Award contributed to costs incurred by taxpayer without being extravagant or punitive to Minister

Tax - Income tax - Administration and enforcement

Taxpayer entered into series of transactions with non-arm’s length non-residents. Minister of National Revenue’s reassessments added to taxpayer’s income and increased taxpayer’s resource allowance, relying on sham and s. 247(2) of Income Tax Act. Tax Court judge allowed taxpayer’s appeals. Parties made submissions on costs. Taxpayer awarded costs of $10,250,000 for counsel fees and disbursements were to be taxed. Taxpayer was wholly successful, amounts in issue were substantial, and issues were important and complex. Judgment was likely to have significant precedential value. Appeals required substantial amount of work, especially due to Minister’s reliance on sham. Minister’s decision to vigorously pursue sham argument was not evidence of improper or vexatious conduct. Factors justified lump sum award of $10,250,000 in lieu of taxed costs for counsel fees, which amounted to 35 per cent of counsel fees actually incurred. Award contributed to costs incurred by taxpayer without being extravagant or punitive to Minister. Minister’s counsel fees did not place “reasonableness” cap on partial indemnity costs awarded to taxpayer.

Cameco Corporation v. The Queen (2019), 2019 CarswellNat 1484, 2019 TCC 92, John R. Owen J. (T.C.C. [General Procedure]); additional reasons (2018), 2018 CarswellNat 11611, 2018 CarswellNat 5346, 2018 TCC 195, 2018 CCI 195, John R. Owen J. (T.C.C. [General Procedure]).

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