Citation: 2005TCC227
Date: 20050329
Docket: 2003-1915(IT)G
BETWEEN:
MORONI’S
RESTAURANT INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER IN RESPECT OF COSTS
Bell, J.
[1] The Respondent filed a motion on
July 2, 2003 for:
1. an Order quashing the appeal of
the Appellant, with costs;
2. in the alternative, an Order
extending time for the Respondent to file its Reply to the Appellant's Notice
of Appeal by 30 days from the date of the Order of the Tax Court of Canada
disposing of this motion, and extending time for the service of the filed Reply
for five days from the date of filing of the Reply;
3. such further and other relief
as the Respondent may request and as may appear just to this Honourable Court.
The grounds for the motion were stated to be that the Notice
of Appeal was filed more than 90 days after the Notice of Confirmation of the
Appellant’s 1992, 1993, and 1994 taxation years was sent to the Appellant.
[2] Shelley Jean Kamin (“Kamin”), a lawyer, was retained by the Appellant on
January 15, 2003.
[3] Kamin, in an affidavit sworn July 17, 2003, stated in paragraph 24:\
On March 12, 2003, I received by fax from Mr.
Tierney (“Tierney”), who was also Moroni’s accountant, a copy of Notification
of Confirmation by the Minister dated February 12, 2001 concerning Moroni’s.
The Confirmation referred to Moroni’s income from a business for its 1992, 1994
and 1995 taxation years, and the penalties levied under subsections 162(2.11),
163(2) of the Income Tax Act (the “Act”) with respect to Moroni’s
1994 and 1995 taxation years.
Her affidavit continues that she was confused about the
contents of the confirmation and was unclear as to the reference to subsection
162(2) of the Income Tax Act (“Act”). She said that she could
not reconcile the amounts of income shown on the confirmation with the amounts
of allegedly unreported business income that the Minister had added to Moroni’s income by way of reassessments
of its 1992, 1993, and 1994 taxation years. One of her telephone conversations
with Mr. Meehan (“Meehan”) of the CCRA revealed his statement that the
confirmation should have been mailed on February 12, 2002 or the day thereafter “and he
speculated as to why the date appearing on the confirmation for Moroni’s was February 12, 2001.” Her
affidavit continues:
He said that the references to 1995 in the
confirmation for Moroni’s were ‘typos’, and that the penalties mentioned in
the confirmation ‘are wrong’.
Meehan, according to Kamin, telephoned her on April 7, 2003 to advise that the CCRA was able
to verify that the confirmation was sent by registered mail on February 13,
2002. The affidavit then discloses that on April 30, 2003 Kamin received from the CCRA by registered mail ‘a new,
original executed notification of confirmation by the Minister, dated February
12, 2002. The new Confirmation deleted references to Moroni’s 1995 taxation year. Instead it
referred to Moroni's income from a business for its
1992, 1993 and 1994 taxation years and the penalties levied under section
163(2) of the Act respecting the 1993 and 1994 years. Meehan also advised
her, according to her affidavit, that the CCRA had obtained proof of the
receipt of the confirmation for Moroni’s, the documents proving same having been forwarded to her.
[4] On May 9, 2003, Kamin filed a Notice of Appeal with
this Court in response to the corrected Notification.
[5] I heard the motion and granted an Order refusing the
motion to quash the appeal, setting a date for the Respondent to file a Reply
to the Notice of Appeal and setting dates for the receipt of submissions on
costs.
[6] Respondent’s written submissions respecting those costs
read in part, as follows:
The first Notice of Confirmation had mistakes on it,
but was the end product of a long course of conduct and communication between
the Minister and Moroni’s. The Respondent therefore filed a motion and
supporting affidavits to quash the Appellant’s Notice of Appeal on July 2,
2003.
[7] Respondent’s submission notes
that on December 2,
2003 the parties
conducted cross-examinations on the affidavits of both parties. Counsel for
the Appellant, in her submissions on costs, referred to a letter dated
September 25, 2003 to the attention of Michael Ezri (“Ezri”), counsel for the
Respondent. That letter reads in part:
Regarding the Moroni’s Restaurant matter, the
appellant would also like to see that motion settle so that we may, instead,
deal with the substantive issues of the appeal. We, therefore, propose that
the Crown withdraw its motion. The Appellant will agree that it be on a
without costs basis. This offer to settle is open until Friday, October 3rd,
2003 at 5 p.m. If the appellant’s offer is not accepted by that time and if
the Crown pursues the motion, in spite of the recommendation of Associate Chief
Judge Bowman on July 31, 2003, please be advised that the Appellant will be
seeking costs on a full indemnification basis.
You have stated that Ms. Kamin’s affidavit puts in
issue her “state of mind” and that the Respondent requires oral cross‑examination
on her affidavit. The Appellant respectfully disagrees. The only issue in
these proceedings is the validity of the Minister’s documentation, and Ms.
Kamin’s state of mind is not relevant to that determination. In addition, I
have mentioned to you the governing principles of solicitor-client privilege
and litigation privilege.
I have suggested to you that Ms. Kamin could be
examined by way of written interrogatories, but the Respondent is insisting on
oral cross-examination of Ms. Kamin. Ms. Kamin advises that she would be
available for examination on the following dates: October 16th, 17th,
24th or 28th. We will advise whether we will be
examining Mr. Meehan and Ms. Durant.
[8] On November 6, 2003, according to Appellant’s
counsel’s submission, the Respondent served the Appellant with a Notice to
Attend requiring Kamin to attend for cross-examination on her affidavit. She
continues by saying that the Respondent did not use any part of the transcript
of Kamin’s examination during the hearing of the motion.
[9] Appellant’s counsel also submitted that the motion to
quash was dismissed by Justice R.D. Bell on February 4, 2004. She continues:
To date, the Respondent has neither pursued nor
withdrawn the motion for examination as it relates to the motion to quash Moroni’s,
but it is now moot given Mr. Justice Bell’s decision.
[10] Respondent’s counsel said that the
motion to quash was dismissed and that the Respondent does “not oppose an award
of costs to the Appellant in respect of that motion”. Respondent’s counsel
submitted that the tariff to the Rules of General Procedure would allow
the Appellant a maximum of $250 for every day or part thereof spent on the
motion and cross-examination on affidavit. He states that this would amount to
$750 for the conference on July 21, 2003, $250 for the cross-examinations,
and $250 for the hearing on February 4, 2004. He refers to the Appellant’s
entitlement to disbursements stating that he has not been provided with the
amount of same. In total, the Respondent says that it would not oppose an award
of costs of between $1,250 and $1,750. It is noted that the Respondent made two
affidavit deponents, one from Kingston and one
from Toronto, available in Ottawa for
cross-examination.
ANALYSIS AND CONCLUSION
[11] It is remarkable that
Respondent's counsel instituted a motion to quash the Notice of Appeal. It was
based on the new Notification, not on the first Notice of Confirmation which
included several errors.
As I said in delivering reasons for
my orders:
I'm just not going to have that right to appeal
extinguished by a document and a lot of fuss about a document which was
patently wrong in several details and irreconcilable as to the figures that
were concerned …
I have an abiding belief in the rule of law and the
system of justice that furnishes statutory rights to someone, especially in
matters of income and the income tax law and I think that there has to be a
clear set of circumstances annihilating those rights, and I am talking about
the rights of appeal and all the steps in it.
[12] In the circumstances I conclude
that the motion was unnecessary, resulting in waste of time for the Court, for
the Appellant and for the Respondent.
[13] The Appellant seeks solicitor
and client costs and, in the absence thereof, costs in the sum of $15,000. As I
stated, in the Reasons for Order in Nicholas Giannakouras, of even date
herewith,
In spite of the Respondent’s zealous behaviour, an
award of solicitor-client costs in unwarranted.
I conclude that the Respondent’s conduct in bringing the
motion was wholly unnecessary and inappropriate, the objective appearing to be
solely to deny the Appellant’s right to appeal. However, as the Supreme Court
of Canada said in Young v. Young, [1993] 4 S.C.R. 3, at page 17, the
Respondent did not exhibit “reprehensible, scandalous, or outrageous conduct”
in this matter.
[14] Accordingly, I award costs of
$5,000 payable forthwith by the Respondent to the Appellant.
Signed at Ottawa, Canada, this 30th day of March, 2005.
“R.D. Bell”
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