http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/68558/index.do 
O’Dwyer v. The Queen (March 21, 2014 – 2014 TCC 90) was a motion for costs in an appeal where the Minister’s assessment of advisor penalties was vacated. The Tax court had earlier struck the Minister’s Reply on the basis that it disclosed no grounds for opposing the appeal:
http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/30889/index.do 
This decision was upheld by the Federal Court of Appeal (blogged previously on this site):
http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/62832/index.do
The taxpayer asked for full indemnity costs or, in the alternative, 90% of his full costs. The court reviewed all of the relevant factors from the jurisprudence but it appears to this author that the taxpayer’s complete success combined with the magnitude of the penalty he faced were the two most compelling aspects of that review:
a) Results:
[14] The Appellant achieved complete victory. The alternative relief sought by the Appellant was rendered moot by this unequivocal outcome. The order granted was fully determinative and terminally dispositive of a successful appeal. At a preliminary stage and following the only avenue open to the Appellant at the time, namely the bringing of a motion to compel particulars or to strike the Reply, the Appellant was completely successful before this Court. What began as an interlocutory process became a final outcome. Given such a result, the authority cited by the Respondent that only costs under the Tariff should apply to interlocutory matters is not applicable:
Canadian Imperial bank of Commerce v. R, 2013 FCA 179 at paragraphs 7 and 81.
b) Amounts in Issue:
[15] The Appellant was assessed with a third party penalty under the Act. The assessment qua penalty relates not to a reassessment of his tax return, but a penalty with respect to professional services offered to others. This is among one of the most unilateral type of assessments available to the Minister under the Act. It becomes liability for tax, but is entirely unrelated to the Appellant’s own income and filings. Accordingly, the Appellant, aside from bringing the motion, had only two stark choices: continue to prosecute the appeal without a proper Reply or personally pay the penalty in excess of $3,000,000. The relative importance of these amounts, measured against the taxpayer’s livelihood, financial resources and professional reputation were massive. In fact, it is difficult to imagine another event in his professional life which could have so affected the remainder of his working life and financial well-being. This huge personal penalty exalts the Appellant’s right to know within the Reply the factual basis of the imposition of the unilateral penalty against him. This right is further enhanced because the penalty itself is unrelated to the Appellant’s personal affairs which by comparison to usual assessments would otherwise have been deemed him to have personal and intimate knowledge.
In addition, the Crown’s refusal to objectively assess its own case was a large contributing factor in the award:
i) Improper Conduct or Negligence:
[24] The Court has already determined that there were no improper, vexatious or unnecessary proceedings. However, there was, from the beginning and throughout, a refusal by the Respondent to properly assess the merits of the case, its theory and the requisite facts. The Respondent’s failure to effectively assess the absence of facts otherwise necessary to establish the specific allegations against the Appellant, his role in the promotion of the tax shelter and the connection of that role to the penalty assessed, was at the heart of the striking of the Reply. In addition, even on the finding related to the definition of the partnership as property, it is clear that while the Federal Court of Appeal would not have upheld the decision of this Court to strike the Reply on that ground alone, the Federal Court of Appeal in several paragraphs of its decision reflected that such drafting was a legal error within the Reply.
[25] Factually and with reference to recent authorities where enhanced costs have been awarded, the Respondent’s conduct as a factor falls somewhere between malfeasance (Lariche and Miller, supra) and no appreciable neglect, delay or intransigence ( Reynold Dickie v. The Queen, 2012 TCC 327, Alberta Circuits and Daishowa-Marubeni, supra). In affixing the spectral placement of such conduct in this matter, it would appear farther away from neutrality than it does from impropriety.
As a result the court accepted the taxpayer’s alternative position and awarded 90% of his solicitor and client costs:
[27] The Court, in applying the factors above, identifies that most, if not all, of the factors weigh strongly in favour of awarding the Appellant enhanced costs: the probable dramatic financial effect of the penalty on the taxpayer, the importance of the issue to the Respondent and to the Appellant, the comparative complexity of the penalty provisions, the efficacy of litigating the deficiencies in the Reply at the pleading stage, the offer of settlement made in writing (albeit by nature an all or nothing settlement) and the conduct of the Respondent, not to the extent of improper conduct, but to the extent of myopic, perfunctory and hasty evaluations of the merits of the assessment throughout (ultimately reflected in the Reply). Moreover, the final factor, relating to the Respondent’s conduct, was a determinative omission to the entire appeal which arose and continued in the face of legitimate queries of, and subsequent opportunities provided to, the Respondent to evaluate, amend or vacate such penalties when questioned at various stages by the Appellant and the Court, alike.
[28] Accordingly, the consideration of all of these factors justifies an award of costs to the Appellant on the basis of a lump sum equal to $33,519.00 being approximately 90% of his solicitor and client costs. In addition, the Appellant shall have its costs on this motion as requested.
Comment: This is one of the largest ( as a percentage of actual costs) Tax Court awards against the Crown in some time. Unless it is upset on appeal it may prove a harbinger of greater sanctions against the Crown for “myopic, perfunctory and hasty evaluations of the merits” of assessments it attempts to support.