Date: 20060104

Docket: T-430-05

Citation: 2006 FC 4

[ENGLISH TRANSLATION]

OTTAWA, Ontario, this 4th day of January, 2006

PRESENT: THE HONOURABLE JUSTICE PAUL U.C. ROULEAU

 

BETWEEN:

9058-3956 QUÉBEC INC.

AND 2970-7528 QUÉBEC INC.

AND 9005-0659 QUÉBEC INC.

 

Applicants

and

 

THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS, AS THE MINISTER RESPONSIBLE FOR THE CANADA BORDER SERVICES AGENCY AND THE MINISTER OF NATIONAL REVENUE (AS THE MINISTER RESPONSIBLE) FOR THE CANADA CUSTOMS AND REVENUE AGENCY

 

Respondents

 

REASONS FOR JUDGMENT AND JUDGMENT

 

 

• [1]This application for judicial review is made pursuant to section 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7 regarding a decision made by Yvan Bélanger, Trade Policy Services Officer (the officer) at the Canada Border Services Agency (CBSA), on February 9, 2005, in which he denied the three applicants’ drawback claims, which were considered incomplete.

 

• [2]A drawback is a refund, in whole or in part, of import duties or taxes on goods that are later re-exported or used in the manufacture of other goods for export. The three drawback claims were submitted to the CBSA under subsection 113(1) of the Customs Tariff, S.C. 1997, c. 36 (the Tariff).

 

• [3]The applicants are exporting vehicles that they have purchased in Canada in new, unused condition by entrusting them with customs brokers and specialized transporters. These vehicles are not, however, being imported by the applicants.

 

• [4]These vehicles were imported into Canada by automotive manufacturers that apparently then sold them to Canadian dealerships. In recent years, manufacturers have prohibited dealerships from selling these vehicles for export or resale (see GM letter no. 2002-050, Exhibit C of Roger Boutin’s affidavit, Vol. 1 of the applicants’ record on page 97.2).

 

• [5]The applicants seem to have acquired these vehicles through resellers who appear to have acquired them from dealerships.

 

• [6]Each applicant has submitted a drawback claim to the CBSA along with a list of the new exported vehicles and a letter stating the grounds of their claim:

 

-  On January 4, 2005, by 9058-3956 Québec Inc. in relation to 99 vehicles (Director General: Roger Boutin).

 

-  On January 12, 2005, by 2970-7528 Québec Inc. in relation to 148 vehicles (Director General: Sarkis Minassian).

 

-  On January 13, 2005, by 9005-0659 Québec Inc. in relation to 31 vehicles (President: Dany Lamoureux).

 

 

• [7]In the explanatory letters accompanying their drawback claims, the applicants explain that they did not have certain customs information about the exported vehicles, namely:

 

-  The import date for the vehicles included in the drawback claims;

-  The point of entry into Canada of said vehicles;

-  The type of currency used by the importer;

-  The exact value for duty declared for each vehicle;

-  The duty imposed and paid for each vehicle;

-  The code for the port of entry where the vehicles were imported into Canada;

-  The importer number and transaction number for said vehicles;

-  The release date of the vehicles following their import and customs clearance.

 

 

• [8]The applicants therefore requested that the CBSA provide them with this information.

 

• [9]That said, the applicants did not provide a notice of waiver (form K32A) when they submitted their drawback claims, contrary to section 119 of the Tariff:

 

 

 

• [10]In a decision rendered by CBSA Officer Yvan Bélanger on February 9, 2005, the applicants’ drawback claims were denied. That decision reads as follows:

[translation]

I hereby acknowledge receipt of your drawback claims (M251077 – M251078 – M251079) dated January 27, 2005. The excise tax refunds that your clients received are outside the mandate of the CBSA, but within the mandate of the Canada Revenue Agency (CRA). The CBSA requirements under the Customs Act and Customs Tariff are different.

 

Given that these claims are incomplete (lack of supporting documentation, including the K32A forms issued by the original importers transferring the right to claim customs paid on the original values of the vehicles at the time of import to your clients, as well as the numbers and dates for the import documents for said vehicles, and the importer number of the various clients), they have been denied.

 

Given that there is no formal appeal mechanism for the drawback program at the regional level, your only recourse to appeal this decision is through the Director of the Duty Drawback Program at headquarters in Ottawa, who will review your claim and the supporting documentation provided in order to make a final decision.

 

 

• [11]Form K32A is the form in which the other persons eligible for the drawback waive that entitlement. In this case, the other persons eligible for the drawback are the importers of these vehicles.

 

• [12]The applicants argue that they are entitled to the drawback under subsection 9(1) of the Goods Imported and Exported Refund and Drawback Regulations, SOR/96-42 (the Regulations):

 

 

 

• [13]The applicants claim that the officer erred in law by requiring the applicants to show that the original importers waived their entitlement to the drawback. In their opinion, that entitlement was waived automatically when the original importers sold the vehicles they had imported into Canada to the dealerships.

 

• [14]The applicants argue that by purchasing these vehicles from resellers who had purchased them from dealerships beforehand, the resellers guaranteed the applicants that the goods were tariff-free and therefore that customs duties, excise taxes or other duties or taxes imposed beforehand by any federal legislation had been paid.

 

• [15]The applicants maintain that they could not provide the notice of waiver because they are competing with manufacturers for the sale of new vehicles on foreign markets. To prevent this competition, Canadian automotive dealerships do not have the right to sell new vehicles for export or resale and are subject to penalties imposed by manufacturers if they do. The applicants claim that it was impossible for them to ask the selling dealerships or original importers for a notice of waiver or the information they were missing, otherwise they would not have been able to acquire the vehicles. Such a request could potentially have resulted in legal action filed by the manufacturers against the selling dealerships and consequently the applicants.

 

• [16]Should the Court recognize that the applicants are entitled to the drawback, they submit, pursuant to subsection 107(5) of the Customs Act, that the officer may provide, allow to be provided or provide access to customs information upon receipt of a drawback claim submitted under subsection 113(1) of the Customs Tariff.

 

• [17]Given that under the Customs Act, the officer is able to provide information, notably for a drawback claim, this information could have been provided to the applicants in their capacity as vehicle exporters. The applicants therefore had the required capacity to obtain the customs information.

 

• [18]According to the applicants, the officer’s decision not to provide them with access to the requested information is unreasonable, and he unlawfully refused to exercise his discretion. The officer subordinated his decision to the will of a third party: the original vehicle importer. The officer therefore refused to exercise his jurisdiction based on his misinterpretation of the extent of his jurisdiction. In short, the remedy sought is a mandamus application.

 

• [19]To ensure that the CBSA does not grant the drawback more than once, the respondents argue that the applicants were required to produce a notice of waiver pursuant to section 5 of the Regulations:

 

 

 

 

• [20]Given that the applicants were unable to obtain the notice of waiver from the importers, they cannot be granted the drawback. The respondents therefore argue that without the notice of waiver, the decision-maker could reasonably refuse to issue the drawbacks, seeing as the parties were unable to demonstrate that they were the only ones entitled to the drawback.

 

• [21]The respondents also maintain that even if the Court were to rule that the applicants are entitled to the drawback, the Court cannot order the respondents to provide the customs information sought. The respondents argue that under subsection 107(5) of the Customs Act, the official has the discretion to provide, allow to be provided or provide access to customs information. In the respondents’ opinion, exercising that discretion is entirely optional. As a result, and based on the criteria set out in Apotex Inc. v. Canada (Attorney General), [1994] 1 FC 742, the respondents argue that the mandamus conclusion sought by the applicants cannot be issued given that the mandamus criteria have not been met.

 

• [22]The respondents also argue that even if the Court had to allow the writ of mandamus against the officer’s decision, it would be useless because the respondents do not have some of the information sought by the applicants. For example, the respondents argue that they do not know the value for duty of each vehicle unless they are imported individually. The respondents also claim that the importer number could not be obtained except through reconciliation with the importer’s documents, because these details were submitted under the Motor Vehicle Safety Act and not the Customs Act. As for the criteria stipulated in Apotex, the respondents argue that they have no public legal duty to effect such a reconciliation.

 

• [23]This case raises the following issues:

 

• 1)What standard of review applies to reviewing the federal agency’s decision?

 

• 2)Did the agency err in law, requiring the Court’s intervention, when it denied the applicants’ drawback claims on the basis that they were not supported by notices of drawback waiver from the original importers?

 

• 3)Should the answer to that question be in favour of the applicants, did the officer have the discretion to provide the customs information to the applicants, and if so, did he err in the exercise of his discretion?

 

 

 

ANALYSIS

 

• 1)What standard of review applies to reviewing the CBSA’s decision?

 

• [24]The applicants have not addressed this issue in their memorandum of fact and law. The respondents, however, assert that the standard of review applicable to the CBSA’s decision is the standard of reasonableness simpliciter.

 

• [25]In light of the pragmatic and functional tests reiterated in Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, it is possible to determine that the standard applicable to the CBSA’s decision is that of correctness.

 

• [26]First, the Customs Tariff does not contain a privative clause that could be a basis for with-drawing the CBSA’s decision from the scope of judicial review.

 

• [27]Next, the Court’s expertise is like that of the CBSA with regard to the legislative interpretation of the provisions of the Customs Tariff and the related Regulations, which prove to be relevant to this matter.

 

• [28]With regard to the issue of whether the Customs Tariff is a polycentric statute, Shore J. establishes the following in A & R Dress Co. Inc. v. Canada (Minister of National Revenue), 2005 FC 681, [2005] F.C.J. No. 861 (QL) at paragraph 15:

 

The Customs Tariff provides for duties imposition and duties relief. Section 109 and following of the Customs Tariff provide for duties relief in respect of obsolete and surplus goods. This is not a polycentric issue, where competing rights are at stake. It is a question of whether these sections entitle an entity to a refund. This factor points to a low deferential standard of review.

 

 

• [29]Although this matter involves a drawback claim under another provision of the Customs Tariff, this passage is nonetheless applicable to the facts of this case.

 

• [30]The nature of the issue in this case may be characterized as being of fact and law.

 

 

 

• 2)Did the agency err in law, requiring the Court’s intervention, when it denied the applicants’ drawback claims on the basis that they were not supported by notices of drawback waiver from the original importers?

 

 

• [31]From the outset, the respondents have agreed that the applicants are among those eligible for a drawback. They argue, however, that the applicants are not the only ones who are eligible.

 

• [32]The respondents submit that drawback eligibility is assignable, and as a result the notice of waiver is required so that the CBSA can ensure that a drawback is not granted more than once.

 

• [33]Normally, the way for the applicant to discharge the burden of demonstrating that the applicant is the sole beneficiary entitled to the drawback, as determined by the legislation, is to produce the K32A form, the terms of which stipulate that any other persons eligible for the drawback waive that entitlement.

 

• [34]In this case, the applicants submitted a drawback claim to the CBSA and the burden was consequently on the applicants to demonstrate the drawback entitlement had been transferred to them upon the sale of the vehicles listed in the affidavits.

 

• [35]The respondents claim that the CBSA cannot be forced to grant a drawback for a vehicle because the person claiming the drawback is unable to demonstrate that he or she is the sole beneficiary of this drawback.

 

• [36]The applicants claim that they do not need to demonstrate that other people have waived their entitlement because they are the only ones who are entitled to a drawback as the exporters of their own vehicles.

 

• [37]The applicants also submit that the agency erred in its overly liberal interpretation of the persons eligible for the drawback.

 

Legislative history

 

a) The 1973 Regulations

 

• [38]In the Goods Imported and Exported Drawback Regulations, SOR/73-97, by using the conditional tense, Parliament appears to have meant to require a waiver from any person eligible to claim the drawback, except the applicant, of course.

 

 

 

 

 

b) The 1978 Regulations

 

• [39]In 1978, certain amendments to the Regulations entered into force via the Goods Imported and Exported Drawback Regulations, SOR/78-374. Parliament thereby meant to allow other categories of persons to be eligible for the drawback. Parliament did, however, employ different wording in reference to the waiver required for the applicant to be entitled to the drawback. That said, the meaning behind the language is clear and the use of the conditional tense once again infers that Parliament thereby meant for the waiver to be required of any person eligible to claim the drawback.

 

 

 

 

 

c) The 1986 Regulations

 

• [40]In 1986, the Goods Imported and Exported Drawback Regulations, SOR/86-795 amended the categories of persons eligible to claim a drawback once again. The plural form was also used in the section dealing with persons from whom a notice of waiver is required. In short, the applicant had to provide a request for waiver from all other persons eligible to claim the drawback.

 

 

 

 

d) The 1996 Regulations

 

• [41]In 1996, the Goods Imported and Exported Drawback Regulations, SOR/96-42 stipulated that the applicant had to provide a waiver from all other persons entitled to claim the drawback. Parliament dispensed with the plural form in the portion of the provision related to persons from whom a drawback waiver is required. Subsection 9(1) of the Regulations stipulates the categories of persons eligible to claim a drawback.

 

 

 

 

• [42]The applicants claim that they do not need to provide a notice of waiver from the importers because they are the only ones entitled to the drawback.

 

• [43]Given that the meaning of the scope of the aforementioned concept is not clearly established in the Tariff or Regulations, the intention of Parliament can be defined through statutory interpretation, which in this case falls under the legislative context. Memorandum D7-4-2, “Duty Drawback Program” (dated January 31, 1996) appears to support the conclusion that the notice of waiver is required from any person eligible for the drawback, regardless of the ownership of the exported good.

 

 

 

 

• [44]In light of this administrative interpretation, the applicants appear to be wrong in believing that they are the only ones entitled to claim a drawback, alleging that by purchasing the vehicles from the hands of importers, they waived the rights of other persons eligible for the drawback. The Regulations do not contain any provision allowing a drawback to be granted to the buyer who is unable to obtain a notice of waiver. In short, it is the standing of the person that seems to give rise to the entitlement to the drawback claim, not the right to ownership.

 

• [45]Therefore, the meaning given to the legislative text suggests that the applicant, whether ex-porter, importer, owner, processor or producer, must provide a waiver from any other person entitled to claim the drawback, regardless of the right of ownership in the exported property.

 

• [46]In this matter, the applicants could not show that the CBSA’s decision was incorrect considering the applicable law. Based on that, the CBSA’s decision is therefore upheld, the Court having no other grounds for believing that the CBSA’s interpretation of the provisions involving the persons eligible for entitlement to the drawback is unreasonable.

 

• [47]Given that the answer to the second question is not in favour of the applicants, there is no need to answer whether the officer had the discretion and obligation to provide the customs information to the applicants.

 

• [48]Nevertheless, I would like to note that the information provided by the importers was provided to accommodate the requirements of the Motor Vehicle Safety Act, and not provided under the Customs Act.

 

• [49]It is completely unreasonable to require customs officers to be responsible for having the description of every item imported into Canada on file, and more specifically all the information that the applicants require to submit a detailed drawback claim. As I have stated, those details were submitted under the Motor Vehicle Safety Act and not the Customs Act. Every federal department has its own import rules and requirements, and the officer exercises complete discretion, as stipulated in paragraph 107(5)(l) of the Customs Act, which reads as follows:

 

 

 

 

 

• [50]As for the officer’s actions, sections 113 and 119 of the Regulations address drawback refunds. Those sections read as follows:

 

 

 

• [51]Mandamus is only available when there is a public legal duty to act owed to the applicant. Pursuant to the above-quoted sections, the customs officer cannot act outside of the requirements of the Act or Regulations. The officer cannot perform any other function and has no obligation to act outside of the limits established in the Act and Regulations. Furthermore, as the Federal Court of Appeal stated in Apotex Inc. v. Canada (Attorney General), [1994] 1 FC 742:

 

Where the duty sought to be enforced is discretionary, the following rules apply:

 

(a) in exercising a discretion, the decision-maker must not act in a manner which can be characterized as “unfair”, “oppressive” or demonstrate “flagrant impropriety” or “bad faith”;

 

(b) mandamus is unavailable if the decision-maker’s discretion is characterized as being “unqualified”, “absolute”, “permissive” or “unfettered”;

 

(c) in the exercise of a “fettered” discretion, the decision-maker must act upon “relevant”, as opposed to “irrelevant”, considerations;

 

(d) mandamus is unavailable to compel the exercise of a “fettered discretion” in a particular way; and

 

(e) mandamus is only available when the decision-maker’s discretion is “spent”; i.e., the applicant has a vested right to the performance of the duty.

 

 

• [52]Given that the officer exercises complete discretion, the respondents maintain that, in relation to the above-cited ratio, the mandamus conclusion sought by the applicants cannot be issued de facto.

• [53]As stipulated in section 119 of the Regulations, the form prescribed by the department and a waiver from any other persons eligible for the drawback should have been submitted to the officer. The officer cannot exceed his jurisdiction.

 

 

 

JUDGMENT

 

  The application for judicial review is dismissed with costs.

 

 

 

“Paul U.C. Rouleau”

FEDERAL COURT

 

SOLICITORS OF RECORD

 

 

 

DOCKET:  T-430-05

 

STYLE OF CAUSE:  9058-3956 QUÉBEC INC. ET AL v. THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS ET AL

 

PLACE OF HEARING:  Montréal, Quebec

 

DATE OF HEARING:  November 14, 2005

 

REASONS FOR JUDGMENT BY:  ROULEAU D.J.

 

DATED:  January 4, 2006

 

 

 

APPEARANCES:

 

Denis Péloquin	FOR THE APPLICANTS
Jacques Savary	FOR THE RESPONDENTS

 

SOLICITORS OF RECORD:

 

Denis Pélouqin Montréal, Quebec	FOR THE APPLICANTS
John H. Sims, Q.C. Deputy Attorney General of Canada	FOR THE RESPONDENTS