In a recent decision the Ontario Court of Appeal rejected a request by a charity to seal documents in a court proceeding. Here is some background on the matter and an explanation of the meaning of this decision.
The Muslim Association of Canada was being audited by CRA and had brought a Charter challenge against CRA in the Ontario courts relating to the CRA’s audit of MAC. The judge of the Ontario court had decided that the audit was not over and therefore the MAC application was premature and dismissed the application. MAC appealed that decision.
On July 8, 2024, the Ontario Court of Appeal dismissed MAC’s Appeal. This decision, released September 13, 2024, deals with the issue of cost and the issue of whether a sealing order will be given, which would prevent the public from seeing some of the documents.
Despite MAC going to court and arguing that the Federal government was acting inappropriately, MAC, on a number of occasions, has requested sealing orders. The courts have rejected these requests emphasizing the importance of an open court system and the public’s right to know.
The Court noted:
[11] As the Supreme Court observed in Sherman Estate v. Donovan, 2021 SCC 25, [2021] 2 S.C.R. 75, court openness is protected by the constitutionally entrenched right of freedom of expression and is essential to the proper functioning of Canadian democracy. There is a strong presumption in favour of open courts, which presumption can be limited only in exceptional circumstances where there is a demonstrated and serious risk to an important competing public interest. Moreover, any such restrictions on court openness must be no greater than necessary to protect the competing public interest.
Charities can learn that we have tremendous (far too much in my view) secrecy in the charity sector. The confidentiality provisions of the ITA means that in some cases CRA cannot disclose any information about misconduct of a charity, even if it is very serious, until the charity is suspended, penalized or revoked.
It is interesting that a number of legal publications have written about this decision because of its importance, but no umbrella organization in the charity sector has commented on it as best we know.
Here is the text of the decision:
COURT OF APPEAL FOR ONTARIO
CITATION: Muslim Association of Canada v. Canada (Attorney General), 2024 ONCA 663
DATE: 20240909
DOCKET: COA-23-CV-1096
Sossin, Monahan and Madsen JJ.A.
BETWEEN
Muslim Association of Canada
Applicant
(Appellant)
and
Attorney General of Canada
Respondent
(Respondent)
Geoff R. Hall, Anu Koshal, Adam Kanji and Almut MacDonald, for the appellant
Lynn Marchildon, Kevin Palframan and Mitchell Meraw, for the respondent
Heard: June 18, 2024
On appeal from the judgment of Justice Markus Koehnen of the Superior Court of Justice, dated September 13, 2023, with reasons reported at 2023 ONSC 5171, 168 O.R. (3d) 294.
REASONS FOR DECISION
[1] On July 8, 2024, we dismissed the appellant’s appeal from the application judge’s order dismissing the appellant’s Charter challenge to a Canada Revenue Agency (CRA) audit of their charitable status (see Muslim Association of Canada v. Canada (Attorney General), 2024 ONCA 541). We did not find it necessary to consider the fresh evidence that the parties had sought to adduce on the appeal and, accordingly, dismissed both fresh evidence motions.
[2] The parties were invited to make cost submissions in the event that they were unable to come to an agreement on the issue of costs. The parties were also invited to make submissions as to whether the fresh evidence which they had sought to adduce on the appeal should be subject to a sealing order. Having received the parties’ submissions, we set out below our disposition on both issues.
COSTS
[3] Each party seeks a cost order in their favour.
[4] The appellant argues that no costs should be ordered in respect of the appeal but seeks its costs in respect of the fresh evidence motions. With respect to the appeal, the appellant argues that success on the appeal was divided and, as a public interest litigant, it should not be required to bear any costs for pursuing its Charter rights. The appellant nevertheless seeks costs of $15,000 in respect of the fresh evidence motions on the basis that the motions were an unnecessary step that was instigated by the respondent.
[5] The respondent argues that, as the successful party on the appeal, it should be awarded partial indemnity costs of $50,000. The respondent argues that no costs should be awarded in respect of the fresh evidence motions since both parties acted reasonably in bringing the motions and the court did not find it necessary to deal with the merits.
[6] In our view it is appropriate that each party bear its own costs, both in respect of the appeal as well as the fresh evidence motions.
[7] Success on the appeal was divided. Although we upheld the application judge’s dismissal of the application as premature, we disagreed with his finding that the only remedy available to the appellant in respect of a CRA penalty assessment is an appeal to the Tax Court. Given the divided success on the appeal, a no-costs order is appropriate.
[8] Nor should any costs be ordered in respect of the fresh evidence motions. Both parties acted reasonably in bringing the motions since that evidence might well have been relevant had the court considered the merits of the appellant’s Charter application. Given that the court did not find it necessary to consider the motions, each party should bear their own costs in that respect.
SEALING ORDER
[9] The appellant seeks a sealing order in respect of the fresh evidence that the parties sought to introduce on the appeal. This evidence consists of an affidavit from a CRA official attaching the CRA’s final audit decision, and an affidavit from a member of the appellant’s board of directors attaching various documents responding to the CRA’s final audit (collectively, the “Fresh Evidence”). The appellant argues there is a serious risk of harm to the dignity and/or physical safety of its members and of all Muslim Canadians should the Fresh Evidence not be sealed. It seeks an order sealing the Fresh Evidence in its entirety or, in the alternative, making redactions to the Fresh Evidence similar to those ordered by Centa J. in respect of certain parts of the application record filed by the parties in the Superior Court (see Muslim Association of Canada v. Attorney General of Canada, 2023 ONSC 1923 (“Muslim Association sealing order decision (ONSC)”)).
[10] The respondent opposes the sealing order sought by the appellant on the basis that it is inconsistent with the open court principle and that the safety and privacy interests raised by the appellant can be adequately addressed by applying the redactions similar to those ordered by Centa J.
[11] As the Supreme Court observed in Sherman Estate v. Donovan, 2021 SCC 25, [2021] 2 S.C.R. 75, court openness is protected by the constitutionally entrenched right of freedom of expression and is essential to the proper functioning of Canadian democracy. There is a strong presumption in favour of open courts, which presumption can be limited only in exceptional circumstances where there is a demonstrated and serious risk to an important competing public interest. Moreover, any such restrictions on court openness must be no greater than necessary to protect the competing public interest.
[12] Applying these principles, Centa J. noted that where (as in this case) there are serious allegations of government wrongdoing, it is essential that such allegations be litigated in public, since “[w]here government misconduct is alleged, sunlight remains the best of disinfectants.” (Muslim Association sealing order decision (ONSC), at para. 59, citing Ontario (Public Safety and Security) v. Criminal Lawyers’ Association, 2010 SCC 23, [2010] 1 S.C.R. 815, at para. 37.) While Centa J. acknowledged that the privacy and safety concerns identified by the appellant were serious and important, he concluded that those concerns could be adequately addressed by redacting from CRA’s Administrative Fairness Letter (the “AFL”), and from the appellant’s letters responding to the AFL (the “Response Letters”), the names and personal information of individuals who are only peripherally involved in the litigation.[1]However, no redactions were ordered to the parties’ factums or affidavits.
[13] Centa J.’s order represents a careful and appropriate balancing of the open court principle on the one hand and the competing public interests at stake in this litigation on the other. This is reflected in the fact that in their submissions to the case management judge on this appeal, both parties agreed to continue the terms of Centa J.’s order in respect of the application record in the Superior Court (see unreported endorsement of van Rensburg J.A. in Muslim Association of Canada v. Attorney General of Canada (May 14, 2024), M54923).
[14] We see no reason to depart from Centa J.’s carefully tailored approach in determining the appropriateness of limitations on public access to the Fresh Evidence. Like Centa J., we affirm that it is particularly important in litigation involving allegations of government wrongdoing that the public have unfettered access to the relevant court record. We acknowledge that the competing privacy and security interests raised by the appellant are important but conclude that those competing interests can be adequately protected by making limited redactions to the CRA final audit, in a manner analogous to that ordered by Centa J. in relation to the record before the Superior Court.
[15] Accordingly, we dismiss the appellant’s application for a sealing order, and instead order that the parties prepare a redacted version of the CRA final audit, in accordance with the terms set out in para. 63 of Centa J.’s endorsement. For clarity, we do not order any redactions to the documents attached to the responding affidavit filed by the appellant on this appeal, since all those documents appear to already be part of the public record. Should the parties have any difficulty implementing the redactions, they may make written submissions outlining the nature of the difficulty and the respective positions of the parties within 14 days of the release of these reasons.
[16] The parties shall file with the Registrar both an unredacted and the redacted version of the Fresh Evidence. The redacted version will form part of the public record, while the unredacted version shall not be inspected by any person without leave.
[17] No costs are ordered in respect of this application for a sealing order.
“L. Sossin J.A.”
“P.J. Monahan J.A.”
“L. Madsen J.A.”