In a recent Federal Court of Appeal Decision, Fortius Foundation v. Canada (National Revenue), (PDF) the FCA dismissed a motion for interim relief from the charity that CRA has proposed to revoke. The charity wanted to stop CRA from taking certain steps to revoke its registered charity status.  The court sided with CRA and determined, in a similar way to a number of other cases, that taking away charitable status does not cause irreparable harm, “absent evidence of unique or specific harm or damage” which is very difficult to prove.

Here are some of the most relevant paragraphs from the FCA decision:

[8] The CRA conducted an audit of Fortius’s operations for the period from October 1, 2014 to September 30, 2016. The CRA concluded that several aspects of Fortius’s operations did not comply with the statutory requirements for its continued registration:

• a) Fortius was not constituted and operated exclusively for charitable purposes;
• b) Fortius failed to devote resources to charitable activities carried on by Fortius itself;
• c) Fortius failed to meet the disbursement quota;
• d) Fortius failed to maintain adequate books and records;
• e) Fortius failed to issue donation receipts in accordance with the ITA and/or the Income Tax Regulations, C.R.C., c. 945 (Regulations); and
• f) Fortius failed to file an information return as and when required by the ITA and/or the Regulations.

[9] If a charity ceases to comply with any of the requirements governing registration, the Minister may give notice to the charity that she proposes to revoke its registration under subsection 168(1) of the ITA. Thirty days following the mailing date of that notice, the Minister may publish a copy of the notice in the Canada Gazette under paragraph 168(2)(b) of the ITA, notwithstanding a charity’s objection and appeal rights. Paragraph 168(2)(b) establishes that revocation is effective as of the date the notice is published.

[10] On July 21, 2022, the Charities Directorate sent Fortius a notice of intention to revoke its registration as a charity. The notice informed Fortius that its registration would be immediately revoked 30 days after the date of the notice, on August 20, 2022.

[11] On August 18, 2022, Fortius filed the application for an injunction and the motion for interim relief.

[12] On August 19, 2022, the Minister agreed not to publish the revocation notice in the Canada Gazette until 30 days after the Court has issued its decision on the motion.

[13] Fortius has yet to file an objection to the Minister’s notice of intention to revoke. The deadline for Fortius to do so is October 19, 2022, which is 90 days from the notice’s mailing date as prescribed by subsection 168(4) of the ITA.

II. Issue

[14] The issue before me is whether Fortius has shown that it would be just and equitable for the Court to stay the Minister’s publication of the notice revoking Fortius’s registration until the Application has been determined, based on the well-established tripartite test (Google Inc. v. Equustek Solutions Inc., 2017 SCC 34, [2017] 1 S.C.R. 824 (Google) and RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 (RJR-MacDonald)).

III. Analysis

[15] The Google/RJR-MacDonald test applies to both applications to restrain the publication of revocation notices as well as to motions for interim stays (Ahlul-Bayt Centre, Ottawa v. Canada (National Revenue), 2018 FCA 61, 2018 D.T.C. 5037 at para. 8 (Ahlul-Bayt)). Consequently, in both the application and the motion, the applicant must satisfy the same three requirements: that there is a serious issue to be tried, that publication of the notice will cause Fortius irreparable harm, and that the balance of convenience favours Fortius and not the Minister. Assessing these criteria is context-specific and requires the Court to determine whether granting the relief is “just and equitable in all of the circumstances of the case” (Google at para. 25). The Court must consider each part of the tripartite test based upon the evidentiary record before it (Ahlul-Bayt at para. 12).

…

[26] Publication of the notice of revocation also does not foreclose Fortius’s statutory appeal rights. The ITA permits the Minister to revoke charitable registration “at this time, subject, of course, to later challenge” (Glooscap at para. 52). An applicant has the right to file an objection with the Minister in response to her decision to revoke the charity’s registration, and if the Minister confirms her decision, the applicant can then file an appeal in this Court pursuant to subsection 172(3) of the ITA. At that stage, the Court will hear the appeal on its merits. The outcome on this motion does not therefore eliminate any opportunity Fortius has under the ITA to challenge the Minister’s decision to revoke its registration as a charity.

[27] Finally, to accept the assertion that a dismissal of a motion for interim relief renders the application moot would result in a predetermined outcome in all analogous cases; in every case, a registered charity facing revocation of its charity status could effectively frustrate the Minister’s ability to employ the statutory powers under subsection 168(2) of the ITA by filing both an application seeking a long-term stay of the revocation and a motion seeking an interim stay.

[28] Second, Fortius also asserts that its loss of the statutory benefits conferred upon registered charities is itself evidence of irreparable harm. I disagree.

[29] 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 (Gateway City Church v. Canada (National Revenue), 2013 FCA 126, 445 N.R. 360 at para. 14):

Accepting [such general assertions] as sufficient evidence of irreparable harm would unduly undercut the power 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.

[30] A parallel may be drawn between Fortius’s argument about its loss of statutory benefits to arguments about the harm inherent in an individual’s loss of immigration status. This Court has rejected arguments that family separation and emotional hardship arising from removal from Canada constitute irreparable harm, as they are usual consequences attendant on removal (Atwal v. Canada (Minister of Citizenship and Immigration), 2004 FCA 427, 330 N.R. 300 at para. 16; Baron v. Canada (Minister of Public Safety and Emergency Preparedness), 2009 FCA 81, [2010] 2 F.C.R. 311 at para. 69). Such usual consequences, while sometimes heartbreaking, do not give rise to “some prejudice beyond that which is inherent in the notion of the [lost status] itself” and do not therefore establish irreparable harm resulting from a dismissal of the applicant’s claim (Melo v. Canada (Minister of Citizenship and Immigration), 188 F.T.R. 39, 2000 CanLII 15140 (FC) at para. 21).

[31] Absent evidence of unique or specific harm or damage, irreparable harm does not encompass the ordinary consequences that flow from an entity losing its registered charity status (such as loss of tax-exempt status, ineligibility to issue donation receipts, and payment of a revocation tax pursuant to section 188 of the ITA). 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” (Holy Alpha and Omega Church of Toronto v. Canada (Attorney General), 2009 FCA 265, [2010] 1 C.T.C. 161 at para. 22 (Holy Alpha)).

[32] The determination whether irreparable harm has been established takes place within the parameters or guardrails of certain principles; those include the rejection of evidence that is based on speculation or that is not sufficiently compelling to meet the evidentiary burden. As discussed, a further constraint is that the normal, foreseeable consequences associated with the exercise of the statutory powers granted the Minister do not, in and of themselves, give rise to irreparable harm.

[33] The existence of irreparable harm is a highly fact specific exercise; each case must be considered in light of the evidence and context. For this reason, the Court requires specific, direct evidence demonstrating the damage to the charity’s operations that would be caused by the Minister’s publication of the notice. Evidence showing that a reduction in donations would entirely frustrate a charity’s ability to fulfill specific obligations, for example, could meet this threshold (Holy Alpha at para. 21). Similarly, in Cheder Chabad v. Canada (National Revenue), 2013 FCA 196 at paras. 31, 27 and 30, irreparable harm was established where the evidence showed that the majority of students attending the applicant’s school relied on tuition subsidies, generated from the charity’s fundraising efforts, to afford their schooling.

[34] Third, Fortius asserts that revocation of its charity status would result in an inability to raise money from donors to fund its legal expenses and an obligation to pay a revocation tax under subsection 188(1.1) of the ITA, which together would deprive it of the financial resources it requires to exercise its statutory rights of objection and appeal. This argument is contradicted by the evidence before the Court.

[35] As the Minister points out, in a November 15, 2021 letter to the CRA, one of Fortius’s directors asserted that “there are enough funds to fight this issue in the Tax Court of Canada should CRA proceed” and that Fortius’s assets, valued at “less than $1 million”, generate income that “[Fortius] may be required to use … to retain a law firm to make further complex technical legal representations and to represent [Fortius] in the Federal Court of Appeal and/or the Tax Court of Canada.”

[36] Even if the Court accepted that a charity could prove irreparable harm on the basis of a general reduction in donations, Fortius’s T3010 filings for 2014 through to 2021 demonstrate that it in fact received negligible funding from receipted donations. The evidence demonstrates that receipted donations comprised between 0.05% and 1.5% of the overall declared revenue received by Fortius between 2015 and 2021.

[37] Given the insignificance of receipted donations relative to its overall revenues, Fortius cannot contend that being deprived of the ability to issue donation receipts would irreparably harm its ability to fund recourse to its appeal rights and associated legal expenses.

B. Balance of Convenience

[38] Although Fortius’s failure to establish irreparable harm is sufficient to dismiss this motion, I will comment nonetheless on the final consideration of the RJR MacDonald test – the balance of convenience. The balance weighs in favour of the Minister.

[39] The public has a legitimate interest in the exercise of CRA’s statutory mandate to enforce the obligations applicable to registered charities under the ITA. This public interest attracts significant weight in the analysis of the balance of convenience on a motion for interim relief in this context (Glooscap at para. 53). The CRA’s enforcement of these obligations protects both the public’s confidence in registered charities as well as potential donors (International Charity Association Network v. The Queen, 2008 TCC 3, [2008] 4 C.T.C. 2064 at paras. 76-77).

[40] Public interest considerations take on greater resonance where the charity has enjoyed sizeable monetary benefits due to its registration as a charity (Glooscap at para. 53). The Minister asserts that the amounts in issue are sizeable, as Fortius 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.

[41] The weight that the Court will give to public interest considerations is increased where the charity has previously declined to respond to prior warnings regarding non-compliance with its statutory obligations (Glooscap at para. 53). In this case, the Minister asserts that Fortius breached commitments previously made to CRA concerning how it would operate, as evidenced in a compliance agreement. Whether Fortius, in fact, breached the terms of the compliance agreement and the associated requirements of the ITA is a question for the objection and appeal process to determine. At this stage, however, the assertion that Fortius has breached the terms of the agreement has not been sufficiently refuted on the evidence.

[42] Fortius puts considerable emphasis on its assertion that the Minister’s review of its practices were prompted by a disaffected third party, who allegedly embarked on a campaign of letter writing to spread rumours and false information about its operations. This argument is not relevant to this proceeding.

[43] The reasons for the Minister’s decision to revoke charitable registration are open to review on appeal pursuant to subsection 172(3) of the ITA. In the event that Fortius pursues the appeals process, Fortius can then adduce evidence and argue that the Minister’s decision was influenced by a third party “citizen journalist” and that this bears on the legality of the decision to revoke. At this stage however, those allegations are irrelevant to both the irreparable harm and balance of convenience considerations of the RJR-MacDonald test. These considerations focus on the motion, not on the Minister’s decision-making process. In any event, the Minister may often act on third party information or tips. Regardless of the motive of the informant, the question for the Minister remained one of whether Fortius was entitled, as a matter of law, to continued registration as a charity under the ITA.

IV. Conclusion

[44] For the reasons above, I would dismiss the motion for interim relief.