Sheldon Inwentash and Lynn Factor Charitable Foundation v. Minister of National Revenue, (2012) 432 N.R. 338 (FCA)

• Judge: Dawson, Trudel and Stratas, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: February 29, 2012
• Jurisdiction: Canada (Federal)
• Citations: (2012), 432 N.R. 338 (FCA);2012 FCA 136

Sheldon Inwentash & Lynn Factor Fdn. v. MNR (2012), 432 N.R. 338 (FCA)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

Temp. Cite: [2012] N.R. TBEd. MY.012

The Sheldon Inwentash and Lynn Factor Charitable Foundation (appellant) v. Her Majesty the Queen (respondent)

(A-235-11; 2012 FCA 136; 2012 CAF 136)

Indexed As: Sheldon Inwentash and Lynn Factor Charitable Foundation v. Minister of National Revenue

Federal Court of Appeal

Dawson, Trudel and Stratas, JJ.A.

May 4, 2012.

Summary:

An inter vivos trust (the foundation) was settled by Inwentash for the purpose of making gifts to Canadian registered charities. The trust was a charitable foundation as defined in s. 149.1(1) of the Income Tax Act and a registered charity as defined in s. 248(1) of the Act. The foundation had a single trustee. All, or substantially all, of the capital contributed to the trust was contributed by Inwentash, his wife and/or entities controlled by them. The Minister of National Revenue advised the foundation that it qualified for tax exempt status as a registered charity and was designated as a private foundation. A private foundation was subject to more detailed and restrictive rules than a public foundation. The foundation objected to the private foundation designation. The Minister of National Revenue affirmed the designation. The foundation appealed.

The Federal Court of Appeal dismissed the appeal.

Crown - Topic 666

Authority of Ministers - Interpretation of legislation (incl. standard of review of ministerial interpretation) - The Minister of National Revenue advised a charitable foundation that it qualified for tax exempt status as a registered charity and was designated as a private foundation - The foundation objected to the private foundation designation - The Minister of National Revenue affirmed the designation - The foundation appealed under s. 172(3)(a.i) of the Income Tax Act - The Federal Court of Appeal held that, for the following reasons, the Minister's interpretation of the definition of "public foundation" was an extricable question of law to be reviewed on the correctness standard - First, s. 172(3)(a.i) permitted an appeal to be brought directly to the court - The absence of a privative provision in the Act was a signal that no deference was owed to the Minister's interpretation of the Act - Questions of law which arose under the Act and which were appealed to the Tax Court and to the Court of Appeal were always reviewed on the correctness standards - There was no basis for distinguishing the standard applied in those cases from the one applied here - Second, the proper interpretation was a question of law and the Minister possessed no greater expertise than the court when it came to statutory interpretation - Third, the Minister acted in an administrative capacity when confirming the designation - Finally, the court had previously applied the correctness standard of review to extricable questions of law decided by the Minister - That conclusion was consistent with the 2012 decision in Georgia Strait Alliance et al. v. Canada (Minister of Fisheries and Oceans) et al. (F.C.A.), which held that the reasonableness standard did not apply to the interpretation of a statute by a minister responsible for its implementation unless parliament provided otherwise - See paragraphs 18 to 23.

Income Tax - Topic 7533

Exemptions - Particular exemptions - Charitable organizations and foundations - An inter vivos trust (the foundation) was settled by Inwentash for the purpose of making gifts to Canadian registered charities - The trust was a charitable foundation as defined in s. 149.1(1) of the Income Tax Act and a registered charity as defined in s. 248(1) of the Act - The foundation had a single trustee - All, or substantially all, of the capital contributed to the trust was contributed by Inwentash, his wife and/or entities controlled by them - The Minister of National Revenue advised the foundation that it qualified for tax exempt status as a registered charity and was designated as a private foundation (which was subject to more detailed and restrictive rules than a public foundation) - The foundation objected to the private foundation designation - The Minister of National Revenue affirmed the designation - The Federal Court of Appeal dismissed the foundation's appeal - There was no express provision dealing with a foundation that had only one trustee - The fact that s. 149.1 commenced with "'public foundation' means ..." indicated that the definition was exhaustive of the meaning - The definition continued with the requirements that "... more than 50% of the  ... trustees  ... deal with each other and with each of the other  ... trustees  ... at arm's length" - Through that language parliament had precisely and unequivocally evidenced its intent that there had to be more than one trustee (director, officer or like official) of a public foundation - Therefore, the words' ordinary meaning played the dominant role in the interpretation - The legislative context and purpose supported that definition - The requirement that there be more than one arm's length trustee provided greater assurance that a public foundation would not be used for tax avoidance purposes - See paragraphs 24 to 42.

Income Tax - Topic 7533

Exemptions - Particular exemptions - Charitable organizations and foundations - An inter vivos trust (the foundation) was settled by Inwentash for the purpose of making gifts to Canadian registered charities - The trust was a charitable foundation as defined in s. 149.1(1) of the Income Tax Act and registered charity as defined in s. 248(1) of the Act - The foundation had a single trustee - All, or substantially all, of the capital contributed to the trust was contributed by Inwentash, his wife and/or entities controlled by them - The definition of "public foundation" in s. 149.1 required that "... more than 50% of the  ... trustees  ... deal with each other and with each of the other  ... trustees  ... at arm's length" - The Minister of National Revenue advised the foundation that it qualified for tax exempt status as a registered charity and was designated as a private foundation (which was subject to more detailed and restrictive rules than a public foundation) - The foundation objected to the private foundation designation - The Minister of National Revenue affirmed the designation - The foundation appealed, asserting that the definition should be read in the singular pursuant to s. 33(2) of the federal Interpretation Act - The Federal Court of Appeal rejected the assertion - Section 33(2) was subject to s. 3(a) of that Act which stated that "[e]very provision of this Act applies, unless a contrary intention appears, to every enactment" - The use of the terms "more than 50%", "deal with each other" and "at arm's length" all evidenced a contrary intention to the application of s. 33(2) to the definition - See paragraphs 43 and 44.

Income Tax - Topic 7533

Exemptions - Particular exemptions - Charitable organizations and foundations - An inter vivos trust (the foundation) was settled by Inwentash for the purpose of making gifts to Canadian registered charities - The trust was a charitable foundation as defined in s. 149.1(1) of the Income Tax Act and a registered charity as defined in s. 248(1) of the Act - The foundation had a single trustee - All, or substantially all, of the capital contributed to the trust was contributed by Inwentash, his wife and/or entities controlled by them - The definition of "public foundation" in s. 149.1 required that "... more than 50% of the  ... trustees  ... deal with each other and with each of the other  ... trustees  ... at arm's length" - The Minister of National Revenue advised the foundation that it qualified for tax exempt status as a registered charity and was designated as a private foundation (which was subject to more detailed and restrictive rules than a public foundation) - The foundation objected to the private foundation designation - The Minister of National Revenue affirmed the designation - The foundation appealed, asserting that certain parts of the definition should be read out or not applied where a public foundation had a single trustee - The Federal Court of Appeal dismissed the appeal - The assertion was contrary to the principle that every word found in a statute was supposed to have a meaning - Courts were to avoid adopting interpretations that rendered any portion of a statute meaningless or mere surplusage - See paragraph 45.

Income Tax - Topic 7533

Exemptions - Particular exemptions - Charitable organizations and foundations - An inter vivos trust (the foundation) was settled by Inwentash for the purpose of making gifts to Canadian registered charities - The trust was a charitable foundation as defined in s. 149.1(1) of the Act and a registered charity as defined in s. 248(1) - The foundation had a single trustee - All, or substantially all, of the capital contributed to the trust was contributed by Inwentash, his wife and/or entities controlled by them - The definition of "public foundation" in s. 149.1 required that "... more than 50% of the  ... trustees  ... deal with each other and with each of the other  ... trustees  ... at arm's length" - The Minister of National Revenue advised the foundation that it qualified for tax exempt status as a registered charity and was designated as a private foundation (which was subject to more detailed and restrictive rules than a public foundation) - The foundation objected to the private foundation designation - The Minister of National Revenue affirmed the designation - The foundation appealed, asserting that the Canada Revenue Agency had taken contradictory administrative position on whether a public foundation required two or three trustees - The Federal Court of Appeal dismissed the appeal - The Agency's administrative policy was not determinative of a meaning of a provision of the Act - See paragraph 46.

Income Tax - Topic 8002

Returns, assessments, payment and appeals - Appeals to court - General - Standard and scope of review - [See Crown - Topic 666 ].

Statutes - Topic 2271

Interpretation - Presumptions and rules in aid - Against tautology (every word must have a meaning) - [See third Income Tax - Topic 7533 ].

Statutes - Topic 2280

Interpretation - Presumptions and rules in aid - Against surplusage - [See third Income Tax - Topic 7533 ].

Statutes - Topic 2410

Interpretation - Interpretation of words and phrases - Plural and singular nouns - [See second Income Tax - Topic 7533 ].

Statutes - Topic 2457

Interpretation - Interpretation of words and phrases - Interpretation and definition clauses - Use of word "means" - [See Crown - Topic 666 ].

Statutes - Topic 2603

Interpretation - Interpretation of words and phrases - Modern rule (incl. interpretation by context) - Intention from whole of section or statute - [See first Income Tax - Topic 7533 ].

Statutes - Topic 3003

Interpretation - Construction where intention is plain - General principles - Effect of plain intention - [See first Income Tax - Topic 7533 ].

Cases Noticed:

Action by Christians for the Abolition of Torture v. Canada (2002), 302 N.R. 109; 2002 FCA 499, refd to. [para. 23].

Georgia Strait Alliance et al. v. Canada (Minister of Fisheries and Oceans) et al. (2012), 427 N.R. 110; 2012 FCA 40, refd to. [para. 23].

Celgene Corp. v. Canada (Attorney General), [2011] 1 S.C.R. 3; 410 N.R. 127; 2011 SCC 1, refd to. [para. 27].

Winters v. Legal Services Society (B.C.), [1999] 3 S.C.R. 160; 244 N.R. 203; 128 B.C.A.C. 161; 208 W.A.C. 161, refd to. [para. 45].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 149.1 [para. 7].

Interpretation Act, R.S.C. 1985, c. I-21, sect. 3(1) [para. 44]; sect. 33(2) [paras. 43, 44].

Authors and Works Noticed:

Canada, Department of Finance, Discussion Paper: The Tax Treatment of Charities (1975), paras. 26, 28, 29 [para. 36].

Counsel:

Stephen S. Ruby and Elie S. Roth, for the appellant;

Elizabeth Chasson and Craig Maw, for the respondent.

Solicitors of Record:

Davies Ward Phillips & Vineberg LLP, Toronto, Ontario, for the appellant;

Myles J. Kirvan, Deputy Attorney General of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard at Toronto, Ontario, on February 29, 2012, by Dawson, Trudel, and Stratas, JJ.A., of the Federal Court of Appeal. Dawson, J.A., delivered the following reasons for judgment for the court on May 4, 2012.