Executive Summary: Key Legal and Evidentiary Issues

• Judicial review centered on whether the Agence du Revenu du Québec's refusal to cancel accumulated mining tax interest met the reasonableness standard set out in Vavilov.
   
• Reliance on an internal report and interest calculation worksheets was rejected because these documents were never disclosed to the applicant before or alongside the decision.
   
• An affidavit from the applicant's representative was excluded as either redundant with the existing record or impermissible new evidence on judicial review.
   
• Key precedent addressed whether a decision-maker's silence on a central taxpayer argument — the effect of the ministry's delay in issuing assessment notices — undermined the decision's justification and transparency.
   
• Revenu Québec's own interpretation bulletin, recognizing undue processing delay as grounds for interest relief, was found not to have been meaningfully engaged with by the decision-maker.
   
• Ultimately, the court found the ARQ's failure to address the applicant's serious, repeatedly raised arguments rendered the decision unreasonable, without deciding those arguments' ultimate merits.
   

Facts of the case

First Quantum Minerals Ltd. acquired the Quebec mining company Troïlus in 2013. In November 2014, the Ministère de l'Énergie et des Ressources naturelles (MERN) issued notices of assessment covering Troïlus's 2008–2011 financial years, claiming interest of $1,119,451 under the Mining Tax Act. In May 2015, First Quantum Minerals asked MERN to waive part of this interest, citing staffing disruptions following the acquisition, delays in the issuance of the assessment notices themselves, and payments made in excess of taxes ultimately found owing. MERN responded in August 2015, waiving a portion of the interest but maintaining the remainder. Administrative responsibility passed to the Agence du Revenu du Québec (ARQ) in September 2015. First Quantum Minerals pursued further review requests in 2016 and again in 2022, reiterating its earlier arguments and adding that the original decision lacked adequate reasons. In August 2024, the ARQ's Tax Credit Verification Directorate cancelled interest for a specific period but maintained the balance, citing the company's history of late and missed instalment payments. First Quantum Minerals then sought judicial review of that August 2024 decision.

Policy and legislative provisions at issue

The dispute engaged section 94.1 of the Tax Administration Act, which grants the Minister discretion to cancel or waive interest, penalties, or charges assessed under a fiscal law. It also engaged section 52.0.2 of the Mining Tax Act, which automatically triggers a 10% additional interest rate where an operator fails to pay required instalments, and the instalment obligations set out in that Act for operators whose annual duties exceed prescribed thresholds. Revenu Québec's own interpretation bulletin on the waiver or cancellation of interest was central to the analysis: it identifies inability to pay, harm caused by the Agency's own actions — including undue delay in processing — and exceptional circumstances beyond the taxpayer's control as grounds for relief, while directing decision-makers to weigh the taxpayer's compliance history, awareness of any unpaid balance, reasonable efforts to comply, and promptness in remedying any delay.

Reasoning and analysis

Applying the presumptive reasonableness standard confirmed in Canada (Minister of Citizenship and Immigration) v. Vavilov, the court assessed whether the ARQ's reasoning was internally coherent and justified in light of the legal and factual constraints before it. The court emphasized that while decision-makers need not respond to every argument, failure to meaningfully engage with a party's key arguments raises doubt about whether the decision-maker was truly attentive to the matter, and reviewing courts cannot speculate about unstated justifications. Two exhibits — an internal report and an interest calculation worksheet — along with a supporting affidavit, were excluded from consideration because they were extrinsic to the reasons actually given to First Quantum Minerals and could not be used to retroactively justify the decision. Turning to substance, the court found that First Quantum Minerals had repeatedly raised a serious argument, supported by Hillier v. Canada (Attorney General), that MERN's own delay in issuing the assessment notices contributed to the interest accrual, and had also invoked Revenu Québec's bulletin recognizing undue departmental delay as a basis for relief. The ARQ's reasons, while explaining why interest was owed based on the company's payment history, never addressed why its discretion to cancel interest attributable to the ministry's own delay was not exercised. Citing Habitations Tyrons inc. v. Agence du Revenu du Québec, the court noted that relying solely on the taxpayer's non-compliance to refuse relief effectively negates the equitable purpose of the discretionary provision.

Ruling and overall outcome

The court allowed First Quantum Minerals Ltd.'s application for judicial review, declaring the ARQ's August 29, 2024 decision unreasonable because it failed to grapple with the applicant's central arguments concerning administrative delay, without pronouncing on the ultimate merits of those arguments. The matter was referred back to the ARQ for redetermination of First Quantum Minerals' request for review, with costs awarded in favour of First Quantum Minerals Ltd., the successful applicant; the judgment does not specify a dollar amount for those costs.