Indexed as:

Papineau v. Canada (Minister of National Revenue - M.N.R.)

Joseph Papineau, Appellant,

v. The Minister of National Revenue, Respondent

[1992] T.C.J. No. 796

Action No. 90-460(IT)

 Tax Court of Canada

 London, Ontario

Rowe T.C.J.

Heard: April 22 and 23, 1991

 Judgment: November 10, 1992

(8 pp.)

Practice -- Costs -- Income tax appeal -- Expert reports, attendance at trial by junior counsel, preparation of bill of costs, photocopies and GST.

This was a ruling as to costs. The appellant included in his bill of costs amounts for the following: Expert reports, attendance by junior counsel at trial, preparation of bill of costs, photocopies and GST paid on disbursements. The expert was the appellant's bookkeeper.

HELD: No amount was allowed for the expert's reports nor for attendance of junior counsel nor for GST. The amount for preparation of the bill of costs was allowed in full but only a lump sum was allowed for photocopies. The bookkeeper was not qualified as an expert nor were expert's reports filed. Schedules only were tendered into evidence. There was no provision for doubling the counsel fee set by the Rules on the basis that junior counsel also attended. The matter was a straightforward farm loss case. The amount sought for GST was unfounded.

STATUTES, REGULATIONS AND RULES CITED:

Income Tax Act, S.C. 1970-71-72, c. 63, s.  31(1).

Tax Court of Canada Rules of Practice and Procedure for the Award of Costs, s. 8(2)(c), 8(2)(d), 8(5), 8(6).

P.G. Colautti and G. Campbell, for the Appellant.

David O'Brien, for the Respondent.

ROWE T.C.J.:

Summary

The appeals of Joseph Papineau were heard on April 22 and 23, 1991 in London, Ontario, before His Honour Judge D.W. Rowe. In computing his income for the 1985 and 1986 taxation years, the appellant sought to deduct losses in respect of his farming operation in the amount of $40,111.21 and $32,780.36 respectively. The respondent restricted the losses to $5,000.00 for both taxation years pursuant to subsection 31(1) of the Income Tax Act. The appeals were allowed with costs.

Counsel for the appellant submitted a comprehensive, detailed and revised Bill of Costs claiming $1,475.00 in counsel fees and $6,294.22 for disbursements for a total sum of $7,769.22. The items disputed by the respondent are as follows:

1.	Experts Reports	$5,478.35
2.	Attendance by Junior Counsel	500.00
3.	Preparation of Bill of Costs	50.00
4.	Photocopies	480.50
5.	GST paid on various disbursements	49.44

The Appellant's Position

In his written submission counsel for the appellant submits that the disbursements claimed in the Bill for Mr. Gerald Fraser's services, Item No. 1, is an appropriate item to be included in the Bill of Costs. In their opinion, Mr. Fraser was something more than an independent witness. He testified as to a prepared comparative statement of farming expenses for the appellant's 1985 taxation year which was based on projected revenue and expenses calculated on average yields without the intervention of problems caused by the weather together with the actual figures of revenue and expenses as filed. The comparative statement was accepted by the Court and was filed as exhibit A-3 to the proceedings for the purpose of identifying the actual revenue, farm subsidies and interest rebates received from the beginning farmers assistance program. It is their contention that Mr. Fraser's opinion evidence was put before the Court and assisted the Court in making its decision in their client's favour.

That is the extent of the appellant's argument. No mention is made as to item numbers 2 through 5 which are also disputed by the respondent.

The Respondent's Position

Counsel for the respondent submitted the following written submission:

"This letter constitutes the respondent's written submission pursuant to Rule 13(5) of the Tax Court of Canada Rules of Practice and Procedure for the Award of Costs (Income Tax Act).

This matter was a straightforward farm loss case. The appellant called two witnesses, and also testified himself. The first witness, Gerald Fraser, was the appellant's bookkeeper. He also provided submissions on the appellant's behalf at the objection stage.

Mr. Fraser was neither proffered nor qualified as an expert witness nor was his field of expertise suggested, let alone grounded by questions by the appellant's counsel. No report was prepared, filed pursuant to the Tax Court Rules and Friedman v. M.N.R. 78 D.T.C. 1599 or submitted as evidence. Rather, schedules prepared by Mr. Fraser were marked as exhibits. The respondent therefore submits that no amounts are payable in respect of "Experts Reports".

The respondent relies upon subsection 8(c) of the Rules for the Award of Costs in that counsel fees for the conduct of the hearing are limited to a maximum of $125.00 per half day, for a total of $500.00. There is no provision for doubling the counsel fee set by the Rules, on the basis that junior counsel also attends at trial.

With respect to Mr. Campbell's claim for $50.00 for the taxation of costs, the respondent takes the position that the proceeding is wholly unnecessary. By letters dated November 12, 1991, December 4, 1991, January 27, 1992 and May 28, 1992, the respondent indicated it would entertain a Bill of Costs prepared in accordance with the Rules. The respondent submits that taxation was unnecessary and was occasioned by the appellant's counsel. Therefore, no amount should be payable in respect of taxation.

Mr. Campbell's Bill of Costs also includes photocopying charges in the amount of $480.50. Pursuant to Moloney v. Canada [1989] F.C. D-18(Taxing Off.), the practice of the Federal Court is to allow 25 cents per page of photocopying. On that basis, Mr. Campbell is asserting that photocopies which were essential for the conduct of this appeal numbered 1,922 pages. The respondent submits that $125.00, representing photocopies numbering 500 pages is more than reasonable in the context of a farm loss case.

The appellant has also sought "GST paid on various disbursements", in the amount of $49.44. At 7%, this represents payment of $706.29. It is submitted that this amount is unfounded and should not be allowed.

Analysis

Item No. 1. Experts Reports

Subsection 8(5) of the Tax Court of Canada Rules of Practice and Procedure for the Award Costs (Income Tax Act) which are applicable to this taxation, herein after referred to as the Rules, reads:

"There may be paid to a witness who appears to give evidence as an expert a reasonable payment for the service performed by the witness in preparing himself to give evidence and in giving evidence".

From my review of the Court File, the Minutes of Hearing and the Partial Transcription of Evidence taken during the Examination-In-Chief of the witness Gerald Fraser, I can only conclude that Mr. Fraser was not qualified by the Court as an expert witness and therefore did not testify in the capacity as an expert during the hearing. No expert's report was prepared, filed or submitted as evidence prior to or during the hearing. Rather, schedules prepared by Mr. Fraser were tendered into evidence and marked as exhibits. Consequently, no amount is claimable in respect of services performed by Mr. Fraser, the appellant's bookkeeper, in testifying pursuant to subsection 8(5) of the Rules. The costs claimed for this item in the amount of $5,478.35 is taxed off the bill in toto.

Further support of my determination on this particular issue can be found in the case of Canadian Titanium Pigments, Limited and Fratelli D'Amico Armatori (unreported) F.C.C.. In that case the Honourable Mr. Justice Walsh had this to say at page 4 of his decision:

"Furthermore an expert witness who does not testify with respect to the contents of his affidavit as an expert, but is merely called upon to give general non-expert evidence cannot be considered as an expert nor be taxed as such. (My emphasis)

In Crown Trust Co. v. The Queen, (1977) 2 F.C. 673, (1977) C.T.C. 320, 77 D.T.C. 5173 (T.D.) - A witness who was not allowed to testify at trial as an expert shall be taxed as an ordinary witness.

Item No: 2. Junior Counsel Fee

Subsection 8(2)(c) of the Rules reads:

"The following fees may be allowed for the services of counsel: for the conduct of a hearing, $125 per half day or part thereof".

As can be seen there is no provision for doubling the counsel fee set by the Rules on the basis that junior counsel also attends trial. From my review of the material on the Court file, I have to agree with the respondent's submission that this matter was a straightforward farm loss case. I add here, that having considered the circumstances of this case as well as the amount of preparation work for trial by junior counsel, I have decided that the employment of a junior counsel was not necessary even though he attended with his senior throughout the 2 day trial. I disallow the $500 fee claimed for the attendance of junior counsel at trial.

Item No. 3. Preparation of Bill of Costs

Subsection 8(2)(d) of the Rules reads:

"The following fees may be allowed for the Services of Counsel:

for the taxation of costs, $50."

In order to determine this dispute and dispose of the matter I am of the view that this taxation was necessary. Accordingly I allow the $50 fee for the taxation of costs as provided for in the tariff.

Item No. 4 Photocopies

In Amfac Foods Inc et al and Irving Pulp & Paper Ltd. Dube J. of the Federal Court, in a review of a taxation of costs, dealt with a claim for photocopying disallowed by the taxing officer. After referring to two Federal Court decisions, namely Domenico Vespoli et al v. Her Majesty the Queen et al and Windsurfing International Inc., et al and Bic Sports et al he had this to say at page 8 of his decision:

"It would appear that the general rule is that disbursements for photocopies are allowable when same are contracted out: the amounts actually paid by the firm are recoverable. In-house photocopying, as in the present instance, is considered to be included in the legal firm's overhead and not taxable. Under the circumstances, the taxing officer was not in error".

There is no evidence before me, one way or the other, to suggest that the material photocopied in this case was contracted out. I could of asked for some. Exhibit A-2, tendered as evidence at the hearing was the most voluminous. It was a document brief (documents obtained through the Privacy Act Application) which, according to my estimated calculation consisted of about 600 pages. Pursuant to Maloney v. Canada (1989) F.C. D-18 (Taxing Off.), which is referred to in the respondent's written submission, the practice of the Federal Court is to allow 25 cents per page of photocopying. From my review of the law on costs, there is no question that photocopies are taxable in a variety of jurisdictions. It may be evident that some are unnecessary, however, that is a matter for taxation with consequent review, if appropriate, by the Court. If I accept the amount claimed by counsel for photocopying disbursements at the rate of 25 cents per page, on that basis he is asserting that photocopies which were essential for the conduct of the appeal numbered 1,922 pages. It may be that he provided a copy of the brief to the respondent prior to or during the hearing but in the absence of any evidence before me to suggest he did so, I cannot make that assumption. Counsel for the respondent has submitted that $125.00 representing photocopies numbering 500 pages is appropriate in this case. I agree.

Item No. 5. GST

In light of my findings in respect of this taxation, the amount sought for goods and services tax paid on various disbursements is unfounded and therefore is not allowed.

One item claimed in the Bill of Costs by counsel for the appellant, which was not disputed by the respondent in his written submission, is a $175.00 fee for the "preparation and attendance at hearing for the adjournment of proceedings". I note that the adjournment, which was granted by the Court on September 17, 1990, was requested by a law student of the appellant's law firm. There is no provision in the Rules or Tariff to allow this fee. Consequently, it is taxed off the Bill.

The end result is that I have taxed the party and party costs of the appellant in this proceeding and I allow the sum of $1,210.93 and a certificate to that effect is issued herewith.

90-460 (IT)

BETWEEN:

JOSEPH PAPINEAU,
	Appellant,

- and -

THE MINISTER OF NATIONAL REVENUE,
	Respondent.

CERTIFICATE OF TAXATION

I CERTIFY that I have taxed the party and party costs of the appellant in this appeal under the authority of subsection 8(6) of the Tax Court of Canada Rules of Practice and Procedure for the Award of Costs (Income Tax Act and I ALLOW THE SUM OF $1,210.93.