Toronto, Ontario, January 12, 2006
PRESENT: THE HONOURABLE MADAM JUSTICE SNIDER
BETWEEN:
THE JOHN MCKELLAR CHARITABLE FOUNDATION
Applicant
and
CANADA REVENUE AGENCY
Respondent
REASONS FOR ORDER AND ORDER
[1] Underlying this Motion is an application for judicial review which was filed with this Court on May 3, 2005. The application relates to various materials identifying unnamed third parties who made donations to the John McKellar Charitable Foundation (the "Applicant") in 2002 and 2003 (the "2002-2003 Donor Lists"). The Applicant alleges that the 2002-2003 Donor Lists were provided to the Canada Revenue Agency ("CRA") contrary to the provisions of ss.231.2(2) and (3) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp)(the "ITA"). In the judicial review application, the Applicant seeks various remedies to prevent the CRA from making use of the 2002-2003 Donor Lists.
[2] In the events leading to the hearing of the judicial review application, the parties entered into an agreement (the "Agreement") reflected in an e-mail exchange between counsel on May 12 and 13, 2005. The Agreement provides as follows:
CRA will forthwith turn over to [counsel for the Respondent], as custodian, the 2002-2003 Donor Lists, as defined in the Notice of Application (including any copies of such 2002-2003 Donor Lists or notes, lists, memoranda, faxes, voice mail, email, and records of any kind derived in whole or in part from the 2002-2003 Donor Lists).
[Counsel for the Respondent] will not provide any representative of CRA with access to such materials unless and until the final disposition of this matter in favour of your client in the Federal Court of Canada or the discontinuance of this application by your client.
This Agreement was not filed with the Court; nor does it contain any reference to the Court.
[3] In early December, the Applicant expressed concern that not all information was delivered to counsel for the Respondent. Further, in a letter dated December 1, 2005, counsel for the Applicant stated:
It now appears that over the past several days Ms. Watt has been sending correspondence to a great many of the 2002 donors, if not all of them. My client is quite concerned that, on the face of it at least, it appears likely that Ms. Watt is making use of the McKellar database (or other McKellar materials) in violation of CRA's undertaking in this proceeding.
[4] Having failed to obtain an acceptable explanation for this alleged breach of the Agreement, the Applicant brought this Motion, seeking:
1. An Order declaring that the actions of the CRA, Ms. Janice Watt, Srey Soun, Saverio Cristiano, Annie Li, L. Innocentin, Ying Chen, K. Lamothe and Raza Jadgal in sending certain section 231.1 requirements to persons who have made donations to the Applicant are in breach of the Agreement;
2. An interim Order prohibiting CRA from making use of the 2002-2003 Donor Lists and other related information;
3. An interim Order requiring CRA to turn over to this Honourable Court for sealing the 2002-2003 Donor Lists and other related information;
4. An Order compelling the attendance of Ms. Watt and the other individuals set out in
paragraph 1 for examination to determine the extent of the breaches of the Agreement;
5. A permanent Order prohibiting CRA from making use of the 2002-2003 Donor Lists and other related information derived by virtue of their breaches of the Agreement;
6. A permanent Order prohibiting CRA from reassessing any 2002 or 2003 Donors to the Applicant by virtue of their abuse of process in breaching the Agreement given in this Honourable Court;
7. An Order abridging the time for service of this Motion Record;
8. Costs of this motion; and
9. Such further and other relief as counsel may advise and that this Honourable Court deems just.
[5] At the commencement of the hearing of this motion, the Applicant clarified that it is seeking only the relief set out in paragraphs 1, 5 and 6 of the Notice of Motion. Simply stated, the Applicant is seeking:
(a) injunctive relief that would prohibit CRA from making use of the 2002-2003 Donor Lists and other related information;
(b) an order compelling certain employees of CRA to attend for examination to determine "the extent of breach of the undertaking."
[6] The Applicant, as I understand its submissions, would not characterize its motion
as a request for injunctive relief. Rather, its asserts that this Court has the inherent ability to compel the Respondent to comply with the Agreement where there is prima facie evidence that it has failed to do so (Williams Information Services Corp. v. Williams Telecommunications Corp. [1998] F.C.J. No. 594 (F.C.T.D.) at para. 18; aff'd on other grounds (1999), 250 N.R.67 (F.C.A.); Halsbury's Laws of England, 4th ed. Vol. 44(I) (London: Butterworths, 1995) at para. 354).
[7] I note that, while the Applicant describes the Agreement as an "Undertaking", it is more properly characterized as an agreement between the parties to the judicial review. Further, it is not an undertaking given to or filed with the court. Given these facts and that the relief sought from this court is indistinguishable from an interlocutory injunction, the application before me should be treated as such. Specifically, to obtain the requested relief, the Applicant must satisfy this Court that it meets the conjunctive tri-partite test for an interlocutory injunction set out in R.J.R. MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. This approach is consistent with the Federal Courts Rules and the developed jurisprudence on injunctive relief. A private agreement between the parties to which the Court is not a party does not, in my view, change the law regarding the granting of an interlocutory injunction.
[8] It follows that, if I treat this motion as an application for an interim injunction, it must fail. The Applicant has not addressed the components of the tri-partite test. In particular, before me, there is absolutely no evidence of irreparable harm or with regard to the balance of convenience.
[9] If I am wrong in this conclusion, I still conclude that the motion must fail. This is because the entire basis of the motion is an alleged breach of the Agreement. The Applicant asserts that the receipt by "dozens" of the 2002 Donors of reassessment letter is prima facie evidence that the CRA used the information in contravention of the Agreement. I do not agree. The record of this motion demonstrates that the Respondent consistently has stated that the information related to the 2002 Donors could be obtained from other sources. This was best described, in September 2005, by Ms. J. Watt during cross-examination on her affidavit, where she outlined how she could link referrals from head office or from different tax services offices to the 2002 Donors. It is clear from this sworn testimony that there are other means to obtain the information; it was not necessary to use the information that is subject to the Agreement.
[10] In oral submissions, the Applicant stated that it had "suspicions" that the Agreement had been breached. Mere suspicion is not sufficient to convince me that the Agreement has not been respected. Indeed, Ms. Watt testified that: "I'm not using the Undertaking information for any purpose". In the face of this sworn testimony to the contrary, the suspicions of the Applicant are not sustainable.
[11] For these reasons the motion will be denied.
ORDER
THIS COURT ORDERS that the motion is dismissed with costs to the Respondent, in any event of the cause.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-779-05
STYLE OF CAUSE: THE JOHN MCKELLAR CHARITABLE FOUNDATION
APPLICANT
and
CANADA REVENUE AGENCY
RESPONDENT
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JANUARY 9, 2006
AND ORDER BY: SNIDER J.
APPEARANCES:
William Innes
R. Brendan Bisell FOR THE APPLICANT
Peter A. Vita, Q.C.
Aleksandrs Zemdegs FOR THE RESPONDENT
SOLICITORS OF RECORD:
Fraser Milner Casgrain LLP
Barristers & Solicitors
Toronto, Ontario FOR THE APPLICANT
John H. Sims, Q.C.
Deputy Attorney General