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CROWN - Malicious prosecution by Crown servants

Wednesday, May 15, 2019 @ 7:25 AM  

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Appeal by the Canada Revenue Agency from an order finding it liable for malicious prosecution and breach of the s. 7 Charter rights of the respondents. The CRA alleged the respondents and their corporations had evaded taxes on income generated through their restaurant by not reporting $1.7 million of income. It had received a tip that the respondents were skimming cash out of the business, were paying suppliers and employees in cash, and were not fully reporting the revenue from the business. An audit revealed the respondents had destroyed many source documents. The respondents’ personal accounts showed large deposits of cash. The Crown’s theory in the criminal prosecution was that the revenue from one of three daily shifts was not reported as the till tapes were not provided to the bookkeeper. After a criminal trial, the respondents were acquitted of all charges. The trial judge found reasonable and probable cause to initiate or continue the prosecution did not exist and that the CRA had suppressed and withheld evidence from the Crown and was motivated by malice.

HELD: Appeal allowed. The trial judge erred in articulating the actus reus of the offence of tax evasion, which led him to erroneously apply the test for reasonable and probable cause. The trial judge’s analysis proceeded on the erroneous basis that tax evasion could not be proven unless the particular mechanics of how the tax was evaded and the quantum of unreported income could be proven. Contrary to the trial judge’s statement, proof that the respondents intentionally did not report income was the actus reus for tax evasion, and what they did or did not do to avoid paying taxes did not necessarily have to be shown for a conviction, if the fact of intentionally not paying taxes could be otherwise demonstrated. The trial judge erroneously relied on the criminal trial judge’s findings of fact. When the uncontested evidence of all the relevant circumstances known to the prosecution was considered and viewed objectively, reasonable and probable cause existed as a matter of law.

Samaroo v. Canada Revenue Agency, [2019] B.C.J. No. 566, British Columbia Court of Appeal, D.F. Tysoe, D.C. Harris and S.A. Griffin JJ.A., April 9, 2019. Digest No. TLD-May132019005