eBay Loses Bid to Stay Disclosure of Top Sellers to the Canada Revenue Agency Pending Appeal

We previously reported that eBay Canada Limited and eBay CS Vancouver Inc. (collectively "eBay") were ordered by the Federal Court to disclose contact information and sales volumes of top sellers ("PowerSellers") to the Minister of National Revenue (Minister) (see ETIPS®, "Court Orders E-Bay to Disclose Sellers to Canadian Tax Authority", Vol. 6, No. 8, October 10th, 2007). eBay appealed the Federal Court decision and brought a motion to stay the judgment until disposition of the appeal. The Federal Court of Appeal (FCA) applied the tri-parte test in RJR – MacDonald Inc. v. Canada (Attorney General) to stay a judgment pending appeal. The FCA was satisfied that eBay met the first branch of the test, an arguable case. The second branch of the test is irreparable harm, that is, harm that cannot be quantified in monetary terms or that cannot be cured. eBay argued that the disclosure of information would render its appeal moot. Further, if the appeal was successful, the disclosure of information would result in irreparable harm. The FCA agreed that the disclosure could not be undone to the extent that the Minister acts on the information prior to the disposition of the appeal. However, the FCA concluded that eBay itself would not suffer any harm from the Minister's use of the information to check whether PowerSellers' had unreported income or reassessment of PowerSellers. eBay also argued that the information sought by the Minister was possessed by its parent company, eBay Inc., and eBay was contractually prohibited from disclosing confidential information without the consent of eBay Inc. The FCA found that it was unclear if the contracts would be breached by disclosure of information pursuant to a court order, and even if there was a breach, there was no resulting harm to eBay. Accordingly, the FCA concluded that eBay did not establish that it would suffer irreparable harm from the disclosure of information to the Minister. The third branch of the test is the balance of convenience. The FCA considered (i) the age of the information sought by the Minister (which related to 2004 tax returns that would become statute barred in 2008); and (ii) the importance of maintaining public integrity of the income tax system. The FCA concluded that the balance of interest outweighed eBay's interest in not disclosing the information and favoured the Minister. For further information, see: http://tinyurl.com/58owbx For full-text reasons in eBay Canada Limited v. Canada (National Revenue) 2008 FCA 141, visit: http://decisions.fca-caf.gc.ca/en/2008/2008fca141/2008fca141.html Summary by: Lauren Lodenquai and Tom Feather