We had previously posted the Notice of Intention to revoke for Colel Chabad Lubavitch Foundation of Israel. I just noticed that there was also a Federal Court of Appeal decision in COLEL CHABAD LUBAVITCH FOUNDATION OF ISRAEL v. MINISTER OF NATIONAL REVENUE. (PDF)
The list of reasons for CRA revoking the charity was long. I want to focus on only two of them.
First, there was the issuance of an inappropriate for $3.5 million. The court summarizes “issuance of donation receipts over the 2003 to 2007 period where a partial gift was made by a donor, Dr. Lorne Sokol, through which he was given receipts for approximately $3.5 million but approximately 80-90% thereof was remitted back to him by the appellant via a corporation registered in Belize, the Moshe Shmuel Deitsch Corp;”. That is a lot of money for one receipt. I am not sure if this is the same doctor as described in a Toronto Star article.
Second, and more importantly, there is an allegation of bias on the part of CRA. The FCA reviewed that allegation and dismissed it. Here are some of the salient paragraphs:
A. Does Mr. Racine’s involvement in the first audit give rise to a reasonable apprehension of bias?
[36] The test applicable to the assessment of an allegation of bias like the one made in this case is well known and involves asking, “what would an informed person, viewing the matter realistically and practically—and having thought the matter through—conclude. Would [that person] think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly” (Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716 at p. 394 [National Energy Board]). Thus, a claim that circumstances give rise to a reasonable apprehension of bias must be evaluated “through the eyes of the reasonable, informed, practical and realistic person who considers the matter in some detail” (R. v. S. (R.D.), [1997] 3 S.C.R. 484, 151 D.L.R (4th) 193 (S.C.C.) at para. 36 [S. (R.D.)]).
[37] The inquiry into whether a decision-maker’s conduct creates a reasonable apprehension of bias is inherently contextual and fact-specific (Yukon Francophone School Board, Education Area #23 v. Yukon (Attorney General), 2015 SCC 25, [2015] 2 S.C.R. 282 at para. 26). In addition, the case law firmly establishes that the threshold for a finding of bias is high; a party alleging bias must rebut a strong presumption of impartiality on the part of the decision-maker and must do so with concrete evidence, as opposed to speculation (National Energy Board at p. 395; Wewaykum Indian Band v. Canada, 2003 SCC 45, [2003] 2 S.C.R. 259 at paras. 76-77 [Wewaykum]; S. (R.D.) at paras. 112-114).
[38] A reasonable apprehension of bias—if not a finding of actual bias—may well arise where the same decision-maker makes an initial decision and then sits in appeal from that decision or appoints the appellate decision-maker (see, for example, MacBain v. Lederman, [1985] 1 F.C. 856 (FCA), 22 D.L.R. (4th) 119 at paras. 11, 14; Port Colborne Warehousing Ltd. v Canada (Bd. of Steamship Inspection), 73 N.R. 126, 1987CarswellNat 924 at para. 12). In such circumstances, there is a perceived denial of an impartial appellate decision-maker. This sort of circumstance has sometimes been described as a violation of the maxim “nemo judex in causa sua” or that no one shall be a judge of that person’s own cause.
[39] Turning to the notion of legitimate expectations, an administrative decision-maker’s failure to follow the procedure it has said it would follow may give rise to a breach of procedural fairness (Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 (1999), 174 D.L.R. (4th) 193 at para. 26 [Baker]; Canada (Attorney General) v. Mavi, 2011 SCC 30, [2011] 2 S.C.R. 504 [Mavi]). The Supreme Court set out the conditions where an administrative decision-maker’s representations give rise to legitimate expectations in Mavi at paragraph 68:
Where a government official makes representations within the scope of his or her authority to an individual about an administrative process that the government will follow, and the representations said to give rise to the legitimate expectations are clear, unambiguous and unqualified, the government may be held to its word, provided the representations are procedural in nature and do not conflict with the decision-maker’s statutory duty. Proof of reliance is not a requisite. See Mount Sinai Hospital Center [v. Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281], at paras. 29-30; Moreau-Bérubé v. New Brunswick (Judicial Council), 2002 SCC 11, [2002] 1 S.C.R. 249, at para. 78; and C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539, at para. 131. It will be a breach of the duty of fairness for the decision maker to fail in a substantial way to live up to its undertaking: Brown and Evans, at pp. 7-25 and 7-26.
[40] Application of the foregoing principles in the instant appeal results in a determination that the appellant’s legitimate expectations were not violated and that Mr. Racine’s dual role did not give rise to either actual bias or to a reasonable apprehension of bias through violation of the prohibition against playing both the role of initial and appellate decision-maker.
[41] Here, the involvement of Mr. Racine in the first audit was minimal and, to the extent he has been shown to have actually examined issues during the first audit as opposed to merely providing general advice or reviewing others’ drafts, his examination was related to issues surrounding the scholarships provided by the appellant. Scholarships were not at issue in the second audit or the appeal.
[42] The first audit, moreover, was a partial one of the appellant’s 2003 and 2004 taxation years, where the donation scheme was not at issue because it had not yet been uncovered. With the exception of the donation scheme, the second audit and the appeal of the Notice of Intention to Revoke did not relate to the 2003 and 2004 taxation years. There was accordingly no overlap in the files or issues that Mr. Racine considered in the first audit and during the appeal from the Notice of Intention to Revoke.
[43] Furthermore, Mr. Racine was not the decision-maker in respect of the determinations that give rise to this appeal. Rather, it was Mr. Manconi, who issued the Notice of Intention to Revoke, and Mr. Piotrkowski, who issued the Notice of Confirmation.
[44] Based on the foregoing, Mr. Racine cannot be said to have sat in appeal from a decision he made.
[45] The present case is somewhat similar to Wewaykum. There, the Supreme Court held that tangential involvement in a case by one of its members when he was the Associate Deputy Minister of Justice and generally oversaw the litigation that ended up before the Supreme Court several years later did not give rise to a reasonable apprehension of bias, even where that member of the Court wrote the reasons in the case. Similarly, Mr. Racine’s tangential involvement, many years earlierin respect of different issues in different taxation years from those that were examined in the appeal does not give rise to a reasonable apprehension of bias in the present case.
[46] Nor does what occurred here violate any legitimate expectations the appellant might have had flowing from the CRA’s Appeals Manual and the Taxpayer Bill of Rights. The passages in those publications upon which the appellant relies do not prohibit what occurred in this case. The two audits concerned different taxation years, except for the donation scheme, which was discovered only during the second audit. Mr. Racine was therefore not involved in auditing any issues that were part of the appeal. Accordingly, he cannot be said as an appeals officer to have been “involved with the original decision under dispute”, to use the wording of the Taxpayer Bill of Rights, or to have been involved with the same file, as prohibited by the CRA’s Appeals Manual.
[47] Particularly in light of the need for clear, unambiguous and unqualified representations in order to find a violation of a party’s reasonable expectations as required by Mavi, there has been no violation of the appellant’s legitimate expectations in this case.
[48] I therefore conclude that there has been no violation of the appellant’s procedural fairness rights and that what occurred in the present case does not give rise to either actual bias or a reasonable apprehension of bias.