Date: 20050722
Docket: 05-T-47
Citation: 2005 FC 1019
Ottawa, Ontario, July 22, 2005
Present: THE HONOURABLE JUSTICE GAUTHIER
BETWEEN:
NEXEN INC. and WASCANA ENERGY 2001 LTD., carrying on business in partnership as Nexen Marketing (hereinafter "Nexen Marketing") and NEXEN INC.
Applicants
and
THE MINISTER OF PUBLIC SAFETY
AND EMERGENCY PREPAREDNESS (CANADA)
Respondent
REASONS FOR ORDER AND ORDER
[1] This is a motion by the applicants made in writing pursuant to Rule 369 of the Federal Courts Rules, 1998, SOR/98 106, as amended, for an extension of the time to bring a judicial review application pursuant to section 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7, as amended.
[2] In support of their motion, the applicants filed the affidavit of Frank E. Kopitar, the vice-president of taxation for Nexen Marketing, which sets out the relevant facts.
[3] The applicants seek judicial review of two decisions of the Canada Boarder Services Agency (CBSA) issued on March 2, 2004. On May 31, 2004, Nexen Marketing filed a Request for redetermination pursuant to section 60(1) of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.). This remedy was expressly referred to in the CBSA decisions. In their Request for redetermination, Nexen Marketing raised a primary argument that is briefly described in the affidavit and will now be referred to as the In-Transit Argument.
[4] Mr. Kopitar says that Nexen Marketing was not aware that it also had to file an application to judicially review those decisions because the authority reviewing their request did not have jurisdiction to consider the In-Transit Argument.
[5] It appears that in January 2005, BP Canada company who are represented by the same tax counsel as the applicant (Felesky Flynn LLP) did file an application for judicial review of a similar decision of CBSA because they also wanted to raise the In-Transit Argument.
[6] In the context of BP Canada's application, Felesky Flynn had an exchange with Justice Canada on whether the In-Transit Argument should be raised in the context of a Request for redetermination under the Customs Act, or through an application for judicial review of the CBSA decisions. On February 16, 2005, it was clear that both parties agreed that the In-Transit Argument could not be addressed pursuant to section 60(1) of the Customs Act.
[7] Mr. Kopitar states that "in or around February 2005", Nexen Marketing became aware of this application and contacted BP Canada through their mutual tax counsel who also advised them of their exchange of correspondence with Justice Canada, and of the letter dated February 16, 2005.
[8] According to Mr. Kopitar, with the advice and assistance of Feleskly Fynn, the applicants commenced preparation of their own application and Notice of motion for an extension of time, shortly after been advised of Justice Canada's letter of February 16, 2005.
[9] It also appears that the Canadian Association of Petroleum Producers (CAPP) wrote to CBSA on February 18, 2005 to express their concern regarding CBSA decisions and their assessing policy.
[10] Although Nexen Marketing is a member of CAPP, there is no indication in Mr. Kopitar's evidence that Nexen participated in any way to those discussions or in the meeting held on April 13, 2005, between CAPP and CBSA. There is no indication either that any further discussions were carried out after that meeting or regarding when exactly Nexen Marketing became aware of CAPP's discussions with CBSA.
[11] The Notice of motion for the extension of time together with the affidavit of Mr. Kopitar were filed on June 29, 2005.
[12] The test applicable to determine if the Court should exercise its discretion in favour of the applicant is well established. It is referred to in seminal decisions such as Grewal v. Canada (M.C.I.) (1985), 63 N.R. 106 (F.C.A.)(QL) and Canada Attorney General v. Hennelly, _1999_ F.C.J. no. 846 (F.C.A.)(QL). Although the list of elements that the Court may consider is not exhaustive, there are generally four criteria that must be satisfied:
i) a continuing intention to pursue the application;
ii) a reasonable explanation for the delay;
iii) that no prejudice to the respondent arises as a result of such delay and;
iv) that there are some merits to the application.
_13_ At paragraph 31 of his affidavit, Mr. Kopitar states that while preparing his affidavit, he took great care to establish the foundation of an arguable case in the application that would be clear to the Court. No draft of this application was included in the Motion record. Having stated that the issues underlying the CBSA decisions, which include but are not limited to those involded with the In-Transit Argument, are very complex, poorly understood, and involve fundamental problems in the application of the Excise Tax Act and Customs Act to the importation of gas, Mr. Kopitar simply refers to an article written by Blair Nikon and Peter Mitchell of Felesky Flynn LLP dated September 2004 (exhibit F) which he summarizes as follows:
"(a) It is not clear where, if anywhere, gas imported into Canada is released under the provisions of the Customs Act. This creates uncertainty in many circumstances as to who is responsible for customs accounting and liable for payment of GST in respect of an importation of gas.
(b) Gas being carried for the account of all shippers is commingled in the pipeline system, together with "linepack" owed by the carrier. This also creates uncertainty in many cases as to who is responsible for customs accounting and liable for payment of GST.
(c) It is unclear how the provisions of section 23 of the Customs Act and section 144.01 of the Excise Tax Act apply to the in-transit movement of gas between points in Canada through the United States."
(my emphasis)
_14_ The respondent has not challenged these allegations and the Court is prepared to accept that the applicants have an arguable case. Considering the evidence and the submissions before me, I have insufficient information to further assess the relative strength of the applicants' arguments.
_15_ With respect to their continuing intention to pursue their application, the applicants submit that the filing of their Request for redetermination establishes their continued intention to contest the CBSA decisions by any means available to them. At paragraph 30 of his affidavit, Mr. Kopitar states " at no time did I, on behalf of the Applicant, abandon the intent of making the Application or of challenging the Nexen CBSA Decisions to the full extent possible".
_16_ As mentioned, the Request for redetermination was filed within 59 days of the issuance of the decisions. The intention to file it was formed some time before that, but it is not clear in the affidavit when this happened. As argued by the respondent, it is not clear that the applicants did form their intention to file the said Request for redetermination on or before April 1, 2004, that is, within the 30 days period provided for in section 18.1(2) of the Federal Courts Act.
_17_ Also, given that the applicants' position is that they were unaware that they could or should file an application for the judicial review of theses decisions, it is difficult to imagine how they could have formed an intention to file such an application within the required delay.
_18_ Be that as it may, and even if I were to assume that Nexen Marketing implicitly formed an intention to file an application within the required 30 days, and has not abandoned such intention since then, I am not satisfied at all that the applicants have properly explained the delay in their motion.
_19_ The evidence is vague as to exactly when the applicants learned of Justice Canada's letter of February 16, 2005, or of the application filed by counsel on behalf of BP Canada in January 2005.
_20_ The delay between February and June 29, 2005, is four times the normal delay provided for the filling of the application. I am not satisfied that the complexity of the issues justifies this kind of delay especially when one considers that this matter had already presumably been considered by the applicants' counsel before filing the BP Canada application. Exhibit F was available since September 2004.
_21_ The pursuit of discussions between third parties in February and April 2005, of which the applicants may or may not have known about at the time, does not provide a satisfactory explanation either.
_22_ As to the work related demands on the time of Mr. Kopitar, his staff and his counsel referred to in the affidavit, the Court notes that in numerous decisions it has been held that such an excuse rarely justifies an extension of time (for example Chin v. Canada (M.E.I.), _1993_ F.C.J. no. 1033 (T.D.)(QL) and Boubarak c. Canada (M.C.I.), _2003_ F.C.J. no. 1553 (T.D.)(QL)). It is surprising that the high amounts at stake for the applicants did not press upon them a greater sense of urgency than was demonstrated.
_23_ With all due respect for the contrary opinion, the content of the applicants' motion record is quite straightforward and simply could not have required several months to prepare.
_24_ On the basis on the evidence presented, I cannot conclude that the applicants were diligent and have properly explained their failure to meet the statutory deadline. In the particular circumstances, this failure convinces me that no extension should be granted.
_25_ The motion is dismissed.
"Johanne Gauthier"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: 05-T-47
STYLE OF CAUSE: NEXEN INC. and WASCANA ENERGY 2001 LTD., carrying in partnership as Nexen Marketing (hereinafter "Nexen Marketing") and NEXEN INC.
Applicants
and
THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS (CANADA)
Respondent
PLACE OF HEARING:
DATE OF HEARING:
REASONS FOR ORDER AND ORDER : GAUTHIER J.
DATED: July 22, 2005
APPEARANCES:
Felesky Flynn LLP FOR APPLICANT
John H. Sims, Qc FOR RESPONDENT
SOLICITORS OF RECORD:
H. George McKenzie, Q.C. FOR APPLICANT
D. Blair Nixon, Q.C.
Calgary, Alberta
John H. Sims, Q.C. FOR RESPONDENT
Deputy Attorney General of Canada
Ottawa, Ontario
The Request for redetermination did not cover the portion of the decisions which dealt with a three months period ending September 30, 2002.
Tenaska Marketing Canada would also have filed a similar application. It is not clear if this party was a co-applicant with BP Canada or if it filed a separate application, and if so, if they had different counsel.
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