Background
Amir Salehi appealed assessments for approximately $580,000 in unreported HST arising from the demolition, renovation, and sale of two homes. He maintained that the properties were intended as personal residences but were sold after unexpected contingencies arose. For one property, 17 Dunblaine Avenue, he also argued that he was not required to collect HST because the corporate purchaser was registered for HST.
The Crown prevailed completely in the seven-day trial, and the Court’s July 28, 2026 judgment awarded it costs while inviting submissions on the amount. The trial had been interrupted after Salehi made a last-minute request that led to amended pleadings, reopened evidence, further discovery, and two additional hearing days. A previous order had already addressed the costs of the amendment motion and provided for the Crown to recover tariff costs for the further discovery.
The Court’s Holding
The Tax Court fixed the Crown’s costs at a lump sum of $33,613, including disbursements. It rejected Salehi’s request to defer the costs determination until the Federal Court of Appeal decided his appeal, reasoning that costs should, where possible, be determined promptly by the trial judge while the relevant circumstances remain fresh.
Starting with Salehi’s tariff calculation, the Court corrected the hearing-day count, allowed fees for second counsel during five trial days, and added an amount for work repeated after the pleadings were amended. Those adjustments produced tariff costs and disbursements totaling $25,613. The Court added $8,000 because the Crown had succeeded entirely and Salehi’s late defence concerning the corporate purchaser and section 194 of the Excise Tax Act was marginal or doomed to fail, disrupted the trial, and required additional preparation and court time.
The Court separately found that Salehi should have admitted that he had stated in writing that the Dunblaine sale was exempt. It nevertheless declined to attach meaningful costs consequences to that refusal because no particular resulting consequence was identified and Salehi had admitted the document’s authenticity.
Key Takeaways
- The Tax Court may determine costs while an appeal is pending, particularly when the trial judge is best positioned to assess the relevant circumstances.
- A late, unsuccessful defence that requires amended pleadings, further discovery, renewed preparation, and additional hearing time may justify costs above the tariff.
- The Court awarded the Crown $33,613, including disbursements, after correcting the tariff calculation and adding $8,000 for the disruption and added work caused by the late defence.
Why It Matters
The order illustrates that the Tax Court’s tariff is a starting point rather than an automatic ceiling. Complete success, the length of the hearing, second-counsel participation, duplicated procedural work, and the pursuit of a marginal late-stage position can support an increased lump-sum award.
It also distinguishes between litigation conduct that merely appears unreasonable and conduct that actually affects costs. Although Salehi improperly denied a readily established fact, the Court found no identifiable consequence from that denial and did not treat it as a significant factor in fixing the award.