A-164-80
Claude Leclerc (Appellant) (Defendant)
v.
The Queen (Respondent) (Plaintiff)
A-165-80
Georges E. Lemay (Appellant) (Defendant)
v.
The Queen (Respondent) (Plaintiff)
Court of Appeal, Pratte, Le Dain JJ. and Hyde
D.J.—Montreal, September 21, 1982.
Practice — Costs — Appeal from Trial Judge's decision
reducing appellants' taxed costs because appeals not raising
principle which would affect future cases and because small
amount of taxes involved — Costs awarded pursuant to s.
178(2) of the Act — Hourly rate and hours worked on appeals
not excessive — Trial Judge erred in law — Principles in The
Queen v. Creamer, 11977] 2 F.C. 195 (T.D.) apply — Purpose
of s. 178(2) to enable taxpayer to recover reasonable costs
notwithstanding outcome and amount involved — Income Tax
Act, S.C. 1970-71-72, c. 63, s. 178(2), as ,am. by S.C. 1976-77,
c. 4, s. 64.
Income tax — Practice — "Reasonable and proper costs"
pursuant to s. 178(2) of the Act — Trial Judge erred in law in
reducing taxed costs awarded to taxpayer because exceeded
amount of tax involved and because no precedential value in
appeals — The Queen v. Creamer, 11977] 2 F.C. 195 (T.D.)
applied — Purpose of s. 178(2) to enable taxpayer to recover
reasonable costs notwithstanding outcome and amount
involved — Income Tax Act, S.C. 1970-71-72, c. 63, s. 178(2),
as am. by S.C. 1976-77, c. 4, s. 64.
CASE JUDICIALLY CONSIDERED
APPLIED:
The Queen v. Creamer, [1977] 2 F.C. 195 (T.D.).
COUNSEL:
Jean Delage for appellant (defendant).
D. Thibodeau and P. Cossette for respondent
(plaintiff).
SOLICITORS:
Monet, Hart, Saint-Pierre & Des Marais,
Montreal, for appellant (defendant).
Deputy Attorney General of Canada for
respondent (plaintiff).
The following is the English version of the
reasons for judgment delivered orally by
PRATTE J.: This case concerns appeals from
decisions of the Trial Division [[1980] 2 F.C. 194],
which allowed two applications made by Her
Majesty to review the taxation of costs previously
awarded to Messrs. Leclerc and Lemay by the
Court.
Her Majesty had appealed to the Trial Division
from decisions of the Tax Review Board in favour
of Messrs. Leclerc and Lemay. The amount at
issue in each of these appeals was approximately
$1,325. The appeals were allowed and Her Majes
ty won her case. As the cases were ones in which
subsection 178(2) of the Income Tax Act [R.S.C.
1952, c. 148, as am. by S.C. 1970-71-72, c. 63, s.
1; S.C. 1976-77, c. 4, s. 64] had to be applied, the
judgments nonetheless directed Her Majesty in
each of the cases to pay half the reasonable and
proper costs incurred by the two taxpayers. The
District Administrator taxed these costs in each
case in the amount of $2,500, plus expenses. The
judgments a quo reduced these amounts by half.
The two amounts of $2,500 awarded by the
Administrator represented pay for seventy-seven
hours of work which counsel for Messrs. Leclerc
and Lemay claimed to have devoted to the defence
of their client's interests.
If I understand his decision correctly, the Trial
Judge held that the hourly rate of $70 claimed by
counsel for the applicants was not excessive; he
also considered that they had in fact spent seventy-
seven hours working on the two appeals and that
the time also was not excessive. He nonetheless
reduced the amounts awarded by the Administra
tor by half, because the two appeals raised no
question of principle that could arise in other
cases: he concluded from this that the costs could
not be reasonable and proper if they exceeded the
amount at issue.
In so finding, the Trial Judge appears to have
committed an error of law. In a case where subsec
tion 178(2) of the Income Tax Act applies, neither
the fact that the amount at issue in the appeal was
small nor the fact that the appeal raised no ques-
tion of principle seems to me to have any bearing
in deciding on the amount of the reasonable costs
to which the taxpayer is entitled. The purpose of
subsection 178(2) is to enable the taxpayer to
recover his reasonable costs, whatever the outcome
of the appeal and even though the appeal may not
involve a very large amount. The considerations
applicable to determining the amount of the costs
to which a taxpayer is entitled under subsection
178(2) would seem to be contained in the passage
from the decision in The Queen v. Creamer
([1977] 2 F.C. 195 (T.D.), at page 206), in which
Mahoney J. indicated the result which Parliament
sought to attain when this provision is applicable:
Parliament intended that, when so sued, the taxpayer be able to
defend himself, as he may be competently advised, undeterred
by the expense involved, so long as it is reasonably and properly
incurred.
While the taxpayer is not to be deterred by financial con
siderations from undertaking his defence, he is not being given
a licence to squander public funds in a frivolous or luxurious
manner, nor are those whom he retains. If they charge a fair
fee for time necessarily spent in the defence of the action, they
may expect their client to be put in funds, or reimbursed, for its
payment.
For these reasons, I would allow the appeals,
quash the decisions a quo and restore the decisions
of the District Administrator. I would award each
of the appellants their costs at trial and on appeal,
and I would fix these costs in the amount of $600.
LE DAIN J. concurred.
HYDE D.J. concurred.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.