Background
- Nanny hired Walsh and his company for bookkeeping services from 2019 to 2023, specifically to manage tax remittances (corporate taxes, HST, payroll) to the Canada Revenue Agency (CRA).
- Nanny discovered in 2023 that Walsh failed to remit $318,278.18 intended for CRA payments, leading to penalties.
Key Facts
- Nanny terminated Walsh's services after learning from the CRA that no remittances had been made since 2019.
- Walsh claimed the funds were mistakenly sent to a wrong CRA account but failed to provide any evidence.
- A CRA investigation confirmed no payments were received, resulting in penalties and interest of $21,594.45.
- Nanny subsequently engaged another accounting firm to rectify its tax records, incurring additional costs.
Legal Proceedings
- Nanny filed a lawsuit in October 2023, and the defendants were noted in default by June 2024 for failing to respond.
- A Mareva injunction was issued to freeze the defendants' assets due to evidence of fraud.
- Walsh repeatedly failed to comply with court orders to disclose information and documents, leading to a finding of contempt.
Judgment
- The court found Walsh and his company liable for civil fraud and breach of fiduciary duty.
- The judge ruled that the fraud amounted to malicious and high-handed conduct, justifying punitive damages.
Damages Awarded
- Compensatory Damages:
- $318,278.18 (unpaid CRA remittances)
- $21,594.45 (CRA penalties and interest)
- $12,922.14 (fees paid to Walsh for failed bookkeeping services)
- $14,068.50 (fees for retroactive accounting services)
- Punitive Damages: $75,000 for the fraudulent conduct.
- Costs: $29,363.96 on a full indemnity basis due to the defendants’ egregious conduct.
Total Award: $441,863.26 plus full indemnity costs of $29,363.96.
