Samaroo v. Canada Revenue Agency, 2019 BCCA 113

The Samaroos were acquitted in 2011 on all counts of tax evasion respecting their having allegedly skimmed $1.7 million in cash from the restaurant operations of their corporation between 2004 and 2005. They then were awarded damages (including $750,000 in punitive damages) in 2018 by the B.C. Supreme Court in an action brought by them against CRA for malicious prosecution and breaching their s. 7 Charter rights.

After noting that Miazga v. Kvello Estate, 2009 SCC 51established that one of the requirements for finding malicious prosecution was that “the prosecution was undertaken without reasonable and probable cause,” and noting that CRA had suspected that the Samaroos had failed to provide the “till tapes” for one of the daily shifts to the corporate bookkeeper, Harris JA indicated that here “The trial judge treated proof of the till tape theory, a particular scheme, as essential to proving the actus reus” of the alleged s. 239(1)(d) offence (para. 57), whereas, in fact (para. 58):

[T]he actus reus of the offence does not depend on proof of any particular method by which taxable income is not reported. What matters is the fact that taxable income is intentionally not reported. The existence of unreported taxable income does not necessarily require proof of how it is hidden or disguised.

Furthermore (at para. 72):

… [T]he trial judge improperly reversed the onus of proof. It was for the plaintiffs to demonstrate the absence of reasonable and probable cause, not for the defence to prove it.

Before allowing the appeal and dismissing the underlying action Harris JA, stated (at paras 81, 94, and 97):

… [T]he Samaroos failed to prove an absence of reasonable and probable cause to initiate and continue the prosecution.

… In my view, both the absence of declared income consistent with accumulating savings of the amount claimed and the apparent illogicality of holding cash rather than paying off expensive debt objectively casts doubt on the claim that the cash represented savings accumulated over a lengthy time. …

Viewing the matter as a circumstantial case, the inculpatory facts are sufficiently enveloping to call for an exculpatory explanation of the origins of the cash deposits. …

The Samaroos were acquitted in 2011 on all counts of tax evasion respecting their having allegedly skimmed $1.7 million in cash from the restaurant operations of their corporation. In 2018, they were awarded damages (including $750,000 in punitive damages) by the B.C. Supreme Court in an action brought by them against CRA for malicious prosecution and breaching their s. 7 Charter rights.

This decision has now been reversed by the B.C. Court of Appeal. One of the requirements for finding malicious prosecution was that “the prosecution was undertaken without reasonable and probable cause.” Although CRA had suspected that the Samaroos had failed to provide the “till tapes” for one of the daily shifts to the corporate bookkeeper, Harris JA indicated that the trial judge had erred in considering “proof of the till tape theory, a particular scheme, as essential to proving the actus reus” of the alleged s. 239(1)(d) offence (para. 57) - whereas, in fact (para. 58):

[T]he actus reus of the offence does not depend on proof of any particular method by which taxable income is not reported. What matters is the fact that taxable income is intentionally not reported. The existence of unreported taxable income does not necessarily require proof of how it is hidden or disguised.

As the “Samaroos failed to prove an absence of reasonable and probable cause to initiate and continue the prosecution,” their appeal was dismissed.