Civil suit against CRA fails

Federal court says St. John's man ineptly managed payroll accounts

Published on May 5, 2014
Gary Hennessey. —Telegram file photo

A St. John’s man’s attempt to prove local officials from the Canada Revenue Agency (CRA) acted maliciously in their efforts to collect payroll remittance arrears from him has failed.

A federal court judge has ruled Gary Hennessey, who is also the subject of a pending court case for income tax-related offences, was not a victim of circumstances.

In a 74-page ruling at the end of March in St. John’s, Judge Robert L. Barnes said Hennessey “was inept at managing and accounting for payroll disbursements” he handled for several hundred clients.

The case relates to Hennessey’s former business, Administrative Services, which handled payroll services for hundreds of home-care workers on behalf of their clients. Eastern Health provided the money to pay them.

It was found some of those clients owed CRA money, and when Eastern Health and CRA failed to settle the matter, CRA went to Hennessey and held him accountable for the arrears.

According to evidence presented in the case, Hennessey filed for bankruptcy in 2008.

Hennessey listed a liability to CRA for an amount totalling $650,000. He was discharged from bankruptcy the following February.

Barnes said the system for managing provincial home care payroll accounts back then was clearly a poorly designed system. He also called out Eastern Health for failing to provide oversight.

Ultimately, Barnes found Hennessey to lack credibility as a witness, providing evidence that “was rambling and convoluted.”

Barnes noted that Hennessey failed to document how he dealt with some of the arrears accounts and “made a mess of the payroll accounts of his clients.”

He also said it was reasonable for CRA not to aggressively pursue the clients given Hennessey had created a mess and was not able to clearly account for what happened.

“In my view, the CRA’s conduct was fair, responsible and reasonable throughout,” Barnes said in his decision.

The civil suit was originally filed in 2010. Barnes decision also requires Hennessey to cover courts costs for the defendant.