Date: 20020719

Docket: 97-2707-IT-G

BETWEEN:

JOHN JACULA,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for taxation

Reeve, D., Vancouver, T.C.C.

[1]            This taxation of costs was heard by conference call in Vancouver at 10:30 a.m. (PST) on Tuesday July 9th, 2002. It follows the judgment of the Honourable Judge Bowie, dated March 12^th, 1999, dismissing the appeals with costs. On October 30, 2001, the Respondent filed a Bill of Costs with the Court for $1,625.00 for the services of counsel and $112.86 for disbursements. At the taxation, Ms. Belinda Schmid was counsel representing the Respondent and Mr. Jucula represented himself.

SUBMISSIONS - Mr. Jacula for himself

[2]            Revenue Canada claimed that they were owed money, therefore, after consulting with an accountant, an appeal was filed with the Tax Court. On December 3, 1997, bankruptcy was initiated and the business was shut down. Because of the bankruptcy there was no business, so there was no point in proceeding with an appeal at the Tax Court. At some point during the process, the Respondent's counsel was informed of this. The trustee was expected to take care of all outstanding expenses and it was not understood why the appeal had not been withdrawn. Because the bankruptcy was in the hands of the trustee, there could be no interference. Correspondence had been received from the Tax Court but no appearance was made on the scheduled date as I felt that it was not necessary. Although the decision on the appeal was made after the discharge from bankruptcy, the bill included a receipt dated November 20, 1997, which was before the bankruptcy was initiated. There are insufficient funds to pay this bill.

SUBMISSIONS - Ms. Schmid for the Respondent

[3]            The Appellant went bankrupt in 1997 but the appeal was not concluded until 1999. A decision from the Court with respect to costs, could not be known during the bankruptcy. As a result the amounts claimed were not expenses that were included in bankruptcy debts. The appeal continued after the Appellant was discharged. If the Appellant or the trustee did not wish to pursue the appeal, either could have taken steps to discontinue. Although the Appellant may have notified the Respondent's counsel at some point, it is not up to the Respondent to discontinue an appeal. In bankruptcy, a trustee can proceed with an appeal even if the Appellant does not wish to do so. The Bill of Costs covers the services of counsel in accordance with the Tariff for a Class A proceeding and disbursements are supported by receipts. A certificate is requested for the amount claimed.

DECISION

[4]            This appeal was instituted as a Class A appeal on September 2, 1997. In November 1997, the Respondent incurred a $100.00 expense to personally serve the Appellant with a copy of the Minister's reply to the appeal. For the registration of mail to the Appellant and the Tax Court, the Respondent incurred additional expenses of $12.86 on December 4, 1997 and on December 30, 1998. According to a document submitted on behalf of the Appellant by Paul A. Pope of Deloitte and Touche, Bankruptcy Trustee, the Appellant declared bankruptcy on December

3, 1997 and was discharged on September 4th, 1998. The Respondent submits that seeking an amount for costs on this appeal was not possible in this instance because they would not know the outcome of the case or any resulting order with respect to costs. In effect, there would be no certainty of a contingent debt to claim in the bankruptcy process.

[5]            Fees for the services of counsel and expenses that have been incurred form the costs that may be awarded by the Court. I appreciate that the Respondent, at the time of the bankruptcy, could not foresee that costs may be awarded at the conclusion of the appeal. The Respondent was aware of the $100.00 expense for a process server on November 20, 1997. Section 121 of the Bankruptcy and Insolvency Act (R.S. 1985, c B-3) makes it clear that all debts and liabilities incurred up to the day a person or business becomes bankrupt are provable claims. This $100 expense was incurred before the Appellant became bankrupt so the Respondent could have made a claim for this disbursement during the bankruptcy process. Requiring an order of the Court for costs is not necessary to seek recovery of an established expense. An amount was claimed during the bankruptcy that formed part of the dispute under appeal without awaiting an order of the Court. The decision of the Court could not be foreseen in this instance either. This particular disbursement existed and was a probable provable claim during the bankruptcy proceedings. The purpose of bankruptcy is to discharge debts and remove the burden from the bankrupt. The discharge from bankruptcy exhausted any existing debts up to that point, therefore, the amount of $100.00 is taxed off.

[6]            With respect to the expenses arising from the appeal, this appeal was not withdrawn but proceeded in the Tax Court during the period of the bankruptcy and concluded after the discharge of bankruptcy. On March 8, 1999, the appeal was scheduled to be heard. On that date, the Appellant did not appear and the appeal was dismissed with costs. It was incumbent upon the Appellant or the trustee in bankruptcy to follow the proper procedure if either wished to discontinue the appeal. This action would ensure that no further expenses were incurred with respect to the proceedings. The appeal was not withdrawn and when the case was called and the Appellant did not appear, the appeal was dismissed with costs and these costs are recoverable.

[7]            The Respondent's Bill of Costs is consistent with Tariff B of Schedule II for a Class A appeal and the actions that occurred with respect to this matter. The amount of $1,625.00 is allowed for the services of counsel. An amount of $250 is also allowed for the taxation. For disbursements, an amount of $12.86 is allowed. These amounts total $1,887.86. A certificate will be issued.

               

Dated at Vancouver, British Columbia this 19th day of July, 2002.

________________________

Taxing Officer

Date: 20020719

Docket: 97-2707(IT)G

BETWEEN:

JOHN JACULA,

Appellant,

and

                                                                             HER MAJESTY THE QUEEN,

Respondent.

CERTIFICATE OF COSTS

I CERTIFY that I have taxed the party and party costs of the Respondent in this proceeding under the authority of subsection 153(1) of the Tax Court of Canada Rules (General Procedure), and I allow the sum of $1,887.86.

Dated at Vancouver, British Columbia, this 19th day of July, 2002.

____________________________________

Taxing Officer