Words and Phrases - "set aside"

After the taxpayer was reassessed for over $200 million and appealed to the Tax Court, the Minister obtained an ex parte order under s. 225.2 (the “Jeopardy Order”) to take collection action forthwith. The taxpayer paid $12.75 million on account of his tax liability. However, the Federal Court then made a consent order that the Jeopardy Order be “set aside and vacated” (which Webb JA interpreted as signifying its annulment) and the $12.75 million was refunded to the taxpayer pursuant to s. 164(1.1), but without interest, whose absence the taxpayer now challenged.

Webb JA stated (at para 17):

If the amount was refunded under [subsection 164(1.1)], then Mr. Grenon would have been entitled to interest on such refund under subsection 164(3) of the Act. Therefore, the issue in this case is whether subsection 164(1.1) of the Act applied.

Before ordering that the taxpayer was to be paid interest on the $12.75 million pursuant to s. 164(3), Webb JA stated (at paras. 26, 33 and 34):

… [S]etting aside the Jeopardy Order in this case would mean that subsection 164(1.1) of the Act, should be read as if the Jeopardy Order had never been issued. This would mean that “no authorization has been granted under subsection 225.2(2) in respect of the amount assessed” for the purposes of this subsection. Since Mr. Grenon has appealed the reassessments to the Tax Court and has applied in writing for the refund, the other conditions of this subsection have been satisfied and interest is payable under subsection 164(3) of the Act. ...

Since any interest paid on the amount refunded to him will have to be repaid with interest if the result of Mr. Grenon’s appeal is that all or a portion of the refunded amount is still payable, there is no loss to the federal government if interest is paid on the refunded amount, absent any collection concerns. …

There is a loss to Mr. Grenon if interest is not paid on the refunded amount and he is successful in his appeal in reducing his outstanding liability to less than the refunded amount. In my view, this would support the contextual interpretation that interest should be paid to him on the refunded amount.