Date: 20121025
Docket:
T-682-11
Citation:
2012 FC 1224
[UNREVISED
CERTIFIED ENGLISH TRANSLATION]
Ottawa, Ontario,
October 25, 2012
PRESENT: The
Honourable Mr. Justice Pinard
BETWEEN:
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DESGAGNÉS
TRANSARCTIK INC.
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Applicant
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and
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ATTORNEY GENERAL OF
CANADA
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
[1]
This
is an application for judicial review of a decision by the Minister of Finance
(the Minister) in which he refused to recommend to the Governor in Council that
customs duties be remitted to the applicant for the three vessels it imported
into Canada pursuant to subsection 115(1) of the Customs Tariff, SC
1997, c 36 (the Tariff). This provision of the Tariff reads as follows:
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115. (1) The Governor in Council may, on the recommendation
of the Minister or the Minister of Public Safety and Emergency Preparedness,
by order, remit duties.
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115. (1) Sur recommandation du ministre ou du ministre de la
Sécurité publique et de la Protection civile, le gouverneur en conseil peut,
par décret, remettre des droits.
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[2]
The
Tariff provides that the importation of vessels is subject to a 25% customs
duty. However, pursuant to subsection 115(1), importers of vessels may apply
for remission of these duties following a two‑step decision‑making
process. First, the importers must submit an application for duty remission to
the Minister. The Minister decides whether it is appropriate to recommend
remission to the Governor in Council. It is to be noted that, even if the
Minister makes the recommendation to the Governor in Council, the latter makes
the final decision whether or not to grant the remission.
[3]
On
August 13, 2009, a representative of the applicant met with two officials
from the Department of Finance (the Department) to give them three remission applications
regarding the importation of the vessels M/V Rosaire Desgagnés (imported
in 2007), M/V Zélada Desgagnés (imported in 2009) and M/V Sedna
Desgagnés (imported in 2009) (the applications). The applicant had paid a
total of $13,654,800 in customs duties for the importation of these vessels.
[4]
On
August 14, 2009, after a cursory review of the applications, an official
from the Department asked the applicant’s representative for further
information. On August 24, 2009, the applicant sent a letter to the
Department containing the information requested. Upon receipt of this letter,
the officials began to analyze the applications.
[5]
In
analyzing these applications, the officials noted that the vessels in question
were primarily used to transport merchandise to the Arctic market and that the
applicant’s main competitor for these routes was Nunavut Eastern Arctic
Shipping (NEAS). In 2000, NEAS had applied for the remission of customs duties
for the importation of the M/V Umiavut, a vessel that the company wanted
to assign to routes to the Arctic market. At that time, the applicant had
opposed NEAS’ application, and the Minister of the day had refused the
application on the basis of that opposition.
[6]
Shortly
after receiving these applications, the government began consultations on a
proposal for a general remission of customs duties on the importation of
certain types of vessels beginning January 1, 2010. On October 24,
2009, in Part I of the Canada Gazette, the government invited interested
parties to submit their views on this proposal. Regardless of the consultations
on this project, the government continued its practice of analyzing applications
for duty remission on vessels imported prior to January 1, 2010, as stated
in the public notice in the Canada Gazette.
[7]
NEAS
was informed of the applications submitted by the applicant on August 13,
2009, and opposed them in writing on August 20, 2009, as well as at a
meeting with representatives of the Minister of Finance in December 2009. NEAS expressed
the opinion that accepting the applicant’s applications would create a
situation of unfairness against it and stated that if the applications were
accepted, it would, in turn, request customs duty remission for the importation
of its vessels.
[8]
The
Department of Finance did not tell the applicant about NEAS’ letter of
opposition or the meeting with NEAS.
[9]
The
Department’s officials wrote a memorandum dated April 22, 2010, to the
Minister in which they expressed the view that the duty remission requested by
the applicant would be unfair to NEAS because of the previous decision concerning
its vessel. Consequently, they suggested to the Minister that he not recommend to
the Governor in Council that duties be remitted to the applicant. Following
this advice, the Minister decided to not recommend to the Governor in Council that
the duties paid by the applicant be remitted, and the applicant was informed of
this in a timely manner.
[10]
On
September 23, 2010, after the consultation process mentioned above, the Governor
in Council adopted new tariff measures in respect of vessels (SOR/2010-202). She
granted the remission of customs duties for certain vessels imported into Canada
after January 1, 2010.
[11]
On
October 1, 2010, the Minister publicly announced the implementation of
these new measures, indicating in addition that decisions had been made on all
pending duty remission applications. The Minister also published a list of the
remission applications that had been granted. The applicant’s applications
were, however, not on that list.
[12]
On
the same day, following the Minister’s announcement, the respondent maintains
that an official verbally informed the applicant, through its representative,
of the Minister’s decision. The respondent adds that he also told the applicant,
verbally, the reasons for the Minister’s decision on October 18, 2010. The
applicant disputes these facts. Although it acknowledges that its
representative telephoned the Department on October 1, 2010, the
representative was unable to reach an official. It maintains that its
representative did not speak with the Minister’s official until
October 14, 2010, about the rejection of the applications.
[13]
On
October 8, 2010, the applicant’s President and Chief Executive Officer (the
CEO) sent a letter to the Minister asking to meet with him to explain why its
applications should be allowed and, in the alternative, if they had already
been rejected, why the decision should be reconsidered. It was decided to
submit this request for reconsideration to the Minister and to not finalize or
communicate the written decision to the applicant regarding the applications.
[14]
By
letter sent to the Minister on November 2, 2010, NEAS again opposed
granting the applicant’s applications.
[15]
The
officials reviewed the applicant’s letter dated October 8, 2010. They
wrote a memorandum dated November 5, 2010, to the Minister, in which they
said that they did not see any new information that could change their previous
recommendation to reject the applications.
[16]
Subsequently,
on November 25, 2010, the officials met with the applicant’s CEO. He gave
them written representations in support of his oral presentation. The officials
felt hat the applicant’s representations did not change their recommendation and
that it was not necessary to change their memorandum of November 5, 2010.
[17]
Finally,
the Minister decided on the basis of the November 5, 2010, memorandum to maintain
his rejection of the applications. The Minister sent the applicant a letter to
that effect on March 11, 2011.
[18]
In
that letter of March 11, 2011, the Minister stated that his rejection of the
applications was based on the need to ensure fair and equitable treatment of
the owners of vessels working in the same market as the applicant’s three
vessels and on an effort to comply with previous decisions dealing with the
issue of remitting customs duties.
* * *
* * * * *
[19]
First,
the applicant submits that the Minister’s power to recommend to the Governor in
Council to remit customs duties is discretionary and thus limited by the
requirement of natural justice and procedural fairness. The applicant refers to
Comeau’s Sea Foods Ltd. v Canada (Minister of Fisheries and Oceans),
[1997] 1 S.C.R. 12, at paragraph 36 and Campbell v Attorney General of Canada,
2006 FC 510, at paragraph 21.
[20]
The
applicant maintains that even if the affected party’ right to be heard gives
rise to different requirements according to the circumstances, this Court has
established that where an administrative decision is based primarily on
extrinsic evidence, the affected party must be informed of the evidence and
have the opportunity to respond to it. In this regard, the applicant relies on Mehta
v. Minister of Citizenship and Immigration, 2003 FC 1073, at paragraphs 8 and
9.
[21]
In
this case, the applicant argues that it never had the opportunity to present
its position fully and fairly because the Minister had not identified the
precedent in question as being related to his previous NEAS decision and had
not informed the applicant of the details of this precedent. The applicant also
submits that the Minister did not tell it about NEAS’ repeated opposition or
the reasons for that opposition. The applicant states that, since it lacked the
necessary information, it was put in a position where none of its representations
to the Department could address the factors that led to its applications being
rejected.
[22]
The
applicant submits that the Department did not notify it of the first decision,
the underlying reasons or the reconsideration of the applications.
[23]
In
response to these arguments by the applicant, the respondent maintains that
this Court and the Federal Court of Appeal in Waycobah First Nation v Attorney
General of Canada, 2010 FC 1188, Waycobah First Nation v Attorney
General of Canada, 2011 FCA 191, established that the Minister’s duty of
procedural fairness is at the lower end of the scale on an application under
subsection 23(2) of the Financial Administration Act, RSC 1985, c.
F-11. The respondent submits that it should be the same on an application under
subsection 115(1) of the Tariff, and I agree because both statutes permit
the exceptional remission of duties imposed generally; the wording of these
subsections is similar; and the Minister’s discretion is even broader under
subsection 115(1) of the Tariff than under subsection 23(2) of the Financial
Administration Act, which reads as follows:
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23. (2)
The Governor in Council may, on the recommendation of the appropriate
Minister, remit any tax or penalty, including any interest paid or payable
thereon, where the Governor in Council considers that the collection of the
tax or the enforcement of the penalty is unreasonable or unjust or that it is
otherwise in the public interest to remit the tax or penalty.
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23. (2)
Sur recommandation du ministre compétent, le Governor in Council peut faire
remise de toutes taxes ou pénalités, ainsi que des intérêts afférents, s’il
estime que leur perception ou leur exécution forcée est déraisonnable ou
injuste ou que, d’une façon générale, l’intérêt public justifie la remise.
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(see also Germain v Attorney
General of Canada, 2012 FC 768 and Williams v Minister of National
Revenue, 2011 FC 766).
[24]
The
respondent also refers to Baker v Canada (Minister of Citizenship and Immigration),
[1999] 2 S.C.R. 817, at paragraphs 21 and 23 to 28, to state that the nature of
the procedural fairness rules applicable to a case must be determined by
analyzing the following factors:
1.
the
nature of the decision being made and the process followed in making it;
2.
the
nature of the statutory scheme and the terms of the statute pursuant to which
the decision‑maker operates;
3.
the
importance of the decision to the individual or individuals affected;
4.
the
legitimate expectations of the person challenging the decision;
5.
The
decision‑maker’s choices of procedure should be considered and respected,
particularly when the statute gives the decision‑maker the ability to
choose its own procedures.
[25]
The
respondent argues that an analysis of these factors shows that the requirements
of the duty of fairness that apply to the decision‑making process on an
application under subsection 115(1) of the Tariff are at the low end of
the procedural fairness scale. I concur. As the respondent submits:
1.
Remitting
duties is an exception to the Tariff’s general principle that customs duties
are payable on imported goods. The process for making a decision is left to the
Minister’s complete discretion and is ad hoc in nature since the
Minister has not limited the decision‑making process through a policy or
directive;
2.
The
Tariff does not limit the discretion of ministers or of the Governor in Council
to remit customs duties;
3.
The
amount at issue is significant, but the applicant must have known that it would
pay customs duties on its three vessels at the time they were imported;
4.
The
applicant could not legitimately expect to receive a remission of customs
duties because it knew it had successfully opposed the duty remission
application by its competitor NEAS in 2000, and the same assessment practice
was still in force for vessels imported prior to January 1, 2010;
5.
The
Minister’s choice of procedure for applications under subsection 115(1) of
the Tariff should be respected because the Act gives the Minister the ability
to choose the applicable procedure.
[26]
It
is important to indicate that, in this case, the applicant’s written
representations sent to the respondent on November 25, 2010, show that the
applicant knew about NEAS’ opposition to its remission applications and that it
had the opportunity to make written and oral representations in this regard.
[27]
Moreover,
the correspondence sent by the applicant to the respondent subsequent to
October 1, 2010, has convinced me that the applicant was aware of the
Minister’s first decision to reject the applications. In addition, I do not
accept the applicant’s argument that it was not aware of the Minister’s
decision to reconsider the applications because, in his presentation on
November 25, 2010, the applicant’s CEO argued before the Department’s officials
that the applications should be granted.
[28]
In
all this context, I am of the view that there was no breach of the duty of
procedural fairness here.
[29]
Second,
the applicant contends that the decision in question is unreasonable.
[30]
According
to Dunsmuir v New Brunswick, [2008] 1 S.C.R. 190 [Dunsmuir], at paragraph
47, reasonableness is concerned mostly with “the existence of justification,
transparency and intelligibility within the decision-making process. But it is
also concerned with whether the decision falls within a range of possible,
acceptable outcomes which are defensible in respect of the facts and law.”
[31]
I
also adopt the following statements of the Federal Court of Appeal in Nitschmann
et al v Treasury Board, 2009 FCA 263, at paragraph 9:
When reviewing for reasonableness, a Court must
examine the reasons given for the decision in order to ensure that it contains
a rational justification. A decision is rationally justified if it falls within
a range of possible, acceptable outcomes which are defensible having regard to
the relevant facts and the law (Dunsmuir, above, para. 47).
and in Exeter v Attorney General
of Canada, 2011 FCA 253, 423 NR 262, at paragraph 15:
Under reasonableness review, the Court is not
permitted to make its own decisions and substitute its views on these matters
for those of the Tribunal. In particular, the Court is not permitted to redo
the Tribunal’s findings of fact and exercises of fact-based discretion. Rather,
the Court is limited to considering whether the decisions of the Tribunal fall
within a range of possible outcomes that are defensible on the facts and the
law: Dunsmuir, supra at paragraph 47. Put another way, the
Tribunal is entitled to “a margin of appreciation within the range of
acceptable and rational solutions”: Dunsmuir, supra at paragraph
47. As a practical matter, this Court can only interfere where the Tribunal has
erred in a fundamental way.
[32]
In
this case, it is my view that the decision is reasonable. Fairness with a
competitor as an explanation for rejecting a customs duties remission
application is a serious ground and justifies the Minister’s conclusion that
the applicant’s applications should be rejected. I concur with the respondent
that there is nothing illusory about wanting to avoid favouring one competitor
over another in the Arctic market. In addition, since it was relevant for the
Minister to take into consideration the applicant’s opposition to NEAS’
application in 2000, it was also relevant for the Minister to take into
consideration NEAS’ opposition to the within applications.
[33]
The
fair treatment of two competitors is therefore a relevant consideration, and
the Minister did not err by basing his decision on that factor. Relying on Keating
v Minister of Fisheries and Oceans, 2002 FCT 1174, 224 FTR 98, the
applicant argues that an administrative decision may be set aside where the
decision‑maker, in making his or her decision, relied on a political
consideration instead of relevant considerations. In my view, the Keating
case is distinguishable from this case. In Keating, this Court
determined that the Minister’s decision should be set aside because the Deputy
Minister’s remarks gave rise to the apprehension that the application was
assessed by taking into consideration potential criticisms from others in the
industry. This Court found that the Deputy Minister’s comment about
criticisms that others in the fishing industry might make was not an
appropriate consideration for the purposes of reviewing the applicant’s
application to the Minister. Unlike that case, in this case, the officials’
memoranda did not mention any political consideration for rejecting the
applicant’s applications.
[34]
In
the circumstances, there is therefore no basis for me to find that the decision
was unreasonable. I have not been persuaded that the respondent made a fundamental
error, and I find that his decision falls within a range of possible,
acceptable outcomes which are defensible in respect of the facts and law (Dunsmuir,
above).
* * *
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[35]
For
all these reasons, the application for judicial review is dismissed with costs.
JUDGMENT
The application for judicial review of the decision
by the Minister of Finance in which he refused to recommend to the Governor in
Council that customs duties be remitted to the applicant for the three vessels it
imported into Canada pursuant to subsection 115(1) of the Customs Tariff,
SC 1997, c 36, is dismissed with costs.
“Yvon Pinard”
Certified true translation
Mary Jo Egan, LLB
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