Citation: 2011 TCC 350
Date: 20110909
Docket: 2006-3621(GST)G
2006-3622(IT)G
2006-3622(IT)G
BETWEEN:
ANTONIO PASCOAL
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
AMENDED REASONS FOR ORDER
McArthur J.
[1]
The Appellant’s motion
is for Partial or Substantial Indemnity Costs following an Order of December 2,
2009 allowing these appeals “with costs.”
[2]
In his written
submissions the Appellant’s counsel submitted the following facts:
1. A trial was held in this matter before The Honourable Justice
C.H. McArthur on September 22, 2009 in Kingston, Ontario based on income tax
assessments for tax under Section 227.1(1) of the Income Tax Act and Section
323 of the Excise Tax Act, for tax years 2000, 2004 and 2005 in relation to two
companies, AJV and ANVIC, in relation to which Mr. Pascoal was a director.
2. A Judgment was rendered by The Honourable Justice C.H. McArthur
on December 2, 2009 in favour of the Appellant. Shown to me now and attached as
Exhibit “B” is a copy of the Judgment dated December 2, 2009.
3. The Trial pertained to assessment of $446,115.00 in respect of
unpaid income tax deductions, interest and penalties payable by AJV and
$205,245.00 in respect of unpaid income tax deductions, interest and penalties
payable by ANVIC and $191,379.00 for unremitted GST, penalties and interest payable
by AJV. Mr. Pascoal was successful at Trial.
[3]
Counsel further
referred me to Langeville v. Her Majesty the Queen a decision of
Boyle J. In exercising my discretion pursuant to subsection 147(3) of this
Courts Rules (General Procedure), I may consider the following:
In exercising its discretionary power pursuant to subsection (1) the
Court may consider,
(a) the result of the proceeding ,
(b) the amounts in issue,
(c) the importance of the issues,
(d) any offer of settlement made in writing,
(e) the volume of work,
(f) the complexity of the issues,
(g) the conduct of any party that tended to shorten or to
lengthen unnecessarily the duration of the proceeding,
(h) the denial or the neglect or refusal of any party to
admit anything that should have been admitted,
(i) whether any stage in the proceeding was,
(i) improper, vexatious, or unnecessary, or
(ii) taken through negligence, mistake or excessive
caution,
(j) any other matter relevant to the question of costs.
(4) The Court may fix all or part of the costs with or without
reference to Schedule II, Tariff B and, further, it may award a lump sum in
lieu of or in addition to any taxed costs.
(5) Notwithstanding any other provision in these rules, the Court
has the discretionary power,
(a) to award or refuse costs in respect of a particular issue
or part of a proceeding,
(b) to award a percentage of taxed costs or award taxed costs
up to and for a particular stage of a proceeding, or
(c) to award all or part of the costs on a solicitor and client
basis.
Briefly applying the subsection 147(3)
considerations, in order, I find:
a) the Appellant was 100%
successful;
b) the amount in issue of over
$600,000 was more than the average for “director liability cases”.
c) the issues were somewhat
routine
d) in effect, there were no
offers to settle of significance
e) the volume of work submitted
by Counsel appears high. Possibly some of Counsel’s hours were devoted to
Natalie, who is not privy to this motion
f) similar issues have been
decided many times by this Court with varying outcomes, justifying the
Minister’s assessment
g) the duration of the proceeding
was average
h) there was no evidence of
neglect to admit on either side
i) this does not apply
j) primary, if not total,
liability appears to rest with the Appellant’s son Tony. I was not aware of the
Minister dealing with Tony, although he did testify during the Appellant’s
hearing.
[4]
Antonio Pascoal was a de jure (at law) director of the two corporations AJV and ANVIC.
The Minister assessed him $446,115 in respect of unpaid income tax deductions,
interest and penalties payable by AJV, and $205,254 in respect of unpaid income
tax deductions, interest and penalties payable by ANVIC. He was further
assessed $191,379 for unremitted GST, penalties and interest payable by AJV. He
was a 70 plus year old illiterate construction worker and specialized in the
erection of scaffolding. He became a director in the two corporations to assist
his son Tony, a graduate engineer from Queen
University, in the formation of two construction corporations that failed. The
Appellant had no input in the administration of Tony’s companies. He did
whatever his on asked him to do, in complete confidence.
[5]
My conclusion in the
Reasons for Judgment is found at paragraph 28 which states the following:
[28] To conclude, Antonio with his limited abilities and
business knowledge, acted reasonably to rely on his son to apprise him of his
duties and obligations as a director when they arose.
Natalie who had nothing to do with ANVIC other than being a director on paper.
[6]
The Respondent provided
a Proposed Bill of Costs pursuant to Schedule II, Tariff B(1) concluding that
the appropriate award of costs in the circumstances would be $8,612.14
(9,312.14 after taxation).
[7]
An affidavit filed on
behalf of the Appellant states in paragraph 6:
The matter involved litigation which began in 2005 and ended in 2009
which involved numerous meetings with the Appellant, review of minute books,
preparation of notice of objection, preparation of notice of appeal,
preparation of list of documents, preparation of notices discontinuance,
preparation of affidavit of documents, preparation for and attendance at
discovery, preparation of notice of motions, preparation for meetings with
Revenue Canada, preparation for status hearing, preparation for trial and
numerous correspondence between counsel.
[8]
Paragraph 9 of the same
affidavit indicates disbursements totalling $4,029.00 which include $1,500
filing fee and $1,200 for Notice of Appeal.
[9]
Paragraph 11 contains
the following:
The Appellant is requesting substantial indemnity costs in relation
to this matter in the amount of $35,791.50 which includes fees for 112.60
hours. (at $250.00 per hour)
[10]
This Court has probably
heard hundreds of director liability cases since its inception. The complexity
of the present issue was moderately above average. The volume of work was in
the high average range in that the Appellant was a director of the two
corporations involved (AJV and ANVIC) and he was further assessed for default
of the corporations’ failure to remit GST. The amounts involved were more than
the average. In addition, Appellant’s counsel prior to the hearing, acted for
the Appellant’s daughter, Natalie, who was assessed together with her father
with respect to the default of ANVIC. I don’t believe she should have been
assessed, although this is said in hind sight. Just prior to trial she had a
falling out with her father and retained separate counsel. In any event, her
appeal costs are not in issue before me.
[11]
It was my original
intent to award Tariff costs as set out in our General Procedure Rules. Upon
hearing Mr. Van Dyke’s submissions and considering the
legitimate disbursements, I conclude that the amount
of $16,000, all inclusive, is more reasonable, given the circumstances. The
Appellant is further awarded $500.00 in respect of the costs of his
submissions.
Signed at Ottawa, Canada, this 9th day of September 2011.
“C.H. McArthur”
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