Rule 147 of the Tax Court of Canada Rules (General Procedure) governs costs, including the enhanced cost consequences that flow from a written settlement offer. Where a party makes a genuine written offer to settle that contains an element of compromise, and then obtains a judgment as favourable as or more favourable than the offer, the Court may award that party substantially enhanced costs from the date of the offer onward.
The rule cuts both ways: a party who rejects a reasonable offer and then does worse at trial can be exposed to enhanced costs against them. A well-timed, early Rule 147 offer is one of the few tools that can both encourage settlement and shift cost risk onto the other side for the remainder of the litigation.