Docket: 2009-2898(IT)G
BETWEEN:
SHIRLEY PATRICIA MCKENZIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion
heard in writing, as agreed upon by the parties at a
case management hearing held by
teleconference
on January 13, 2012 at Ottawa, Ontario.
Before: The Honourable Justice Patrick
Boyle
Representations:
|
Counsel for the Appellant:
|
David C. Nathanson, Q.C.
Adrienne K. Woodyard
|
|
Counsel for the Respondent:
|
Donna Dorosh
Darren Prevost
|
____________________________________________________________________
ORDER
UPON MOTION brought by the appellant for an
order extending the time within which the appellant may request costs on a
substantial indemnity basis after the date of a settlement offer; and,
A direction that the appellant is entitled
to such costs, as well as party-and-party costs to the date of service of the
Settlement Offer, plus reasonable disbursements and applicable taxes.
AND UPON reading the Affidavit of David C.
Nathanson, dated February 3, 2012, filed in support thereof;
AND UPON receipt of the written submissions
of both parties;
IT IS ORDERED THAT, in accordance with the
attached Reasons for Order:
1.
The appellant’s motion
for an extension of time to request increased costs is dismissed;
2.
The appellant is
entitled to costs in accordance with the applicable tariff, pursuant to the
judgment rendered; and
3.
The respondent is
entitled to its costs of this motion.
Signed at Vancouver, British Columbia, this 9th day
of October, 2012.
"Patrick Boyle"
Citation: 2012 TCC 329
Date: 20121009
Docket: 2009-2898(IT)G
BETWEEN:
SHIRLEY PATRICIA MCKENZIE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Boyle J.
[1]
Taxpayer’s counsel has
made a request for an increased costs award following complete success, with costs,
on the merits at trial. The request is for costs on a substantial indemnity basis
following the date of a settlement proposal made by the appellant and based
upon the Tax Court of Canada Practice Notes Nos. 17 and 18 and proposed
Rule 147(3.1).
[2]
The appellant is
relying upon her pre-trial written proposal that the matter be settled “on the
basis that the respondent consent to judgment allowing the appeal, without
costs to either party”.
[3]
Following the hearing
of the appeal on April 27 and 28, 2011, judgment was rendered on June 9, 2011
allowing the appeal in full with costs.
[4]
At the conclusion of
the hearing of the appeal, I raised with the parties the issue of counsel wishing
to speak as to costs. I clearly indicated that, if either party wanted to make submissions
on costs after judgment was issued, they were to be made within 30 days
following judgment. I asked taxpayer’s counsel if that would be satisfactory
and he indicated it would.
[5]
The time frame of 30
days following judgment is consistent with the 30 day timeframe set out in Rule
147(7) dealing with costs generally.
[6]
In his first request to
the Court for costs in excess of tariff, made in a letter dated November 24,
2011, taxpayer’s counsel indicated that the respondent had not referred to any
requirement in the Rules, or any previous decision supporting her position that
the request was out-of-time. Further, he did not recall the 30 day time frame
being discussed and agreed to at the hearing.
[7]
A teleconference
hearing was held on January 13, 2012 to address the issue of the appellant’s
request for increased costs. At that time, I read the relevant portion of the
transcript to counsel, drew his attention to Rule 143(7) and the decision of
Rip J. in Atcon Construction Inc. v. Her Majesty the Queen, 2003 TCC 174,
which in turn refers to the Federal Court of Appeal decision in Canada v.
Ontario Development Corp., 92 DTC 6121 . A schedule
was set through to March 2012 to permit a motion to be brought and written
submissions made with respect to:
1.
a motion to extend the
time to apply for increased costs;
2.
the timeliness of the
request already made; and
3.
the merits of the
request for increased costs in either event.
The appellant’s motion was brought in February 2012
and the last of the submissions were received in March 2012.
I. Timeliness and application regarding
extension of time:
[8]
It is clear that the
appellant’s initial written request for increased costs was out of time, being beyond
the applicable 30 day period. See the decision of Bowie J. in Bibby v. Her
Majesty the Queen, 2010 TCC 111.
[9]
This is not an
appropriate case in which to grant the application to extend time under the
Rules for the following reasons:
1.
Taxpayer’s counsel is a
very experienced tax litigator before our Court, had co-counsel, and is a
member of a well-resourced firm;
2.
The 30 day time limit
was drawn to counsel’s attention by the judge at the conclusion of the hearing.
Further, counsel was asked if 30 days was sufficient and he agreed that it was;
3.
The 30 day limit is
clearly set out in the same Rule 147 which permits increased costs in the event
of a no less favourable settlement offer;
4.
Rule 147(3.1) relating
to settlement offers should not be automatic or mandatory. It certainly does
not limit a trial judge’s overall discretion with respect to the awarding of
costs before it is enacted; this is implicit in Practice Note No. 17;
5.
The appellant’s counsel
had no intention to apply for increased costs within the applicable 30 day
period. Even if, as put forth, he wrongly thought the 30 days should start from
the expiry of the appeal period, he still was outside the mistaken 30 day
period, not having even contacted the respondent until after that time.
6.
Inadvertence of counsel
is not generally a reasonable explanation for delay sufficient to support an
extension of time. The decision of this Court’s current Chief Justice in Atcon
Construction Inc., addresses this clearly. Rip J., as he then was, quoted
Heald J. in the Federal Court of Appeal decision in Ontario Development
Corp.:
13
[. . .]
. . . In my view, the fact that counsel was not
familiar with the Rules of this Court regarding costs is not a satisfactory
basis for seeking an extension. . . . It seems to me that a 30
day time period is realistic and reasonable. Parties to litigation,
particularly at the appellate level, have a right to expect some degree of
finality to the proceedings in cases such as this where there has been no
indication that the matter is to proceed further. There are no special
extenuating circumstances in this case that would warrant an extension of the
time provided in the Rules from 30 days to approximately 100 days. If this
respondent is entitled, in the circumstances outlined herein, to an extension
amounting to more than three times the period set out in the Rules, it would be
difficult to think of a case where such an application could be refused. An
extension in these circumstances would be tantamount to amending Rule 344(7)(a).
The analysis and comments in these two
cases apply equally in this particular case.
II. The merits of the request for increased
costs:
[10]
Rule 147(3) provides
that, in exercising its discretionary power to determine the amount of costs, the
Court may consider a written offer of settlement. Proposed Rule 147(3.1) has
yet to be enacted. It provides that, in the event a no less favourable
settlement offer is made in certain circumstances, the successful party will be
entitled to substantial indemnity costs after the date thereof. The proposed
rule is addressed in the Court’s Practice Note Nos. 17 and 18. Practice Note
No. 17 provides that, until such time as the proposed Rule 147(3.1)
becomes effective, the practice of the Court shall conform to the proposals.
[11]
I do not accept that a
proposal to settle on a basis that the appeal be allowed in full without costs,
and under threat of seeking substantial indemnity costs if the appeal is
allowed by the Court, constitutes a settlement offer for any of these purposes.
I am of the view that a settlement offer for these purposes has to involve a
degree of compromise. This is supported by such cases as Imperial Oil
Resources Ltd. v. Canada (Attorney General), 2011 FC 652 and Hine v. Her
Majesty The Queen, 2012 TCC 295.
[12]
Otherwise, both parties
to every appeal would routinely propose that the appeal be allowed or withdrawn
without costs, with a view to supporting a claim for increased costs in the
event they succeed, and thereby defeating the ordinary rules, practices and
considerations applicable to the awarding of costs.
[13]
This can create certain
difficulties in the context of proposing to settle all-or-nothing cases as
discussed by the Federal Court of Appeal in CIBC World Markets Inc. v. Her
Majesty the Queen, 2012 FCA 3, and by the Ontario Superior Court of Justice in OMERS
Realty Corporation v. Minister of Finance (Costs), 2012 ONSC 159.
[14]
In the circumstances of
this case, even had the application for increased costs been timely, the
settlement offer relied upon does not constitute the type of settlement offer
warranting consideration for purposes of Rule 147(3) or Practice Note Nos. 17
and 18, nor, in my view, should it for purposes of proposed Rule 147(3.1) if
enacted as worded.
[15]
The only basis for the
appellant’s request for increased costs set out in the Notice of Motion is the
settlement offer. In the written representations, very brief mention is made of
some of the other costs considerations in Rule 147(3). Had the application been
timely, I would not think that, in the overall circumstances of this case,
costs beyond tariff are warranted after considering the relevant factors
enumerated in Rule 147(3). I do not accept that the trial or the trial
preparation proceeded inefficiently. The parties filed a Partial Agreed
Statement of Facts. The trial involved only one issue. No material facts were
in dispute. The parties agreed on a Joint Book of Documents. The evidence was
straightforward. In addition to the taxpayer there were only two other
witnesses. The respondent did not call any witnesses. While novel, the issue
was not particularly complex. In the Reasons for Judgment the issue is
described in a single-sentence paragraph, the position of the parties in three
paragraphs and the Court’s analysis in nine paragraphs.
III. Conclusion:
[16]
In the circumstances,
the appellant’s motion for an extension of time is dismissed and the appellant
is out of time to request increased costs. The appellant is entitled to costs
in accordance with the applicable tariff, pursuant to the judgment rendered.
The respondent is entitled to its costs of this motion.
Signed at Vancouver, British Columbia, this 9th
day of October, 2012.
"Patrick Boyle"
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