After a criminal prosecution of the appellants, in connection with allegedly fraudulent SR&ED claims, was stayed, the appellants brought an action in the Federal Court against the Crown for damages based on multiple grounds including a negligent investigation by CRA of their claims (which were found by Barnes J in the Federal Court to have entailed their use of backdated documents). In confirming the dismissal of their action, Boivin JA noted that:
- “The Judge recognized that the CRA investigators owed the appellants a duty of care … but found that the investigation was not carried out in a manner that could be characterized as negligent and was not motivated by malice or any other improper purpose” (para. 6).
- Similarly “the Judge found that the appellants had not met the burden of demonstrating that the investigation was legally unsound or that CRA officials acted unlawfully, maliciously, or negligently in the conduct of the investigation” (para. 13).
- Regarding the appellants’ contention “that the procedures set out in the Taxation Operations Manual (TOM) 11 for CRA investigations were not properly followed … the Judge rightly noted that the TOM 11
‘is a set of guidelines that have no binding legal effect and their breach is not evidence per se of a wrongful prosecution or negligence’” (paras. 11, 13).
Boivin JA found “no reason to disturb the Judge’s findings” (para. 16).