Taxpayers incorrect to attribute to employee all that was known by CRA at time of reassessments

Setting aside. Canada Revenue Agency (CRA) charged plaintiff taxpayers with fraud and tax evasion for underreporting their incomes. Criminal trial judge found that CRA employee had been intentionally misleading in swearing Information to Obtain (ITO), and charges were later stayed. Taxpayers brought action for misfeasance in public office against CRA and employee. Parties consented to discontinuance of action. When taxpayers received reassessments showing monies received as non-taxable, taxpayers brought application to set aside discontinuance based on exceptional circumstances. Motion judge dismissed motion on ground that reassessments would not have had any impact on decision. Judge held that reassessments could not help prove what employee knew when swearing ITO. Judge found that evidence could have been obtained by time of trial had they exercised proper diligence. Taxpayers appealed. Appeal dismissed. Taxpayers did not meet high bar for setting aside consent discontinuance because fresh evidence could not have affected result. Taxpayers were incorrect to attribute to employee, at early stage of investigation, all that was known and concluded by CRA at time of new reassessments. Equivocal nature of fresh evidence would not affect outcome of action, as reassessments could show that employee had reasonable grounds, or believed he had reasonable grounds, or acted unlawfully knowing he did not have reasonable grounds when he swore ITO. Reassessments addressed one concern raised by trial judge that taxpayers could not prove that original assessment was incorrect, but other obstacles remained. Taxpayers were not faulted on their diligence in pursuing reassessments.

Holterman v. Fish (2017), 2017 CarswellOnt 15346, 2017 ONCA 769, K. Feldman J.A., E.A. Cronk J.A., and B.W. Miller J.A. (Ont. C.A.); affirmed (2016), 2016 CarswellOnt 8589, 2016 ONSC 3275, Lederer J. (Ont. S.C.J.).