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2007-2583(IT)G

TAX COURT OF CANADA

BETWEEN:

PETER SOMMERER

Appellant

– and –

HER MAJESTY THE QUEEN Respondent

ORAL REASONS FOR JUDGMENT ON COSTS MOTION

The attached transcript is the Oral Reasons for Judgement in the Appellant’s motion with respect to costs in the above-noted matter as recorded by the Court Reporter. This transcript has not been certified, confirmed or edited in any manner by the Tax Court of Canada or Associate Chief Justice Rossiter and could contain errors. Copyright in the transcript is held by A.S.A.P. Reporting Services Inc.

Court File No.: 2007-2583(IT)G

TAX COURT OF CANADA

BETWEEN:

PETER SOMMERERAppellant

- and-

HER MAJESTY THE QUEENRespondent

CONFERENCE CALL TO HEAR ORAL REASONS BEFORETHE HONOURABLE JUSTICE CAMPBELL J. MILLER

at Courts Administration Service,200 Kent Street, 2nd Floor, Ottawa, Ontarioon Thursday, July 14, 2011 at 10:30 a.m.

APPEARANCES:

Mr. Daniel Sandler

Mr. Luther Chambers, Q.C.

Also Present:

Ms. Sue Rochon

A.S.A.P. Reporting Services Inc. © 2011

for the Appellant

for the Respondent

Court Registrar

200 Elgin St., Suite 1105Ottawa, Ontario K2P 1L5(613) 564-2727

333 Bay Street, Suite 900Toronto, Ontario M5H 2T4(416) 861-8720

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1 Ottawa, Ontario

2 Upon commencing on Thursday, July 14, 2011

3 at 10:30 a.m.

4 THE REGISTRAR: The sitting of the

5 Tax Court of Canada at Ottawa is now open.

6 Before the court is the appeal of

7 Peter Sommerer versus Her Majesty the Queen, file

8 2007-2583 (IT)G.

9 For the appellant, Daniel Sandler;

10 and for the respondent, Luther Chambers.

11 The Honourable Justice Miller is

12 presiding.

13 Your Honour?

14 JUSTICE MILLER: Yes. Good morning,

15 Mr. Sandler. Good morning, Mr. Chambers.

16 MR. CHAMBERS: Good morning, Your

17 Honour.

18 MR. SANDLER: Your Honour.

19 JUSTICE MILLER: Yes. I am prepared

20 to give an order with respect to costs in this

21 matter. Later today, I will sign that order, but

22 right now I will give you my oral reasons as

23 follows.

24 Mr. Sommerer brings a motion for

25 an order pursuant to Rule 147 of the Tax Court of

A.S.A.P. Reporting Services Inc.(613) 564-2727 (416) 861-8720

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1 Canada rules, general procedure, for directions

2 increasing costs awarded at trial to an amount in

3 excess of the tariff.

4 Specifically, he seeks 50 per cent

5 of solicitor-client costs to the date of a

6 settlement offer, September 21st, 2010, and 80 per

7 cent of solicitor-client costs after that date,

8 plus disbursements of $83,258 for a total amount

9 sought of $876,293.17.

10 The respondent is prepared to pay

11 costs in accordance with tariff in the amount of

12 fees of $35,400, plus disbursements of $32,789 for

13 a total of $68,189.

14 The parties are intimately

15 familiar with the facts of this case and the nature

16 and the length of these proceedings. It's

17 unnecessary for me to repeat the background, which

18 is clearly set out in my reasons for jUdgement of

19 April 14th, 2011.

20 Before addressing criteria set out

21 in Rule 147(3), which will assist me in the

22 exercise of my discretion in determining the

23 quantum of costs, I wish to address whether there

24 is a threshold test that the parties seeking costs

25 beyond tariff must pass before the judge even


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1 considers the factors set out in Rule 147(3).

2 The respondent argues, relying on

3 former Chief Justice Bowman's comments in

4 Continental Bank, that costs beyond tariff are only

5 justified in exceptional circumstances, though not

6 necessarily egregious circumstances that might

7 justify solicitor-client costs. The appellant

8 responds that there is no such threshold test, that

9 the judge is simply to exercise his or her

10 discretion considering the Rule 147(3) factors.

11 Certainly the wording of Rule 147

12 suggests no threshold test but provides wide

13 discretion to the judge to consider the factors

14 identified in subsection (3) of Rule 147 in coming

15 to a reasoned, balanced decision.

16 I agree with the appellant.

17 Recent cases, such as General

18 Electric with Justice Hogan, the Campbell case

19 with, oddly enough, Justice Campbell, the Jolly

20 Farmer case, Justice Boyle suggest there is no

21 threshold, but that is open to the jUdge to take

22 into account the 147(3) factors.

23 Clearly, cases have suggested this

24 is an exercise that cannot be undertaken

25 capriciously.


4

1 Further, cases have supported the

2 proposition that full solicitor-client costs should

3 only be considered in circumstances that might be

4 found to be egregious. But for award of costs above

5 tariff and below solicitor-client costs, it's for

6 the parties to satisfy a judge a consideration of

7 the Rule 147(3) factors should or should not result

8 in costs beyond tariff.

9 This may well represent a

10 departure from former Chief Justice Bowman's

11 comment in Continental Bank that, quote:

12 In the normal course, tariff

13 is to be respected unless

14 exceptional circumstances dictate

15 a departure from it. Such

16 circumstances could be misconduct

17 by one of the parties, undue

18 delay, inappropriate prolongation

19 of the proceedings, unnecessary

20 procedural wrangling, to mention

21 only a few.

22 Closed quotes.

23 Interestingly, I find that these

24 examples given by the former Chief Justice are

25 examples of some of the very factors listed in Rule


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1 147(3), such as: first, conduct of a party to

2 unnecessarily lengthen the duration of the

3 proceeding -- sub (g) of 147(3); or whether any

4 stage was improper or vexatious -- sub (i) of

5 147(3); or refusal of a party to admit anything

6 that should have been admitted -- sub (h) of

7 147(3).

8 In effect, I find support, even in

9 Continental Bank, for the proposition that the

10 judge, in awarding costs beyond tariff, though not

11 solicitor-client costs, simply reviews the Rule

12 147(3) factors to determine an appropriate award of

13 costs beyond tariff.

14 This approach is not, as the

15 respondent might suggest, centred on any principle

16 of punishment. Nor do I agree that it necessarily

17 leads to any litigacion or assessment chill.

18 This approach, I would suggest, is

19 in line with the court's clear shift to recognizing

20 the importance of settlement offers in making an

21 award of costs.

22 This is certainly apparent from

23 recent case law, such as Donato, Ducharme,

24 Langille, and Walsh, as well as from recent

25 Practice Note 17, notwithstanding it has not been


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1 made a rule as yet.

2 I'll have more to say on the

3 impact of the settlement offer in a few minutes.

4 In summary, I find Justice Boyle's

5 concluding comment in Jolly Farmer a propos. Quote:

6 I'm confident that our

7 court's judges can exercise their

8 discretion appropriately, and

9 their discretion will not be

10 fettered by my decision in this

11 case. Indeed, it may be that any

12 risk that the threat of costs

13 deters individual Canadians from

14 pursuing tax appeals where they

15 perceive injustice can be

16 addressed by judges taking a

17 separate approach to awards of

18 costs in excess of tariff in

19 appropriate circumstances where

20 the parties are all well

21 represented.

22 Closed quotes.

23 As pointed out by Mr. Sandler,

24 award of costs is more art than science. And judges

25 of this court are entrusted by the rules to


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1 practice their craft diligently, fairly and

2 responsibly, guided by suggested considerations,

3 but unburdened by rigid formulaic guidelines.

4 I share Justice Boyle's confidence

5 that judges of this court are up to the task.

6 I'll now turn to a consideration

7 of those factors in Rule 147(3) addressed by the

8 parties.

9 First, result of the proceeding.

10 The appellant did obtain the full relief sought,

11 though was not successful in all his arguments,

12 significantly on the issue of whether there was or

13 was not a trust. The result certainly justifies an

14 award of costs, but in the circumstances, in and of

15 itself, is not such an overwhelming victory to

16 warrant significant departure from tariff.

17 Second, the amounts in issue.

18 There was approximately $7 million in taxes and

19 interest in issue. While the amount was certainly

20 significant to Mr. Sommerer, this was not a lead

21 case for other taxpayers with any corresponding

22 multiplication of the amounts in issue. This factor

23 is worthy of some consideration, but again, by

24 itself does not warrant the extent of costs over

25 tariff sought by the appellant.


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Third, importance of the issues.

The appellant suggests this is the first case in

which the court has been called upon:

A) to interpret the scope of

Subsection 75(2) of the Income

Tax Act;

B) to determine whether a

relationship between a foreign

entity and a Canadian taxpayer

is such as to constitute a

trust with a foreign entity, a

trustee of a trust under the

act;

C) to clarify the status of the

foreign entity;

D) to determine whether a tax

convention entered into in

December of 1976 between Canada

and another country based on

the GECD model treaty, which

provides exclusive taxing

jurisdiction to the other

country in respect of a gain

made upon the disposition of

property by a person who is a


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1 resident of the other country

2 is effective to deny Canada the

3 right to tax that gain in the

4 hands of another person

5 pursuant of a tax avoidance

6 provision in this case,

7 Subsection 75(2) of the Act.

8 The Federal Court of Appeal will

9 have an opportunity to rule on these issues as

10 these matters have been appealed. And I agree with

11 the appellant that decisions on these issues will

12 assist the resolution of similar disputes in the

13 future.

14 I also accept that resolution of

15 the application of Section 75(2), the application

16 of the treaty and a clarification of a foundation

17 must all be of interest to taxpayers, but certainly

18 they are of considerable interest and benefit to

19 Canada Revenue Agency.

20 This litigation did not cover any

21 well-worn paths of prior cases but dealt with those

22 identified previously unaddressed issues.

23 The world continues to grow

24 smaller, and international commercial or personal

25 arrangements are becoming more and more prevalent.


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1 The types of issues brought to the court by Mr.

2 Sommerer reflect this international and economic

3 reality. It is important for government and

4 taxpayers to have some certainty on these issues.

5 This is an important factor.

6 Fourth factor: offer of settlement

7 that was made in writing. While, as I've indicated,

8 there are new rules pending in this court

9 addressing the issue of the impact of settlement

10 offers on costs, I share Justice Boyle's views

11 expressed in case of Langille versus the Queen,

12 paragraphs 10 through 12. Quote:

13 As I noted in Jolly Farmer

14 Products, the rules of this court

15 on costs do not specify, as those

16 of several jurisdictions do, that

17 if an unsuccessful party has not

18 accepted a settlement offer at

19 least as favourable as the outcome

20 of the trial, that party is

21 responsible for substantial

22 indemnity or solicitor-client

23 costs from the date of the offer

24 through to the end of the trial.

25 In Jolly Farmer I awarded an


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amount in excess of the tariff

amount on account of such a

settlement offer.

I restate my comments therein

that parties should take seriously

their obligations to consider

settlement offers carefully or run

the risk of increased costs if

they are not more successful at

trial.

Rule 147 specifically refers

to settlement offers as a matter

to be considered in deciding cost

awards. Logically, in most cases,

this could only have been intended

to justify an increase in the

amount of costs awarded beyond the

tariff.

I do not believe that the

absence of an express rule

permitting substantial indemnity

cost awards where an at least as

favourable settlement offer is

rejected leaves this court unable,

as a matter of law or


12

1 jurisdiction, to choose to

2 exercise its discretion with

3 respect to costs by making such an

4 award inappropriate in the

5 circumstances.

6 Closed quotes.

7 On September 21st, 2010 the

8 appellant made a written offer to the respondent as

9 follows. Quote:

10 Having regard for the very

11 considerable cost of taking this

12 tax appeal to trial, Mr. Sommerer

13 will accept an inclusion into

14 income of one-sixth of the gain of

15 the foundation from the

16 disposition of the Vienna Systems

17 Corporation shares, reflecting six

18 discretionary contingent

19 beneficiaries existing throughout

20 1998 as full and final settlement

21 of his appeal. This offer is for

22 purposes only of settling the

23 present litigation and would

24 preclude any further tax

25 consequence under the Income Tax


13

1 Act in respect of the gains

2 realized by the foundation.

3 As you can appreciate, expert

4 testimony must soon be prepared in

5 time for the trial commencing

6 December 6th, 2010.

7 This offer will remain open

8 until October 8th, 2010 at which

9 time you must begin incurring the

10 expense of engaging experts and

11 preparing expert reports.

12 Closed quotes.

13 End of offer.

14 The respondent rejected the offer,

15 and countered on the basis that 50 per cent of the

16 taxable capital gain realized by the Sommerer

17 Private Foundation was attributable to Mr.

18 Sommerer.

19 The appellant rejected the counter

20 offer and made a second written offer on October

21 27th, 2010, accepting the respondent's alternative

22 argument as set out in the reply that one-fifth of

23 the tax book capital gain made by the Sommerer

24 Private Foundation was FAPI, F-A-P-I, to Mr.

25 Sommerer. The respondent rejected this offer on


14

1 November 15th, 2010.

2 The respondent acknowledges there

3 may be tax cases in which a failure to enter into a

4 settlement agreement is relevant and cites the

5 example of where the rejected offer is based on

6 reasonable alternative grounds in accordance with

7 the Income Tax Act.

8 The respondent, however,

9 distinguishes settlements which would result in

10 arbitrary reassessments, contending that such

11 arbitrary settlement offers should not play any

12 part in determining whether one should depart from

13 the tariff in awarding costs.

14 With respect, I fail to see the

15 distinction.

16 Indeed, in this very matter, the

17 Crown did counter with an offer that would have led

18 to what she calls an arbitrary assessment.

19 In my view, the more critical

20 issue for the judge to consider in exercising his

21 or her discretion is the bona fides of the offer.

22 In this case, I have not heard any submissions that

23 the offers were anything other than serious,

24 thoughtful attempts to resolve a very complicated

25 matter.


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1 I appreciate the respondent

2 strives to always reach a principled result. As

3 guardian of the public purse, this is appropriate.

4 But when a case such as this, with its many twists

5 and turns, leaves the respondent herself to engage

6 in haggling over money, I am unswayed by her

7 current argument that I should now ignore similar

8 offers from the appellant.

9 However, even if I accept the

10 respondent's argument that only principled offers

11 can and should be considered by a jUdge in relying

12 on settlement offers in determining an award of

13 costs, I find that is the kind of offer the

14 appellant made.

15 Mr. Sommerer relied upon the

16 respondent's own alternative argument in offering

17 to accept a portion of the taxable capital gains

18 that Mr. Sommerer -- sorry -- accept a portion of

19 the taxable capital gains.

20 Mr. Sommerer got the portion wrong

21 in the first offer and made a second offer agreeing

22 to a one-fifth allocation, believing that to be the

23 appropriate allocation. And certainly, it was the

24 allocation the respondent herself sought in her own

25 reply.

A.S~A.P.Reporting Services Inc.(613) 564-2727 (416) 861-8720

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1 What did the respondent do? It

2 simply rejected the offer without reason.

3 Mr. Chambers now argues that the

4 appropriate allocation should have been one-

5 quarter, and therefore the one-fifth offer was not

6 principled.

7 With respect, this is somewhat

8 specious. The respondent did not, at the time of

9 the offer, say to the appellant: Oops, one-fifth is

10 wrong. It should be one-quarter. The respondent

11 just said no.

12 The respondent, relying on the

13 case of Galway, says the court could not have

14 approved a consent judgement at one-fifth.

15 Frankly, that does not sway me.

16 The respondent could have, and I

17 would suggest should have, pointed out the error in

18 the one-fifth allocation either by letter or, more

19 properly, amending their pleadings.

20 The respondent did neither.

21 I do not accept the respondent now

22 suggesting I should ignore the settlement offer as

23 it was not principled. I find it was a principled

24 offer. But even if it wasn't, it was certainly open

25 to the Crown to accept other than by the route of a


17

1 consent judgement.

2 Obviously, the appellant fared

3 better with my decision than he would have if the

4 respondent had accepted either offer. Hindsight is

5 always 20-20. The respondent made a calculated risk

6 assessment, concluding, according to the CRA

7 officer, Mr. Dion, that the respondent's own

8 alternative position was simply not good enough. It

9 required considerable time and expense to find out

10 otherwise.

11 I am influenced by these offers

12 and the respondent's rejection of them and conclude

13 that this factor justifies costs in excess of

14 tariff, certainly with respect to the period

15 subsequent to the offers.

16 I note that in the cases cited

17 earlier of Donato, Longille, Ducharme and Walsh,

18 costs in excess of tariff were awarded entirely,

19 according to Mr. Sandler, on the basis of a

20 settlement offer having been made and rejected.

21 Fifth factor: volume of work. In

22 written submissions, the appellant advises that the

23 time spent by the firm of Couzin-Taylor in this

24 appeal was approximately 3,865 hours, 2,588 of

25 which were spent in preparation for the hearing of


18

1 the appeal and were directly related to the

2 complexity and number of issues and extensive

3 research required to prepare for and argue the

4 issues in court.

5 Indeed, it was indicated that

6 about 500 hours were spent researching, formulating

7 and writing the written submissions to assist with

8 oral arguments. Almost 200 hours were spent

9 researching the legislative background of

10 subsection 22(2) of the Act, the predecessor to

11 Subsection 75 (2) .

12 The expression "no stone unturned"

13 leaps to mind.

14 The respondent appears to only

15 have questioned the reasonableness of the hours

16 spent by appellant's counsel's team in connection

17 with discovery, however.

18 The number of documents disclosed

19 pursuant to the respondent's full disclosure

20 request resulted in a list of over 900 documents.

21 The respondent listed 200 documents. A large number

22 of these required translation from German. This

23 naturally increased the already burdensome volume

24 of work.

25 I need little convincing that the


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1 work by both sides was extensive.

2 As is already clear, I do believe

3 some amount in excess of tariff is warranted. The

4 impact of the volume of work goes to quantum. It is

5 always difficult to assess one firm's efforts

6 compared to another's or compared to any normative

7 standard, if there is such a thing.

8 If actual hours spent are the

9 starting point to which a percentage might be

10 applied, are those actual hours to be questioned?

11 By that, I do not mean whether or

12 not they were incurred. Certainly, they were

13 incurred. And further, I have no doubt they were

14 incurred on the principle of thoroughness. But how

15 much should a losing party cover the winning

16 party's diligence?

17 As mentioned, Mr. Chambers

18 challenges the time spent in connection with

19 examinations for discovery.

20 The example I use in this regard,

21 however, to illustrate the dilemma facing the judge

22 is whether the appellant was correct in the hours

23 spent in reaching a conclusion there was no helpful

24 legislative background of Subsection 22(2) of the

25 Act.


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1 Was an additional 180 hours truly

2 necessary to nail that? Who knows? At some point

3 counsel, for any number of reasons, but cost being

4 one of them, decides that enough is enough. Some

5 counsel will reach that decision sooner than

6 others. I don't raise this as a criticism but as a

7 conundrum in determining who should bear the cost

8 of one counsel's decision to pullout all the

9 stops.

10 It's impossible and unwise, I

11 would suggest, to apply any robotic mathematical

12 formula; but I simply bear in mind that there comes

13 a point when counsel cannot expect the other side

14 to cover all the legal costs in extensive research

15 and preparation.

16 All to say I recognize the

17 considerable volume of work and will exercise my

18 discretion in assessing the impact of that in

19 coming to a fair and just award.

20 The sixth factor: the complexity

21 of the issues. The appellant stressed this factor

22 in arguing for a substantial cost award.

23 Again, it takes little convincing

24 me that these matters were complex. I agree this

25 was a lengthy appeal involving complex factual and


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legal questions, which the appellant summarized as

follows:

1) the legal effectiveness of a

transaction entered into in

1996;

2) the characterization of the

relationship between the SPF

and Canadian taxpayers in order

to determine whether such

entity or such a relationship

constituted a trust for the

purpose of Section 75(2) of the

Act;

3) the applicability of Section

75(2) of the Act to a person

who transferred property for

value to a trust;

4) the applicability of the

Canada-Austria Tax Convention

having regard to the basis of

the liability of the SPF to

taxation in Austria;

5) if applicable, the effect of

the convention upon Canada's

right to tax in the hands of a


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Canadian taxpayer the taxable

portion of the gain realized by

an Austrian resident upon the

disposition of shares;

6) whether the SPF was the agent

of the appellant for purposes

of holding and disposing of

property;

7) whether a portion of the

capital gains realized by the

SPF was foreign accrual

property income of the

appellant;

8) whether Section 74.4(2)

applied to deem the appellant

to have received interest in

accordance with that

subsection; and

9) how the French text of

Section 75(2) (a) (i) could be

reconciled with the English

text of that paragraph.

The international context of this

appeal also required the testimony of two experts

from Austria. I note that the respondent expanded


23

1 the issues from a concentration on the issue of

2 trust versus corporation and the application of

3 Subsection 75(2) of the Act to add the issues of

4 agency, the timing of the sale of shares, FAPI, and

5 the application of the Canada-Austria Income Tax

6 Convention.

7 Anyone of these issues would

8 require a significant thought, preparation and

9 presentation. Cumulatively, it was an epic task.

10 The correct interpretation of Subsection 75(2) of

11 the Act alone presented the parties with a Rubix

12 cube-like puzzle.

13 So it's an easy conclusion to

14 reach that the legal issues and factual context

15 were complex. It's also easy for me to say that I

16 consider this an important factor in the

17 determination of costs.

18 The hard part is translating that

19 into a dollar amount.

20 The appellant has made no

21 representations with respect to the other factors

22 itemized in Rule 147(3), though I have made note,

23 as indicated, that the respondent added issues

24 throughout the litigation, which she is certainly

25 entitled to do. But at least two of such issues


24

1 were dropped at the trial, having left the

2 appellant to prepare for such arguments

3 unnecessarily.

4 I also am influenced

5 No, sorry. Bear with me a moment.

6 In summary, I conclude that due to

7 the importance and complexity of the issues, but

8 mainly due to the settlement offers made by the

9 appellant and rejected by the respondent, that

10 costs in accordance with tariff are not a just

11 reflection of the appellant's entitlement.

12 There is also something of a

13 cumulative effect of such a number of the Rule

14 147(3) factors coming into play.

15 I conclude there should be some

16 significant indemnity for post-settlement costs,

17 yet not so much for pre-settlement costs. Taking

18 into account then the volume of the work, while

19 acknowledging the difficulty in assessing the need

20 for the extent of the work undertaken by

21 appellant's counsel, I direct that costs prior to

22 the settlement offer should be $150,000 and costs

23 post-settlement offer should be $450,000 for a

24 total lump sum of $600,000, plus disbursements,

25 which I will now address.


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1 The appellant lists his

2 disbursements in accordance with tariff as follows:

3 filing fee, $550i Apex translation costs: $10,030i

4 court reporting services at examination for

5 discovery, $4,590i certified copy of trial

6 transcript, $4,108i consulting fees for Albert

7 Oosterhoff, $2,800i fees for Dr. Torggler, the

8 expert witness, $52,898i photocopy charges, $8,279,

9 for a total of $83,258.

10 The respondent challenges the

11 following: the cost of transcript, $4,108i Mr.

12 Oosterhoff's fees of $2,800i and the expert Dr.

13 Torggler's fees of $52,898.

14 With respect to the cost of the

15 transcript and Oosterhoff fees, I accept the

16 respondent's argument that these are not

17 appropriate for the Crown to bear. Parties can

18 normally make arrangements for sharing transcript

19 costs.

20 With respect to Mr. Oosterhoff,

21 who was not called as an expert but appears to have

22 been tapped into for his expertise on the law of

23 trusts as a leading author in that regard, he was

24 not presented to the court as co-counselor as an

25 expert. This is not an appropriate disbursement to


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1 be borne by the respondent, especially in light of

2 the very well regarded senior counsel, acting for

3 the appellant, whose time is being compensated.

4 With respect to Dr. Torggler, the

5 cost of retaining him, described of the Cadillac of

6 experts in Austrian foundations, is trickier.

7 First, I find it was essential to

8 have experts assist me in understanding the

9 Austrian legislation with respect of foundations

10 and how the Austrian courts have interpreted such

11 legislation.

12 The testimony of both Dr. Torggler

13 and Dr. Plesser helped immensely in grappling with

14 the determination of the nature of an Austrian

15 foundation. This, in turn, allowed me to apply

16 Canadian law to figure out whether a trust

17 relationship existed.

18 I concluded a trust did exist

19 under Canadian law, a conclusion contrary to what

20 the appellant thought.

21 Because the appellant was

22 otherwise successful in the end result, should my

23 conclusion on the trust issue be disregarded for

24 purposes of determining who should bear how much of

25 the cost of Dr. Torggler?


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1 Experts are in court to help the

2 judges, not to serve as advocates for one side or

3 the other.

4 I concur with Justice Hogan's

5 comments in the General Electric case at, quote:

6 Costs and disbursements

7 should not be distributed with

8 amounts being determined on the

9 basis of results achieved with

10 respect to specific arguments.

11 Closed quotes.

12 Costs of experts can be recovered

13 as disbursements and are not limited to the $350

14 found in tariff A, provided they are reasonable.

15 I was provided little guidance on

16 the reasonableness of Dr. Torggler's charges

17 compared to other experts on Austrian foundations

18 or legal experts generally.

19 What I do know, however, is that

20 Dr. Torggler charged €400 an hour, except for the

21 trial time where he charged €7,200 a day. If I

22 calculate that latter rate on eight-hour days, Dr.

23 Torggler's charge was €900 a day, well over twice

24 his rate for the -- €900 per hour, sorry, not per

25 day -- well over twice his rate for the preparation

A.S.A.P. Reporting Se~"ices Illc.(613) 564-2727 (416) 861-8720

28

1 of his expert report.

2 I'm not prepared to require the

3 losing side, in these circumstances, to bear such

4 excess, and I limit the three-day trial to Dr.

5 Torggler's, what I will call, regular rates. That

6 reduces the €21,600 charge for the three days to

7 €9, 600.

8 A further €1,379 was charged by

9 Dr. Torggler for post-trial work, which Mr. Sandler

10 described as Dr. Torggler clarifying his testimony.

11 I find that out-of-court

12 clarifying comments by a witness post-trial are not

13 appropriate costs to be borne by the losing side.

14 That goes well beyond what constitutes the cost of

15 an expert's report and appearance that could be

16 charged to the other side. The €1,379 charge is not

17 recoverable.

18 I conclude that all other charges

19 by Dr. Torggler went to the preparation of the

20 expert report and any rebuttal, notwithstanding

21 that his schedule of time worked is not as explicit

22 as the respondent felt it should be.

23 In summary, I reduced Dr.

24 Torggler's charge from €41,001 to €27,622, which

25 converted at the rate of 1.286 is $35,522.39.

A.S.A.P. Reporti1lg Services I1lc.(613) 564-2727 (416) 861-8720

29

1 The allowable disbursements

2 therefore are: translation, $10,030.94; court

3 reporting for examinations, $4,590.40; Dr.

4 Torggler, $35,522.39; and photocopy, $8,279.60 for

5 a total of disbursements of $58,423.33.

6 In conclusion, the appellant is

7 awarded costs of $658,423.33, which includes the

8 disbursements of the $58,423.33.

9 That's all. Thank you. I will sign

10 an order later today and get it to you as soon as

11 possible.

12 Thank you all very much.

13 MR. SANDLER: Thank you, Your

14 Honour.

15 THE REGISTRAR: The court is now

16 closed. You may hang up.

17 Whereupon the conference call ended on Thursday,

18 July 14, 2011 at 11:06 a.m.


I HEREBY CERTIFY THAT I have, to the best

of my skill and ability, accurately transcribed

the foregoing interview.

Antoinette Forcione, Legal Transcriptionist


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