Sherman v. Canada (Minister of National Revenue)

Sherman v. Canada (Minister of National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2004-01-23 Neutral citation 2004 FCA 29 File numbers A-387-02 Notes Digest Decision Content Date: 20040123 Docket: A-387-02 Citation: 2004 FCA 29 Present: DESJARDINS J.A. LÉTOURNEAU J.A. EVANS J.A. BETWEEN: DAVID M. SHERMAN Appellant and THE MINISTER OF NATIONAL REVENUE Respondent Dealt with in writing without appearance of parties. Order delivered at Ottawa, Ontario, on January 23, 2004. REASONS FOR ORDER BY: LÉTOURNEAU J.A. CONCURRED IN BY: DESJARDINS J.A. EVANS J.A. Date: 20040123 Docket: A-387-02 Citation: 2004 FCA 29 Present: DESJARDINS J.A. LÉTOURNEAU J.A. EVANS J.A. BETWEEN: DAVID M. SHERMAN Appellant and THE MINISTER OF NATIONAL REVENUE Respondent REASONS FOR ORDER AS TO COSTS LÉTOURNEAU J.A. [1] In a judgment dated May 6, 2003, this Court concluded in part: The appellant is entitled to disbursements and a moderate allowance for the time and effort he devoted to preparing and presenting his case before the Trial and the Appeal Divisions of this Court on proof that, in so doing, he incurred an opportunity cost by foregoing remunerative activity. [2] By motion made under Rule 369, the appellant requests that this Court fix the award of costs at $30,528.00 for his time spent and $684.18 for disbursements plus costs of his motion in the amount of $5,760.00 plus disbursements for the twelve hours he spent to prepare and file his motion for costs. The appellant filed an affidavit to his motion detailing his costs. He submits that he worked 66.1 hours on the trial and the appeal. He calculates one half of the opportunity costs of his time at the rate of $550.00 an hour, the other half at $600.00 per hour. He discounted the total figure by 20% in order to meet the requirement that the allowance be moderate. [3] The respondent does not dispute the appellant's request for $684.08 in disbursements but otherwise opposes both his other requests. I should add that the appellant kept a detailed account of the time spent and effort devoted to the preparation and defence of his case. I do not think that the number of hours is unreasonable or subject to argument. [4] The objection is based on two grounds. Firstly, the respondent says that the appellant did not indicate the provisions on which the motion is based, except for Rule 369, which is procedural. The appellant is long out of time to bring his motion either under Rule 397 or under Rule 403 and has not asked for an extension. [5] Secondly, the respondent claims that it is implicit in this Court's judgment and reasons for judgment that the appellant was awarded party and party costs to be calculated according to Tariff B, the applicable tariff under the Rules. [6] This Court's decision, issued on May 6, 2003, was based on case law on which the Court relied to award to the appellant "a moderate allowance for the time and effort devoted to preparing and presenting the case". Rule 397 does not apply as there are no grounds for reconsideration. [7] The appellant could have sought an extension of time and brought a motion under Rule 403 for directions to the taxation officer. In the part of its order dealing with costs, this Court intended not to fix the actual quantum of the costs awarded, but to leave it to a taxation officer to determine such quantum within the parameters of the reasons for the costs order. However, since the Court is now seized with the issue, which is novel, and in view of the wide gap separating the parties with respect to the meaning of a "moderate allowance", it would be better for this Court to rule on it than merely to issue directions. Consequently, the appellant's bill of costs was appropriately brought under Rule 369. [8] The purpose of the costs rules is not to reimburse all the expenses and disbursements incurred by a party in the pursuit of litigation, but to provide partial compensation. The costs awarded, as a matter of principle, are party-and-party costs. Unless the Court orders otherwise, Rule 407 requires that they be assessed in accordance with column III of the table to Tariff B. As the Federal Court properly said in Apotex Inc. v. Wellcome Foundation Ltd. (1998), 159 F.T.R. 233, Tariff B represents a compromise between compensating the successful party and burdening the unsuccessful party. [9] Column III of the table to Tariff B is intended to address a case of average complexity: Apotex Inc. v. Syntex Pharmaceuticals International Ltd., 2001 FCA 137. The Tariff includes counsel fees among the judicial costs. Since it applies uniformly across Canada, it obviously does not reflect a counsel's actual fees as lawyers' hourly rates vary considerably from province to province, from city to city and between urban and rural areas. [10] There is no doubt that the appellant, who was unrepresented, expended time and effort in the pursuit of his claims. However, as the Alberta Court of Appeal pointed out in Dechant v. Law Society of Alberta, 2001 ABCA 81, "represented litigants also sacrifice a considerable amount of their own time and effort for which no compensation is paid". Furthermore, their lawyers' fees are not fully reimbursed. I agree that "applying an identical cost schedule to both represented and unrepresented litigants will work an inequity against the represented litigant who, even with an award of costs, will be left with some legal fees to pay and no compensation for a personal investment of time": ibid, paragraph 16. It could also promote self-litigation as an occupation: ibid, paragraph 17; see also Lee v. Anderson Resources Ltd., 2002 ABQB 536, (2002) 307 A.R. 303 (Alta Q.B.). [11] In the present instance, if the appellant had been represented, he would have been awarded party and party costs according to column III of the table to Tariff B. I believe that his award of costs as an unrepresented litigant can, at best, equal, but should not exceed, what would have otherwise been paid to him if he had been represented by counsel. I should add that the unrepresented litigant enjoys no automatic right to the full amount contemplated by the tariff. The amount of the award is in the discretion of the Court. The concept of a "moderate allowance" is an indication of a partial indemnity although, as previously mentioned, I accept that, in appropriate but rare cases, the amount of that indemnity could be equal to what the tariff would grant to a represented litigant. [12] Like Registrar Doolan in City Club Development (Middlegate) Corp. v. Cutts (1996) 26 B.C.L.R. (3d) 39, Registrar Roland of the Supreme Court of Canada concluded in Metzner v. Metzner, [2000] S.C.C.A. No. 527, that the "reasonably competent solicitor approach was unworkable when assessing special costs awarded to a lay litigant": S.C.C. Bulletin 2001, p. 1158. She endorsed the conclusion that the only reasonable approach was to make an award on a quantum meruit basis. [13] In Clark v. Taylor [2003] N.W.T.J. No. 67, Vertes J. of the Northwest Territories Supreme Court was called upon to assess costs for an unrepresented female litigant. At paragraph 12 of the decision, he wrote: In considering what would be a "reasonable" allowance for the applicant's loss of time in preparing and presenting her case, I am not convinced that it is at all appropriate to simply apply what she herself would charge for her hourly fees to a client. The reality is that any litigation will eat up time and expenses whether one is represented or not. [14] He went on to add that the tariff can provide useful benchmarks, even if costs are not assessed on the tariff basis. I agree. The hourly rate claimed by the appellant in the present case is not the benchmark to be used in determining the quantum of a moderate allowance. It is much in excess of the allocation rate contemplated by the tariff. [15] In the present case, this Court was of the view that the appellant, who is a reputable tax expert, raised new issues of public interest as regards the interpretation of an international tax convention and the right to access the information obtained and exchanged pursuant to that Convention: see paragraph 44 of the decision. The work submitted by the appellant was of good quality . The submissions to the Court were well documented and helpful. There is no doubt that his attendance at the hearing before the Federal Court and our Court was necessary and caused him to lose time from work. Furthermore, the appellant behaved with great propriety throughout the litigation. [16] Bearing all these factors in mind, including the legitimate purpose pursued by the appellant and the fact that costs under Tariff B would have amounted to some $7,200.00, I would fix the moderate allowance at $6,000.00 plus disbursements in the undisputed amount of $684.08. As for the costs and disbursements of bringing this motion, I would allow the sum of $350.00. [17] It would have been useful if the parties, or at least the respondent who was opposing the bill of costs, had given us some of the existing jurisprudence relating to the interpretation and application of the "moderate allowance" notion. "Gilles Létourneau" J.A. "I concur. Alice Desjardins J.A." "I agree John M. Evans J.A." FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-387-02 STYLE OF CAUSE: DAVID M. SHERMAN v. THE MINISTER OF NATIONAL REVENUE MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES REASONS FOR ORDER BY: LÉTOURNEAU J.A. CONCURRED IN BY: DESJARDINS J.A. EVANS J.A. DATED: January 23, 2004 WRITTEN REPRESENTATIONS BY: David M. Sherman ON HIS OWN BEHALF Sointula Kirkpatrick Louis L'Heureux FOR THE RESPONDENT SOLICITORS OF RECORD: Morris A. Rosenberg Deputy Attorney General of Canada Toronto, Ontario FOR THE RESPONDENT