Date: 20120517
Docket: A-479-08
Citation: 2012 FC 604
Ottawa, Ontario, May 17, 2012
PRESENT: The Honourable Mr. Justice Harrington
BETWEEN:
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NEIL MCFADYEN
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Appellant
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and
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ATTORNEY GENERAL
OF CANADA
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Respondent
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REASONS FOR ORDER AND ORDER
(REVIEW OF COSTS ASSESSMENT)
[1]
In
the face of it, Mr. McFadyen unilaterally discontinued an appeal to the Federal
Court of Appeal from a decision of the Tax Court of Canada just days before the
scheduled hearing. The Attorney General of Canada sought an assessment of his
costs. They were fixed by Mr. Bruce Preston, assessment officer, in the amount
of $1,338. This is a review of his certificate of assessment. Rule 414 of the Federal
Courts Rules provides that if, as in this case, the assessment officer is
not a judge, the motion in reassessment is to be heard by a judge of the
Federal Court, not the Federal Court of Appeal.
[2]
When
the request for assessment was made, the key document before Mr. Preston was a
notice of discontinuance which said nothing about costs, and which was not
countersigned by the respondent. Rule 402 provides:
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Unless
otherwise ordered by the Court or agreed by the parties, a party against whom
an action, application or appeal has been discontinued or against whom a
motion has been abandoned is entitled to costs forthwith, which may be
assessed and the payment of which may be enforced as if judgment for the
amount of the costs had been given in favour of that party.
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Sauf
ordonnance contraire de la Cour ou entente entre les parties, lorsqu’une
action, une demande ou un appel fait l’objet d’un désistement ou qu’une
requête est abandonnée, la partie contre laquelle l’action, la demande ou
l’appel a été engagé ou la requête présentée a droit aux dépens sans délai.
Les dépens peuvent être taxés et le paiement peut en être poursuivi par
exécution forcée comme s’ils avaient été adjugés par jugement rendu en faveur
de la partie.
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[3]
Mr.
McFadyen’s position then, and now, is that the parties had agreed that his
appeal be discontinued, each party paying its own costs. If that is so, the
agreement was not vitiated by the fact that the notice of discontinuance is
silent on costs, and is not countersigned by solicitors for the respondent.
[4]
Mr.
McFadyen’s position before the assessment officer, and now, is that since in
his responding material on the assessment he provided prima face
evidence that there had been a settlement, Mr. Preston was without jurisdiction
to assess costs. The burden was on the other party, the Attorney General of
Canada, to move for a declaration that the notice of discontinuance had not
been filed in pursuance of a settlement agreement which included a waiver of
costs.
[5]
In
his reasons, Mr. Preston said that he was without jurisdiction to make a
determination as to the validity of the alleged agreement. He said “…its
validity must be judicially determined.” I agree. However, he went on to say
that he did not think that he was therefore barred from assessing the Attorney
General of Canada’s costs, as his jurisdiction derived from rule 402. Since the
issue of a settlement agreement was not raised until Mr. McFadyen’s cost
submissions were filed, given the provisions of that article, and based on the
court record at the time of the discontinuance, he concluded that “…I may
proceed with the assessment of costs.”
[6]
In
setting the matter down for a hearing, or as in this case by written
submissions only, I find that the assessment officer had some discretion. He
could have suspended his assessment for a brief period to allow a party, in my
opinion, Mr. McFadyen, to move the court, presumably the Federal Court of
Appeal, for a declaration that there had been a settlement. However, in my
opinion, he also had the discretion to proceed with the assessment. To this
day, neither party has sought a declaration from any court as to whether or not
the appeal was discontinued on the basis that each party would bear its own
costs.
[7]
Since
I am sitting in review of that assessment, since in my opinion it was open to
Mr. Preston to make that assessment, and since the reasonableness of the
quantum has never been contested, I shall dismiss Mr. McFadyen’s motion.
However, in the hope of giving some guidance to the parties, I have the
following comments.
[8]
In
May 2009, Mr. McFadyen had four proceedings against the Attorney General of
Canada. His wife, Ms. Gardner, had one. The Attorney General was represented in
two of Mr. McFadyen’s proceedings by one counsel at the Department of Justice,
and in each of the other two by other counsel at the Department of Justice. On
11 May 2009, all three wrote to Mr. McFadyen’s counsel, and to his wife’s
counsel, referring to all five proceedings. The offer there made, which was
open until13 May 2009 at 4:30 p.m., was that the respondent or
defendant, as the case may be, would agree to a dismissal of the action or
appeal, as the case may be, on a without cost basis. However, the letter also
provided: “This offer is not subject to partial acceptance.”
[9]
It
is common ground that Mr. McFadyen’s spouse did not accept. On that basis there
was no settlement. This was and is the Attorney General’s position.
[10]
However,
on 12 May 2009, there was a letter from one of the Department of Justice’s
counsel, Elizabeth Kikuchi, with copy to the other two counsel at the
Department of Justice, addressed only to Mr. McFadyen’s counsel, Mr.
Riddell, and which only referred to his four proceedings. The letter says:
“This letter is further to our recent telephone conversation. Please find
attached our proposed settlement agreement and release for the proceedings
relating to Mr. McFadyen.” The attached document was entitled “Settlement
Agreement and Full and Final Release”. Neither the letter nor the attached
document made any reference whatsoever to the proceedings instituted by
Mr. McFadyen’s spouse. According to Mr. McFadyen’s counsel, Mr. Riddell,
who in essence was testifying rather than making submissions, he had informed
Ms. Kikuchi that Mr. McFadyen’s spouse would not go along with the proposal. He
counter-offered that Mr. McFadyen’s spouse be dropped from the equation and
that Mr. McFadyen would be prepared to accept. Therefore, he took the letter of
12 May 2009, with attachment, as acceptance of the counteroffer.
[11]
On
13 May 2009, he wrote to Ms. Kikuchi with copy to the other two counsel. He
referred to the letter dated 12 May 2009 and confirmed that Mr. McFadyen had
accepted the proposed settlement. He wrote by facsimile. He enclosed an
executed copy of the settlement agreement in full and final release and said he
would take charge of effecting the various discontinuances.
[12]
That
same day, two of the Attorney General’s counsel, Brian Harvey and Andrew
Miller, wrote to Mr. Riddell, with copy to Ms. Kikuchi, saying there had been
no settlement as Mr. McFadyen’s spouse had not accepted the offer, and the
offer had, therefore, expired by lapse of time. Ms. Kikuchi did not write a
letter at that time.
[13]
The
discontinuance in this, and in the other proceedings, was only filed
subsequently to the receipt of the letters from Mr. Harvey and Mr. Miller.
[14]
As
I stated during oral argument, there is a prima face case that there was
no settlement and there is a prima face case that there was a
settlement. If either party were moving for summary judgment, even if I had
jurisdiction, I would not grant same. What is crucial is the content of the
discussion on 12 May 2009 between Mr. Riddell and Ms. Kikuchi. At the very
least, there would have to be affidavits from both, and an opportunity to
cross-examine before a court with jurisdiction could decide one way or the other.
[15]
It
seems to me that the burden is on the party invoking the agreement, Mr.
McFadyen.
[16]
Mr.
McFadyen submits that the Federal Court of Appeal would have jurisdiction,
while Mr. Miller, on behalf of the Attorney General, submits that it is
the Ontario Superior Court of Justice which should decide. The issue is not
whether the Ontario courts have
jurisdiction. The issue is whether the Federal Court, or the Federal Court of
Appeal, has jurisdiction.
[17]
While
it may be that once upon a time one might argue that this was simply a matter
of contract at large, and the federal courts did not have jurisdiction, it
seems to me that that day has long passed. Pursuant to section 22 of the Federal
Courts Act, rules 324 and following of the Federal Courts Rules and
the Commercial Arbitration Act, it is incongruous that the Federal Court
has jurisdiction to determine whether or not parties who were not before the
Court at the time validly entered into an arbitration agreement, and yet not be
able to determine whether negotiations between counsel, as officers of this
Court, representing parties who were before this Court, resulted in an offer
and acceptance. Furthermore, if that were the case, then rules 419 and
following of the Federal Courts Rules, which deal with the cost
consequences of offers to settle, would be meaningless if one party could take
the position there had been no such offer and this Court could not decide the
point.
[18]
In
addition, if it is determined that the discontinuance was filed as a result of
a genuine mistake, only the Federal Court of Appeal is in position to allow Mr.
McFadyen to withdraw the discontinuance and continue his appeal.
[19]
In
summary, I find that Mr. Preston was entitled to proceed as he did and my
review concludes that the quantum of his assessment was reasonable. Neither he,
nor I in review, have jurisdiction to determine whether or not an agreement had
been reached so that the appeal could be discontinued on a without-cost basis.
[20]
The
motion shall be dismissed without costs. The parties agree that the assessment
officer was without jurisdiction to determine the validity of the alleged
settlement, and yet squabble incessantly as to who has the burden of proof and
which court has jurisdiction to decide the point.
[21]
To
use the words of Mr. Justice Evans in Apotex Inc v Merck & Co Inc,
2008 FCA 371, 382 NR 374, at paragraph 16, this motion “…has done little to
advance the public interest in the due administration of justice.”
ORDER
FOR REASONS
GIVEN;
THIS COURT
ORDERS that:
1.
The
motion in reassessment of the certificate of costs issued by the assessment
officer is dismissed.
2.
The
whole without costs.
“Sean Harrington”
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