Splane (R.O.J.) v. Canada, [1991] 1 CTC 406, [1991] DTC 5130

Cullen, J.:—When my reasons for judgment were written I acceded to counsel's request that I reserve my decision on costs to permit each party to make written submissions to the Court on this issue.

The written arguments have now been received and read. With great respect, I can find no basis for awarding costs on a solicitor and client basis. The agreed facts make it quite clear that payments were made to the applicant in each of his 1985, 1986 and 1987 taxation years pursuant to a policy adopted by Treasury Board. I accept that it wasn't until 1988 that the applicant was sent T4A supplementary forms for each of these taxation years which advised that the payments were taxable benefits under section 62 of the Income Tax Act,, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the"Act"). I can also accept that the applicant never believed the payments were anything other than reimbursements because he agreed to transfer to Edmonton where his cost of living and interest on a mortgage could exceed that in Smiths Falls, Ontario. Certainly, the issues were broadened in the statement of defence by the Deputy Attorney General but there was more than adequate time to prepare for that situation. Both sides had reasons for delay of the action and each moved for different reasons—one for judgment and another for dismissal of the actions. Again this is not grounds for an award of solicitor/client costs. Counsel for the applicant commenced his action in the Federal Court of Canada for the solid reasons given but that was counsel's advice accepted by his client and not due to any untoward action by the respondent.

It is obvious that the issues argued before me had been argued in other cases and that appeals were pending. It was hardly surprising that my decision would also be appealed in the Department's hope of determining the exact law applicable for a series of comparable but different facts.

Again, this was not a test case and no one came forward who agreed to be bound by my decision or the decision of the Court of Appeal. We are talking here of a case involving less than $1,000 in taxes. There was in fact no wish by the applicant to be associated in any way with other cases with similar claims, such as R.C.M.P. employees.

Greater co-operation between the parties would have been preferable but as I stated earlier, both sides had complaints about the manner in which the case was proceeding, or more accurately, not proceeding.

A successful litigant normally receives party-and-party costs to which he entitled under the tariff. To move away from the position is "an unusual and exceptional step”: Factory Carpet Ltd. v. The Queen, [1985] 2 C.T.C. 267; 85 D.T.C. 5464. I have not found the exceptional circumstances that must exist to justify departing from the tariff. I stated earlier that the respondent broadened the issues but I believe counsel for the respondent puts it more accurately in his written argument at paragraphs 23 and 24:

23. A second complaint is that the Defence refers to sections 3, 5, 6 and 248(1) of the Income Tax Act, whereas the Notification of Confirmation had referred only to s. 6(1)(a), and that this "substantially broaden[ed] the issues of fact and law” in the litigation. (12) It is submitted that this argument is devoid of merit. Sections 3 and 5 simply bring into play the notion of income from a source, the source being employment. Section 248(1) simply contains a number of definitions, one of which is "personal or living expenses", which is relevant in attempting to distinguish the Huffman case.

24. It was clear to all concerned that the issue was whether the mortgage interest differential was taxable. The Minister's position was that it was an employment benefit under s. 6(1)(a), but it was equally possible for the Court to find that it was "other remuneration” under s. 5. It is submitted that in no way did reference to these other provisions of the Income Tax Act broaden the issues of fact and law. In fact, the second entry on the Pro-Forma Bill of Costs is "To Preliminary analysis of sections 5 and 6 of the Income Tax Act and relevant case law and advising client on merits of appeal HGW: 5 hours". (Exhibit R. to Wolff's affidavit) This would have occurred long before the Defence was filed, and there are no entries on the Pro- Forma Bill of Costs showing any research and analysis of sections 3 and 248(1) of the Income Tax Act. Therefore the inclusion of these other sections of the Income Tax Act in the Defence did not result in additional research being done, nor did it prolong the course of the litigation.

Conclusion

An order will go dismissing this motion with costs to the respondent under section 1(f) of Tariff B in the amount of $75 and awarding the applicant for this action and action in Court No, T-1877-88 one set of part-and-party costs under Tariffs A and B in the amounts of $193.60 for disbursements and $1,175 for fees.

Motion dismissed.