Kaitlin Coward

Following the dismissal of the plaintiffs' action against the Canada Revenue Agency and others, the successful defendants sought costs of $766,325.50 on a partial indemnity basis.

The court found the hours docketed by the defendants' counsel to be excessive and duplicative, noting the involvement of multiple senior counsel.

Applying the principle of reasonableness and proportionality, the court fixed the costs payable by the plaintiffs at $273,000, inclusive of disbursements and taxes.

The plaintiffs, including a software partnership and its investors, brought an action against the Canada Revenue Agency and its agents for negligent investigation, misfeasance in public office, and Charter breaches arising from a tax audit and subsequent criminal investigation into a suspected tax shelter fraud.

The court dismissed the action, finding that the auditor did not cross the line into a criminal investigation improperly, and that the investigators met the standard of care.

The court concluded there was substantial evidence supporting the CRA's belief that the enterprise was a fraudulent tax scheme, and no actionable wrongs were committed by the defendants.

During an abbreviated civil trial for negligent investigation against the Canada Revenue Agency, the defendants sought to introduce transcripts of testimony given by a now-deceased CRA auditor during a prior criminal preliminary inquiry.

The plaintiffs objected on the basis of hearsay.

The court applied the principled exception to the hearsay rule, finding that the necessity criterion was met due to the auditor's death, and the reliability criterion was satisfied because the auditor had been rigorously cross-examined on relevant issues during the preliminary inquiry.

The transcripts were ruled admissible.

The Monitor in a CCAA proceeding sought to declare void as an unjust preference $12 million in HST payments made by the insolvent debtor to the Canada Revenue Agency shortly before commencing a proposal proceeding.

The court dismissed the motion, finding that the payments were funded by an inter-company loan specifically earmarked for the tax liability, meaning the transaction was economically neutral to the debtor and did not prejudice the recovery of unsecured creditors.