Hermes Numismatique et Arts Anciens, Inc. v. Canada (Minister of National Revenue), docket T-954-99

Date: 20000818

Docket: T-954-99

BETWEEN:

     HERMES NUMISMATIQUE ET ARTS ANCIENS, INC.

     Plaintiff

     - and -

     THE MINISTER OF NATIONAL REVENUE

         Defendant

     REASONS FOR ORDER

LEMIEUX J.:

INTRODUCTION

[1]      This is an appeal by Hermes Numismatique et Arts Anciens Inc., (the "plaintiff") made in writing pursuant to Rule 369 of the Federal Court Rules, 1998, (the "Rules") from an order of Prothonotary Morneau, dated October 27, 1999, granting the defendant"s motion, pursuant to paragraph 221(1)(a) of the Rules, striking out the plaintiff"s statement of claim.

BACKGROUND

[2]      The plaintiff"s statement of claim, filed in this Court on May 31, 1999, contained the following main allegations:

(1)      the plaintiff"s purchase, prior to August 1990, of 53 Lebanese produced mosaic pieces from a Lebanese dealer in Beirut, Lebanon;

(2)      the 1990 detention of these mosaics by the Department of National Revenue (Customs and Excise), ("DNR") when they arrived at the Port of Montreal in order to investigate their importation;

(3)      after the commissioning by DNR of an expert to review the mosaics, their release by the Department and their entry into Canada on January 23, 1991, accepting Lebanon as the country of origin, such importation becoming final and binding under sections 57 to 61 of the Customs Act;

(4)      the storage of these mosaics by the plaintiff at a warehouse in St-Laurent, Quebec from 1991 to 1997, there being no further inquiries by DNR;

(5)      the July 10, 1998 seizure of the mosaics by the defendant along with the plaintiff"s books and records;

(6)      the forwarding by the defendant, on or about July 11, 1998, of a notice of seizure to plaintiff by mail alleging misdeclaration of origin of all 53 mosaics imported in 1990;

(7)      the failure to respond to the notice by the plaintiff"s lawyer who mistakenly understood that the civil notice of seizure was duplicative of the criminal seizure.

[3]      The plaintiff"s statement of claim then alleges that shortly after the notice of seizure was sent by DNR to the plaintiff, DNR "ostensibly" notified the Government of Syria ("Syria") of the seizure of the mosaics who then initiated third party proceedings in the Quebec Superior Court in August 1998, claiming title to them which led to a February 23, 1999 settlement out of Court between Syria and DNR.

[4]      The Government of Canada had "returned" 39 of the mosaics to the Government of Syria without the authority of the Quebec Superior Court but some of the mosaics remain in Montreal awaiting export to Syria and pursuant to separate legal proceedings instituted by the plaintiff, the defendant agreed to hold the mosaics in Canada pending the disposition of the plaintiff"s claim.

[5]      The plaintiff alleges the defendant"s seizure is an absolute nullity because, for a number of reasons, the defendant had no right to make the seizure.

[6]      In its statement of claim, the plaintiff seeks the following:

(a)      A declaration from this Court that the Defendant acted contrary to section 113 of the Customs Act;

(b)      A declaration from this Court that the customs seizure executed by the Defendant against the Plaintiff is a nullity as it was beyond the prescription contained in section 113 of the Customs Act;

(c)      An order for delivery of the Plaintiff"s goods;

(d)      General damages in the amount of One Million Dollars ($1,000,000) arising from the seizure of the Plaintiff"s goods and defamation directed towards the Plaintiff by the Defendant;

(e)      Punitive damages in the amount of One Hundred Thousand Dollars (($100,000.00);

(f)      Special damages in the amount to be determined at a reasonable time before trial.

The Prothonotary"s decision

[7]      The Prothonotary, in his decision, accepted DNR"s submissions this Court was without jurisdiction to deal with the plaintiff"s statement of claim because the declarations sought, a precondition to the recovery of damages, violated the statutory scheme provided for in sections 123 to 135 of the Customs Act . These provisions enable any person from whom goods are seized to request a decision of the Minister under section 131 by giving notice in writing. Section 135 provides for an appeal to this Court from the Minister"s decision. As a result, the Prothonotary struck out the plaintiff"s statement of claim keeping alive however the plaintiff"s defamation claim.

[8]      Prothonotary Morneau rejected, out of hand, the plaintiff"s argument that the administrative review scheme set out in the Customs Act only applied to situations where a person was challenging a seizure arising out of that person"s own alleged contravention of the Act or Regulations. The plaintiff had argued the administrative review scheme did not apply to his situation where a person was attacking the seizure itself was unlawful because it was time barred, and the question of the mosaics" origin insulated by sections 57 to 61 of the Customs Act.

[9]      Prothonotary Morneau concluded that it was clear and evident to him that the Customs Act envisaged only one way of challenging a seizure as forfeit and that was by notice to the Minister within 30 days regardless of whether that person was seeking a ruling of non contravention of the Customs Act or claiming the seizure"s illegality.

[10]      Prothonotary Morneau relied upon the privative clause in section 123 of the Act and considered the jurisprudence. Moreover, he did not deal with the scope and meaning of section 106 of the Act, a provision which was relied upon by the plaintiff as an indicator that sections 123 to 135 were not a complete code.

ANALYSIS

(a)      The test on appeal

[11]      In accordance with the Federal Court of Appeal"s decision in Canada v. Aqua-Gem Investment Ltd. , [1993] 2 F.C. 425, I must review Prothonotary Morneau"s decision by exercising my discretion de novo because his decision was vital to the final resolution of the matter.

(b)      The test which the Prothonotary had to apply

[12]      As established by Supreme Court of Canada in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, the test for the application of paragraph 221(1)(a) of the Rules is, assuming that the facts as stated in the statement of claim can be proven, is it "plain and obvious" that the plaintiff"s statement of claim discloses no reasonable cause of action?

[13]      Madam Justice Wilson, on behalf of the Court, went on to say this at page 980:

As in England, if there is a chance that the plaintiff might succeed, then the plaintiff should not be "driven from the judgment seat". Neither the length and complexity of the issues, the novelty of the cause of action, nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case. Only if the action is certain to fail because it contains a radical defect ranking with the others listed in rule 19(24) of the British Columbia Rules of Court should the relevant portions of a plaintiff"s statement of claim be struck out under rule 19(24)(a).

(c)      Discussion and conclusions

[14]      The task which the Prothonotary had to discharge was to decide whether the case was beyond doubt ([1980] 2 S.C.R. 735">Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735 at 758). The Prothonotary"s task was not to decide the substance of the plaintiff"s claim on its merits and, in my view, with respect, he committed an error by crossing this line canvassing, as he did, considerable case law.

[15]      Ultimately, it may turn out that the view taken by the Prothonotary is the correct one but it certainly cannot be said it is beyond doubt sections 123 to 135 of the Customs Act are a bar to the plaintiff"s action for declarations and damages and this for several reasons.

[16]      First, the plaintiff raises a fairly arguable point that the scheme in the Customs Act only applies to review seizures based on a contravention of the Act or Regulations. The plaintiff is not challenging the seizure on this basis but because there was no statutory foundation for its exercise.

[17]      Second, the plaintiff alleges a wrongful disposition of the mosaics without authority of the Quebec Superior Court under section 139 of the Customs Act.

[18]      Third, the interrelationship between the statutory seizure review scheme with section 106 of the Customs Act, coupled with section 17 of the Federal Court Act and the Crown Liability and Proceedings Act, is a complex one as is the overlap between administrative law and statutory law remedies in this context (see for example Dome Petroleum Ltd. v. Canada, 26 F.T.R. 318, and Comeau Sea Foods Ltd. v. Canada, [1995]2 F.C. 467 (F.C.A.).

[19]      Fourth, the availability of damages coupled with declarations raises complex legal issues in a specific factual context. For a recent discussion see Creed v. The Solicitor General of Canada, T-237-96, February 16, 1998.

[20]      For all of these reasons, this appeal is allowed and the decision of the learned Prothonotary striking out the plaintiff"s statement of claim is set aside with costs.

    

    

     J U D G E

OTTAWA, ONTARIO

AUGUST 18, 2000