Marimac Inc. v. Canada (Public Safety and Emergency Preparedness), 2007 FC 353

 

Date: 20070403

Docket: T-233-06

Citation: 2007 FC 353

Ottawa, Ontario, April 3, 2007

PRESENT:     The Honourable Mr. Justice Simon Noël

 

 

BETWEEN:

MARIMAC INC

Applicant

and

 

THE MINISTER OF PUBLIC SAFETY AND EMERGENCY PREPAREDNESS

Respondent

 

 

REASONS FOR JUDGMENT AND JUDGMENT

 

[1]               This is an application brought by Marimac Inc. (Applicant), pursuant to section 129.2 of the Customs Act, R.S.C. 1985, c. 1 (2^nd Supp.) (Act), seeking an extension of time to request a decision of the Minister of Public Safety and Emergency Preparedness (Respondent) regarding the 42 Administrative Monetary Penalty System (AMPS) Notices of penalty assessments (NPAs) served on February 8, 2005.  An application for an extension of time was already made to the Respondent pursuant to section 129.1(5) of the Customs Act, but was refused in a decision dated December 1, 2005.        

 

I.  Facts

[2]               On October 20 and 21 2004, Canadian Border Service Agency (CBSA) (then called Canadian Customs Revenue Agency) officials conducted a surprise bonded warehouse verification on the Applicant’s warehouse in Cornwall, Ontario. 

 

[3]               Following the verification a series of 42 AMPS NPAs were issued against the Applicant, pursuant to sections 109.1 and 109.3 of the Act, demanding 171 784.18$ in payment. 

 

[4]               On February 8, 2005, the 42 NPAs were served upon the Applicant’s business address, Marimac Inc., 3400 Montreal Road, Cornwall, Ontario, K6H 5R5 (Cornwall address), by registered mail in four separate envelopes.  It is undisputed that the four envelopes were received by the Applicant.  It is also to be noted that the business address of the Applicant is the only address associated with Marimac Inc. known to customs officials. 

 

[5]               On May 6, 2005, 42 “Notices of arrears” and applicable “Statements of account” were sent to the Applicant’s business address, by mail, pursuant to subsection 97.22(1) of the Act. 

 

[6]               The Applicant did not respond to the Notices of arrear or the Statements of account.  Thus, by letter dated July 14, 2005, the Customs Collection division of the CBSA served upon the Applicant a “Notice of overdue account” informing the Applicant that its “release before payment privileges” would be revoked and any importations made by the Applicant, or on the Applicant’s behalf, would be detained until payment in full was received by the CBSA’s Collection office.

 

[7]               By fax memorandum dated July 29, 2005, Milgram & Company Limited, the Applicant’s broker (broker), wrote to the CBSA, advising that the Applicant would like to appeal the NPAs and asked that the files relating to the issuances of the NPAs be delivered to the Recourse Directorate of the CBSA.

 

[8]               Although the Applicant makes references to other letters, the next letter on file, dated October 24, 2005 (October 24, 2005 letter), is from the Applicant’s broker and requests, pursuant to section 129.1 of the Act, an extension of time so as to seek a decision of the Minister regarding the NPAs issued.  Such a request was necessary as the 90 day limitation period to request a decision of the Minister, under section 129 of the Act, had expired.

 

[9]                 On November 29, 2005, an adjudicator of the Customs and Appeal Directorate of the CBSA reviewed the information contained in the Applicant’s October 24, 2005 letter and recommended that the application be refused in light of the criteria set out in subsection 129.1(5) of the Act. 

 

[10]           On December 1, 2005, a Manager of the Recourse Directorate refused to grant the Applicant an extension of time to request a decision of the Minister regarding the NPAs issued, on the basis that the Applicant did not meet the criteria set out in subsection 129.1(5) of the Act. 

 

[11]           Therefore, as provided for in section 129.2 of the Act, the Applicant is asking the Court to grant the present application so as to provide it with an extension of time to request a decision of the Minister regarding the NPAs served on February 8, 2005.

 

II. Issues

(1)   Does the Applicant meet the criteria set out in subsection 129.2(4) of the Act so as to qualify for an extension of time to request a decision of the Minister regarding the 42 NPAs issued on February 8, 2005? 

 

III.  Relevant legislation

 

[12]           Under subsection 109.1(1) of the Act, every person who fails to comply with any provision of the Act is liable to a penalty of not more than twenty-five thousand dollars.

 

 

[13]           Subsection 109.3(1) of the Act provides that a penalty for which a person is liable under section 109.1 of the Act may be assessed by an officer, and if such an assessment is made, an officer shall serve upon the person a written notice of that assessment by registered or certified mail, or by delivering such a notice in person. 

 

109.3 (1) A penalty to which a person is liable under section 109.1 or 109.2 may be assessed by an officer and, if an assessment is made, an officer shall serve on the person a written notice of that assessment by sending it by registered or certified mail or delivering it to the person. [Emphasis added]

109.3 (1) Les pénalités prévues aux articles 109.1 ou 109.2 peuvent être établies par l’agent. Le cas échéant, un avis écrit de cotisation concernant la pénalité est signifié à personne ou par courrier recommandé ou certifié par l’agent à la personne tenue de la payer. [Je souligne]

 

[14]           Section 127 of the Act states that a debt due to the Her Majesty as a result of a notice served under section 109.3 is final and not subject to review except to the extent and in the manner provided for in sections 127.1 and 129 of the Act. 

 

[15]           Section 129 of the Act allows a person to whom a notice of assessment is served under section 109.3 of the Act to request a decision of the Minister regarding the notice of assessment, within 90 days of its service.

 

[16]           If a person to whom a notice of assessment is served fails to request a decision of the Minister within the 90 day period after a notice of assessment is served, they may apply for an extension of time to request such a decision pursuant to section 129.1 of the Act. 

 

[17]           If the Minister refuses to grant an extension of time to a person so that a request to the Minister may be made, a person to whom a notice of assessment is served may apply to the Federal Court, under section 129.2 of the Act, for an extension of time to make a request to the Minister for a decision regarding a notice of assessment issued.  Such an extension will only be granted by the Court if the criteria set out under subsection 129.2(4) are met. 

 

IV. Synopsis of the Facts pertinent to the Analysis

 

[18]           The following background information is of essence to the issue to be determined:

 

 

 

-                     On February 8, 2005, 42 NPAs were served by registered mail in four separate envelopes to the Applicant’s Cornwall address, as provided for in subsection 109.3(1) of the Act;

-                     On May 6, 2005, 42 notices of arrear and applicable statements of account were sent to the Applicant at its Cornwall address;

-                     On May 9, 2005, the 90 day period provided for in section 129.1 and subparagraph 129.2(4)b) i) of the Act elapsed;

-                     On or about July 14, 2005, a notice of overdue account was served on the Applicant at its Cornwall address.  This notice stated that the Applicant’s release before payment privileges would be revoked and any importations made by the Applicant would be detained until full payment of the overdue account was received by the CBSA;

-                     On July 29, 2005, the Applicant finally reacted to the issuance of the NPAs by having its broker fax a memorandum advising that the Applicant wanted to appeal the NPAs issued, and requesting that the file or files relating to the NPAs issued be delivered to the CBSA recourse directorate.

-                     On October 24, 2005, the Applicant applied, pursuant to section 129.1 of the Act, for an extension of time to seek a decision of the Minister in what concerns the NPAs, this request was refused on December 1, 2005;

 

 

 

 

-                     On February 9, 2006, an application to the Federal Court was filed, the said application was made within 90 days of the dismissal of the administrative application for an extension (December 1, 2005), as provided for by subsection 129.2(4) of the Act;

 

V. Analysis

 

(1)   Does the Applicant meet the criteria set out in subsection 129.2(4) of the Act so as to qualify for an extension of time to request a decision of the Minister regarding the 42 NPAs issued on February 8, 2005? 

 

[19]           Marimac Inc. is the sole and only person liable under the Act and is the only person to be served with NPAs pursuant to section 109.3 of the Act.  The evidence clearly demonstrates that on February 8, 2005, an employee of the Applicant, D. Pizzardi, received the four envelopes containing the 42 NPAs.  However, the Applicant’s evidence also indicates that D. Pizzardi failed to inform anyone within the Marimac Group that 42 NPAs were received.  It is to be noted that the only evidence submitted on this point is at paragraph 16 of the amended affidavit of Mr. Bob Khamis (Mr. Khamis), Division Manager of Marimac Inc., and within the October 24, 2005 letter.  For the sake of completeness, some of the relevant portions of both these pieces of evidence are reproduced below.  Mr. Khamis, in his amended affidavit, wrote (Amended affidavit of Mr. Bob Khamis dated April 28, 2006) :

16.           Apparently, the four envelopes were signed for by an employee who failed to bring the fact of receipt of the four envelopes to anyone’s attention within the Marimac Group. 

 

 

Whereas the October 24, 2005 letter states (Amended affidavit of Mr. Bob Khamis, Exhibit 3, page 3):

 

To be best of our knowledge the AMPS Penalty notices were not directed to any informed individual’s attention and were not accompanied by a cover letter.  No action was taken on behalf of Marimac to protect their time limit for appeal simply because the principals at Marimac were never made aware of the penalties when they were received from the C.B.S.A.

 

It is imperative that these two documents be assessed in light of the evidence filed by both parties.

 

[20]           Furthermore, the evidence shows that on May 6, 2005, notices of arrear and applicable statements of account were sent to the Applicant, within 90 days of the initial issuance of the NPAs.  Marimac Inc. did not present any evidence concerning this correspondence.  The evidence indicates that only after receiving a notice of overdue account, dated July 14, 2005, did the Applicant respond to the NPAs by way of a memorandum dated July 29, 2005 sent by its broker.  Thus, in what concerns the 90 day period following the receipt of the NPAs, the only evidence submitted by Applicant is that D. Pizzardi did not bring the NPAs to the attention of anyone within the Marimac group.  I reiterate, the Applicant has not provided any explanation as to what action, if any, was taken upon receipt of the notices of arrear and applicable statements of account.

 

 

 

 

[21]           As referred to above, Mr. Khamis, Division Manager of Marimac Inc., filed an affidavit in support of this application.  In his affidavit, Mr. Khamis details that he met with CBSA officers at the time of the bonded warehouse verification and left them a business card indicating that the Applicant’s head office was in Montreal, and not in Cornwall.  Moreover, in his affidavit Mr. Khamis states that he informed the officers that he wished to receive all mailings, correspondence, etc. concerning any potential assessments at the head office address.  This information is not supported by the documentation on file, as Mr. Jason Proceviat, Manager of the Adjudicative Division of the Recourse Directorate, Admissibility Branch of the CBSA noted in his affidavit (Respondent’s Record, Affidavit of Jason Proceviat, paragraph 16).  Moreover, the verification officer’s report on the Marimac Warehouse audit does not mention that Mr. Khamis stated that all correspondence, mailings, etc. should be sent to the Montreal address.  More importantly, there is no mention of this in the broker’s October 24, 2005 letter, in support of the application for an extension of the 90 day period to request a decision of the Minister, pursuant to section 129.1 of the Act.  The verification officer’s report indicates that Mr. Khamis was contacted after the audit ended.  In my opinion, if details relating to the request that all mailings, correspondence, etc. be sent to the Montreal address were important enough to include in Mr. Khamis’ affidavit, certainly this information should have been included in the broker’s October 24, 2005 letter.   In my opinion, a negative inference can surely be deduced from the aforementioned evidence or lack thereof.

 

 

 

 

[22]           It is also important to mention that during the verification, the Applicant’s broker was informed that the Applicant’s warehouse was being audited.  The verification officer’s report indicates that upon the officers’ arrival at the warehouse the broker was contacted and subsequently provided the officers with an inventory sheet, called “Bonded Warehouse Inventory”, which allowed the audit to begin.  The broker was also contacted by a verification officer once the audit was completed.  Moreover, a copy of the audit logs was given to the Applicant after the audit.  Thus, from the evidence it is clear that the Applicant and his broker had full knowledge that an audit was being conducted at the Cornwall warehouse.  

 

[23]           There is also evidence indicating that Mr. Khamis, during his discussions with the verification officers, repeatedly asked if a deal could be made or whether a discussion on matters of interest could be held.  Mr. Khamis, at the time of his departure from the warehouse, made comments to the effect that he knew the CBSA Chief of Operations, that in the past they were able to work things out and he would therefore be requesting a meeting with him after the audit (Marimac Warehouse Audit, Respondent’s Record, Affidavit of Mike Milne, Exhibit A, page 118).  This being said, there is no evidence on file that such a meeting occurred.

 

 

 

 

[24]           The Act clearly specifies that a person has 90 days to request a decision of the Minister regarding a NPA served (see subsection 129(1) of the Act).  The evidence shows that the Applicant did not make such a request within the 90 day period.  As provided for in section 129.1 of the Act, an extension of time so as to request a decision of the Minister may be granted if the criteria set out in subsection 129.1(5) of the Act are met.  The Applicant did not make such a request until October 24, 2005.  This request was denied on December 1, 2005 on the basis that the criteria set out in subsection 129.1(5) of the Act were not met.  It is to be noted that even though the request was made within the year following the elapse of the 90 day period following the date of service of the NPAs (February 8, 2005), the Applicant was not able to convince the Minister that it was unable to act or have another person act on its behalf, or that it had a bona fide intention to request a decision of the Minister relating to the NPAs within the aforementioned 90 day period.

 

[25]           The Applicant seeks, by the present application, to have the Court grant an extension of time so that a request to the Minister can be made regarding the 42 NPAs, pursuant to subsection 129.2(4) of the Act.  In order to succeed on such an application, the Applicant must convince the Court that:

a)                  the application was made within one year of the end of the 90 day period which commenced on the date of service of the NPAs; and

b)                  within the 90 day period following the service of the NPAs:

 

i)                    the Applicant was not able to act; or

 

 

ii)                   the Applicant was not able to instruct another person to act on its behalf; or

iii)                 the Applicant had a bone fide intention to request a decision of the Minister;

c)                  it would be just and equitable to grant the application; and

d)                  the application for an extension was made as soon as circumstances permitted.

 

[26]           After having reviewed the evidence, the affidavits filed, the documentation submitted, and the cross-examination of Mr. Proceviat, I conclude that the Applicant was able to act, or was in a position to instruct someone to act on its behalf.  Moreover, I conclude that the Applicant has not demonstrated that it had a bone fide intention to request a decision of the Minister.

 

[27]           Having already commented on some of the evidence, I would add that my conclusions are based on the fact that the evidence has clearly shown that the NPAs were served on the Applicant in accordance with the Act; that the notices of arrear and statements of account were sent to the Applicant within the 90 day period following the service of the NPAs; and that the Applicant did not file any evidence as to what came of these notices.  Moreover, I favoured the documentary evidence indicating that Mr. Khamis did not ask for the NPAs to be forwarded to the Applicant’s Montreal office rather than the Cornwall warehouse address.  I also note that Mr. Khamis and the Applicant’s broker were fully aware of the audit and the fact that Mr. Khamis was supposed to follow up on the audit with the Chief of Operations of the CBSA.  The Applicant’s submission, at this late stage, that it did not have knowledge of the NPAs within the 90 day period following their service, is not believable as the evidence clearly shows otherwise.  Thus, I can but only conclude that the Applicant was aware of the NPAs and the notices of arrear and statements of account, and knowingly failed to act or instruct someone to act on its behalf.  Such behaviour does not show a  bone fide intent to request a decision.  Since the Court will only grant an extension of time to request a decision of the Minister where all the criteria set out at subsection 129.2(4) of the Act are met, and the Applicant has not met criterion b) as per the criteria listed at paragraph 25 of this decision, criteria c) and d) of this same list must not be addressed. 

 

[28]           This being said, the Applicant also submits that if the Respondent had followed its Memorandum D22-1-1, dated June 16, 2003, at paragraphs 12 and 13, its broker would have received copies of the NPAs, and would have been able to inform the Applicant of the issuance of the NPAs, since a disclosure authorization letter would have been signed to this effect.  Paragraphs 12 and 13 read as follows:

 

[29]           The Applicant, by submitting such an argument, is trying to circumvent the evidence presented and is attempting to impose on the Respondent an obligation to inform a third party (the broker) of the NPAs.  Having said this, and read paragraphs 12 and 13 of Memorandum D22-1-1, I cannot see how these paragraphs impose on the Respondent an obligation to obtain a disclosure authorization letter from the Applicant, or impose on the Respondent an obligation to forward such a form to a broker.

 

[30]           Nowhere in the Act is it stated that Customs officials must serve a NPA elsewhere than the mailing address that is on file for a person against whom a NPA is issued.  Thus, the failure to send a copy of the NPAs to the broker cannot be considered a breach of the Applicant’s legitimate expectation and cannot serve as an excuse for the Applicant failing to request a decision from the Minister within the 90 day period set out in subsection 129(1) of the Act.

 

[31]           It is to be recalled that a memorandum is merely a policy guideline and as such cannot create expectations of substantive rights (Oberlander v. Canada (Attorney General), 2004 FCA 213 at paragraph 30).  At best, a policy guideline is administrative in nature, and therefore cannot be considered equivalent to a statute or a regulation, as it is neither enforceable nor has force of law (Byer v. Canada, 2002 FCT 518 (TD), aff’d 2002 FCA 430).   Finally, I reiterate, the evidence indicates that the Applicant and the broker were informed by the verification officers of the commencement of the audit and was again contacted upon the audit’s completion. 

 

V.  Costs

 

[32]             For the reasons given above, the application for an extension of time to request a decision of the Minister regarding the 42 NPAs cannot be granted.  Therefore, costs will be in favour of the Respondent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JUDGMENT

 

THIS COURT ORDERS THAT:

 

-          The application for an extension of time to request a decision of the Minister regarding the NPAs issued is dismissed;

-          Costs are granted in favour of the Respondent.

 

“Simon Noël”

 

FEDERAL COURT

 

NAMES OF COUSEL AND SOLICITORS OF RECORD

 

 

DOCKET:                                           T-233-06

 

STYLE OF CAUSE:                           MARIMAC INC. v. THE MINISTER OF PUBLIC

                                                            SAFETY AND EMERGENCY PREPAREDNESS

 

 

PLACE OF HEARING:                     Montreal

 

DATE OF HEARING:                       March 21, 2007

 

REASONS FOR:                               THE HONOURABLE MR. JUSTICE SIMON NOËL

 

DATED:                                              April 3, 2007

 

 

APPEARANCES:

 

Mr. Michael Kaylor                              FOR APPLICANT

 

Mr. Jacques Mimar                              FOR RESPONDENT

 

 

 

SOLICITORS OF RECORD:

 

LAPOINTE, ROSENSTEIN  

Montreal, Quebec                                FOR APPLICANT

 

                       

JOHN H. SIMS, Q.C.

Montreal, Quebec                                FOR RESPONDENT