Canada: Taxation Law @ Gowlings November 8, 2010

Last Updated: November 22 2010


  • The Minister Loses on Jeopardy
  • Taxand - access Taxand's Take for the latest tax issues affecting multinationals worldwide as well as Taxand's latest range of publications.

The Minister Loses on Jeopardy
By Stevan Novoselac and John Sorensen


The Federal Court of Canada's recent judgment in Minister of National Revenue v. Robarts,1 addresses the limitations in the Minister of National Revenue's ("Minister") ability to take aggressive steps to collect assessed tax in situations where a taxpayer is otherwise shielded from collection actions. In Robarts, the Court took a dim view of the Minister's failure to provide complete and accurate facts and fair interpretations of the relevant legal principles and therefore ultimately halted the collections actions.

General Principles

The Minister generally has broad powers to collect assessed tax, subject to certain limitations. However, those limitations may not apply in situations where the Minister is satisfied that there are reasonable grounds to believe that collection of an amount assessed would be jeopardized by any delay. In those circumstances, the Minister can seek to take immediate collection actions against a taxpayer by obtaining a so-called "jeopardy order". Jeopardy orders are obtained by an application to the Federal Court, without any notice to the taxpayer. When the Minister obtains a jeopardy order, the taxpayer can later apply to the Federal Court to review and reconsider the order.

Facts in Robarts

Mr. Robarts was a businessman from Kelowna, B.C. He was assessed for his 2005, 2006 and 2008 taxation years by notices of reassessment dated February 1, 2010. On April 6, 2010, the Minister applied for a jeopardy order to collect the assessed amount, based on an affidavit ("Affidavit") by the Canada Revenue Agency ("CRA") officer assigned to Mr. Robarts' collection file. That Affidavit asserted that:

  • funds in Mr. Robarts' bank accounts were his only significant asset;
  • he was in a position to withdraw those funds before the CRA could take collection actions;
  • he had under-reported his income for the taxation years in issue and failed to report income in the past;
  • he had conducted his tax affairs in an unorthodox way and had dissipated assets after being notified of the reassessments against him; and
  • collection actions were not possible by law because of the 90-day statutory stay on collection which follows an assessment or reassessment.

Relying on the Affidavit, the Federal Court granted a jeopardy order to enable the CRA to deploy immediate collections actions against Mr. Robarts. Mr. Robarts then brought an application to have the jeopardy order reviewed.

In his application, Mr. Robarts stated that his bank accounts included long-term investments which were not readily dissipated. Moreover, one of the substantial amounts that had been withdrawn from his bank account after he was reassessed had been returned to the account six weeks later. Further, the allegation that he had under-reported his income was a matter in dispute, and was the issue which the CRA appeals division and potentially the Tax Court of Canada would be called upon to determine. In Mr. Robarts' submission, he did not conduct his affairs in an unorthodox way, and he alleged that the Minister did not provide all of the relevant evidence with respect to his finances when the Minister applied for the jeopardy order.

Legal Principles on a Court's Review of a Jeopardy Order

In reviewing and reconsidering the jeopardy order against Mr. Robarts, the Federal Court relied on the following two-step test.

First, the taxpayer must establish that there are reasonable grounds to doubt that collection of assessed tax would be jeopardized by delaying collection. However, even if the taxpayer is not able to establish that position, a judge may set aside the jeopardy order where the Minister has not met his obligation to make full and frank disclosure of all relevant facts and law to the Court on the initial application for the jeopardy order.

Second, if the taxpayer establishes that collection is not in jeopardy, the onus shifts back to the Minister to prove that the jeopardy order is justified. At this point, the Court reviews all of the evidence and considers whether, on the whole, there are reasonable grounds to believe that collection of an assessed amount would be jeopardized by delay.

The Court Applies the Legal Principles to the Facts in Robarts

The Court held that the Minister failed in his obligation to provide full and frank disclosure to the Court. The Court explained that the Minister has the duty to exercise utmost good faith and to ensure full and frank disclosure of all relevant facts, even those facts which are unhelpful or inconvenient or which demonstrate weaknesses in his own case. This is because a jeopardy order is granted without notice to or representations from the taxpayer. The Court found that the Minister omitted relevant facts from the Affidavit. For example, although the Affidavit alleged that $109,000 was withdrawn from Mr. Robarts' bank account after he was reassessed, the Affidavit omitted to state that the amount was re-deposited about six weeks later. In the Court's view, this was the single most important fact in the Affidavit. The Court further held that the Minister's representative had failed to seek and obtain the necessary information that would have properly informed the Affidavit.

The Court also held that the Minister did not make full and frank disclosure of the factual and legal elements of the case law he relied on in his submissions to obtain the jeopardy order. Moreover, the Court stated that although good faith on the Minister's part must be presumed, the Minister's representations left "a sour taste" and "important omissions on relevant case law from the Minister's written submissions are certainly not compliant with the spirit of these extraordinary [jeopardy order] procedures".

Consequently, the jeopardy order was based on misleading, incomplete or incorrect facts and law, and had to be vacated.

The Court further considered whether the Minister had, in the first place, demonstrated that there were reasonable grounds to be believe that the collection of assessed tax would be jeopardized by delay. On this question, the Court found that the Affidavit contained factual allegations that went beyond the reassessments that were in issue, "in an effort to taint the taxpayer's character and form the basis for the issuance of the Order". The Court held that it would be wrong to draw a negative inference regarding Mr. Robarts' management of his tax affairs, since the issues were litigious questions that were not yet settled.


The Robarts decision should provide useful guidance for both the CRA and taxpayers. For the CRA, it is hoped that the decision will serve as a reminder of the strict and vigorous standards to be applied when seeking jeopardy orders. For taxpayers, it could certainly be used as further support to challenge any jeopardy orders that may be obtained based on incomplete or wrong facts and/or statements of law.


1. 2010 FC 875 ("Robarts").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
19 Sep 2019, Seminar, Birmingham, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

26 Sep 2019, Seminar, London, UK

Providing GCs, Heads of Legal and senior in-house lawyers with timely, topical and practical legal advice on a variety of topics.

8 Oct 2019, Seminar, Birmingham, UK

Supporting the development of paralegals, trainees and lawyers of up to five years' PQE by providing valuable knowledge and guidance together with practical tips.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions