From: AlanBaggett@volcanomail.com   
      
   BC Supreme Court Chews Out CRA for Abusing Its Power :CRA SOTW   
      
   By The CCF |  May 1, 2014  PRINCE GEORGE, B.C. -- Canada Revenue Agency must   
   live up to its responsibilities to the Canadian public and apply "a little   
   common sense" when auditing and re-assessing taxpayers, the Supreme Court of   
   British Columbia said in    
   a decision released on May 1, 2014.   
      
   Karen Selick, the Canadian Constitution Foundation (CCF)'s litigation   
   director, called the decision a precedent-setting victory for taxpayers. "We   
   agree heartily with the court that holding CRA personnel to a standard of care   
   that might make them more    
   careful of taxpayers' rights is a good thing. This was one of the results the   
   CCF hoped to achieve by supporting taxpayer Irvin Leroux through this lawsuit."   
      
   Leroux sued the CRA for negligence in 2007 after the CRA imposed "huge   
   penalties" on him following an audit of his income tax returns--penalties that   
   were ultimately reversed in Tax Court. Leroux was assisted in bringing his   
   lawsuit by the CCF, a    
   registered charitable organization that engages in public interest litigation   
   on a pro bono basis.   
      
   The CRA made repeated attempts to have the negligence lawsuit thrown out at   
   preliminary stages, but the trial was finally held before Madam Justice M.A.   
   Humphries of the BC Supreme Court in late 2013.   
      
   The judge had stern criticism of the CRA's handling of Leroux's audit. "[T]he   
   very disproportionality of [the penalties] should have prompted CRA to take a   
   closer look at this file," she wrote. "Instead they simply proceeded with no   
   apparent care or    
   comprehension as to what they were doing to the taxpayer . . . " even though   
   the result would be "so obviously devastating to the taxpayer."   
      
   The court held that the CRA auditors owed a duty of care to Leroux, even   
   though courts in previous cases have been reluctant to impose this legal   
   obligation on the tax department. Furthermore, there was "a clear breach of   
   the standard of care expected of    
   an auditor of CRA in relation to a taxpayer."   
      
   This was "a misuse of statutory powers," the judgment states.   
      
   Citing a 2011 case from the Tax Court of Canada, Justice Humphries said that   
   CRA must have clear evidence of taxpayer recklessness or wrongful intent in   
   order to justify a penalty. "The taxpayer gets the benefit of the doubt," she   
   wrote.   
      
   "Unfortunately," the CCF's Karen Selick explained, "despite the invaluable   
   service that Irvin has rendered to other taxpayers, the court was unable to   
   award him any damages. The evidence did not meet the high standard necessary   
   to prove that the CRA    
   caused his financial downfall."   
      
   Selick continued: "We're very grateful to Laurie Armstrong, the lawyer who   
   represented Irvin at trial, for helping to achieve this landmark decision."   
      
   The court ordered each side to bear its own legal costs of the trial, although   
   Leroux had earlier been awarded some costs from the CRA in several preliminary   
   motions and appeals.   
      
   The decision in Leroux v. Canada Revenue Agency 2014 BCSC 720 can be   
   downloaded from the BC courts website.   
      
   The Canadian Constitution Foundation (CCF) is a registered charity,   
   independent and non-partisan. We defend the constitutional rights and freedoms   
   of Canadians in the courts of law and public opinion.   
      
      
      
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