Date: 19980821
Docket: T-75-93
BETWEEN:
HOUSE OF GIFTWARES LIMITED,
Plaintiff,
- and -
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] I have allowed the Defendant's motion to strike out the Statement of Claim. In doing so I have dismissed the action as lacking a reasonable cause of action, for at best the Plaintiff seeks, by a compassionate argument, some form of declaration, reducing a statutory penalty for a violation of the Customs Act, C. 52.6 R.S. 1985 (2nd. Supp.), a violation admitted by the Plaintiff. However, by reason of the Defendant's substantial delay in bringing the motion, each side will bear its own costs.
SOME RELEVANT BACKGROUND
[2] On 28 March 1991 Revenue Canada, Customs and Excise Investigations, issued a Notice of Ascertained Forfeiture in the amount of $201,899.82 against the Plaintiff. The Notice arose out of the failure to pay full duty, brought about by the undervaluing of imported goods. The Plaintiff then requested the Minister's decision, pursuant to section 129 of the Customs Act. Upon receiving the Minister's unfavourable notice of reasons for the seizure the Plaintiff appealed the decision by way of an action in this Court pursuant to section 135 of the Customs Act.
[3] The Statement of Claim neither denies the undervaluing nor alleges any error in the Minister's decision. Indeed, not only is there no substantive excuse or plea in the Statement of Claim, but also the Plaintiff admits the undervaluing and goes on to suggest mitigating factors. The mitigating factors includes that the undervaluing was done on the advice of a supplier and acquiesced to by an unsophisticated plaintiff operating a business of marginal solvency. The Plaintiff says it did not receive any substantial gain or profit and that the undervaluing hurt no other individuals or businesses. These factors, and the fact that the Plaintiff saved approximately 50% of the duty and taxes which are now claimed, are not of any particular relevance, nor is the suggestion, by the Plaintiff, that enforced payment of the assessment could force the Plaintiff into bankruptcy.
CONSIDERATION
[4] To deny a plaintiff a day in court, by striking out a statement of claim for want of a reasonable cause of action, is not to be done lightly. Indeed, the Court will only strike out a statement of claim if it is plain, obvious and beyond doubt that the claim is one which cannot succeed.
[5] As I have noted, the claim arises from the undervaluation of goods, for customs purposes and the resulting failure to pay appropriate duty, on the proper value under sections 17 and 32 of the Customs Act, the latter section also referring to regulations.
[6] Section 24(1) of the Customs Act allows the customs officer, believing on reasonable grounds that there has been a contravention of the Act, to take various steps including serving a notice demanding payment. Such a notice is final and not subject to any review, except as provided in the Customs Act.
[7] Section 129(1) of the Act sets out a procedure by which to obtain review, being that of a ministerial decision. The Minister's task, as set out in section 1331(1)(a), in an instance in which a Notice of Ascertained Forfeiture has been issued, is to consider and weigh the circumstances and decide ". . . whether the Act or regulations were so contravened; . . . ". It is here the Plaintiff runs into difficulty in appealing the Minister's decision to this Court, for the Plaintiff can obtain no mileage from compassionate pleas, the Minister having determined that the Act or the regulations had been contravened.
[8] This brings me to the issue of what, if anything at all, the Court might grant by way of relief. Mr. Justice Mahoney, as he was then, touched on this point, in the context of vacating a forfeiture, in Lawson v. The Queen, [1980] 1 F.C. 767 at 771-772:
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In considering an application to vacate a forfeiture the Court is bound to consider all grounds under which the evidence discloses the goods might have been forfeited. It cannot limit its consideration only to the stated ground of forfeiture. The Court is, however, limited to a determination of whether or not the goods were, in fact and law, liable to forfeiture. |
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[emphasis added]
The key concept to take from this is that the Court is limited to a consideration of whether there has been a contravention of the Customs legislation opening the goods and the plaintiff to liability under the Notice of Ascertained Forfeiture.
[9] The law obliges an importer of goods to properly declare them, including by declaring a proper value, and to then pay the appropriate duty. The Plaintiff admits this was not done, in effect not only justifying the Minister's decision that Customs Act requirements were contravened, but also negating any argument that might be made to this Court that the goods were not, in fact and law, liable to an ascertained forfeiture.
CONCLUSION
[10] Given that the Minister was clearly allowed to come to the decision that he did and that the Statement of Claim discloses no grounds by which to contest that decision, the Statement of Claim is struck out, as revealing no cause of action. By reason of the clear admissions in the Statement of Claim, no amendment would be of any assistance. The action is therefore dismissed.
[11] The Defendant asks for costs. Given delay on the part of the Defendant, who served a defence some four years after the action was begun and did not file it until a year later, it would be inappropriate to award costs. Both sides shall bear their own costs.
(Sgd.) "John A. Hargrave"
Prothonotary
21 August 1998
Vancouver, British Columbia
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.: T-75-93
STYLE OF CAUSE: House of Giftwares Limited
v.
The Minister of National Revenue
REASONS FOR ORDER OF MR. JOHN HARGRAVE, PROTHONOTARY
dated August 21, 1998
SOLICITORS OF RECORD:
| Mr. Robert P. Sokalski on behalf of the Plaintiff |
| Mr. Duncan A. Fraser on behalf of the Respondent |
Department of Justice
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