Date: 20011207
Docket: 2000-2416-IT-I
BETWEEN:
KUMARA S. RACHAMALLA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Order
Campbell, J.
[1]
Judgment was rendered in this matter on October 10, 2001. The
appeal was allowed and the parties were permitted to make written
submissions with respect to costs.
[2] I
have reviewed the written submissions by counsel for both the
Appellant and the Respondent.
[3]
The Appellant is certainly entitled to costs by virtue of the
appeal being allowed. The issue here is the quantum of costs.
[4]
The Appellant submitted that if costs were awarded under section
11 of the Informal Procedure Rules, on a party and party basis,
the amount would be $1,590.00. It was argued that this amount was
in now way indicative of the time and disbursements incurred by
the Appellant in preparation and presentation of the case.
Appellant suggested that a lump sum award of $14,000.00 would be
more reasonable. Appellant counsel argued that such an award
would send a clear signal to the Minister of the "...harsh
economic consequences of forcing a taxpayer to Court where the
evidence to establish a commercial enterprise is so clear in the
context of an assessment raised on the basis of no reasonable
expectation of profit". Counsel relied on the case of
Finch v. The Queen 2000 DTC 2382, where an
extraordinary amount of $25,000.00 was ordered against the
Crown.
[5]
Respondent counsel submitted that an award of costs in the amount
of $14,000.00 would be tantamount to solicitor and client costs
against the Respondent. Counsel provided a number of authorities
[Young v. Young (1993), 108 D.L.R. 4th 193; Bland v.
National Capital Commission, [1993] 1 F.C. 541 (F.C.A.);
Yacyshyn v. R. 1999 Carswell Nat. 158 (F.C.A.); Yuck v.
R. 1996 Carswell Nat. 1356 (T.C.C.)] to support the
argument that solicitor and client costs were inappropriate in
these circumstances. These cases support the proposition that
solicitor and client costs are appropriate where there has been
misconduct in the litigation process or vexatious, reprehensible,
scandalous or outrageous conduct by one of the parties.
[6]
Neither bad faith nor gross negligence is alleged here. Solicitor
and client costs are awarded only in exceptional circumstances.
There are no allegations of improper conduct on the part of
Respondent counsel. However as pointed out by Appellant counsel,
there was minimal new documentary evidence introduced at the
hearing and the auditor's admissions in evidence supported
many of the Appellant's contentions. This was clearly a case
which should have been settled before reaching the courtroom. A
careful review of the documentary evidence clearly supported the
Appellant's case. However solicitor and client costs are not
awarded simply because the case has no merit. Though this is not
a case that would justify solicitor and client costs, an award
based on party and party costs, in no way compensates the
Appellant with respect to his costs in mounting the appeal. I
therefore award costs to the Appellant in the amount of
$5,000.00.
Signed at Ottawa, Canada, this 7th day of December 2001.
"Diane Campbell"
J.T.C.C.
COURT FILE
NO.:
2000-2416(IT)I
STYLE OF
CAUSE:
Kumara Rachamalla and
Her Majesty the Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
June 1 and June 28, 2001
REASONS FOR JUDGMENT
BY:
The Honourable Judge Diane Campbell
DATE OF REASONS FOR ORDER: December 7, 2001
APPEARANCES:
Counsel for the
Appellant:
A. Christina Tari
Counsel for the
Respondent:
Sointula Kirkpatrick
COUNSEL OF RECORD:
For the
Appellant:
Name:
A. Christina Tari
Firm:
Richler and Tari
Toronto, Ontario
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
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