Docket: A-260-14
Citation:
2015 FCA 11
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CORAM:
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DAWSON J.A.
STRATAS J.A.
BOIVIN J.A.
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BETWEEN:
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HER MAJESTY THE QUEEN
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Appellant
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And
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SHEILA DIFLORIO
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Respondent
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REASONS
FOR JUDGMENT
BOIVIN J.A.
[1]
This is an appeal from a decision of then Chief
Justice Rip of the Tax Court of Canada (the Tax Court) dated April 22, 2014.
[2]
On March 5, 2014 the Tax Court allowed Ms
DiFlorio’s (the respondent) appeal of her assessment under the Excise Tax
Act, R.S.C. 1985, c. E-15 for Goods and Services Tax (GST) on the grounds
that there was no business partnership between the respondent and her husband
that would permit the Minister of National Revenue to hold her jointly and
severally liable for the GST.
[3]
The Tax Court allowed the respondent’s appeal
from the assessment with costs.
[4]
Concerned about the Tax Court’s jurisdiction to
make a costs award, on March 12, 2014, the appellant (the Crown) sent a letter seeking
reconsideration of the award of costs by the Tax Court. The Crown submitted
that pursuant to subparagraph 18.3009(1)(c)(i) of
the Tax Court of Canada Act, R.S.C. 1985, c. T-2, cost awards may
only be awarded in appeals under Part IX of the Excise Tax Act in cases
in which the amount in dispute does not exceed $7,000. The Crown therefore submitted
that the amount in dispute was $16,536.33 and thus in excess of the $7,000
limitation.
[5]
The Tax Court responded to the Crown’s letter
and issued an amended judgment on April 22, 2014 replacing its judgment
issued on March 5, 2014. In that amended decision, the Tax Court increased the
costs to “actual costs incurred for counsel”
(effectively solicitor and client costs) but provided no reasons.
[6]
In its appeal to this Court, the Crown does not
take issue with the substantive conclusions reached by the Tax Court in
quashing the assessment but appeals the award of costs against it in the
amended judgment.
[7]
The central issue before our Court is whether
the Tax Court had jurisdiction to award any costs let alone solicitor client
costs. This is a question of law that attracts the correctness standard of
review (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).
[8]
On this appeal, the respondent argued that the
amount in dispute totalled less than $7,000. I cannot agree. Without doubt, as
defined in paragraph 2.2(2)(c) of the Tax Court of Canada Act
and, on the basis of (i) the Notice of Appeal before the Tax Court (Appeal Book,
vol. 1 at p. 38); (ii) the Crown’s reply to the Notice of Appeal (Appeal Book,
vol. 1 at p. 45) and; (iii) the Tax Court’s reasons at paragraph 3, the amount
in dispute in the appeal before the Tax Court was $16,536.33.
[9]
After considering the parties’ submissions, I am
of the view that the Tax Court acted without jurisdiction when it awarded costs
in favour of the respondent. Our Court held in Canada v. Moncton Computer
Exchange Ltd., 2001 FCA 381, 284 N.R. 229 at paragraph 22 that subsection
18.3009(1) “must be read as limiting the jurisdiction of
the Tax Court [of Canada] to award costs in any GST or GST/HST appeal under the
informal procedure”. This provision clearly ousts the Tax Court’s
discretion to award any costs at all in cases in which the amount in dispute
exceeds $7,000, such as the present case. It follows that the Tax Court erred
in law when it awarded costs.
[10]
For the foregoing reasons, the appeal should be
allowed. In the unique circumstances of this case, each party should bear its
own costs.
“Richard Boivin”
“I agree
Eleanor R. Dawson J.A.”
“I agree
David Stratas
J.A.”
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