Date: 20090331
Docket: A-214-08
Citation: 2009 FCA 101
Present: SHARLOW
J.A.
BETWEEN:
HOLY ALPHA AND OMEGA CHURCH OF TORONTO
Applicant
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR ORDER
SHARLOW J.A.
[1]
The
applicant Holy Alpha and Omega Church of Toronto (HOAC) is seeking an order
under paragraph 168(2)(b) of the Income Tax Act, R.S.C. 1985, c.
1 (5th Supp.) to delay the revocation of its registration as a
charity until its objection and any resulting appeals are resolved. Before me
is a motion by the respondent (the Crown) for leave under Rule 312 of the Federal
Courts Rules, SOR/98-106, to file a further affidavit. HOAC opposes the
motion.
[2]
The
decision to grant or deny leave under Rule 312 to file an additional affidavit
is a discretionary one. In exercising that discretion, the overriding
consideration is whether the interests of justice will be served by permitting the
Crown to file the additional affidavit. Generally, the following questions
should be taken into account:
a) Was the evidence sought to be
adduced available when the party filed its affidavits under Rule 306 or 308, as
the case may be, or could it have been available with the exercise of due
diligence?
b) Will the evidence assist the
Court, in the sense that it is relevant to an issue to be determined and
sufficiently probative that it could affect the result?
c) Will the evidence cause
substantial or serious prejudice to the other party?
(See Atlantic Engraving Ltd. v. Lapointe Rosenstein, 2002 FCA
503, at paragraphs 8 and 9.)
[3]
HOAC is
registered as a charitable organization under the Income Tax Act. In April
of 2008, HOAC received a notice of intention to revoke its registration. Many
reasons are given for the proposed revocation. It is alleged that (1) HOAC failed
to maintain adequate books and records, so that the tax auditors were unable to
determine the propriety of claimed expenses totalling over $2.3 million in 2003
and 2004; (2) only a small portion of HOAC’s claimed revenues in those years
were reflected in bank deposits; (3) HOAC failed to exercise direction and
control over funds allegedly sent overseas; and (4) HOAC failed to obtain the
required information for donation receipts issued for gifts in kind, or to
account for 2,499 missing numbered receipt forms.
[4]
HOAC has filed
a notice of objection pursuant to subsection 168(4) of the Income Tax Act.
However, the pending objection does not preclude the Minister from proceeding
with the revocation by publishing the notice in the Canada Gazette pursuant to
subsection 168(2).
[5]
On May 9,
2008, HOAC filed an application in this Court to seek an order under paragraph
168(2)(b) of the Income Tax Act staying the publication of the notice
in the Canada Gazette until the disposition of its objection and any resulting
appeal. Such an application requires the Court to apply the normal test for
interlocutory relief from RJR – Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. Thus,
the questions to be considered upon the hearing of the application will be (1)
whether HOAC’s objection raises a serious issue, (2) whether HOAC will suffer
irreparable harm if the stay is not granted, and (3) whether the balance of
convenience favours granting or denying the stay (International Charity
Association Network v. Minister of National Revenue, 2008 FCA 114, Chosen
Kallah Fund of Toronto v. Minister of National Revenue, 2008 FCA 311).
[6]
In support
of its application for a stay, HOAC filed the affidavit of Pastor John A.
Mensah sworn September 4, 2008 and the affidavit of Lino Mastromonaco sworn
September 22, 2008. The Crown filed the affidavit of James Wells affirmed on
November 6, 2008 (the first Wells affidavit). Mr. Wells has been cross-examined
on his affidavit. The cross-examination was completed on December 5, 2008. HOAC
filed the applicant’s record on January 12, 2009. The respondent’s record has
not yet been filed.
[7]
In the
first Wells affidavit, Mr. Wells explains that HOAC came to the attention of
the tax authorities as the result of a project initiated to investigate
allegations that certain charities and tax preparers in the Toronto area were engaged in the
selling of false charitable donation receipts. In cross-examination, Mr. Wells
stated that the investigation had produced “no clear indication” that HOAC
directly sold donation receipts, but that tax officials had identified tax
preparers that were selling HOAC’s receipts to taxpayers. He also stated that
the investigation is ongoing. The intended revocation of HOAC’s registration as
a charity is not based on any allegation that HOAC was involved in the selling of
false donation receipts.
[8]
The new affidavit
the Crown wishes to file is the affidavit of Mr. Wells sworn February 11, 2009
(the second Wells affidavit), with appended documents. The new evidence sought
to be adduced comprises the appended documents and the interpretation of those
documents as set out in the second Wells affidavit.
[9]
Mr. Wells
says in the second Wells affidavit that the appended documents were first made
available to him on December 18, 2008 (after the completion of his
cross-examination). He says that the documents were seized by the police in the
course of its investigation of a tax preparer believed to be participating in a
tax receipt selling scheme. He also says that the “CRA believes” that these
documents comprise evidence that the tax preparer paid HOAC a percentage of the
value of the false receipts, and also that certain amounts were paid to Pastor
Mensah, thus implicating HOAC in the receipt selling scheme.
[10]
I do not
doubt that Mr. Wells was not personally aware of the new evidence until
December 18, 2008. However, Mr. Wells is not the only tax authority involved in
this matter. The question I must consider is whether, with due diligence, the Crown
could have obtained the new evidence prior to filing the first Wells affidavit.
That question is impossible to answer because the second Wells affidavit does
not say when the documents comprising the new evidence were seized. The onus of
establishing the answer to that question is on the Crown, and it has not been
discharged. That is a sufficient basis for denying this motion, but there is a
further reason.
[11]
The Crown
argues that the new evidence could be relevant to the question of whether the
balance of convenience favours granting or denying the stay. I agree that if
the new evidence is capable of establishing that HOAC is involved in a
fraudulent receipt selling scheme, it would assist the position of the Crown on
that issue. Perhaps the documents might be interpreted as proposed by the
Crown, but they may also be understood to be consistent with the argument of
HOAC that some of its receipts were taken without authority by a person who is
no longer involved with HOAC. The second Wells affidavit does not explain how
the tax authorities concluded from their analysis of the documents that they
comprise evidence of HOAC’s participation in a fraudulent receipt selling
scheme. On balance, I am not persuaded that the second Wells affidavit is sufficiently
probative to assist the Court in determining the application.
[12]
For these
reasons, the motion of the Crown to file a further affidavit will be dismissed,
and a new deadline will be established for the filing of the respondent’s
record. HOAC is entitled to its costs of this motion.
“K.
Sharlow”
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