B.C.'s highest court has thrown out a $1.3-million award handed to a man who says he developed post-traumatic stress disorder after tax officials searched his office.

Hal Neumann sued the Canada Revenue Agency after employees showed up unannounced to search his Saanich home office as part of a tax-evasion investigation into someone he had done business with. The investigators had a warrant, but Neumann argued that he was profoundly impacted by the surprise search and what he termed a "negligent investigation."

In a decision Wednesday, the B.C. Court of Appeal overturned a jury's 2009 ruling that investigators had violated Neumann's rights and that he deserved a massive cash award in compensation.

"The arrival of police officers at one's home armed with a warrant to search is doubtless an upsetting and frightening event for anyone who experiences it," Justice Catherine Anne Ryan wrote on behalf of the appeal court panel.

"That said, the search warrant is an important and accepted enforcement tool utilized by those charged with investigating crime. If a search warrant is lawfully obtained and executed, those subjected to it cannot seek compensation for its unintended repercussions."

Neumann, who earns a living buying and selling used heavy equipment, was at his desk on Sept. 7, 2005 when investigators arrived at his door accompanied by police and presented him with a warrant to search the house, according to court documents.

Even though he was told that he wasn't under investigation, Neumann testified in court that he was worried about being killed if he didn't cooperate – an understandable concern for a man who had escaped totalitarian East Germany with his family as a boy.

A psychiatrist who examined him testified that Neumann was seriously traumatized by the search, and would have suffered less distress if investigators had simply warned him before they showed up.

But investigators said they were unaware before they arrived that Neumann's office was also his home, and that they were careful to stay out of his living areas once they were aware of the situation.

The appeal court agreed that police and CRA officials had done nothing wrong during their investigation, and that they had done all they could to confine their search to Neumann's office.

"There was no evidence to support a claim of unreasonable search," Ryan wrote. "The award for damages for a Charter breach is untenable and must be set aside."