Citation: 2011TCC50
Date: 20110127
Docket: 2004-3464(GST)G
BETWEEN:
IPAX CANADA LIMITED,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Docket: 2004-4526(IT)G
BETWEEN:
DOREEN CRAWFORD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2004-4527(IT)G
BETWEEN:
GARFIELD CRAWFORD,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS RESPECTING SUBMISSIONS ON COSTS
V.A. Miller J.
[1]
In my Judgment in these
appeals, I invited the parties to submit written submissions if they were
unable to reach an agreement with respect to costs.
[2]
The appeals were heard
on common evidence on April 15, 16, July 5 and 6, 2010. The Minister of
National Revenue (the Minister) used the net worth method to reassess the
individual Appellants for the 1995 to 2000 taxation years inclusively. The
following amounts were included in income:
|
Year
|
Garfield Crawford
|
Doreen Crawford
|
|
|
|
|
|
1995
|
$30,328
|
$21,229
|
|
1996
|
$16,119
|
$11,283
|
|
1997
|
$29,734
|
$20,814
|
|
1998
|
$32,345
|
$22,641
|
|
1999
|
$29,355
|
$20,549
|
|
2000
|
$40,495
|
$28,347
|
The Minister of National Revenue (the
“Minister”) relied on subsection 152(4) of the Income Tax Act (the “Act”) to reassess Doreen
Crawford and Garfield Crawford’s 1995 taxation year beyond the statutory
limitation period. The Minister relied on subsection 152(7) to assess the
individual Appellants’ tax liability for the 2000 taxation year. Penalties
pursuant to section 162 and subsection 163(2) of the Act were assessed
for each of the individual Appellants.
[3]
The corporate Appellant’s
GST appeal related to the reporting periods May 1, 1994 to April 30, 2001. The
Minister had increased its GST collectible by the amount of $102,168.25.
[4]
The appeals were
allowed to reduce the assessments by amounts conceded by the Respondent and by
the further amounts of $7,356, $8,628, $7,220, $6,353, $6,181, $6,244 for the
1995, 1996, 1997, 1998, 1999 and 2000 taxation years respectively.
[5]
The Appellants seek
either a partial award of costs or an Order that no costs are to be awarded.
[6]
The Respondent seeks
costs and presents two options for awarding those costs.
Option 1
a)
Costs according to
Schedule II, Tariff B (the “Tariff”);
b)
A lump sum of $10,000
in enhanced costs pursuant to subsection 147(4) of the Tax Court of Canada
Rules (General Procedure) (the “Rules”); and
c)
Costs of the written
submissions fixed at $525
Option 2
a)
Costs according to the
Tariff, plus counsel fees for July 5 and 6, 2010; and,
b)
Costs for the written
submissions fixed at $525
[7]
Section 147 of the Rules
gives the Court a broad discretion in awarding costs but that discretion
must be exercised on a principled basis[1].
Section 147 of the Rules reads:
General
Principles
147. (1) The Court may determine
the amount of the costs of all parties involved in any proceeding, the
allocation of those costs and the persons required to pay them.
(2)
Costs may be awarded to or against the Crown.
(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.
(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.
(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.
(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.
[8]
Costs are normally
awarded in accordance with the Tariff[2];
unless there are unusual circumstances to deviate from it.
[9]
After a consideration
of the factors in subsection 147(3) of the Rules and the circumstances
of these appeals, I have concluded that the Respondent should be awarded costs
on a lump sum basis.
[10]
The Respondent was
mainly successful in these appeals. Statute barred periods and a statute barred
year were opened. Gross negligence penalties and late filing penalties were
upheld. The assessments were largely upheld for all Appellants.
[11]
There were settlement
offers made by both parties. However, neither of the two offers made by the
Appellants addressed the issues underlying the appeals. The first offer was
made on February 17, 2009 and the individual Appellants offered to settle on a
without costs basis if the Minister vacated their assessments. They submitted a
second offer on June 15, 2010, in which they offered to pay $55,000 in total,
on condition that this would satisfy the tax and GST liabilities, including
penalties and interest, for all three Appellants.
[12]
On April 13, 2010, prior
to the hearing of these appeals, the Respondent made an offer to settle on the
basis that the amounts in Garfield and Doreen Crawford’s appeals be reduced by
$2,950 and $2,050 for each of the years in issue. In making this offer, the
Respondent considered the Appellant’s representations regarding personal
expenditures. The result would carry over to the corporate Appellant
accordingly. The Appellants rejected this offer without making a counter-offer.
[13]
On June 30, 2010, the
Respondent made a further offer to settle these appeals on a basis that was
more favourable to the Appellants than the result of the judgment. The
Appellants did not reply to this settlement offer.
[14]
Written settlement
offers are one of the main factors which are considered when making an award of
costs[3]. The Chief
Justice of this Court has stressed the importance of settlement by issuing Practice
Note 17 which allows the Court to consider written settlement offers when
making an award of costs.
[15]
The Appellants’ actions
tended to lengthen these proceedings. They refused to submit a joint book of
documents; and, they initially refused to admit any of the Minister’s audited
numbers, even when presented with the supporting documents. They produced three
books of documents which did not appear on their list of documents. They
produced partial business records which had never been given to the auditor or
appeals officer. All of these productions required that the parties present
arguments with respect to the admissibility of the documents.
[16]
The Respondent has
submitted that its costs, based on the Tariff, are $28,973.89. In the
circumstances, I award costs to the Respondent in a lump sum amount of $30,000.
Signed at Ottawa, Canada, this 27th day of January
2011.
“V.A. Miller”
Email this Content