Date: 20070522
Docket: T-1554-02
Citation: 2007 FC 542
BETWEEN:
HUGH STANFIELD, GRETA
ANDERSON, ROBERT ANDERSON,
DONALD APOLCZER, CAROL L. APOLCZER, JAMES
C. AYEARST,
ELIZABETH JOAN AYEARST, CHRISTINE
BANVILLE, BRENT BEYAK,
DAVID G. BLISSETT, JAMES L. BRADY, KEITH
BROOKE,
GEORGE BURDEN, DONALD CAREY, PATRICIA
CARPENTER,
ALAN CARPENTER, MARIA CLARKE, KENNETH
CLARKE,
JULIA S. CUNDLIFFE, KATE A. DAVIS, LARRY
DAVIS,
ALLAN DE HAAN, HERB DEMARS, TERRANCE
DUNFORD,
IRVINE J. DYCK, NORMA FARENICK, STEPHAN
FRALICK,
RENEE GALLANT, ROY GALLANT, MARY GELPKE,
PAUL GELPKE,
DIANNE GERMAIN, BEN GOERTZEN, MARTHA
GOERTZEN,
PETER GRABOSKI, FRANK GRAF, GARY H.
GRUETER,
DAVID R. HACKETT, ERIC. R. HARRISON,
KENNETH ALLAN HAY,
JOHN A. HIGGINS, GEOFFREY HILLIARD,
WILLIAM JOHNSON,
PETER LEGER, EDNA L. LINDAL, ROBERT
LINDAL,
WAYNE GARRY MARTIN, ED MACINTOSH, ROBERT
MCGINN,
TERENCE MEADOWS, ROBERT NABER, EDITH
NELSON,
GARTH L. NELSON, GLENN PARKER, JOAN L.
PARSONS,
HELEN PARSONS, DANNY PAWLACHUK, JOSEPH
PENNIMPEDE,
IRENE PENNIMPEDE, BRENDA QUATTRIN, GARRY
REIMER,
NEIL REINHART, GLEN ROBBINS, LUC ROBERGE,
JOAN ELLEN SABOURIN,
PAUL WYATT SABOURIN, MARK SAMPSON, SUSAN
SCOTT, PHILIP SCOTT,
MICHAEL SLADE, KAZIK SMILOWSKI, FRANCES
SMILOWSKI,
CANDICE STANFIELD, SEONA STEPHEN, JOHN G.
STEPHEN,
GREGORY STEVENS, JENNIFER STEVENS, ROGER
S. STOGRE,
BRIAN E. STOUTENBURG, LESLEY SUGGITT,
JAMES H. SUGGITT,
SCOTT THOMSON, ALLAN TOLSMA, TOM TOLSMA,
AGNES DOROTHY TOLSMA,
ANDREW TROJNER, MARY TROJNER, JIM R.
TROJNER,
GEORGE H. WADSWORTH, SHARON WADSWORTH, GLENYS WHELAN,
EARL WILKES, DAVID J. WILLIAMS, MILDRED
WILLIAMSON,
KERRY WILSON, HARVEY YARN, DAVID ZEVICK, PREBEN ANDERSEN,
DANIEL M. ARRIGO, ROBERT P. BLAIR,
STEPHEN P. BURKE,
BRENT CARLSON, FIONA DOUGLAS-CRAMPTON,
HELEN FADDEN,
REID FREDERICK, EDGAR GIESBRECHT, JOHN
GORDON,
GARY HAMMER, JOHN F. HEATHE, JUDITH A.
KOSTUK,
RON A. KROWCHUK, LARRY LEDOUX, PENNY
LEDOUX,
ERNEST REIMER, LAURIE REIMER, MAXWELL
THOMPSON
Applicants
and
THE
MINISTER OF NATIONAL REVENUE
Respondent
ASSESSMENT OF
COSTS - REASONS
Charles E. Stinson
Assessment Officer
[1]
This
application for judicial review, addressing a request by the Respondent for
audit information asserted by the Applicants to actually be for criminal
investigation purposes, was granted with costs against the Respondent. I issued
a timetable for written disposition of the assessment of the Applicants' bill
of costs.
[2]
The
Respondent objected to the 6 units ($120.00 per unit) claimed under counsel fee
item 4 for two motions to consolidate as the resultant orders were silent on
costs. The Applicants did not address this in rebuttal. In any event, I
disallow the 6 units further to my conclusions in Balisky v. Canada (Minister of
Natural Resources), [2004] F.C.J. No. 536 (A.O.) at para. [6] and Aird
v. Country Park Village
Properties (Mainland) Ltd., [2005] F.C.J. No. 1426 (A.O.) at para. [10].
The Respondent's only other objection addressed the claim for 223 units under
item 1 (preparation and filing of originating documents and application records
/ available range 4-7 units). The remaining fee items not in issue are only
claimed once for the Applicants as a whole.
[3]
Court
file T-1554-02 was instituted in the name of Hugh Stanfield (the Stanfield
Applicant) only. However, many other individuals had brought similar applications
for judicial review. The Stanfield Applicant moved the Court, counsel for the
Respondent consenting, for an order consolidating certain of said applications
(96) with court file T-1554-02 on the grounds that they all sought similar
relief, all involved substantially similar evidence, the outcome in court file
T-1554-02 would likely resolve said applications and such consolidation would
promote expeditious and inexpensive resolutions by avoiding a multiplicity of
proceedings. On November 14, 2002, the Prothonotary, John A. Hargrave (the
Prothonotary) ordered (the 1st Order) that:
The matters in Schedule "A",
which Schedule is attached, are now consolidated, to be heard together, or one
following the other as the hearing judge may determine.
All filing shall now to be in this file,
T-1554-02. Filings to date in the Schedule "A" proceedings are now
deemed to have been made in this file, T-1554-02.
A copy of this Order shall go into each
Schedule "A" file.
The style of cause shall now be that set
out above.
Subsequently, the Applicants moved the
Court, counsel for the Respondent consenting, for similar relief relative to an
additional nineteen of said applications. On January 28, 2003, the Prothonotary
ordered (the 2nd Order) that:
The matters in Schedule "A"
above are now consolidated into this proceeding, T-1554-02, to be heard
together, or one following the other as the hearing judge may decide.
All filings shall be in this file,
T-1554-02, which is to have the style of cause set out above.
For the sake of good order a copy of this
order to go into each Schedule "A" file.
Subsequently, a number of Applicants
discontinued their respective proceedings. The remaining Applicants claim the
maximum 7 units under item 1 for the Stanfield Applicant and 50 percent (to
reflect the volume of work particular to each Applicant before consolidation,
but recognizing that, after consolidation, only a single set of work occurred
for the Applicants as a whole) of the minimum 4 units under item 1 for each of 108
other Applicants all for a total of 223 units ($26,760.00 + tax).
I. The
Applicants' Position
[4]
The
Applicants asserted that the Respondent, further to concerns about alleged tax
loss arrangements associated with currency and commodity transactions, sent to
each Applicant a demand for information in the form of a questionnaire under
cover of a letter stating that, although "a criminal investigation
regarding the promotion of transactions of the type claimed on your income tax
return" was underway, you "are not under investigation at the present
time but we wish to advise you that any information submitted may be provided
to our Investigations Division for review." As they were concerned that
this information would be used to further criminal investigation of each of
them, each Applicant brought an application for judicial review. The resultant
judgment quashed the letters and prohibited the Respondent from bringing
process against the Applicants for failing to respond to the letters.
[5]
The
Applicants argued further to Rules 409 and 400(3)(a) (result), (c) (importance
and complexity of the issues), (g) (amount of work) and (h) (the public
interest) that their costs as claimed should be allowed. The decision here, the
first to consider the scope and application of Supreme Court of Canada case law
on the line between a tax audit and a criminal investigation relative to
information sought from a taxpayer, was of public interest. The Tariff permits
recovery of less than 20 percent of the actual cost for the considerable work,
confirmed in the record, required of counsel. The individual proceedings above consolidated
in court file T-1554-02 were not stayed and each initially required work within
the meaning of item 1 and particular to the respective circumstances of each Applicant
instituting legal proceedings to preserve the right against self-incrimination.
[6]
The
Applicants argued that the Respondent's position, i.e. that only 7 units are
allowable for item 1, is prejudicial to those Applicants additional to the
Stanfield Applicant because it precludes their costs associated with real and
considerable work. This acts as a disincentive and is inconsistent with the
purpose of consolidation of proceedings, i.e. more expeditious and efficient
dispositions. Successful litigants, who already have an award of costs, should
not have to incur additional costs for applications under Rule 400(4) (lump
sum) or 400(3)(l) (directions for multiple sets of costs). As well, Rule
400(3)(l) does not apply here because the Applicants had a common
solicitor and did not separate their positions unnecessarily. The record
refutes the Respondent's assertion that most of the work under item 1 was
concentrated on the Applicants' Record, which included a Memorandum of Fact and
Law, only one of which was filed.
II. The Respondent's Position
[7]
The
Respondent asserted that the issue in this litigation, i.e. whether the
predominant purpose of the letters was audit or criminal investigation, was not
complex, was based on settled law and, although important to the Applicants,
had no wider application. Party and party costs under the Tariff permit only
partial indemnity. The Applicants did not, as they could have, apply for
directions for full indemnity via a lump sum under Rule 400(4) or multiple sets
of costs under Rule 400(3)(l), and cannot purport to do so now in the
guise of an assessment of costs: see Astrazeneca A.B. v. Novopharm Ltd., [2004]
F.C.J. No. 1196 (A.O.). The Respondent agreed to the maximum 7 units permitted
for item 1, but argued that, in the absence of directions from the Court, there
is no discretion to exceed that amount.
[8]
The
Respondent argued that the Applicants' submissions concede, by agreeing that
item 1 addresses the drafting, service and filing of the supporting materials
additional to the instituting document, that item 1 can only be allowed once in
a proceeding regardless of the number of originating documents therein. As
there was only one judgment in one proceeding, the Applicants cannot claim
anything beyond the 7 units conceded above. Further, the additional 216 units
are excessive in that most of the work addressed the Application Record, only
one of which, containing the Memorandum of Fact and Law, was prepared and filed
for the Applicants as a whole.
III. Assessment
[9]
I
accept the Applicants' evidence that, for each person, a discrete institution
and preparation of a supporting affidavit particular to each necessarily
occurred. I agree with the Respondent that, absent directions otherwise, I
cannot exceed the maximum 7 units. However, I concluded at para. [7] in Starlight
v. Canada, [2001]
F.C.J. No. 1376 (A.O.) that the same point in the ranges throughout the Tariff
need not be used, as each item for the services of counsel is discrete and must
be considered in its own circumstances. As well, broad distinctions may be
required between an upper versus lower allowance from available ranges. These
propositions could be relevant if the judgment for costs here could be said to
apply to those Applicants' files, i.e. a discrete finding for each in turn additional
to that for the Stanfield Applicant.
[10]
A
noticeable difference between the 1st Order and the 2nd
Order is the provision in the former that filings to date in the other court
files are now deemed to have been made in court file T-1554-02. That provision
on its face did not suggest that costs of the Applicants, other than the
Stanfield Applicant, associated with work under item 1, i.e. to meet
individually with counsel to convey instructions to institute an application
for judicial review and for counsel to carry out said instructions, were
somehow subsumed in and confined to the limits of a single potential award of
costs specific to the Stanfield Applicant. It did not suggest that said
Applicants, other than the Stanfield Applicant, would be entitled to multiple
sets of costs, i.e. an item 1 fee for each Applicant.
[11]
I
do think that, although the respective filings of each Applicant were
consolidated in this single court file T-1554-02, their respective interests
remained independent of one another (some common surnames indicate possible
husband and wife scenarios, however). That is, although the single hearing and
outcome could be determinative for all, the underlying transactions resulting
in the respective court files for each in turn were discrete factual
situations. Paragraph [6] of the decision (dated July 21, 2005), noting the
Applicants' agreement to use the Stanfield Applicant's situation as an example
of the transactions engaged in by each Applicant, reinforces my view of certain
circumstances common for all of the Applicants, but certain other circumstances
particular to each Applicant. As well, paragraphs [8] and [9] indicate the
Respondent's interest relative to the Applicants extended to multiple tax
avoidance schemes of various promoters from several areas of Canada. It is
highly unlikely that Greta Anderson, as a random example, would ordinarily have
agreed to sit in the same room with Donald Apolczer, another random example, to
lay bare to their common counsel the full details of her particular
transactions within the meaning of solicitor-client privilege. I therefore
conclude that, regardless of the circumstances of common counsel, each
Applicant reasonably and necessarily incurred item 1 costs particular to each,
at least in terms of the preparation of the respective instituting document and
affidavit for each. However, it seems clear that any work on the Application
Record with particular regard here to the Memorandum of Fact and Law was a
single endeavour common to all Applicants.
[12]
I
conclude that the 1st Order, which along with the 2nd
Order formed part of the Application Record before the hearing judge, subsumed
the respective court files within T-1554-02, but did not order them out of
existence. Rather, each was deemed to have existed to date in court file
T-1554-02. Presumably, common filings and events would subsequently dispose of
each matter. That did not preclude filings particular to each and excluding the
interest of all other Applicants, i.e. the respective notices of discontinuance
filed subsequent to the 1st Order and the 2nd Order by
seven Applicants. Each Applicant had already incurred costs within the meaning
of item 1 independent of one another. The 1st Order brought them
within the confines of court file T-1554-02 and by extension within the
confines of its judgment which did not distinguish between the Stanfield
Applicant and the other Applicants. That judgment was silent on restrictions to
costs and silent on multiple sets of costs, i.e. whether to allow or prohibit
them. It did not, and could not purport to do so, act as if in appeal of the 1st
Order by varying or vacating the latter's terms. The 1st Order did
not, as it could have, specify that the costs of all Applicants additional to
those of the Stanfield Applicant were somehow precluded, superseded or
restricted by the potential event particular to the Stanfield Applicant or that
the only costs available for the proceeding as a whole would be those of the
Stanfield Applicant. That left the hearing judge unfettered as to costs of the
proceeding. By virtue of the 1st Order, the hearing judge was not to
be seized of only one matter, i.e. that of the Stanfield Applicant, but many
matters, i.e. those of the Stanfield Applicant plus the other Applicants. By
virtue of the 1st Order, the hearing judge's decision applied to
all. It follows, I think, that its provisions for costs apply to all Applicants
given the absence of restrictive language.
[13]
Accordingly,
each is entitled to a discrete item 1 allowance. Given a common record and
hearing, I do not think that the item 1 allowance for each Applicant can be set
in a vacuum without regard to the overlying circumstances of certain common
interests. However, in my view, that is resolved in the voluntary reductions in
the bill of costs as presented. The record confirms that, after consolidation,
no work occurred within the parameters of the judgment for costs that would
entitle the Applicants to multiples of other fee items, in the manner here for
item 1, such as item 14(a) (attendance by counsel at the hearing of the
judicial review).
[14]
The
absence in the 2nd Order of deeming language comparable to that in
the 1st Order is of concern. However, there is not any indication in
the judgment or in the 2nd Order that the second set of consolidated
Applicants were to receive considerations different from those for the first
set of Applicants (the 1st Order). I allow the item 1 claim as
presented at 223 units. The Applicants' bill of costs, presented at $62,728.92,
is assessed and allowed at $61,904.52.
"Charles
E. Stinson"
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