Taxman ruined their lives

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A Vancouver Island couple has been awarded nearly $1.7 million in damages after a judge criticized the Canada Revenue Agency for the "ruination" of their business and personal lives by "high-handed, reprehensible and malicious" actions.

Justice Robert Punnett of the Supreme Court of British Columbia says Tony and Helen Samaroo of Nanaimo were the victims of an "egregious" prosecution based on unfounded theory and suspicion about alleged tax evasion at the couple's restaurant and other businesses.

The Samaroos 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 the business. They were acquitted of all charges in a provincial court trial in 2010 in what the judge hearing the case agreed amounted to the Crown using "voodoo accounting" to support its case.

The couple sued for malicious prosecution, alleging prosecutor Brian Jones, the Canada Revenue Agency and its senior investigator, Keith Kendal, targeted them, despite lacking any direct evidence of wrongdoing.

Punnett's ruling says Jones failed to exercise "prosecutorial discretion" but clears him of malicious intent. It criticizes the agency and Kendal in assessing punitive and aggravated damages on behalf of the Samaroos.

"The CRA used the powers of the state in the form of a criminal prosecution to wrongfully and maliciously prosecute," writes Punnett.

The judge also criticizes Kendal for misleading the prosecution, almost from the beginning, finding he knew evidence that was required to support any allegation of skimming could not be gathered.

"The behaviour of Mr. Kendal respecting the suppressing and misstating of evidence deserves rebuke. It offends this 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," Punnett writes in his judgment dated Friday.

The ruling discusses what the judge calls "the unfortunate culture" within the Canada Revenue Agency.

It describes an email to Jones and Kendal from another investigator during discussions about 88 proposed charges against the Samaroos, quipping that "after 85 charges, doesn't a guilty verdict call for a guillotine?"

Later, after 21 charges had been approved, the same author wrote to Jones, pointing to a front page newspaper story about the case, with the comment, "I can't wait to read the edition after the guilty verdict."

Punnett writes that agency employees "looked forward with unprofessional glee to the plaintiffs' anticipated conviction and sentencing and their resulting ruination," an approach he calls "deeply troubling."