R. Orrin J. Splane v. Her Majesty the Queen, [1991] 2 CTC 224, 91 DTC 5549

Heald, J.A.: This appeal was heard immediately after the Court dismissed with costs this respondent's appeal in file No. A-725-90 between the same parties. Appeal No. A-725-90 was an appeal from the decision of Cullen, J. wherein he allowed the appeal of the taxpayer (this appellant) from certain reassessments for income tax. In that decision Mr. Justice Cullen reserved on the question of costs and invited submissions thereon. Subsequently, and after those submissions were reserved, he proceeded to dispose of the question of costs by Order dated January 30, 1991. This appeal is from that Order.

Before Mr. Justice Cullen, this appellant had requested an award of costs on a solicitor and client basis. Cullen, J. refused this request. In our view he acted properly in so doing.

The trial judge enumerated various grounds upon which this appellant supported the request for solicitor and client costs [1] , and proceeded, tnereaf- ter, to dismiss this request in the circumstances here present. We can find no basis for interfering with his decision.

Before us, the appellant advanced a further argument to the effect that since the amount of tax and interest in issue was very small, an award of costs on a solicitor and client basis should be awarded by analogy to the provisions of subsection 178(2) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act") [2] .

It is apparent that the provisions of subsection 178(2) do not directly apply here because this was not an appeal by the Minister nor was it an appeal from the Tax Court of Canada [3] . Likewise we are not persuaded that subsection 178(2) would apply by analogy. It seems clear that the rationale for subsection 178(2) is to enable the Crown to have important decisions of principle decided in the Federal Court in cases where the amount of tax in issue is small and, where, as a result, the taxpayer might be inclined to not contest the matter in the Federal Court if the usual rule as to costs was not altered. However, this is not such a case. In this case the taxpayer chose to commence his action in the Federal Court-Trial Division. He was successful there. It is the Crown that has appealed to the Court of Appeal. In the circumstances of this case we can see no possible basis for the application of subsection 178(2) by analogy.

For these reasons, the appeal will be dismissed with costs.

Appeal dismissed.