9101-9380 Québec Inc. v. Canada (Canada Customs and Revenue Agency), 2005 FC 929

Date: 20050630

Docket: T-1066-05

Citation: 2005 FC 929

Ottawa, Ontario, the 30th day of June 2005

Present:                     The Honourable Mr. Justice François Lemieux

BETWEEN:

                                9101-9380 QUÉBEC INC. (LES TABACS GALAXY)

                                                                                                                                          Applicant

                                                                        - and -

                                   CANADA CUSTOMS AND REVENUE AGENCY

                                                                                                                                     Respondent

                                           REASONS FOR ORDER AND ORDER

[1]                The applicant 9101-9380 Québec Inc. ("Tabacs Galaxy") is a manufacturer of tobacco employing more than10 persons. It began its activities in 2001.

[2]                On June 6, 2005, Phil McLester, Director (the Director), Excise Duties and Taxes Division of the Canada Customs and Revenue Agency (the Agency), rejected the renewal application by Tabacs Galaxy for its tobacco licence 51-TL-35.

[3]                On July 1, 2003, tobacco licence 51-TL-35 had been issued to Tabacs Galaxy pursuant to paragraph 14(1)(d) of the Excise Act 2001 (the Act). That licence was valid for a period of two years ending July 1, 2005.

[4]                On June 21, 2005 Tabacs Galaxy filed an application for judicial review, seeking the following conclusions:

(1)         invalidate the decision by the Canada Customs and Revenue Agency dated June 6, 2005;

2)          invalidate subparagraphs 2(2)(b)(i), 3(2)(b)(i) and paragraph 12(1)(e) of the Regulations Respecting Excise Licences and Registrations (the Regulations);

(3)         invalidate paragraph 14.2(a) and 6, 7 and sections 7.9 of the Act Respecting Taxation of Tobacco.

[5]                On June 23, 2005, Tabacs Galaxy filed a motion for an interlocutory injunction pursuant to rule 373 of the Federal Court Rules (the Rules). I heard the parties by conference call on June 29, 2005: that motion is the subject of these reasons.

[6]                The purpose of the Tabacs Galaxy motion was:

[TRANSLATION]

THAT AN ORDER FOR AN INTERLOCUTORY INJUNCTION be made in accordance with rule 373 of the Federal Court Rules, directing the Canada Customs and Revenue Agency and its Director to stay the application and the decision rendered on June 6, 2005, regarding the non-renewal of the licence held by the applicant until a final decision is rendered on the application for judicial review;

THAT AN ORDER be made that the applicant's tobacco licence remain in effect until final judgment is rendered on the application for judicial review;

IF NECESSARY, THAT AN INTERIM SAFEGUARD ORDER be made until judgment is rendered this motion, that 51-TL-35 remain in effect . . . [Emphasis added.]

[7]                In his decision of June 6, 2005, the Director indicated the grounds for denying the application by Tabacs Galaxy to renew tobacco licence 51-TL-35. I set out the Director's conclusion in his letter to the applicant dated June 6, 2005:

[TRANSLATION]

In the five years immediately before the date of its licence renewal application, therefore, Galaxy failed to comply with an Act of Parliament other than the Act, and its Regulations, respecting the taxation of or controls on alcohol or tobacco products, and failed to comply with an Act of the legislature of a province (Quebec) respecting the taxation of or controls on alcohol or tobacco products.

Galaxy no longer satisfies the requirements set out in section 2 of the Regulations. Galaxy therefore is not eligible for renewal of its licence under subsection 9(2) of the Regulations. Consequently, your application to renew your tobacco licence is rejected and the Galaxy licence is not renewed.

[8]                Tabacs Galaxy's motion for an interlocutory injunction must be assessed in a somewhat special context. On the same day that Tabacs Galaxy filed its motion for an interlocutory injunction, Blais J. of this Court rendered judgment in case T-253-05, 9101-9380 Québec Inc. (Les Tabacs Galaxy) v. Canada Customs and Revenue Agency, 2005 FC 895. In that case, Blais J. dismissed an application for judicial review by Tabacs Galaxy from a decision by the Director dated January 31, 2005, the effect of which was to revoke tobacco licence 51-TL-35 on the ground that it had failed to comply with an Act of Parliament, the Excise Act, and an Act of the legislature of a province, the Act Respecting Taxation of Tobacco, contrary to section 12 of the Regulations. In other words, the grounds for revoking the licence were the same as those for not renewing it.

[9]                I set out below sections 2, 9, 10 and 12 of the Regulations.

[10]            We should again note the orders sought by Tabacs Galaxy:

(1)        an interlocutory injunction directing the Agency and its Director to stay the application and the decision dated June 6, 2005, regarding the non-renewal of the licence held by the applicant until a final decision is rendered on the application for judicial review;

(2)        an order that the applicant's tobacco licence remain in effect until final judgment is rendered on the application for judicial review.

[11]            In my view, this motion for an interlocutory injunction must be dismissed for two reasons, the first of which is a lack of jurisdiction, and the other the finding that the applicant did not persuade the Court of the existence of a serious issue or that the balance of convenience was in its favour.

[12]            Granting what Tabacs Galaxy is seeking, that is ordering that a tobacco licence remain in effect until a final decision is rendered on the application for judicial review, which under the Regulations must expire on July 1, 2005 (see section 4 of the Regulations), as noted by Rothstein J. of the Federal Court Trial Division, as he then was, in Rajan v. Canada (Minister of Employment and Immigration), [1994] F.C.J. No. 1618, would be tantamount to making an order that is expressly contrary to a provision of an Act of Parliament. I set out paragraphs 5 and 6 of his reasons below:

¶ 5       I am of the opinion that I do not have jurisdiction to grant the stay requested. To grant the stay would be tantamount to my making an order that is expressly contrary to a provision of an Act of Parliament. The stay would provide that the departure order should not be deemed to be a deportation order, notwithstanding that no certificate of departure had issued within the applicable period. I do not see how a court can issue a stay that, in effect, would change an act of Parliament.

¶ 6       Counsel for the applicant says that under the inherent jurisdiction of the Court and the Court's express jurisdiction under section 18.2 of the Federal Court Act, the Court does have jurisdiction to grant the stay requested. But if this argument were correct, the inherent jurisdiction or the express jurisdiction conferred upon it by Parliament under section 18.2, would enable the Court to make orders at large, without regard to its jurisdiction or the provisions of the statutes that it interprets. Subject to my comments below relating to constitutional challenges to statutes, this proposition is absolutely unacceptable. It is obvious that the courts may not ignore or change statute law. What is argued is so clearly inconsistent with the well-known roles of the courts and Parliament and our fundamental system of law, that I do not think anything more need be said.

[13]            This Court's judgment in Heritage Duty Free Shops Inc. v. Canada (Minister National Revenue), [2000] F.C.J. No. 2101 is to same effect.

[14]            Another consequence follows from the legal concept that an order for a stay or an interlocutory injunction cannot change a statute or regulation (in this case the expiry date of a licence, the maximum limit of which is set by the Regulations). The prerequisite for an application to renew a licence is that there is something to be renewed, namely that the licence exists.

[15]            In the case at bar, by operation of law, the Tabacs Galaxy licence expired on July 1, 2005, and moreover, there is the judgment of Blais J. which held that the Tabacs Galaxy licence had been legally cancelled. These two points make the application for an interlocutory injunction, if not the application for judicial review, moot because there is no longer a licence to be renewed or to remain in effect. (See Fontana v. Ontario (Registrar of Motor Vehicles), [2002] O.J. No. 3740.)

[16]            As mentioned, with respect to the second ground for denying the motion for an interlocutory injunction, Tabacs Galaxy did not persuade the Court of the existence of a serious issue or and that the balance of convenience favoured it.

[17]            However, Tabacs Galaxy established the existence of irreparable harm, referring to the judgment of Gauthier J. in case T-253-05, between the same parties, in which the judge stayed the enforcement of the Agency decision dated January 31, 2005, cancelling licence 51-TL-35, until a decision was rendered on the application for judicial review. As mentioned, it was Blais J. who decided this judicial review.

[18]            In her judgment, cited at [2005] F.C. 309, Gauthier J. determined that irreparable harm had been established. I quote paragraphs 40 and 41 of her judgment:

¶ 40       As the Supreme Court noted in R.J.R. -McDonald, supra, "'irreparable' refers to the nature of the harm suffered rather than its magnitude". That includes harm which cannot be cured, because one party cannot collect damages from the other or would find it difficult to do so. This includes cases in which the right to compensation is not clear or is limited.

¶ 41       The Court is satisfied that the closure of Tabacs Galaxy for a period of four months will necessarily entail a loss of earnings, and probably the loss of part of its clientele, and that in this specific case such harm must be regarded as irreparable.

[19]            Counsel for Tabacs Galaxy argued that three serious issues existed. First, despite the fact that Blais J. had held the contrary, he maintained that there was still a serious issue regarding the retroactivity of the Regulations which came into effect on April 1, 2003, as the facts alleged in the finding of guilt occurred on September 3, 2002. Second, the procedure used by the Agency in dealing with its application for renewal was unfair, because it did not give Tabacs Galaxy an opportunity to make submissions in opposition to the decisions made to suspend and cancel the tobacco licence. Third, the treatment given to Tabacs Galaxy by the Agency was vitiated by inequality under the Act.

[20]            I cannot accept any of these arguments regarding the existence of serious issues, even if I accept that the judgment of Blais J. does not have the effect of res judicata as it is not a final decision, and that the test for assessing a serious issue is that of a frivolous or vexatious request.

[21]            In my opinion, Blais J. clearly decided that the Regulations did not apply retroactively, relying on the case law cited at paragraph 15 of his reasons, on [1968] S.C.R. 341">Paton v. The Queen, [1968] S.C.R. 341, and on the reasons of Gauthier J., supra. The judgment of Blais J. seems to me to be quite correct and counsel for Tabacs Galaxy indicated no valid reason for making any other determination. In my opinion, the procedure followed by the Agency was not unfair. In connection with its application to renew, Tabacs Galaxy was fully aware of the Agency's concerns and could have presented its arguments before the decision was made. As counsel for the Agency submitted, there is no equivalence between an application to renew and a suspension or cancellation proceeding. As to unequal treatment under the Act, counsel for Tabacs Galaxy admitted there was no evidence before the Court to support that argument.

[22]            Finally, I feel that the balance of convenience favours the Agency. Counsel for the Agency referred the Court to the judgment of Strayer J. of the Federal Court Trial Division, as he then was, in Canadian Free Speech League v. Canada, [1992] F.C.J. No. 966. I cite paragraphs 7 and 11 of his decision:

¶ 7       With respect to the balance of convenience, which is another factor I must consider, the cases, including a decision of the Supreme Court of Canada, have made it clear that when one is balancing the interests of an individual or a society against the public interest in a sense of the public administration carrying out the laws of legislatures or Parliament, one must give due weight to the public interest.

¶ 11       There is a principle of granting injunctions, that they should be granted, if possible, to preserve the status quo. In terms of the administration of the laws of Parliament, it has been said in the case of the Attorney General of Canada v. Gould back in 1984 by the Federal Court of Appeal and by the Supreme Court of Canada that granting an injunction which would have the effect of giving the Plaintiff his ultimate remedy, involving in the process treating as invalid what has otherwise been regarded as a lawful or legitimate Act of Parliament, treating it in that way pending trial, is not a matter of maintaining the status quo, it is altering the status quo.

[23]            I am also relying on R.J.R. - MacDonald Inc. v. Canada (A.G.), [1994] 1 S.C.R. 311, as to the public interest in an application to invalidate a statute or regulation.

                                               ORDER

THE COURT ORDERS that this motion for an interlocutory injunction be dismissed with costs.

Certified true translation

K. Harvey

                                                  FEDERAL COURT

                              SOLICITORS OF RECORD

DOCKET:                                                                   T-1066-05

STYLE OF CAUSE:                                                   TABACS GALAXY v. Canada Customs and Revenue Agency

PLACE OF HEARING:                                             Ottawa

DATE OF HEARING:                                               June 29, 2005

REASONS FOR ORDER BY:                                  The Honourable Mr. Justice Lemieux

DATED:                                                                      June 30, 2005

APPEARANCES:

Louis Masson                                                                FOR THE APPLICANT

Jacques Mimar                                                              FOR THE RESPONDENT

SOLICITORS OF RECORD:

Joli-Coeur, Lacasse, Jetté, Saint-Pierre                          FOR THE APPLICANT

Québec, Quebec

Attorney General of Canada                                          FOR THE RESPONDENT

Montréal, Quebec