Lynn Marchildon

The Court of Appeal for Ontario addressed costs and a sealing order following its dismissal of the appellant's Charter challenge to a Canada Revenue Agency (CRA) audit.

The court ordered each party to bear its own costs for both the appeal and the fresh evidence motions, citing divided success on the appeal and reasonable conduct regarding the fresh evidence motions.

Regarding the sealing order for fresh evidence, the court dismissed the appellant's request for a full sealing order, instead ordering limited redactions to the CRA final audit, consistent with a prior Superior Court order, to balance the open court principle with privacy and safety concerns, particularly given allegations of government wrongdoing.

The appellant, a Muslim charity, appealed the dismissal of its application challenging a Canadian Revenue Agency (CRA) audit process, alleging violations of its Charter rights due to discriminatory targeting and Islamophobic attitudes.

The application judge dismissed the challenge as premature, citing an insufficient factual record and the availability of administrative appeal processes under the Income Tax Act.

The Court of Appeal upheld the dismissal, affirming the court's discretion to refuse to decide a case based on a preliminary and incomplete factual record, even for Charter relief.

While disagreeing with the lower court's suggestion that the Tax Court's jurisdiction would necessarily bar a subsequent Superior Court Charter challenge, the appellate court found the prematurity finding to be correct given the ongoing administrative process.

The applicant, Muslim Association of Canada (MAC), challenged a Canada Revenue Agency (CRA) audit and its preliminary recommendation to suspend MAC's charitable status, alleging Charter violations based on discriminatory information and Islamophobia.

The court dismissed the application on grounds of prematurity, holding that judicial intervention was inappropriate before the completion of the administrative process, which included internal appeals and further rights of appeal to the Tax Court of Canada or Federal Court of Appeal.

The Muslim Association of Canada (MAC) brought a motion for a sealing order concerning an Administrative Fairness Letter (AFL) and its responses, central to its application alleging systemic bias and Islamophobia in a Canada Revenue Agency (CRA) audit.

The Attorney General of Canada opposed the sealing order, proposing a more tailored redaction approach.

The court, applying the Sherman Estate test, declined the full sealing order.

While acknowledging a serious risk to the physical safety and dignity of minors and peripherally involved MAC members due to personal information, the court found that a full sealing order was not necessary.

Instead, it ordered specific redactions of names of minors and peripherally involved members, personal contact information, and financial details, emphasizing the paramount importance of open courts for public debate on government conduct, especially concerning allegations of constitutional violations.

The moving party brought a motion for an interlocutory injunction to prohibit the Canada Revenue Agency (CRA) from rendering a final audit decision that could recommend the revocation of its charitable status.

The moving party alleged the audit was tainted by Islamophobia and violated its Charter rights.

The court dismissed the motion, finding that while there was a serious issue to be tried, the moving party failed to establish irreparable harm because the CRA had not yet made a final decision, making the anticipated harm premature and speculative.

The court also found the balance of convenience favoured the CRA due to the public interest in its regulatory role, and the moving party failed to meet the high threshold for a quia timet injunction.

Following the dismissal of an urgent motion for injunctive relief and the stay of the action pending exhaustion of a statutory grievance procedure under the National Defence Act, the court addressed the issue of costs.

The plaintiff sought full solicitor-client costs, arguing that the judgment achieved a result more favourable than a prior settlement proposal.

The court rejected this argument, finding the plaintiff obtained no advantage from the judgment and had in fact lost certain protections offered during settlement negotiations.

The defendant sought partial indemnity costs calculated at 60 percent of counsel’s hourly rate for work responding to the motion.

The court found the request reasonable given the complexity of the issues and ordered the plaintiff to pay fixed costs of $26,404.73 inclusive of taxes and disbursements.

The plaintiff, a Captain in the Canadian Forces, brought a motion for an interlocutory injunction to prevent the military from requiring her to undergo a psychosocial assessment, and a civil action seeking damages for alleged Charter breaches.

The defendant argued the court lacked jurisdiction because the plaintiff had not exhausted the statutory grievance procedure under the National Defence Act.

The court agreed, finding the plaintiff's claims arose exclusively from her military employment and were a disguised grievance.

The court also dismissed the injunction motion, finding the plaintiff failed to establish a serious issue to be tried, irreparable harm, or that the balance of convenience favoured her.

The action was stayed pending the exhaustion of the statutory grievance process.