Date: 20000413
Docket: T-1677-79
T-3488-82
T-2518-89
T-2521-89
T-2522-89
IN RE: The Income Tax Act
BETWEEN:
GRANT R. WILSON
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
ASSESSMENT OF COSTS - REASONS
CHARLES E. STINSON
Assessment Officer
[1] Further to my Reasons herein issued on October 15, 1999, the Plaintiff presented three bills of costs and the Defendant presented two bills of costs for assessment on a party and party basis. At their request, written submissions were made in addition to those led orally.
[2] The Defendant"s Bills of Costs in T-2518-89 and T-2522-89
| 2 Preparation and filing of Defence, 4-7 5 500.00 |
| 5 Preparation and filing of Motion to dismiss for |
| want of Prosecution 3-7 4 400.00 |
| 7 Discovery of documents, including listing, 2-5 4 400.00 |
affidavit and inspection
| 8 Preparation for examination for discovery of 2-5 4 200.00 |
Plaintiff and Defendant () 2 T-2522-89)
| 9 Attending on examination for discovery of 0-3 2 600.00 |
Plaintiff and Defendant, (per hour x 6 hours)
() 2 T-2522-89)
| 13 Counsel fee: 2-5 5 250.00 |
(a) preparation for trial, including correspondence,
preparation of witnesses, issuance of subpoenas, and
other services, 5 units x $100.00)() 2 T-2522-89)
| (b) preparation for trial, per day in Court after 2-3 3 300.00 |
the first day, 2 days x $300.00 () 2 T-2522-89)
| 14 Counsel fee: 2-3 3 2,700.00 |
(a) to first counsel, per hour in Court (18 hours)
() 2 T-2522-89)
| 24 Travel by counsel to attend at examinations 1-5 3 150.00 |
() 2 T-2522-89)
| 24 Travel by counsel to attend at trial 1-5 3 150.00 |
() 2 T-2522-89)
| 25 Services after judgment 1 1 100.00 |
| Transcripts of Discovery 915.75 |
Filing Fee of Joint Application for Time and Place for
| Meetings in London, Ontario with client and witness: ... 470.39 |
| TOTAL DISBURSEMENTS: $2,980.76 |
| TOTAL COSTS, FEES AND DISBURSEMENTS: $8,730.76 |
Assessment of Costs (range 2-6)
| Note: The above is the bill for T-2518-89. The bill for T-2522-89, totalling $5,850.00, differs from it only in that the bracketed notes for items 8, 9, 13, 14 and 24 refer to T-2518-89 instead and there is only one disbursement of $100.00 for the joint application for the trial date, all other disbursements having been merged with T-2518-89. As is common practice, item 26 is claimed in both, but without specifying an amount, on the basis that oral submissions must be completed before counsel can gauge an amount appropriate for the overall difficulty. |
The Plaintiff"s Position on T-2518-89 and T-2522-89
[3] The Plaintiff renewed his objection under the Income Tax Act, s.225.1(3) to these costs being assessed while his appeals against the very judgments awarding costs are outstanding. The costs may be assessed, but not set off against costs owed to him in the other matters. The Court heard these 2 matters (on director"s liability) with T-2523-89 in less than 1 day. The trial in T-2521-89 occupied approximately 1 day. Given that a 5th case, T-2519-89, came on in the same time frame, the fees claimed for these two bills of costs are excessive and should be reduced. The Plaintiff asserted that the trial sitting hours were 9:30 a.m. - 4:30 p.m. and 9:30 a.m. - 4:00 p.m., respectively, for the 2 days with 1" hours lunch each day. Therefore, the 18 hours claimed for item 14 are excessive. The Plaintiff argued that, as he had not claimed for item 26, the Crown should be denied said item. The Plaintiff suggested fees of $4,250.00 in place of the $5,750.00 for each bill of costs.
[4] The Plaintiff argued that $840.42 for photocopies is excessive and that the supporting evidence was insufficient. Given the $470.39 claimed for witness meetings, the $339.60 for a single witness, who testified for less than a day, is excessive. The associated mileage claim is excessive given an 80 kilometre round-trip. The 2nd witness did not attend at trial and never produced the documents required of him. The Plaintiff noted that he would have claimed meals and other expenses for his witnesses if he had realized that the Crown would do so. The Plaintiff suggested $1,819.00 total for disbursements.
The Crown"s Position on T-2518-89 and T-2522-89
[5] Counsel for the Crown corrected item 9 by changing 6 hours to 7 hours consistent with the court reporter"s invoice. The Crown noted that the three director"s liability cases were heard on common evidence in the same 2 days as T-2521-89, which addressed a separate issue. The Crown was successful with costs in T-2518-89 and T-2522-89. The Plaintiff was successful without costs on that 3rd matter, T-2523-89, and successful with costs on T-2521-89. Upon commencement on the 1st day, the parties agreed to dismissal without costs of two additional cases, T-2519-89 and T-2520-89. Therefore, counsel for the Crown, by using the Plaintiff"s submissions above, coupled with analysis of the trial transcript, suggested 84% of the time at trial be allocated to T-2518-89 and T-2522-89, and that 16% be allocated to T-2521-89. That is, item 14 in each of T-2518-89 and T-2522-89 should be amended to reflect 4.125 hours for each and item 14 in T-2521-89 should be amended to reflect 1.75 hours. The Crown noted fee items 8, 9, 13, 14 and 24 were divided between the two files because both were heard on common evidence. The actual hours, ie. the 7 hours for item 9, might not necessarily have been split evenly between the two files, but for convenience in the bills of costs, they were claimed that way. Given the duration of assessment of costs, the Crown claimed 3 units for item 26 in each file.
[6] The Crown noted that the evidence breaks down each component of the witness fees and confirms payment. The Receiver"s accountant was under subpoena to attend and produce records. Subsequently, the records were admitted as evidence without his testimony, but his presence was still necessary in the event of controversy over admissibility. The witness fees claimed were consistent with the Federal Court Tariff s. 3 and the Ontario Rules of Civil Procedure Tariff A. The photocopy charges detailed at $0.08 per page in the evidence were particular to these two files.
Assessment of T-2518-89 and T-2522-89
[7] The Plaintiff"s affidavit sworn November 13, 1999 renews his objection under the Income Tax Act ss. 222.1 and 225.1 to assessments of costs pending disposition of his appeals. I have already addressed this point in paragraphs [5] -[7] of my Reasons herein supra. In assessing these two bills of costs, and the Plaintiff"s three bills of costs below, I have applied Grace M. Carlile v. Her Majesty the Queen1 . The Crown does not claim maximum fees for everything. Its analysis of the trial transcript was rough, but I find little in the evidence as an alternative. I allow the fees as presented except for certain changes noted below.
[8] The discretion described in Rule 400(1) must be a visible allowance by way of an order or judgment. This having been precluded by withdrawal of the motion for want of prosecution, and final judgments in such circumstances not being taken as addressing preparation for such interlocutory proceedings, I disallow item 5. By contrast, the final judgment does trigger an entitlement to fee items such as pleadings and discoveries because those interlocutory events are not a function of an interlocutory proceeding disposed of by way of an Order. The context of Rule 2, defining "assessment officer", means that I do not exercise the "discretion of the Court" to authorize item 24 in the first instance. That authorization being absent, I must disallow the two item 24's. However, consistent with my decision in ITV Technologies, Inc. v. WIC Television Ltd.2, I allow the associated travel disbursements. Given the Crown"s analysis, and the difficulty in attributing individual files to given points in the trial sitting days, I allow the Crown only 3 units under item 13(a) in each file, the same as the Plaintiff received below in T-2521-89. Again, noting the roughness of estimates before me, I allow 4.8 hours for item 14(a) in each file at the rate of 2 units per hour. I allow item 26 as claimed. The issues of interest and set-off were important. The fact that the Plaintiff himself did not claim item 26 is irrelevant to the Crown"s entitlement under the judgment. Finally, I allow the remaining disbursements as presented, with one exception below, as reasonable on the record. In particular, the practice is to allow disbursements for witnesses prepared, but not called, if the circumstances existing at the time warranted the outlay as prudent. I reduce photocopies to $660.00 consistent with Local 4004, Airline Division of Canadian Union of Public Employees v. Air Canada3. The rate was not in issue, but the proof of what was copied was less than absolute.
[9] The Plaintiff"s Bill of Costs in T-2521-89
| Item Taxable Service No of Hours Units Fees |
| 1. Preparation and filing of a Statement |
| Preparation and filing of Affidavit N/A 6 600.00 |
| 2. Preparation and filing Reply of Defence N/A 6 600.00 |
| 4. Preparation and filing of joint application |
| for trial date N/A 3 300.00 |
| 5. Preparation and filing of a contested motion |
for production of Defendant"s affidavit
| of documents N/A 5 500.00 |
| 6. Appearance on motions 2 2 400.00 |
| 6.(i) Motion on behalf of plaintiff for production |
| of Defendant"s affidavit of documents 1 2 200.00 |
| 7. Discovery of documents including listing, affidavit and inspection |
Preparation of Plaintiff"s Affidavit of
Documents and notice to inspect and notice
| to admit documents and notice under the |
| Canada Evidence Act N/A 4 400.00 |
| 9. Attending Examinations 4 2 800.00 |
| 13. Counsel Fee - Preparation for Trial 8 3 2,400.00 |
| 14. Counsel Fee - per hour in court 7 4 2,800.00 |
| 20. Requisition for hearing N/A 1 100.00 |
| 24. Travel by Counsel N/A 1 100.00 |
| 25. Service after judgment N/A 1 100.00 |
| 26. Taxation of costs N/A 3 300.00 |
| Total units 47 $10,200.00 |
DISBURSEMENTS
...
| Fees for the party who commences a proceeding |
| in the Trial Division $20.00 |
| 2. Other disbursements as were reasonably |
necessary in the proceedings: (Annex A ...)
| Sub-total 1,290.96 $1,290.96 |
| 3. All services, sales or consumption taxes paid or payable |
on counsel fees and disbursement:
| Prejudgment interest from July 23, 1996 per Section 36 of the |
| Federal Court Act $3,104.00 |
The Crown"s Position on T-2521-89
[10] The Crown conceded items 9, 25 and 26 as presented. Generally, the Crown argued that several fee items were incorrectly claimed as a function of an hourly rate where, in fact, the fee schedule permitted only a global number of units. The Crown argued that item 1 should be reduced to 5 units because this was a straightforward matter concerning whether Revenue Canada was statute-barred from reassessment of the Plaintiff. The extra 6 units for filing an affidavit must be disallowed in the absence of any authority under item 1. The 6 units for item 2 must be deleted in the absence of a Reply to Defence. The Crown argued that item 4 must be deleted because the evidence is that this matter was heard with the director"s liability cases further to a single joint application prepared, filed and paid for by the Department of Justice. Items 5, 6 and 6(i) must be denied in the absence of any motion or even a letter concerning production of an affidavit of documents. As well, given no affidavit of documents, but only a bundle of documents not conforming to the Rules, item 7 should be denied. Alternatively, considering the deficiencies, only 3 units should be allowed in the absence of complexity.
[11] The Crown noted that the entitlement under item 13 is not a function of a number of hours as claimed. Therefore, the 24 units claimed should be replaced by the minimum 2 units. The number of hours actually billed for this and other items is immaterial. Consistent with its analysis above, the Crown argued that 1.75 hours at the lower rate of 2 units per hour, instead of 7 hours, should be allowed for item 14 in the absence of complexity. The Crown asserted that item 20 must be deleted because it applies to appeals, and not trials, and that item 24 must be deleted because the Plaintiff"s counsel resided in the same city as the trial site.
[12] The Crown noted the lack of evidence for disbursements, but conceded them if consistent with his lawyer"s billing. Two exceptions are the $20.00 for institution of the action which should be reduced to the $2.00 authorized by Tariff A1(1)(a)(i) and the $293.75 for transcripts which should be deleted in full because: 1) only the Plaintiff was examined for discovery; 2) his lawyer"s billing discloses no such payment; 3) the Department of Justice actually paid for the examination.
The Plaintiff"s Position on T-2521-89
[13] The Plaintiff asserted that the Crown"s evidence, in addition to his own filings, supports his bill of costs. He argued that the number of hours actually billed by his lawyer, Ian Dantzer, indicates the complexity of this matter. His lawyer"s docket billed 13.0, 10.5, 12.5, 13.4, 1.9, 0.7, 31.5, 16.0 and 5.0 hours for items 1, 2, 4, 5, 6, 7, 13, 14 and 20 respectively for which the bill of costs claims more modest amounts. The Plaintiff asserted that the transcript indices for his discovery in 1990 and for the trial in 1996 were sufficient for me to determine the hours attributable within the trial dates without the necessity of an evaluation of all of the transcripts. The Plaintiff noted that the "N/A" used for items 20, 24, 25 and 26 indicates 1 hour from Mr. Dantzer"s docket was the basis of each claim. The Plaintiff asserted that all disbursements are documented within Mr. Dantzer"s billing and actually total $1,326.83. This litigation addressed reassessments in 1980 and 1988 necessitating legal expenses over a 16 year period.
Assessment of T-2521-89
[14] The Plaintiff"s submissions and materials were problematic. For example, his affidavit sworn November 13, 1999 refers to attached exhibits, but does not append them. He presents fee items such as item 13 as a function of a number of hours, although Tariff B does not so provide. The discovery and trial indices noted above, and left for me to deduce hours attributed for trial, are of no help for item 14. Having read the pleadings and the Court"s Reasons for Judgment, I find that this was not the most complex of cases, but it did raise certain problems. The preamble to the Judgment dated July 23, 1996 confirms that it was heard with 3 other matters over a period of 3 days.
[15] The delay in bringing T-1677-79 and T-3488-82 to assessment was noticeably longer. My adjustments here as a function of my conclusions below on interest are minimal. I allow 5 units for item 1 and remove the 6 units claimed for filing of an affidavit. I delete item 2 in the absence of a Reply of Defence. Although the Plaintiff surely participated in the joint application, the Order setting the trial date was silent on costs, as is the usual practice, and therefore the visible and requisite exercise of the Court"s discretion under Rule 400(1) being absent, I must disallow item 4. Similarly, the record discloses interlocutory motions either withdrawn or allowed without any mention of costs, meaning no authority for items 5, 6 and 6(i) exists. I therefore disallow them. Regardless of the deficiencies alleged, the Plaintiff was obligated to submit to discovery. I allow 3 units for item 7. I allow 3 units for item 13(a). The rate of 4 units claimed for item 14 is beyond Column III. The Crown"s estimate of 1.75 hours attributable to trial in T-2521-89 was rough. I allow 3.5 hours at 2 units per hour for item 14(a). I disallow item 20. I disallow item 24 as above.
[16] I allow the claim for discovery transcript. The Court record discloses discovery for the Plaintiff on August 30, 1990, a date consistent with Mr. Dantzer"s docket. His billing includes entries on November 30 and December 4, 1990 for "Summarizing transcripts", which were likely the discovery transcripts. As well, his billing includes $293.75 for "Transcripts". The claim for disbursements in the bill of costs is more than that billed by his lawyer. If the disbursements do indeed total $1,326.83, the basis for that calculation is not apparent to me. The lawyer"s billing clearly identifies $15.42 as GST, but the bill of costs claims it as PST. Consistent with Local 4004, supra , I reduce the claim for photocopies and allow $1,000.00 total for disbursements inclusive of all taxes. This includes only $2.00 per Tariff A1(1)(a)(i) for institution, in place of the $20.00 claimed. Consistent with my rationale below, I remove the $3,104.00 claimed for interest.
[17] The Plaintiff"s Bills of Costs in T-1677-79 and T-3488-82
| Item Taxable Service No of Hours Units Fees |
| 1. Preparation and filing of a Statement of |
| Claim ( 2 units per claim) N/A 6 $1,200.00 |
| Preparation and filing of Affidavit |
| ( 3 units per claim) N/A 6 1,200.00 |
| 2. Preparation and filing Reply of Defence |
| (2 claims) N/A 6 1,200.00 |
| 4. Preparation and filing of joint application |
| for trial date N/A 4 400.00 |
| 5. Preparation and filing of a contested motion |
for production of Defendant"s affidavit
| of documents (2 claims) N/A 5 1,000.00 |
| 6. Appearance on motions 3 2 600.00 |
| 6.(i) Motion on behalf of plaintiff for production |
of Defendant"s affidavit of documents
| 7. Discovery of documents including listing, affidavit and inspection |
Preparation of Plaintiff"s Affidavit of
Documents and notice to inspect and notice
| to admit documents and notice under the |
| Canada Evidence Act (2 claims) N/A 4 800.00 |
| 9. Attending Examinations (2 claims) 6 2 1,200.00 |
| 13. Counsel Fee - Preparation for Trial 18 3 5,400.00 |
| 14. Counsel Fee - per hour in court 15 3 4,500.00 |
| 20. Requisition for hearing (2 claims) N/A 2 200.00 |
| 24. Travel by Counsel N/A 2 200.00 |
| 25. Service after judgment (2 claims) N/A 2 200.00 |
| 26. Taxation of costs N/A 4 400.00 |
| Total units 53 $19,100.00 |
DISBURSEMENTS
...
| Fees for the party who commences a proceeding |
| in the Trial Division (2 claims) $40.00 |
| Appearance, as a witness (2 days), Robert Earley $40.00 |
| Appearance, as a witness (1 day), David Wall $20.00 |
| 2. Other disbursements ... |
| 3. All services, sales or consumption taxes paid or payable |
on counsel fees and disbursement:
| Prejudgment interest from August 31, 1988 per Section 36 of the |
| Federal Court Act $38,555.00 |
| Note: The Plaintiff claims the above for each file. |
The Crown"s Position on T-1677-79 and T-3488-82
[18] Generally, the Crown argued that the Plaintiff did not discharge his onus to lead sufficient evidence. The timing of the Notice of Change of Solicitor suggests that Mr. Dantzer"s docket is not an appropriate indicator of the effort and cost for this litigation as a whole. The Crown argued that the issue in these matters, being the extent to which farming operations were the Plaintiff"s primary source of income and which loss deductions were permissible, was a question of fact. The Reasons for Judgment at page 4, "The issue of whether a taxpayer fits into the first or second category is almost entirely factual", support this view. Therefore, the Crown argued that each item 1 should be reduced to 5 units. As above, Tariff B does not permit any units for an affidavit under item 1. As above for T-2521-89, the Crown argued that there was no authority to claim items 2, 4, 5, 6, 6(i) and 7. As well, the Registry"s tariff receipt confirms that the Department of Justice originated the joint application underlying item 4. For item 9, the Crown emphasized that only the Plaintiff was examined for discovery and that the Department of Justice arranged and paid for everything, including a confirmation of booking for 3 hours per letter dated October 26, 1983 from the Plaintiff"s counsel. The Crown noted that overtime was possible and that the transcript itself does not log the hours, but, in the absence of sufficient evidence, the 6 hours claimed for item 9 should be reduced to 3 hours.
[19] For item 13, the Crown argued that the bills of costs repeat the same mistakes in T-2521-89 above, ie. calculating the claim as a function of a number of hours contrary to the provisions in Tariff B. As above, the Crown argued for only 2 units in each file. For item 14, the Crown noted that the Court record reflects 2 days for trial. Given the Plaintiff"s emphasis on actual sitting times, and given inconsistencies in the evidence, ie. which docket entries to attribute to trial sittings, the 15 hours claimed should be reduced to 10 hours at 2 units per hour. As above, the Crown argued that item 20 addresses appeals, not trials, and must be removed in each file. The Crown urged the removal of item 24 in each bill for the reasons given in T-2521-89. The Crown conceded item 25 in each file and also conceded 2 units for item 26 in each file.
[20] As above for T-2521-89, the Crown argued that the $40.00 claimed for institution must be reduced to $2.00 in each file per Tariff A1(1)(a)(i). The Crown noted the absence of evidence of subpoenas for witnesses, argued that the $40.00 and $20.00 claimed for witness fees should be modified to allow what the Tariff at the time permitted, and asserted that these, and the remaining disbursements, having been paid once only in total for both files, can be claimed only once in total for both bills of costs. Other than simple listing in Mr. Dantzer"s billing, the record discloses no other evidence to support or clarify the disbursements. That is problematic because Mr. Dantzer was not counsel throughout and therefore it is unclear whether the $886.97 is attributable solely to his representation, as opposed to earlier counsel as well. The $293.75 for transcripts must be deleted because only the Plaintiff was examined for discovery and the Department of Justice paid for that expense. Mr. Dantzer"s billing discloses no record of payment for discovery transcripts.
The Plaintiff"s Position on T-1677-79 and T-3488-82
[21] Generally, the Plaintiff noted that his brother was his original counsel and that, consistent with docket entries, Mr. Dantzer took over at the discovery stage. The billings by counsel preceding Mr. Dantzer, which are the basis of items 1, 2, 5 and 6, are not available. As the Department of Justice used several lawyers, counsel appearing as respondent on this assessment is not as familiar as he is with the demands at every stage of this litigation. The trial occupied 4 days, addressed issues of deductions for a "gentleman" farmer versus those for business ventures and, because of a precedent setting result, caused changes to the Income Tax Act . Relative to Rule 400, the Dantzer billing dated October 24, 1988 reflects the demands on counsel, and on the Plaintiff personally, of this litigation. For items 7 and 9, Mr. Dantzer actually billed 15.4 and 5.7 hours respectively, but the bills of costs claim lesser amounts. The Plaintiff asserted that the evidence discloses that he has spent over $100,000.00 on these matters, but that he charged, for example, only 18 and 15 hours respectively for items 13 and 14 in the face of billings of 30.1 and 22.0 hours respectively for these items in the Dantzer docket.
[22] The Plaintiff said that he did not have copies of receipts because his counsel had retained them. However, the disbursements in Mr. Dantzer"s billing were listed on the basis of those receipts. The $886.97 applied only to these 2 files. The Plaintiff asserted that he would have claimed meals for his witnesses if he had realized that the Crown would do so. The Plaintiff asserted that, if he appeals, he will add claims for disbursements incurred, but not previously claimed. The Plaintiff noted that he has attempted since 1988, via various means including settlement proposals, to effect the return of monies wrongfully seized.
Assessment of T-1677-79 and T-3488-82
[23] As above, in the absence of compelling evidence from the Plaintiff and having read the pleadings and the Reasons for Judgment, I find these matters do not necessarily fall at either the maximum or the minimum of the continuum of ranges in Tariff B. I have some difficulties reconciling the Plaintiff"s submissions and materials. For example, the docket entries for Mr. Dantzer date from November 20, 1987, a point some time after the completion of discoveries confirmed in correspondence dated November 5, 1987 from the Defendant"s counsel. Yet, the Plaintiff"s written submissions dated February 26, 2000, and his oral submissions, assert Mr. Dantzer"s billing as the basis for item 7. Inexplicably, the Plaintiff claims a number of units in each bill of costs for a given service such as item 1, and then by adding one of these notations in brackets for each, "(2 units per claim)", "(3 units per claim" or "(2 claims)", doubles the claim in a manner that misconceives the scheme of the Tariff for fees. I have adjusted the allowances accordingly throughout both bills of costs without further comment. I adjusted the allowances for some items as a function of my conclusions below on interest.
[24] I allow 5 units for item 1 in each file and, as above for T-2521-89, disallow the 6 units claimed for filing of an affidavit. As above for T-2521-89, I disallow the claims in both files for items 2, 4, 5, 6, 6(i), 20 and 24. I allow 4 units for item 7 in each file. I allow the 2 units claimed per hour for item 9, but, given difficulties with the evidence and submissions, for only 2.5 hours in each file. The Plaintiff is entitled to claim item 13 in each file. He did not break item 13 down per its subsections (a) and (b). Preparation for these two matters was surely intertwined. I allow 3 units under item 13(a) for each file. For item 14, I note that the Abstract of Hearing discloses approximately 10 hours total for these two matters in contrast to the Plaintiff"s claim of 30 hours. In the circumstances, I allow 5 hours at 3 units per hour in T-1677-79 and 5 hours at 2 units per hour in T-3488-82 for item 14(a). Notwithstanding the Crown"s concession, the Plaintiff"s doubling factor for item 25 as noted above exceeds my jurisdiction and I reduce the 2 units claimed to 1 unit in each file. Strictly speaking, item 26 is reserved for indemnification for counsel"s time, and not for a lay litigant"s time. However, some time in Mr. Dantzer"s docket could be attributed to assessment of costs. As well, I am aware informally that the Plaintiff has consulted with a lawyer, but confirmation of billing was not before me. In the circumstances, I allow the 2 units conceded in each file for item 26.
[25] As above for T-2521-89, I allow only $2.00 in each file for the Registry fee for filing of the statement of claim. Mr. Wall was called as a witness at trial, but not Mr. Earley. It is well established that a witness, prepared for a valid issue at trial, but not ultimately called by reasons of agreement or settlement, can be approved for costs. Usually, the evidence must establish the framework of necessity in the circumstances existing at the time such costs were incurred, and then the reason for the subsequent change in circumstances. Generally, I found the Plaintiff"s submissions, evidence and calculations problematic and I am not inclined to extend much leeway as a function of Carlile, supra . Therefore, I disallow the $40.00 claimed in each file for Mr. Earley. As for Mr. Wall, the evidence does not specifically attribute his evidence to both files, but I will permit the Plaintiff leeway and approve the $20.00 claimed in each file.
[26] By comparing certain charges in Mr. Dantzer"s billing to disbursements claimed in each bill of costs, I conclude that the Plaintiff has misconceived, as he did for fees, the scheme of costs as it relates to disbursements. For example, Mr. Dantzer"s billing lists $27.36 and $5.55 as the combined totals for both matters for postage and facsimile respectively, but the Plaintiff claims those amounts once in T-1677-79 and then again in T-3488-82. That violates a fundamental premise that a party shall not profit by way of costs, which are an indemnity. I have made the appropriate adjustments in each bill of costs. The Plaintiff"s written submissions attributing the $293.75 for discovery transcript to T-2521-89 are consistent with my reading of Mr. Dantzer"s docket. However, I do not follow the accompanying re-calculation of disbursements to $938.62. I certainly think that the Plaintiff incurred disbursements for these matters in addition to those attributable to Mr. Dantzer"s involvement. Again, per Local 4004, supra , I find the proof for photocopies to be less than absolute and therefore I reduce the allowance for them. I did not give any weight to the Plaintiff"s argument that he would have claimed for certain other disbursements had he realized that the Defendant intended to do so. For all disbursements, I allow $200.00 in each file inclusive of all taxes. I disallow the claim for interest for the reasons given below.
The Plaintiff"s Position on Interest
[27] The Plaintiff argued that interest was paid and recognized by the Department of Justice in T-1677-79 and T-3488-82. The Court awarded interest in those two files. The Plaintiff relied on his affidavit sworn June 11, 1999 to assert that the delay in pursuing costs was the fault of his counsel and not his own fault. Rule 400(3)(o), permitting consideration of "any other matter that it considers relevant", and Rule 409, authorizing the assessment officer to consider factors in Rule 400(3), do not mention interest and therefore do not limit the assessment officer from awarding the interest to which the Plaintiff is entitled. As well, the Federal Court Act ss. 36 and 37 provide for interest. The Plaintiff tendered these written submissions:
| Mr. Wilson is requesting both pre-judgment and post-judgment interest of approximately $18,427.32 on Assessments T-1677-79 and T-3488-82 since 1976/1977, some 22-23 years later. In the re-assessment of 1988, with payment of $495,159.06 in 1991, interest was included, which did not include costs. This payment is currently back in the Courts due to the seizure of these funds without Authority and Law. Interest on the funds paid in 1991 has not been claimed in the new Court Action T-745-99 for Costs. Interest due has already been established on the re-assessment of Taxation years and interest should further be granted on the Costs awarded. There should not be (2) standards. This case established a major Tax deduction precedence within the Canadian Tax Act. |
| Interest on File No: T-2521-89 in the amount of approximately $3,104.00 on a Bill of Costs presented in the amount of $12,506.38, both pre-judgment and post-judgment on a file for Taxation year 1978, which, the claim started in 1979, was re-assessed for the second time in 1988 and was finally adjudicated in 1996. Both the Bill of Costs and interest being claimed is [sic] not substantial on legal costs since 1978. |
| The Federal Court Act allows and grants interest on both pre-judgment and post-judgment. There should not be (2) standards being applied by the Defence. They have asserted interest due on Court Files: T-2518-99 [sic] and T-2522-89, currently under Appeal . Interest was paid by the Defendants on ruling and re-assessment of T-1677-79, T-3488-82 and T-2521-89. The application by the Plaintiff for interest on costs was applied for in the original submission in February 1999, heard by Justice Lufty. It was the Assessment officer that further established with the Plaintiff that interest on costs were applicable under Rule 36 of the Federal Court Act. |
| Simple interest of 6% on File No: T-1677-79 and T-3488-82 is much greater than $18,427.32 since 1976/1977. Also on File No: T-2521-89, simple interest of 6% would be much greater than $3,104.00 since 1979 on $12,506.38 being claimed. The Federal Court Act grants interest in Section 36 and 37. |
| 5) In your review of the Bill of Costs on Assessments T-1677-79; T-3488-82 and T-2521-89, you must consider many factors and Section 400 does not rule out interest. |
| File Nos: T-1677-79 and T-3488-82 commenced in 1976/1977 and were adjudicated in 1988, with a payment of $495,159.06 being made and later seized with interest accrued within. |
| Also File No: T-2521-89 commenced in 1978 and was adjudicated in 1996 with interest accrued with the re-assessment that totally amounted to $156,447.00 |
| In deciding the award of Assessments on File Nos: T-1677-79; T-3488-82 and T-2521-89 under Rule 400(3) Sections (a), (b), (c), (d), (h), (i) and (l), should serve as clear factors on behalf of the Plaintiff"s claims. It may be also noted in Section "E" commencing in May 1991 and into the offer of January 18, 2000, the Plaintiff has made reasonable and fair offers to settle without approval or consideration by the Defendants. |
| I don" [sic ] believe that in your Assessment findings that Section K(ii) can be considered as this reflects within the proceeding and certainly with the Affidavit of June 11, 2999 [sic], it clearly reflects my ignorance on the claim for costs and my knowledge that costs had not been applied for. All of my actions should not be prejudiced on the efforts of a non-solicitor or upon my financial ability to secure a solicitor. Affidavits should not be treated lightly. |
| On receipt of the Defendants [sic] Book of Authorities on February 25, 2000, the Plaintiff with all due regard, does not have the legal expertise to provide, as responding authorities to costs and interest, other that what is provided with the Income Tax Act, Federal Court Rules and Federal Court Act and Court of Justice Act. |
| 6A) Byers Transport Ltd. v. Kosanovich |
| The summation of the hearing paragraph (44) reflects that a Taxing officer"s functions do not include relief or interest. Yet the Crown in its submission of February 23, 2000 page (4) states "it is the Crowns [sic ] position that an Assessment officer has the jurisdiction to disallow or reduce the amount of interest accrued on an award of costs, pursuant to Rule 409 and 400(3) of the Federal Court rules. |
| This case awards interest, although, the high being claimed was reduced. The Plaintiff has not submitted a high rate, even thru the periof [sic]of high interest rates and recession in the 1980's and early 1990's. |
| 6C) Courts of Justice Act - Section 129, grants post-judgment interest, which is being claimed. |
| 6D) Court of Justice Act - Section 128, grants pre-judgment interest "on an order for payment of money, a person is entitled to claim and have included in the order as an award of interest". |
| It is the position of the Plaintiffs since the judgment of 1988 in Court Files T-1677-79 and T-3488-82 and the remittance of 1991, that included interest, both pre-judgment and post-judgment and following the wrongful seizure of funds remitted in 1991 for the order, the Plaintiff has taken continuing efforts for the return and funds in this file. |
The Crown"s Position on Interest
[28] The Crown tendered these written submissions:
| Mr. Wilson has claimed pre-judgment interest pursuant to section 36 of the Federal Court Act in the amount of $3,104.00 on proposed costs of $12,506.38 in court file no. T-2521-89 and in the amount of $38,555.00 on proposed costs of $20,127.68 in court files nos. T-1677-79/T-3488-82. |
| The Crown submits that Mr. Wilson is not entitled to pre-judgment interest on his costs as it is the judgment on the merits of the appeal that gives rise to an award of costs. Hence, the entitlement to costs only came into existence at the time the judgments were rendered and interest, if any, only accrues from that date forward. The Crown further submits that Mr. Wilson should neither be entitled to post-judgment interest on his costs. |
| It is the Crown"s position that an assessment officer has the jurisdiction to disallow or reduce the amount of interest accrued on an award of costs, pursuant to Rules 409 and 400(3) of the Federal Court Rules and that jurisdiction should be exercised in the Crown"s favour in the present case. The Crown acknowledges your decision in the case of Byers Transport v. Kosanovich , [1996] F.C.J. No. 760 (T.D.) at 31 (Q.L.) in which you have ruled that the entitlement to and the calculation of interest is not a function of a taxing certificate but rather a function of the court"s decision as embodied in the judgment. At p. 31 of the judgment, you have stated: |
| "Finally, Kosanovich asked for interest on taxed costs. To put that request in context, I note that, generally, these headings describe the various types of relief available in the disposition of the substantive issues of litigation: (a) liability; (b) directions; (c) damages; (d) costs and (e) interest. Taxation and Taxing Officers are a function of (d) and no other types of relief. Taxing Officers do not, despite appearances to the contrary, award costs. That authority is reserved to the Court or legislation. The Taxing Officer, via taxation, translates said award to a dollar figure. Assignment and/or calculation of interest is not part of that process. Put another way, interest is a function of the Court"s decision as embodied in the Judgment. It is not a function of the Taxing Officer"s Certificate. The entitlement to the interest calculation may become an issue in the enforcement stage of litigation. If a dispute arose, jurisdiction would like [sic ] with the Court and not with the Taxing Officer. In so concluding, I read the Alberta Judgment Interest Act, c. J-O.5 and, in particular, section 6 thereof". |
| The Crown agrees with your reasoning in Byers Transport, however respectfully submits that Rules 409 and 400(3) of the Federal Court Rules allows [sic] you to reduce or disallow the amount of costs awarded to a party based on one of the factors stated in subrule 400(3) of the Federal Court Rules, which includes delay in bringing an application for an assessment of costs. |
| Rules 409 and 400(3) read as follows: |
| 400. (3) Factors in awarding costs -- In exercising its discretion under subsection (1), the Court may consider |
| (k) whether any step in the proceeding was ... |
| (iii) taken through negligence, mistake or excessive caution ... |
| (o) any other matter that it considers relevant. |
| 409. Factors in assessing costs -- In assessing costs, an assessment officer may consider the factors referred to in subsection 400(3). |
| Rule 409 states that an assessment officer may consider the factors referred to in subsection 400(3) in assessing costs. The assessment officer is given discretionary authority to consider any factors contained in subrule 400(3) to determine the amount of costs that should to [sic] be payable to a successful party. The Crown respectfully submits that an assessment officer can therefore reduce or disallow costs on the basis of one of the factors as set out in subrule 400(3). Based on subparagraph 400(3)(k)(ii) or paragraph 400(3)(o) of the Rules, an assessment officer can reduce the amount of costs otherwise payable to a successful party on the basis of delay in bringing its application for an assessment of costs. Subparagraph 400(3)(k)(ii) provides that you may consider whether any step in the proceeding was taken through negligence, mistake or excessive caution and paragraph 400(3)(o) further allows you to consider any other matter that you may consider relevant. The Crown respectfully submits that, based on the reasons below, Mr. Wilson acted negligently in failing to bring his application for an assessment of costs within a reasonable time after the judgments were rendered. As such, the Crown submits that Mr. Wilson"s costs should be reduced by an amount equivalent to the amount of interest otherwise payable on these costs. |
| Mr. Wilson relied on his affidavit sworn June 11, 1999, bearing court file nos. T-1677-89 [sic], T-3488-82 and T-2521-89, for the proposition that he was only advised in January 1999 that court costs had not yet been assessed in the above-named matter. At paragraph 3 and 4 of the affidavit, he states that "In January 1999, I learned from prior counsel that court costs in the above-named matters had not been applied for or requested following the court decisions adjudged". The Crown notes that this evidence is not corroborated by Mr. Dantzer and submits that absent corroboration, little weight should be placed on this evidence in light of the Crown"s evidence to the contrary outlined below. The Crown submits that Mr. Wilson was aware of the procedure to be followed to have his costs assessed as early as September 7, 1989 and that he was notified on at least two occasions prior to January 1999 that costs had not yet been assessed. The Crown submits that Mr. Wilson, while on notice of the procedure required for an assessment of costs, failed to take steps in a reasonable time after the judgments were rendered to have his costs assessed. Mr. Wilson was first notified by letter to his counsel dated September 7, 1989 from Mr. J. Paul Malette of our office that that [sic ] the Crown had not received a Bill of Costs in respect of court files T-1677-79, T-3488-82. The letter specifically requests that a bill of costs be forwarded to our office for our review (Tab A of the Affidavit of Kevin Dias in court files nos. T-1677-79/T-3488-82). The letter states as follows: |
| "I understand that Mr. G. Wilson is seeking his costs in the above referred matter. We have no record of having received a Bill of Costs from your office. |
| If your client wishes to pursue this matter, would you kindly forward a draft Bill of Costs for our perusal?" |
| The Crown was not served with a bill of costs further to this letter. The Crown submits that as at September 7, 1989, Mr. Wilson was notified of the procedure to have his costs assessed and of the fact that a bill of costs had not yet been forwarded to our office. Mr. Wilson was again notified of this fact in a letter received by him from the Honorable [sic] Mr. Pierre Gravelle dated January 4, 1990. This letter is attached as Exhibit no. "8" to Mr. Wilson"s affidavit sworn February 23, 1999 in court file nos. T-1677-79 and T-3488-82. At page 2 of this letter, the Honorable [sic ] Mr. Pierre Gravelle advises Mr. Wilson that, as at January 4, 1990, a bill of costs has not been received by the Department of Justice further to Mr. Malette"s letter dated September 7, 1989. Paragraph 3 of the letter states as follows: |
| "You have also noted that the Minister"s response of May 26, 1989, indicated your court costs had been determined and paid by the Department when in fact this was not the case. I would like to apologize for this error, and any inconvenience it may have cause.[sic ] Revenue Canada"s lawyer for your case, Mr. Paul Malette of the Department of Justice in Toronto, wrote to your representative on September 7, 1989, requesting a Bill of Costs. To date, no reply has been received. If you have any questions, Mr. Malette can be reached by telephone at (416) 973-3105. Furthermore, I would also like to acknowledge receipt of your appeals to the Federal Court - Trial Division for the 1978 and 1979 taxation years". |
| The Crown submits that these letters clearly demonstrate that Mr. Wilson knew as early as September 1989 of the procedure involved to have his costs assessed and that, in fact, his costs had not yet been assessed by the court. Mr. Wilson has not provided any evidence to explain the delay in bringing his application for an assessment of costs until May 1999. The Crown respectfully submits that this delay should be taken into consideration in the calculation of the costs to be awarded to Mr. Wilson in court files nos. T-1677-79, T-3488-82 and T-2521-89. Hence, the Crown submits that the amount of costs should be reduced by an amount equivalent to the interest otherwise payable on these costs. In this regard, the Crown relies on the case of Mintz v. Mintz (1984), 46 C.P.C. 234 (Ont. S.C.) |
| Moreover, the Crown submits that Mr. Wilson should not benefit from the high interest rate that was in place during the recession when delay can be attributed to his actions; Mintz v. Mintz (1984), 46 C.P.C. 234 (Ont. S.C.) |
| Based on all these reasons, the Crown respectfully requests that the costs assessed in favour of Mr. Wilson in court files nos. T-1677-79, T-3488-82 and T-2521-89 be reduced by an amount equivalent to the interest payable pursuant to section 129 of the Courts of Justice Act on these costs. |
As well, the Crown noted that questions 337-342 of the cross-examination on his affidavit sworn June 2, 1999 disclose that he had paid his legal fees from monies properly due to the Crown. That is, as of 1991, no interest was due on Mr. Dantzer"s billings satisfied by that payment.
Assessment of Interest
[29] Interest is defined in Black"s Law Dictionary, Seventh Edition 1999, Bryan A. Garner ed., as the "compensation fixed by agreement or allowed by law for the use or detention of money, or for the loss of money by one who is entitled to its use..." (p.816) Interest can be of two kinds, "that ... agreed to be paid on a loan ... that payable as damages for the non-payment of a debt or other sum of money...In equity, interest seems to have allowed as damages... where there was a wrongful detention of money".4 That is, interest is a penalty or premium for use, delay or deferral relative to money. Essentially, costs are an indemnity and not compensation or damages in the sense of these definitions. This term in Rule 409, "assessing costs", cannot be stretched as function of Rule 407 to add an element of compensation or damages to the assessed costs. In particular, Rule 409 cannot be used as authority to arrive at a final conclusion on the actual dollar amount of costs, and then, before signing off on the Certificate, to take an additional step to compensate, not for the money actually paid, but for the money lost as a function of not having been able to use for other purposes, in the interim, the money actually paid. I think that such relief is available to the parties, but Rule 409, in specifying that I may consider Rule 400(3) factors, cannot be stretched to usurp the Court"s authority in the area of interest, including any relief available under the various statutes cited.
[30] Rule 671, referred to in Mintz, supra, permits the allowance of a "nominal or other sum" for costs for refusal or neglect in bringing a bill of costs to assessment. In Mintz, supra , the assessment officer used interest to crystallize that sum, but clearly he could have used some method other than interest to give effect to the additional power under Rule 671 for exercise by the assessment officer. In contrast, Rule 409 lets me consider certain factors, but permits me leeway only to apply that consideration as a function of Rule 407 in arriving at the actual amount for costs as an indemnity. Finally, the Plaintiff"s evidence is problematic. Paragraph 10 of his affidavit sworn on February 23, 1999 certainly implies that he was aware of the January 4, 1990 letter, addressed to him personally and urging resolution of costs, at some point in time shortly after it was sent. Therefore, his statements in paragraphs 3 and 4 of his affidavit sworn June 11, 1999, that he learned only in January, 1999 that his lawyer had not applied for and received court costs, are contradictory. The Crown has satisfied me that the Plaintiff frustrated its efforts to resolve costs and therefore I have allowed lower amounts above than I might ordinarily have done for some items.
The Plaintiff"s Position on Set-off
[31] The Plaintiff, in addition to submissions on set-off addressing issues covered in my Reasons herein supra, and in addition to certain affidavits (see, for example, attachments to his January 24, 2000 letter), tendered written submissions:
| ... After reviewing Mr. Stinson"s report of October 15, 1999 and his consideration to allow set-offs of the Defense"s [sic ] Bill of Costs T-2522-89 and T-2518-89, is contrary to Rules 221.1; 224.1; 225.1; 225.1(2); and 225.1(3) of the Income Tax Act, which disallows set-offs of Assessed Costs, while under appeal. |
| I have placed H.M.Q. and counsel on notice of the laws and rules disallowing set-offs of this nature while under appeal, which further "prejudices" myself and my claims...(letter Jan. 24, 2000 to Registry) |
| Confirming our telephone conversation of this date, I attach a "Proposed Settlement" on the above Court files and Bill of Costs, from the report of Charles E. Stinson, dated October 15, 1999. |
| As I confirmed, I do not have Counsel of Record on these files, and am representing myself. Within the attached proposed settlement, I have reduced our interest requests by 50% on files T-1677-79; T-3488-82 and T-2521-89. While agreeing to set-offs on your file nos: T-2522-89 and T-2518-89, that are under Appeal and are restricted from set-offs under the Income Tax Act Rules 225.1(2)(3)... Proposed Settlement with Set-off"s subject to Rule 221.1; 225.1; 224.1; 225.1(2) and 225.1(3) ...(letter Jan. 18, 2000 to Department of Justice) |
| Thank you for your letter dated January 18, 2000 enclosing you (sic) proposed settlement of the outstanding bills of costs. |
| As I had indicated in my letter to you dated June 9, 1999, your bills of cost for court files T-2521-89, T-1677-79 and T-3488-82 required adjustments in order to conform with what can be claimed pursuant to the tariff under the Federal Court Rules. I had attached a recalculation of your bills of costs to my letter dated June 9, 1999. As you may recall, your costs were recalculated to $3,800.00 in court file T-2521-89 and in the amount of $6,000.00 for both court files T-1677-79 and T-3488-82. In our opinion, you are only entitled to these amounts exclusive of interest as costs for these court file numbers. Your proposed settlement on the bills of costs is unacceptable as it incorrectly calculates allowable costs in your favour. |
| As I indicated in my letter of June 9, 1999, the Crown is agreeable to setting-off your bills of costs as calculated by the Crown in the amount of $9,800.00 and waiving the balance outstanding by you of $4,780.76 after the set-off. (letter Jan. 20, 2000, to Plaintiff from Department of Justice) |
| ... 7) Collection restrictions and the Crown"s right to set-off |
| Firstly, the Assessment Officer under Section 408(2) and 409 may consider, adjust costs by way of set offs and may consider the factors of Section 400(3). |
| * Section 225.1 - Collection restrictions of the Income tax Act are quite explicit in that "the act imposes certain limits on Revenue Canada collections of unpaid amounts for which a taxpayer has been assessed under the Act. In general, collection actions are limited for 90 days after the date of assessment, or until any obligation or appeal by the taxpayer has been disposed of" it references. |
| * Section (e) restricts the retention of the amount by way of deductions or set-off under Section 224.1 of the Act. |
| * Section 225.1(3) - "where a taxpayer has appealed from an assessment of an amount payable under the Act to the Tax Court of Canada, the Minister shall not for the purpose of collecting the amount in controversy, take any of the actions described in Section 225.1 paragraphs (a) to (g) before the day on which the taxpayer discontinues the Appeal". |
| The Plaintiff submits, although the Assessment has not been made on File Nos: T-2518-89 and T-2522-89, consideration should be made at this point of Assessment whether or not to consider the Assessment. |
| (1) Section 400(3) subsection (a) (1) where there have been 2 different solicitors for the Defendants (Taylor & Shipley) and "0" whether or not Section 225.1 and 225.1(3) of the Income Tax Act must be considered carefully in granting both Assessments and set-off while under Appeal ... (letter Feb. 26, 2000 to Registry) |
The Crown"s Position on Set-off
[32] The Crown, in addition to submissions such as the September 27, 1999 letter referred to below and addressed in my Reasons herein, supra, tendered these written submissions:
| ... Application of Collection Restrictions under the Income Tax Act and Crown"s Right to Set-off |
| Mr. Wilson submits that the Crown is restricted from setting off its costs as against Mr. Wilson"s pursuant to Rule 407(3) of the Federal Court Rules because of the collection restrictions contained in the Income Tax Act. Mr. Wilson submits that the Crown is restricted from any set-off as the Court"s decision regarding court files nos. T-2518-89 and T-2522-89 is presently under appeal at the Federal Court of Appeal. He argues that section 225.1 of the Income Tax Act stays all collection proceedings, which includes the right to set-off, pending the determination of the appeal. |
| The Crown submits that the collection restrictions contained in section 225.1 of the Income Tax Act do not apply to the case at hand. The Crown is not restricted from taking collection action, which includes the right of set-off, once the court of first instance has rendered judgment in favour of the Crown. There are no collection restrictions in the Income Tax Act on an appeal of a decision from the court of first instance. Mr. Wilson relied on subsection 225.1(2) and (3). Subsection 225.1(2) restricts the Crown from taking collection action until ninety days has elapsed from the time the Crown confirms or varies an assessment of tax and subsection 225.1(3) restricts the Crown from collection action until a decision is rendered by the Tax Court of Canada. There are no restrictions imposed on the Crown on an appeal from the decision of the Tax Court of Canada (i.e. the court of first instance). As such, any costs awarded to the Crown is [sic] collectable as against Mr. Wilson. Hence, the Crown respectfully requests that you exercise your jurisdiction to set-off the costs awarded to Mr. Wilson as against the Crown"s costs, on the basis of all of the reasons stipulated in my letter to the Federal Court dated September 27, 1999 ... (letter Feb. 23, 2000, to Registry) |
Assessment of Set-off
[33] The Plaintiff still misconceives the application of the sections of the Income Tax Act cited. However, it does not necessarily follow so easily that the Crown"s position should prevail. My Reasons herein, supra , suggest a broad or liberal interpretation of Rule 408(2): "where parties are liable to pay costs to each, an assessment officer may adjust those costs by way of set-off". I read the cases cited in The Law of Costs , Second Edition, Mark M. Orkin, Q.C. ed. at pp. 2-100.1 to 2-108 and noted the comments addressing instances on both sides of the issue of whether costs associated with independent actions may be set off as of right:
211. CLAIM, COUNTERCLAIM AND SET-OFF
...
211.1 Claim and Set-off
| Set-off and counterclaim are in their nature different, the former being a defence to the main action, and the latter in effect a cross-action. This distinction is important when dealing with the question of costs 711, and it makes no difference for this purpose whether defendant has erroneously shaped his or her defence as a counterclaim instead of a set-off; the substance of the defence has to be regarded, not its mere form.712 When, therefore, a defendant proves a set-off equalling or exceeding the plaintiff"s claim, he or she is entitled to have the action dismissed with costs and, in the latter situation, to judgment as well for the excess with the full costs of the action 713 ... |
231. SETTING OFF COSTS
213.1 Set Off of Costs against Costs
| Where a party entitled to receive costs is also liable to pay costs to any other party, the assessment officer has power to adjust the costs by way of setoff. |
| Ontario Rule 58.05(5)738 provides: |
| 58.05(5) Where parties are liable to pay costs to each other, the assessment officer may adjust the costs by way of set off. |
| The power is a discretionary one, to be exercised on equitable principles, there being no strict right to a set-off.739 The court itself can always set off costs.740 |
| The set-off referred to in the rule is a mechanical calculation only. it [sic] does not refer to equitable or legal set off.741 |
| The word "costs" used in subrule 58.05(5) includes interest properly payable on the costs from the date the costs were ordered.742 |
| The predecessor to Rule 58.05(5) was held to extend to a successful appellant"s costs in the Court of Appeal which may be set off against the costs of the action,743 but not to costs of appeal beyond the Court of Appeal.744 Where there are two defendants, one of whom is entitled to costs of the appeal, the plaintiff may set these off against the costs of the action payable by both defendants.745 |
| The court has sometimes asserted a discretionary jurisdiction to set off costs recovered in separate actions746 so long as both the party in whose favour and the party against whom the set-off is ordered are parties in both actions.747 In Ontario, however, the cases have held that there could be no set off of costs in separate actions even between the same parties,748 and this rule was extended to cover the costs of claim and counterclaim when these were, in fact, two separate and independent actions.749 |
| An application to set off costs awarded to an appellant corporation on the appeal and at trial against costs awarded to individual defendants at trial was refused on the ground, inter alia, that there were no mutual debts between the individual defendants and the corporation and thus no legal basis to apply the equitable rule of set-off.750 |
| Where the costs of the action are being assessed the assessment officer should not close the assessment and certify the result until all interlocutory costs have been assessed although he or she may do so if the party entitled to the interlocutory costs unreasonably delays bringing in the bill for assessment.751 A plaintiff who discontinued an action was held not entitled to set off against defendant"s costs of the action interlocutory costs previously awarded to the plaintiff.752 |
| For purposes of set-off, interest on costs should be calculated according to the dates and rates stipulated in the orders awarding costs and included in the set-off calculations.753 |
213.2 Set Off of Costs against Judgment
| Where the setting off of one set of costs against another set of costs is a discretionary matter reserved to the assessment officer,754 the setting off of interlocutory costs against a judgment subsequently obtained in the action is a matter of right.755 It should be directed by the court in the exercise of its equitable jurisdiction, not left to be dealt with by the assessment officer, and can be given effect to either at the trial or upon a substantive application, the former method being preferable as avoiding expense and confusion.756 Where interlocutory costs are incurred after judgment, these should also be set off against the judgment, although in this case an application to the court has been held necessary.757 Costs of a motion for a new trial have been held to be interlocutory costs, and semble the costs of any motion can be treated as interlocutory for the purposes of set-off,758 for example, the costs of setting aside a writ of seizure and sale.759 The court may also order that trial costs of an opposing party be set off.760 |
| There is no precedent for setting off a costs order against some other claim761... |
| 711 Gates v. Seagram (1909), 19 O.L.R. 216 (C.A.); and see Halifax Sheet Metal Works v. Hiseler (1920), 53 D.L.R. 738 (N.S.S.C.). |
| 712 Gates v. Seagram, supra, footnote 711; Girardot v. Welton (1900), 19 P.R. (Ont.) 162, affd loc. cit. p. 201; Cutler v. Morse (1888), 12 P.R. (Ont.) 594. |
| 713 Ontario Foundation & Engineering Co. Ltd. v. Johnston (1923), 25 O.W.N. 473 (H.C.); Gates v. Seagram, supra, footnote 711. |
| 739 McCarthy v. Cooper (1887), 12 P.R. (Ont.) 125. And see Clarke v. Holmes (1894), 16 P.R. (Ont.) 94 (Q.B.), affg 15 P.R. (Ont.) 269. See, however, Real Estate Loan Co. v. Molesworth (1885), 3 Man. R. 176 (Q.B.). As to setting-off costs in a personal injury action, see Ciulla v. Vaughan (Town) (1988), 13 A.C.W.S. (3d) 110 (Ont. Assessment Officer). |
| 740 Dasmesh Holdings Ltd. v. McDonald (1985), 31 A.C.W.S. (2d) 13 (B.C.C.A.); Atrium Construction Ltd. v. Homestead Heights Ltd. (1990), 24 A.C.W.S. (2d) 169 (Ont. Ct. (Gen. Div.)) (court set off plaintiff"s party-and-party costs of main action against defendant"s solicitor-and-client costs of counterclaim). |
| 741 Ontex Resources Ltd. v. Metalore Resources Ltd.(1997), 69 A.C.W.S. (3d) 805 (Ont. Master). |
| 743 McConnell v. Erdman (1906), 7 O.W.R. 874 (H.C.). |
| 745 Pringle v. Olshinetsky (1908), 12 O.W.R. 197 (H.C.). |
| 746 Reid v. Cupper, [1915] 2 K.B. 147, followed in Barsi v. Farcas, [1924] 2 D.L.R. 660 (Sask. C.A.), and Royal Bank v. Skeans (1917), 36 D.L.R. 390 (B.C.C.A.). And see Bank of Hamilton v. Atkins, [1924] 1 W.W.R. 1157 (B.C.C.A.). |
| 747 Humphrey v. Wilson (1917), 10 D.L.R. 360 (Man. K.B.). |
| 748 York Condominium Corp. No. 329 v. Dazol Developments Ltd. (1979), 12 C.P.C. 182 (Ont. S.C.); Girardot v. Welton (1900), 19 P.R. (Ont.) 201 (Div. Ct.); Cuthbert v. Commercial Travellers Ass"n (1877), 7 P.R. (Ont.) 255. |
| 749 Link v. Bush (1890), 13 P.R. (Ont.) 425 (Common Pleas Div.), followed in Summerfeldt v. Johnston (1895), 17 P.R. (Ont.) 6. |
| 750 677933 Ontario Ltd. v. Dical Investments Ltd. (1992), 34 A.C.W.S. (3d) 1201 (Ont. C.A.). |
| 751 Cousineau v. Park (1892), 15 P.R. (Ont.) 37. See however, Clarke v. Homes, supra, footnote 739. |
| 752 Pawlowski Inc. v. Matos (1978), 6 C.P.C. 113 (Ont. H.C.J.). |
| 753 Ontex Resources Ltd. v. Metalore Resources Ltd. (1996), 67 A.C.W.S. (3d) 233 (Ont. Master). |
| 754 See heading "Set Off of Costs against Costs", supra ... 213.1 |
| 755 Kohen v. Culley, Breay v. Dover Ltd., [1925] 4 D.L.R. 344 (Ont. S.C. App. Div.); Re Banks v. Yule, [1955] 2 D.L.R. 34 (Ont. H.C.J.). In Mitchell v. Stephens, [1930] 1 D.L.R. 980 (Sask. C.A.), the matter was regarded as discretionary, the principle being to do what "is fair for the purpose of preventing absurdity or injustice". See also Young v. Hobson (1880), 8 P.R. (Ont.) 253. |
| 756 Kohen v. Culley, Breay & Dover Ltd., ibid. As to the effect of set-off on a solicitor"s lien, see: Durall Construction v. H.J.. O"Connell Ltd. (1977), 16 O.R. (2d) 713 (H.C.J.); Re Kushner and MacDonald (1976), 14 O.R. (2d) 385 (H.C.J.). As to the rule in Alberta see Sutherland v. Spruce Grove (1919), 44 D.L.R. 375 (Alta. S.C. App. Div.); For Manitoba see Iwanczuk v. Nachewski, [1950], 2 W.W.R. 241 (Man. K.B.); Anderson v. CP.R.. [1937] 2 D.L.R. 184 (Man. C.A.); for Saskatchewan see Stewart v. Lehmann, [1925] 4 D.L.R. 16 (Sask. C.A.); and see (W.E). Phillips Co. Ltd. v. Robinson, [1940] O.W.N. 426 (H.C.J.). See also Landymore v. Hardy (1992), 112 N.S.R. (2d) 410 (S.C.)(where plaintiff obtained judgment for specific performance of offer to purchase property, costs were ordered set off against the purchase price); Poulin v. Pettitt (1992), 10 C.P.C. (3d) 29 (Ont. Ct. (Gen. Div.))(defendant entitled to set off costs against judgment); Kolecki v. McArthur (1992), 132 A.R. 81 (Q.B.) (defendant entitled to set off expenses incurred to obtain evidence of plaintiff"s conduct, against damage award). |
| 757 Elgie v. Butt (1899), 18 P.R. (Ont.) 469 (C.A.). |
| 758 Young v. Hobson, supra, footnote 755. |
| 759 Munro v. DeBlois (1913), 12 D.L.R. 858 (N.S.S.C.) |
| 760 Eastern Canadian Cleaners Ltd. v. S.J. Kernaghan Adjusters Ltd. (1985), 68 N.S.R. (2d) 187 (S.C.T.D.). |
| 761 Canadian Express Ltd. v. Blair (1992), 11 O.R. (3d) 221, 13 C.P.C. (3d) 375 (Gen. Div.). |
The Ontario Rule is essentially identical to the Federal Court Rule. The Court in McCarthy v. Cooper, supra, an appeal from a decision by a Master refusing set-off of costs in a case involving costs payable by both sides to one another in the same action, commented (p. 126): "The words "may be deducted" and "may adjust by way of taxation" indicate that equitable considerations are allowed to enter into the disposal of the contention, and there is no strict right in the matter: Edward v. Hope5, Bennett v. Tregent6." . The Court in Re Clarke and Holmes, Solicitors, supra refused set-off where one set of costs was not yet taxed, reinforced the discretionary nature of the set-off of costs and noted that a payable forthwith provision attached to a set of costs may affect how that discretion should be exercised. In Real Estate Loan Co. v. Molesworth, supra, the Court confirmed that there can be set-off between interlocutory costs.
[34] The decision in Reid v. Cupper, supra, addressing in part the effect of a solicitor"s lien for costs in an unsuccessful appeal against an allowance of set-off of costs between two independent actions with common parties save for an additional litigant in one of the actions, but different causes of action, is instructive on the genesis of set-off and reinforces the concept that it should be very much a function of equitable discretion in the circumstances. The rule referred to at page 151, which describes the powers of the taxing officer for set-off and which apparently attracted interpretations precluding set-offs between independent proceedings, contains this phrase, "In any case", which in its singular construction implying one action, represents in my opinion a distinctly restrictive feature absent in Federal Court Rule 408(2). The Court in Barsi v. Farcas, supra , followed Reid v. Cupper in similar circumstances, i.e. two independent actions, common parties save for an additional litigant in one of the actions, but different causes of actions, and noted that the presence of the additional litigant was irrelevant in the exercise of discretion in favour of set-off between costs of independent actions.
[35] In Sutherland v. Spruce Grove, supra, the Court appeared to view the costs of the action and the costs of the appeal from the trial judgment, in litigation for assessment, taxation and tax enforcement, as costs of independent proceedings relative to the consideration to be given to a solicitor"s lien for costs. The rule for set-off referred to at page 376, and under consideration as to whether it precluded set-off between costs of independent actions, contains this phrase, "in the particular cause or matter", which, in its singular construction implying one action, again represents in my opinion a distinctly restrictive feature not present in Federal Court Rule 408(2). The Court found that the equitable discretion in Reid v. Cupper , favouring set-off of costs between independent actions, if the circumstances warrant, to be the preferred approach. The Court commented, as do Courts in several jurisdictions in the footnoted cases, that it would be unfair to force a solvent person to pay monies owing to an insolvent or unwilling person, himself owing a different sum to the solvent person, without giving that solvent person equitable consideration for set-off as an alternative means of satisfaction. In Humphrey v. Wilson et al, supra, the Court commented on Reid v. Cupper and, indicated that, for set-off of costs between independent actions, the particular parties between which set-off is sought should each be a party in both actions, although not necessarily the only parties.
[36] In York Condominium Corporation No. 329 v. Dazol Developments Ltd. et al, supra, a taxation of costs addressing set-off of costs between two independent actions with the same parties, but different causes of action, the taxation officer was faced with a rule similar to Federal Court Rule 408(2), "Where a party entitled to receive costs is liable to pay costs to any other party, the Taxing Officer may adjust the costs by way of deduction or set-off"(p.183), which he found, for certain reasons, precluded him from exercising discretion "notwithstanding that the parties are the same, and even if it is the equitable thing to do"(p. 185). With respect, as noted below, I think that the scheme of the Federal Court Act and Rules permit a more equitable approach as a function of Rule 408(2), but without a presumption that an assessment officer can usurp the authority reserved to the Court under Rule 400. In Cuthbert v. Commercial Travellers Association, supra , the additional factor of different courts contributed to a denial of set-off of costs between independent actions. In these circumstances, I do not give it weight. In Link v Bush, supra, the Court noted the claim and counterclaim are separate and distinct actions and found that, although equitable considerations appeared to favour a set-off of costs between the independent proceedings in the circumstances, it was bound by its own legislation and jurisprudence to deny such a set-off. In my opinion, those limiting factors are not present in the cases before me.
[37] In Re Banks and Banks v. Yule, supra, the government contended that the monies due to the Plaintiff from the Unsatisfied Judgment Fund (for motor vehicle accidents) further to judgment against the Defendant in the main action could be properly reduced by set-off against the monies due to the Defendant further to judgment against the Plaintiff in the counterclaim. Alternatively, the government asserted that the sum due to the Plaintiff represented an asset available for realization by the Plaintiff relative to his judgment against the Defendant. The unpaid solicitor for the defendant advanced a lien for costs and opposed such set-off. The Court noted past limits (p.38) on the jurisdiction of the Taxing Officer concerning set-off, limitations protecting a solicitor"s lien for costs relative to set-off for which interlocutory costs in the same action were an exception (p.39) and considered the history of equitable jurisdiction concerning set-off (p.39).
[38] In concluding that an action and counterclaim were independent proceedings, but that the solicitor"s lien for costs precluded set-off in the circumstances (pp.42-43), the Court commented (p.42):
| ... Another authority cited in Holmested & Langton, op. cit., is that of Brown v. Nelson, 11 P.R. (Ont.) 121, decided before the introduction of the old R. 253 but after our present R. 115 had come into existence. The result in that case would also seem to support the proposition mentioned in Holmested & Langton but I point out that it was a judgment of a single Judge, who expressed doubt about his power to entertain the matter. At p. 124 of that report, Osler J.A. treated the cause as being comprised of both claim and counterclaim since they arose out of the same transaction. He clearly acknowledged that he did not wish to be understood as holding that where the claim and counterclaim were independent of each other the costs should be dealt with otherwise than they were before the Judicature Act. With respect, it seems to me that such reasoning loses sight of the sharp distinction between a set-off and a counterclaim. A set-off is a defence; a counterclaim is a cross-action. In the former the verdict is only for the balance; in the latter there are two distinct verdicts. Those differences are important but do not seem to have been afforded their proper place in the judgment in Brown v. Nelson. If, as would appear to be the case, the counterclaim was truly in the nature of a cross-action, then the claim and counterclaim could not be looked upon as one cause. It is also to be noted that while an appeal was taken from that judgment the matter was settled before being heard by the Divisional Court... |
Although the Plaintiff here incorrectly relies on the Income Tax Act for his premise, this passage succinctly captures that part of his position asserting that awards of costs, as a function of discrete actions or proceedings, should not be congealed into a single block thereby precluding independent execution and collection of each award of costs all as a function of independent judgments. I found this passage difficult to resolve with my conclusions below because, while it did not preclude an equitable exercise of discretion and rather placed certain conceptual limits on that exercise relative to the potential for prejudice to the solicitor"s lien for costs in the circumstances of Re Banks and Banks v. Yule, it did not appear to preclude it in the circumstances of other independent actions.
[39] An interlocutory proceeding has its own issues and disposition independent of and distinct from the main action or any other interlocutory proceeding and therefore, although part of the continuum of that single piece of litigation, is not part of the deliberations required of the trial Judge. However, consistent with the strict concept of set-off in Re Banks and Banks v. Yule, supra, it arises out of the same cause and is appropriate for set-off. The rationales for set-off of costs between action and counterclaim; between action and appeal and between independent actions, in terms of Re Banks, are much more divisive issues in the authorities. Here, the parties are the same; different causes of action were heard together in one of the trials; the same Court and Act governing subject matter are involved; there is apparently no solicitor"s lien for costs in issue and there is no delay required to address outstanding assessments. I note the affidavit of Douglas A. Ivey sworn March 9, 1999 in T-1677-79 and T-3488-82 disclosing that the Plaintiff"s former solicitor, Mr. Dantzer, is having difficulties with payment by the Plaintiff. However, a solicitor"s lien for costs was not advanced before me.
[40] The Federal Court Act, s. 3 confirms our jurisdiction in equity. Rule 409 is permissive and does not give me authority under Rule 400(1). The cases considered above essentially address the sort of judicial authority contemplated by 400(1). However, I do not think that the exercise of that authority, the source of my jurisdiction, precludes me from equitable considerations. The issue is the degree to which equitable jurisdiction is reserved to Rule 400. As noted in my Reasons herein, supra, the language of Rule 408(2) could be interpreted broadly to favour the Crown"s position. That the Crown may be the most frequent litigant in this Court should not limit its access to equitable considerations. Rule 3 is imperative and requires that the Rules "shall be interpreted and applied so as to secure the just, most expeditious and least expensive determination of every proceeding on its merits." I do not think that its operation is confined to the event of the final judgment, but rather includes events or steps such as here for these assessment of costs. The Crown has satisfied me that, if the results of these five assessments are left for independent executory processes, it has some basis for its concern about prejudice to its position because of an apparent lack of any realistic means of recovery within the jurisdiction against the Plaintiff. I give Rule 408(2) a pragmatic reading in the light of Rule 3 and conclude on equitable considerations that the Crown should receive the set-off requested.
[41] The Defendant"s bills of costs in T-2518-89 and T-2522-89, presented at $9,030.76 and $6,150.00 respectively, are assessed and allowed at $6,260.34 and $3,560.00 respectively. The Plaintiff"s bills of costs in T-2521-89, T-1677-79 and T-3488-82, presented at $15,610.38, $58,682.68 and $58,682.68 respectively, are assessed and allowed at $4,000.00, $3,700.00 and $3,200.00 respectively. I will issue a single certificate of assessment styled in these five actions certifying the above results for a set-off of $1,079.66 in favour of the Plaintiff.
"Charles E. Stinson"
Assessment Officer
Dated the 13th day of April, 2000.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
COURT FILE NOS.: T-1677-79, T-3488-82, T-2518-89, T-2521-89, T-2522-89
| STYLE OF CAUSE: Grant R. Wilson v. Her Majesty the Queen |
| PLACE OF HEARING: Teleconference between Vancouver, British Columbia, North Palm Beach, Florida and Toronto, Ontario |
DATE OF HEARING: February 16, 2000
ASSESSMENT OF COSTS - REASONS BY: CHARLES E. STINSON
DATED: APRIL 13, 2000
APPEARANCES:
Grant R. Wilson the Plaintiff
Nancy Arnold for the Defendant
SOLICITORS OF RECORD:
Morris Rosenberg for the Defendant
Deputy Attorney General of Canada
Ottawa, Ontario
__________________
1 97 D.T.C. 5284
2 T-1459-97 issued January 12, 2000
3 March 25, 1999 in T-323-98
4 Jowitt "s Dictionary of English Law, second Edition, 1977, John Burke ed., p.997
5 14 Q.B.D. 922.
6 6 P.R. 171.
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