Citation: 2006TCC11
Date: 20060104
Docket: 2003-1899(IT)G
BETWEEN:
NEVIO CIMOLAI,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Rip, J.
[1] In reasons for judgment in the appeal of Nevio Cimolai v. Canada, dated November 25, 2005 I asked the parties to make submissions in writing as to costs.
[2] By Notice of Appeal filed on May 23, 2003 the appellant appealed his 2001 taxation year claiming that he is entitled to deduct from income a) legal expenses to establish a right to salary from an employer ("first issue"), and b) legal expenses "to prosecute a tort which arose in the ordinary course of business"; ("second issue"). The amount of expenses claimed for each issue were not set out in the Notice of Appeal; however I assume that at least the aggregate amount claimed was set out in Dr. Cimolai's income tax return for 2001.
[3] At trial respondent's counsel advised that the respondent consented to judgment allowing the sum of $48,319.61 respecting legal expenses to establish a right to salary, the first issue. The trial proceeded with respect to the second issue only. Dr. Cimolai did not succeed on the latter claim.
[4] At time of judgment I did not know at what stage of the appeal the respondent informed Dr. Cimolai that she consented to allow his legal expenses incurred to claim salary and therefore was not in a position to consider costs. For example, if the Crown had conveyed its consent at the eleventh hour, it may not have been entitled to costs.
[5] In his submissions Dr. Cimolai advises that "unofficially" the Crown "indicated in Court on January, 2005, during a pre-hearing, that it would likely capitulate to that issue". However, he states, there was nothing in writing.
[6] Dr. Cimolai proposes that the Crown be responsible for all costs since he won the "much greater majority of the assessment." He also asserts that when the Crown indicated in January 2005 that it would consent to allowing the claim of $48,319.61, Crown counsel indicated that "it would anticipate that the costs would be paid by the Crown on the account that the sum embodied the majority of the overall deduction." Also, Dr. Cimolai claims, the Crown knew from the onset of the appeal that he was entitled to deduct the $48,319.61.
[7] Counsel for the respondent advises that as early as December 3, 2003, the respondent requested Dr. Cimolai to provide sub-totals for the two categories of expenses and the appellant did not respond to this request. The request was repeated on April 13, 2004 when the respondent served a list of questions on Dr. Cimolai pursuant to s. 113 of the Tax Court of Canada Rules (General Procedure). Dr. Cimolai, according to counsel, answered the questions by providing pages showing the total of each invoice but not the particulars which would have formed part of each invoice and which would have permitted the respondent to satisfy herself as to the particulars of the legal expenses. On May 28, 2004, counsel advises that she wrote to Dr. Cimolai requesting these particulars but he did not reply.
[8] On January 25, 2005, the appellant brought a motion for the following relief: (a) an order allowing his appeal; (b) in the alternative, an order compelling the respondent to answer a second set of interrogatories; (c) in the further alternative, an order compelling the respondent to attend oral discoveries; and (d) costs of his application and compensation for lost wages.
[9] On January 25, 2005, the respondent brought a cross-application for the following relief (a) an order terminating the appellant's written discovery of the respondent; (b) an order directing the appellant to provide the respondent with complete copies of his legal invoices; (c) an order setting the appeal down for hearing; and (d) costs of the application.
[10] At the hearing of the applications and cross-application on July 25, 2005 the appellant asserted solicitor-client privilege as his reason for refusing to disclose complete copies of his legal invoices to the respondent. According to the respondent's brief the appellant expressed concern over disclosing the complete invoices in light of the fact that his British Columbia Supreme Court actions were ongoing and he did not wish to risk the information in the invoices becoming available to the litigants in those actions. Respondent's counsel states that my colleague Hershfield J. cautioned the appellant that his refusal to disclose the complete invoices could be detrimental to his appeal. Respondent's counsel states that the appellant advised Hershfield J. that that he would be willing to show counsel for the respondent the complete invoices, but did not wish for copies to be made or for the complete invoices to become part of the court record. The Court ordered that the appellant's written discovery be terminated, subject to the respondent re-answering 3 questions from the original set of interrogatories. Hershfield J. apparently declined to order the appellant to disclose the complete invoices on the basis that the appellant was entitled to withhold such information at his peril. A written Order and Reasons for Order were subsequently issued on February 3, 2005.
[11] Counsel for the respondent says that she met with the appellant immediately following the conclusion of the January 25, 2005 hearing in order to review the complete invoices. At the end of the meeting, counsel for the respondent advises she asked the appellant to obtain a letter from his counsel in the wrongful suspension action verifying the legal fees ($48,319.61) incurred for that action. At this meeting, counsel for the respondent states, she also advised the appellant that she expected to concede the deductibility of the legal expenses incurred for the wrongful suspension action. However, according to the respondent's counsel, the letter from his counsel was necessary in order for her to obtain the necessary instructions to concede the issue.
[12] On February 17, 2005, the appellant provided the respondent with a letter from his counsel in the wrongful suspension action verifying legal expenses incurred in the amount of $48,319.61.
[13] On April 26, 2005, the parties appeared before Justice Hershfield for a status hearing. At this status hearing, counsel for the respondent says, counsel advised the Court that the respondent was prepared to concede the deductibility of the legal expenses relating to the wrongful suspension action, but that the parties continued to disagree on the deductibility of the legal expenses relating to the defamation action. Counsel for the respondent states that she offered to read the conceded amount of legal expenses into the record. However, she says that the Hershfield J. directed her to advise the trial judge of the details of the concession and proceeded to set the matter down for hearing on September 6, 2005.
[14] I appreciate that Dr. Cimolai appeared without counsel and during the various meetings with counsel for the respondent and during the various procedures may have been leery of providing information to the Crown. However, as late as April 2005 Dr. Cimolai knew that the first issue was settled and that he need not prepare for the trial with respect to this issue. The delay in the Crown arriving at the decision to concede the first issue was due in no small part to the action or inaction of the appellant himself; this may have been the result of his suspicion and mistrust of the tax authority.
[15] As far as the actual trial of the appeal is concerned, there was only the second issue that had to be tried and judged. Preparation for trial was solely on the second issue and Dr. Cimolai did not succeed on the second issue. He is liable for 50 percent of costs of any matter or procedure prior to January 26, 2005 and all costs thereafter.
Signed at Ottawa, Canada, this 4th day of January 2006.
"Gerald J. Rip"
CITATION: 2006TCC11
COURT FILE NO.: 2003-1899(IT)G
STYLE OF CAUSE: NEVIO CIMOLAI AND THE QUEEN
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: September 6, 2005
REASONS FOR JUDGEMENT BY: The Honourable Justice Gerald J. Rip
DATE OF JUDGMENT: January 4, 2006
APPEARANCES:
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For the Appellant:
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The appellant himself
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Counsel for the Respondent:
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Susan Wong
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COUNSEL OF RECORD:
For the Appellant:
Name: Susan Wong
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Ontario
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