Date: 20010406
Docket: 98-2448-IT-G
BETWEEN:
JOHN DISBROWE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Motion heard on February 13, 2001 at Toronto, Ontario by the Honourable Judge Terrence O'Connor
Counsel for the Appellant: Sergio Grillone
Counsel for the Respondent: David W. Chodikoff
Order and Reasons for Order
[1] On February 5, 2001 Counsel for the Appellant filed a Notice of Motion to have the costs of this appeal awarded to the Appellant on a solicitor and client basis or alternatively to have the amounts provided for in Schedule 2 of Tariff B of the Tax Court of Canada Rules ("Rules") increased. The grounds for the Motion are as follows:
1. On or about September 23, 1998, Disbrowe filed a Notice of Appeal with respect to an assessment of his 1995 Income Tax Return. The Notice of Assessment would have required Disbrowe to pay capital gain tax on $150,000.
2. On or about May 5, 1999, Disbrowe offered to settle the outstanding appeal in writing on the basis of a 65% and 35% split of the shares. This offer was not accepted by Revenue Canada.
3. Disbrowe's offer to settle was reiterated on or about May 31, 2000 by way of written correspondence.
4. Disbrowe was entirely successful on the appeal, awarded his costs and beat his Offer to Settle.
5. The amounts at issue are substantial to the Appellant.
6. The amounts at issue are of great importance to the Appellant's financial situation.
7. The appeal was complex and led to a great volume of work and additional expense for the Appellant.
8. The Department of Justice solicitor Mr. Ghan ("Ghan") acted in a most unprofessional manner. He was rude and abusive towards Disbrowe, and acted throughout in a vexatious and improper manner, which unduly lengthen [sic] the hearing of the appeal, which caused additional hardship and expense for Disbrowe.
9. Sections 147, 150, 151, 153 to 154, 157 and 158 of the Tax Court of Canada Rules.
[2] Section 147 of the Rules provides as follows:
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147. (1) Subject to the provisions of the Act, the Court shall have full discretionary power over the payment of the costs of all parties involved in any proceeding, the amount and allocation of those costs and determining the persons by whom they are to be paid. |
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(2) Costs may be awarded to or against the Crown. |
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(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 stage 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. |
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(4) The Court may fix all or part of the costs with or without reference to Schedule II, Tariff B and, further, it may award a lump sum in lieu of or in addition to any taxed costs. |
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(5) Notwithstanding any other provision in these rules, the Court has the discretionary power, (a) to award or refuse costs in respect of a particular issue or part of a proceeding, (b) to award a percentage of taxed costs or award taxed costs up to and for a particular stage of a proceeding, or (c) to award all or part of the costs on a solicitor and client basis. |
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(6) The Court may give directions to the taxing officer and, without limiting the generality of the foregoing, the Court in any particular proceeding may give directions, (a) respecting increases over the amounts specified for the items in Schedule II, Tariff B, (b) respecting services rendered or disbursements incurred that are not included in Schedule II, Tariff B, and (c) to permit the taxing officer to consider factors other than those specified in section 154 when the costs are taxed. |
As a result of the foregoing section, the Court has discretion with respect to costs.
[3] Costs on a solicitor and client basis are rarely awarded. In essence they apply only to extreme cases of misbehaviour of some sort, either by the litigants or by counsel. Parties to litigation must recognize that the Tariff costs will not fully compensate the successful litigant. In my opinion, both counsel of record in this appeal in essence carried on a "cat fight" to use the expression used by Judge Bonner in the hearing of the two Motions mentioned later.
[4] I have carefully considered the Appellant's Motion Record, the Respondent's Motion Record and the Respondent's Book of Authorities. In reaching the conclusion below I have considered the following factors provided for in section 147(3) of the Rules, namely:
(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; and
(f) the complexity of the issues.
My order is as follows:
1. Costs are not to be awarded on a solicitor and client basis.
2. Considering the foregoing factors and in particular the importance of the issues, the complexity of the issues and most significantly the offer of settlement made in writing by the Appellant dated May 5, 1999 and reiterated in writing May 31, 2000 which, if accepted would have avoided this acrimonious appeal, I consider it reasonable to increase the Appellant's costs over the Tariff.
[5] I believe a fair award of costs to the Appellant is to award costs in accordance with Schedule 2 of Tariff B, plus a flat amount of $7,000 over and above the Tariff amounts plus all allowable disbursements.
[6] Counsel for the Respondent submits that the costs to be awarded to the Respondent on the Motions dated August 18, 2000 and September 1, 2000, wherein Bonner, J. granted costs to the Respondent, should be fixed at $1,000. I agree that that is a fair and reasonable amount. Therefore the costs awarded above to the Appellant are to be reduced by $1,000.
[7] Counsel for the Respondent also made efforts to cross-examine Michael J. Buccioni on his Affidavit in support of the Motion for increased costs. Considering that I have based my decision on the factors cited above, and not on the improper conduct of any parties or their Counsel, there is no need for the said cross-examination.
[8] In conclusion, the Motion for increased costs dated February 5, 2001 is allowed to the foregoing extent with costs on a party and party basis with respect to that Motion.
Signed at Ottawa, Canada, this 6th day of April, 2001.
"T. O'Connor"
J.T.C.C.