RFA Natural Gas Inc. v. The Queen, docket 97-2327-GST-G

Date: 20001128

Docket: 97-2327-GST-G

BETWEEN:

RFA NATURAL GAS INC.,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Bowman, A.C.J.

[1]            On September 5, 2000 this case came on for hearing in Vancouver. It was set for four days. The appellant's representative, Ms. Linda Leonard, despite having informed counsel for the respondent that she would appear, did not appear and the appeal was therefore dismissed. I agreed with Mr. Carvalho that the parties could make written submissions on costs.

[2]            Counsel for the respondent has submitted an excellent and comprehensive argument in support of the view that the conduct of Ms. Leonard is such that solicitor and client costs should be awarded against the appellant. Although Mr. Carvalho's written argument was submitted to the court on September 26, 2000 and a copy was sent to the appellant, c/o Ms. Leonard, nothing has been received from the appellant and I shall deal with the issue of costs without the benefit of any representation from the appellant. The fact that the appellant did not make any representation as to costs does not of course mean that I must accept automatically the respondent's submissions. This is not like a default judgment. I have a discretion and the fact that Ms. Leonard chooses to make no representation should not weigh particularly heavily, if at all, in the exercise of that discretion.

[3]            Although the appeal involved a substantial amount of money, the appellant elected under section 18.3001 of the Tax Court of Canada Act for the informal procedure to apply. In the informal procedure Ms. Leonard, who is not a lawyer, could have represented the appellant.

[4]            The Attorney General of Canada moved under subsection 18.3002(1) that the appeal be removed to the general procedure. Bell J. ordered that the general procedure apply and ordered as well that "Costs shall be at the discretion of the trial Judge".

[5]            Subsection 18.3002(3) of the Tax Court of Canada Act reads:

                (3)            The Court shall, on making an order under subsection (1), order that all reasonable and proper costs of the person who has brought the appeal be borne by Her Majesty in right of Canada where

                (a)            the amount in dispute is equal to or less than $7,000; and

                (b)            the aggregate of supplies for the prior fiscal year of that person is equal to or less than $1,000,000.

[6]            Evidently Bell J. was satisfied that that subsection did not apply.

[7]            Section 18.3007 reads:

                (1)            Where the following conditions are met, namely,

                (a)            an order has been made under subsection 18.3002(1) in respect of an appeal,

                (b)            the appeal is not an appeal referred to in subsection 18.3002(3),

                (c)            the amount in dispute in the appeal is equal to or less than $50,000, and

                (d)            the aggregate of supplies for the prior fiscal year of the person who brought the appeal is equal to or less than $6,000,000,

the Court may, where the circumstances so warrant,

                (e)            make no order as to costs or order that the person who brought the appeal be awarded costs, notwithstanding that under the rules of Court costs would be adjudged to Her Majesty in right of Canada, or

                (f)             make an order that that person be awarded costs, notwithstanding that under the rules of Court no order as to costs would be made.

                (2)            Where costs are awarded under subsection (1), the award shall be made at the time of the order disposing of the appeal.

[8]            I have no evidence before me that the conditions in paragraphs 18.3007(1)(a), (b), (c) and (d) have or have not been met. Section 18.3007 essentially permits the court to award costs on a basis different from that upon which they would have been ordered had the appellant elected the general procedure, rather than being forced into it by the court at the request of the Attorney General. Section 18.3007 is not a factor in this determination.

[9]            I shall approach the question on the basis that I have the usual discretion with respect to costs that is given to the court under subsection 147(1) of the Tax Court of Canada Rules (General Procedure).

[10]          Ms. Leonard, an officer or director of the appellant, applied to represent the appellant and her motion was granted.

[11]          I do not propose to reproduce the litany of occasions on which she has played fast and loose with the court and the respondent. These are detailed in the ten pages of Mr. Carvalho's submission. The facts set out therein are unchallenged and many of them are evident from the court record. It is perfectly obvious that Ms. Leonard has abused this court's procedures. We have indulged her with adjournment after adjournment. She has failed to turn up at examinations for discovery. Deadlines set by the court were missed. The court has done its utmost to accommodate her. On one occasion because she was in jail and another because, as the result of her conviction and incarceration in the United States, she could not come to Canada. An order was made permitting her to represent the appellant even though she was not a member of any bar.

[12]          As late as the Friday before the case was scheduled to be heard in Vancouver counsel for the respondent, as well as someone from the court, communicated with her and were assured that she was prepared to proceed. I flew to Vancouver and set aside four days for the hearing. The respondent flew a number of witnesses to Vancouver, including expert witnesses, from various parts of Canada and the United States. On the Monday set for hearing no one representing the appellant appeared.

[13]          Under section 147 of the general procedure rules the court has a broad discretion with respect to the awarding of costs. Ms. Leonard's behaviour has been scandalous, reprehensible and outrageous. She has acted in total disregard for the court and for the respondent. Had the appellant elected the general procedure at the outset I would unquestionably have awarded costs to the respondent on a solicitor and client basis. There is however one consideration — and it is the only one — that impels me to award costs only on a party and party basis. It is this. The appellant was forced into the general procedure by the Attorney General of Canada. It did not elect that procedure. Had the case remained in the informal procedure Ms. Leonard could with impunity have behaved just as outrageously and the court would have been powerless to award costs against the appellant at all.

[14]          In the circumstances I am awarding costs to the respondent on a party and party basis in accordance with Tariff B of Schedule II of the General Procedure Rules.

[15]          The respondent is entitled to be reimbursed for all of her costs thrown away as a result of the appellant's failure to appear at the hearing and at other scheduled times, including all costs of bringing witnesses to Vancouver for the hearing and all witness fees, including the full amount of fees paid to expert witnesses, notwithstanding section 5 of Tariff A of Schedule II of the Rules.

Signed at Ottawa, Canada, this 28th day of November 2000.

"D.G.H. Bowman"

A.C.J.