Section 180

The Minister sent a notice of intention to revoke (“NITR”), to the appellant, a registered charity. After the Minister issued a notice of confirmation, the Minister agreed, in correspondence with the appellant, to stay the publication of the NITR until the period for appealing the notice of confirmation had expired.

About a month later, the appellant filed a notice of appeal in the Federal Court of Appeal but did not apply for an order extending the period after which the Minister could publish the NITR. Less than three weeks later, the Minister published the NITR in the Canada Gazette, thereby revoking the appellant's charitable registration. As noted by Monaghan JA, a charity cannot appeal a revocation (as contrasted to an NITR).

The appellant filed an application for judicial review and for injunctive relief in the Federal Court regarding the Minister's decision to publish the NITR, and also filed an application for judicial review of the Minister's decision to publish the NITR in the Federal Court of Appeal.

At issue in this proceeding was whether the Federal Court had been correct in determining that it lacked jurisdiction to review the publication decision. The appellant submitted that, as the ITA appeal provisions only captured the decision to issue or confirm the issuance of the NITR and the decision to publish the NITR (triggering revocation of charitable registration) was a separate decision that the appellant could not appeal, therefore only the Federal Court had jurisdiction (pursuant to s. 18(1) of the Federal Courts Act) to judicially review the publication decision.

Before rejecting this submission, Monaghan JA noted that s. 172(3) provided that a registered charity may appeal to the Federal Court of Appeal the Minister’s decision to issue the NITR or to confirm it following objection, and that s. 180(2) provided that the Federal Court had no jurisdiction to entertain “any proceeding in respect of a decision of the Minister” from which any such appeal may be instituted. She then stated (at paras. 29-30):

Revocation of charitable status is only effective on publication. Issuance of the NITR is thus a pre-condition to revocation. The decision to issue or confirm a NITR may be appealed, and any appeal must be to this Court. Once the NITR is issued, only this Court can order the Minister to stay publication and thereby stay revocation. Publication gives effect to the revocation that is the subject of the confirmed NITR. The confirmed NITR, in turn, may be challenged in an appeal.

Given this legislative scheme, there can be no doubt that an application for judicial review of the Minister’s decision to publish the NITR is a proceeding “in respect of” (i.e., “in relation to”, “with reference to”, or “in connection with”) the Minister’s decision to issue or confirm the NITR: Nowegijick at 39.

Monaghan JA noted that she was not commenting on the separate application for judicial review by the Federal Court of Appeal of the Minister’s decision to publish.

The taxpayer, who was cognitively disabled from a brain injury and had limited ability to represent himself, used an agent to dispute assessments that treated (consistently with judgments on GST appeals by him for much of the same period) amounts as having been received by him qua employee, so that they were employment income for ITA purposes. During the course of the hearing, the Tax Court expressed significant concerns about the continued representation of the taxpayer by an agent who had been identified in other proceedings as a vexatious litigant, whereupon that agent resigned. The taxpayer then requested an adjournment to seek advice as to whether he should be represented by counsel, which the Tax Court refused, without giving reasons. The taxpayer was given the choice of discontinuing his appeal - or proceeding with his appeal on his own, which he did.

Monaghan JA found (at para. 31) that “the Tax Court breached Mr. Shull’s procedural fairness rights by refusing the adjournment.” However, she stated (at para. 32):

A finding of a breach of procedural fairness renders a decision liable to be overturned … . However, where the result is inevitable, a court may exercise its discretion to not grant a remedy for the breach … .

The latter narrow exception applied: the taxpayer’s appeal had “no prospect of success” (para. 34). The taxpayer’s appeal was allowed, but only to reverse the costs award made against him.

After noting that the trial judge had made findings respecting the interpretation of contracts, Boivin JA referred to Sattva, [2014] 2 S.C.R. 633, for the proposition that “contractual interpretation constitutes a question of mixed fact and law” - so that the applicable review standard, following Housen v. Nikolaisen, 2002 SCC 33, was of palpable and overriding error.

The taxpayer (now represented by counsel) raised in the FCA a new argument in support of his position that losses from disposing of stock option shares were business losses, namely, that he had been effectively deemed by s. 253(b) to be carrying on business in Canada. In finding that this new argument could be raised, Sharlow JA stated (at paras. 4-5):

When an appellant seeks to raise an issue of law which does not require further evidence, and which will not cause prejudice to the respondent, it is an error of law for an appellate court to refuse to consider the argument (Athey v. Leonati, [1996] 3 S.C.R. 458 … at paragraph 51).

In the present case, all of the evidence necessary to consider the applicability of subsection 253(b) of the Act was adduced at trial and I am satisfied that the respondent will not be prejudiced by allowing the appellant to raise this argument; it was the respondent who raised at trial the issue of whether the appellant was carrying on business in Canada when the loss on the sale of shares was incurred

In affirming the trial judge's findings that the taxpayers' documentation was inadequate to support their purported cash expenses (see summary under General Concepts - Evidence), Gauthier JA stated (at para. 11):

As Stratas JA explained in Canada v. South Yukon Forset Corporation, 2012 FCA 164 at paragraph 46, "[w]hen arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the tree standing. The entire tree must fall. Here, ... at least one of the judge's references appears to be factually incorrect if read literally... . That being said, the tree has not fallen.

At trial, the judge found that s. 31(1) did not stop the taxpayer from claiming farming losses for his horse breeding and racing business. He found that the taxpayer's farming constituted a significant part of his income in the years in question, and was more than a "sideline business." Therefore, under the framework set out in Gunn, s. 31(1) did not apply.

In affirming the trial judge's decision, Evans J.A. stated for the court at para. 27 that "it is not normally the function of an appellate court to second guess a trial judge's application of the law to the facts."

In noting an exception to the rule that in reviewing decisions of the Tax Court, the standard of review for conclusions of mixed fact and law was of palpable and overriding error, Malone J.A. stated (at pp. 6469-6470) that "if a clear legal error can be isolated from the facts, the error will be reviewed on a correctness standard".

"The standard of review set out in Housen v. Nikolaisen, [2002] 2 S.C.R. 235 applies to appeals from the Tax Court conducted under its informal procedure ... . That is, for questions of law, the standard is correctness while for findings of fact, inferences or conclusions of fact, or conclusions of mixed law and fact, the standard is palpable and overriding error." (p. 6408)

La Forest J. found (at p. 6111) that the role that an appellate court should give deference to the findings of fact made by a trial judge "applies not only when the credibility of witnesses is at issue, although in such a case it may be more strictly applied, but also to all conclusions of fact made by the trial judge", but went on to find that the Supreme Court of Canada should not give any deference to factual findings made by the Court of Appeal that differed from those of the trial judge.

Although the findings of facts of the trial judge were based on an agreed statement of facts, his findings involved drawing influences from those facts as to the true nature of the transactions, and in doing so he was obliged to apply the right legal principles in characterizing the transactions in terms of the provisions of the Act. Accordingly, the Court of Appeal was required to show some deference to the factual conclusion of the trial judge.

The inferences drawn by the trial judge that two subsidiaries were mere instrumentalities of the taxpayer were overturned by Iacobucci, C.J. after citing Gurd's Products.

Where neither of the parties disputes the findings of fact made by the Trial Judge, the Federal Court of Appeal is entitled to disagree with the Trial Judge on the inferences to be drawn from such facts if it is of the opinion that those inferences cannot, in the circumstances, be supported.

Where the task confronting the trial judge was esentially one of finding the facts and applying the appropriate law, the appellate court should not interfere "unless the findings of fact were unsupportable and the proper law was not applied."

When the Minister takes a new position in the Court of Appeal, or in argument before the trial judge, the court should only consider that position when it is satisfied beyond a reasonable doubt that all requisite evidence has been adduced at trial that may bear on that position.

Where a view taken by the trial judge as to a question of fact and opinion "is not unreasonable or based on some erroneous principle, the Court, on appeal, will not substitute a different view merely because it might, had it been the Court of first instance, have preferred such a different view."

"[A]n initial Appellate Court must take into consideration well-established precedents, namely: (1) where the credibility of witnesses is involved, except in extraordinary cases, the finding of the Trial Judge must not be set aside; (2) the interpretation of the evidence is left to the discretion of the judge who sees and hears the witnesses, and it is the duty of a Court of Appeal to respect the judgment of the judge who has these privileges unless it is satisfied that the latter was plainly wrong."