PRACTICE |
Costs |
Chua v. M.N.R.
T-1216-99
2002 FCT 144, Stinson T.O.
7/2/02
13 pp.
Judicial review, addressing constitutionality of respondent's collection proceedings against applicant for tax debt owing to Internal Revenue Service (IRS) of United States of America, resulted in Court finding in favour of applicant, awarding three-quarters of applicant's costs in accordance with Federal Court Rules, 1998, Tariff B, column III--Items in bill of costs in dispute: two claims of 6 units each under item 3 for supplemental affidavits; $1,800 claim under item 14(b) for second counsel; doubling of fees after December 8, 1999 under r. 420; $14,012.43 for U.S. attorney Moran; photocopy claims--Item 3 "amendment of documents, where amendment necessitated by new or amended originating document, pleading, notice or affidavit of another party"--Item 14(b) "counsel fee to second counsel, where Court directs, 50% of amount calculated under paragraph (a)"--R. 420 providing where plaintiff making written offer to settle, and obtains judgment as or more favourable than terms of offer, plaintiff entitled to party-and-party costs to date of service of settlement offer, double such costs thereafter--(1) Respondent argued two of claims under item 5 (preparation, filing of contested motion) already address services claimed under item 3-- Irrelevant whether supplemental affidavits claimed under item 3 address interlocutory proceedings or substantive issues of judicial review--Jurisdictions which capture partial indemnity in tariff such as Tariff B, generally list discrete events for recovery of costs, which may not be exhaustive--Applicant received indemnification under items 5, 13 thus precluding recovery under item 3--(2) Respondent arguing item 14(b) requiring direction of Court --R. 409 permitting assessment officer to consider r. 400(3) factors--Not meaning, relative to rr. 405 (assessment by assessment officer), 407 (assessment according to Tariff B), definition of "assessment officer" in r. 2, and constitution of Court outlined in Federal Court Act, s. 5 that assessment officer can exercise r. 400(1) authority of Court--Item 14(b) claim disallowed--(3) Respondent arguing applicant not entitled to double fees under r. 420 as settlement negotiations between IRS, applicant irrelevant to issues on judicial review--R. 419 providing r. 420 applies to judicial review proceedings--Court's decision not extinguishing U.S. tax debt--Judicial review instituted June 30, 1999--Respondent suggested applicant approach IRS directly in September 1999--Settlement discussions flowed from contact with IRS--Unlikely respondent could have realistically influenced IRS to settle or extinguish U.S. tax debt, thus making judicial review unnecessary--From perspective of Yared Realty Ltd. v. Topalovic (1981), 45 C.P.C. 189 (Ont. H.C.), absence of language in r. 420(1) restricting application to parties to litigation, and as applicant's dealings with IRS could have directly affected collection proceeds regardless of lapsed time limits in United States to formally challenge tax debt, result more favourable for applicant than for respondent and IRS--IRS, as part of counter-offer, included discontinuance of judicial review as term of settlement--Term motivated by wish to preclude any potential weakening of Convention--Double fees awarded--(4) Respondent argued charge for U.S. attorney should be deleted--Conceded Moran rendered service, but argued opinion letter not advancing litigation because addressed correctness of calculations underlying U.S. tax debt, matter not in issue at judicial review--Record indicating Moran retained because respondent's disclosure allegedly inadequate--Applicant pursued position at time charge for Moran incurred based on need to elicit information from IRS representative, Ehrlich--Doubtful applicant would have attempted settlement of U.S. tax debt at this stage of life, but for respondent's decision to proceed with collection--Therefore costs associated with Moran would not have been incurred but for said decision-- Moran's opinion, initially to address Ehrlich's evidence in context of interlocutory proceedings for which no costs awarded, ultimately used for additional purposes such as settlement negotiations relevant in context of judicial review--Settlement proposal substantially based on his report, which was beyond expertise of Canadian counsel--Respondent proceeded with response--Must accept consequences of some associated costs--Applicant should bear some responsibility for difficulty posed--Amount claimed reduced to $9,000--(5) Respondent argued claim for photocopies not meeting test of Diversified Products Corp. v. Tye-Sil Corp. (1990), 34 C.P.R. (3d) 267 (F.C.T.D.)--Photocopy charges sometimes include copies of irrelevant, marginally relevant authorities--Reduced amount of $1,200 allowed--Bill of costs, presented at $51,287.46 allowed at $42,088.45-- Federal Court Rules, 1998, SOR/98-106, rr. 2 "assessment officer", 400(3), 405, 407, 409, 419, 420, Tariff B, items 3, 14(b)--Federal Court Act, R.S.C., 1985, c. F-7, s. 5 (as am. by R.S.C., 1985 (1st Supp.), c. 41, s. 11; S.C. 1992, c. 49, s. 127; 1996, c. 22, s. 1).