The owners of MGM Restaurant were awarded almost $1.7 million by the Supreme Court of B.C. in a lawsuit against the Canada Revenue Agency. (BLACK PRESS file photo)

The owners of a restaurant in Nanaimo were awarded almost $1.7 million by the Supreme Court of B.C. in a lawsuit against the Canada Revenue Agency.

In a ruling Friday, Justice Robert Punnett found the CRA “vicariously liable” for the conduct of an investigator in prosecuting Tony and Helen Samaroo for tax evasion and found that the CRA’s conduct was “high-handed, reprehensible and malicious.”

In 2008, the Canada Revenue Agency issued an indictment against the the MGM Restaurant for allegedly skimming $1.7 million between 2004-2005 via incomplete reporting of sales summaries. However, the Samaroos were acquitted in 2011 after they were able to plausibly explain their bookkeeping.

In e-mailed communications during the investigation leading up to that trial, CRA employees joked about potential news coverage of a guilty verdict and whether it would “call for a guillotine.”

The Samaroos commenced their lawsuit in 2012, positing that CRA employees initiated a prosecution “without reasonable and probable grounds and with malice,” according to last week’s judgment. The defendant argued that there was no evidence to suggest that there wasn’t “reasonable and probable cause” for prosecution, “nor is there evidence that the defendants acted for a purpose other than to place the case before the court for adjudication.”

Punnett wrote in his judgment that after CRA employees “looked forward with unprofessional glee to the plaintiffs’ anticipated conviction and sentencing and their resulting ruination.”

Tony and Helen Samaroo, who no longer live together, were awarded $300,000 each in punitive damages and were awarded $750,000 in punitive damages and $347,732 in legal expenses.

The justice noted that “no amount of punitive damages will cause the CRA financial hardship.”