MacDonald – Federal Court of Appeal finds that the Crown’s seeking an increased costs award was impermissible relitigation

After the taxpayer’s success in MacDonald in the Tax Court, he secured an enhanced costs award from the Tax Court based on a settlement offer he had made. After the reversal of MacDonald in the Federal Court of Appeal, as further confirmed by the Supreme Court, the Crown appealed the enhanced cost award, seeking enhanced costs instead for itself based on a settlement offer it had made.

Stratas JA found that this appeal should be dismissed on two grounds:

• When the FCA had allowed the Crown’s appeal, it awarded costs on the usual scale to the Crown. Since the entitlement for costs in the TCC proceedings had thus been decided, it could not now be relitigated in the current appeal by virtue of the res judicata doctrine.
• Since the TCC’s enhanced cost order (under Rule 147(7)) was wholly contingent on the order it made in the underlying action, when that order was reversed, its Rule 147(7) order was rendered a nullity – there was nothing for the Crown to appeal.

Neal Armstrong. Summary of Canada v. MacDonald, 2021 FCA 6 under General Concepts – Res Judicata.