Marie-France Dompierre

The appellant sought enhanced costs on a solicitor-client basis following a successful motion to strike the respondent's reply.

The Tax Court of Canada declined to award solicitor-client costs, finding the respondent's conduct was not reprehensible, scandalous, or outrageous.

However, considering the volume of work required to address the defective 125-page reply, the Court awarded a lump sum of $10,000 in costs to the appellant, which exceeded the Tariff amount.

The appellant brought a motion to strike the respondent's Reply to the Notice of Appeal in its entirety.

The appellant argued the Reply contained overreaching denials, assumptions of mixed fact and law, conclusions of law, repetitive and colorful language, and improperly pleaded evidence.

The Tax Court of Canada agreed that the Reply contained numerous defects, including the improper pleading of evidence in the schedules and conclusions of law such as 'sham'.

The Court struck the Reply in its entirety but granted the respondent leave to file a fresh reply.

The Respondent brought motions for leave to amend the replies in two appeals.

The Appellant did not oppose the motion in the second appeal.

In the first appeal, the Respondent sought to add arguments relating to a tax shelter, window dressing, and the GAAR.

The Court denied leave to add the tax shelter and window dressing arguments because the Respondent had previously represented to the Court that it would not rely on the tax shelter argument, had missed previous opportunities to plead these arguments, and the proposed amendments were not timely.

The Court granted leave to add the GAAR arguments and other minor revisions.