Date: 20080918
Docket: T-811-07
Citation: 2008
FC 1050
Ottawa, Ontario, September 18, 2008
PRESENT: The
Honourable Mr. Justice Lemieux
BETWEEN:
PACIFIC PANTS COMPANY INC.
and
SHELDON LIEBMAN
Applicants
and
THE MINISTER OF PUBLIC SAFETY
AND EMERGENCY PREPAREDNESS
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
Introduction
[1]
The
Minister of Public Safety and Emergency Preparedness (the Minister) has
consented to an order (1) granting the applicants’ judicial review application
(2) quashing the decision dated April 12, 2007, made by the Minister’s delegate
pursuant to section 133 of the Customs Act (the Act) and
(3) referring the matter back to a differently constituted Minister’s delegate.
[2]
The
Minister’s consent is predicated on breaches of natural justice, namely, the
failure on the part of two adjudicators considering the applicants’ appeal of
an Ascertained Forfeiture in the amount of $1,615,151.10 (the forfeiture
amount) to disclose to the applicants’ counsel information and documentation
which they had received from the investigators of the Canada Border Services
Agency (the Agency). Moreover, the Minister’s delegate received input or
representations from the Agency which the applicants’ counsel was unaware of
after the adjudicator had made her recommendation the demand for payment of the
forfeiture amount to the applicants be cancelled. In addition, the
investigators failed, despite being specifically requested to do so by Adjudicator
Lepage, to provide the Applicants the supporting documentation to most of the
32 worksheets, upon which the forfeiture amount was based, which had been sent
to Mr. Liebman.
[3]
Two issues
remain for determination by this Court:
(1)
What
should be the scope of the directions the Court is to provide as to how the
reconsideration will be carried out? and
(2)
What level
of costs should be awarded to the applicants?
[4]
The cost
issue is easy to state: counsel for the Minister submits the costs should be
awarded to the applicants based on Column III of the Tariff in the Federal
Courts Rules (the Rules). Counsel for the applicants argues
solicitor-client costs in respect of the judicial review application are
warranted in the particular circumstances of this case.
[5]
The extent
of the requested directions to be issued by this Court on reconsideration is
more complicated. Counsel for the Minister submits this Court should issue a
direction on reconsideration which would state it would be carried out on the
basis of the record existing at the time of the Minister’s first decision was
rendered on April 12, 2007, such record being the certified record filed with
this Court in this judicial review proceeding pursuant to the request made by
the applicants’ counsel under Rule 317 of the Rules. Counsel for the
applicants, on the other hand, argues the direction should be framed in terms
of a directed decision, namely, the Minister’s new decision be “in accordance
with the adjudicator’s conclusions and recommendation as set out in the Case
Synopsis and Reasons for Decision dated June 13, 2006” which, as noted, is to
cancel the demand for the payment of the Ascertained Forfeiture. To understand the position of the parties,
I set out the relevant facts.
Facts
[6]
Pacific Pants Company
Limited (Pacific) is a Montréal based company which imports garment products for
sale to retailers. Sheldon Liebman is its owner and its President.
[7]
In 1997, the Customs
Investigations Division, at Revenue Canada, opened an investigation into Pacific’s
importing practices following a May 13, 1997 seizure of unreported T-shirts
imported by Pacific from Tate Fashion Ltd. based in Hong Kong (Tate).
Pacific’s import declarations were reviewed for a period spanning from January 1994
to October 1997. The investigators determined there were problems with those
declarations.
[8]
Search warrants were
obtained and executed.
[9]
An analysis of
Pacific’s seized books and records revealed that Pacific was not reporting
goods to Customs and, in some cases, was declaring its goods but at much lower
values than the actual price paid for them. (See Applicants’ record, volume I,
page 166.)
[10]
As a result of the
audit, a quantity of merchandise was seized on December 19, 1997 and their
return was offered for a sum equal to the unpaid duties, GST and a penalty
equal to twice the revenue evaded.
[11]
As a further result
of the examination of the books and records seized from Pacific, Customs Canada
issued to Pacific, on March 16, 1998, a Notice of Ascertained Forfeiture (the
Notice), amended the same day, in the amount of $1,615,151 on account “a false
statement was made to Customs concerning the quantity and values
of the said goods …”. Once again the amount was calculated on the basis of
duty unpaid, GST and a penalty twice the revenue evaded.
[12]
The reason for the Notice,
rather than a physical seizure, was because the Notice related to the
importation of garments which had already entered Canada and sold by Pacific to retailers during a period from
January 1994 to October 1997 and, consequently, there were no goods to seize.
[13]
The record indicates
Pacific did not appeal the physical seizure of the goods but appealed the
Notice. The appeal was dealt with by adjudicators in the Adjudications Branch
of Revenue Canada which became the Recourse Branch
upon a re-organization. It also appears an arrangement was agreed to between
Customs and Pacific that releases of the goods under the physical seizure would
be dealt with first and once all the goods had been removed from seizure,
counsel for Pacific would be making its representation with respect to the
Notice.
[14]
In a letter dated September
18, 2003 (Applicants’ record (A.R.), volume I, page 164), Dwayne Mockler,
from the Adjudication Division stated to Mr. Liebman that by July 18, 2002
all of the seized goods had been released and that he had contacted Mr. Liebman
in July and December 2002 requesting his representations and had not received
anything from Pacific. He requested Pacific’s representation by October 24,
2003 and, if not received by then, the matter would be sent to final decision.
A further extension was granted to November 13, 2003 by the new
adjudicator, Suzanne Regan who had taken over the file from Mr. Mockler.
[15]
On November 15,
2003, Mr. Liebman sent a
fax to Adjudicator Regan requesting disclosure of the information she had in
her files stating: “We need all back up info. - we have none available”.
Adjudicator Regan’s file contained no supporting documents except in relation
to worksheet no. 18. She wrote to Investigator McKenna the next day indicating
to him Mr. Liebman was asking for the backup documents to some of the
worksheets and asked him that he (Investigator McKenna) provide Mr. Liebman
with that information adding: “It appears that no documentation was ever
provided to support each worksheet – were they?” [Emphasis mine.]
[16]
A further extension
was granted to January 16, 2004 after Adjudicator Regan heard from
Pacific’s new solicitor on the file. Zave Kaufman sent in his preliminary
representations on January 14, 2004 (A.R., volume I, page 184). The
focus of Mr. Kaufman’s submissions was the investigators had erroneously
corrected the selling price from Tate to Pacific and there was no evidence on
any additional payments from Pacific to Tate in respect of the imported goods
to which the Notice related. The adjudicator sent a copy of Mr. Kaufman’s
letter to the investigator for comment.
[17]
On March 8, 2004,
the adjudicator received the investigator’s comments, which she sent the next
day to Mr. Kaufman for his reaction. Investigator McKenna’s letter of March 8,
2004 provided a history of Pacific’s encounters with Customs; in particular, he
asserted there were additional payments from Pacific to Tate over and above the
amounts declared, a fact the investigator states flows from an analysis of
Pacific’s cash disbursement records, its purchase records, bank records and
Tate’s invoices.
[18]
On April 8, 2004,
Mr. Kaufman responded to the Investigator McKenna’s comments which, as noted,
had been sent to him by Adjudicator Regan. He denied the existence of any
additional payments from Pacific to Tate; stated the Investigator’s figures are
a reconstruction of Pacific’s disbursements and he needs the methodology used
by the Investigator. The Adjudicator responded on April 14, 2004 to Mr.
Kaufman’s stating it would be studied by the Investigator with a P.S. to
the Investigator “any concern.”
[19]
On April 29, 2004,
Investigator McKenna responded to the Adjudicator arguing and submitting, in a
ten page letter, there were additional payments from Pacific to Tate. His
letter was not sent by the Adjudicator to Mr. Kaufman for comment. This
is the first breach of procedural fairness on which the Minister’s consent
to allowing this judicial review application is based (A.R., volume II, page
241).
[20]
Adjudicator Joanne
Lepage was appointed to deal with the file sometime in late 2004 replacing Adjudicator
Regan. On January 13, 2005, she wrote to Mr. Kaufman. She said it would
appear, from a quick review of the file, that on October 24, 2004 Suzanne Regan
had granted the applicants an extension of time in order to provide Pacific an
opportunity to obtain proof from the Bank of Hong Kong of the amount paid for
the goods involved in the Notice and that, in a short conversation she had with
Mr. Liebman, he was unable to obtain that information. The adjudicator stated
to Mr. Kaufman, there was no longer any need to hold the matter in abeyance and
asked that any additional representations be submitted by February 1, 2005
(A.R., volume II, page 252).
[21]
On January 31,
2005, Mr. Kaufman responded. He repeated his claim that while the
investigation was never able to substantiate the existence of additional
payments made by Pacific to Tate with regards to the relevant import
transactions, Pacific Pants had endeavored to independently unearth copies of
proofs of payment made to Tate between the period of September 1995 and
December 1996. He added: “We say copies, insofar as all original documentation
related to these transactions were seized from Pacific Pants premises by Canada
Customs Investigation Officers … and to our knowledge, never returned to our
client”. Mr. Kaufman then provided the results of his efforts. Tate could be of
no assistance as it has gone bankrupt. As an alternative, he stated Pacific
sought copies of bank payments made by Pacific, through the Hong Kong Bank to
substantiate the true value for duty was properly declared. He informed the
adjudicator that avenue was unproductive because the Bank no longer had any
records on file given its legal obligation to retain records being seven years.
[22]
Mr. Kaufman
suggests one obvious avenue: the seized Pacific records in the hands of the
investigators. He
asserted, however, that Pacific had met its original obligation to show that it
had properly declared the values for duty of the imported goods at the time of
import and that the investigators were never able to discover evidence of
additional payments, despite a thorough search of bank and corporate records at
the time of the investigation; an admission made to him by Investigator McKenna
on January 5, 2004. He asserted that Canada Customs had “the documentation it
needs to support our position and that the interest of justice requires that
documentation be made available to him” (A.R., volume II, pages 255 and 256).
[Emphasis mine.]
[23]
On August 18, 2005, Adjudicator Lepage wrote to Mr.
Kaufman. She referred to the fact Mr. Liebman had been provided with copies of
all worksheets and that Mr. Kaufman had said in his letter of December 15,
2003, he would be making an application under the Access to Information
Act. Her information was he had not made such an application and invited
him to do so to obtain the documentation which he claims may assist in
supporting his position that the true value for duty was reported as required.
[24]
On September 12,
2005, Mr. Kaufman made a request to the Access Coordinator, which he copied
to Adjudicator Lepage, for disclosure of proofs of payments, made via the Hong
Kong Bank to Tate, to establish that the only payments made were those which
were fully disclosed to Canada Customs at the time of import (A.R., volume II,
page 262).
[25]
With this request for
access made, the file was held in abeyance until Mr. Kaufman received the
information sought (A.R., volume II, page 265).
[26]
On November 16,
2005, Investigator McKenna wrote to Adjudicator Lepage stating his position
was that the demand for payment should stand and “I will be sending supporting
documents shortly that will confirm the notice”.
[27]
On November 29,
2005, Adjudicator Lepage
sent a fax to Investigator McKenna stating a decision would not be
rendered until all submissions were in. She requested he forward all supporting
documentation by February 6, 2006 noting “the only documents presently
on file which were sent by your office include the Statement of Particulars,
the worksheets and related Reference Identification, as well as the reference material
for worksheet no. 18” (A.R., volume II, page 269).
[28]
On December 19,
2005, Mr. McKenna sent a 5 page letter to clarify and support the demand
for payment. Attached to that submission where extensive (267 pages) of
supporting documents for worksheets 14, 3, 4 and 30. This submission nor the
supporting documents were not provided to Mr. Kaufman for comment. This
second breach of procedural fairness is the second reason why the Minister has
consented to this judicial review application being allowed (A.R., volume
II, pages 270 to 541). [Emphasis mine.]
[29]
On April 27, 2006, Adjudicator Lepage wrote to Mr. Kaufman
stating since “no additional submissions have been forthcoming since he had
submitted his access request, I must advise you that this matter will be
submitted for final decision on or about May 15, 2006 and that he should
provide his comments prior to this date” (A.R., volume II, page 543).
[30]
On May 15, 2006, Mr. Kaufman asked for more time to
provide his final submission which was granted to June 12, 2006.
[31]
On June 11, 2006,
Mr. Kaufman provided his submission stating: “We thank you for having
granted us a time extension in order that we might further analyze the
documentation as received from the CBSA pursuant to our request under the Access
to Information Act.” [Emphasis mine.] He provided his analysis
referring to documentation which he had received from Mrs. Regan on March 9,
2004 referencing a series of spreadsheets prepared by the investigators
referred to as Attachments “L” and “M”.
[32]
He refers to
Attachment “L” which purports to detail purchases made from Tate (between June
95 and January 96) totaling $946,168 and compares with telex transfer payments
of $1,639,000 made between May and October 95 as corroborated by supporting documentation
obtained by warrant from Pacific Pants’ bank (the Hong Kong Bank of Canada). He
stated: “Having now had the opportunity to review the same documentation (as
obtained through our “ATI” request) as the officers, we sincerely have had
great difficulty in reconciling the same figures as quoted on this spreadsheet.”
[Emphasis mine.]
[33]
He provided his
reasons. He added: “Furthermore, it appears that little or no consideration was
ever given (by the investigators) that the payments could have been made in the
course of normal business dealings for such costs as quota, buying agent
commissions or for sums advanced (to the agent) and held in account overseas in
anticipation of payments for goods to follow” which Mr. Kaufman explains in the
next paragraph of his letter of June 11, 2006 as: “not meant to refer to part
lot shipments but rather to monies which are “advanced” to use as payment for
goods which have suddenly become available (in the market) due to a
cancellation of an order, over production runs, bankruptcies, etc.)”.
[34]
He makes a comment
with respect to attachment “M” detailing purchases from Tate from January 96 to
98 in the amount of $3,001,275. He stated there were no proofs of telex
transfer payments (as made by the bank) in the file. In other words, he did not
have any supporting documents.
[35]
He closed by stating
Pacific “routinely advanced monies to its overseas agent(s) to facilitate a
quick purchase of goods should they appear on the market at distressed prices.
This was standard practice for our client.” He requested a meeting (A.R.,
Volume II, pages 548 to 550).
[36]
As stated in a Case Synopsis
and Reasons for decision dated June 13, 2006, Adjudicator Lepage
recommended it be decided that:
·
There has been a
contravention of the Customs Act in respect to the Notice which was
served;
·
Pursuant to section
133 of the Customs Act, the demand for payment be withdrawn (A.R.,
Volume II, pages 551 to 560).
[37]
In reaching her
recommendation, Adjudicator Lepage reviewed the proceedings and the evidence
including the evidence which she had before her, which encompassed the
additional evidence backing up Worksheets 14, 3, 4 and 30 which the Applicants
never received because it was not sent to Mr. Kaufman.
[38]
At page 5, she
writes:
With
respect to the additional payments, the Investigator explains that,
through an analysis of PPC’s cash disbursement and purchase journals, bank
records, and Tate Fashion invoices, it was determined that between 1995 and
January 1998, PPC purchased $3,947,443.76 of goods from Tate Fashion while,
between May 1995 and October 1997, the cash disbursements amounted to
$8,179,291.85. It was noted that because PPC’s purchase journal and cash
disbursement entries ceased in January 1996 and October 1997, respectively, the
company’s purchase journal was “reconstructed” using the vendor’s invoices. The
Investigator subsequently “corrected certain under declared imports by
$1,904,895”, suggesting that the difference could possibly be attributed to
quota charge payments on the undeclared goods.
[39]
At page 9, she
concludes with respect to the additional payments as follows:
Nevertheless,
the claimant contends that the actual price paid for all of the goods contained
in the shipments was properly reported. He adds that there is no evidence to
support the issuing agency’s allegation of undervaluation. With respect to
this claim of undervaluation, a review of the methodology used by the
investigators indicates that they compared PPC’s cash disbursement and purchase
journals, bank records, and invoices from Tate Fashion, “corrected certain
under declared imports by $1,904,895”. However, with respect to the
allegation of undervaluation, despite a thorough review of the reports on file,
there is no evidence positively establishing that the lump sum cash disbursements
were additional monetary payments to Tate Fashion specifically for the goods in
question and that, consequently, the invoices used to support the accounting
documents listed a fraudulent value. A direct correlation between the
“disbursement” entries and the particular invoice/purchase orders has not been
established. As such, the allegation pertaining to the evasion of revenue is,
at best, questionable.
It
is noted that the criminal charges to which the claimants pleaded guilty
were with respect to smuggling and false information pertaining to import
permits rather than to undervaluation. [Emphasis mine.]
[40]
The Minister’s
delegate did not accept Adjudicator Lepage’s recommendation. In his decision
letter of April 12, 2007 (some eight months after he had received
Adjudicator Lepage’s recommendation), sent to Mr. Liebman, copy to Zave
Kaufman, he decided as Adjudicator Lepage had, that under the provisions of
section 131 of the Customs Act, there had been a contravention of that Act
or Regulations with respect to the Notice which was served. He was also
of the view that under the provisions of section 133 of the Customs Act,
the demand for payment of the forfeiture amount is maintained for the reason
that a true and complete declaration concerning the value and quantity of the goods
was not made to Customs, the forfeiture is justified.
[41]
The Minister’s
delegate informed Mr. Liebman “after considering the evidence on file provided
by you as well as Customs Investigation, I was unable to accept your representations
that the difference in monies paid by Pacific Pants during the period of
investigation was for “advance” purchase of goods that may suddenly become
available in the market at distressed prices”.
[42]
In the Minister’s
delegate’s view “the evidence on file clearly establishes that additional
payments were made to Tate Fashion by Pacific Pants during the period
investigated”.
[43]
He further stated
Pacific Pants had not provided any evidence to demonstrate that the additional
payments identified by Customs Investigation “were used for the purposes that
you claim or that the monies ever had been returned to Pacific Pants” and
concluded in the absence of the evidence “to support your claim that the
difference in payments between your client and Tate Fashion was for advance
purchases of goods and not for the actual goods that have been imported during
the time period under investigation, I can only conclude that the additional
payments were for the goods imported during the time period under investigation
and, therefore, this resulted in the true price of the goods being undervalued
and a contravention of the Customs Act did occur”. [My underlining.]
Analysis
1.
The scope of the directions to be provided
(a)
discussion
[44]
As noted, counsel for
the Minister argues the reconsideration should be on the basis of the
information contained in the certified tribunal record which was before the
Minister’s delegate which would include the information which Mr. Kaufman had
not seen in respect of certain worksheets (sent to the Adjudicator on December
19, 2005 by Investigator McKenna) and the information in the Investigator’s
submission of April 2004. Counsel for the Minister made an additional point. It
was his view based on the Federal Court of Appeal’s decision in Francella v.
the Attorney General of Canada, 2003 FCA 441 (Francella), the Agency
should not have an opportunity to submit new evidence which existed at the time
of the Minister’s Delegate but which was not before him. In other words, the Agency
should not get “a second kick at the can”. He explained his position succinctly
at paragraphs 20 and 21 of his written representations:
20.
Considering Francella
v. A.G. Canada, Respondent agrees that it is too late to give the
Investigator who issued the Amended Notice of Ascertained Forfeiture the
opportunity to introduce evidence that could have been introduced before the
Minister during the adjudication process.
21.
Consequently, the
Respondent submits that the Court should refer the matter back to the Minister
for reconsideration on the basis of the sole record that was before the
Minister when he has rendered its decision on April 12, 2007. (More precisely,
it is too late for the CBSA’s Investigator who issued the Amended Notice of
Ascertained forfeiture to provide the Minister with the missing supporting
evidence mentioned in the documents “reference identification” attached to each
and every worksheet, even if that supporting evidence could possibly prove that
the demand for payment in the amount of 1,615,151.10 $ is entirely well founded
in fact and in law).
[45]
Francella, above, supports the counsel for the Minister’s
submissions on this point. This case, which involved the assessment of
penalties against the Applicant under the Employment Insurance Act, was
decided by Justice Rothstein when he was a member of the Federal Court of
Appeal. At paragraphs 8 and 9, he wrote:
8 When
an Umpire remits a matter to either the same or a differently constituted Board
of Referees for reconsideration, whether the reconsideration hearing is de
novo will depend on the terms on which the matter has been remitted by the
Umpire and on the requirements of procedural fairness. Providing there is no
overriding unfairness, it is open to an Umpire to specify the manner in which a
matter which is remitted for rehearing is to proceed, whether by way of a fresh
hearing on new evidence, a hearing on the record before the first Board of
referees or a combination of the two. It may be that the new evidence will
be limited to specific issues. I do not suggest these options are exhaustive. The
point is that, provided the procedure is fair, there are a number of options
open to an Umpire when remitting a matter for redetermination to a Board of
Referees. Certainly, it is not inevitable that the redetermination hearing must
be conducted de novo.
9 As
to fairness, I do not purport to list exhaustively the circumstances in
which allowing or not allowing new evidence might be unfair. Each case must be
considered on its own facts. However, it would seem to me that, except in the
most unusual circumstances, it would be procedurally unfair to remit a matter
for reconsideration for the sole purpose of giving one party an opportunity to
introduce new evidence that could have been introduced at a prior hearing. Generally,
once parties close the evidentiary portion of their cases, they proceed to
argument and the case is decided on the basis of the evidence submitted. If
evidence was deliberately or even accidentally withheld and it is later found
that the evidence would be helpful to the party, it will generally be too late
to admit it. The opposing party may have determined its strategy on the
basis of evidence that was not adduced, or may even have made prejudicial
admissions on this basis. [Emphasis mine.]
[46]
In the particular
circumstances of the case before him, Justice Rothstein came to the conclusion
it was unfair to allow the Employment Insurance Commission an opportunity to
provide new evidence not before the Board of Referees. This is what he wrote at
paragraph 11 of his reasons:
11 However,
even if the words could be construed as permitting the introduction of new
evidence, I think that it would be unfair to allow new evidence in this case..
In his August 1, 2000, decision, the Umpire was not satisfied that the evidence
before the first Board of Referees supported a finding that false or misleading
statements were knowingly made on reporting cards. In his January 18, 2002,
decisions, he confirmed that the sole basis for remitting the matter to a newly
constituted Board of Referees was the absence of evidence to support the
allegation that the applicants had made false and misleading statements. It was
unfair to give the Commission "a second kick at the can." The
Commission was not the appellant before the Umpire. There was no finding of
an error of law or procedure at the first Board of Referees hearings. It would
be unfair to grant relief to the Commission on the applicants' appeals,
especially when there was no finding of error on the part of the first Board of
Referees. [Emphasis mine.]
[47]
Counsel for the
Applicants invokes the following reasons in support of his argument for
directions equivalent to a “directed verdict”:
·
There is no factual
issue remaining to be resolved. All the evidence that was in the certified
tribunal record was before Adjudicator Lepage. In particular, there is no
substance to the Minister’s claim the applicants plead guilty on 9 counts under
section 158 of the Customs Act since there is no evidence in the
certified record that this is so. He argues the evidence in the Minister’s
amended motion record is insufficient to establish the Applicants’ pleas;
·
All the evidence
considered by Adjudicator Lepage points to one direction: there was no evidence
before her which could reasonably lead to the conclusion the Applicants
undervalued the goods, which are the subject of the Notice, and paid for the
true value of these goods through additional payments. The Investigators and,
in particular, the immediate supervisor of the investigators at the Agency
realized there was no direct correlation between the disbursement entries and a
particular invoice/purchase orders. This supervisor improperly lobbied the
decision-maker to overturn Adjudicator Lepage’s recommendation;
·
A remand direction is
appropriate because the Minister breached his statutory duty to render a
decision “as soon as is reasonably possible having regard to the circumstances”
and the consequences of the delay (13 years since the importation of the goods)
have destroyed the ability of the Applicants to properly deal with the
allegations;
·
He argued a remand on
a directed verdict is further warranted because my colleague Justice Russell
had already clearly stated in Leasak v. Canada (Minister of Public Safety
and Emergency Preparedness), 2006 FC 1397 it was improper an
Adjudicator to receive submissions from Customs Officers without providing the
person directly affected with an opportunity to respond. Counsel for the
applicants submitted the conduct by Adjudicators in the Recourse Branch in this
case repeated what the Court had proscribed in Leasak and should be
sanctioned for it through a directed verdict.
(b)
conclusions on this point
[48]
The jurisprudence of
the Federal Court of Appeal and of this Court clearly holds that the provisions
of paragraph 18.1(3)(b) of the Federal Courts Act which provides that
the Court, on a judicial review application may, in setting aside a decision
when referring that decision back for re-determination, do so “with such
directions as it considers to be appropriate” are sufficiently broad
to authorize the Court to direct the decision to be made on reconsideration by
the federal tribunal but such a direction is an exceptional power which should
only be exercised in the clearest of circumstances. Justice Evans, on behalf of
the Federal Court of Appeal, wrote the following at paragraph 14 in Rafuse
v. Canada (Pension Appeals Board), 2002 CAF 31:
14 While the directions that the Court may
issue when setting aside a tribunal's decision include directions in the
nature of a directed verdict, this is an exceptional power that should be
exercised only in the clearest of circumstances: Xie, supra, at paragraph
18. Such will rarely be the case when the issue in dispute is essentially
factual in nature (Ali v. Canada (Minister of Employment and Immigration),
[1994] 3 F.C. 73 (T.D.)), particularly when, as here, the tribunal has not
made the relevant finding. [Emphasis mine.]
[49]
In Rafuse,
Justice Evans cited with approval Justice Reed’s decision in Ali v. Canada (Minister of Employment and Immigration), [1994] 3 F.C. 73. In that decision,
Justice Reed outlined at paragraph 18 of her reasons the kinds of
considerations which should be taken into account to justify the issuance of a
directed decision on reconsideration:
…
·
is the evidence on
the record so clearly conclusive that the only possible conclusion is that the
claimant is a Convention refugee;
·
is the sole issue to
be decided a pure question of law which will be dispositive of the case;
·
is the legal issue
based on uncontroverted evidence and accepted facts;
·
is there a factual
issue which involves conflicting evidence which is central to the claim?
[50]
I am prepared to
expand that list of considerations to include unreasonable administrative delay
which causes prejudice. I rely on the Supreme Court of Canada’s decision in Blencoe
v. British Columbia (Human Rights Commission), [2000] 2 S.C.R. 307 (Blencoe),
at paragraph 160:
160
As indicated above, the central factors toward which the modern administrative
law cases as a whole propel us are length, cause, and effects. Approaching
these now with a more refined understanding of different kinds and contexts of
delay, we see three main factors to be balanced in assessing the reasonableness
of an administrative delay:
(1) the time taken compared to the
inherent time requirements of the matter before the particular administrative
body, which would encompass legal complexities (including the presence of
any especially complex systemic issues) and factual complexities (including the
need to gather large amounts of information or technical data), as well as
reasonable periods of time for procedural safeguards that protect parties or
the public;
(2) the causes of delay beyond
the inherent time requirements of the matter, which would include
consideration of such elements as whether the affected individual contributed
to or waived parts of the delay and whether the administrative body used as
efficiently as possible those resources it had available; and
(3) the impact of the delay,
considered as encompassing both prejudice in an evidentiary sense and other
harms to the lives of real people impacted by the ongoing delay. This may also
include a consideration of the efforts by various parties to minimize negative
impacts by providing information or interim solutions. [Emphasis mine.]
…
[51]
In the case before
me, counsel for the applicants argues the delay in investigating and reaching a
decision is unreasonable causing serious prejudice to their case to the point
they have lost an opportunity to muster evidence in which to mount a persuasive
case to the Minister.
[52]
I am not prepared to
find, on the facts of this case, the delay in investigating and reaching a
decision was unreasonable. The evidence on the record is to the effect
submissions on the demand for payment of the forfeiture amount was, by
agreement, postponed until the goods, which were the subject of the physical
seizure, were released. The record also indicates the Applicants themselves
were responsible for much of the delay (see paragraphs 14, 16, 20, 23, 24, 27
and 30 of these reasons).
[53]
At the hearing of
this matter, I indicated to both counsel I was very much concerned with the
Applicants’ allegation the passage of time had blunted any chance they had to gather
the evidence which would enable them to mount a convincing case that any
additional payments made to Tate was not on account of the actual value of the
imported goods subject of the investigation. This argument proceeded on the
assumption the seized records of Pacific were not available to the applicants
because Customs Canada could not locate them. Compounding this fact was Tate’s
bankruptcy and the unavailability of payment records at the Bank of Hong Kong.
[54]
On the evidence
before me, I am not satisfied the applicants have made out a case of prejudice.
It is clear the applicants’ solicitor, Zave Kaufman, was successful in
obtaining, through the Access to Information Act, some or all of the
seized Pacific records which enabled him to make the submissions he did on June
11, 2006 to Adjudicator Lepage. In particular, those submissions address a
series of spreadsheets referred to as Attachments “L” and “M” compiled by the
Investigators at Customs Canada.
[55]
At this point in
time, this Court does not know what material Maître Kaufman received through
his Access request: did he receive copies of all of the documents seized from
Pacific or just some of them; what Pacific records did he obtain through his
Access request and whether there are missing documents and, if so, what is
their impact on the Applicants’ case? The answer to these questions is not
known; the Applicants had a burden to adduce evidence which would show
prejudice. In my view, they have failed to do so.
[56]
Given my findings on
the reasonableness of the delay and lack of demonstrated prejudice, I need not
discuss whether a directed decision would be an appropriate remedy in the
circumstances. See the discussion on this point in Blencoe, at
paragraphs 178 to 186, where reference is made at paragraph 181 to the Minister
of Citizenship and Immigration v. Tobiass, [1997] 3 S.C.R. 391 (see also
the recent Supreme Court of Canada decision in Charkaoui v. Canada (Minister
of Citizenship and Immigration), 2008 SCC 38).
[57]
A reading of these
cases suggest to this Court the remedy suggested by the Applicants – a directed
verdict – would be too harsh despite the fact the Adjudication Division had
been warned by Justice MacKay in ACL Canada Inc. v. the Queen, 107
D.L.R. (4th) 736, at pages 758 to 760 (ACL Canada) that
procedural fairness was very important on appeals dealing with custom
enforcement measures particularly with respect to exchanges of information
between an adjudicator and customs officials without disclosure to the person
affected by the enforcement measure. Justice Russell in Leasak based his
decision on Justice MacKay’s decision ACL Canada.
[58]
The Adjudicators in
the Adjudication Division, now the Recourse Branch, should have been aware of
that receiving information from investigators without disclosing that
information to the Applicants’ counsel was wrong.
[59]
There is a further
reason for refusing to direct a decision on reconsideration in this case. The
factual landscape and the reasonable inferences which may be drawn from that
landscape are to a substantial degree unsettled. It seems to me a directed
decision would render nugatory the very purpose the reconsideration: to enable
the applicants to comment on evidence which should have properly been disclosed
to them was not.
[60]
For these reasons,
the Applicants’ request for a directed decision on reconsideration is denied.
2.
The cost issue
(a)
discussion
[61]
The history of this
judicial review proceeding is as follows:
·
May 11, 2007 – Notice of Application filed by the
Applicants;
·
May 17, 2007 – Notice of Appearance filed by the
Minister indicating the Minister “intends to oppose this application”;
·
June 8, 2007 – Filing of the Certified Tribunal
Record;
·
July 13, 2007 – Order by Prothonotary Morneau issued
on consent extending the time to July 31, 2007 to serve and file the
Applicants’ affidavit and providing the Respondent’s affidavit to be served and
filed 60 days after service of the Applicants’ affidavit;
·
October 19, 2007 – Order of Prothonotary Aronovitch at
the request of counsel for the Respondent, consented to by the Applicants, suspending
the judicial review proceeding until February 1, 2008 with the Respondent’s
affidavit(s) due that day. The record indicates the underlying reason was on
account of settlement negotiations. No affidavit, under Rule 307 of the Federal
Courts Rules, 1998 (the Rules) was ever filed on behalf of the
Respondent;
·
March 12, 2008 – The Applicants serve and file their
record;
·
April 17, 2008 – Applicants file a requisition for a
hearing;
·
June 3, 2008 – Order setting down for hearing this
judicial review application in Montreal, on September 2, 2008;
·
August 6, 2008 – Letter from counsel for the Respondent
advising the Court the Respondent would not oppose the judicial review application
and further advising the Respondent would be filing a motion with the Court
for an order granting the appeal, quashing the Minister’s delegate’s decision
of April 12, 2007;
·
August 12, 2008 – Respondent’s motion record filed;
·
August 14, 2008 – Order from this Court scheduling the
procedure for the hearing of the motion to which these reasons relate.
[62]
The applicants seek
solicitor-client costs on this application for judicial review. It is
recognized by the parties the Court has wide discretion in fixing costs (see Consorzio
Del Prosciutto Di Parma v. Maple Leaf Meats, 2002 FCA 417). However, the
Supreme Court of Canada has instructed the Courts when an award of solicitor-client
costs was appropriate.
[63]
In Baker v. Canada (Minister of Citizenship and
Immigration), [1999] 2
S.C.R. 817 at paragraph 77, Justice L’Heureux-Dubé referring to the case of Young
v. Young, [1993] 4 S.C.R. 3 ruled that “solicitor-client costs are generally awarded
only where there has been reprehensible, scandalous or outrageous conduct on
the part of one of the parties” in the conduct of the litigation.
(b) conclusions
on this point
[64]
I am of the view
solicitor-client costs cannot be awarded in this case. The Applicants have not
shown conduct on the part of the Respondent or his counsel which meets the test
of “reprehensible, scandalous or outrageous conduct”. Indeed, counsel for the Applicants
takes, at paragraph 32 of its response to the Respondent’s motion is
complementary view of counsel for the Respondent’s conduct.
[65]
Counsel for the
Applicants argues the Respondent consented to the judicial review application
at the very last moment forcing the Applicants that file a section 317 request,
file an affidavit, prepare an Applicants’ record. Counsel again argues
solicitor-client costs should be sanctioned because adjudicators have been
warned by the jurisprudence to be very careful about breaching procedural
fairness.
[66]
I note that when the
Applicants filed their judicial review application, they signaled to the
Respondent that issues of procedural fairness were central to their case.
Moreover, when the Respondent received the certified tribunal record, it became
evident that proscribed breaches had occurred.
[67]
As I have indicated,
this conduct does not warrant solicitor-client costs as I read the
jurisprudence on the point. However, I am of the view, the Respondent should
have reacted more quickly when it became apparent fairness in the process had
suffered. It is to counsel for the Respondent’s credit that he sought a stay of
proceedings on October 19, 2007. There is no explanation in the record why the
case was not settled.
[68]
As Justice Rothstein
pointed out in the Consorzio Del Prosciutto Di Parma case, the Court has
full discretionary power as to the amount of costs to be awarded. In the
circumstances of this case, increased party – party costs are appropriate not
to punish the Respondent but to signal that, on the basis of the record before
me, the delay in settling this judicial review application caused the
Applicants to incur unnecessary expenses, keeping in mind as was said in Consorzio
at paragraph 9 that the objective in a cost award is to award an
appropriate contribution towards solicitor-client costs. The cost award
suggested by counsel for the Respondent fixed at Column III of the table to
Tariff B is not satisfactory in the circumstance.
[69]
An appropriate
contribution to solicitor-client costs is to fix costs based on Column V at the
mid point of the scale prescribed for appropriate items.
3.
Postscript
(a)
adequate reasons
[70]
Counsel for the
Applicants raised in argument the Minister’s delegate, in this case, did not
provide adequate reasons in support of his decision to maintain the demand for
payment of the forfeited amount. There is a wealth of cases holding a tribunal
must provide adequate reasons. Generally speaking, reasons must be proper,
adequate and intelligible and must enable the person concerned to assess whether
he has grounds to appeal; reasons must outline the reasoning process which lead
to its conclusions (see Northwestern Utilities Ltd. v. Edmonton, [1979]
1 S.C.R. 684, at page 707).
[71]
Reasons, in a case
such as this one where the amounts involved are substantial, must come to grips
with the principal elements of relevant submissions (see Lee v. Canada, [1994]
1 F.C. 15, at pages 26 and 27).
[72]
I do not propose to
comment on the adequacy of the reasons given by the Minister’s delegate whose
decision is under review because the matter was only raised at the hearing.
However, I took the opportunity to state the general principles on the point so
as to guide the reasons which will be provided on reconsideration.
(b)
submissions on reconsideration
[73]
Counsel for the
Respondent proposed that the Applicants only be allowed to make submissions in
respect of any evidence or submissions in the record that had not been disclosed
to them prior to the April 12, 2007 decision. I do not agree with that proposal
which is too limitative in the circumstances and is likely to cause problems.
The Applicants should be able to make such submissions on reconsideration as
they consider appropriate.
JUDGMENT
THIS COURT ORDERS AND ADJUGES that:
1. The Respondent’s designation
is corrected for the “Minister for Public Safety and Emergency Preparedness”,
in accordance with section 2 of the Customs Act, R.S.C. 1985, c. 1 (2nd
Supp);
2. The Applicants’ Application
for judicial review is granted, with costs; the Minister’s decision, dated
April 12, 2007, made pursuant to section 133 of the Customs Act is
quashed and the matter is referred back to the Minister for reconsideration
with the following instructions taking into account the reasons this Court has
issued today:
(a) The reconsideration shall be
conducted and decided by a different duly appointed Minister’s delegate;
(b) The reconsideration shall be
determined on the basis of the record existing at the time the Minister’s
delegate rendered his April 12, 2007 decision, such record being the Certified
Record filed in the present file;
(c) The Applicants may file
evidence and make submissions;
(d) This Court will remain seized
of the matter on reconsideration to assist the parties in the implementation of
this judgment in a manner consistent with these reasons for judgment;
3. The Applicants
shall have their costs on a party-party basis fixed in accordance with Column V
of Tariff B of the Rules based on the mid-point of the scale in such
Column for each relevant costs item.
“François Lemieux”
__________________________
Judge
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