Samaroo – malicious prosecution claim against CRA founders in B.C. Court of Appeal for failure to establish absence of “reasonable and probable cause”

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 - whereas, in fact:

[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.

Neal Armstrong. Summary of Samaroo v. Canada Revenue Agency, 2019 BCCA 113 under General Concepts – Malicious Prosecution.