CRA wins appeal against B.C. couple who alleged ‘malicious’ tax evasion probe

VANCOUVER — The British Columbia Court of Appeal has set aside a $1.7-million damage award to a Vancouver Island couple who a lower court had said were ruined through the “malicious” actions of the Canada Revenue Agency.

Tony and Helen Samaroo were operating a restaurant, night club and motel in Nanaimo in 2008 when they were charged with 21 counts of tax evasion for allegedly skimming $1.7 million from their businesses.

They were acquitted of all charges in provincial court in 2010 in what the judge hearing the case agreed amounted to the Crown using “voodoo accounting” to support its case, and the couple then sued for malicious prosecution.

A B.C. Supreme Court judge ruled last year that the Samaroos were the victims of an “egregious” prosecution based on an unfounded theory and suspicion about the alleged tax evasion.

But in a decision released Tuesday on behalf of the three-judge panel, Justice David Harris says the trial judge was wrong to base his analysis on the idea that tax evasion can’t be proven without also proving exactly how it was done.

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As a result, Harris says the judge dismissed some relevant evidence as “mere hypothesis,” instead of recognizing there was a reasonable and probable cause to launch a case.

Because the analysis was faulty, Harris says it’s unnecessary to look at whether the trial judge erred in his conclusion that the Crown was motivated by malice or the investigator for the Canada Revenue Agency acted for an “improper purpose.”

“When the correct legal test is applied properly to the elements of the offence, with a correct onus of proof in a claim of malicious prosecution, and viewing the issue objectively, the Samaroos cannot succeed in showing that there was an absence of reasonable and probable cause to initiate and continue the prosecution,” the decision says.

The Canadian Press