Minister of National Revenue v. Bethlehem Copper Corporation LTD, [1976] CTC 698, 76 DTC 6430

Ryan, J (concurred in by Heald and Urie, JJ):—This is an appeal from an order of the Trial Division delivered September 15, 1975, whereby the Crown was directed to pay interest on judgments for costs at 5% per annum from the dates of the judgments.

The respondent, a British Columbia company, was assessed tax for the year 1967. and appealed to the Trial Division. The respondent was successful at the trial of the action, which was held in British Columbia, and was awarded costs; the judgment was delivered on september 22, 1972. The Minister appealed and the appeal was dismissed with costs by a judgment delivered May 9, 1973. An appeal by the Minister to the Supreme Court of Canada was also dismissed with costs, which were subsequently taxed and paid and are not in issue in the present appeal.

By an order dated June 23, 1975 the trial judge in the action directed that all steps in the action, for the purposes of Tariff A of the Rules of the Federal Court, should be classified as being Class III. It was also directed, pursuant to paragraph 2(a) of Tariff B, that certain specified disbursements should be allowed.

On June 23, 1975 the District Administrator of the Court at Vancouver certified that the costs of the respondent in the present proceedings, in respect both of the trial and of the appeal to the Court of Appeal, had been taxed and allowed at the sum of $21,243.73.

On September 15, 1975 Mr Justice Gibson of the Trial Division ordered that the Crown should be directed to pay interest at 5% per year from the dates of judgment on the judgments for costs of the Trial Division and of the Court of Appeal. It is from this order that this appeal was brought.

Section 40 of the Federal Court Act provides for the payment of interest on a judgment from the time of giving the judgment.* It was not disputed in argument that a judgment for costs is a judgment for purposes of section 40.

At the moment a judgment for costs is given, its amount is, of course, not precisely fixed unless the judgment is for a lump sum. Taxation is, however, essentially an administrative process although there are, sometimes, as there were in this case, discretionary elements involved. The presence of such elements of discretion in the taxing of costs does not seem to me to place any real barrier in the way of reading the words of section 40 in their ordinary sense: interest on costs taxed in due course pursuant to a judgment should run from the time the judgment is delivered subject, of course, to a contrary order. There was no such contrary order in this case.

It is not strictly necessary to decide whether sections 13 to 15 of the Interest Act are made applicable to this case by section 12 of the Act.t Assuming that they are—and I am inclined to the view that in relevant

*Section 40 of the Federal Court Act provides:

“40. Unless otherwise ordered by the Court, a judgment, including a judgment against the Crown, bears interest from the time of giving the judgment at the rate prescribed by section 3 of the Interest Act.”

^Sections 12 to 15 of the Interest Act provide:

"12. Sections 13, 14 and 15 apply to the Provinces of Manitoba, British Columbia, Saskatchewan and Alberta and to the Northwest Territories and the Yukon Territory only.

13. Every judgment debt shall bear interest at the rate of five per cent per annum until it is satisfied.

14. Unless it is otherwise ordered by the court, such interest shall be calculated from the time of the rendering of the verdict or of the giving of the judgment, as the case may be, notwithstanding that the entry of judgment upon the verdict or upon the giving of the judgment has been suspended by any proceedings either in the same court or in appeal.

15. Any sum of money or any costs, charges or expenses made payable by or under any judgment, decree, rule or order of any court whatever in any civil proceeding shall for the purposes of this Act be deemed to be a judgment debt."

particulars they are applicable—they reinforce the judgment I have formed on the effect of section 40 of the Federal Court Act, reading that section by itself. By section 15 of the Interest Act, costs made payable by any judgment of any court whatever in a civil proceeding are, for purposes of the Act, deemed to be a judgment debt. By virtue of section 13, every judgment debt is to bear interest, and under section 14 such interest is to be calculated from the time of giving the judgment.

I would, with respect, follow the judgment of the British Columbia Court of Appeal in Star Mining and Milling Company, Limited v Byron N White Company (1910), 15 BCR 161.

We were referred in argument to the judgment of Mr Justice Grant in Canadian Aero Service Ltd v O'Malley et al (1973), 12 CPR (2d) 91, in which it was held that, in Ontario, the date from which interest is to be calculated on taxed costs, in respect of trial division judgments, is the date of the certificate of taxation. I note, however, that Mr Justice Grant referred particularly to Form 115, the form of the writ of fi fa in the appendix of forms to the Ontario Rules of Practice. He said, at pages 93-4, with reference to Form 115:

. . . the second blank relates to the date from which interest is to run on costs, and the words in parenthesis direct that it be completed by instering “the date of the certificate of taxation”.

He also said, at page 95:

It is my view that the long-established principle whereby interests on costs could only be recovered from the date of the certificate of taxation, is, by virtue of s 25 of the Judicature Act, and the rules and Form 115 appended thereto, applicable to the present situation, and that the statement of Riddell, J, supra, in Vano v Canadian Coloured Cotton Mills Co is the correct statement of the law.*

Form 56, the form of writ of fieri facias, in the Appendix to the Federal Court Rules, provides in paragraph 1:

WE COMMAND YOU:

1. That of the goods and chattels and lands and tenements of C. D. within your jurisdiction you cause to be made a certain sum or sums that were on the day of , 19 , adjudged (or ordered) to be paid by the said C. D. to A. B. (or into court) by a judgment (or order) of the above named Court in the above named action (or as the case may be), which sum or sums are more specifically described as follows:

(here enumerate the sum or sums payable by virtue of the judgment including any amount payable as costs indicating, if it be the case, that it was determined by a taxing master’s certificate)

and also interest on such sum or sums of money to the extent that such interest is, in accordance with law, payable thereon by the said C. D., which interest is more specifically described as follows:

(here specify the rate of interest and the interest period for interest on each sum, referring to the statutory authority for such interest)

and also an amount equal to all fees and expenses of execution of this writ;

“Italics added.

It may be noted that in Form 56 interest is to be charged .. on such sum or sums of money to the extent that such interest is, in accordance with law, payable thereon . . .”.* [1] It is also stipulated that reference is to be made to the statutory authority for such interest, which in the present case I take to be section 40 of the Federal Court Act.

We were also referred to a recent English case, K v K, [1976] 2 All ER 774, in which it was held, in a decision of the Family Division, that interest payable under section 17 of the Judgments Act 1838 on costs incurred in the Family Division become due only from the date of the order for payment following the taxing officer’s certificate. The decision was cited particularly with a view to distinguishing a series of cases decided in England between 1883 and 1894 which support the proposition that interest on a judgment for costs runs from the date of the judgment, not from the date of taxation. It was submitted that, in K v K, the Family Division distinguished those cases on the ground that the depended on the English Rules of 1883 and especially on a footnote to a form of writ of fi fa included in an appendix to those Rules; substantial changes were made in the forms of writ of fi fa by the Rules of the Supreme Court, 1965, and the footnote was omitted. It is true that, with reference to these changes, the judgment in K v K does say, at page 778: “. . . Most important of all, the footnote has gone.” I confess, however, that for purposes of the present case I do not find K v K in any way decisive; resolution of the problem in that case appears to me to have depended on particular developments in legislation and rule-making and on the proceedings actually followed in the various divisions of the English Supreme Court. The following passage from the judgment of Sir George Baker in K v K, at pages 779 and 780, supports this view:

I have no doubt that the 1838 Act applies to the Family Division (see the Supreme Court of Judicature (Consolidation) Act 1925, s 225) and that, subject to any particular rule made by virtue of s 99(e) of the 1925 Act, the same practice in relation to execution should apply as in other Divisions; RSC Ord 45, r 12, applies and the prescribed forms for writ of fi fa must be used. I am however of the opinion that: (a) the Matrimonial Causes (Costs) Rules 1971, r 8, is a special rule and that as costs are not payable until the order for payment which follows the taxing master’s certificate, interest cannot be charged until that date. I reject counsel for the wife’s argument that RSC Ord 62, r 3(1), creates the obligation to pay at the date of the order of Dunn J, and that the notice is merely a statement that the amount of costs has been finally quantified. In other words, Dunn J’s order created, or was the fount of, an obligation to pay costs which crystallised into, or became enforceable as, a liability to pay only on notice after costs had been taxed. The husband was ordered to pay within 28 days of the notice of 18th August 1975 and he did so. It is to be noted that the lump sum was not due and payable until 1st September and, although the wife was not claiming interest on that, counsel’s argument involved the proposition that she could have claimed such interest from 17th May 1974, the date of Dunn J’s order, and that as the order is silent about interest, there would be no discretion in this court to disallow it. This is, however, contrary, not only to what Field J said in Pyman’s case [[1884] WN at 100], . there may be a judgment directing money to be paid on a future day, in which case the interest will begin to run from that day . . .”, but also to the approach of the Court of Appeal in Harrison v Harrison [18th July 1974, unreported] where an order for payment of interest at 11 per cent from judgment on the wife’s share of the matrimonial home, on the basis that she was being kept out of her interest, was set aside. (b) There has never been a practice in the Probate Divorce and Admiralty or Family Division to claim or allow interest on costs from the date of the order, (c) For many years there has been no settled practice in other Divisions to claim such interest, although the post-1883 cases would have justified such a claim. (d) The ratio of Boswell v Coaks [(1887) 36 WR 65], a decision which would otherwise have been binding on me (or at any rate in the absence of a special rule), ceased to be valid from the omission of the footnote and the change of the forms of writ in 1965-66.

I would dismiss the appeal.

The amount involved in the appeal is approximately $3,000. The solicitor and client costs of the respondent may exceed this amount. The question of law involved has its difficulties, which the appellant appears to want resolved. I would award costs on a solicitor and client basis.