The OCA, relying on a Supreme Court of Canada decision, said that the tort of misfeasance in public office could occur in one of two ways: (A) the CRA officer could act deliberately to cause harm or (B) the officer "acts with knowledge both that she or he has no power to do the act complained of and that the act is likely to injure the plaintiff."
In this case, OCA Justice Laskin said that Ms. Gardner had to show that the CRA knew it had no legal authority to reassess her. To do that, the Court said, she had to show first that the assessment was wrong.
Was Justice Laskin right? CRA makes mistakes interpreting tax law all the time. And so do tax lawyers and judges. So, how could proof that the reassessment was wrong be proof that CRA knew it had no lawful authority to act? Often, the law is not so clear.
This case is another of many in which taxpayers sue CRA for reassessing them. The Court did not say that Ms. Gardner was right, though. It simply said that she wasn't too late to start her lawsuit; she could go ahead with it toward trial.
But the decision confirms that you can sue a CRA officer for abusing his legal power. For example, suppose a CRA Collections officer garnishes your bank account, when he knows that you have filed a Notice of Objection. (The tax rules say that when you file a Notice of Objection, generally, CRA may not collect the tax owing until another CRA officer examines your objection.) If the garnishment action causes you to lose your job or suffer in another way, you might be able to sue CRA for your damages.
See Gardner v. Canada (Attorney General), 2013 ONCA