Mark G Smerchanski v. Minister of National Revenue, [1977] CTC 283, 77 DTC 5198

The Chief Justice:—This is a motion by the respondent for an order that costs be paid to the respondent in the amount of $8,626 with interest thereon.* [1]

The proceeding in this Court is an appeal from the Trial Division. This Court’s judgment, rendered on March 13, 1974, dismissed the appeal with costs [reported [1974] CTC 241]. An appeal to the Supreme Court of Canada was dismissed on June 29, 1976 [reported [1976] CTC 488].

At the end of the submissions of counsel for the respondent, I intimated that I did not find it necessary, as I then appreciated the matter, to call on counsel for the appellant but I adjourned the hearing of the matter so that counsel for the respondent might consider whether he wished to make further submissions in writing.

A letter has now been received by the Registry indicating that counsel for the respondent has no further submissions to make.

In my view, I am bound by this Court’s decision in Crabbe v Minister of Transport ([1973] FC 1091), to dismiss this application. In that case an application to fix costs that, by a prior judgment of the Court, had been ordered to be paid “when taxed’’ was dismissed on the ground that is set out at pages 1091-92, as follows:

. . . Such a judgment is final (Rule 337(4)) except that

(a) its terms may be reconsidered on the ground that they do not accord with the reasons or that there has been an accidental omission (Rule 337(5)), and

(b) clerical mistakes and accidental slips, etc., may be corrected (Rule 337(6)).

That judgment establishes, in my view, that, where this Court gives judgment for costs to be taxed, it cannot subsequently substitute a lump sum unless by way of reconsideration of the judgment for a reason that falls within one of the classes of case to be found in Rule 337(5) or (6). This is not such a case (see Appendix).

I do not overlook the fact that the Notice of Motion indicates an intention to make the application for an order fixing the total amount of the costs “pursuant to paragraph 3 of Tariff B and Rules 344(7) and 350(3)”. In my view this cannot change the nature of the order that may be sought as set out in the Notice of Motion without the acquiescence of the opposing party and the Court and it cannot be said that there was any acquiescence on the part of the opposing party during the hearing of this application.

Nevertheless, counsel for the respondent was permitted to address the Court as though there were before the Court

(a) an application to increase certain of the amounts for services of solicitors and counsel set out in paragraph 2 of Tariff B to the Rules as contemplated by paragraph 3 of Tariff B and Rule 344(7),* [2] and

(b) an application under Rule 350(3) that the Court tax the costs allowed by the judgment disposing of the appeal.

In so far as the motion might be regarded as seeking taxation of costs by a judge under Rule 350(3),t [3] I am of opinion that it should be dismissed because there is no material establishing that “there would otherwise be a delay in the taxation”. (In my view, the paragraph in question is obviously intended for a case where a judge is sitting at a place where there is no authorized taxing officer available or for some comparable exceptional case and does not entitle a party as of right to taxation of costs by a judge instead of taxation by a regular taxation officer.) Furthermore, if a judge were to act as taxing officer, the provisions of Rule 350(1) should be complied with.t [4]

In any event, in my view, special court directions changing the tariff amounts, such as are contemplated by paragraph 3 of Tariff B and certain of the Rules, should be obtained before the taxation procedure is proceeded with so that such directions will be available to support the amounts claimed in the Bill of Costs at the time of the taxation. (There may be circumstances justifying a departure from such course of events but they do not occur to me.)

In so far as the motion might be regarded as seeking directions from the Court under paragraph 3 of Tariff B, the motion was not made within the time contemplated by Rule 344(7), which reads:

(7) Any party may

(a) after judgment has been pronounced, within the time allowed by Rule 337(5) to move the Court to reconsider the pronouncement, or

(b) after the Court has reached a conclusion as to the judgment to be pronounced, at the time of the return of the motion for judgment,

whether or not the judgment includes any order concerning costs, move the Court to make any special direction concerning costs contemplated by this rule, including any direction contemplated by Tariff B, and to decide any question as to the application of any of the provisions in Rule 346. An application under this paragraph in the Court of Appeal shall be made before the Chief Justice or a judge nominated by him but either party may apply to a Court composed of at least 3 judges to review a decision so obtained.” [5]

and there has been no application for an extension of such time.

I might add that, as seems clear to me from a reading of Rule 344(7) with Rule 337(5), it is contemplated that any such application for a direction increasing costs should be made while the matter is sufficiently fresh in the mind of the Court that the Court is in a position to appreciate whether there were present in the particular case circumstances justifying a departure from the normal tariff amounts; and it would, in my view, require very special reasons to warrant a lengthy extension of the time contemplated by Rule 344(7) such as would be required here.

Finally, I should say on this point that the material submitted in support of this application does not, in my opinion, provide a reasonably arguable case for an exercise of judicial discretion increasing the fees for services of solicitors and counsel in connection with this appeal. Such a direction must be based on relevant considerations and must not be made on an arbitrary basis. All that has been established here is that the respondent incurred a very large solicitor and client bill in connection with the appeal, which would have been relevant if costs had been awarded on a solicitor and client basis but is not ordinarily relevant to the determination of costs on a party and party basis. Nothing has been put forward to suggest that there was anything in the conduct of the appeal to warrant any increase in the party and party tariff. While there is no principle with reference to the basis for ordinary party and party costs that is apparent to me from a study of the relevant Rules, it does seem to be clear that party and party costs are not designed to constitute full compensation to the successful party for his solicitor and client costs. (This must certainly be so in a case such as this where the successful party has chosen to instruct counsel whose base of operations is elsewhere than the appropriate place for the hearing of the appeal.)

Reference was made to some four or five decisions of the Trial Division where Tariff B items were increased apparently “having regard particularly to the great volume of work done in preparation . . I have difficulty in accepting volume of work in preparation considered alone, or in conjunction with such factors as the difficulty or importance of the case, as constituting a basis for exercising the judicial discretion to increase Tariff B costs items. It must be obvious that such items are so low in relation to what is involved in a very substantial proportion of the matters that come before the Court that they are not designed to provide complete compensation to the successful party for the costs incurred by him in the litigation. (Indeed, what is sought in this case is an increase that would still leave the successful party largely uncompensated for solicitor and client costs.) If Federal Court party and party costs are not designed to provide full reimbursement, as it seems to me, what is intended is that they be made up of the completely arbitrary amounts fixed by or in accordance with the rules subject to variations (where authorized) based on factors arising out of the conduct of the particular proceeding. As it seems to me, the vague basis put forward on behalf of the respondent would put the Court in the position, in a very substantial proportion of proceedings, of weighing imponderable factors, or factors that are not capable of determination, with a view to making an allowance of an undefined portion of solicitor and client costs. In my view, such an approach is not acceptable as a basis for exercising a judicial discretion under Tariff B and would open the way for an unseemly complication of our practice.* [6]

For the above reasons, I am of opinion that the application should be dismissed even if it could be regarded as being for one of the other orders indicated above that are not set out in the Notice of Motion.

I am further of the view that the motion should be dismissed with costs.

APPENDIX

On reading the reasons in the Crabbe case, I find a sentence therein in which there is, in my opinion, a patent error, which might well cause confusion. That sentence reads:

In the present case since the judgment was pronounced in open court the matter of awarding a fixed amount in lieu of costs to be taxed might have been spoken to before the judgment was pronounced or it might have been raised on an application under Rule 344(7), within the time limited by Rule 337(5), to reconsider the pronouncement on any ground falling within Rules 337(5) and 337(6), that is to say, on the ground (1) (Rule 337(5)) that the terms of the judgment did not accord with the reasons of the Court or that there had been an accidental omission or (2) (Rule 337(6)) that there had been a clerical or accidental slip which required correction.

Having regard to the last portion of that sentence and reading the reasons as a whole, it is, in my view, clear that what it was intended to convey was that an application after judgment to fix an amount in lieu of costs to be taxed would have to be made under Rule 337(5) or (6). I can only conclude that the words “it might have been raised on an application under Rule 344(7) . . . to reconsider the pronouncement” found their way into the sentence by error. Rule 344(7) authorizes applications for special directions to be carried out on the taxation of costs. It does not authorize applications to change a “pronouncement” of judgment or a judgment after it has been signed. The sentence from the Crabbe reasons that I have quoted should, in my opinion, have read as follows:

In the present case, since the judgment was pronounced in open court, the matter of awarding a fixed amount in lieu of costs to be taxed might have been spoken to before judgment was pronounced or it might have been raised on an application under Rule 337(5) or (6), that is to say, on the ground (1) (Rule 337(5)) that the terms of the judgment did not accord with the reasoning of the Court or that there had been an accidental omission, or

(2) (Rule 337(6)) that there had been a clerical or accidental slip which required correction.

This error seems to have played a part in leading Walsh, J, in his Reasons for Judgment of January 27, 1976, in Crelinston Fruit Company v Maritime Fruit Carriers Co Ltd, T-2994-72, to the conclusion that, on a review of a taxation, directions might be made under Rule 344(7), a view that also seems to have been taken by Kerr, J in Aladdin Industries Inc v Canadian Thermos Products Ltd, [1973] FC 943. I can only say that the view expressed by Thurlow and Pratte, JJ and myself in the Crabbe case was that, on a review of a taxation under Rule 346(2), the Court decides whether the taxing officer erred in performing his duty and can neither change the Court’s judgment nor make a direction or order contemplated by Rule 344 or paragraph 3 of Tariff B.