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Docket: 2000-5089(GST)G
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BETWEEN:
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VINCENZO POLSINELLI,
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
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Before: The Honourable Justice G. Sheridan
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Counsel for the Applicant:
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Domenic Marciano
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Counsel for the Respondent:
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Jason J. Wakely
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____________________________________________________________________
ORDER AS TO COSTS
Upon
motion by the Applicant for an Order pursuant to section 147 of
the Tax Court of Canada Rules (General Procedure)
("Rules") for costs in excess of those to which
he is are entitled under Schedule II, Tariff B
("Tariff") of the Rules;
And
upon the Applicant's request that this motion be disposed of
by the Court upon consideration of written submissions of
counsel;
And
upon the Respondent opposing that motion;
And upon reading the written submissions of both parties;
It is
ordered that the Applicant's motion be dismissed in
accordance with the attached Reasons for Order, and costs be
awarded by the Taxing Officer in accordance with Schedule II,
Tariff B.
Each party shall bear its costs in respect of this motion.
Signed at Ottawa, Canada, this 25th day of October, 2004.
Sheridan, J.
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Docket: 2000-5087(GST)G
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BETWEEN:
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ENZO POLSINELLI,
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
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Before: The Honourable Justice G. Sheridan
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Counsel for the Applicant:
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Domenic Marciano
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Counsel for the Respondent:
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Jason J. Wakely
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____________________________________________________________________
ORDER AS TO COSTS
Upon motion by the Applicant for an order pursuant to section
147 of the Tax Court of Canada Rules (General Procedure)
("Rules") for costs in excess of those to which
he is are entitled under Schedule II, Tariff B
("Tariff") of the Rules;
And
upon the Applicant's request that this motion be disposed of
by the Court upon consideration of written submissions of
counsel;
And
upon the Respondent opposing that motion;
And upon reading the written submissions of both parties;
It is
ordered that the Applicant's motion be dismissed in
accordance with the attached Reasons for Order, and costs be
awarded by the Taxing Officer in accordance with Schedule II,
Tariff B.
Each party shall bear its costs in respect of this motion.
Signed at Ottawa, Canada, this 25th day of October, 2004.
Sheridan, J.
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Citation: 2004TCC720
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Date: 20041025
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Docket: 2000-5089(GST)G
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BETWEEN:
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VINCENZO POLSINELLI,
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent,
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Docket: 2000-5087(GST)G
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AND BETWEEN:
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ENZO POLSINELLI
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER AS TO COSTS
Sheridan, J.
[1] The Applicants, Vincenzo
Polsinelli (2000-5089(GST)G) and Enzo Polsinelli
(2000-5087(GST)G), are each seeking an Order pursuant to
subsection 147(7) of the Tax Court of Canada Rules (General
Procedure) for costs in excess of Schedule II, Tariff B of
the Tax Court of Canada Rules. In Judgments dated April 8,
2004, I allowed, with costs, the appeals filed by the Applicants
on the basis that they had exercised due diligence within the
meaning of subsection 323(3) of the Excise Tax Act and
were, therefore, not liable for the unremitted GST of the
corporation for which they had served as directors.
[2] The Applicants are requesting:
(a) An Order (i)
allowing counsel to make oral and/or written submissions to this
Honourable Court with respect to costs, and (ii) to have this
Honourable Court fix costs in consequence thereto.
(b) In the
alternative, an Order directing that costs be assessed by a
taxing officer and directing said taxing officer to award costs
in accordance with Schedule II, Tariff B to the date of the
Applicants' first written settlement offer, and thereafter to
award costs on a solicitor-client scale and without regard to
Schedule II, Tariff B, or otherwise providing said taxing officer
with such other direction as this Honourable Court deems
just.
[3] Counsel for the Respondent takes
the position that the Applicants' applications ought to be
dismissed with a direction to the Taxing Officer:
(a) that [Enzo
Polsinelli's] costs be calculated in accordance with Class C
of Schedule II, Tariff B of the Tax Court of Canada Rules
(General Procedure); and
(b) that [Vincenzo
Polsinelli's] costs be calculated in accordance with Class A
of the tariff , with the elimination of fees for pre-hearing
conference, status hearing, preparation for hearing, and conduct
of the hearing.
[4] With regard to the Applicants'
claim for costs on a solicitor-client basis, the case law is
clear that the awarding of such costs is "exceptional and
generally to be awarded only on the ground of misconduct
connected with the litigation"[1]. There is simply nothing in the
Respondent's conduct that could properly be characterized as
"reprehensible, scandalous or outrageous" so as to
justify such an award.
[5] In determining whether the
Applicants ought to be granted party and party costs in excess of
the Tariff, the Court must have regard to the criteria set out in
subsection 147(3) of the Rules:
(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.
[6] Applying the criteria to the
Applicants' case, the result of the proceeding is that they
were successful in their appeals. Though the amounts in issue
were significant to the Applicants personally, they were not, in
the broader context, extraordinarily large. Likewise, the issues
were important to the Applicants, but not in the sense of blazing
a trail through unexplored legal terrain. On the same principle,
neither the "volume of work" nor the "complexity
of the issues" merits a larger award of costs. Regarding the
Applicants' offers to settle, I am in agreement with the
decision of my colleague, Lamarre, J. in Miller v.Canada[2] in which she held that the
analysis in Lyons v. Canada[3] applied with
equal vigour to an award of costs in excess of the Tariff:
...
para
10
The Applicants place special emphasis on paragraph 147(3)(d) of
the Rules. It provides that in exercising its full discretionary
powers over the payment of costs under subsection 147(1) the
Court may consider any offer of settlement made in writing. The
word "may" is to be construed "permissive":
subsections 2(1), 3(1), section 11 of the Interpretation Act. I
do not construe the paragraph referred to as legislating that if
an offer in writing to settle has been refused the Court shall
award solicitor and client costs to the offeror if the offeror
obtains a judgment more favourable than the terms of the offer to
settle, the award to be effective the date of refusal. This is
the essence of the applicants' argument and the import of it
is that rule 49.10 of the Ontario Rules of Civil Procedure is to
be regarded as, in effect, incorporated in the Rules. In argument
counsel for the applicants cited rule 49.10 and jurisprudence
relating to it. That rule reads:
"49.10(1)
Where an offer to settle,
(a) is made by a
plaintiff at least seven days before the commencement of the
hearing;
(b) is not withdrawn
and does not expire before the commencement of the hearing;
and
(c) is not accepted
by the defendant,
and the plaintiff obtains a judgment as favourable as or more
favourable than the terms of the offer to settle, the plaintiff
is entitled to party and party costs to the date the offer to
settle was served and solicitor and client costs from that date,
unless the court orders otherwise."
para
11
There is no rule analogous to 49.10(1) in the Rules and its
intendment cannot be regarded as incorporated therein by
necessary implication.
[7] The criteria in paragraphs (h),
(i) and (j) of subsection 147(3) have no application in this
matter.
[8] In Continental Bank of Canada
v. Canada[4], Bowman, A.C.J. recognized that
costs awards were not designed to cover the full costs of
litigation:
...
para
9
It is obvious that the amounts provided in the tariff were never
intended to compensate a litigant fully for the legal expenses
incurred in prosecuting an appeal. The fact that the amounts set
out in the tariff appear to be inordinately low in relation to a
party's actual costs is not a reason for increasing the costs
awarded beyond those provided in the tariff. I do not think it is
appropriate that every time a large and complex tax case comes
before this court we should exercise our discretion to increase
the costs awarded to an amount that is more commensurate with
what the taxpayers' lawyers are likely to charge. It must
have been obvious to the members of the Rules Committee who
prepared the tariff that the party and party costs recoverable
are small in relation to a litigant's actual costs. Many
cases that come before this court are large and complex. Tax
litigation is a complex and specialized area of the law and the
drafters of our Rules must be taken to have known that.
Bowman, A.C.J. went on to say that " ... [i]n awarding
costs in an income tax appeal it should be borne in mind that
whether the taxpayer is successful or unsuccessful the expenses
of prosecuting an appeal (net of any costs recovered), including
costs awarded against the taxpayer, are deductible in computing
income under paragraph 60(o) of the Income Tax Act."
[9] With these words in mind and
having considered the arguments of counsel in light of the
criteria in subsection 147(3) of the Rules, I am unable to
conclude that the Applicants are entitled to costs in excess of
these set out in the Tariff. Accordingly, the application is
dismissed and costs shall be awarded by the Taxing Officer in
accordance with Schedule II, Tariff B. Each party shall bear its
own costs in respect of this motion.
Signed at Ottawa, Canada, this 25th day of October, 2004.
Sheridan, J.
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