Date: 20111216
Dockets: A-103-11
A-106-11
A-104-11
A-105-11
A-102-11
Citation: 2011 FCA 346
CORAM: DAWSON J.A.
TRUDEL J.A.
MAINVILLE J.A.
Docket:
A-103-11
BETWEEN:
MICHEL
GUIBORD
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket: A-106-11
BETWEEN:
MEI GUIBORD
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket: A-104-11
BETWEEN:
GEORGE S.
SZETO INVESTMENTS LTD.
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket:
A-105-11
BETWEEN:
GEORGE S. SZETO
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket:
A-102-11
BETWEEN:
GEORGE S.
SZETO INVESTMENTS LTD.
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Heard at Ottawa,
Ontario,
on December 7, 2011.
Judgment delivered at Ottawa,
Ontario, on December
16, 2011.
REASONS FOR JUDGMENT BY: DAWSON J.A.
CONCURRED
IN BY: TRUDEL
J.A.
MAINVILLE
J.A.
Date: 20111216
Dockets: A-103-11
A-106-11
A-104-11
A-105-11
A-102-11
Citation: 2011 FCA 346
CORAM: DAWSON J.A.
TRUDEL J.A.
MAINVILLE
J.A.
Docket:
A-103-11
BETWEEN:
MICHEL
GUIBORD
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket: A-106-11
BETWEEN:
MEI GUIBORD
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket: A-104-11
BETWEEN:
GEORGE S.
SZETO INVESTMENTS LTD.
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket:
A-105-11
BETWEEN:
GEORGE S. SZETO
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
Docket:
A-102-11
BETWEEN:
GEORGE S.
SZETO INVESTMENTS LTD.
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR JUDGMENT
DAWSON J.A.
[1]
Michel
Guibord, Mei Guibord and George S. Szeto appealed to the Tax Court of Canada in
respect to reassessments issued by the Minister of National Revenue (Minister)
under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). George
S. Szeto Investments Ltd. appealed reassessments issued by the Minister under
the Income Tax Act and the Excise Tax Act, R.S.C. 1985, c. E-15. George
S. Szeto Investments Ltd. owns and operates the Ruby King Restaurant and shall
be referred to in these reasons as “Ruby King”.
[2]
The
appeals of the reassessments – which were based on the net worth method - were
decided on common evidence following thirteen days of hearings before V. A.
Miller J. of the Tax Court of Canada (Judge). The appellants were partially
successful before the Tax Court of Canada. The Judge was satisfied that the
Minister was justified in opening the three statute-barred taxation years for
all the appellants because she found that they had made misrepresentations
relating to their income which, at minimum, were attributable to neglect and
carelessness. The Judge went on to make various corrections to the appellants’
net worth statements. She then set aside the penalties imposed upon the
individual appellants while confirming the penalties assessed on Ruby King. The
issue of costs was reserved. After receiving written submissions on costs, the
Judge issued reasons and an order with respect to costs.
[3]
The
appellants appealed to this Court on the merits and with respect to costs.
Their appeals to this Court on the merits have all been dismissed in judgments
issued on December 14, 2011. These reasons concern their appeals of the costs
order, which appeals were all consolidated by order of this Court dated May 19,
2011.
[4]
The
appellants sought costs in the Tax Court of Canada, either on a substantial
indemnity basis or on a lump sum basis. Together, they sought $340,640.06 on a
substantial indemnity basis or $227,093.37 on a lump sum basis. They calculated
their costs based upon the tariff to the Tax Court of Canada Rules (General
Procedures), SOR/90-688a (Rules) to be $65,007.41.
[5]
The
respondent also requested costs in the Tax Court of Canada as a lump sum award
in the amount of $255,721.10 or, in the alternative, that costs be calculated
in accordance with the tariff in a total amount of $98,693.65.
[6]
For reasons
cited as 2011 TCC 53, the Judge determined that the appellants should not be
awarded costs in excess of the tariff. Taking into account the factors under
subsection 147(3) of the Rules, she ordered that the appellants receive one set
of costs in the total amount of $50,000. These appeals are from that order.
[7]
The
appellants raised two grounds of appeal in this Court: (a) the Judge failed to
consider their submission that the Minister improperly refused to concede that
the amounts identified in the financial statements as “Due to shareholders”
were in fact unreported sales of Ruby King, thus prolonging the proceedings and
impeding possible settlements; (b) the Judge erred in fact by confusing the
appellants’ party and party costs totalling $257,982 with the appellants’
tariff costs of $65,007.41.
[8]
At the
hearing before our Court and after questioning from the bench, the appellants’
counsel acknowledged that Tariff B of Schedule II to the Rules provides that
the tariff costs are party and party costs, and consequently further
acknowledged that the Judge had thus not confused the appellants’ party and
party costs and tariff costs. This ground of appeal was therefore withdrawn by
counsel, leaving only the first ground to consider.
[9]
An award of costs in the Tax Court of Canada is
governed by section 147 the Rules. That section vests the Tax Court with
discretionary power over costs. Criteria for the exercise of that discretion are
set forth in subsection 147(3). Subsection 147(4) confers an additional power
which includes the awarding of costs without reference to Schedule II, Tariff B
or by way of lump sum.
[10]
Such
costs awards are largely at the discretion of a Tax Court judge because that judge
is in the best position to
determine which party should pay costs and the quantum of such costs. Though
these costs awards are highly discretionary, that discretion must be exercised
on a principled basis: Lau v. Canada, 2004 FCA 10. An appellate
court must thus defer to a Tax Court judge’s exercise of discretion in determining
costs and should only intervene if the judge considered irrelevant factors,
failed to consider relevant factors, or reached an unreasonable conclusion.
[11]
The
appellants contend that the Judge failed to consider a relevant factor. They
assert they submitted to the Judge that the Minister refused to concede that
the amounts identified as “Due to shareholders” in the financial statements of
Ruby King were in fact unreported sales of Ruby King. The appellants add that
this refusal unduly lengthened the trial by a few days. The appellants further
assert that the Minister’s refusal to make the concession was unreasonable in
light of the Canada Revenue Agency auditor’s testimony in cross-examination, referred
to at paragraph 33 of the Judge’s reasons on the merits of their appeals
reported as 2010 TCC 420.
[12]
There was
some discussion at the hearing before this Court as to whether or not this
issue had indeed been raised before the Judge. This Court thus requested that
the parties submit to it the written representations they had made before the
Judge on the issue of costs and which were not in the appeal record. After
reading these submissions, it is not clear that the issue was squarely raised
before the Judge. It follows that the Judge did not err by failing to consider
an issue not directly raised before her.
[13]
I would
therefore dismiss the appeals with one set of costs to the respondent in
respect of all five appeals from the costs order.
“Eleanor
R. Dawson”
“I
agree.
Johanne
Trudel J.A.”
“I
agree.
Robert M. Mainville J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-103-11
APPEAL FROM AN ORDER OF THE HONOURABLE
JUSTICE VALERIE MILLER, DATED JANUARY 27, 2011.
STYLE OF CAUSE: Michel
Guibord v. Her Majesty The Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December 7, 2011
REASONS FOR JUDGMENT BY: DAWSON J.A.
CONCURRED IN BY: TRUDEL J.A.
MAINVILLE
J.A.
DATED: December 16, 2011
APPEARANCES:
|
Charles Gibson
Ian
Houle
|
FOR THE APPELLANT
|
|
Josée Tremblay
Natasha
Wallace
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Vincent Dagenais Gibson
Ottawa,
Ontario
|
FOR THE APPELLANT
|
|
Myles J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-106-11
APPEAL FROM AN ORDER OF THE HONOURABLE
JUSTICE VALERIE MILLER, DATED JANUARY 27, 2011.
STYLE OF CAUSE: Mei
Guibord v. Her Majesty The Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December
7, 2011
REASONS FOR JUDGMENT BY: DAWSON J.A.
CONCURRED IN BY: TRUDEL
J.A.
MAINVILLE
J.A.
DATED: December
16, 2011
APPEARANCES:
|
Charles
Gibson
Ian
Houle
|
FOR THE APPELLANT
|
|
Josée
Tremblay
Natasha
Wallace
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Vincent
Dagenais Gibson
Ottawa,
Ontario
|
FOR THE APPELLANT
|
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-104-11
APPEAL FROM AN ORDER OF THE HONOURABLE
JUSTICE VALERIE MILLER, DATED JANUARY 27, 2011.
STYLE OF CAUSE: George
S. Szeto Investments Ltd. v. Her Majesty The Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December
7, 2011
REASONS FOR JUDGMENT BY: DAWSON J.A.
CONCURRED IN BY: TRUDEL
J.A.
MAINVILLE
J.A.
DATED: December
16, 2011
APPEARANCES:
|
Charles
Gibson
Ian
Houle
|
FOR THE APPELLANT
|
|
Josée
Tremblay
Natasha
Wallace
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Vincent
Dagenais Gibson
Ottawa,
Ontario
|
FOR THE APPELLANT
|
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND
SOLICITORS OF RECORD
DOCKET: A-105-11
APPEAL FROM AN ORDER OF THE HONOURABLE
JUSTICE VALERIE MILLER, DATED JANUARY 27, 2011.
STYLE OF CAUSE: George
S. Szeto v. Her Majesty The Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December
7, 2011
REASONS FOR JUDGMENT BY: DAWSON J.A.
CONCURRED IN BY: TRUDEL
J.A.
MAINVILLE
J.A.
DATED: December
16, 2011
APPEARANCES:
|
Charles
Gibson
Ian
Houle
|
FOR THE APPELLANT
|
|
Josée
Tremblay
Natasha
Wallace
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Vincent
Dagenais Gibson
Ottawa,
Ontario
|
FOR THE APPELLANT
|
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS
OF RECORD
DOCKET: A-102-11
APPEAL FROM AN ORDER OF THE HONOURABLE
JUSTICE VALERIE MILLER, DATED JANUARY 27, 2011.
STYLE OF CAUSE: George
S. Szeto Investments Ltd. v. Her Majesty The Queen
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December
7, 2011
REASONS FOR JUDGMENT BY: DAWSON J.A.
CONCURRED IN BY: TRUDEL
J.A.
MAINVILLE
J.A.
DATED: December
16, 2011
APPEARANCES:
|
Charles
Gibson
Ian
Houle
|
FOR THE APPELLANT
|
|
Josée
Tremblay
Natasha
Wallace
|
FOR
THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Vincent
Dagenais Gibson
Ottawa,
Ontario
|
FOR THE APPELLANT
|
|
Myles
J. Kirvan
Deputy
Attorney General of Canada
|
FOR
THE RESPONDENT
|
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