Date: 20011207
Docket: 2000-2416-IT-I
BETWEEN:
KUMARA S. RACHAMALLA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Order
Campbell, J.
[1] Judgment was rendered in this matter on October 10, 2001. The appeal was allowed and the parties were permitted to make written submissions with respect to costs.
[2] I have reviewed the written submissions by counsel for both the Appellant and the Respondent.
[3] The Appellant is certainly entitled to costs by virtue of the appeal being allowed. The issue here is the quantum of costs.
[4] The Appellant submitted that if costs were awarded under section 11 of the Informal Procedure Rules, on a party and party basis, the amount would be $1,590.00. It was argued that this amount was in now way indicative of the time and disbursements incurred by the Appellant in preparation and presentation of the case. Appellant suggested that a lump sum award of $14,000.00 would be more reasonable. Appellant counsel argued that such an award would send a clear signal to the Minister of the "...harsh economic consequences of forcing a taxpayer to Court where the evidence to establish a commercial enterprise is so clear in the context of an assessment raised on the basis of no reasonable expectation of profit". Counsel relied on the case of Finch v. The Queen 2000 DTC 2382, where an extraordinary amount of $25,000.00 was ordered against the Crown.
[5] Respondent counsel submitted that an award of costs in the amount of $14,000.00 would be tantamount to solicitor and client costs against the Respondent. Counsel provided a number of authorities [Young v. Young (1993), 108 D.L.R. 4th 193; Bland v. National Capital Commission, [1993] 1 F.C. 541 (F.C.A.); Yacyshyn v. R. 1999 Carswell Nat. 158 (F.C.A.); Yuck v. R. 1996 Carswell Nat. 1356 (T.C.C.)] to support the argument that solicitor and client costs were inappropriate in these circumstances. These cases support the proposition that solicitor and client costs are appropriate where there has been misconduct in the litigation process or vexatious, reprehensible, scandalous or outrageous conduct by one of the parties.
[6] Neither bad faith nor gross negligence is alleged here. Solicitor and client costs are awarded only in exceptional circumstances. There are no allegations of improper conduct on the part of Respondent counsel. However as pointed out by Appellant counsel, there was minimal new documentary evidence introduced at the hearing and the auditor's admissions in evidence supported many of the Appellant's contentions. This was clearly a case which should have been settled before reaching the courtroom. A careful review of the documentary evidence clearly supported the Appellant's case. However solicitor and client costs are not awarded simply because the case has no merit. Though this is not a case that would justify solicitor and client costs, an award based on party and party costs, in no way compensates the Appellant with respect to his costs in mounting the appeal. I therefore award costs to the Appellant in the amount of $5,000.00.
Signed at Ottawa, Canada, this 7th day of December 2001.
"Diane Campbell"
J.T.C.C.
COURT FILE NO.: 2000-2416(IT)I
STYLE OF CAUSE: Kumara Rachamalla and
Her Majesty the Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: June 1 and June 28, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge Diane Campbell
DATE OF REASONS FOR ORDER: December 7, 2001
APPEARANCES:
Counsel for the Appellant: A. Christina Tari
Counsel for the Respondent: Sointula Kirkpatrick
COUNSEL OF RECORD:
For the Appellant:
Name: A. Christina Tari
Firm: Richler and Tari
Toronto, Ontario
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada