Executive Summary: Key Legal and Evidentiary Issues

• Applicants challenged the fairness of the Canada Revenue Agency's (CRA) process for issuing tax reassessment confirmations.

• Asserted improper sub-delegation of authority within the CRA involving Department of Justice counsel.

• Claimed CRA failed to follow through on promises to contact applicants before confirming reassessments.

• Bypassed the Tax Court appeal process and sought judicial review in Federal Court.

• The court found no sufficient factual basis to support allegations of procedural unfairness or improper conduct.

• Judicial review applications were struck for lacking jurisdiction and failing to establish a viable legal claim.

Facts and outcome of the case

Three corporate applicants—Spennie Holdings Inc, SMK Property Inc, and ASLK Group Inc—filed judicial review applications challenging the Canada Revenue Agency’s confirmation of tax reassessments related to transactions involving so-called "Gemini Shares." All applicants were represented by the same legal counsel and filed similar complaints, arguing that the CRA’s internal objection and confirmation process was procedurally unfair. Specifically, they alleged that the CRA had failed to provide promised communications, including the assignment of an appeals officer, updates on related case reviews, and an opportunity to understand or contest the decisions before they were finalized.

The applicants also claimed improper sub-delegation of authority. They pointed to comments made by a Department of Justice lawyer involved in a related Tax Court case (ASLK Inc, a separate but related entity), suggesting that the outcomes of their reassessments were predetermined. The applicants alleged this conduct demonstrated undue influence and procedural impropriety.

Rather than appeal to the Tax Court of Canada, as allowed under the Income Tax Act, the applicants chose to pursue judicial review in Federal Court, arguing that their case involved administrative fairness, not tax liability per se. They sought to have the reassessment confirmations quashed and returned to the CRA for reconsideration.

The court found that the proper remedy for challenging tax reassessments, including procedural issues, lies with the Tax Court. The court emphasized that judicial review is not available where a statutory appeal route exists and found that the applicants had not provided sufficient facts to support their claims of improper conduct or sub-delegation. The court noted that simply being aware of a decision does not amount to participating in it, and speculative allegations were insufficient to justify judicial intervention.

As a result, the court struck all three applications for judicial review without leave to amend, concluding that the applicants failed to state a reasonable cause of action and had an adequate, effective remedy in the Tax Court.

Costs were awarded in favor of the respondent, the Attorney General of Canada. Each applicant was ordered to pay $1,200 in costs, totaling $3,600 across the three matters, payable forthwith.