Date:
20140213
Docket:
A-350-00
Citation: 2014 FCA 44
Present: JOHANNE
PARENT, Assessment Officer
BETWEEN:
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CHARLES GAGNÉ
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Applicant
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and
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HER MAJESTY THE
QUEEN
(Revenue Canada –
Tax)
and
THE ATTORNEY GENERAL
OF CANADA
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Respondents
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REASONS
FOR ASSESSMENT
JOHANNE PARENT,
Assessment Officer
[1]
On
October 17, 2001, the Court allowed the application for judicial review, with
costs in the Federal Court of Appeal and the Tax Court of Canada. On
December 14, 2001, the Court dismissed that applicant’s motion for
directions to the assessment officer, holding that costs would be assessed in
the usual manner, in accordance with Column III of Tariff B. On
July 8, 2013, the applicant
entered in the Court record its bill of costs prepared in accordance with
Column III. At the request of counsel for the applicant, it was decided
that the assessment would proceed on written representations, and to this end, directions
were issued informing the parties of that decision and of the limitation periods
for filing representations. Written representations in response to the bill of
costs were served and received on September 9, 2013. On September 25, 2013, counsel for the
applicant sent the Court Registry a letter containing its written
representations in reply, along with an amended bill of costs prepared in
accordance with Column III of Tariff B and confirming use
of the unit value in force at the time of the proceedings before the Court. In
that letter, counsel for the applicant also reported that he was waiting to
hear from opposing counsel regarding the need for a hearing. After receiving the
letter, I had numerous telephone conversations regarding this matter, and it
was not until early January 2014 that counsel for the applicant announced that
negotiations with the opposing party were over and asked that the bill of costs
be assessed on the basis of the representations in the record. Now that the
parties have entered in the Court record their written submissions on costs and
in reply, I will proceed with the assessment.
[2]
First
of all, counsel for the respondents alleges in her written representations in
response that costs were awarded 11 years ago. She then makes
representations regarding the six-year limitation period provided under
section 32 of the Crown Liability and Proceedings Act [CLPA]. In
the alternative, should it be decided that the applicant is entitled to costs,
she presents an argument regarding what amount would be reasonable in the
circumstances.
Is the assessment of bills of
costs as provided in the Federal Courts Rules subject to the prescription
period in section 32 of the CLPA?
[3]
Counsel
for the respondents submits that section 32 [translation] “states that except as otherwise provided by
legislation, the prescription periods apply to proceedings by or against the
Crown”:
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32. Except as otherwise provided in this Act or
in any other Act of Parliament, the laws relating to prescription and the
limitation of actions in force in a province between subject and subject
apply to any proceedings by or against the Crown in respect of any cause of
action arising in that province, and proceedings by or against the Crown in
respect of a cause of action arising otherwise than in a province shall be
taken within six years after the cause of action arose.
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32. Sauf disposition contraire de la présente
loi ou de toute autre loi fédérale, les règles de droit en matière de
prescription qui, dans une province, régissent les rapports entre
particuliers s’appliquent lors des poursuites auxquelles l’État est partie
pour tout fait générateur survenu dans la province. Lorsque ce dernier
survient ailleurs que dans une province, la procédure se prescrit par six
ans.
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Referring to Markevich v Canada, 2003 SCC 9, para. 39 [Markevich], counsel for the respondent
alleges that since the federal government is not located in any particular
province, the “cause of action” therefore arose “otherwise than in a province”.
Since the prescription period begins running the day costs are awarded to one
party, the prescription period for recovery would have expired six years after
the award of costs was made. Consequently, it is argued that the costs are no
longer recoverable.
[4]
In
reply, counsel for the applicant submits that the request for assessment is not
prescribed and asks that the bill of costs be assessed. On this point, he
argues as follows:
[translation]
10. Section 32 does not apply in
the present case. The true cause of action is the judgment of the Federal Court
of Appeal awarding costs in both courts.
11. For administrative reasons,
and in the light of how the Tax Court of Canada and the Federal Court of Appeal
are organized, the Tax Court of Canada located in Ottawa had jurisdiction, and
the appeal of the taxpayer, domiciled in Quebec, was fileable in the Federal
Court of Appeal located in Ottawa.
Considering that Markevich pertained to the
collection of a tax debt, counsel for the applicant argues that its does not
apply here. The present case concerns the recovery of a judgement debt, and if
prescription applied, it would have been interrupted by the request for
directions made to the Court. In support of his representations, counsel for
the applicant refers, without elaborating, to Rhéaume v Canada, 2012 FCA
138 and Urbandale Realty Corp. v Canada, 2008 FCA 167 [Urbandale].
[5]
I
do not think that the costs due upon allocation by the Court pursuant to
subsection 400(1) of the Federal Courts Rules are subject to the
prescription period in section 32 of the CLPA.
[6]
In
Markevich, as counsel for the respondents states, the Supreme Court
notes that section 32 provides, except as otherwise provided by
legislation, that the prescription periods apply to proceedings by or against
the Crown. The Court adds at paragraph 9 that
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. . [t]he section applies to the statutory collection
procedures if two criteria are met. First, the ITA must not otherwise
provide for limitation periods with respect to the collection of tax debts.
Second, the statutory collection procedures must qualify under s. 32 as
“proceedings . . . in respect of a cause of action”.
[7]
If
we apply the reasoning of the Supreme Court to the case at hand, the question
to be answered as regards the first test would be this: Does the Federal
Courts Act provide for prescription periods applicable to the recovery of
assessed costs? There is no prescription period in the Federal Courts Act or
the Federal Courts Rules regarding the assessment of bills of costs.
However, section 39 of the Federal Courts Act [FCA] does provide as
follows:
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39. (1) Except as expressly provided by any other
Act, the laws relating to prescription and the limitation of actions in force
in a province between subject and subject apply to any proceedings in the
Federal Court of Appeal or the Federal Court in respect of any cause of
action arising in that province.
(2) A proceeding in the
Federal Court of Appeal or the Federal Court in respect of a cause of action
arising otherwise than in a province shall be taken within six years after
the cause of action arose.
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39. (1) Sauf disposition contraire d’une autre
loi, les règles de droit en matière de prescription qui, dans une province,
régissent les rapports entre particuliers s’appliquent à toute instance
devant la Cour d’appel fédérale ou la Cour fédérale dont le fait générateur
est survenu dans cette province.
(2) Le délai de
prescription est de six ans à compter du fait générateur lorsque celui-ci
n’est pas survenu dans une province.
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[8]
Then
there is the second test: Under section 32 of the CLPA, is the recovery of
costs a proceeding by or against the Crown in respect of any cause of
action? I note that, like
section 32 of the CLPA, section 39 of the FCA uses the term “cause of
action” to describe the proceeding or action. In Markevich, the Court
notes at paragraph 27 that “a ‘cause of action’ is only a set of facts
that provides the basis for an action in court”. On the basis of this definition,
I, like my colleague in Urbandale, do not think that an award of costs
by the Court is a cause of action within the meaning of Markevich. In Urbandale,
the assessment officer remarked:
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I venture some obiter
commentary on the Respondent’s CLPA, s. 32, position. Without the
benefit of Markevich, Doer and the Ontario Rules, I likely
would have addressed the issue of a statutory bar as follows. John Burke, Jowitt’s
Dictionary of English Law, 2d ed. (London: Sweet & Maxwell Limited,
1997) vol. 1, s.v. “cause of action” defines it as “the fact or
combination of facts which give rise to a right to sue” and asserted that it
“consists of two things, the wrongful act and the consequent damage.” In a rough
sense, the Appellant’s position would assert the reassessment of taxes as the
wrongful act and the associated payment of more taxes as the consequent damage.
The judgment, which could include as here an award of costs, disposing of said
cause of action renders it res judicata. As the matter of costs is
subsumed in the judgment and I presume that an award of costs is an explicit
final disposition of entitlement to costs within the meaning of Rule 400(1),
providing that the “Court shall have full discretionary power over the amount
and allocation of costs and the determination of by whom they are to be paid”,
the matter of entitlement to costs is res judicata and cannot be the
subject of an independent proceeding or action for further adjudication other
than by statutorily sanctioned process such as a formal appeal of the judgment
for costs.
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I think that the
definition in Jowitt’s of “cause of action” contemplates an action or
appeal but not the interlocutory process within each. The process of quantification
of the award of costs in a judgment is incidental to the judgment and is
therefore interlocutory. I simply do not think that the CLPA, s. 32
addresses such interlocutory process and therefore the Respondent can only
raise delay in the context of arguing for reduced costs on assessment further
to Rule 400(3) factors. I note that if the Respondent was a non-Crown
litigant and therefore subject to execution, unlike the Crown not subject to
execution further to the CLPA, s. 29, the Appellant might encounter
difficulty in executing for assessed costs in the face of Rule 434(1)(a)
requiring leave of the Court for issuance of a writ of execution if six or more
years have elapsed since the date of judgment.
[9]
Given
that an award of costs is not a “cause of action” within the meaning of the
CLPA or the FCA, but a process that is incidental to the judgment of the Court,
I conclude that the prescription period provided in section 32 of the CLPA
and section 39 of the FCA does not apply to an assessment of costs.
Therefore, I will now assess the applicant’s costs in view of the parties’
arguments as submitted in their written representations.
[10]
In
response to the applicant’s bill of costs, counsel for the respondents alleges
that the bill of costs prepared in accordance with Column III of Tariff B
and totalling approximately $2,000.00 should be reduced pursuant to
section 409 and paragraphs 400(3)(i) and (o) of the
Rules to a maximum lump sum of $1,000.00, and that the respondents should be
awarded the costs of the assessment in accordance with subsection 408(3)
of Rules. She raises the following grounds in support of this argument: several
years have passed after the six-year prescription period, during which time
nothing was done to recover the costs; and the applicant allegedly did not file
a suitable bill of costs. In reply, counsel for the applicant included with his
representations an amended bill of costs, alleging that the respondents
suffered no harm, in that the claimed unit value is from 2001, not 2013.
[11]
Section
409 and paragraph 400(3)(i) of the Rules allow an assessment
officer to consider any conduct of a party that tended to shorten or
unnecessarily lengthen the duration of the proceeding. In the present case, no
representations were made to justify the time that elapsed between the decision
of the Court dated December 14, 2001, and the
filing of the bill of costs. Despite this, I would not apply paragraph 400(3)(i)
to all the proceedings claimed in this case, since it was lengthened only in
respect of the assessment of costs. In the light of the preceding, the improper
delay in filing the bill of costs, and subsection 408(3) of the Rules, the
units claimed by the applicant for the assessment of the bill of costs will not
be allowed.
[12]
As
regards the other services claimed in the bill of costs, upon reading the
respondents’ representations, I have trouble understanding how they suffered
any harm owing to the passage of time when no concrete grounds were raised in
this regard. As for the deficiencies in the first bill of costs, the applicant
filed an amended document more in keeping with the rules. Absent any other
relevant evidence or information regarding the alleged harm caused by the
delay, I will assess the amended bill of costs in the light of the decisions of
the Court in this case and of the Federal Courts Rules.
[13]
Given the lack of any specific challenge regarding the services
and disbursements claimed in the applicant’s bill of costs, I have reviewed all
the elements while making sure that the services claimed match what is provided
in the decisions of the Court in this case and in Tariff B of the Federal
Courts Rules. The
costs requested under Item 17 (preparation, filing and service of notice
of appeal), Item 18 (preparation of appeal book), Item 19 (preparation
of memorandum of fact and law), Item 20 (requisition for hearing), Item 21
(representations on motion to strike) and Item 22 (counsel fee on hearing
of appeal) are uncontested and are allowed as requested.
[14]
Counsel
for the applicant is again claiming two units under Item 21(a) for a
motion and for the service of written representations. Subsection 400(1)
of the Federal Courts Rules establishes the discretion of the Court in
determining costs. As stated by the Court of Appeal at paragraph 7 of Pelletier v
Canada, [2006] F.C.J. No. 1884, “the duty of an assessment officer is to assess costs, not award
them”. From my reading of the record, apart from the order dated
August 10, 2000, for which costs have already been awarded, the Court does
not explicitly or even implicitly state in its decisions dated March 30,
2001, and December 14, 2001, any award of costs to either party, except
where it notes in its December 14 decision that there would be no costs in
that motion. Accordingly, the units claimed under Item 21(a) will not be
allowed.
[15]
The
claim under Item 24 for travel by counsel to attend a
hearing cannot be allowed. Item 24 clearly specifies that this item is
“at the discretion of the Court”. This discretion does not extend to the
assessment officer if the Court has not already issued any specific directions
in this regard (see: Fournier Pharma Inc. v Canada 2008 FC 929). Absent
a clear direction from the Court, the assessment officer has no jurisdiction to
allow costs under Item 24 of Tariff B.
[16]
Counsel for the applicant is claiming provincial sales tax (QST)
for the services claimed in the bill of costs. The definition of “taxable
service” appearing in subsection 1(1) of the Retail
Sales Tax Act, R.S.O. 1990, c. R.31, made no mention of “legal
services” in 2000–2001. As the assessment of costs should cover only those
costs that have actually been incurred, the amount claimed for provincial sales
tax will not be allowed. As for the amounts claimed for the Goods and Services
Tax (GST), they will be allowed, but at the rate applicable in 2001.
[17]
The justification for the disbursements claimed is set out in the
affidavit of Jean
J. Laflamme. Said disbursements are uncontested and are considered to be
expenses necessary for the conduct of this case. The amounts are justified and
will therefore be allowed as requested. However, the calculation of the total
amount claimed was adjusted to counter the double payment of taxes already claimed
on invoices and to reflect the revised calculations of the amounts set out in
the amended bill of costs.
[18]
The
applicant’s bill of costs is assessed and allowed in the amount of $1,908.27. A
certificate of assessment will be issued for this amount.
“Johanne Parent”
Certified
true translation
François
Brunet, Revisor
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