Date: 20110317
Docket: A-272-08
Citation: 2011 FCA 105
BETWEEN:
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GARRET MADELL
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Appellant
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and
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HER MAJESTY THE QUEEN
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Respondent
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ASSESSMENT
OF COSTS – REASONS
Charles E. Stinson
Assessment
Officer
I. Introduction
[1]
The
Court dismissed with costs this appeal of a decision of the Tax Court of Canada
addressing tax shelter arrangements and loyalty card programs. I issued a
timetable for written disposition of the assessment of the Respondent’s bill of
costs.
II. The
Respondent’s Position
[2]
The
Respondent’s bill of costs claimed at or near the maximum value in the
available ranges for counsel fees, except for fee item 26 (assessment of costs)
claimed at the mid-range value. The Respondent argued further to Rules 409
and 400(3)(a) (result), (g) (amount of work), (i) (conduct tending to shorten
or unnecessarily delay a proceeding) and (k) (improper, vexatious or
unnecessary steps) that the claim of $4,084.80 for costs ($2,502.50 for counsel
fees, $1,062.30 for disbursements and additional counsel fees of $520 for the
assessment of costs) is within Tariff limits and is reasonable in these
circumstances.
III. The
Appellant’s Position
[3]
The
Appellant noted as background information (not before me in affidavit form, but
generally available in the court file) that his role as a representative
litigant for about 460 taxpayers resulted in significantly lower costs for the
Respondent in this Court and below. Although the efforts of all the taxpayers,
including the Appellant, contributed to an orderly formulation of their
respective appeals below, the amount of time taken required those individuals
not selected as representative litigants to apply in the Tax Court of Canada
for extensions of their respective appeal periods. The supervising judge there
directed that these motions be held in abeyance pending the outcome of the
representative cases.
[4]
The
Appellant asserted that it was the understanding throughout that the
representative cases would be determinative of the balance of the appeals. The
co-operation and sacrifice of resources of the representative taxpayers
benefited the Respondent relative to the cost of addressing several hundred
taxpayers, but the representative taxpayers received no recompense from this
entire process. The Tax Court of Canada dismissed the test case on May 2, 2008.
The various taxpayers filed a notice of discontinuance of the applications to
extend time to file notices of appeal on November 13, 2009, on a without costs
basis as consented to by the Crown. This completely disposed of all matters
between the parties, including costs in both courts.
[5]
The
Appellant noted the comment in Western Canada Shopping Centres Inc v Dutton,
[2001] 2 S.C.R. 534 that the absence of comprehensive legislation on class action
practice means that the courts must use their inherent power to settle the
rules of practice and procedure for disputes brought before them. The
Appellant argued generally that the Respondent’s bill of costs is inappropriate
given the representative circumstances of the Appellant and their associated
economy of scale.
[6]
The
Appellant noted that Rule 400 grants the Court broad discretionary power over
the payment of costs of any party. The Court may relative to Rule 400(3)(a) consider
result, i.e. this appeal was dismissed and a notice of discontinuance was
filed. Relative to Rule 400(3)(b) (amounts claimed and amounts recovered), the
taxpayers are now obligated to pay significant amounts of interest and
penalties largely further to this prolonged process. As well, the
representative taxpayer will not receive costs. Relative to Rule 400(3)(c)
(importance and complexity), the Court should support the efforts of taxpayers
as here significantly alleviating burden on the legal system. Relative to Rule
400(3)(d) (apportionment of liability), the Court should compensate the
Appellant further to his sacrifice of time and resources for the benefit
of all the taxpayers, none of whom have indemnified him for his costs. Relative
to Rule 400(3)(i), the Court should consider the extra time and cost associated
with the rejection of the initial proposed representative candidate by counsel
for the Respondent on the basis of perceived potential risk to his client.
The Appellant argued accordingly that the Court should exercise its general
discretion to strike the Respondent’s bill of costs.
IV. Assessment
[7]
I
found the affidavit of Ashley Utri sworn August 5, 2008, in support of the
Appellant’s motion for an extension of time to settle the contents of the
appeal book, useful for clarification of the Appellant’s position. It
asserted that the parties agreed before the Tax Court of Canada that
adjudication of the representative cases of four taxpayers would bind the
adjudication of the balance of the cases, that approximately 151 of the
original group of approximately 370 taxpayers submitted the appropriate
undertaking to the Tax Court of Canada, that the May 8, 2008 decision addressed
the four test cases and that Garret Madell was selected as the representative
appellant here for the purpose of this appeal from the May 8, 2008 decision.
Generally, I did not find anything in the record indicating a special agreement
between the parties concerning liability for costs, including any specific
consideration in favour of Mr. Madell as the ultimate representative taxpayer.
[8]
Pages
14-16 of the trial transcript disclose the Appellant’s counsel discussing the
relationship of the four representative taxpayers to the rest of the
appellants, but without reference to any special considerations for costs
(pp. 497-99 of the Appeal Book). The presiding judge then dealt with
preliminary matters up to page 37 of the transcript, following which the
Appellant’s counsel made his opening statement in which he referred to the test
case format, but said nothing about special considerations for costs (pp.
37-45, pp. 520-28 of the Appeal Book). The opening statement by the
Respondent’s counsel did not mention costs (pp. 45-49, pp. 528-32 of the Appeal
Book). The trial transcript of the oral evidence does not disclose references
to or discussion of litigation costs (pp. 49-668, pp. 532-1151 of the Appeal
Book).
[9]
Page
438 discloses the Appellant’s counsel introducing certain documents, referring
to the representative nature of the test cases and then using the term “member
of a class” (p. 921 of the Appeal Book; p. 441, p. 924 of the Appeal Book). The
trial judge immediately asserted that this was not a class action. The
Appellant’s counsel agreed. The trial judge then noted that the four test cases
were “somewhat similar to a class action perhaps” (pp. 441-43, pp. 924-26 of
the Appeal Book). There ensued a discussion about the composition of the
representative taxpayers and the balance of the taxpayers, but there was no
mention of litigation costs as an issue for resolution by the trial judge.
[10]
Pages
668-84 of the trial transcript disclose that, at the conclusion of the oral
evidence, counsel suggested an adjournment to permit them to obtain
transcripts, submit written argument and then schedule any needed oral argument
(pp. 1151-1167 of the Appeal Book). There were general references to the four
test cases relative to the larger group of taxpayers. The Appeal Book does not
disclose any written argument after the Tax Court of Canada hearing. The trial
judge did convene two subsequent teleconferences with counsel. His decision did
not refer to the four test cases in the context of the larger group of
taxpayers and therefore there were no special directions on costs in that area
as an issue within the appeal to this Court.
[11]
Paragraph
2 of the Appellant’s Memorandum of Fact and Law here referred to his
representative status. Paragraph 58 referred to the negative impact on the
Appellant and the other taxpayers, but did not mention costs. Paragraph 61
asked for the Appellant’s costs of the appeal, but not for a broader
direction on costs relative to the Appellant’s representative status. Paragraph
8 of the Respondent’s Memorandum of Fact and Law referred to the representative
status of the Appellant and the three other taxpayers, but did not mention
costs there or elsewhere relative to special considerations for the Appellant’s
representative status. The decision of the Federal Court of Appeal did not
refer to the Appellant’s representative status either in the context of this
appeal or in that of the trial below, and it did not give special directions
further to said representative status.
[12]
The
Notice of Discontinuance dated November 13, 2009 in the Tax Court of Canada did
not contain language binding on costs considerations in the Federal Court
of Appeal. As well, it restricted itself to the motions to extend time.
Its body referred to an attached table listing the relevant taxpayers for whom
it applied: the Appellant’s name appeared on page 4. I find this document
irrelevant for the assessment of costs in this Court. As well, I find that,
further to the materials available to me, special consideration of the
Appellant’s costs relative to his representative status was not an issue below
for the trial judge or in the appeal here.
[13]
The
Appellant’s position, in urging me to effectively strike an award of costs,
essentially misconceived the role of an assessment officer: see para 3 of Marshall
v Canada, [2006] FCJ
No 1282 (AO) [Marshall]. I do not have the jurisdiction to vacate
or vary a judgment as I am not the “Court” as that term is used in the Federal
Courts Rules: see Marshall above and Sander Holdings Ltd v Canada
(Minister of Agriculture), [2009] FCJ No 720 (AO) [Sander Holdings].
With respect, the Federal Court of Appeal having rendered its judgment for
costs, I doubt that the relief contemplated by the Appellant’s materials before
me is available via interlocutory process.
[14]
The
Appellant’s materials, focused as they were on striking the costs as a whole,
did not analyse individual counsel fee or disbursement items. However, I
perceive them as general opposition to the bill of costs. Effectively, these
circumstances are as if the Appellant had advanced no materials given the
absence of any relevant representations which could have assisted me in
identifying the respective issues for individual items of costs and making a
decision. My view, often expressed in comparable circumstances, is that
the Federal Courts Rules do not contemplate a litigant benefiting
by having an assessment officer step away from a neutral position to act as the
litigant’s advocate in challenging given items in a bill of costs. However, the
assessment officer cannot certify unlawful items, i.e. those outside the
authority of the judgment and the tariff. I examined each item claimed in
the bill of costs and the supporting materials within those parameters.
[15]
My
findings in Halford v Seed Hawk Inc (2009), 69 CPR (4th) 1,
[2006] FCJ No 629 (AO), Biovail Corp v Canada (Minister of National Health
and Welfare) (2007), 61 CPR (4th) 33, [2007] FCJ No 1018
(AO), aff’d (2008), 64 CPR (4th) 475, [2008] FCJ No 342 (FC) and Abbott
Laboratories v Canada (Minister of Health) (2008), 66 CPR (4th)
301, [2008] FCJ No 870 (AO) [Abbott] set out my views on the threshold
of proof for categories of costs and my approach to their assessment.
Paragraphs 68 to 72 inclusive of Abbott above summarize the subjective
elements and the notion of rough justice in assessments of costs. In paragraphs
38 to 40 of Aventis Pharma Inc v Apotex Inc, [2009] FCJ No. 56 (AO), I
reinforced my view that an assessment of costs should reflect the reality of
the demands of litigation. I endorse the practical approach in paragraph 69 of Merck
& Co v Canada (Minister of Health), [2007] FCJ No 428 (AO) aff’d on its
point and others, but varied on others [2007] FCJ No 1337 (FC). Paragraph 14 of
Merck & Co v Apotex Inc (2009), 73 CPR (4th) 423, [2008]
FCJ No 1656 (FCA) held that “in view of the limited material available to
assessment officers, determining what expenses are “reasonable” is often likely
to do no more than rough justice between the parties and inevitably involves
the exercise of a substantial degree of discretion on the part of assessment
officers.” This practice of rough justice does not, however, require an
assessment officer to approve any and all claimed items of costs without
question. Disallowances or reductions often occur. I have generally held that a
paucity of evidence may result in conservative allowances.
[16]
I
concluded in paragraph 7 of Starlight v Canada [2001] FCJ No 1376 (AO)
that the same point in the ranges throughout the Tariff need not be used as
each fee item for the services of counsel is discrete and must be considered in
its own circumstances. As well, broad distinctions may be required between an
upper versus lower allowance from available ranges.
[17]
The
total amount claimed in the bill of costs is generally arguable as reasonable
within the limits of the award of costs and in the circumstances of this litigation
and is allowed as presented, except for one counsel fee item which requires my
intervention. Further to my conclusions in paragraph 15 of Sander Holdings
above, I disallow the claim for second counsel under fee item 22(b).
[18]
My
allowance above of the balance of the bill of costs included $1,033.80 for
photocopies, although the proof was less than absolute. Paragraph 65 of Abbott
above summarized my practice for photocopies including the need “to strike the
appropriate balance between the right of a successful litigant to be
indemnified for its reasonably necessary costs and the right of an unsuccessful
litigant to be shielded from excessive or unnecessary costs.” The Respondent’s
bill of costs is assessed and allowed at the reduced amount of $3,597.30.
“Charles
E. Stinson”
Vancouver, British Columbia
March 17, 2011
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