Executive Summary: Key Legal and Evidentiary Issues

• The Minister of National Revenue obtained an ex parte Jeopardy Order under subsection 225.2(2) of the Income Tax Act on January 26, 2026, granted by Justice Duchesne on an expedited basis.

• Respondent Teresa Lynn Wallace filed a motion to set aside the Jeopardy Order or, alternatively, to vary it to permit limited ordinary-course business operations.

• Multiple procedural deficiencies plagued the Respondent's filings, including missing hearing dates, unsigned memoranda, absent proof of service, and non-compliance with Federal Courts Rules 360, 364, and 369.

• Justice Gleeson directed the Respondent's motion be accepted for filing without prejudice to the Applicant's right to object and deemed it a motion in writing under Rule 369.

• On April 24, 2026, Justice Gascon granted the Respondent's motion in part, permitting supplementary materials and setting timelines for the parties.

• Teresa Lynn Wallace is seeking leave under Rule 120 to represent the Corporation in this matter, with a Motion for Review scheduled for May 20, 2025, by videoconference.

Background and filing of the application

This case, filed in the Federal Court of Canada under file number T-275-26 in Vancouver, concerns a tax recovery dispute between the Minister of National Revenue (the Applicant) and Teresa Lynn Wallace et al. (the Respondents). The nature of the proceeding is classified under LIR articles 164(1.2) and 225.2, relating to compromised recovery. On January 21, 2026, the Applicant filed a Notice of Application with regard to a Jeopardy Order and simultaneously submitted a letter pursuant to Rule 35 requesting a special sitting or, alternatively, disposition of the matter in writing. The Applicant also sought leave under Rule 362(2)(b) to file the remainder of its application materials by January 23, 2026.

The ex parte Jeopardy Order

The Court acknowledged the urgency of the Applicant's request and directed the filing of the Application Record electronically by January 23, 2026. On January 26, 2026, following a brief 11-minute case management conference held virtually before Justice Duchesne, the Court granted the Jeopardy Order sought by the Applicant on an expedited and ex parte basis under subsection 225.2(2) of the Income Tax Act. The Order was served on the Respondents by personal service on January 26, 2026, and subsequently by ordinary and registered mail on February 2, 2026.

The Respondents' motion to set aside or vary the order

In early March 2026, procedural activity intensified as the Respondents sought to file various documents with the Court. There was considerable confusion regarding the purpose of these filings, prompting the Applicant to seek directions from the Court. On March 10, 2026, Justice Aylen issued oral directions clarifying the situation: earlier filings from the Respondents received in February were rejected, while the motion record received on March 9, 2026, was accepted for filing. The Respondents' motion, as contained in their March 9 filing, sought an order setting aside the Jeopardy Order issued on January 26, 2026, or in the alternative, varying it to permit limited ordinary-course business operations in accordance with a Proposed Order. The Court directed the parties to confer and propose a date for the Applicant's responding motion record and the hearing of the motion by videoconference.

Procedural directions and the Applicant's response

Justice Aylen further directed on March 12, 2026, that the Minister of National Revenue was to serve and file its responding motion record by March 25, 2026, regarding the Respondents' motion to set aside or vary the Jeopardy Order. The Applicant complied, filing its motion record on March 25, 2026, which included affidavits of Brandon Kuo and Davina Goh along with a Memorandum of Fact and Law in opposition to the Respondents' notice of motion.

Further motions and filing deficiencies

On April 2, 2026, Justice Gleeson issued written directions addressing yet another procedural complication. The Respondents' Notice of Motion dated March 27, 2026, which sought an extension of time to file supplementary materials, was refused for filing due to the absence of proof of service and failure to identify a return date or request decision on written representations. The Respondents subsequently resubmitted materials on April 7, 2026, but the Registry again noted several deficiencies, including a Notice of Motion that did not comply with Rules 360 or 369 and an unsigned Memorandum of Fact and Law. Despite these shortcomings, Justice Gleeson directed on April 7, 2026, that the motion be accepted for filing without prejudice to the Applicant's ability to object and deemed it brought as a motion in writing under Rule 369.

The Respondent's supplementary motion and the Applicant's opposition

On April 7, 2026, the Respondent filed a Notice of Motion in writing seeking leave to rely on the Proposed Supplementary Affidavit of Teresa Lynn Wallace and its exhibits, as well as a proposed supplementary Memorandum of Fact and Law. The Applicant filed its opposition on April 15, 2026, including an affidavit of Angela Lam and written representations. The Respondent submitted reply representations on April 20, 2026.

The partial granting of the motion and upcoming review

On April 24, 2026, Justice Gascon rendered an order without personal appearance granting the Respondent's motion in part. The order set timelines for the parties, and a Motion for Review was scheduled for May 20, 2025, at 10:00 a.m. Pacific Time by videoconference. Additionally, the record indicates that Teresa Lynn Wallace has sought leave from the Court pursuant to Rule 120 to represent the Corporation in this matter, though her motion record submission was referred back by the Registry for correction due to non-compliance with Federal Courts Rule 364 regarding the requirements for a motion record. No exact monetary amount at issue has been specified in the court docket records available; however, the proceeding remains ongoing, with the next significant procedural step being the scheduled Motion for Review.