Taxman’s ‘malicious’ prosecution to cost $1.7M

CONDUCT IN THIS CASEWAS HIGH-HANDED AND MALICIOUS.

• A judge has rebuked the Canada Revenue Agency and ordered it to pay more than $1 million in damages for maliciously prosecuting a Nanaimo, B.C. couple for alleged tax evasion.

In June 2008, Tony and Helen Samaroo, who operated a restaurant, a nightclub and a motel in the Vancouver Island community, were charged with 21 criminal counts of avoiding taxes. They were accused of skimming $1.7 million from their restaurant, the MGM, between 2004 and 2005, but in April 2011, following a 19-day trial, a Provincial Court judge acquitted them of all charges.

The judge found that Tony Samaroo was a credible witness and that his demeanour was impressive and his explanations for the revenues at the restaurant plausible and consistent.

The couple then sued the Canada Revenue Agency and an “ad hoc” prosecutor who was involved in the case for malicious prosecution.

In his ruling, B.C. Supreme Court Justice Robert Punnett found that the agency was liable for the actions of Keith Kendal, a senior CRA investigator, and other employees.

“The conduct in this case was high-handed, reprehensible and malicious,” the judge said in a ruling released Monday.

“The behaviour of Mr. Kendal respecting the suppressing and misstating of evidence deserves rebuke. It offends the court’s sense of decency and was a marked departure from conduct expected of an individual in Mr. Kendal’s position and an agency such as the CRA.”

The judge added the conduct of the CRA was blameworthy as it engaged core values in society and the checks and balances that exist when invoking the power of the state against the individual.

“As noted earlier, the charges never should have proceeded given it was clear prior to charge approval that additional evidence was required to meet the charge approval standard,” said the judge.

“Mr. Kendal knew that the necessary evidence was not available from (the company bookkeeper). The conduct of Mr. Kendal was reprehensible. Evidence was concealed.”

The judge awarded $750,000 in punitive damages to the Samaroos and $300,000 to each of them for aggravated damages.

The couple was also awarded $347,000 for legal fees.

The total amount awarded to the couple comes to nearly $1.7 million.