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Lost in Taxation

JeevanRevenue Agency Ordered to Pay $1.7M in Damages

In 2008, Tony and Helen Samaroo, a couple from Nanaimo, British Columbia who owned a popular restaurant called the MGM, were charged with twenty-one counts of tax evasion. The Samaroos were accused of misrepresenting earnings and pocketing upwards of $50,000 a month off the books. The couple claimed that they were simply transferring old $50 and $100 bills from a safety deposit box containing three decades worth of savings out of concern that the bank would be unwilling to accept the dated currency. After several years at trial with the Canada Revenue Agency (CRA), the Provincial Court of British Columbia acquitted the couple of all charges citing insufficient evidence of any wrongdoing.

However, the matter was not entirely put to rest. In 2012, the Samaroos undertook legal action against the CRA for malicious prosecution that significantly damaged their reputations. Both Tony and Helen Samaroo, along with their adult son and daughter, provided testimony concerning the lasting impact that the charges have had on their lives. According to the family, Tony and Helen separated in the aftermath of the case and each reported a loss of strength and spirit. Tony claimed that he no longer has an active social life and spends his days drinking and watching television, while Helen described herself as withdrawn and depressed.

Helen remarked before the court that others now look at her differently and so she feels embarrassed to go to the restaurant and interact with customers. Further, she stated that the accusations have had “a profound effect and their house ceased being a hub of family life and became quiet.” Tony and Helen’s daughter also indicated that she stopped using her surname due to the shame associated with the criminal allegations. Tony and Helen’s son claimed that his life had been “turned upside down by the charges.” The Samaroos alleged that many of MGM’s regular customers had stopped visiting the establishment despite the acquittal, and that they had lost contact with several close friends.

Earlier this month, Justice Robert Punnett of the Supreme Court of British Columbia ordered the CRA to pay the Samaroos nearly $1.7 million in damages. Justice Punnett claimed that the CRA’s malicious prosecution of the couple had irrevocably tarnished their reputations and extinguished their desire to continue operating the restaurant. According to Justice Punnett, “[t]he plaintiffs are entitled to substantial compensation for their suffering with respect to their humiliation, loss of self-confidence, loss of self-esteem, stress, damage to their reputations and the like, and the impact that has had on their business and personal lives.” The damages include $348,000 for legal fees that the couple spent to defend themselves during trial, as well as $300,000 in aggravated damages for both Tony and Helen Samaroo and $750,000 in punitive damages against the CRA.

In a scathing ninety-page ruling, Justice Punnett admonished the CRA for the “ruination of [the Samaroo’s] business and personal lives by high-handed, reprehensible and malicious actions.” In his decision, Justice Punnett cited a CRA report that justified bringing charges against the Samaroos on the sole basis that the tax agency had never prosecuted a restaurant in the city of Nanaimo. Additionally, the ruling highlighted an email exchange between members of the CRA investigative team appointed to the case that stated: “Front page of Wednesday’s Nanaimo Daily News. I can’t wait to read the edition after the guilty verdict.” In his ruling, Justice Punnett expressed concern that prosecutors for the CRA were not adhering to the presumption of innocence: “CRA employees looked forward with unprofessional glee to the plaintiffs’ anticipated conviction and sentencing and their resulting ruination. It is appalling that the incarceration of the plaintiffs would be joked about.”

While Justice Punnett conceded that the damages in this case would not result in serious financial hardship for the CRA, the judgment to compensate the Samaroos would reaffirm that such grievous conduct would not be tolerated. In a recent statement, the CRA stated that “[i]t is firmly committed to responsible enforcement in order to preserve the integrity of Canada’s tax system”. From the date of judgment, the CRA and the Department of Justice have thirty days to appeal the Supreme Court of British Columbia’s decision in this matter. It is unclear at this point, however, whether appeal proceedings will be initiated.