invited counsel to consult and seek agreement on a recommended level of costs, requesting that if they failed to agree each should provide written submissions on costs by specified dates for consideration by the Court. Counsel failed to agree. Each then made written submissions as directed, and I have had the opportunity to consider those submissions.
[6] For the applicant it is urged that it should have costs, having brought its application as the only means of contesting the audit and assessment after some months of seeking to persuade CCRA that the basis for its audit was in error, all to no avail, only to have the Minister finally concede that appeared to be the case. That concession only came after the applicant's record was filed in its judicial review application. Further, it is urged that the applicant was substantially successful, achieving the objective of its application for judicial review, the entire cost of which was necessary by the failure of CCRA to recognize the inadequacy of its own audit process. The applicant urges that those circumstances warrant a lump sum for costs in excess of the tariff under the Court's Rules in order to provide a reasonable indemnity towards the costs incurred by the applicant.
[7] The applicant submits two draft bills of costs: one on a solicitor and client basis in an amount of $96,951. and the other under Tariff B, column V totalling $15,501., both figures including disbursements of $2,330. including GST and PST taxes. It is urged that an award of costs under the Tariff would leave the applicant out-of-pocket to a significant degree and in the circumstances the applicant seeks costs in the sum of $65,000., approximately two-thirds of the amount of costs on a solicitor and client basis.
[8] The respondent's submissions are summed up in writing as follows:
15. In the circumstances of this case, it is reasonable for the Applicant to be awarded party and party costs under Column III of the table to Tariff B with respect to its Application only. At the hearing of the motion in this matter, the Court refused the Applicant's request for an award of costs on a solicitor and client basis. Such an award is not warranted in this case and the Court rejected this request when advanced at the hearing. As the Respondent was completely successful in its motion, the Applicant ought not to be awarded any costs in respect of that motion. The Respondent's willingness to forgo costs on its motion should be taken into account in awarding costs to the Applicant on its Application. As this matter was of average complexity, it does not warrant an award under Column V of the table to Tariff B. The Respondent should only be liable for those reasonable disbursements, which the Applicant can prove it incurred in pursuing its Application.
Conclusion
[9] In my opinion:
1) as indicated when this matter was heard, there is no evidence that would warrant an award of costs on a solicitor and client basis;
2) for the same reason there is no basis for fixing an award of costs with reference to two-thirds or any other ratio of solicitor and client costs;
3) while each party perceives it was successful on the outcome of the respondent's motion, the respondent claiming that the essence of the relief sought having been obtained by the Minister and the applicant urging that the order allowing the application was on terms which in effect supported its application for judicial review, it is this Court's view that success was divided on disposition of the application by the Minister;
4) in view of the fact that the applicant's costs in preparation of its application for judicial review arose out of the acknowledged questionable process of the CCRA in lieu of an effective practice for auditing of tax returns and remission of credits, fees and costs for the preparation of the applicant's application for judicial review and its costs on the respondent's motion are allowed in the amounts of $7,500. for fees and $2,176. for disbursements excluding amounts claimed for GST which, if paid, is recoverable by the applicant, and for PST which, it is said, is not payable. The sum fixed for fees reflects the mid-level of recoverable costs under column IV of Tariff B in the Court's Rules. That may be significantly less than the costs incurred by the applicant but the amount is fixed considering that the applicant's costs, while they were incurred to respond to the Minister's audit and assessment, arose in the normal course of business, in defending the applicant's circumstances as a taxpayer;
ORDER
IT IS ORDERED that the applicant shall have costs in the amount of $9,676.00, that is $7,500.00 for fees plus $2,176.00 for disbursements, excluding any claim for GST or PST.
(signed) W. Andrew MacKay
____________________________
JUDGE
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-641-02
STYLE OF CAUSE: JANDA PRODUCTS CANADA LIMITED v.
MINISTER OF NATIONAL REVENUE
SUBMISSIONS DEALT WITH IN WRITING WITHOUT THE APPEARANCE OF PARTIES
REASONS FOR ORDER
AND ORDER ON COSTS : The Honourable Mr. Justice MacKay
WRITTEN REPRESENTATIONS BY:
IRVING MARKS FOR THE APPLICANT
ELIZABETH CHASSON FOR THE RESPONDENT
KEVIN DIAS
SOLICITORS OF RECORD:
ROBINS, APPLEBY & TAUB LLP FOR THE APPLICANT
TORONTO
MORRIS ROSENBERG FOR THE RESPONDENT
DEPUTY ATTORNEY GENERAL
OF CANADA