Scarborough Community Legal Services v. The Queen, 85 DTC 5102, [1985] 1 CTC 98 (FCA)

Marceau, J:—This is an appeal from a decision of the Minister of National Revenue denying the appellant’s application to be registered as a “charity” pursuant to the Income Tax Act, RSC 1952, c 148 (as amended by SC 1970-71-72, c 63; SC 1976-77, c 4; 1977-78, c 1).

Under the Income Tax Act, charitable organizations registered as “charity” (paragraph 110(8)(c)) are given very special status: not only are they exempted from tax, like all other non-profit organizations (paragraph 149( l)(f)), but specially all donations made to them are deductible by donors in computing their own taxable incomes (paragraph 110 ( l)(a)(i) ). There is however only one short paragraph of the Act that purports to define a “charitable organization”:

149.1 (1) In this section

(b) “Charitable organization”.—“charitable organization” means an organization, whether or not incorporated, all the resources of which are devoted to charitable activities carried on by the organization itself and no part of the income of which is payable to, or is otherwise available for, the personal benefit of any proprietor, member, shareholder, trustee or settlor thereof;

and the sole provisions dealing directly with the procedure relating to registration are to be found in subsection 172(3) and (4):

172 (3) Appeal from refusal to register, revocation of registration, etc. Where the Minister

(a) refuses to register an applicant for registration as a registered charity or registered Canadian amateur athletic association, or gives notice under subsection 168(1) to such a charity or association that he proposes to revoke its registration,

(b) refuses to accept for registration for the purposes of this Act any retirement savings plan,

(c) refuses to accept for registration for the purposes of this Act any profit sharing plan or revokes the registration of such a plan,

(d) refuses to issue a certificate of exemption under subsection 212(14),

(e) refuses to accept for registration for the purposes of this Act any education savings plan or revokes the registration of any such plan,

(f) refuses to accept for registration for the purposes of the Act any home ownership savings plan or revokes the registration of any such plan, or

(g) refuses to accept for registration for the purposes of this Act any retirement income fund or revokes the registration of any such fund,

the applicant or the charity or association, as the case may be, in a case described in paragraph (a), the applicant in a case described in paragraph (b), (d), (e), (f) or (g) or a trustee under the plan or an employer of employees who are beneficiaries under the plan, in a case described in paragraph (c), may, notwithstanding section 24 of the Federal Court Act, appeal from such decision or from the giving of such notice to the Federal Court of Appeal.

172 (4) Deemed refusal to register. For the purposes of subsection (3), the Minister shall be deemed to have refused

(a) to register an applicant for registration as a registered charity or registered Canadian amateur athletic association,

(b) to accept for registration for the purposes of this Act any retirement savings plan or profit sharing plan,

(c) to issue a certificate of exemption under subsection 212(14),

(d) to accept for registration for the purposes of this Act any education savings plan,

(e) to accept for registration for the purposes of this Act any home ownership savings plan, or

(f) to accept for registration for the purposes of this Act any retirement income fund,

where he has not notified the applicant for registration or for the certificate, as the case may be, of his disposition of the application within 180 days after the filing of the application with him, and in any such case, an appeal from such refusal to the Federal Court of Appeal pursuant to subsection (3) may, notwithstanding anything in subsection 180(1), be instituted under section 180 at any time by filing a notice of appeal in the Court.

It will have been noted that the exact meaning of the phrase ‘‘all the resources of which are devoted to charitable activities” in the definition of paragraph 149.1(1)(b) is nowhere given and the manner in which an application for registration will have to be presented to and disposed of by the Minister is not expressly determined. Such legislative laconism was bound to raise problems as it was obviously leaving many questions unanswered. Surprisingly, it does not appear that this Court has yet been called upon to take position on any of these questions, despite the fact that, as we have been told, more than forty-five hundred applications for registration are made each year, and close to twenty per cent of them are refused. This case, so far as I know, is the first one to come before this Court requiring the disposition of some of the most basic of those unanswered questions.

The facts can hardly be more straightforward. The appellant was incorporated as a no-share corporation in September 1982 under the Ontario Corporations Act, to operate as a community-based legal clinic within the meaning of the Ontario Legal Aid Act, RSO 1980, c 234. The objects for which it was incorporated were:

To establish, maintain and operate a community clinic within and for the benefit of the Scarborough community in the Borough of Scarborough in the Municipality of Metropolitan Toronto, in the Province of Ontario, and in connection with this and subject to the applicable laws of Ontario from time to time, to provide advice, assistance, representation, education and research to both individuals and groups, and to organize, carry on and participate in such other activities as may from time to time seem expedient for the benefit of the Scarborough community.

As a legal clinic, the appellant is funded by the Ontario Legal Aid Plan (Ontario Legal Aid Regulations, Reg 575, Part X), but its directors would like to look to sources other than the Plan for additional funds to carry on its activities. If registered as a charitable organization, it would, of course, be in a far better position to solicit gifts. On July 13, 1983, the appellant applied for registration as a “charity” by completing the form prescribed by the Minister for that purpose (form T2050) and filing it with the Department together with some governing documents, namely its Annual Report, dated September 23, 1982, and a certified copy of its Letters Patent. By letter dated August 9, 1983, the appellant was requested to add to the supportive documentation attached to its application a copy of its by-laws, a request it complied with, but it received no other communication from the Department until it was advised of the Minister’s refusal by a letter dated January 3, 1984 which read, in part, as follows:

We have examined the application for registration as a charity under the Income Tax Act submitted by the Scarborough Community Legal Services.

We regret to advise you that the application cannot be granted.

Upon reading the legal Service’s Annual Report, it is our view that your organization has participated and intends to continue its participation in activities which are political. By way of example, we refer to your participation in a rally at Queen’s Park with respect to the Family Benefits program, and the involvement with the Committee to Improve the Scarborough Property Standards By-laws.

The Political character of the cited activities denies the Scarborough Community Legal Services standing as a charity within the meaning of the Income Tax Act. It may be that your organization qualifies for tax-exempt status as a non-profit organization under the Income Tax Act, paragraph 149( 1)(1).

We regret that our response to the application of the Scarborough Community Legal Services could not be more favourable. We can advise you that the Income Tax Act, paragraph 172(3) provides an appeal from our decision.

In support of its appeal to this Court pursuant to paragraph 172(3)(a), the appellant puts forward two grounds. The first one is that the Minister has failed to comply with the rules of natural justice or procedural fairness in coming to a decision without giving it prior notice of the case against it and an opportunity to meet that case. The second one is that the Minister has erred in holding that any involvement in political activities disentitles an organisation to registration as a “charity” under the Income Tax Act. A preliminary remark comes to mind. While both grounds are supportive of the appeal in that they both can lead to the setting aside of the impugned decision, they obviously are not both of the same type and cannot give rise to the same remedy. The first one may only lead to a referral back of the matter to the Minister with instructions as to the proper procedural steps to be followed before coming to a conclusion, while the other may force the Court to take a position as to the substance of that conclusion. It is clear, in those circumstances, that the second ground will have to be considered and disposed of only if the first one proves to be ill-founded.

1. The Procedural Issue

As noted above, a decision by the Minister to refuse an application for registration as a “charity” may only be appealed to this Court (sec 182(3)), (supra) the Tax Review Board and the Federal Court Trial Division being both denied jurisdiction (sec 180). The appellant’s argument on the procedural issue is that, in view of the special system of appeal to which it is subjected, the decision has to be taken as a judicial decision subject to the laws of natural justice or, in the alternative, if still an administrative decision, one which requires the authority to act fairly, with the result that the Minister cannot reach a conclusion adverse to the applicant without first giving it prior notice of the case against it and an opportunity to meet that case. And the appellant, in support of its argument, refers to the decision of this Court in Renaissance International v MNR, [1983] 1 FC 860; [1982] CTC 393; 83 DTC 5024.

This Renaissance case was concerned with the revocation of an organization’s registration as a charity under section 168 of the Act. The Minister, through his Director of the Registration Division, had made the decision to revoke the registration on the basis of information obtained through investigations authorized by him, after having been given notice of some disqualifying activities in which the organization had apparently become involved. The organization, however, had not been advised that an inquiry was being carried out, nor had it been given an opportunity to refute the allegations. The Court was unanimous in setting aside the decision. Both Mr Justice Heald, writing for himself and Mr Justice Cowan DJ, and Mr Justice Pratte spoke in general terms of a failure by the Director to observe the requirements of natural justice and procedural fairness. But, the gist of their common reasoning, as I understand it, was that the record before the Minister had a most serious defect in so far as, on the facts, it contained “no input from the appellant’’, a defect that could not be cured by the appeal since, under the provisions of the Act applicable to it, it was clear that the Court was expected to decide as it does normally, that is to say, on the sole basis of the record constituted by the court of first instance.

It does not appear to me that this Renaissance decision has application in the present case. While a decision to revoke a previously recognized special status on the ground of unacceptable conduct has the effect of a penal conviction and the function of making it may probably be said to be quasi-judicial, it being similar to that of a judge presiding over a penal tribunal, a decision to deny an applicant the right to be given special status on the facts and evidence submitted by him, lacks the basic characteristics of an adjudication inter partes by a court of law. Moreover, and most importantly, the decision to refuse the application in the present case was not made on the basis of information obtained without the interested party’s participation; it was made solely on the evidence submitted by the applicant itself.

The function of the Minister in dealing with an application for registration as a “charity” under the Income Tax Act is, in my view, a strictly administrative function, and in spite of the fact that it involves the application of substantive rules and not the implementation of social and economic policy, on the basis of the basic criteria formulated by Mr Justice Dickson (as he then was) in the leading case of MNR v Coopers and Lybrand, [1979] 1 SCR 495; [1978] CTC 829; 78 DTC 6528, it does not appear to me to be one subject, in its exercise, to judicial or quasi-judicial process. I am unable to accept the appellant’s suggestion that procedural fairness would call for a hearing of some sort before a contrary decision is reached by the Minister (or his duly authorized representative). Not only do I think that a requirement of that kind would go beyond Parliament’s will as reflected in the legislation, I fail to see how such a hearing could better achieve justice and equity. If the decision is wrong because the law was improperly applied to the facts or because improper qualification was attributed to those facts, the appeal will remedy the situation; and if the decision is wrong because of a failure by the applicant to give all the facts or to expose them correctly, there is nothing to prevent him from renewing his application.

My view is that there was no obligation on the part of the Minister to notify the appellant and invite submission or to conduct a hearing prior to refusing its application for registration as a charity. The appellant therefore fails on its first ground of attack, and that being so, it is necessary to consider and dispose of the other issue raised by the appeal.

2. The Substantive Issue

The passages of the letter of refusal reproduced above made it clear that, in the opinion of the Minister, the appellant was not a charitable organization within the meaning of the Act because it had participated in and intended to continue its participation in “activities which are political”, such as taking part (as it had done the year before) in a rally at Queen’s Park to protest against a proposal by the Government to bring changes to the Family Benefits program, or being involved (as it still was) with the Committee to Improve the Scarborough Property Standards By-laws. In the appellant’s submission, this reason, which provided the sole basis for the denial of its application, is invalid because it is wrong in law. A three-tier argument is advanced: the activities referred to by the Minister are merely means to achieve objects and, as such, are irrelevant; even if they have to be considered, they are activities; in any event, be they political activities or not, they are only incidental to primary purposes.

It might as well be said right away that I fail to appreciate the accuracy or at least the pertinence, in the present context, of the suggested distinction between “partisan advocacy” and “political activity”. It seems to me that while an undertaking aimed specifically and directly at influencing the policy-making process may always be said to be political, it is hard to envisage how it can qualify as “charitable” within the meaning of the Act. It is true that the word charitable is not defined in the Act. It is also true that the common-law tests to identify charities as set out in the leading English case of Pemsel v Special Commissioners of Income Tax, 3 TC 53; [1891] AC 531; [1888] 2 All ER Rep 296 (ie relief of poverty, advancement of religion, advancement of education, other purposes of a charitable nature beneficial to the community as a whole) — which tests have been accepted in this country (see: Guaranty Trust Company of Canada v MNR, 1967 SCR 133) and are now applied in practice (see: Information Circular 77-14 issued by the Department) — remain quite vague. But, having said that, I do not think that the meaning of the word charitable can ever be so extended as to cover a particular activity aimed, as I said, specifically and directly at influencing the policy-making process, whatever be the conditions or the context in which it is carried out.

The appellant is able to advance an argument with much more substance by relying on a distinction between purposes or objects and means and, alternatively, on a further distinction between primary and incidental purposes. Indeed, the first distinction has been developed and relied on in many cases concerned with the identification of charitable trusts, bodies or associations, in fact mainly in England (see for instance: McGovern v Attorney General, [1931] 3 All ER 493 (Ch D); National Anti-Vivisection Society v Inland Revenue Commissioners, [1948] AC 31 (H L), In re Strakosch dec’d, [1949] 1 Ch 529 (CA); Trustees for the Roll of Voluntary Workers v Commissioners of Inland Revenue, [1942] SC 47) but also in Canada, namely in the Guaranty Trust Company case (supra). And the second distinction, of course, is the foundation for the “preponderant purpose test” widely applied in the jurisprudence of the Provinces and recently adopted by the Supreme Court (in The Regional Assessment Commissioner and The Municipal Clerk of the Corporation of the Town of Hearst v Caisse populaire de Hearst Limitée, [1983] 1 SCR 57) to determine whether a person or corporation is “carrying on a business” within the meaning of provincial business assessment statutes. I am of the opinion, however, that these distinctions do not help the appellant’s position in the circumstances of this case.

It ought to be noted first that, in all those cases where the distinction between purpose and means was given effect to, the question before the Court was whether a certain trust, body or association could be said to have been established or organized “for charitable purposes only”. Under paragraph 149. l(l)(b) of the Income Tax Act, the question to be determined is different since it is whether the organization is one “whose resources are devoted exclusively to charitable activities", a difference all the more striking in that, in the immediately preceding provision of the Act dealing with “charitable foundation”, the other type of “charity”, the reference is to “a corporation or trust constituted and operated exclusively for charitable purposes". It ought to be noted, as well that the distinction is in itself quite a relative one, it being consistent with human behaviour that the object a person has in view today is often simply a means for him to achieve a further object tomorrow. The distinction could be relied on in those cases referred to above only with reference to the declared purposes for which the trust or the body had been constituted or was operated and even then, not without the important qualification set out by Lord Denning in the British Launderer’s Research Association v Hendon Rating Authority, [1949] 1 KB 462 at 467, 1 All ER 21 and adopted by Ritchie, J in the Guaranty Trust Company case (supra) to the effect that means which could be said to be “an end in themselves” were to be considered “collateral purposes”. In any event, I do not see how such a distinction between object and means can be so adapted as to have a role to play in identifying a “charitable organization” under paragraph 149. l(l)(b) of the Act. It seems to me that the activities of a group can hardly be rationally classified on the sole basis of their more or less close proximity to the general purposes for which the group was organized.

The other distinction relied on by the appellant in the alternative, the distinction between primary and incidental purposes, is a much more fundamental and objective one, and I would readily concede that it should be adapted and applied in giving effect to paragraph 149. l(l)(b) of the Act. I would feel that an organization should not lose its status as a charitable organization because of some quite exceptional and sporadic activity in which it may be momentarily involved, and, above all, I do not think that an activity would be deprived of its charitable nature only because one of its component or some incidental or subservient portion thereof cannot, when considered in isolation, be seen as a charity. It is clear, however, that the appellant’s sustained efforts to influence the policy- making process constitute an essential part of its action and are not only “incidental” to some other of its charitable activities.

I wish I could have found otherwise, but I do not think that the appellant’s contentions with respect to the substantive issue are valid. It does not appear to me that the Minister was wrong in coming to the conclusion that the appellant did not satisfy the requirements of the Act to be registered as a “charity”.

My overall conclusion, therefore, is that the appeal should be dismissed, with costs.

Urie, J:—I have had the advantage of reading the reasons for judgment of both Heald, J and Marceau J. It is with some regret that I have concluded that I cannot agree with Mr Justice Heald on the “procedural issue” and, thus, with his proposed disposition of the appeal. On the other hand, while I agree with the conclusion reached by Mr Justice Marceau on the “procedural issue”, I arrive at the same conclusion by a different approach so that I must briefly set forth the reasoning whereby I come to that conclusion.

Counsel for the respondent placed great emphasis on the fact that when an organization seeks to be registered as a charity under the Income Tax Act, it is seeking a privilege which is available only to those who meet the strict requirements of the statute relating to their qualifications as charities. Among those requirements are the procedural ones prescribed in accordance with the statute for satisfying the Minister of National Revenue that all of the purported charity’s resources “are devoted to charitable activities . . .”. The application is required to be in a prescribed form and to be supported by documents the nature of which is also prescribed, although there is no limitation on an applicant providing other supporting material.

The legislative framework within which the privilege extended to registered charities to receive gifts without being liable to pay income tax thereon and for the donors to such registered charities to be entitled to claim deductions for such gifts in the computation of their taxable income, is found in the following subsections of the Act:

110 (1) For the purpose of computing the taxable income of a taxpayer for a taxation year, there may be deducted from his income for the year such of the following amounts as are applicable:

(a) the aggregate of gifts made by the taxpayer in the year (and in the five immediately preceding taxation years to the extent of the amount thereof that was not deductible in computing the taxable income of the taxpayer for any preceding taxation year) to

(i) registered charities

110 (8) In this section

(c) “registered charity” means

(i) a charitable organization or charitable foundation, within the meanings assigned by subsection 149.1(1), that is resident in Canada and was either created or established in Canada, or

(ii) a branch, section, parish, congregation or other division of an organization

described in subparagraph (i) that receives donations on its own behalf,

that has applied to the Minister in prescribed form for registration, that has been registered and whose registration has not been revoked under subsection 168(2).

149 (1) No tax is payable under this Part upon the taxable income of a person for the period when that person was

(f) a registered charity

149.1(1) In this section

(b) “charitable organization” means an organization, whether or not incorporated, all the resources of which are devoted to charitable activities carried on by the organization itself and no part of the income of which is payable to, or is otherwise available for, the personal benefit of any proprietor, member, shareholder, trustee or settlor thereof;

(d) “charity” means a charitable organization or charitable foundation;

Section 168 provides for the circumstances in which the registration of the charity may be revoked. As pointed out by Marceau, J, subsections 172(3) and

(4) relate, inter alia, to the refusal of registration and the deemed refusal to register certain charities. Subsection 244(16) provides the authority for deeming prescribed forms to be prescribed by the Minister and only he being permitted to call such forms into question. No issue is taken with the form used in this case and it is common ground that the material filed in support of the appellant’s application for registration complied with the requirements of the prescribed form. Neither was it contested that the appellant could have, had it wished to do so, filed other explanatory material relating to its activities and the means it employed to carry out its corporate objects. As a matter of fact, the appellant complied with the request of the Minister for the filing of additional material after the original application had been submitted.

The sole issue then is whether, bearing in mind the legislative framework within which the privilege extended to charities and to donors to them exists, was the Minister in breach of the principles of natural justice or of the rules of procedural fairness in failing to give to the appellant the opportunity to make submissions with respect to the grounds upon which he proposed to refuse the appellant’s application for registration as a charity?

As was said by Le Dain, J in this Court in Inuit Tapirisat of Canada v The Right Honourable Jules Léger et al, [1979] 1 FC 710 at 715:

Whether the procedural duty of fairness is to be regarded as something different from natural justice or merely an aspect of it, the majority opinion in the Nicholson case seems clearly to indicate that its application is not to depend on the distinction between judicial or quasi-judicial and administrative functions.

At 717 he also had this to say:

Procedural fairness, like natural justice, is a common law requirement that is applied as a matter of statutory interpretation. In the absence of express procedural provisions it must be found to be impliedly required by the statute. It is necessary to consider the legislative context of the power as a whole. What is really in issue is what it is appropriate to require of a particular authority in the way of procedure, given the nature of the authority, the nature of the power exercised by it, and the consequences of the power for the individuals affected. The requirements of fairness must be balanced by the needs of the administrative process in question.

While the judgment of this Court in that case was reversed by the Supreme Court of Canada, neither of the foregoing statements was disavowed and both seem to reflect the current thinking in this country on the two doctrines.

In the Supreme Court of Canada on the appeal, there styled Attorney General of Canada v Inuit Tapirisat of Canada et al, [1980] 2 SCR 735, Estey, J had this to say at 755 about finding a statutory basis for a requirement of procedural fairness:

While it is true that a duty to observe procedural fairness, as expressed in the maxim audi alteram partem need not be express (Alliance des Professeurs Catholiques de Montréal v Commission des Relations Ouvrières de la Province de Québec), it will not be implied in every case. It is always a question of construing the statutory scheme as a whole in order to see to what degree, if any, the legislator intended the principle to apply.

Applying that principle to the statutory scheme for the registration of charities, I am unable to find either as a matter of natural justice or of procedural fairness, an obligation on the Minister to invite representations or conduct a hearing before reaching a decision on the application. The prescribed material must, of course, support the application. The contents of that material, both that which is helpful and that which is damaging, is, of course, known to the applicant as are the legal requirements for satisfying the Minister that the organization is in law a charity. Nothing that I have found in the statute precludes an applicant from making submissions in support of its application, or to explain deficiencies or defects therein or from filing additional supporting material to demonstrate that it is truly a “charity” to which registration should be granted. Whether it chooses either to do so or not, the Minister, relying on what is before him, must decide whether registration should be granted or not. The failure to call for representations cannot, therefore, in the statutory context of an application for registration, vitiate his decision, as I see it.

Nor do I believe that this Court’s decision in the Renaissance case [1983] 1 FC 860* [1] affects this conclusion since I believe it to be distinguishable on at least two grounds. First, and most importantly, as I see it, in that case Renaissance had been for some time registered as a charity so that the revocation of its registration took away from it an important privilege which it, and donors to it, had had for some time. From the fact of that registration there flowed other benefits to the organization such as, for example, the ability to indulge in financial planning for its charitable activities which it might well lose in part if donors to it lost the right to claim deductions for their donations. Those benefits, as a matter of fairness, ought not to have been terminated without giving the beneficiary of them at least the opportunity to know the reasons for the proposed revocation and to make representations with respect thereto. Clearly, no such rights can have accrued to an applicant for registration. The second distinguishing feature in the case at bar arises from the first. The decision by the Minister in Renaissance was taken without notice being given to the charity either of the investigations into its activities, their results nor of the basis upon which the Minister proposed to revoke the registration. Here, on the other hand, while the precise ground of refusal was not known to the appellant, it must be taken to have been aware that to qualify as a charity it must meet the statutory and common law requirements for its characterization as such and, in particular, that its activities must be exclusively charitable. It knew, or ought to have known, that its involvement in political advocacy might cast a doubt as to its charitable bona fides so that it was incumbent on it to satisfy the Minister that the political activity did not affect its primary charitable function.

For all of the foregoing reasons, I am of the opinion that the appellant’s argument on the procedural aspect of its appeal must fail.

It is unnecessary for me to comment on the substantive issue since I am substantially in agreement with what my brother Marceau, J has said. I, too, would dismiss the appeal on its merits.

Since the appellant has not succeeded on either of its bases for the appeal, I would dismiss it with costs.

Heald, J:—I have had the advantage of reading in draft the reasons for judgment proposed by my brother, Marceau, J herein. The facts, the relevant statutory provisions and the grounds of appeal are accurately set out therein and need not be repeated.

I agree with Mr Justice Marceau that while both grounds of appeal asserted by the appellant are supportive of the appeal, they are not of the same type and do not give rise to the same remedy. I also agree that the first ground of appeal (which he characterizes as the procedural issue) would, if successful, only lead to a referral back of the matter to the Minister with directions as to the proper procedural steps to be followed before coming to a conclusion, while the other ground of appeal may force the Court to take a position as to the substance of that conclusion. I also agree that the second ground of appeal need only be addressed if the first one proves to be ill-founded. Mr Justice Marceau concludes that the procedural issue raised by the appellant is ill-founded and, thus, proceeds to a consideration of the second issue. Because I have concluded that there is merit in the procedural issue and that the appeal should be allowed, and the matter referred back to the Minister with directions, it is not necessary for me to enter into a consideration of the second issue raised by the appellant. I will, therefore, in these reasons, confine myself to the procedural issue.

Contrary to the view expressed by my brother Marceau, I have the opinion that the decision of this Court in the case of Renaissance International v MNR, (1982), 47 NR 1) does have application in the case at bar. It is true that in the Renaissance case, the appeal to the Court was from the Minister’s notice of revocation of the charitable registration of Renaissance under subsection 168(1) of the Income Tax Act whereas in this case, the appeal is from a refusal by the Minister to register the appellant as a registered charity. However, it is also accurate to observe that both appeals are brought pursuant to subsection 172(3) of the Income Tax Act, the relevant portion of which reads:

172. . . .

(3) Appeal from Refusal to register, revocation of registration, etc.—Where the Minister

(a) refuses to register an applicant for registration as a registered charity or registered Canadian amateur athletic association, or gives notice under subsection 168(1) to such a charity or association that he proposes to revoke its registration,

. the charity . .. in a case described in paragraph (a) . . . may, notwithstanding section 24 of the Federal Court Act, appeal from such decision or from the giving of such notice to the Federal Court of Appeal.

Likewise, in my view, section 180 of the Income Tax Act applies to the present appeal. The relevant portion thereof reads as follows:

180. (1) ... An appeal to the Federal Court of Appeal pursuant to subsection 172(3) may be instituted by filing . . . in the Court within 30 days from

(a) the time the decision of the Minister to refuse the application for registration . . . was served by the Minister by registered mail on the party instituting the appeal, or

as the case may be, or within such further time as the Court of Appeal or a judge thereof may, either before or after the expiry of those 30 days, fix or allow.

(2) No jurisdiction in Tax Court of Canada or Federal Court — Trial Division.— Neither the Tax Court of Canada nor the Federal Court — Trial Division has jurisdiction to entertain any proceeding in respect of a decision of the Minister from which an appeal may be instituted under this section.

(3) Summary disposition of appeal.—An appeal to the Federal Court of Appeal instituted under this section shall be heard and determined in a summary way.

Accordingly, I think that my observations at page 3 of the Renaissance case apply to the instant case. The passage I am referring to reads as follows:

In my view, both of those decisions are, in all likelihood, quasi-judicial decisions notwithstanding that the statutory scheme as set out supra does not specifically provide for participation by the party affected in the adjudicative process. This view is strengthened by the fact that the statute provides for an appeal to this Court, an appeal similar to appeals to this Court from the Trial Division. A perusal of sections 172 and 175 to 180 inclusive of the Income Tax Act makes it clear, in my view, that whereas the so- called “appeals” from an assessment directly to the Trial Division or from the Tax Review Board to the Trial Division are intended to be trials de novo, an appeal under section 180 to this Court is an appeal in the normal sense, that is, an appeal in which the question is whether or not the tribunal below was right on the basis of the materials which it had before it when it made its decision.

I so conclude because I think that reasoning applies in this case as well since the right of appeal herein is also found in subsection 172(3). Therefore the provisions of section 180 apply to this appeal as well. Accordingly, and for the reasons expressed in Renaissance, supra, I think that the Minister’s decision in the case at bar is a quasi-judicial decision. At page 4 of the Renaissance reasons, I said:

I am, accordingly, persuaded that the appellant’s rights are seriously and adversely affected by these “decisions” so as to impose upon the Director the duty to observe the requirements of natural justice, or at the very least, the duty to accord procedural fairness to the appellant. The provision for an appeal to this Court requires that appeal to be an appeal in the strict and traditional sense since it is not an appeal by way of a rehearing or trial de novo. Therefore, the appeal should be on a proper record of the evidence adduced before the Director which persuaded him to make the decisions herein impugned.

My reasons were concurred in by Cowan, DJ. Mr Justice Pratte, the other member of the panel in Renaissance wrote reasons concurring in the result. At page 6 of the report he said:

It is common ground that, before receiving that notice, the appellant had not been made aware either of the allegations retained against it or of the intention of the respondent to revoke its registration. It is for that reason that, in support of its appeal under subsection 172(3), it submitted that the respondent failed to comply with the requirements of procedural fairness or natural justice.

and again at 7:

However, in this instance, the right of appeal created by subsection 172(3) is a right of appeal to a Court which, it is well known, normally decides appeals on a record created in the inferior Court and accepts to receive further evidence only “on special grounds” (see Rule 1102(1)). Moreover, when the provisions of the Income Tax Act applicable to that appeal are contrasted with those of section 175 governing the appeals to the Trial Division, it becomes apparent that it was not intended that the appeal to this Court be an appeal de novo like the appeal in the Trial Division. I therefore conclude that the appeal created by subsection 172(3) is what I would call an ordinary appeal which the Court normally decides on the sole basis of a record constituted by the Tribunal of first instance. It follows, in my view, that the decision of the Minister to send a notice of revocation under subsection 168(1) must be arrived at in a manner enabling the Minister to create a record sufficiently complete to be used by this Court in deciding the appeal. This presupposes, in my view, that the Minister must follow a procedure enabling him to constitute a record reflecting not only his point of view but also that of the organization concerned.

For those reasons, I have concluded after much hesitation that, contrary to what was argued by counsel for the respondent, the provisions of the Income Tax Act do not impliedly relieve the Minister from the duty to comply with the rules of natural justice and procedural fairness before sending a notice pursuant to subsection 168(1). On the contrary, those provisions, as I read them, rather suggest that the Minister, before sending the notice, must first give to the person or persons concerned a reasonable opportunity to answer the allegations made against them.

It is noted from the above quotations from the reasons of Pratte, J that he was of the view that it was incumbent on the Minister to . follow a procedure enabling him to constitute a record reflecting not only his point of view but also that of the organization concerned” and that . the Minister, before sending the notice, must first give to the person or persons concerned a reasonable opportunity to answer the allegations made against them.”

I agree with Mr Justice Marceau that there is a factual difference between the Renaissance case and the case at bar, namely — in the case at bar the Minister’s decision to refuse registration was made solely on the evidence submitted by the appellant itself. However, in my view, the rationale of Renaissance still applies because the Minister made his decision based on his own appreciation of certain facts contained in the material submitted by the appellant. That appreciation was based on his unilateral interpretation of some of the appellant’s activities as revealed in the appellant’s annual report without first contacting the appellant to advise it of that interpretation before refusing the application. I do not contend that the statutory scheme requires a formal hearing before the decision to refuse was made. However, I do think natural justice or the duty to act fairly would require, perhaps, a telephone call or a letter to the appellant advising of the Minister’s difficulties or problems with the application, thus giving the appellant the opportunity to, at least, attempt to answer the Minister’s objections. This would have resulted in a record reflecting the point of view of both the Minister and the organization concerned. Such a procedure would have given the appellant a reasonable opportunity to answer the allegations made against registration.

I think an approach which so limits and constrains the rules of procedural fairness and natural justice as to apply them only in cases where adverse material has been filed, is an undue limitation of those concepts. In this case, the Minister formed a view on the basis of the material submitted. He made his decision to refuse registration based on that view without giving any indication to the appellant of the basis for that view. Surely the appellant should have been given an opportunity to advance possible reasons to the Minister as to why his preliminary view was not correct before the Minister’s decision to refuse was made. In the case of Furnell v Whangarei High Schools Board ((1973) AC 660), Lord Morris of Borth-y-Gest, speaking for the majority, said at 679 that “natural justice is but fairness writ large and juridically. It has been described as ‘fair play in action’.” In the Nicholson case (Nicholson v Haldimand Norfolk Regional Police Commissions, [1979] 1 SCR 311) Chief Justice Laskin, speaking for the majority of the Supreme Court of Canada, said at 328:

The present case is one where the consequences to the appellant are serious indeed in respect of his wish to continue in a public office, and yet the respondent Board has thought it fit and has asserted a legal right to dispense with his services without any indication to him of why he was deemed unsuitable to continue to hold it.

In my opinion, the appellant should have been told why his services were no longer required and given an opportunity, whether orally or in writing as the Board might determine, to respond. The Board itself, I would think, would wish to be certain that it had not made a mistake in some fact or circumstance which it deemed relevant to its determination. Once it had the appellant’s response, it would be for the Board to decide on what action to take, without its decision being reviewable elsewhere, always premising good faith.

I think those comments apply to the case at bar. This appellant was given the right, pursuant to the Income Tax Act to apply for charitable registration under that Act. Given compliance with the applicable provisions thereof, it had the right to receive registration. Rejection of registration has for it, very serious consequences — for example — rejection would very seriously restrict its fund raising capabilities. As in Nicholson, I think this appellant should have been told, before refusal, why its application was being refused and given an opportunity to respond. I think the Minister was in a position similar to that of the Board in Nicholson, namely, he would wish to be certain that he “had not made a mistake in some fact or circumstance” which was relevant to his decision.

For these reasons I would allow the appeal, set aside the Minister’s decision herein and refer the matter back to the Minister for reconsideration after advising the appellant of his objections to the application and after affording to the appellant a reasonable opportunity to answer those objections.