Executive Summary: Key Legal and Evidentiary Issues

• The court held that it lacked jurisdiction to grant an interlocutory injunction restraining publication of the CRA’s Notice of Intention to Revoke the charity’s registration, because the Income Tax Act assigns such challenges to the Federal Court of Appeal.

• Coram Deo Foundation, a registered charity based in Vancouver, was the subject of a CRA audit covering specific recent years, which identified non-compliance with requirements that its resources be devoted to exclusively charitable purposes and that adequate books and records be maintained.

• The CRA’s concerns included payments and an interest-free loan involving a director/pastor, as well as record-keeping and timing issues regarding the deposit of donated funds, which the Minister characterized as non-incidental private benefit and mismanagement of charitable resources.

• The charity applied to the Supreme Court of British Columbia for an interlocutory injunction to prevent the Minister from publishing the Notice of Intention to Revoke in the Canada Gazette while it pursued its challenge through the federal process.

• In considering the RJR-MacDonald test in the alternative, the judge assessed whether there was a serious issue to be tried, irreparable harm from publication (including reputational damage and impact on operations), and the balance of convenience given the public interest in enforcement of the charity law regime.

• The application was dismissed, leaving the Minister of National Revenue and CRA free to proceed with publication and revocation under the federal statutory scheme; the Minister was the successful party, and no specific monetary amount was ordered or awarded in the decision.

Factual background

Coram Deo Foundation (the “Charity”) is a registered charity based in Vancouver, British Columbia. The Canada Revenue Agency (“CRA”) conducted an audit of the Charity for a defined period of recent years. Following this audit, CRA concluded that the Charity had not complied with certain provisions of the Income Tax Act (the “Act”) governing registered charities. The Minister of National Revenue (the “Minister”) notified the Charity that its registration as a charity would be revoked and that a Notice of Intention to Revoke (the “Notice”) would be published in the Canada Gazette (the “Gazette”), after which revocation would take effect.

The Charity responded to the CRA’s audit letters, provided explanations and additional information, and attempted to address the concerns raised. Despite these submissions, CRA maintained its position that there were serious instances of non-compliance and proceeded to issue the Notice of Intention to Revoke.

The Charity then filed a petition in the Supreme Court of British Columbia. In this petition, the Charity sought an interlocutory injunction preventing the Minister from publishing the Notice in the Gazette, pending the outcome of the appropriate federal court proceedings challenging the revocation decision.

The charity and the CRA audit

The reasons describe the Charity as a Christian-based organization that supports various programs and activities, including initiatives outside Canada, and provides financial assistance to beneficiaries through grants and scholarships. The Charity’s board and directors are responsible for its governance and for ensuring that its activities and use of funds comply with the Act and with CRA’s requirements for registered charities.

CRA audited the Charity for a specified period that included multiple recent calendar years. In the audit correspondence and final audit letter, CRA stated that it had identified several areas of non-compliance with the Act. These included findings that the Charity had not operated exclusively for charitable purposes and had not devoted all of its resources to charitable activities, as required for continued registration under the Act. CRA also raised concerns about the adequacy of the Charity’s books and records.

The CRA’s findings focused in part on financial transactions involving a director and pastor associated with the Charity. The audit identified consulting fees paid to that individual and an interest-free loan advanced to him to facilitate the purchase of a condominium. CRA treated these transactions as conferring a non-incidental private benefit, contrary to the requirement that a charity’s resources be used exclusively for charitable purposes. The audit also noted problems with the timing of deposits of donated funds and record-keeping practices, leading CRA to question whether the Charity had properly managed and safeguarded its donations.

Current CRA audit and Notice of Intention to Revoke

After reviewing the Charity’s responses to its preliminary and final audit letters, CRA remained concerned that the Charity’s conduct breached the Act. The Minister decided to proceed with revocation of the Charity’s registration. A Notice of Intention to Revoke was issued, and the Charity was advised that the Notice would be published in the Gazette after the statutory waiting period, at which point the revocation would take effect.

The Notice and related correspondence explained that, in CRA’s view, the Charity had:

• Failed to operate for exclusively charitable purposes by providing non-incidental private benefits to a related individual; and

• Failed to maintain adequate books and records as required by the Act.

The Charity disputed CRA’s conclusions, arguing that the payments and loan were consistent with the Charity’s purposes and that any deficiencies in timing or documentation had been or could be corrected. It also emphasized the impact that revocation would have on its ability to continue serving its beneficiaries.

The petition and request for an interlocutory injunction

The Charity brought its petition in the Supreme Court of British Columbia seeking to restrain the Minister from publishing the Notice in the Gazette. It did not, in this proceeding, ask the provincial court to quash or set aside the revocation decision itself. Rather, the aim was to preserve the Charity’s position while it pursued the appropriate challenge in the federal courts.

In support of the injunction, the Charity argued that once the Notice was published, it would suffer serious and irreparable harm. The Charity pointed to the likely loss of donor confidence, damage to its reputation, and disruption to its relationships with beneficiaries and partner organizations. It also argued that publication of the Notice could not later be “undone” even if the Charity were ultimately successful before the Federal Court of Appeal.

The Minister opposed the petition. The Minister’s primary position was that the Supreme Court of British Columbia had no jurisdiction to grant the injunction in light of the exclusive federal jurisdiction conferred by the Act. In the alternative, the Minister argued that the Charity had not met the test for interlocutory injunctive relief, particularly on the elements of irreparable harm and balance of convenience, when the public interest and the audit findings were taken into account.

Policy terms and statutory framework at issue

The legal framework at issue comprised provisions of the Income Tax Act and related federal legislation governing the registration and revocation of charities and the role of the Federal Court and Federal Court of Appeal. The reasons refer to section 168 of the Act, including s. 168(2)(b), which sets out the process for issuing and publishing a notice of intention to revoke a charity’s registration. The Act provides that, after the issuance of such a notice, a charity may seek judicial review in the Federal Court of Appeal of the Minister’s decision to revoke.

The court considered the effect of provisions in the Act and in the Federal Courts Act that:

• Confer exclusive original jurisdiction on the Federal Court and Federal Court of Appeal to hear and determine applications for judicial review of federal decision-makers, including decisions of the Minister of National Revenue under the Act; and

• Empower the Federal Court and Federal Court of Appeal to grant extraordinary remedies such as injunctions, prohibition, mandamus, and related relief in connection with such decisions.

The Minister argued that this federal statutory scheme is comprehensive and that the jurisdiction to review and control the Minister’s exercise of revocation powers—including through interlocutory injunctions—is assigned exclusively to the Federal Court of Appeal, not to provincial superior courts. The Charity, in contrast, relied on the inherent jurisdiction of the superior courts of the provinces to grant equitable remedies such as injunctions, particularly where urgent relief was said to be necessary to prevent irreparable harm.

Preliminary objection to jurisdiction

The judge addressed the Minister’s preliminary objection to jurisdiction as a threshold issue. After reviewing the relevant provisions of the Income Tax Act and the Federal Courts Act, the court concluded that Parliament had clearly allocated jurisdiction over challenges to revocation decisions, and associated remedies, to the federal courts.

The reasons explain that section 168(2)(b) of the Act directs the manner in which a notice of intention to revoke is to be given and provides for its publication in the Gazette. The Act then provides that an affected charity may apply to the Federal Court of Appeal for judicial review of the Minister’s decision. Under the Federal Courts Act, that court has been expressly granted the power to grant injunctions and other extraordinary remedies against federal decision-makers, including the Minister.

The judge found that this legislative scheme demonstrated Parliament’s intention that disputes about the validity and effect of a notice of intention to revoke, and applications for related injunctive relief, be addressed in the federal court system. In these circumstances, the general equitable jurisdiction of the Supreme Court of British Columbia could not be invoked to grant an injunction that would interfere with the federal process established by statute.

On that basis, the court held that it lacked jurisdiction to consider the Charity’s petition for an interlocutory injunction and that the petition must be dismissed.

Test for an interlocutory injunction (in the alternative)

Although the jurisdictional ruling was dispositive, the judge went on to analyze, in the alternative, whether the Charity would have been entitled to an interlocutory injunction if jurisdiction had existed. The court applied the familiar three-part test from RJR-MacDonald and subsequent cases:

1. Whether there is a serious issue to be tried;

2. Whether the applicant would suffer irreparable harm if the relief were not granted; and

3. Where the balance of convenience lies, including any pertinent public interest considerations.

The parties agreed on this test but disagreed on its application to the facts of the case.

Serious issue to be tried

On the first branch, the court considered whether the Charity had raised a serious issue about the legality or reasonableness of the Minister’s decision to revoke its registration. The threshold for this branch is low: the applicant need not show that it is likely to succeed at the final hearing, only that the claim is neither frivolous nor vexatious.

The Charity pointed to its explanations for the payments and loan to the director and pastor, its argument that the benefits were not private or were incidental to its charitable purposes, and its assertions that it had corrected or could correct deficiencies in its records and donation handling. The Charity maintained that the Minister had erred in interpreting the Act and in characterizing its conduct as non-compliant.

The Minister, for his part, relied on the audit findings, which described the payments and interest-free loan as non-incidental private benefits, and on the identified failures in record-keeping and donation management. While the judge acknowledged the low threshold for a serious issue to be tried, the reasons also highlight that the ultimate merits of the Minister’s decision are for the Federal Court of Appeal to determine under the statutory review process.

Irreparable harm

On the second branch, the Charity argued that publication of the Notice in the Gazette would cause irreparable harm. It emphasized that publication would publicly signal that CRA had determined the Charity no longer met the requirements for registration, leading to reputational damage that could not be quantified or easily reversed. The Charity also pointed to likely loss of donor support, disruption of relationships with beneficiaries and partners, and impairment of its ability to carry on operations.

The court accepted that reputational damage, loss of goodwill, and disruption to charitable activities can, in principle, amount to irreparable harm because they are not readily compensable by damages. However, the reasons also emphasize that this harm must be assessed in light of the audit findings and the public interest in transparency when CRA has concluded that a registered charity has not complied with the Act.

The Minister noted that the audit had identified serious concerns about non-incidental private benefits and deficiencies in the Charity’s management of donations and record-keeping. The judge considered these findings and the nature of the alleged mismanagement and concluded that the potential harm to the Charity from publication could not be viewed in isolation from the public’s interest in being made aware of CRA’s conclusions about a registered charity’s compliance.

The balance of convenience

On the third branch, the court considered the balance of convenience, which requires weighing the potential harm to the applicant if relief is denied against the potential harm to the respondent and the public interest if relief is granted. The judge canvassed both the private interests of the Charity and its stakeholders and the broader public interest in the integrity and enforcement of the federal charity law regime.

On the Charity’s side, the court acknowledged the likely difficulties the Charity would face if the Notice were published and the revocation took effect, including challenges in fundraising and maintaining relationships with beneficiaries and partner organizations. The Charity argued that these consequences warranted preserving the status quo until the Federal Court of Appeal had ruled on the lawfulness of the Minister’s decision.

On the Minister’s and public’s side, the court emphasized the importance of ensuring that charitable registration is only maintained by organizations that meet the statutory requirements and of promptly informing the public when CRA has concluded that a charity should be revoked. The court also noted that Parliament had provided a specific process for challenging revocation in the Federal Court of Appeal and empowered that court to grant interim relief where appropriate.

Taking all these factors into account, the judge concluded that the balance of convenience did not favour granting an interlocutory injunction, even if the court had jurisdiction. The public interest in the enforcement of the Act and in transparency about the status of registered charities weighed heavily in this assessment, particularly in light of the findings regarding private benefits and financial management.

Ruling and overall outcome

In the result, the Supreme Court of British Columbia dismissed Coram Deo Foundation’s petition. The court found that it lacked jurisdiction to grant an interlocutory injunction preventing the Minister from publishing the Notice of Intention to Revoke the Charity’s registration in the Canada Gazette, because the Income Tax Act and the Federal Courts Act confer exclusive jurisdiction over such matters on the federal courts.

The judge further indicated, in the alternative, that even if jurisdiction were assumed, the Charity had not met the requirements for interlocutory injunctive relief under the RJR-MacDonald test. The court was not persuaded that the alleged irreparable harm and the balance of convenience outweighed the public interest in enforcing the statutory scheme, particularly given the CRA’s audit findings regarding non-incidental private benefits and deficiencies in record-keeping and donation handling.

Accordingly, the Minister of National Revenue was the successful party on the application. The reasons do not state any specific amount of money ordered, granted, or awarded in favour of the Minister or any other party, and no such monetary award can be determined from the decision itself.