[1] These appeals from a judgment of the Tax Court of Canada dated January 21, 2003 raise a common issue. That issue is whether Bowman A.C.J. erred in awarding lump sum costs in respect to both matters which he heard together.

[2] The underlying proceedings in the Tax Court concerned the liability of each respondent for non-remittance of goods and services tax on the basis that each was a director of the corporate debtor at the relevant time. Bowman A.C.J. found that Agatha Lau was never a director and that while Patrick Lau had been a director, he was not liable because he had acted with "due diligence".

[3] An award of costs is governed by rule 147 of the Court'sGeneral Procedure Rules. That rule vests the Tax Court would "full discretionary power" over payment of costs. Criteria for the exercise at that discretion are set forth in subsection 147 (3). Subsection (4) confers an additional power which includes the awarding of costs by way of lump sum. It reads:

(4) The Court may fix all or part of the costs with or without reference to Schedule II, Tariff B and, further, it may award a lump sum in lieu of or in addition to any taxed costs.

[4] Bowman A.C.J. rejected the awarding of costs on a solicitor and client basis. He said so explicitly. Instead, he took into account certain of the criteria set out in subsection 147 (3) of the Rules as well as his discretionary power to award a lump sum pursuant to subsection 147 (4). He noted that at the request of the Crown the appeals were "bumped up" from the informal to the General Procedure. The effect, in his view, was to "put a considerable burden on both appellants". He also intimated that the case against Agatha Lau was utterly without merit, and that the Crown should have been "a little more ready to accept" an offer to settle before trial. He compared the amount of party and party costs under the Court's Tariff with solicitor and client costs of more than $103,000.00 which he regarded as "rather high". In the end, he found that "a fair disposition of this matter and one that partially compensates the appellants for their ordeal of having to come to court and justify their position is $52,000.00".

[5] It can be seen that the awarding of costs under rule 147 is highly discretionary although, of course, that discretion must be exercised on a principled basis. We are all of the view that it was so exercised by the Tax Court and that no basis has been shown for interfering with the judgment below.

[6] Accordingly, the appeals as consolidated will be dismissed with one set of costs.

"A. J. Stone"

J.A.

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET: A-95-03

A-96-03

STYLE OF CAUSE: HER MAJESTY THE QUEEN

Appellant

and

PATRICK WING CHU LAU

Respondent

AND BETWEEN:

HER MAJESTY THE QUEEN

Appellant

and

AGATHA KIT CHUN LAU

Respondent

PLACE OF HEARING: TORONTO, ONTARIO

DATE OF HEARING: JANUARY 14, 2004

REASONS FOR JUDGMENT: STONE J.A.

CONCURRED IN BY: SEXTON J.A.

MALONE J.A.

DATED: JANUARY 14, 2004

APPEARANCES:

Ms. Livia Singer

Ms. Jocelyn Espejo Clarke FOR THE APPELLANT

Mr. Robert J. Morris FOR THE RESPONDENT

SOLICITORS OF RECORD:

Morris Rosenberg

Deputy Attorney General of Canada FOR THE APPELLANT

Lerner & Associates LLP

Toronto, Ontario FOR THE RESPONDENTS

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Canada v. Lau, 2004 FCA 10

Citations2004 FCA 10

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2004 FCA 10