The notion of costs is based on the premise that the successful party in a proceeding should be compensated for part of the costs that it incurred. In the Tax Court of Canada, the award of costs is a discretionary award made by the sitting judge based on a number of factors. The factors that the Court may consider include:
(a) the result of the proceeding;
(b) the amounts in issue;
(c) the importance of the issues;
(d) any offer of settlement made in writing;
(e) the volume of work;
(f) the complexity of the issues;
(g) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;
(h) the denial or the neglect or refusal of any party to admit anything that should have been admitted;
(i) whether any stage in the proceeding was: (i) improper, vexatious or unnecessary; or (ii) taken through negligence, mistake or excessive caution;
(j) any other matter relevant to the question of costs.
Generally, the Court has 4 options in awarding costs:
- award no costs;
- award “party-party” costs;
- award lump sum costs; or
- award solicitor-client costs.
Party-party costs generally refer to an award of costs based on the tariffs (Schedule II of the Tax Court of Canada Rules (General Procedure)).
Lump sum costs is when the Court specifically states the amount to be awarded to a party.
Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties to the proceeding.
Last updated: October 4, 2015