Revenue agency loses battle but continues to harass taxpayer

By on August 8, 2014

Please cast your mind back to the summer of 2001. You were the president of the National Citizens’ Coalition. I was a lawyer in private practice. The two of us, together with the head of a Canadian think tank, had a conference call. We discussed the idea of setting up a charitable organization that would bring court challenges against laws and government actions that violated citizens’ rights.

We all thought something needed to be done. Individual Canadians were being trampled by an ever-growing state.

Maybe the courts could help, we thought. You yourself were fresh from a courtroom victory (Harper v. Canada (Attorney General), 2001 ABQB 558 – later, unfortunately, overturned) in which the Alberta Court of Queen’s Bench struck down federal election spending limits as violations of freedom of expression and freedom of association.

No specific action was decided upon in that conference call, but here we are 13 years later. You are now the Prime Minister of Canada. I am now the litigation director of the Canadian Constitution Foundation (CCF). The CCF is a registered charity that brings court challenges against laws and government actions that violate citizens’ rights – exactly the sort of institution we talked about 13 years ago.

I’m sure you’re too busy to pay much attention to what the CCF has been doing, so let me tell you about a recent victory we achieved. We assisted a taxpayer named Irvin Leroux in getting a decision from the BC Supreme Court, holding that Canada Revenue Agency (CRA) owed him a duty of care and breached its duty towards him. This was a precedent-setting ruling: never before had the CRA been told by any court that it had a duty towards individual taxpayers to treat them with care, and not to be negligent towards them. The horror stories I’ve heard over the past four years, as we’ve shepherded Leroux’s case through the courts, have convinced me that the CRA treats enormous numbers of taxpayers in a cavalier, irresponsible, bullying manner that brings shame upon the agency and everyone who is supposedly overseeing it.

Tax lawyers and accountants are celebrating the Leroux decision. They are writing and blogging about it. They are citing it to courts in cases involving other taxpayers who have been bullied and mistreated by the CRA.

Meanwhile, Leroux himself has to continue fighting. The trial judge, Madam Justice M.A. Humphries, wasn’t persuaded that the CRA’s negligent mistreatment of him had caused his financial ruin. So he is taking his case to the B.C. Court of Appeal, hoping that they will be better able to connect the dots.

And what has the CRA’s reaction been? It has filed its own motion for leave to appeal a portion of the Leroux decision to the B.C. Court of Appeal. Specifically, its notice of motion alleges that the “trial judge specifically erred in denying costs to the Canada Revenue Agency on the basis of . . . reliance on a duty of care owed by the Canada Revenue Agency to the plaintiff. . . .”

Translation: the CRA continues to believe that it has the right to assess and audit taxpayers in a careless, negligent manner, and it wants the courts to back away from the criticism that Humphries heaped upon it. Worse yet, it wants Leroux to pay its legal fees – which must be astronomical after almost eight years of fighting the negligence claim – out of his pensioner’s income of approximately $1,100 per month.

Ironically, Leroux never would have sued the CRA for negligence had he not been encouraged to do so by — guess who? – members of the Harper government. After settling a nine-year fight with the CRA in tax court in 2005, Leroux consulted Dick Harris, Conservative MP for Cariboo-Prince George. He wanted compensation for the nightmare the CRA had put him through, and for the home and business he had lost as a result. Harris took the matter up with the assistant to then-Minister of National Revenue, Carol Skelton. She told Harris that the CRA could not proactively pay damages to a taxpayer, but that if Leroux would sue the CRA, then a prompt settlement could be made.

Throughout the eight ensuing years, the CRA has never offered a single penny to settle this case. Instead, it has spent hundreds of thousands of dollars having lawyers fight Leroux. Now they have the gall to ask that their negligent mistreatment of him be completely overlooked and that he pay their costs.

Stephen, no doubt your experiences of the past 13 years have shifted your perspective somewhat, but I cannot believe that the man I spoke to in that long-ago conference call has vanished completely. Surely you must see how arrogant and reprehensible the conduct of the CRA has been. I don’t know who calls the shots within their litigation department, but for heaven’s sake can’t you do something to call off these infernal attack dogs?

Leroux has been fighting the CRA since 1996. He’s now 70 years old. He has lost a nest-egg that was at one time worth $4 million. His health has suffered from almost two decades of extreme stress. He doesn’t deserve what they’re doing to him yet again.  -TroyMedia

Karen Selick is the litigation director for the Canadian Constitution Foundation, which has been assisting Mr. Leroux to retain counsel. If you’d like Mr. Harper to read this letter, contact him here and tell him so.

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