http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/100309/index.do 
J.G. Guy Simard v. The Queen (January 6, 2015 – 2015 TCC 2, Rip J.).
Précis: The Crown’s reply in this case alleged that certain persons (their alleged connection with the appeal is not clear) had been charged with various criminal offences. Some of the allegations were inaccurate and none of the persons had ever been actually convicted of the offences described. The Court struck the allegations as scandalous and awarded solicitor-client costs against the Crown.
Decision: This is a very rare example of the Tax Court allowing solicitor-client costs. The case turned on paragraph 76 of the Crown’s Reply which alleged that certain persons (their alleged connection with the appeal is not clear) had been charged with various criminal offences:
[2] Paragraph 76 of the reply read as follows:
76. The Deputy Attorney General relies on the following additional facts:
a) in April 2014, as a result of an investigation of the XXX Tax Shelter by the Royal Canadian Mounted Police (“RCMP”), principals and representatives of XXX and ABC ( … ) were charged with the following offences in relation to their activities in connection with the XXX Tax Shelter:
- fraud over $5,000.00 contrary to paragraph 380(1)(a) of the Criminal Code;
- conspiracy to commit fraud over $5,000.00 contrary to paragraph 465(1)(c) of the Criminal Code;
- laundering proceeds of crime contrary to subsection 462.31(1) of the Criminal Code; and
- commission of an offence for the benefit for a criminal organization contrary to section 467.12 of the Criminal Code.
As it turned out the second and third bullet points were inaccurate; moreover none of the persons had ever been convicted of any of the offences described in paragraph 76.
Justice Rip of the Tax Court struck the paragraph and counsel for the taxpayer moved for solicitor-client costs on the motion to strike.
The Court accepted the fact that counsel for the Crown had acted on the basis of a inaccurate affidavit provided to him by a senior investigator but that was not sufficient to allow the Crown to escape a sanction in the form of costs:
[15] This is not a matter of counsel engaging in slander or the Crown defaming anyone. What we have here is unfounded allegations of a criminal matter based on affidavit evidence that have caused the appellant to incur unnecessary costs in making the motion to strike. Counsel, in preparing pleadings, should be cautious and avoid making allegations that are not accurate (with respect to bullets 2 and 3) and that may be highly prejudicial, whether based on affidavit evidence or otherwise.
[16] I have found the pleadings in paragraph 76 of the reply to the notice of appeal scandalous. As I mentioned to counsel at the hearing of the motion, I was shocked reading paragraph 76 for the first time, comparing it to accusations of the 1950s by U.S. Senator Joseph McCarthy of Wisconsin.
[17] I grant the appellant costs on a solicitor-and-client basis for one counsel and party and party costs for any other counsel who would normally be entitled to costs. This is reasonable in the circumstances in my view.
Comment: Congratulations to Guy DuPont, Ad. E., Michael H. Lubetsky and Mouna Aber of Davies Ward Phillips & Vineberg LLP for an auspicious start to 2015.