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The prominent law firm that has represented well-known Nova Scotia businessman John Risley in his multimillion-dollar tax battle with the Canada Revenue Agency linked to his luxury lifestyle has been allowed to remove itself from the case over what it says are unpaid invoices.
A Tax Court judge last week granted the removal request from the Toronto-based lawyer with Fasken, an order that came days before news emerged that Risley’s investment holding company is mired in more than $1 billion worth of debt and facing a change in ownership.
Risley, who is best known for co-founding Clearwater Seafoods, a company he sold in 2021, declined in an email to CBC News to say how much it’s alleged he owes to Fasken, or why invoices haven’t been paid.
He said he will now be represented by Halifax firm McInnes Cooper in his Tax Court cases. An eight-day hearing in two of his tax appeals is set to begin in May.
Fasken, which is one of the largest business law firms in the country, has represented Risley for at least eight years, including filing his first Tax Court appeal in 2018, a second that same year, and then another in 2024.
Dispute over benefits
Risley, 77, is disputing CRA reassessments that assert he received roughly $90 million in benefits from his companies over a 20-year period but didn’t declare them on his income taxes. Tax officials allege his companies funded his living expenses, hobbies and “personal endeavours.”
At issue is everything from Risley’s mansion in Chester, N.S., to yachts operated by company subsidiaries, a Montana ski lodge, a Labrador fishing lodge and an equestrian stable.
In a court filing last month, Fasken lawyer Jenny Mboutsiadis included an email she wrote to Risley and a number of associates that said, “Unfortunately, Fasken LLP must remove itself as counsel for John for the above noted matters because of the non-payment of the outstanding invoices.”
The lawyer said in a notice of motion to the Tax Court it had “not received the necessary funding to proceed with the litigation.” Mboutsiadis did not reply to a request for comment.
Records filed this week in Nova Scotia Supreme Court reveal that Risley’s debt-laden investment firm, CFFI Ventures Inc., is also facing large tax headaches, and allegedly owes more than $331 million in taxes, interest and penalties following a number of reassessments from the CRA.
The documents do not detail why the tax authorities reassessed the company and two of its predecessors. CFFI Ventures said it disputes the amounts and has lodged objections and an appeal. Stan Spavold, the president of the company, declined to comment Friday on the tax issues.
Large debt
Risley is chairman and CEO of CFFI Ventures, which has interests in numerous companies. It is owned by holding companies and trusts that ultimately benefit Risley and a number of family members.
CFFI Ventures is a partner in a proposed wind-powered hydrogen operation in Newfoundland that failed to get off the ground, a part owner of Newfoundland-based marine service company Horizon Maritime, and a part owner of the skin care company SkinFix.
Financial statements contained in court documents released this week show CFFI Ventures has accrued large interest on its debts, an amount that easily surpasses its revenues.
An interest rate of 20 per cent has been charged on a large loan arranged in 2017 by New York-headquartered HPS Investment Partners. The loan has been in default for three years, and the debt now tops $1 billion.
Under the arrangement being proposed to the court, the assets and certain debt of CFFI Ventures would be transferred to a new entity owned by the HPS creditors. The aim is to “address significant liabilities,” according to court documents.
Risley is not listed as a director of the new entity. In a statement this week, he acknowledged a “higher tolerance for risk than most,” and said, “change is inevitable and I believe this is the right path for the future.”
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