Evidence falls short of establishing irreparable harm warranting interim relief: court
The Federal Court of Appeal has refused to grant a charity’s request for interim relief in connection to the national revenue minister’s intention to publish a notice revoking its charitable status.
In Fortius Foundation v. Canada (National Revenue), 2022 FCA 176, the applicant, Fortius Foundation, is a registered charity under the Income Tax Act (ITA). The Canada Revenue Agency (CRA) conducted an audit of the applicant’ operations for the period from October 2014 to September 2016. The CRA determined that the applicant failed to comply with the requirements for continued registration as a charity under the ITA.
The national revenue minister consequently advised the applicant of her intention to publish a notice revoking its registration in the Canada Gazette pursuant to s. 168(2)(b) of the ITA. The notice informed the applicant that its registration would be immediately revoked 30 days after the date of the notice.
The applicant then filed an application for an injunction and a motion for interim relief before the Federal Court of Appeal. The minister agreed to postpone the publication until the motion for interim relief is determined.
The FCA dismissed the motion, finding that the applicant’s evidence falls short of establishing irreparable harm warranting the interim relief.
The court noted that the issue in this case is whether the applicant has shown that it would be “just and equitable” to stay the minister’s publication until the application has been determined based on the tripartite test laid down in Google Inc. v. Equustek Solutions Inc. and RJR-MacDonald Inc. v. Canada (Attorney General).
According to the court, the Google/RJR-MacDonald test applies to applications to restrain the publication of revocation notices and motions for interim stays. Consequently, in both the application and the motion, the applicant must satisfy the same three requirements:
- There is a serious issue to be tried;
- The publication of the notice will cause the applicant’s irreparable harm;
- The balance of convenience favours the applicant and not the minister.
The court found that the applicant met the first requirement since the minister herself conceded that that there was a serious issue to be tried.
“The threshold for establishing a serious issue is a low one,” Justice Donald Rennie wrote. “To satisfy this test, the moving party must demonstrate only that the objection is ‘neither vexatious nor frivolous’ based on a ‘preliminary assessment of the merits of the case.’”
As to the second requirement, the applicant argued that the publication would prematurely eliminate the statutory benefits that it enjoys as a registered charity, and the loss of such benefits is itself evidence of irreparable harm. The court disagreed.
“This court has rejected general assertions of irreparable harm in the context of charitable status revocation on the basis that, in every case, a charity could say that its work would be seriously impaired by the minister’s revocation and any consequential reduction in donations,” Justice Rennie wrote.
The court stressed that accepting such general assertions as sufficient evidence of irreparable harm would unduly undercut the power that Parliament has given to the minister to protect the public interest in appropriate circumstances by publishing her notice and revoking a registration even before the determination of the objection and later appeal.
“To accept the argument that a reduction in donations, for example, invariably satisfies the second branch of the RJR-MacDonald test in all circumstances would ‘effectively eliminate that element of the test in relation to each and every application made pursuant to paragraph 168(2)(b) of the ITA,’” Justice Rennie wrote.
The court also determined that the applicant failed to satisfy the third requirement as the balance of convenience weighs in favour of the minister and not the applicant.
The court explained that the public has a legitimate interest in the exercise of the CRA’s statutory mandate to enforce the obligations applicable to registered charities under the ITA, and this public interest attracts significant weight in the analysis of the balance of convenience on a motion for interim relief in this context. The CRA’s enforcement of these obligations protects both the public’s confidence in registered charities and potential donors.
The court added that public interest considerations take on greater resonance where an organization has enjoyed sizeable monetary benefits due to its registration as a charity. Here, the minister argued that the amounts in issue are sizeable, as the applicant sustained benefits of $2,379,884 and $2,656,657 during the two fiscal periods included in the CRA’s audit of its operations.
“I agree that the extent of these benefits favours permitting the minister to revoke Fortius’s registration as a charity prior to the determination of the application,” Justice Rennie wrote.