http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/110809/index.do 
Ford Motor Company of Canada Limited v. The Queen (July 16, 2015 – 2015 TCC 185, Boyle J.).
Précis: 2015 has not been a good year for the Federal Crown in terms of adverse costs awards.
Ford Motor which was decided by Justice Boyle on July 16 gives no indication that the Crown`s luck is about to turn. In a decision blogged earlier on this site Justice Boyle dismissed the Crownʼs motion to strike portions of the Ford Motor notice of appeal based on the large corporation rules, holding that the Crown was engaged in an opportunistic attempt to change the rules from a shield to a sword. The Court awarded costs against the Crown in any event of the cause and gave the parties 30 days to agree upon costs or, failing which, a further 30 days to make written submissions.
The Court reviewed the burgeoning jurisprudence on costs awards in excess of the tariff. In addition to voicing concern about the large amounts involved and the importance of the issues, among other things, the Court expressed considerable concern that the Crown had not prepared any written submissions or other advance notice of the arguments she intended to make, effectively tying the hands of the counsel for the taxpayer. Justice Boyle was clearly annoyed that the Crown had ignored its undertakings given to the Case Management Judge that written submissions were to be filed in advance of the hearing of the motion to strike.
The Court awarded 63% ($40,000) of actual legal fees incurred, judging this to be in the middle range of awards under the circumstances. Moreover on the costs of the current July order, the Court ordered costs equal to 75% of actual fees incurred. That expressed the annoyance of the Court that the Crown argued that in the absence of reprehensible, scandalous or outrageous conduct on the part of the Crown, no award in excess of the tariff could be made. Such an argument woefully misstated the current state of the jurisprudence in the Tax Court and the Crown bore the costs of that misstatement.
Decision: On the determination of the costs on the original motion, the controlling factors were the amounts at issue, the importance of the issue and the failure of the Crown to give advance notice of its position or file written submissions (contrary to its undertakings given (at least twice) to the Case Management Judge):
[18] The amount of work required of the Appellant to prepare for the hearing was significantly increased because of the Respondent’s failure to file any written submissions or other advance notice of the arguments she intended to make. While this may not always be a requirement, in this case Respondent’s counsel clearly and unequivocally committed at least twice to file written submissions in a January 2013 case management conference. She committed to do it closer to the hearing date of the motions. The case management judge, Justice Woods, stressed that notice of arguments was expected “well enough in advance”, to which Respondent’s counsel agreed. Appellant’s counsel reminded Respondent’s counsel in the six weeks before the hearing date. The Respondent’s reply was that there was no requirement to file written submissions, but she hoped to file hers seven days before the hearing. When Appellant’s counsel followed up with her again in the week before the hearing, her reply was that while she normally prefers to file something prior to the hearing, it is not always feasible, and this turned out to be one of those instances. No further explanation or apology was given to the Court.
[19] This failure by Respondent’s counsel meant that the Appellant could not prepare and file responding written submissions. This necessarily and reasonably led to the Appellant having to be fully prepared to support and argue in response to all of the possible arguments that could flow from the general grounds set out in the Notice of Motion. Some of the possible arguments were undoubtedly more complex than others and more complex than the ones actually advanced at the hearing. This failure also contributed to the length of the hearing day.
[Footnote omitted]
This led to an award of 63% ($40,000) of actual costs incurred.
Justice Boyle seemed to be slightly more annoyed about the argument on the costs motion itself:
[25] I am also awarding an additional amount of costs in favour of the Appellant for attending to the Court’s resolution of this costs award on the motion to strike. The Respondent’s virtually entire submission on costs was that there was no basis for enhanced costs beyond Tariff as there was no reprehensible, scandalous or outrageous conduct on the part of the Crown in the litigation. As described above, a significant number of decisions have made it very clear that the Tariff is not, and was not intended to be, the default cost amount absent, unusual or exceptional circumstances of misconduct or malfeasance. It is not acceptable for the Crown to simply recite that tired old phrase, clearly taken out of context upon a proper review, without even acknowledging the considerable jurisprudence to the contrary, much less actually seeking to challenge it. I can assume this may have been a significant part of the reason the parties could not agree on costs and had to come back to this Court. In the circumstances, I am fixing costs in respect of the resolution of this costs award at 75% of the Appellant’s reasonable actual costs incurred seeking to resolve the issue of costs since the date of the Order on the Motion to Strike. If the parties cannot agree on what that amount should be, they may contact the Court so that I may fix that amount for them also.
[Footnote omitted]
Clearly the Crown will have to learn to be more flexible in adapting to the new climate of costs awards in the Tax Court and not simply repeat old nostrums.
Both costs awards were made in any event of the cause.