By Lynne M. Westerhof

The Federal Court of Appeal dismissed a charity’s motion for interim relief, demonstrating the difficulty in meeting the threshold of “irreparable harm” required by the court. In Fortius Foundation v Canada (National Revenue), decided on October 19, 2022, the Federal Court of Appeal considered a determination by the Canada Revenue Agency (“CRA”) that the Fortius Foundation (“Fortius”) failed to comply with the requirements for continued registration as a charity under the Income Tax Act (“ITA”). The Minister of National Revenue (“Minister”) subsequently advised Fortius of her intention to publish a notice in the Canada Gazette revoking its charitable registration (the “Notice”). Fortius brought an application for an order under paragraph 168(2)(b) of the ITA precluding the Minister from publishing the Notice until Fortius had the opportunity to pursue an internal appeal process with the Minister, along with any possible appeals from the Minister’s decision (“Internal Appeal”). Fortius also brought a motion for interim relief under rules 372 and 373 of the Federal Courts Rules that sought to enjoin the Minister from publishing the notice of its revocation until Fortius’ application was decided. In its analysis of this matter, the court addressed the motion for interim relief, and ultimately found that Fortius’ arguments were without merit.

The court considered whether Fortius had shown that it would be just and equitable for the court to stay the Minister’s publication of the Notice of revocation until the Internal Appeal was complete, relying on the three-part test set out in RJR MacDonald Inc v Canada (Attorney General) that (1) there was a serious issue to be tried, (2) publication of the Notice would cause Fortius irreparable harm, and (3) the balance of convenience favoured Fortius, not the Minister. That there was a serious issue to be tried was conceded by the Minister.

Fortius focused on the test for irreparable harm with three arguments: that publication of the Notice would (1) “effectively render the application moot”, (2) eliminate the statutory advantages it enjoyed as a registered charity, and (3) undermine its ability to fund its legal costs for the Internal Appeal because the Notice would cause donations to immediately cease. However, the court did not find these arguments persuasive. The court did not agree with Fortius’ first argument that publication would “render the application moot”, stating that “[p]ublication of the notice of revocation […] does not foreclose Fortius’s statutory appeal rights.” Even if the court did not grant the interim motion that Fortius was requesting and if the Minister subsequently published a notice of the revocation of its charitable status, Fortius would still have the opportunity under the ITA to challenge the Minister’s decision to revoke its registration as a charity, meaning that the matter was not moot.

The court was also not persuaded by Fortius’ second argument that the elimination of its statutory advantages as a charity were sufficient evidence of irreparable harm. Instead, the court stated that “[a]bsent evidence of unique or specific harm or damage, irreparable harm does not encompass the ordinary consequences that flow from an entity losing its registered charity status”. Finally, with regards to Fortius’ third argument that the Notice would undermine its ability to receive donations and thus fund its legal cost, the court noted that one of Fortius’ directors had asserted there were enough funds to dispute the matter in court, and further, less than 1.5% of Fortius’ overall revenue between 2015 and 2021 came from receipted donations.

Because Fortius failed to establish irreparable harm under the second part of the RJR MacDonald test, it was not necessary for the court to determine if the third part – balance of convenience – had been met. Nevertheless, the court found that the balance weighed in favour of the Minister because “[t]he public has a legitimate interest in the exercise of CRA’s statutory mandate to enforce the obligations applicable to registered charities under the ITA.” That public interest carries significant weight in the court’s analysis of the balance of convenience.

As Fortius failed to convince the court that it met all three parts of the RJR MacDonald test, the Federal Court of Appeal dismissed its motion for interim relief under rules 372 and 373 of the Federal Courts Rules that sought to enjoin the Minister from publishing the notice of its revocation until Fortius’ application under the ITA was decided. This case demonstrates the fact that while charities may appeal a decision to revoke their charitable status, notice of the revocation of their charitable status may be published in the interim. Persuading the court to delay the publication of a notice of revocation will be very difficult, as the courts have repeatedly stated that the loss of receipting ability and/or revenue is not sufficient to establish irreparable harm. 

​Read the November 2022 Charity & NFP Law Update