|
Civil Litigation Cases - Interrelated Cases. Canada v. Vefghi Holding Corporation
In Canada v. Vefghi Holding Corporation (Fed CA, 2026) the Federal Court of Appeal considers a Crown appeal of the appellate cost award, here in a cross-appeal context.
Here the Crown submits that several other appeals "were held in abeyance pending this appeal and the amounts at issue in these appeals should be considered for" cost award purposes:[6] In seeking enhanced costs for the Tax Court hearing, the Crown, as set out in its written submissions, is asking this Court to exercise its discretion to consider the factors as set out in Rule 147(3)(b), (c), (e) and (f):"147(3) In exercising its discretionary power pursuant to subsection (1) the Court may consider,"
"147(3)"" En exerçant sa discrétion conformément au paragraphe (1), la Cour peut tenir compte :"
"[…]"
"[…]"
"(b) the amounts in issue,"
"b)"" des sommes en cause;"
"(c) the importance of the issues,"
"c)"" de l’importance des questions en litige;"
"[…]"
"[…]"
"(e) the volume of work,"
"e)"" de la charge de travail;"
"(f) the complexity of the issues,"
"f)"" de la complexité des questions en litige;" ....
[8] In any event, the Crown submits that there are several other appeals that were held in abeyance pending this appeal and the amounts at issue in these appeals should be considered for the purposes of Rule 147(3)(b):9. Considering the aggregate amount at issue in all bound appeals is appropriate when fixing costs for a lead case to encourage the prudent and efficient use of public resources through lead cases. [9] The Crown cites 3 decisions of the Tax Court in support of this proposition: Applewood Holdings Inc. v. The Queen, 2019 TCC 34 (Applewood); Spruce Credit Union v. The Queen, 2014 TCC 42 (Spruce Credit Union); and Madison Pacific Properties Inc. v. The King, 2024 TCC 47 (Madison). In both Applewood and Spruce Credit Union, the taxpayers were successful and, therefore, costs were payable by the Crown.
[10] In Spruce Credit Union, the Tax Court Judge noted:[35] It is appropriate in a lead case appeal such as this to consider the aggregate amount being contested by all bound taxpayers when fixing costs. It is equally appropriate to consider that each taxpayer generally has the right to pursue its own appeal to the Court, and that if each other taxpayer pursued an appeal and were successful, they would generally expect to be entitled to a costs award. The prudent and efficient use of public resources through lead cases or otherwise in resolving tax disputes is to be generally encouraged, not discouraged in any way. [11] The reference to the "“prudent and efficient use of public resources through lead cases”" was made in relation to appeals where a number of taxpayers could be entitled to costs payable by the Crown, if each taxpayer successfully pursued an appeal to the Tax Court. In every tax appeal before the Tax Court, the Crown is a party. Therefore, the Crown would have a direct benefit from having a lead case when the Crown is the party paying costs.
[12] However, neither Vefghi Holding nor S.O.N.S. is a party in any of the appeals that the Crown has identified as being held in abeyance. There is also no indication of any relationship or connection between either Vefghi Holding or S.O.N.S. and the appellants in the other appeals. The Crown has not established why it would be appropriate to require Vefghi Holding and S.O.N.S. to pay enhanced costs when neither Vefghi Holding nor S.O.N.S. is a party to these other appeals. The only amount in issue for Vefghi Holding is the amount for which it was assessed ($454,428 of Part IV tax (2023 TCC 135, paragraph 5) and, likewise, the only amount in issue for S.O.N.S. is the amount for which it was assessed ($655,910 of Part IV tax (2023 TCC 135, paragraph 6). There is no indication that Vefghi Holding would have any liability for the tax assessed against S.O.N.S., or vice versa, or that Vefghi Holding or S.O.N.S. would have any liability for the amounts assessed against any of the other taxpayers listed in the Crown’s written submissions.
[13] In Madison, the Crown was awarded costs. The references to taking into account the amounts at issue in other appeals in assessing whether to award enhanced costs are in paragraphs 6 and 7:[6] There was $2,188,839 in federal tax in issue in the Appeal. The Appellant has two other tax years in issue that are currently sitting at CRA Appeals involving the same losses. In addition, there is a further $10 million in federal tax in dispute in a number of related appeals.
[7] The Respondent submits that the additional tax from these disputes should be taken into account as the outcome of the Appeal will have a significant impact on the related appeals. I agree. This factor argues for increased costs.
[emphasis added] [14] The footnote reference to "“related appeals”", in paragraph 6 above, cites the following appeals: "“Appeal numbers 2013-3885(IT)G, 2013-3888(IT)G and 2018-540(IT)G”". In a decision of the Tax Court dated May 18, 2017, MP Western Properties Inc. v. The Queen, 2017 TCC 82, the appeal number 2013-3885(IT)G is identified as the appeal of MP Western Properties Inc., and the appeal number 2013-3888(IT)G is identified as the appeal of 1073774 Properties Inc. In paragraph 2 of that decision, the Tax Court notes that "“""MP Western Properties Inc."" (“Western”), 1073774 Properties Inc. (“107”) and Madison Pacific Properties Ltd. (“Madison”) are part of the same corporate group”". In Madison Pacific Properties Inc. v. His Majesty the King, 2023 TCC 180, the Tax Court Judge in footnote 28 confirmed that the appeal number 2018‑540(IT)G was an appeal of Madison Pacific Properties Inc.
[15] As a result, the reference to Madison does not assist the Crown. The related appeals that were considered in determining the amounts in issue in Madison were other appeals of the same taxpayer or members of the same corporate group.
[16] In my view, in the matter that is before this Court, the amounts in issue are only the amounts that are in issue in the appeals of Vefghi Holding and S.O.N.S. The amounts in issue in these appeals do not support a finding that costs in excess of the tariff should be awarded.
|
