Executive Summary: Key Legal and Evidentiary Issues

• Respondents pled guilty to contempt of a Federal Court compliance order requiring disclosure of financial documents and information under the Income Tax Act.

• CRA evidence revealed that banking records obtainable from CIBC were never requested by Mr. Sanderson despite over two and a half years of non-compliance.

• Partial compliance efforts were deemed insufficient, with the Court finding items (a), (m), and (n) of the Compliance Order remained unsatisfied.

• Mitigating factors included a guilty plea, acceptance of responsibility, and the fact this was a first offence for both Respondents.

• Aggravating factors encompassed the prolonged duration of contemptuous conduct, flagrant lack of effort to comply, and an underwhelming attempt to purge contempt after the hearing.

• Fines of $3,800 per Respondent and solicitor-client costs of $6,585.57 were ordered, with the possibility of imprisonment for non-payment within 30 days.

Background of the dispute

The Minister of National Revenue brought proceedings against 1718743 Ontario Inc., also known as Sanderson Outdoor, and John Robert Sanderson, in the Federal Court of Canada. The case arose from the Respondents' failure to comply with a requirement to provide information and documents to the Minister of National Revenue pursuant to subsection 231.2(1) of the Income Tax Act, RSC 1985, c 1 (5th Supp). A compliance order was issued by Justice Thorne on May 14, 2025, directing the Respondents to furnish a detailed list of items labelled (a) through (o), encompassing banking details, corporate asset disclosures, and financial statements dating back to 2023 in respect of the Corporate Respondent.

The contempt finding and the opportunity to purge

At a hearing on February 18, 2026, both Respondents pled guilty to contempt of the Compliance Order. Mr. Sanderson, who appeared on his own behalf, advised the Court that he was willing to purge the Respondents' contempt, and Madam Justice Whyte Nowak deferred the matter of sentencing to allow the Respondents the time to do so. A sentencing hearing was subsequently held on March 30, 2026, to address the penalty to be imposed upon the Respondents for their contempt, which was not purged in full.

The Respondents' efforts to comply

Between the contempt hearing and the sentencing hearing, Mr. Sanderson submitted a one-page letter on March 21, 2026, responding to the requested items listed at (a) to (o) of the Compliance Order. The letter provided a single paragraph substantive response to items (a) and (n) and otherwise provided the response "none" to each of the other items. No documents accompanied the letter. Normand Guay, the Canada Revenue Agency collections officer assigned to the Respondents' collection case, testified that the CRA accepted the responses for all but three items: item (a), requesting the names and branches of all financial institutions in which the Corporation maintains accounts, investments, and safety deposit boxes, including amounts on deposit as of October 31, 2023; item (m), requesting full details of any other assets the Corporation owns or has an interest in; and item (n), requesting financial statements for the fiscal period October 31, 2023, including a list of accounts receivable.

The CRA's evidence of available records

Mr. Guay presented evidence that he had made a request for information in March 2023 to the Canadian Imperial Bank of Commerce requiring identification and disclosure of banking information for the Respondents covering the period from May 1, 2022, to March 1, 2023. The CIBC's response dated April 6, 2023, identified a personal chequing account for Mr. Sanderson, as well as copies of three deposited cheques from 2022 and 2023, including one payable to Sanderson Outdoor Professional Landscaping noted to be for "snow plowing 2021-2022." Based on this information, Mr. Guay believed that there are records relevant to items (a) and (n) that Mr. Sanderson could have obtained had he made a request of the CIBC himself, and that the Respondents likely have landscaping and snow ploughing equipment that they failed to disclose in answer to item (m).

Mr. Sanderson's testimony and the Court's assessment

Mr. Sanderson gave evidence addressing his efforts to provide the information sought in the Compliance Order, particularly items (a), (m), and (n). He acknowledged that he had no explanation for not having attended the CIBC branch he identified in his letter to obtain copies of his bank statements. He explained more generally that his business took a turn for the worse after the COVID-19 pandemic because he was unable to hire reliable labourers. While he said that he once owned a snow plough and leaf blower for his landscaping business, he stated he no longer owned this equipment. Later in his evidence, he acknowledged owning a RAM truck that he should have listed in answer to item (m) of the Compliance Order. He apologized to the Court and chalked his lack of documentation up to being a bad businessman, rather than dishonesty, on his part, emphasizing that he has no secret banking accounts. The Court accepted that Mr. Sanderson was not actively hiding documents from the Minister but found that he had not purged his contempt in respect of items (a), (m), and (n) of the Order.

Sentencing principles applied by the Court

The Court turned to Rule 472 of the Federal Courts Rules, SOR/98-106, and the sentencing factors identified in Canada (Minister of National Revenue) v Marshall, 2006 FC 788, which reiterated that the primary purpose of imposing sanctions in contempt proceedings is to ensure compliance with court orders. As Justice Zinn noted in the context of the Income Tax Act, compliance is "a fundamental civic duty which cannot be taken lightly or ignored." The Court observed that Mr. Sanderson's apology rang hollow given the lack of meaningful effort he made to purge his contempt, noting that two and a half years and three court orders later, he still had not identified the bank account number under which he conducts his business, nor had he provided a single bank statement or record such as an invoice despite acknowledging that the business continues to operate. While Mr. Sanderson claimed in the letter to have spent "thousands of hours" trying to recover corrupted files, he acknowledged that he had no excuse for not simply going to his bank and asking for a printout of account statements dating back to 2023. His late disclosure of his truck as a corporate asset even in the course of giving his own testimony suggested that he did not put careful thought into his response to the Compliance Order. The Court also referenced the Stewart decision as a comparable case where a $4,000 fine was imposed on each respondent, noting that unlike the present case, the respondents in Stewart failed to attend the contempt hearing and the Court found there to be "essentially no mitigating circumstances, other than the fact that the breach is the [r]espondents' first offence."

Mitigating and aggravating factors

The Court considered mitigating factors, including Mr. Sanderson's guilty plea at the outset of the contempt hearing together with his acceptance of responsibility, and the fact that this was a first offence on the part of both Respondents. However, the Court agreed with the Minister that Mr. Sanderson's partial compliance should not be considered a mitigating factor, finding that his efforts were misdirected and that he could and should have done more — he failed to even disclose a complete address for his corporate banking branch, which he managed to pull up on his cell phone while on the stand. The aggravating factors included the length of the Respondents' contemptuous conduct, which spanned over two and a half years; the flagrant lack of effort to comply with the Order, even in part, before the contempt hearing; and Mr. Sanderson's underwhelming attempt to purge his contempt thereafter.

The ruling and outcome

Madam Justice Whyte Nowak determined that the $4,000 fine from Stewart should be tempered to reflect the few mitigating factors acknowledged, but also noted that at no point during the hearings did Mr. Sanderson take issue with the fine requested by the Minister's counsel — his concern was with an order of jail time, which he asked the Court not to impose. The Court imposed a fine of $3,800 on each of the Corporate Respondent and Mr. Sanderson personally, payable to the Federal Court within 30 days from the date of service of the Order. The Respondents were also ordered to pay a single lump sum amount of $6,585.57 for the Minister's costs and disbursements, payable in favour of the Receiver General of Canada, for which they are jointly and severally liable. The Court reduced the Minister's claimed costs of $11,400.42 on the basis that the Minister had failed to establish the basis for claiming costs associated with the participation of two counsel. Should the Respondents fail to pay the fines and costs within 30 days, the Minister may request that the Court issue a warrant to apprehend Mr. Sanderson and bring him before a judge to show cause why he should not be imprisoned for a period of 30 days, or such time as is required for the Respondents to come into compliance. The Respondents may obtain relief from this term if Mr. Sanderson provides the Minister with an affidavit and arranges for an oral examination under oath to provide evidence satisfactory to the Court that the Respondents are unable to comply. The Minister of National Revenue was the successful party, with the Respondents ordered to pay a combined total of $14,185.57 in fines and costs.