http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/67284/index.do 
Cheder Chabad v. Canada (National Revenue)[1] (August 23, 2013) involved a registered charity that ran a religious school. It had been notified by the Minister that its charitable registration would be revoked. The applicant applied to the Federal Court for an order prohibiting the publication of the notice of revocation in the Canada Gazette. The applicant obtained an interim order pending the hearing of its application. This is the reported decision on the substantive motion before a single judge of the Federal Court of Appeal.
The court first set out the background of the dispute:
[3] The applicant operates a school for boys in the Toronto area. Approximately 180 boys from different areas in Ontario, and some from Alberta, attend the school. The school teaches both secular studies and Jewish studies of the Orthodox Chabad – Lubavitch tradition. The applicant claims to be the only school for boys in the Toronto area that provides Chabad – Lubavitch religious instruction.
[4] Based on the affidavit evidence submitted by the applicant, over 80% of the students at the school receive a partial or full subsidy to cover their tuition costs, and the funds required to subsidize the tuition come from the fundraising activities of the applicant in its capacity as a charity registered under the Act.
[5] The CRA audited the operations of the applicant for the period from July 2007 to June 2009. In a letter dated October 25, 2011, the CRA identified numerous specific areas of non-compliance which it says were uncovered by the audit. One notable area of alleged non-compliance is with respect to a substantial number of gifts in kind, ranging from artwork to jewellery and timeshares, which the applicant was unable to substantiate the existence, the value or the use to the satisfaction of the auditor, but for which it issued donation receipts over a number of years. The amounts at issue are substantial, since the total value of all such assets was reported to be over $10 million.
[6] A series of correspondence from the applicant to the CRA ensued as a result of this audit letter, in which the applicant denied any wrongdoing. It notably attributed the discrepancies in the values indicated in the donation receipts for the gifts in kind and the actual realizable value of the assets to devaluation, physical losses resulting from flooding of its various storage facilities, and difficulties obtaining the full value of the assets through sales and silent auctions.
[7] The applicant’s representations did not convince the Minister. As mentioned above, on July 5, 2013 the Minister’s representative, on the basis of the audit findings, issued a notice of a proposal to revoke the applicant’s registration as a charity under the Act.
[8] On July 31, 2013 the applicant filed an objection pursuant to subsection 168(4) of the Act. After unsuccessfully attempting to convince the Minister to delay the publication of the notice until its objection has been dealt with, on August 15, 2013 the applicant submitted to this Court (a) an application for judicial review with respect to the refusal of the Minister to postpone the publication, and (b) a notice of motion seeking the same relief.
The court then turned to the form of the proceedings:
[9] The applicant has proceeded by way of a judicial review application with respect to the refusal of the Minister to postpone the publication of the notice of proposal to revoke, and it has also submitted a motion for this purpose within the framework of this judicial review application.
[10] The appropriate procedure is not by way of a judicial review application, but rather by way of an application under paragraph 300(b) of the
Federal Courts Rules, SOR/98-106 (“Rules”) brought under paragraph 168(2)(b) of the Act: I
nternational Charity Association Network v. Minister of National Revenue, 2008 FCA 62, 375 N.R. 383 at para. 7.
[11] Under section 57 of the Rules, an originating document is not to be set aside only on the ground that a different originating document should have been used. Moreover, under section 55 of the Rules, in special circumstances, a rule may be varied or dispensed with. In addition, the respondent Minister suffers no prejudice from the procedural irregularity. I consequently intend to deal with the motion on its merits as if it were an application under rule 300(b) of the Rules brought under paragraph 168(2)(b) of the Act.
The court reviewed the well-know tests for issuing a stay or an injunction and concluded that the potential for harm to the school’s students and their families weighed heavily in favour of a continuance of the stay, on a one time basis, until the conclusion of the upcoming school semester:
[34] Under the circumstances of this case, and taking into account the evidence submitted, had the only harm inflicted on the applicant been that identified in the above discussion concerning the irreparable harm component of the test, I would not have found that the balance of convenience favoured the applicant.
[35] However, in the analysis required under the balance of convenience component of the test, I must also include a “consideration of any harm not directly suffered by a party to the application” (RJR-MacDonald at p. 344). In this case there are the interests of the 180 students of the concerned school to take into account.
[36] The academic year will begin in the next few days, and should the operations of the school be disrupted as a result of a shortfall of liquidities, the students and their parents will be placed in a difficult situation. I have no doubt that the parents of the students of the school would have serious difficulties finding, within the next few days, another education institution suitable to their religious convictions, since the uncontested evidence before me shows that the school is the only institution of its kind providing Chabad – Lubavitch religious instruction in the Toronto area. Moreover, with the academic year about to begin, these students would face a disruption in the education pathway that they expect to follow this fall.
[37] In these circumstances, the balance of convenience requires that an orderly solution be crafted which takes into account both the interests of the students as well as the general public interest in the integrity of the charitable sector.
Conclusions
[38] In light of the above I will order, pursuant to paragraph 168(2)(b) of the Act, that the period during which the Minister is precluded from publishing a copy of the notice proposing to revoke the registration of the applicant in the Canada Gazette be extended, on a one-time basis, to December 31, 2013.
[39] This order will allow the applicant to pursue the operations of the school without major disruptions for the fall semester, thus hopefully allowing the students to pursue their preferred curriculum of secular and religious studies for that semester. During this period, the applicant will be expected to proceed with an orderly liquidation of a large part of its assets in kind. It will also be expected to develop, if feasible, an alternative plan to continue the operations of the school after December 31, 2013 without the status of a registered charity under the Act. The applicant will further be expected to notify forthwith the parents of the students of the fact that the Minister will, in all likelihood, proceed with the required publication so as to revoke its registration soon after December 31, 2013. This information will allow the parents sufficient time to consider and secure alternative arrangements for the education of their affected children for the winter 2014 semester, or continued enrolment with the applicant’s school in a non-registered charity context if that is feasible.
The court made no order as to costs.
[1] 2013 FCA 196.