http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/232041/index.do
Grimes v. The Queen (June 15, 2017 – 2017 TCC 113, Lafleur J.).
Précis: The taxpayer disputed CRA’s valuation of shares owned by a family trust on its deemed disposition date. Ultimately the Tax Court substantially reduced the CRA valuation. In this motion dealing with costs the taxpayer asked for costs in excess of the tariff, i.e., 75% ($155,856.83) of its solicitor-client costs, plus 100% of its disbursements (largely expert witness fees). The Court concluded that this was an appropriate case for costs in excess of the tariff, largely because of the significant monetary success of the taxpayer, but concluded that an award of 25% ($52,000) of its solicitor-client costs, plus 100% of its disbursements was more appropriate.
Decision: Although the Court reviewed all of the applicable factors for cost awards in excess of the tariff, the magnitude of the taxpayers success appears to have been the principal factor in its conclusions:
[17] In its submissions, the Appellant stated that it was “substantially successful in the matter before the Court, both with regards to quantum and with regards to points in dispute”.
[18] However, the Respondent submits that: “The Judgment allowed the appeal in part such that success was mixed for either side. The parties had divided success in respect of the fair market value, representing a reduction of approximately 50% of the respondent’s position at the hearing and an increase of over 282% or 2.8 times the value proposed by the appellant”. The Respondent claims that due to the mixed success of the appeal, no costs should be awarded.
[19] I do not agree with the Respondent’s submission. My determination of the fair market value of the Shares at $5,341,334 in the aggregate, was certainly much more favourable to the Appellant. On the one hand, Mr. Spencer had determined the fair market value of the Shares at $9,056,863, which was almost double my final figure. On the other hand, the Appellant’s expert had established the fair market value at $2,966,000, which is closer to my final determination. Even more instructive is the final determination of the fair market value of the 1 Class A Common Share of Holdco. I have determined that fair market value to be $2,641,434; the Appellant’s expert had determined that value at $935,000 and the Respondent’s expert at $6,356,963.
[20] In SWS Communication Inc. v. The Queen, 2012 TCC 377 at para. 34, Justice Hogan provided specific guidelines as to which party should be awarded costs: the appeal should be viewed as a whole; a judge is not to focus separately on the outcome of each argument pleaded by the parties.
In the result the Court opted for 25% of solicitor-client costs, not the 75% award requested by the taxpayer:
The Appellant was seeking 75% of the solicitor‑client costs plus disbursements, as well as HST. An award equivalent to approximately 25% of solicitor‑client costs plus disbursements seems reasonable, appropriate and fair in the circumstances. For these reasons, I conclude that the Appellant is entitled to a lump sum amount of $52,000 together with applicable HST on this amount, and 100% of the disbursements which are: an amount of $62,570.46 for expert fees together with applicable HST on this amount and an amount of $1,468.32 (inclusive of HST) for disbursement incurred by the Appellant’s counsel.