Appeal filed in CRA tax case

Andrew Robinson
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St. John’s man claims federal court judge’s decision biased

A St. John’s man who recently lost his federal court battle to sue the Canada Revenue Agency (CRA) over its alleged malicious attempts to collect payroll remittance arrears from him has filed an appeal.

Gary Hennessey, whose former company used to handle payroll services for hundreds of home-care workers on behalf of their clients, will represent himself in a matter set to be heard by the Federal Court of Appeal.

Administrative Services made statutory deductions from salaries before issuing the remainder to the workers.

It was eventually discovered some clients owed money to CRA dating back to a period when the provincial government allowed them to handle salary deductions themselves.

CRA attempted to settle the matter with the health authority that provided the money to pay the workers — Eastern Health — but later found Hennessey to be accountable for the arrears.

According to information included in Judge Robert L. Barnes decision delivered in March, Hennessey listed a liability to CRA of $650,000 when he filed for bankruptcy in 2008. Hennessey closed his business the year before.

Hennessey — whose initial suit was filed in 2010 — claims Barnes made a biased decision, ignored certain issues within the case, and misrepresented some of the evidence presented.

“What he said in his decision was that CRA’s actions were reasonable and fair,” Hennessey told The Telegram. “I think they were unlawful. If you threaten somebody several times and you walk away, is that right? Is that fair? Is that lawful? I don’t think so. Are they above the law? They have what appears to be the ability to collect money and use methods which most people would consider to be unethical, but I think they went far beyond that. To threaten me once, let alone several times, is unlawful.”

Hennessey said he did not have access to a detailed breakdown of the accounts owing money, which he would have needed in order to pay CRA. Barnes, meanwhile, contended in his decision that Hennessey failed to document how he managed the arrears accounts and “made a mess of the payroll accounts of his clients.” The judge also doubted his credibility as a witness.

“I’ve searched my mind to try and find a way to justify the wording of Judge Barnes’ decision, and I cannot,” said Hennessey. “If I had lost this case on a weighted balance where my evidence was considered fairly, it would be disappointing but more acceptable. But to be done the way it was from the beginning — to be so, in my opinion, overwhelmingly biased and to misrepresent, in my opinion, the evidence that was presented — is so unfair.”

Hennessey hopes his appeal produces a better outcome, though he does not seem overly optimistic.

“I will stand in front of those three judges and as long as they listen to me, which I suspect they have an obligation to do, I will present my case and I will detail my points as best I can. Do I expect to win? No. Why? Because my experience thus far has showed me that it’s not about the truth — it’s about power. It’s about money.”

Twitter: @TeleAndrew

Organizations: Federal Court of Appeal.Administrative Services, The Telegram

Geographic location: Eastern Health

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Recent comments

  • S. Grey
    January 21, 2015 - 16:21

    Were is the CBC or Go Public this is a hugh story that needs to be dug into, to the very top.Were is the National interest in this and the way this Province is governed. Were a man can be broke like this shame on this whole Government. Do people believe that Mr. Hennessy is the first victom of this type of govening he is not. Check all departments. See what you find one big happy FAMILY.

  • Patrick Bay
    July 07, 2014 - 14:07

    The tax court is itself a huge violation of Charter Rights -- using our money to both prosecute us and defend itself in an unlimited capacity is a direct violation of Section 11: "to be presumed innocent until proven guilty according to law in a fair and public hearing by an independent and impartial tribunal;" Furthermore, if they say so, the CRA and will seize any assets they want without any court intervention, and certainly without any attempt to contact you. The corruption and criminality at the CRA is absolutely SYSTEMIC -- it is not limited to individuals or even geographic regions. These are all statements that I can back with 10 years of physical, tangible evidence (in my struggle, it seems, I've made out better than some):

  • Rose
    May 16, 2014 - 10:42

    Shame on you Eastern Health, CRA & Justice System. I have been following this case and I wonder how these people can go to bed and sleep at night knowing full well the horror they have put this man and his family through. How is it legal for a government organization to knowingly pass on tax arrears belonging to their clients to a payroll provider? I don't know how Mr. Hennessey is still standing with what he has endured not only from CRA & the Justice System but also from Eastern Health while he was providing a valuable service for their clients. How can a payroll provider successfully run his business when he is left on the hook for months on end being owed thousands of dollars on a bi-weekly basis which he has already paid out on behalf of the clients. Is this acceptable of Eastern Health? I bet if these government officials were told they wouldn't receive their salary on a bi-weekly basis they would be out on the street in protest. How can CRA take individual's tax arrears and add them to a payroll provider knowing full well that it did not belong to him. This is dictatorship at its finest! How could Judge Barnes misrepresent evidence which was presented to him. Correct me if I am wrong, but I thought all Canadians were entitled to a fair and unbiased trial. Mr. Hennessey don't give up hope, fight for your innocence you deserve it after all you have been through, they owe you that much and more. Good luck and I hope you get your life back on track.

  • Mr. O
    May 13, 2014 - 16:08

    I hope the board of Eastern Health reviews their organization's role in this travesty. This touches on ethical leadership as well as the fiduciary responsibility of them as the governors of this organization. Nothing less than a clear explanation of Eastern Health's actions will suffice. I know Don Keats, the acting CEO of Eastern Health to be a man of honor and integrity. I hope you seize the opportunity to look into this matter and help right this horrible wrong which continues to be perpetrated on this poor, decent man.

  • Randy Cooper
    May 13, 2014 - 12:23

    Gary has been railroaded by the CRA and its back up "legal system". CRA could not nail the large Eastern Health and decided an easier mark is a sole businessman providing a service to clients who had no background to manage their own financial business dealings. Eastern Health was not able to manage this operation and relied on Gary to distribute funds to people providing a valuable service for its clients. Good luck Gary, let us all hope your courage to stand up to "The Man" will give you your life back and help others who are bullied by the "Establishment".

  • Steve
    May 13, 2014 - 09:15

    I've always been a sucker for underdogs, but this one takes the case. David was up against only one Goliath. This guy has two beasts, CRA and Eastern Health using him as their scapegoat. CRA just wants their remittances, doesn't really matter that they have to break this man, financially and emotionally, to get thier pound of flesh. Who cares if they have no business pursuing him for this money? What odds? The ends justify the means, right? Makes me embarrassed to think I always assumed those poor souls being marched in front of the cameras facing tax charges had to be guilty. How naive of me, to trust in our government bodies to act responsibly. To make matters worse, he has another Goliath, in Eastern Health, who after years of ineptitude, incompetence and intransigence (and that's just the "i's"), walked away from their obligations to their clients and their employees (yes, these, poor minimum wage earning souls, trying to eke out a living providing respite care are actually employees of Eastern Health - but of course, that's why Eastern decided to play hard ball with CRA - not just to dodge their legitmate tax liabilities but to avoid the possibility of being deemed the employer and see their costs increase dramatically.) Speaking of which, where are NAPE and CUPE in all of this? If a group of people truly deserved union protection it is this group. Gary Hennessey is a decent, honest man who's only crime was trying to solve the mess resulting from the thoroughly misguided and irresponsible actions of two indecent, dishonest organizations. No good deed goes unpunished indeed! Shame on those at the highest levels of both these organizations for sacrificing an innocent man. Shame on all of us if we sit idly by and let this pass. I pray the Court of Appeal actually gives Mr. Hennessey a real hearing, as opposed to the whitewash which Judge Barnes so readily played along with.

  • Theresa
    May 13, 2014 - 07:30

    Eastern Health is to blame here as well, they have to take some responsibility in this. Yes, CRA went after the wrong person, they should have gone after the employers, shame on you CRA, namely the individuals who owed the money long before Mr. Hennessey took over those accounts. But Eastern Health knew these people had arrears with CRA when they asked Gary Hennesey to take over the accounts for these clients. They (Eastern Health) neglected to tell Gary Hennesey that these individual had arrears with CRA. If they had to notify Mr. Hennessey from the get go then it would be up to him to accept or reject these clients or if he accepted he could have set up some kind of system to deduct more money out of their cheques to catch up on their arrears. But these people were not going to do this, they were not getting paid much at is is, min wage. Because Eastern Health withheld this information from Gary H they should be held accountable. If I were to set up shop today to do payroll services - I would have to have each individual go to CRA and ask to get in writing a confirmation that they do not have arrears before I would take them on. Let this be a lesson to all who is doing payroll services out there for Eastern Health Clients. This must be a first in history - that an individual can be held responsible for another's bills. I am sure if we research this we would not find that this happened to anyone else.

  • reg dahl
    May 12, 2014 - 23:23

    A real peoples COURT of Canada is absolutely needed. The CRA needs to be ABOLISHED for a flat tax. The DOJ and FED Courts need to be abolished because THEY HAVE BECOME A CRIMINAL CULTURE protecting lawlessness by CRA MOB.

  • Amazing
    May 12, 2014 - 22:48

    This is truly an amazing story. I don't know how one man can be so strong as Mr. Hennessy and what he has endured. It's apparent that Cra couldn't get anywhere when it came to collecting from eastern health. They felt it more appropriate to go after one individual who has done nothing more then provide a respectful payroll service to a group of home care workers. I hope Mr Hennessy wins his case and gets his life back on track so he can enjoy his time with his family which has been stolen from him the last number of years.

    • BC
      May 13, 2014 - 12:55

      How do these people sleep at night, CRA, Justice system, and not mention Eastern Heath knowing full well what they are doing and did to this individual's life for the past OMG years and years. In following this story, its basically not what you know its who you know. So with these arrears that didn't belong to this man, add on penalties and interest over all these years would certainly add up to a phenomenal amount, in the hundred of thousands for sure and Eastern Health and CRA walked away from it, letting one individual take the fall for it. This man (Gary) providing services to hundreds of home care workers, obviously that in itself tells you what kind of reputation he had in the community. It amazes me how this man is still standing......hats off to you, Gary. Keep your head up and don't give up end as you will WIN in the end. Best of luck

  • Amazing
    May 12, 2014 - 22:41

    This is an amazing article. I can't believe how CRA would go after a health authority first for taxes and get absolutely no where and then decide to go after one person and try to hold that person accountable. I hope this man can fight his way through the power an get his life back to normal .

  • Eileen
    May 12, 2014 - 22:37

    I have been following this case for awhile and I know how Gary Hennessey has been hammered by CRA over the past 8 or 9 years. I cannot understand why he is being held responsible for taxes owing from clients who were previously not even on his payroll. Does this make sense to anyone??????? How can this happen in a country like Canada. Wouldn't it be the responsibility of CRA to collect these delinquent taxes from these individuals???

  • mitch. Eliot
    May 12, 2014 - 20:40

    The sheer amount of time money and emotional hardship that has been endured would make me think that even if this man had perpetrated some grand evil scheme the punishments of: threats from both clients and CRA, people coming to Mr Hennessey's familial home in rages, freezing personal accounts, forced out of business, massively gross legal bills that will take two lifetimes to pay off should be enough punishment for a much more hanous or brutal crime. now, imagine it was you accused but there was no impropriety, but there is you a scapegoat with a target because nobody wants to tke the blame for shoddy policies and incompetent proticals

  • Pat Grey
    May 12, 2014 - 20:13

    We are witness to a complete failure of a whole justice system here. Here we have a man being convicted of crimes he is not responsible for. Do I believe in conspiracy. Yes I do. Would government do such a thing. Yes indeed. First ask yourself the question about this story. Who aloud the so called employers to keep the taxes that are owed and who has that money. Know ask who is the employer that allowed this to happen before Mr. Hennessy received them as clients. Did the employer tell Mr. Hennessy everything he needed to know to do his job properly.NO. Now ask yourself who is the employer of these people. It is the Government, the ones who aloud it to happen and then did not tell Mr. Hennessy a contractor who is entitled to the same rights as an employee to do his job right by law. But how could he if CRA a government department did not tell him. He cannot. Well guess who the employer is, it is not Mr. Hennessy it is Eastern Heath the Newfoundland Government. They allowed it and then never told this poor man. Another point is a employer does not have to pay an employees taxes it is up to the employees but most employers will do it. The Newfoundland government is the employer of these people and it has been proven. Through a test called Weibe Door. There is a case that has the Newfoundland Government "NAMED" as the employer which Mr. Hennessy has and is being ignored. It is also on the Canlii Law. This can happen to anyone in this province when the government goes against you very scary!!!!! Stuff. Public Inquire lets see who is who. You may be surprised.

  • Jcl
    May 12, 2014 - 18:54

    What happened to Hennessey could happen to us

  • Jennifer
    May 12, 2014 - 18:52

    After reading some of those comments especially from the people that were at the preceding and testified, it appears that their evidence wasn't considered fairly by the court. If it was considered how can they justify pursuing one person for another's persons moneys owed to CRA

  • Jcl
    May 12, 2014 - 18:45

    What happened to Hennessey could happen to us

  • Adam Smith
    May 12, 2014 - 18:13

    I have no idea of the merits Mr. Hennessey's case. My comment is directed at the outrageous circumstance we have allowed to develop in this country with respect to the application of tax law. We have a tax act, a taxation agency, and administrative policies and practises relating to taxation that have become so complex, so arcane and so secretive that they have become - by virtue of that fact alone - unfair, undemocratic and perhaps even unconstitutional. Our annual tax torment has reached the point that almost one-half of all Canadians get someone else to prepare their tax returns. But the big thing that separates ordinary Canadians from wealthy Canadians is that the latter have access to tax accountants, tax lawyers, and financial advisors. These high paid professionals earn their keep by structuring the financial affairs of rich people in such a way that they less tax per dollar of income than many middle class Canadians. And if they have a problem with Revenue Canada, these same professionals can step in and do battle on their behalf. If you want to do something terribly complicated like starting a phone company or getting a broadcast license, then you should expect to pay a lot of money for lawyers and accountants. But someone earning forty or fifty thousand dollars a year should have to hire an expert to prepare their taxes or deal with a tax problem. The test should be that if any provision of the tax code is complicated beyond the point that someone with a high school education can' t understand it, then it should be rendered null and void by the court. I used to think a progressive income tax was fairer than a flat tax. I have come around to the opposite view. Why? Because progressive taxation introduces so many complications that rich people have been able to exploit those complications with the end result they pay less than they would under a flat tax. You don't need to be a libertarian to see that our society - our way of life - has become far too complicated and intellectually draining. It is that way largely because of creeping bureaucracy - the instinct of governments to create more rules than any ordinary person could ever comprehend let alone remember. No wonder we're suffering from much earlier and more severe forms of dementia. We're all walking around with far too much crap in our heads. How the hell do we get off this merry-go-round?

  • Madonna Power
    May 12, 2014 - 15:43

    It just goes to show the power and the callous ways that Canada Revenue Agency has over every taxpayer in Canada. They're are beyond the man in white robe (our God & faith) for the men in black robe over rides him in today's society. I have no faith in the judicial system and the people we let judging us. Keep strong Gary and upward and forward. Get the word out and fight, fight, fight for it's just discrimination all the way against you from the taxman. Best of luck! Looking forward to you being a WINNER on the high profile case. Take Care, Madonna

  • Marshall Art
    May 12, 2014 - 13:13

    From personal experience, I can say that Mr. Hennessey's chances of success with his appeal are not good. The Federal Gov't. and its Agencies don't care squat about legal fees in disputes, court cases or appeals. They'll drag it out until the person involved either passes away, runs out of money or is simply too tired to fight anymore.

  • Robert Fitzpatrick
    May 12, 2014 - 13:02

    Regarding your article of May 12th concerning Mr. Hennessey's civil case against CRA , please allow me to give my perspective on same. Your coverage appeared to be disjointed, incomplete and somewhat biased. Taken out of context your article appears to be very misleading. I personally witnessed Mr. Hennessey being threatened by CRA in 2004. At that time CRA treatened to seize Mr. Hennessey's assets unless he paid all balances owed to CRA. Their threat was excessive since they deemed Mr. Hennessey responsible for other amounts owed by ' former clients' before Mr. Hennessey's involvement with those files and that CRA were well aware of that fact. I felt that to be very unjust, heavy handed and an abuse of power. I testified to that threat during court proceedings.Having seen the court's decision I find it difficult to understand how this information was not given the consideration I felt it deserved and in essence was ignored.

  • Steve
    May 12, 2014 - 12:55

    This poor man has endured the abuse of cowardly bureaucrats, who hide behind their faceless government agency, wielding their quasi-police powers with impunity. Who keeps these petty, vindictive, jealous people in check? Who oversees their abuse of their powers? Obviously not Judge Barnes.

  • Karen Kieley
    May 12, 2014 - 11:48

    It appears that Mr. Hennessey is a scapegoat here. Perhaps CRA should being going after the individuals who actually incurred the taxes. Just a thought but perhaps maybe CRA can go back and do the due diligence required to do what should have been done before they decided to lay blame on one person. Is this what my tax paying dollars are doing? Spending time in a court room trying to lay blame where it does not belong.

    • Dan White
      May 12, 2014 - 12:12

      Hi Karen, In principle, you are correct. The sad part is that the income act allows CRA to collect money in creative ways. Third party penalties (as in Gary's case) is just one of the numerous ways CRA can create tax debts. CRA employees are public servants. They just follow the system. There are both wonderful CRA staff and horrible staff, it is the luck of the draw as to what you are going to get... It is not like a box of chocolates, in this case there is bitter chocolate. Change can only come when we the people stand up for our rights. Knowing what I know, Gary could have been more successful in his case, but; none the less, he is doing all of Canada a favour by standing up for his rights to be treated fairly and professionally.

  • Dan White
    May 12, 2014 - 11:39

    I don't know the background on Gary's case but... I deal with CRA on a regular basis and I watch the tax court cases and appeals. I am no fan of CRA, especially CRA collections. Today, CRA wants the money. They don't care if the taxpayer should have had to pay the tax or not... they do care if they have a legal way to collect it. A sort of reverse loophole ... so to speak. Today, CRA Collections simply wants the money now and will move aggressively to collect it. In respect to Tax Court; By and large I think that the Judges are doing the best they can. They also do a good job of putting CRA in their place for bad behaviour of auditors and collectors. In the cases that are lost in tax court, it is my observation that most losses are due to a case not properly prepared and invariably the Factums are deficient.

    • Karen Kieley
      May 13, 2014 - 12:40

      Hi Dan, I believe this is Federal court not Tax court.

  • more then concerned
    May 12, 2014 - 11:00

    I have been watching what has been happening with this case, why not print the documents in the paper and expose these CRA official's along with the Eastern Health official's and show the public what type of people we have running these departments. It is scary to think that the Government can railroad you to hide their wrong doings They break you and force you to spend all your money so you can not defend yourself. It's a sad day for Canada if they get away with this. We need to start a defence fund to support Mr. Hennessey, so when it goes to court he will be able to afford to defend himself and the prevent the Government and CRA from hiding their wrong doing

  • more then concerned
    May 12, 2014 - 10:59

    I have been watching what has been happening with this case, why not print the documents in the paper and expose these CRA official's along with the Eastern Health official's and show the public what type of people we have running these departments. It is scary to think that the Government can railroad you to hide their wrong doings They break you and force you to spend all your money so you can not defend yourself. It's a sad day for Canada if they get away with this. We need to start a defence fund to support Mr. Hennessey, so when it goes to court he will be able to afford to defend himself and the prevent the Government and CRA from hiding their wrong doing

  • Mary
    May 12, 2014 - 10:32

    In my position at Eastern Health in 1996 known then as the Dept of Social Services, I dealt directly with a representative of CRA regarding self administered homecare accounts. At that time CRA made it clear that the client would be the employer and be responsible for all remittance to CRA. I do not understand why CRA would choose to pressure Mr. Hennessey to pay monies owed by these individuals. By the time CRA decided to go after Mr Hennessey for the arrears of those people they had penalties and interest added on . My question would be why didn't CRA go looking for the arrears from those individuals since it happened before Mr. Hennessey took over the accounts. I was subpoenaed to court to give information regarding this but I do not see any reference to it in the courts decision. If I were a bookkeeper out there today doing payroll I would be worried if the people I would be issuing remittance for had arrears with CRA - that they could eventually charge me for - how would I know - I'm sure the individual is not about to tell me - for confidental reasons CRA aren't about to tell me. As I see it - this equates to some other individual charged with the responsibility of paying by arrears at Newfoundland Power for example.

  • Ron Maclean
    May 12, 2014 - 08:45

    This is the latest article concerning this gentleman's difficulties with the CRA and the legal system. What I find so alarming about his circumstance is the fact he has been held responsible for paying other people's income taxes. There does not appear to be any justification for that. If you owe taxes you can't bill someone else for them. I suspect there is some "other agenda" present that has caused CRA to go after this gentleman for taxes other people owe. Unfortunately this person has learned in a hard way that the "Legal System" has nothing to do with "Justice" and that the "Truth" depends on WHO is involved not WHAT has occurred. This appears to be the facts of the our so-called "Justice-System" when you run afoul of the so-called "official helper", or "establishment". It is a frightening fact that truth and justice take a backseat to power and influence. How would you like to be held accountable for someone else's tax bill?

  • Concerned
    May 12, 2014 - 07:44

    From reading this article it appears that Hitler is running our justice system.It appears that Mr. Hennessey is into the fight of his life for where he deserves justice.My opinion is that the justice system doesn't care about the evidence that Mr.Hennessey has presented. The only words they see are Canada Revenue Agency and to me that means game over for the ordinary Joe.What does it take to prove your innocence in our justice system.Give this man what he is owed and stop covering up for CRA. Good Luck Mr. Hennessey.Hope you win your case and get your life back. Concerned.