Date: 20080606
Docket: A-449-97
Citation: 2008 FCA 167
BETWEEN:
URBANDALE
REALTY CORPORATION LIMITED
Appellant
and
HER
MAJESTY THE QUEEN
Respondent
ASSESSMENT OF
COSTS - REASONS
Charles E. Stinson
Assessment
Officer
[1]
The
Appellant brought this appeal against the judgment (May 23, 1997) of the
Federal Court, Trial Division, which had dismissed its appeal against the
judgment (December 29, 1992) of the Tax Court of Canada dismissing its
appeal against a reassessment for its 1986 taxation year. On February 10, 2000,
the Court allowed this appeal with costs here and in the Trial Division.
[2]
The
Appellant under cover of a letter dated September 22, 2000 sent its account of
costs to the Respondent for payment. Exchanges of correspondence between
opposing counsel ensued. By letter dated March 20, 2001 to the Appellant, the
Respondent asserted that the record did not justify solicitor-client costs and
proposed settling costs at $7,806.00 and $7,450.60 for the trial and appeal
matters respectively, further to the tendering of a proper bill of costs. The
record does not disclose a response on the part of the Appellant.
[3]
On
December 8, 2003, the Appellant filed written submissions and an affidavit
supporting its bill of costs under cover of a letter requesting an appointment
for assessment of costs. Counsel for the Appellant subsequently
followed up with the Registry on this request. On February 6, 2004, I
directed the Registry to place this note (the February 6, 2004 note) in the
record for this court file and for Federal Court file T-533-93:
… I examined the materials for assessment
of costs submitted by StevenVictor [sic] for the Appellant (Plaintiff)
and noted certain potential problems. As I would have directed that some of
these problems be addressed by way of preliminary submissions in any event, I
decided that it would preclude needless expenditures by his client and by the
Crown if I called him directly to note my concerns. We spoke on February 5,
2004 and I raised the following:
(a)
While not
fatal to the assessment process, the Federal Court of Appeal in an obiter
comment several years ago noted that costs for the two Divisions (appeal and
trial) should not be combined in a single bill of costs. Now that there are two
separate and distinct courts, that separation should be even more carefully
maintained, although it has not yet been an issue before me.
(b)
While I
would keep an open mind to any new rationale that he might care to lead, I have
dealt with the issue of jurisdiction of Assessment Officers faced with judgments
for costs without modifiers specifying elevated scales of costs, such as here,
and have held that I have no jurisdiction to usurp the Court’s Rule 400(1) jurisdiction
to allow an elevated scale of costs, i.e. solicitor-client costs or Column V
party and party costs, beyond the “default” scale of Column III costs
prescribed by Rule 407. In these matters, I noted the absence of an “otherwise”
order of the Court under Rule 407. The references in Rules 400(1) and 407 do
not include Assessment Officers.
(c)
By
contrast, in the absence of “otherwise” orders as is the case in these matters,
Assessment Officers would have the jurisdiction to address Rule 420 doubling.
I
noted that, if he wished to pursue the solicitor-client or Column V approach
with an Assessment Officer, I would deal with that via preliminary submissions
to avoid the expense of both sides addressing individual amounts in bills of
costs possibly not sustainable under the restrictions in the Rules per my
reading of the Judgment herein. I said that I had changed my view on given
issues over the years and that I would be open to his arguments, but that
including an Assessment Officer in the definition of “Court” is a difficult
threshold to meet. However, if he wished to attempt to obtain directions from
the Court permitting some sort of elevated scale of costs, he would have to
proceed by way of a formal motion record. Mr. Victor indicated that he would
consider his position before deciding what to do.
[4]
On
February 6, 2004, the Respondent filed reply affidavits under cover of a letter
asserting that they were for an assessment of costs. On April 5, 2007, counsel
for the Respondent requested an update on the status of the assessment of
costs. That same day, I instructed the Registry to send to both sides a copy of
the February 6, 2004 note and to advise counsel for the Respondent that I had
checked my materials, but could find nothing to indicate that counsel for the
Appellant had subsequently contacted the Registry to revive the assessment of
costs.
[5]
The
record discloses correspondence (October 27, 2004, April 9, 2006 and May 17,
2007) from counsel for the Respondent to opposing counsel urging movement on
costs, objecting to solicitor-client costs and requesting a proper bill of
costs on a party and party basis. By letter dated September 4, 2007 to opposing
counsel, counsel for the Respondent revoked any outstanding settlement offers
on costs and put the Appellant on notice that it was statute-barred from
attempting to collect costs. On February 4, 2008, the Appellant filed a motion
for an order directing an assessment officer to assess the Appellant’s costs on
a solicitor-client scale and in the alternative for an order directing
assessment at double the maximum of Column V costs. The Respondent filed materials
opposing the motion on four grounds: (a) the motion was statute-barred; (b) the
motion was out of time further to Rule 403; (c) solicitor-client costs were not
justified; and (d) increased Column V costs were not justified. The Court
disposed of the motion further to (b). Paragraphs 6 to 14 following summarize
the respective positions before the Court of the parties for (a) only.
I. The
Respondent’s Position on a Statutory Bar to Costs
[6]
The
Respondent argued that section 32 of the Crown Liability and Proceedings Act,
R.S.C. 1985, c. C-50 (CLPA) applies:
Except
as otherwise provided in this Act or in any other Act of Parliament, the laws
relating to prescription and the limitation of actions in force in a province
between subject and subject apply to any proceedings by or against the Crown in
respect of any cause of action arising in that province, and proceedings by
or against the Crown in respect of a cause of action arising otherwise than in
a province shall be taken within six years after the cause of action arose.
[Emphasis added]
A cause of action is a set of facts
providing the basis for an action in court: see Markevich v. Canada,
[2003] 1 S.C.R. 94 [Markevich]. Here, the issuance of the judgment
awarding costs was the set of facts giving rise to the cause of action.
[7]
The
Respondent argued that Markevich held that the term “proceeding” could
embrace the statutory tax collection powers of the Crown which are equivalent
in purpose and effect to a court action and that the Crown, having failed to exercise
those powers within the six-year limitation in CLPA, s. 32, was
statute-barred from collecting the tax debt. Doel v. Kerr, [1915] O.J.
No. 75 (C.A.) [Doel] held that a step to enforce a judgment, i.e. an
application to renew execution, not taken within the statute of limitations for
bringing the action itself was barred by said statute.
[8]
The
Respondent argued further to Markevich and Doel that steps such
as a motion under Rule 397 for reconsideration of judgment, a motion under Rule
403 for directions on costs (the motion) and a request under Rule 406 for
an appointment to assess costs (the request) each constitute a proceeding in
respect of a cause of action subject to the six-year limitation period in CLPA,
s. 32. The CLPA, s. 30 permits the Minister of Finance (the Minister) to
authorize, further to “a certificate of judgment against the Crown issued
pursuant to the regulations”, payment out of the Consolidated Revenue Fund to
satisfy judgments for costs. The commentary for Rule 474 in Brian J. Saunders
et al., Federal Courts Practice 2008 (Toronto: Thomson Carswell, 2007)
at 963 states that there is a provincial regulation for such certificates, but
none for Federal Court and Federal Court of Appeal certificates. This
commentary suggests that, as the provision in Rule 474 for issuance by the
Registry of a certificate of judgment is essentially to the same effect as the
regulation for provincial courts, the Minister would likely honour the Rule 474
certificate of judgment.
[9]
The
Respondent argued further to Fegol v. Canada (Minister of National Revenue),
1998 CarswellNat 2407 (F.C.T.D.) that, as a Rule 474 certificate of judgment
for costs cannot be issued until the award of costs has been quantified, the
motion and the request are attempts to quantify costs and are therefore
proceedings in respect of the award of costs subject to the six-year limitation
period in CLPA, s. 32. The earlier request for an appointment to assess
costs is irrelevant because it was abandoned. The Appellant has never filed a
bill of costs under Rule 406 compliant with the scale prescribed by Rule 407.
The cause of action here, i.e. the award of costs, arises other than in a
province: see CLPA, s. 28 and Markevich.
[10]
The
Respondent argued that if the CLPA does not govern the motion and the
request, then the claim for costs should be barred by the equitable doctrine of
laches. The unexplained delay here of almost eight years has prejudiced the
Respondent. The Court held in Maytag Corp. v. Whirlpool Corp., [2001]
F.C.J. No. 1262 (F.C.A.) that matters of costs should be resolved while details
of the case are still fresh. As Kumar v. Canada, [2006]
F.C.J. No. 1122 (A.O.) held that the most recent tariff applies in assessments
of costs, the delay is prejudicial for the Respondent because the Appellant
benefits in 2008 from a scale of costs higher than that applicable in 2000.
II. The
Appellant’s Position on a Statutory Bar to Costs
[11]
The
Appellant argued that the motion and the request are not “proceedings” as that
term is used in the CLPA, s. 32. Although the CLPA does not
define the term “proceedings”, it should be read having regard to the
definition of that term in Ontario’s Rules of Civil Procedure, R.R.O.
1990, Reg. 194, r. 1.03(1) (Ontario Rules) similarly defined in several
other provinces as “an action or application.” The Appellant acknowledged that Markevich
held that other statutory procedures that resemble or are an alternative to
court actions also are “proceedings” as that term is used in CLPA, s. 32,
but argued that the motion and the request are not such alternatives to court
actions and instead are only single steps within a larger court action and its
related appeal. That is, the motion and the request are not “proceedings”
within the meaning of CLPA, s. 32. It is the larger court action, and
its related appeal in which the motion and the request occurred, which are
“proceedings” within said meaning having regard to the traditional definition
of “proceeding” as a court action or application.
[12]
The
Appellant argued that the cause of action within the meaning of the CLPA,
s. 32 was the reassessment of the Appellant’s 1986 taxation year and not the
award of costs made further to its successful litigation challenging said reassessment.
The award of costs is not a cause of action as defined in Markevich at
p. 112, i.e. a set of facts that provides the basis for an action in court, and
it cannot be the subject of an independent action, application or other
proceeding. That is, the Appellant cannot sue the Respondent for its costs in a
separate lawsuit. Rather, the award of costs is the result of the successful
litigation further to the actual cause of action, i.e. the reassessment.
[13]
The
Appellant argued alternatively that the request, made in December 2003 and
accompanied by materials supporting the items of costs, occurred within the
six-year limitation period. The record confirms that counsel for the Appellant
followed up with the assessment officer on the request and eventually received
directions which may have been misinterpreted. That does not mean in any way
that the Appellant abandoned the request. The Respondent’s position is
disingenuous knowing full well that the Appellant had sought a timely
appointment under Rule 406 to assess a bill of costs prepared further to Column
V of the tariff as opposed to Column III. The mere attempt to seek higher
costs does not remove the Appellant’s entitlement to its costs.
The Respondent was aware that the health problems of the principal for the
Appellant had made it difficult for counsel for the Appellant to obtain
instructions.
[14]
The
Appellant argued that the Respondent’s conduct is an estoppel to an assertion
of the doctrine of laches, i.e. lack of timely responses to the Appellant’s
communications and request, absence of evidence of prejudice, not alerting the
Appellant during the six years after judgment that the notion of prejudice
might be asserted and waiting until September 2007 to suddenly change its
position on entitlement to costs by asserting the existence of delay and
prejudice. The record confirms the Appellant’s efforts to advance the process
of quantification of the award of costs and that the Respondent was aware by
September 2000 of the Appellant’s intention to seek solicitor-client costs, and
alternatively by December 2003 to seek increased Column V costs.
III. Assessment
[15]
On
March 4, 2008, the Court ordered that the “appellant’s motion for an order for
directions to the assessment officer is dismissed with costs” and also issued
Reasons for Order (the motion decision). Subsequently, counsel for the
Appellant requested a date for an assessment of costs and indicated that,
having regard to the motion decision, it no longer sought solicitor-client
costs, but would continue to seek double the maximum of Column V costs
including all disbursements and GST.
[16]
The
Respondent replied by relying on the motion materials filed for the hearing of
the motion and argued that the issue of whether the Appellant is statute-barred
from an assessment of costs remains open for adjudication as the motion
decision dismissed the request for solicitor-client costs as out of time and
declined to deal with the request for Column V costs. I think that these
submissions are generally correct, but that they require some clarification by
reference to the motion decision.
[17]
The
motion decision comprised four paragraphs. The first paragraph summarized the
history of the litigation and the motion. The second paragraph disposed of the
motion as out of time further to the 30-day time limit in Rule 403 running from
the date of judgment. The third paragraph, which asserted that even if an
extension of time was granted, the Appellant was not even close to establishing
a case for solicitor-client costs, was in my view simply obiter
commentary. Similarly, the fourth paragraph addressing the alternative request
for increased (Column V) costs was obiter commentary.
[18]
The
Appellant countered the Respondent’s position by also relying on its motion
materials that had been before the Court. The Appellant asserted that the
Respondent had already made the argument that an assessment of costs is
statute-barred, a position which the motion decision rejected with particular
regard to its fourth paragraph which read:
Finally,
with respect to the alternative motion for costs on an increased scale, the
only possible justification for an award of costs in excess of the normal
tariff is that the appellant may have made one or more offers to settle
that were not accepted. There are circumstances in which a written offer to
settle may justify an increased award of costs under the Federal Courts
Rules: see Rules 419 and 420. Generally, the party seeking such an
increased award must establish that the judgment obtained was at least as
favourable as the terms of the offer to settle. In my view, it is open to the
assessment officer to consider the possible application of these provisions in
any case even if no direction is made under Rule 403. I express no opinion
as to whether or not there were any offers to settle in this case that would
cause Rules 419 and 420 to apply.
I disagree. The motion materials on both
sides clearly separated the submissions on the issue of a statute bar from the
other three issues, i.e. out of time under Rule 403 to request directions,
directions for solicitor-client costs and directions for Column V costs. The
matter of a statute bar to an assessment of costs would have been part of
the consideration of the issue of a statute bar to bringing the motion itself
and certainly was not part of the considerations in the motion decision
resulting in dismissal of the motion. The motion decision was silent on the
issue of a statute bar to the motion, and I do not think that it could be said
that an issue of entitlement to proceed with an assessment of costs was ever
before the Court. Therefore, I conclude that this latter issue is not res-judicata
and the Respondent may raise it before me. These reasons dispose of it as a
preliminary objection.
[19]
Any
misunderstanding caused by the February 6, 2004 note was inadvertent. I did not
set out there the rationale underlying my concern as I felt that the
Appellant should have the opportunity to fully lay out its position on my
jurisdiction for increased costs before any ruling. That sentiment still
applies given notice from the Appellant that it will still pursue Column V
costs before me.
[20]
However,
for the benefit of counsel, I will venture certain observations. Rule 405
provides that costs “shall be assessed by an assessment officer”. Rule 407
provides that unless “the Court orders otherwise, party-and-party costs shall
be assessed in accordance with column III.” The Courts Administration
Service Act (CAS Act), s. 10 provides for staff for the purposes of
the CAS Act. The coming into force of the Federal Courts Act on
July 2, 2003 did not change the basic scheme of costs and associated principles
coming forward and being immediately applicable on that date to matters in the
Federal Court of Appeal and in the Federal Court as a function of transitional
section 191 of the CAS Act providing that the Rules continue in force.
Transitional sections 185(14) and 187(2) of the CAS Act provided
respectively for my transfer to the Courts Administration Service providing
registry services to these two Courts (as well as the Court Martial Appeal
Court and the Tax Court of Canada) and for the continuing in force of my order
of appointment as an assessment officer for costs in these two Courts. The Federal
Courts Act s. 5(1) defines the constitution of the Federal Court of Appeal
as the Chief Justice and 12 other judges. Rule 2 provides that “Court” means,
as the circumstances require, the Federal Court of Appeal. Rule 2 also provides
that an “assessment officer” means “an officer of the Registry designated by an
order of the Court, a judge or a prothonotary, and includes, in respect of a
reference, the referee presiding in the reference.” I fall within the first
option, i.e. an officer of the Registry designated by an order of the Court. An
assessment officer is not part of the constitution of the Federal Court of
Appeal defined in the Federal Courts Act, s. 5(1). It follows that the
term “Court” defined in Rule 2 does not include me. I am not aware of
jurisdiction for an assessment officer alternative to that for the Court in
Rules 400(1) and 407 permitting me to effectively vary the Court’s award of
costs by allowing Column V costs in place of the default provision in Rule 407
for Column III costs.
[21]
I
agree with the Appellant that it had taken a step within six years from the
date of judgment to quantify the award of costs via assessment. A bill of costs
framed in a scale other than the default Column III scale in Rule 407 sometimes
occurs, draws an objection of impropriety and is addressed by the assessment
officer further to an analysis of jurisdiction and the underlying parameters of
the award of costs. It does not mean that the assessing party has forfeited the
right to assess costs. Persistence in advancing a bill of costs framed in a
manner apparently inconsistent with the tariff and the award of costs may result
in a lower amount of assessed costs further to Rules 409 and 400(3)(i) (conduct
unnecessarily lengthening a proceeding) and (o) (any other relevant matter).
Those same factors could be advanced before the assessment officer as the basis
for a lower amount of assessed costs further to, for example, delays in
proceeding to assessment notwithstanding the absence of a time limit in Rule
406 for requesting an appointment. Such circumstances could affect the exercise
of discretion under Rule 408(3) which permits an assessment officer to “assess
and allow, or refuse to allow, the costs of an assessment to either party.” The
assessment of costs will proceed.
[22]
I
venture some obiter commentary on the Respondent’s CLPA, s. 32,
position. Without the benefit of Markevich, Doer and the Ontario
Rules, I likely would have addressed the issue of a statutory bar as
follows. John Burke, Jowitt’s Dictionary of English Law, 2d ed. (London:
Sweet & Maxwell Limited, 1997) vol. 1, s.v. “cause of action” defines
it as “the fact or combination of facts which give rise to a right to sue” and
asserted that it “consists of two things, the wrongful act and the consequent
damage.” In a rough sense, the Appellant’s position would assert the
reassessment of taxes as the wrongful act and the associated payment of more
taxes as the consequent damage. The judgment, which could include as here
an award of costs, disposing of said cause of action renders it res judicata.
As the matter of costs is subsumed in the judgment and I presume that an award
of costs is an explicit final disposition of entitlement to costs within the
meaning of Rule 400(1), providing that the “Court shall have full discretionary
power over the amount and allocation of costs and the determination of by whom
they are to be paid”, the matter of entitlement to costs is res judicata
and cannot be the subject of an independent proceeding or action for further
adjudication other than by statutorily sanctioned process such as a formal
appeal of the judgment for costs.
[23]
I
think that the definition in Jowitt’s of “cause of action” contemplates
an action or appeal but not the interlocutory process within each. The process
of quantification of the award of costs in a judgment is incidental to the
judgment and is therefore interlocutory. I simply do not think that the CLPA,
s. 32 addresses such interlocutory process and therefore the Respondent can
only raise delay in the context of arguing for reduced costs on assessment
further to Rule 400(3) factors. I note that if the Respondent was a
non-Crown litigant and therefore subject to execution, unlike the Crown not
subject to execution further to the CLPA, s. 29, the Appellant might
encounter difficulty in executing for assessed costs in the face of Rule
434(1)(a) requiring leave of the Court for issuance of a writ of execution if
six or more years have elapsed since the date of judgment.
[24]
These
comments however do not directly address or resolve the Respondent’s position. Markevich
examined the tax collection powers of the Minister under the Income Tax Act,
s. 223(2) and (3), which permit the Crown to register a certificate of the
amount of tax asserted to be owing without there first having been adjudication
further to a hearing by filing it in the Federal Court and to take proceedings
thereon to enforce it for payment as if it were a judgment of the Federal
Court. The Court described this process as a statutory collection procedure and
found that it was subject to the limitation in the CLPA, s. 32. The case
note on page 96 stated that:
…the ordinary meaning of the phrase
“proceedings . . . in respect of a cause of action” in s. 32 encompasses
the statutory collection procedures of the Minister. It would be incongruous to
find that s. 32 was intended to apply to the court action but not to the
statutory collection procedures that serve the identical purpose. The
rationales that support the application of limitation provisions to Crown
proceedings apply equally to both the court and non-court proceedings at issue
here. To exclude s. 32’s application to proceedings that are equivalent in
purpose and effect to a court action would frustrate the object and aim of
the provision. The legislative history of s. 32 also supports the
inference that Parliament intended its application to extend beyond proceedings
in court….
[25]
I
think that the Respondent’s position is that the CLPA, s. 32 captures
process in a variety of forms be it original proceeding such as an action
or appeal, non-court proceeding such as the Crown’s statutory collection
procedures for tax debts and interlocutory proceeding such as a notice
of motion for directions to the assessment officer or a regulatory
provision such as in Rule 406 for a request for an assessment of costs. The Ontario
Rules, which distinguish a notice of motion from originating process, are
irrelevant for the Respondent’s position because Markevich held that
only a federal Act of Parliament can blunt the application of s. 32 to all
Crown proceedings. Markevich on page 114 held that s. 32 “was meant to
include administrative mechanisms that enable the Crown to achieve exactly the
same result as it would through a formal action in court.” Markevich
does not mention interlocutory process. Interlocutory process such as a request
for an assessment of costs is incidental to “the same result” and therefore cannot
achieve “exactly the same result as…a formal action in court.” I would have
concluded that the limitation period in the CLPA, s. 32 does not apply
to an assessment of costs.
[26]
A
Certificate of Assessment will issue as follows:
I HEREBY CERTIFY that I reject the
Respondent’s preliminary objection that the Appellant is prescribed by the Crown
Liability and Proceedings Act, R.S.C. 1985, c. C-50, s. 32 from proceeding
with assessment of its costs.
“Charles E. Stinson”
Vancouver,
BC
June
6, 2008
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