Crown’s Actions Lead to Marine Atlantic Being Awarded $895,731 in Costs


By: Amit Ummat and Alisha Butani

In Marine Atlantic Inc. v. The King 2024 TCC 51 (the “Case”), Justice Steven K. D’Arcy was tasked with determining the amount of costs that should be awarded to the Appellant. Both the Appellant and the Respondent agree that the Appellant should be awarded enhanced costs, however the issue was whether the amount of the enhanced costs should be greater than 30% of the reasonable legal fees, plus all reasonable and necessary disbursements supported by dockets and invoices incurred by the Appellant (the “Issue”).

Subsection 147(3) of the Tax Court of Canada Rules (General Procedure) (SOR/90-688s) (“Rules”) Generally

The Tax Court of Canada (the “Court”) is given broad discretion to determine:

  1. the amount of costs awarded to parties involved in a proceeding;
  2. the allocation of costs; and
  3. the people who are required to pay costs.

That said, the Court is required to exercise its discretion on a principled, non-arbitrary basis. Subsection 147(3) of the Rules provides the Court with a list of non-determinative factors that should be considered when exercising its aforementioned discretion.


On July 10, 2023, the Court allowed the Appellant’s appeals with costs. The issue of the appeals was whether the Appellant was entitled to claim input tax credits with respect to the GST/HST it paid on goods and services it acquired during the course of its business. The Court gave the Appellant and the Respondent (collectively, the “Parties”) sixty days from July 10, 2023, to make written representations about the amount of costs the Court ought to award the Appellant.

The Appellant in its written submissions asked the Court for a cost award of $1,298,180.81 CAD, which was comprised of the legal fees, disbursements, counsel’s fees in preparing the Appellant’s cost submission, and unrecoverable HST that it incurred. The Respondent concurred with the Appellant’s argument that the Appellant should be awarded enhanced costs, however, in its written submissions argued that the costs awarded to the Appellant should not exceed more than thirty percent (30%) of the reasonable legal fees, plus all reasonable and necessary disbursements supported by dockets and invoices incurred by the Appellant.


The Court examined the relevant factors contained in subsection 147(3) of the Rules to determine the amount of costs to be awarded to the Appellant. The Court considered the following factors:

  1. Result of the Proceedings: The Appellant was successful on all issues before the Court. There were multiple issues before the Court and as such this favors an award of higher costs.
  2. Amount at Issue: The amount at issue is significant, ranging between nineteen and twenty-one million Canadian dollars, and favors an award of enhanced costs.
  3. Importance of Issue: The importance of the issue was not a factor that was of significance in this appeal. The Court’s decision was “based primarily on findings of fact. My finding with respect to the Appellant’s allocation methodology has no precedential value; it was based on existing jurisprudence” (paragraph 23 of Case).
  4. Volume of Work: The volume of work required in the appeals would be above average because it is one that is fact dependent. As such, the volume of work only slightly favored awarding enhanced costs.
  5. The complexity of the Issues: While the appeal involved technical and complex provisions, those provisions have been previously explained in previous decisions issued by the Court. For that reason, the complexity of the issues does not favor an award of enhanced costs.
  6. Conduct of the Parties: The Court found that the conduct of the Parties, specifically the Respondent, was the factor that had the most influence on the Issue. The Court took issue with the Respondent because of its delay in following existing jurisprudence, namely, the Court’s decision in British Columbia Ferry Services Inc. v. The Queen, 2014 TCC 305 (“BC Ferries”). This delay by the Respondent resulted in the Appellant expending over 1,000 hours dealing with matters that should have been undisputed and incurring substantial costs. Further, it was improper for the Respondent to renege on his previous agreement to be bound by the BC Ferries decision.

The Court also took issue with the Respondent’s filing of an affidavit by a CRA tax appeals case specialist, namely, Jonathan Shimizu. The Court explained that the “Respondent’s actions in filing the affidavit was a blatant attempt at trial by ambush in respect of a key issue in the appeals” (paragraph 49 of Case). And further, the affidavit by Jonathan Shimizu should not have been filed because it has “no place in a trial where the facts are in issue” which is the scenario in the Case (paragraph 49 of Case). The Court did not respect the Respondent’s recent practice in not bringing witnesses to hearings for a taxpayer’s appeals but then attempting to enter evidence through affidavits. The Court explains that considering that the CRA has expansive resources it should not be an issue with the Respondent bringing witnesses to a hearing, and if it cannot obtain facts it wishes to rely upon from a cross-examination of the Appellant’s witnesses it should bring its own witnesses rather than relying on an affidavit.

Finally, the Court found the Respondent’s use of the cost submissions to question findings made by the Court in the related appeal to be improper.


After reviewing the relevant factors contained in subsection 147(3) of the Rules, the Court concluded that the Appellant should be awarded costs of 60% of its legal fees, reimbursement for its disbursements in the amount of $92,618.72, and non-recoverable HST equal to 6.14% of its counsel fees and disbursements. As such, the Appellant is entitled to a lump sum payment for costs and disbursements totaling $895,731.40.

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