Citation: 2011TCC446
Date: 20110922
Docket: 2009-215(IT)G
BETWEEN:
NEIL MACCALLUM,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
V.A. Miller J.
[1]
The Appellant has
brought a motion for an order pursuant to section 147 of the Tax Court of
Canada Rules (General Procedure), (the “Rules”), for costs in excess
of the tariff from the date that he made an offer of settlement to the
Respondent. The Appellant has relied on Practice Note 18 and the proposed
amendments to section 147 of the Rules.
[2]
This appeal was heard
June 13, 2011. On June 22, 2011, Reasons for Judgment were issued which allowed
the appeal with costs. At that time, I was not aware that the Appellant had
sent an offer to settle to the Respondent and that he had also sent a copy of
this offer to the Registrar of the Court in a sealed envelope. The Appellant
filed the present motion with the Court on July 21, 2011.
Background
[3]
The Appellant appealed
the reassessment of his 2003, 2004 and 2005 taxation years. In his Notice of
Appeal, he raised four issues. They were:
a)
Whether the
reassessments were made beyond the normal reassessment period;
b)
Whether the Appellant
was entitled to a business investment loss in the 2003 taxation year;
c)
Whether the Minister of
National Revenue (the “Minister”) correctly calculated the Appellant’s personal
use and standby charges with respect to a vehicle owned by the corporation;
d)
Whether the Appellant
was entitled to a reduction in the shareholder benefit calculated by the
Minister.
[4]
By letter dated June 2,
2010, the Appellant offered to settle this appeal on the basis that the
Respondent would allow the business investment loss and the Appellant would
discontinue his appeal of the remaining three issues. The Appellant also
presented a fact scenario in his letter which he felt supported the offer to
settle. This offer was refused, with reasons, on July 7, 2010.
[5]
By letter dated July
30, 2010, the Appellant again made an offer to settle to the Respondent. He
also sent a sealed copy of that offer to the Registrar of this Court. By letter
dated August 10, 2010, the Respondent again refused the Appellant’s offer to
settle.
[6]
In the offer to settle
dated July 30, 2010, the Appellant again asked that the business investment
loss be allowed and that the other issues be dismissed.
[7]
By letter dated
November 12, 2010, the Appellant withdrew three of the issues raised in his
appeal so that the only issue litigated at the hearing of this appeal was
whether the Appellant was entitled to an allowable business investment loss of
$56,016 in his 2003 taxation year.
[8]
The Respondent has
opposed this motion on the basis that the Appellant’s success at Court was as a
result of an argument not made by the Appellant at the time of the offer of
settlement and not reasonably anticipated by the Respondent at the time the
offer to settle was rejected.
[9]
I note that the second
offer to settle from the Appellant did not give any argument or facts in an
attempt to persuade the Respondent to settle. The offer was succinct; it reads:
The Appellant offers to settle his appeal as follows:
1)
The Appellant is entitled to an allowable
business investments loss of $56,016.00 for the 2003 taxation year;
2)
The interest expenses of $7,220.00 for the 2004
taxation year and $6,028.00 for the 2005 taxation year be allowed in full;
3)
The Appellant is entitled to no further relief.
The interest expenses referred to in the
offer to settle were assessed amounts which related to the ABIL for the
Appellant’s 2004 and 2005 taxation.
[10]
Although the Respondent
rejected this last offer to settle on August 10, 2010, the Appellant’s last
offer to settle did not have an expiry date and it was never withdrawn. The
Appellant’s success at Court was primarily based on facts known by the Minister
and admitted by the Respondent in the Joint Statement of Facts.
[11]
The Appellant has
relied on sections of the Rules which are still at the proposal stage.
However, section 147 of the Rules gives the Court a broad discretionary
power in determining an award of costs. The Court can consider an offer of
settlement made in writing; and, any other matter relevant to the question of
costs. In accordance with subsection 147(4), the Court may award a lump sum
with respect to costs.
[12]
In this case, the
Appellant received a judgment that was as favourable as the terms of the offer
to settle. Actually, it was identical to the offer to settle. It is clear that
if the Respondent had accepted the offer, both parties’ costs would have been
greatly reduced.
[13]
In the circumstances, I
conclude that the Appellant is entitled to costs in excess of the tariff for
the period after the offer to settle was made. The Appellant is awarded normal
tariff costs for the period up to July 30, 2010. I award a lump sum amount of
$16,500 for the time period from July 30, 2010. This amount includes an award
of costs for this motion.
Signed at Ottawa, Canada, this 22nd day of
September 2011.
“V.A. Miller”
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