The TCC has the power to award costs to a successful party. There are limits on this discretion for Informal Procedure appeals but much more flexibility under r. 147 of the General Procedure rules.
In this case, Justice Boyle made the extraordinary costs award of about $410,000 (subject to adjustments for a motion and three discoveries). This was about 1/2 the Appellant’s lawyers’ billed fees of $860,000. The lawyers spent at least 2735 hours preparing for and acting on this 4-day hearing and further written submissions. (See para. 40.)
It’s interesting that Justice Boyle said this 50% award “is at the lower end of the traditional range”. (Para. 53.)
Some of the principles Justice Boyle applied for costs awards are these:
“‘… the awarding of costs under rule 147 is highly discretionary although, of course, that discretion must be exercised on a principled basis.'” (Para. 17)
“‘… the amount of solicitor-client costs, while not determinative of an appropriate party-party contribution, may be taken into account when the Court considers it appropriate to do so. Discretion should be prudently exercised. However, it must be borne in mind that the award of costs is a matter of judgment as to what is appropriate and not an accounting exercise.'” (Para. 19.)
“‘… it does not take exceptional circumstances to justify a deviation from the Tariff—far from it. The authority of the Tax Court of Canada is quite clear.'” (Para. 21 at p. 9.)
“‘” … costs should neither be punitive nor extravagant and … [a]n important principle underlying costs is that an award of costs represents a compromise between compensating a successful party and not unduly burdening an unsuccessful party.”‘” (Para. 22.)
“‘The work involved in tax litigation has increasingly become a factor in awarding costs.'” (Para. 26.)
The Federal Court of Appeal recently confirmed that the Rules give Tax Court judges “discretion to award an amount for costs and subsection 147(3) of these Rules sets out certain considerations that may be taken into account by the Court in exercising the discretion to award costs under section 147 of the Rules.” See Canada v. Dickie, 2014 FCA 40 (Webb J.A., who wrote the decision was formerly a Tax Court justice. I added the bold and underline.)
See Spruce Credit Union v. The Queen, (2014 TCC Boyle) (Costs order)