Reference re the jurisdiction of the Tariff Board of Canada, [1934] SCR 538

Supreme Court of Canada

Reference re the jurisdiction of the Tariff Board of Canada, [1934] S.C.R. 538

Date: 1934-06-15.

In the Matter of a Reference Concerning the Jurisdiction of the Tariff Board of Canada.

1934: April 24, 25; 1934: June 15.

Present: Duff C J. and Rinfret, Lamont, Cannon, Crocket and Hughes JJ.

Crown—Tariff Board—Authority to determine questions of law—Authority as to orders of the Minister of National Revenue—Whether its decisions, as to the value of goods for duty purposes, are subject to the approval of the Minister—British Preferential Tariff—Customs Act, R.S.C. 1927, c. 42, ss. 3, 4, 6, 35, 36, 37, 38, 41, 42, 43, 46, 47, 48, 54—Customs Act, s. 43 as enacted by c. 2 of 1930, 2nd session, 21 Geo. V; subs. (1) of s. 43 as substituted by 23-24 Geo. V, c. 7 of 1932-33—Tariff Board Act, 21-22 Geo. V, c. 55.

The Tariff Board, as constituted under chapter 55 of the statutes of 1931, has no authority to determine questions of law as distinct from questions of fact.

The Tariff Board has no authority under that Act to determine that the orders of the Minister of National Revenue, fixing the values for duty of goods, under the authority of s. 3 of the Customs Act (c. 2 of 1930, 2nd sess.), prior to the enactment of c. 7 of 1932-33, were annulled and ceased to be effective from the date of the last mentioned enactment in respect of goods entitled to entry under the British Preferential Tariff.

The decisions of the Tariff Board, when acting under the provisions of part II of its constitutory Act, as to the value of goods for duty purposes, are subject to the approval of the Minister of National Revenue.

REFERENCE by His Excellency the Governor General in Council to the Supreme Court of Canada, for hearing and consideration, pursuant to the authority conferred by s. 55 of the Supreme Court Act, R.S.C., 1927, c. 35. The questions and the pertinent sections of the Customs Act and of the Tariff Board Act are set out in the judgment now reported.

Glynn Osler K.C. and F. P. Varcoe K.C. for the Attorney-General of Canada.

R. S. Robertson K.C. for Doon Twines Limited.

Aimé Geoffrion K.C. for Thomas Bonar & Co. (Canada) Ltd.

O. M. Biggar K.C. for Kruger Ltd

Ls. St. Laurent K.C. for Lancashire Felt Co. of Canada

The judgment of the Court was delivered by

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Rinfret, J.—By Order in Council dated 20th March, 1934, certain questions have been referred to this Court for hearing and consideration, pursuant to s. 55 of the Supreme Court Act, as follows:

1. Has the Tariff Board as constituted under chapter 55 of the statutes of 1931 authority to determine questions of law as distinct from questions of fact?

2. Has the Tariff Board authority under said Act to determine that the orders of the Minister of National Revenue, fixing the values for duty of goods, under the authority of section 43 of the Customs Act as enacted by chapter 2 of the statutes of 1930 (second session), prior to the enactment of chapter 7 of the statutes of 1932-33, were annulled and ceased to be effective from the date of the last mentioned enactment in respect of goods entitled to entry under the British Preferential Tariff?

3. When the Tariff Board acts under the provisions of part II of the said Act, are its decisions as to the value of goods for duty purposes subject to the approval of the Minister of National Revenue?

The Order in Council recites section 43 of the Customs Act, as enacted by c. 2 of 1930 (second session, 21 Geo. V), which provides as follows:

43. (1) If at any time it appears to the satisfaction of the Governor in Council on a report from the Minister that goods of any kind are being imported into Canada, either on sale or on consignment, under such conditions as prejudicially or injuriously to affect the interests of Canadian producers or manufacturers, the Governor in Council may authorize the Minister to fix the value for duty of any class or kind of such goods, and notwithstanding any other provision of this Act, the value so fixed shall be deemed to be the fair market value of such goods.

(2) Every order of the Governor in Council authorizing the Minister to fix the value for duty of any class or kind of such goods, and the value thereof so fixed by the Minister by virtue of such authority, shall be published in the next following issues of the Canada Gazette.

This section came into force on the 22nd September, 1930. Between that date and the 25th November, 1932, the Governor in Council, by appropriate action thereunder, authorized the Minister of National Revenue to fix the value for duty of several classes or kinds of goods and, pursuant to the authorization so given, the Minister fixed the value for duty of such goods. The Orders in Council and the orders of the Minister were duly published in the Canada Gazette.

On the 25th November, 1932, c. 7 of the statutes of 1932-33 (23-24 Geo. V) became law, which Act substituted the following subsection (1) of s. 43 for that enacted in 1930:

43. (1) If at any time it appears to the satisfaction of the Governor in Council on a report from the Minister that goods of any kind not entitled to entry under the British Preferential tariff or any lower tariff are being imported into Canada either on sale or on consignment, under

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such conditions as prejudicially or injuriously to affect the interests of Canadian producers or manufacturers, the Governor in Council may authorize the Minister to fix the value for duty of any class or kind of such goods, and notwithstanding any other provision of this Act, the value so fixed shall be deemed to foe the fair market value of such goods.

The only modification in the new subsection was effected by the insertion of the words:

not entitled to entry under the British Preferential tariff or any lower tariff.

Since the enactment of this subsection in 1932, certain importers of goods entitled to entry under the British Preferential tariff, of classes or kinds of goods falling within the Orders in Council and the orders of the Minister of National Revenue fixing the value for duties, have made application to the Tariff Board for a declaration that the orders of the Minister fixing the value for duty were annulled by c. 7 of the statutes of 1932-33 aforesaid, in so far as they applied to such goods. It was contended that the value for duty should be the appraised value at the time of importation and in the principal markets of the country whence the same had been imported into Canada (s. 35). The applicants alleged that these goods should be dealt with by the Tariff Board under the jurisdiction conferred upon it by part II of the Tariff Board Act. The Tariff Board heard the applications and decided that the orders of the Minister fixing the values for duty of such goods were annulled by the new legislation.

In one of these cases, an appeal was taken to the Governor in Council by a Canadian manufacturer. It was contended, on behalf of such manufacturer, that the Tariff Board had exceeded its jurisdiction in deciding that the orders of the Minister of National Revenue fixing the value for duty of such goods were annulled by c. 7 of the statutes of 1932-33 in so far as they applied to goods entitled to entry under the British Preferential tariff; and it was further contended that if the Board had jurisdiction to decide the question, the decision of the Board that the orders of the Minister fixing the value for duty of such goods were so annulled was erroneous in law.

The Governor in Council considered these matters were of great public importance and thought, pending any decision of the matter, the opinion of the Supreme Court of Canada should be obtained.

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For that purpose, the above questions have been referred to the Court.

Copies of the decisions of the Board upon the concrete cases mentioned in the Order in Council, and also of the reasons for judgment in one of these cases were submitted to the Court; but they were placed before us only for the purpose of illustration; and, by the questions put, the Court is not asked to say if these decisions were right or wrong. It was made clear at the argument that in our answers we are to limit ourselves to the abstract questions referred to us.

We will therefore proceed to give our opinion upon each question with the reasons for each answer.

The Act to provide for the appointment of a Tariff Board, known as the Tariff Board Act (c. 55 of 21-22 Geo. V), came into force on the 3rd of August, 1931. It is divided into two parts.

Part I provides for the constitution of a Board to be called the Tariff Board, consisting of three members appointed by the Governor in Council, and defines the duties of the Board. At the request of the Minister of Finance, the Board shall make inquiries as to several matters therein enumerated in respect to goods produced in or imported into Canada. It may also be empowered by the Governor in Council to hold other inquiries or to make investigations in other matters stated in the Act.

In connection with these inquiries or investigations, the Board is given the power of summoning witnesses and of taking evidence. It holds its sessions in the city of Ottawa, or in any other place in Canada, or, with the consent of the Minister of Finance, in any place outside of Canada. It conducts its proceedings in such manner as may seem to it most convenient for the speedy and efficient discharge of its duties.

In the exercise of its powers of inquiry and investigation as so provided by the Act, the Board is a court of record and has an official seal.

The other provisions of part I relate to the appointment of a secretary, and to his duties, to the appointment of other officers, clerks and employees of the Board, of persons having technical or special knowledge of any of the matters into which inquiry may be made to assist the Board in

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making such inquiries; and they also relate to the salaries, the pensions and the residence of the members of the Board and the other officials.

Then comes part II, which deals with a different subject altogether. Under that part, the powers, functions and duties of the Board of Customs are assigned to the Tariff Board and shall be transacted by that Board after a date to be fixed by the Governor in Council. Whenever in any Act of the Parliament of Canada, or in any regulation or order made thereunder, the Board of Customs is mentioned or referred to, the Tariff Board shall in each and every case be substituted therefor. Section 3 of the Customs Act (c. 42 of R.S.C. 1927) shall be deemed to be repealed from and after the date fixed by the Governor in Council “for the transfer of the duties and powers of the Customs Board to the Tariff Board.” The section of the Customs Act so deemed to be repealed is that which provides for the constitution of the Board of Customs.

The only other provisions to be found in part II of the Tariff Board Act deal with the right of appeal from decisions of the Tariff Board (the former right of appeal from decisions of the Board of Customs is to continue as provided by the Customs Act), when transacting business under this part, and with the right of access to documents and records and to information from any officer, clerk or employee of the public service. There is a further provision for the publication of the decisions of the Board; and finally it is enacted that the Governor in Council may make regulations not inconsistent with this part, or any Act of the Parliament of Canada, as may be deemed necessary for carrying out the provisions of this part; and also that the Board shall have such powers and perform such duties under this part as are assigned to it by any Act of the Parliament of Canada or by the Governor in Council.

The questions and matters submitted to this Court have reference only to the powers of the Tariff Board under part II of the Tariff Board Act; and, in the course of these reasons, it should therefore be borne in mind that we are dealing only with that part of the Act.

As will have been perceived by the analysis just made, when the Tariff Board acts under the provisions of part II, it exercises the powers and functions and duties of the

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former Board of Customs, no less and no more. The Tariff Board is substituted for the Board of Customs, the duties and powers whereof have been “transferred” to it. We are not speaking, of course, of such other powers and duties which may later be assigned to the Board by any Act of the Parliament of Canada or by the Governor in Council (subs. 4 of s. 11). To all intents and purposes under part II, the Tariff Board takes the place of the Board of Customs to such an extent that under the Act

wherever in any Act of the Parliament of Canada, or in any regulation or order made thereunder, the Board of Customs is mentioned or referred to, the Tariff Board shall in each and every case be substituted therefor.

It should be emphasized that, for the purposes of transferring the powers and duties from one board to the other under part II, the legislation proceeds by the mere insertion of the words “Tariff Board” in lieu of the words “Board of Customs” in the Acts of Parliament, or in the regulations and in the orders made thereunder.

It follows that, if we are to ascertain the powers, functions and duties of the Tariff Board under part II, we are compelled to look to the powers, functions and duties of the former Board of Customs. They are to be found in the Customs Act (c. 42 of R.S.C. 1927 and amendments); but in order fully to comprehend the matter, a brief reference must be made to the whole scheme of the customs administration in Canada.

Under Canadian legislation, the control, regulation, management and supervision of the collection of the duties of customs and of matters incident thereto are assigned to the Minister of National Revenue. The Act (c. 137, R.S.C. 1927) provides for a Department of National Revenue over which the Minister presides and of which he has the management and direction. The Act also provides for the appointment of three officers, who are the chief officers of the department, and who are designated as follows: The Commissioner of Customs; the Commissioner of Excise; and the Commissioner of Income Tax. It further provides for the appointment of an Assistant Commissioner of Customs.

The Minister has the power, after such examination as he may prescribe, to select and nominate suitable persons

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for appointment by the Civil Service Commission as customs appraisers of all classes, whether serving at the various ports and places of entry or as Dominion appraisers, or as officers in the customs and excise preventive service or as officers assigned to duties as investigators of values and claims for drawbacks.

They are, of course, all of them, officers of the Department of National Revenue. Dominion appraisers and customs appraisers are defined in s. 4 of the Customs Act. The Dominion appraisers are those who hold “jurisdiction at all ports and places in Canada.” The customs appraisers are those who hold “jurisdiction at such ports and places in Canada as are designated in an order in council in that behalf.” Every appraiser is deemed an officer of customs (sec. 6, Customs Act). The Board of Customs, as constituted under sec. 3 of the Customs Act

consists of the Commissioner of Customs, or any officer for the time being acting as such, who shall be the Chairman of the Board, the Commissioner of Excise, the Commissioner of Income Tax, the Assistant Commissioner of Customs, and such other duly qualified officer of Customs as the Governor in Council from time to time appoints.

And it is a branch of the Department of National Revenue.

Customs duties are either ad valorem or specific duties. In the case of ad valorem duties, they are computed by reference to the value of the goods. This value is called the value for duty (Customs Act, s. 35), and is the “fair market value,” as determined by the methods provided for by the Act. The true and fair market value is ascertained by the appraisers; and, in this respect, subject to the limits of their territorial jurisdiction, the functions of the Dominion appraiser and of the customs appraiser are the same.

But, pursuant to certain provisions of the Customs Act, the Minister of National Revenue may determine the value of goods; and the value so determined, until otherwise provided, is the value upon which duty is to be computed and levied under regulations prescribed by the Minister (ss. 35-4, 36-2, 37, 41. 42, 43, 47, &c.) If there has been a determination or fixing of value properly made by the Minister, the provisions with regard to “fair market value” do not apply. When they apply, as already mentioned, the appraisers

shall, by all reasonable ways and means in * * * their power, ascertain, estimate and appraise the true and fair market value (s. 38).

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(N.B. It is sufficient to note here that the Collector of Customs, at a certain port or place, may sometimes act as appraiser.)

Their decision is subject to review

as to the principal markets of the country, or as to the fair market value of goods for duty purposes (s. 38-4).

The power of review was formally vested in the Board of Customs, and is now vested in the Tariff Board. It is limited to the two particular purposes just stated. The decision of the Board in the exercise of this power is expressly made final and conclusive only “when approved by the Minister” (except as otherwise provided by the Act).

The Board of Customs, therefore, as it formerly existed (now the Tariff Board under part II of the Tariff Board Act), and subject to what may be said later with regard to ss. 48 and 54 of the Customs Act, simply enters into the scheme devised by Parliament for the control and management of the collection of the duties of customs and of matters incidental thereto, primarily put by the Act respecting the Department of National Revenue under the direction, the regulation and the supervision of the Minister who presides over that Department.

The Board of Customs was, and the Tariff Board is, in no sense, a court. By force of the provisions of the Customs Act, it is not a judicial body but an administrative body. Its functions were and are purely departmental. Its duties as set forth in the Act are all in respect to questions of fact; and there is nothing in the Customs Act which purports to exclude from the jurisdiction of the ordinary courts any question of law, either with regard to the validity of the Minister’s acts or otherwise, nor is any such jurisdiction conferred on the Board of Customs (now the Tariff Board, part II). It follows that in the performance of its duties under part II the Board must give effect to the orders of the Minister of National Revenue; and moreover that its decisions are subject to the approval of the Minister, by whose orders the Board is bound as the responsible Head of the Department.

Incidentally, we would say, in connection with s. 43 of the Customs Act, that the question whether a particular case comes or not under that section is left to the Governor

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in Council, and not to the Tariff Board. The point, as it presents itself, is really not so much whether the orders of the Minister were repealed or cancelled by the Act c 7 of 23-24 Geo. V, but rather: whether the orders in council, by virtue of which the Minister’s orders were issued, were themselves annulled by the coming into force of the Act. We find nothing in the Customs Act giving to the Board of Customs (now the Tariff Board) jurisdiction to determine a question of that character. In the present state of the legislation, the determination of that question is undoubtedly vested in the Exchequer Court of Canada.

It remains to consider the sections 48 and 54 of the Customs Act, upon which counsel heard in favour of the Tariff Board’s jurisdiction laid particular stress.

In our view, s. 54 does not really come within the purview of the questions referred to the Court, and we do not consider that the subject-matter of those questions calls for the interpretation of that section. Moreover, the decisions of the Tariff Board which led to the present reference have no apparent connection with s. 54. That section deals with the rate of duty. The matters involved in the decisions of the Tariff Board referred to had to do with the appraisal of values for duty. The section provides that

Whenever any difference arises or whenever any doubt exists as to whether any or what rate of duty is payable on any class of goods, and there is no previous decision upon the question by any competent tribunal, (N.B. Evidently meaning: any court of justice) binding throughout Canada, the Board of Customs (now the Tariff Board under part II) may declare the rate of duty payable on the class of goods in question, or that such goods are exempt from duty.

In each case, the declaration of the Board is subject to an appeal within sixty days from its date by any person interested to the Governor in Council. Any such declaration of the Board, when approved by the Minister, after the expiration of sixty days from the date thereof, or

any such declaration when made by any order in council upon appeal, shall have force and effect as if the same had been sanctioned by statute.

The power given by this section is self-explanatory and does not require any comment. It is entirely distinct and separate from the powers and functions relating to the valuations for duty. We are not considering the effect of that special section in the answers given in this reference.

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It need only be noted that s. 54 calls for a declaration with regard to rate in specially defined cases, that it is subject to appeal to the Governor General in Council; and that it requires either the approval of the Minister or the approval by Order in Council (in case where there was an appeal) in order to have force and effect.

As for section 48, so as to grasp its exact meaning, it ought to be read in full:

48. If, upon any entry or in connection with any entry, it appears to any Dominion appraiser or to the Board of Customs that any goods have been erroneously appraised, or allowed entry at an erroneous valuation by any appraiser or collector acting as such, or that any of the foregoing provisions of this Act respecting the value at which goods shall be entered for duty have not been complied with, such Dominion appraiser or such Board may make a fresh appraisement or valuation, and may direct, under the valuation or appraisement so made, an amended entry and payment of the additional duty, if any, on such goods, or a refund of a part of the duty paid, as the case requires, subject, in case of dissatisfaction on the part of the importer, to such further inquiry and appraisement as in such case hereinafter provided for.

The main observation to be made about this section is that it deals essentially with a pure matter of appraisement. The sections applies when

it appears to any Dominion appraiser or to the Board * * * that any goods have been erroneously appraised or allowed entry at an erroneous valuation by any appraiser.

The section also applies when it appears to the Dominion appraiser or to the Board that “any of the foregoing provisions of this Act respecting the value at which goods shall be entered for duty have not been complied with.” And it was on that part of the section that the contention was most strenuously advanced that the Board had, of necessity, the power to determine questions of law, in order properly to fulfil the functions therein conferred on it.

Let us see however what it is that the Board is authorized to do under that section. It is nothing more than to “make a fresh appraisement or valuation.” Of course, it may also direct an amended entry and payment of additional duty, if any, or a refund of a part of the duty paid. But that is only consequential upon the new “valuation or appraisement so made.” There is no doubt that before the Dominion appraiser or the Board may proceed to make the fresh appraisement or valuation, it must appear to them that there has previously been an erroneous appraisement

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made by the local appraiser or collector; and it stands to reason that, in order to come to that conclusion, the Dominion appraiser or the Board must, in a sense, form an opinion as to the proper method of appraisal which ought to be followed under the Customs Act; and either of them must act upon the view so formed. But that is vastly different from the suggestion that, in the exercise of its jurisdiction under s. 48, the Dominion appraiser or the Board may determine questions of law as distinguished from the question of fact involved in the fresh appraisement or valuation which either of them is called upon to make.

It was argued that every decision of the Board, and more particularly a decision under s. 48 implies: 1—a decision as to value; and 2—a decision as to the rate of duty applicable under the law. And it was contended that, as a necessary consequence, the Board must determine the questions of law which such decisions call for.

It is obvious, however, that the same remark may equally be made of the local appraisers or of the collectors, when they are called upon to ascertain, estimate and appraise the true and fair market value of goods. In that connection, the local appraisers, when giving their decision, are exactly on a par with the Dominion appraiser or the Board. They also, before making their appraisement, must form an opinion as to the relevant law. But, whatever incidental conclusions the appraisers or the Board must come to in order to arrive at a decision on the proper appraisement to be made, the decision of each or either of them is nothing but the finding of a fact in the particular case (Girls Public Day School Trust Ltd. v. Ereaut[1]).

The circumstance that it may appear to a Dominion appraiser or to the Board that an erroneous valuation was made by the local appraiser affords the occasion and is the condition required for the exercise by the Dominion appraiser, or by the Board, of the power to act under section 48. The result, however,—and the only result—is merely that the Dominion appraiser, or the Board, is empowered to “make a fresh appraisement or valuation,” and nothing more. The enactment does not intend to confer

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jurisdiction to deal with anything but physical values and facts. Of course, in so doing, the Dominion appraiser, or the Board, must be guided by a certain view of the law; but,, in so far as they are concerned, the law includes the Orders in Council and the orders of the Minister. In no way are they authorized to dispute the validity of those orders and far less to determine the conditions of that validity or to pronounce upon any other question of law which, in case of conflict between the Crown and the importer, are left to the determination of the courts of justice. To put it in plain words: the Dominion appraiser, or the Board, acting under s. 48, is empowered to make appraisals, and not rulings.

Besides, it must be pointed out that, under s. 48, the Dominion appraisers are given exactly the same powers as the Board; and it seems to us that Parliament cannot have intended by that section to confer jurisdiction on a Dominion appraiser to determine questions of law, or to determine the validity or invalidity of the orders of the Minister, the responsible Head of the Department, of which they are the officers.

Perhaps it may be added that the jurisdiction of the Dominion appraiser or of the Board under s. 48 is only by way of appeal from a valuation or appraisal by an appraiser or collector as such. It would therefore appear that the exercise of the powers therein conferred presupposes a valuation or appraisement; and the consequence would be that when the value for duty is fixed by the Minister, and not by an appraisement, the section does not apply and the Dominion appraiser, or the Board, has no jurisdiction under it.

In conclusion, it may be stated, therefore, that an appraisal, in a sense, involves, on the part of any appraiser, whether in the initial steps, or upon review, or upon appeal under s. 48, the taking into consideration of the state of the law on the subject; but there is a clear distinction between that and the power to determine the question as a question of law.

At the argument, the Trade Agreement between His Majesty’s Government in Canada and His Majesty’s Government in the United Kingdom, as approved by c. 2 of 23-24 Geo. V, was referred to. The Act respecting the

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Agreement was assented to on the 25th November, 1932. At that date, the Tariff Board Act was already on the statute book. By art. 12 of the Agreement, His Majesty’s Government in Canada undertook to constitute forthwith the Tariff Board, for which provision had already been made in the Tariff Board Act (1931). Our attention was not drawn to any subsequent legislation modifying the Board Act after approval was given to the Trade Agreement. It follows that nothing contained in the Agreement may be helpful in construing the provisions of the Board Act.

For the reasons above stated, the questions referred to the Court will be answered as follows:

To Question No. 1: No;

To Question No. 2: No;

To Question No. 3: Yes.