Date: 20100506
Docket: T-2241-95
Citation: 2010 FC 501
BETWEEN:
MARGARET HORN
Plaintiff
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
AS REPRESENTED BY THE MINISTER OF
NATIONAL REVENUE
Defendant
ABORIGINAL LEGAL SERVICES OF TORONTO
Intervener
and
Docket: T-2242-95
BETWEEN:
SANDRA WILLIAMS
Plaintiff
and
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA
AS REPRESENTED BY THE MINISTER
OF NATIONAL REVENUE
Defendant
ABORIGINAL LEGAL SERVICES OF TORONTO
Intervener
ASSESSMENT OF
COSTS – REASONS
Bruce Preston
Assessment Officer
[1]
By
way of Reasons for Judgment and Judgment dated October 16, 2007 the Court
awarded the Defendant party and party costs separately against each Plaintiff.
[2]
By
way of letter dated December 23, 2009 the Defendant requested the assessment of
the Bill of Costs dated July 6, 2009 by way of written submission.
[3]
Pursuant
to the Direction of February 12, 2010 the parties have filed their submissions
concerning costs.
[4]
From
the correspondence submitted it is apparent that there have been at least three
versions of the Bill of Costs and that the parties have been unable to resolve
the issue of costs despite several attempts. Further, having reviewed the
submissions of the parties it is clear that there are only two issues before
me:
1.
Should
costs be assessed at the low end of Column III due to public interest, and;
2.
Should
the disbursement for Professor Beaulieu’s report be allowed?
Column III
[5]
The
Plaintiffs submit that pursuant to Rule 400(3) (h) of the Federal Courts
Rules an Assessment Officer may consider whether the public interest in
having a proceeding litigated justifies a particular award of costs. In support
of this the Plaintiffs refer to Harris v. Canada 2001 FCT 1408 at
paragraph 222:
222 In
its Report on Standing (Toronto: Minister of the Attorney General, 1989) the
Ontario Law Reform Commission proposed criteria to determine the circumstances
where costs should not be awarded against a person who commences public
interest litigation. Those criteria were:
a) The proceeding involves issues the
importance of which extends beyond the immediate interests of the parties
involved.
b) The person has no personal,
proprietary or pecuniary interest in the outcome of the proceeding, or, if he
or she has an interest, it clearly does not justify the proceeding
economically.
c) The issues have not been previously
determined by a court in a proceeding against the same defendant.
d) The defendant has a clearly superior
capacity to bear the costs of the proceeding.
e) The plaintiff has not engaged in
vexatious, frivolous or abusive conduct.
[6]
The
Plaintiffs rely on criteria a), d) and e) in arguing that costs should be
assessed based on the lowest values in the range set out in Column III.
[7]
Concerning
criterion a) the Plaintiffs submit that the Plaintiffs’ cases were selected to
be test cases heard in the Federal Court. The Plaintiffs further submit:
The Plaintiffs’ actions involved the test
for determining whether employment income of a status Indian is “situated on a
reserve” within the meaning of s. 87 of the Indian Act and is therefore
exempt from taxation. The Tax Court of Canada has described the law regarding
the application of section 87 of the Indian Act as subjective and
leading to unpredictable results. The Plaintiffs’ cases sought to bring clarity
to this area of law, which at that time and to this day remains uncertain.
Seeking such clarification is clearly in the broader public interest
particularly as it involves a matter affecting the livelihoods and tax-planning
of status Indians throughout Canada.
[8]
Concerning
criteria d) and e) the Plaintiffs submit that they are individual taxpayers and
that they did not engage in any improper conduct.
[9]
In
reply to the Plaintiffs’ submissions the Defendant submits:
The test case agreement to which the
Plaintiff refers to in his submissions were commenced with the unilaterally
filing of four Statements of Claim in the Federal Court Trial Division in the
fall of 1995 on behalf of Vicky Clarke, Margaret Horn, Margaret Taibossigai and
Sandra Williams to determine if the taxpayers’ employment income was exempt
from taxation under Section 87 of the Indian Act. The parties agreed to
litigate four test cases on the understanding that the four cases would be
representative of all the situations of OI/NLS workers. The Taibossigai
case was later replaced by the Rachel Shilling case and the Clarke
action was later resolved.
Rachel Shilling
The Federal Court Trial Division found
Shilling to be entitled to a Section 87 exemption for her income from NLS. The
Crown appealed this decision to the Federal Court of Appeal which allowed the
Crown’s appeal on June 4, 2001. Shilling sought leave to appeal to the Supreme
Court of Canada and on March 14, 2002, Shilling’s first Application for Leave
to Appeal was denied.
[10]
The
Defendant further submits that the connecting factors test for Section 87
exemption was already well established and has been universally applied by the
Federal Court of Appeal since the Supreme Court of Canada decision in Williams
v. Canada, [1992] 1 S.C.R. 877.
[11]
In
addition, the Defendant submits that even though the Shilling case had
been decided the Plaintiffs carried on with their appeals, that none of the
other NLS/OI employees considered themselves bound by Shilling and that
each employee wanted their individual facts and particular circumstances
presented on appeal to be heard individually by the Tax Court of Canada.
[12]
The
Defendant’s final submission on this point is that Native Leasing Service,
through employee deductions, supported the Aboriginal and Treaty Rights Defence
Fund which was used to fund challenges to the taxation of status Indians’
employment income. Counsel submits that the Plaintiffs are well supported in
their capacity to pay costs.
[13]
On April 27, 2010 counsel for the Plaintiff
submitted a letter in response to the Defendant’s submissions in which he disagrees
with the Defendant’s argument that the financial resources of Native Leasing
Services (NLS) should be taken into account when considering the ability of the
Plaintiffs to pay costs. Counsel submits that an award of costs that is
targeted at the financial resources of NLS would have a chilling effect on
other organizations that assist individual litigants. Counsel relies on Pauli
v. ACE INA Insurance Co., 2004 ABCA 253 in support of this submission.
[14]
Although I am of the opinion that the
submissions contained in the letter of April 27, 2010 should not be considered
as they are outside the provisions of the Direction of February 12, 2010, it
is of little consequence as the matter addressed in the letter is not
determinative of the public interest issue.
[15]
In
their submissions the Plaintiffs refer to parts (a), (d) and (e) of a five part
test to be used when making a determination as to whether the criteria exist to
determine that a matter is of public interest. Based on the criteria submitted
by the Plaintiff it may be arguable that the matter before me could be of
public interest. Although not mentioned, the Plaintiffs may also have an
argument under part (b) of the test; however it is part (c) that is
determinative of the issue.
[16]
Part
(c) of the test as set out in Harris (supra) requires that the issues have not been previously determined by a court in a proceeding
against the same defendant. At paragraph 89 of the Reasons for Judgment and
Judgment the Court finds:
The issue of NLS’s operation and tax exempt
status of its employees was considered by the Federal Court of Appeal in Shilling.
Despite the fact that that case is somewhat distinguishable from this case in
that some of the evidentiary deficiencies identified by the Court have now been
filled in (what aspects of NLS’s business are conducted on-reserve, whether
employees are reserve residents, and what benefits to the reserve), the Court
of Appeal and its comments on key factors is binding on this Court.
[17]
It is clear that the issues have been
previously determined by a Court in a proceeding against the same defendant and
it is for this reason that the Plaintiffs contention that the present cases are
of public interest is not accepted.
[18]
Having determined that this is not a matter
where public interest is a factor in determining costs, and the Plaintiffs not
having presented submissions concerning the individual Items claimed, I have
reviewed the Items claimed by the Defendant and I find the number of units
claimed for each Item to be reasonable in the circumstances of this case.
Professor Beaulieu
[19]
The
Plaintiffs submit that the report of Professor Beaulieu did not solely relate
to the present case and was essentially the same as a report filed in Benoit
v. Canada. The
Plaintiffs further submit:
Indeed, the August 5, 2005 letter of
instruction from the defendants to Professor Beaulieu… suggests the potential
duplication with the report provided in the Benoit case and states: “We
have reviewed your opinion in the Benoit case. We believe this opinion
addresses in large measure the issue of concern to us.” Furthermore, on cross
examination at trial… Professor Beaulieu confirmed that historically the report
filed in the Horn and Williams proceedings was “pretty much the same” as the
report that was filed in the Benoit case.
[20]
The
Plaintiffs further submit that the historical analysis in this proceeding was
substantially identical to the analysis provided in Benoit and cannot be
reasonably claimed as part of the disbursements in this proceeding.
[21]
The
Plaintiffs rely on Biovail Corporation v. Canada (Minister of Health and
Welfare), 2007 FC 767 to support their argument that the first invoice of
Professor Beaulieu related to his general research and, therefore, should not
have been claimed on each Bill of Costs.
[22]
In
reply the Defendant submits that “the expert report prepared by Professor
Beaulieu for this litigation, although similar in nature to his previous
report, was geared specifically to the circumstances of Horn and Williams”.
[23]
Although
the Defendant submits that there were differences between the previous Benoit
report and the report filed here, they do not provide specific evidence of what
those differences are.
[24]
On
the other hand the Plaintiffs have provided specific references suggesting the
reports were “pretty much the same”. Faced with this circumstance, I will apply
the decision of the assessment officer in Métis National Council of Women v.
The Attorney General of Canada [2007] FC 961 at paragraph 21:
The less that evidence is available, the
more that the assessing party is bound up in the assessment officer’s
discretion, the exercise of which should be conservative, with a view to
the sense of austerity which should pervade costs, to preclude prejudice to the
payer of costs.
[25]
The
Defendant having not produced evidence to counter the evidence of the
Plaintiffs, the $3,904.61 claimed on each file for further research is not
allowed.
[26]
The
Defendant has requested that the unit value be adjusted to reflect the current
Tariff B unit value of $130.00. As the unit value to be used for assessments is
that in effect at the time of the assessment, this request is allowed.
[27]
For
the above reasons, the Bills of Costs are allowed at $47,739.23 (T-2241-95) and
$47,304.97 (T-2242-95) respectively. Certificates of assessment will be issued.
“Bruce Preston”
Toronto, Ontario
May 6, 2010
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