Docket:
T-1807-12
Citation: 2014 FC 130
[UNREVISED ENGLISH CERTIFIED
TRANSLATION]
Ottawa, Ontario, February 6,
2014
PRESENT: The Honourable Mr. Justice Roy
|
BETWEEN:
|
|
GESTION J.F.-HOULE INC.
|
|
Applicant
|
|
and
|
|
ATTORNEY GENERAL OF CANADA
|
|
Respondent
|
REASONS FOR JUDGMENT AND JUDGMENT
[1]
The applicant, Gestion J.F.-Houle Inc., is raising
a complaint with respect to two assessments issued under the Customs Tariff,
SC 1997, c 36. The two assessments are the subject of an application for
judicial review pursuant to paragraph 18.1(4)(d) of the Federal
Courts Act, RSC (1985), c F-7. The paragraph reads as follows:
|
18.1 (4) The Federal
Court may grant relief under subsection (3) if it is satisfied that the
federal board, commission or other tribunal
(d) based its decision or order on
an erroneous finding of fact that it made in a perverse or capricious manner
or without regard for the material before it;
|
18.1 (4) Les mesures prévues au paragraphe (3) sont prises si la Cour
fédérale est convaincue que l’office fédéral, selon le cas :
d) a rendu
une décision ou une ordonnance fondée sur une conclusion de fait erronée,
tirée de façon abusive ou arbitraire ou sans tenir compte des éléments dont
il dispose;
|
Facts
[2]
Given that the facts of the two assessments proceed
from different incidents but are essentially similar with respect to their constituent
elements, and that the issues that arise are identical, judgment is hereby rendered
for the two applications for judicial review. I will briefly focus on the facts
in both cases and then address the common issues.
[3]
In both cases, the impugned decision was
rendered on June 18, 2012, by an officer of the Canada Border Services Agency (CBSA).
In both cases, substantial customs duties were assessed.
[4]
On September 16, 2011, the applicant applied for
relief from customs duties that would otherwise be payable regarding the
importation of chicken. On September 22, 2011, the said relief was granted and
a certificate was issued under section 90 of the Customs Tariff.
[5]
The first importation (docket T-1807-12) occurred
regarding the purchase of 40,000 pounds of chicken at a cost of $52,800 from River
Valley Trading, a company in Arizona. Those goods had to be minimally processed
before being exported. It appears that they were going to be exported to Colombia,
Jamaica, Barbados, Aruba and St. Kitts. The transporter, Reliance Transport,
was responsible for transporting the goods from the United States to Canada. It
is not disputed that the goods crossed the Canadian border. It seems that the goods
never reached their destination and that they were stolen during transport, but
on Canadian soil.
[6]
The applicant reported the theft of the chicken
on December 1, 2011, to the Régie inter‑municipale de police Richelieu-Saint-Laurent.
[7]
However, the said theft was never disclosed to
the CBSA. It was only in May 2012 that a CBSA representative who was visiting
the applicant’s offices was able to determine that the granting of the relief
from the customs duties was no longer valid because the imported chicken could
not be exported.
[8]
On June 18, 2012, the assessment was issued for
a total amount of $145,877.23, broken down as follows: $135,771.13 in custom
duties, $9,514.88 in GST and $591.22 in interest.
[9]
In docket T-1808-12, the applicant proceeded
under the same application for relief from customs duties but, this time, 34,000
pounds of chicken was purchased on April 26, 2012. That chicken was from Marshville,
North Carolina, and was apparently bought from the company Service alimentaire
Desco Inc. The transport needed to be provided by a different company, Deisel Transport.
Once again, it is not disputed that the chicken crossed the border but, in an
unfortunate turn of events, that delivery was also stolen. The theft
purportedly took place on April 27, 2012, and it does not seem to have been
reported to the police. Instead, the applicant filed a claim with its insurers.
[10]
In this case, as in the previous one, the
findings that the goods could not be exported were made in May 2012 and the
notice of assessment was completed on June 18, 2012. This time, the assessment
was in the amount of $116,117.05, broken down as follows: $108,512.46 in
customs duties and $7,604.59 in GST.
[11]
The record shows that the applicant received $56,901.30
as an indemnity from its insurers on February 3, 2012; regarding the theft in
April 2012, the insurer paid $150,000 on August 1, 2012.
[12]
Based on these ultimately rather similar facts,
the applicant raised the same issues.
Issues
[13]
The applicant suggested two issues. Are the
thefts of the goods on December 1, 2011, and April 27, 2012, situations that
are subject to section 118 of the Customs Tariff and did the CBSA err by
issuing assessments on June 18, 2012? Strictly speaking, those two issues are
really one. If section 118 of the Customs Tariff applies, the
assessments issued are invalid. Therefore, the issue is whether section 118 applies
in this case.
Standard of review
[14]
Surprisingly, the respondent refuses to discuss
the standard of review that would apply in this case. The respondent merely
states that, regardless of the standard, the CBSA’s decision was well founded both
in fact and in law.
[15]
As expected, the applicant argues that the
correctness standard applies in this case. To do so, it relies on the pre-Dunsmuir
jurisprudence.
[16]
Since Dunsmuir v New Brunswick, 2008 SCC
9, [2008] 1 S.C.R. 190, (Dunsmuir) the case law on judicial review has
clearly tended to favour the reasonableness standard. As such, paragraph 51 of
the decision reads as follows:
[51] .
. . As we will now demonstrate, questions of fact, discretion and policy as
well as questions where the legal issues cannot be easily separated from the
factual issues generally attract a standard of reasonableness while many legal
issues attract a standard of correctness. Some legal issues, however, attract
the more deferential standard of reasonableness.
A little later,
the Court stated the following in paragraph 54:
[54] .
. . Deference will usually result where a tribunal is interpreting its own
statute or statutes closely connected to its function, with which it will have
particular familiarity: [citations omitted]. Deference may also be warranted
where an administrative tribunal has developed particular expertise in the
application of a general common law or civil law rule in relation to a specific
statutory context: . . .
[17]
Very recently, in McLean v British Columbia
(Securities Commission), 2013 SCC 67, the Supreme Court of Canada clearly stayed
the course. The following is stated in paragraphs 21 and 22:
[21] Since
Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, this Court
has repeatedly underscored that “[d]eference will usually result where a
tribunal is interpreting its own statute or statutes closely connected to its
function, with which it will have particular familiarity” (para. 54).
Recently, in an attempt to further simplify matters, this Court held that an
administrative decision maker’s interpretation of its home or closely-connected
statutes “should be presumed to be a question of statutory interpretation
subject to deference on judicial review” (Alberta (Information and Privacy
Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3
S.C.R. 654, at para. 34).
[22] The
presumption endorsed in Alberta Teachers, however, is not carved in
stone. First, this Court has long recognized that certain categories of
questions — even when they involve the interpretation of a home statute —
warrant review on a correctness standard (Dunsmuir, at paras. 58-61).
Second, we have also said that a contextual analysis may “rebut the presumption
of reasonableness review for questions involving the interpretation of the home
statute” (Rogers Communications Inc. v. Society of Composers, Authors and
Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283, at para.
16). The appellant follows both these routes in urging us to accept a
correctness standard. I propose to deal with her second argument first as it
can be dispensed with quickly.
The Court then
focussed on demonstrating that the interpretation of the law applied on a daily
basis by the B.C. Securities Commission had to be reviewed on the
reasonableness standard.
[18]
In fact, since Dunsmuir, the Supreme
Court has established four broad categories of legislation that must be reviewed
on the correctness standard. First, questions regarding the division of powers between
Parliament and the provinces must be reviewed on the correctness standard.
Second, administrative bodies must be correct in their determinations of true questions
of jurisdiction or vires. Third, the correctness standard applies to
questions of general law that are “both of central importance to the legal
system as a whole and outside the adjudicator’s specialized area of expertise”.
Lastly, a correct decision is needed for questions regarding the jurisdictional
lines between two or more competing specialized tribunals.
[19]
As will be discussed, the interpretation to be
given to section 118 does not fall under any of the four categories listed in Dunsmuir
at paragraphs 58 to 61. Since Dunsmuir, the Court has established a
fifth category in Rogers Communications Inc v Society of Composers, Authors
and Music Publishers of Canada, 2012 SCC 35, [2012] 2 S.C.R. 283. It is unnecessary
to elaborate because it does not correspond to the facts in this case. I would
therefore be inclined to see the need to review the decision in this case on
the reasonableness standard.
[20]
Unfortunately, the matter has not been pleaded
on this basis before this Court, which could not benefit from the parties’
perspectives. The respondent merely concedes, so to speak, that the standard
would be correctness given that, in his opinion, the decision that was made was
correct. That is perhaps short-sighted, but that is the respondent’s decision.
Because I found that the text in section 118 is not ambiguous and that the
position adopted by the respondent can only be correct, it is therefore
unnecessary to formally determine the standard of review in this case. In the
circumstances, I prefer to be cautious and not go beyond what the parties
submitted. A matter in which the issue must be resolved and in which the
parties submitted developed arguments would be more appropriate.
Analysis
[21]
The Customs Act, RSC (1985), c 1 (2nd Supp.),
establishes the general principle that “[i]mported goods are charged with
duties thereon from the time of importation thereof until such time as the
duties are paid or the charge is otherwise removed” (subsection 17(1)).
[22]
The Customs Tariff provides the
opportunity for imported goods to be exempted from the payment of duties. In
this case, the applicant availed itself of paragraph 89(1)(b) of the Customs Tariff
to benefit from that relief:
|
89. (1) Subject to subsection (2), section 95 and any regulations made
under section 99, if an application for relief is made within the prescribed
time, in accordance with subsection (4), by a person of a prescribed class,
relief may be granted from the payment of duties that would but for this section
be payable in respect of imported goods that are
. . .
(b) released,
processed in Canada and subsequently exported;
|
89. (1) Sous réserve du paragraphe (2), de l’article 95 et des
règlements visés à l’article 99 et sur demande présentée dans le délai
réglementaire en conformité avec le paragraphe (4) par une personne
appartenant à une catégorie réglementaire, des marchandises importées
peuvent, dans les cas suivants, être exonérées, une fois dédouanées, des
droits qui, sans le présent article, seraient exigibles :
[. . .]
b) elles sont transformées au
Canada et ultérieurement exportées;
|
The Minister of
Public Safety and Emergency Preparedness may issue a certificate to a person
who will have benefited from the relief (section 90, Customs Tariff).
[23]
It is clear that the applicant could not, in
either case under review, satisfy the condition in paragraph 89(1)(b). Even
though the chicken was imported, it was not processed in Canada and could not
be subsequently exported. The law stipulates what happens when a condition to
which relief is subject is not complied with. Section 118 of the Customs
Tariff therefore applies. I reproduce subsection 1 of that section:
|
118. (1) If relief from, or remission of, duties is granted under this
Act, other than under section 92, or if remission of duties is granted under
section 23 of the Financial Administration Act and a condition to which the relief or remission is subject is
not complied with, the person who did not comply with the condition shall,
within 90 days or such other period as may be prescribed after the day of the
failure to comply,
(a) report
the failure to comply to an officer at a customs office; and
(b) pay
to Her Majesty in right of Canada an amount equal to the amount of the duties
in respect of which the relief or remission was granted, unless that person
can provide evidence satisfactory to the Minister of Public Safety and
Emergency Preparedness that
(i) at the
time of the failure to comply with the condition, a refund or drawback would
otherwise have been granted if duties had been paid, or
(ii) the
goods in respect of which the relief or remission was granted qualify in some
other manner for relief or remission under this Act or the Financial
Administration Act.
|
118. (1) Si, en cas d’exonération ou de remise accordée en application
de la présente loi, sauf l’article 92, ou de remise accordée en application
de l’article 23 de la Loi sur la gestion des
finances publiques, une condition de
l’exonération ou de la remise n’est pas observée, la personne défaillante est
tenue, dans les quatre-vingt-dix jours ou dans le délai réglementaire suivant
le moment de l’inobservation, de :
a) déclarer
celle-ci à un agent d’un bureau de douane;
b) payer
à Sa Majesté du chef du Canada les droits faisant l’objet de l’exonération ou
de la remise, sauf si elle peut produire avec sa déclaration les
justificatifs, que le ministre de la Sécurité publique et de la Protection
civile juge convaincants, pour établir un des faits suivants :
(i) au
moment de l’inobservation de la condition, un drawback ou un remboursement
aurait été accordé si les droits avaient été payés,
(ii) les
marchandises sont admissibles à un autre titre à l’exonération ou à la remise
prévue par la présente loi ou à la remise prévue par la Loi sur la
gestion des finances publiques.
|
[24]
The applicant tried to establish that section 118
confers discretion that was allegedly exercised wrongly. If it is true that
some discretion exists in section 118, it does not lie where the applicant
would like it to. As such, the applicant put the following phrases together to
argue that the Minister had broad discretion: “satisfactory to the Minister of
Public Safety and Emergency Preparedness” and “goods . . . qualify in some
other manner for relief or remission under . . . the Financial
Administration Act”. That discretion should have been exercised in favour
of the applicant because common sense must prevail in this type of decision and
the applicant, even though it was the owner of the chicken, never had physical
control over it. How is one liable for taxes on goods that have disappeared?
[25]
In my opinion, that argument is based on a
misreading of section 118. That section simply sets out that, if there is
relief from taxes, or remission of taxes or penalties under section 23 of the Financial
Administration Act, but that a condition to which the relief/remission is
subject is not complied with, it follows that duty is owing. That is the
situation of the applicant.
[26]
Section 118 also provides that the amount is not
payable if the goods may otherwise be exempted or the subject of a remission
set out in the Financial Administration Act. To qualify for the exemptions,
it is up to the applicant to “provide evidence satisfactory to the Minister”. However,
nothing like that was done. The applicant did not submit that the goods in
respect of which the relief or remission was granted qualify in some other
manner for relief under the Customs Tariff or remission under the Financial
Administration Act. It instead puts forward the argument that the law
cannot be construed to have such a draconian effect.
[27]
In my view, it is perhaps a draconian effect,
but it is indeed the purpose of the law. Essentially, the legislation places
risks on importers. Thus, if there is no relief program, duty is owing upon
importation. Someone who imports goods without such a relief program would pay duty
and if the shipment was destroyed, redresss cannot be had against the Crown.
This rule is set out in subsection 23(7) of the Financial Administration Act,
RSC (1985), c F-11, which reads as follows:
|
23. (7) No tax paid to
Her Majesty on any goods shall be remitted by reasons only that, after the
payment of the tax and after release from the control of customs or excise
officers, the goods were lost or destroyed.
|
23. (7) Il n’est pas
fait remise des taxes payées sur des marchandises du seul fait de leur perte
ou de leur destruction après le paiement et après leur enlèvement sur
dédouanement ou congé.
|
[28]
It seems that two conclusions must be drawn from
subsection 23(7): taxes on goods are owing and they cannot be remitted if the
goods are subsequently lost or destroyed.
[29]
It is not surprising that the situation is
symmetrical for relief. Section 118 of the Customs Tariff stipulates
that tax is owing when a condition is not complied with. Here, the exportation
condition could not be met. The result is that the applicant should have
reported, within 90 days, that the condition could not be met due to the theft,
and made the payment to Her Majesty in right of Canada.
[30]
The applicant could avail itself of only two
exceptions in respect of which it should have provided evidence satisfactory to
the Minister. In the matter of qualifying “in some other manner” for relief, no
such allegation was made, much less any satisfactory evidence submitted. In the
matter of a remission set out in the Financial Administration Act, subsection
23(7) of that act is a formidable obstacle. Not only was no request for
remission made under subsection 23(2), but the remission seems prohibited by
subsection 23(7).
[31]
In my view, the attempt under section 118 was
doomed to fail. The Minister cannot find that there was convincing evidence
when none was provided. That was the case here and the measure of discretion
that can be found in the words “satisfactory evidence” could not be exercised
because no evidence was provided. Moreover, the remission under the Financial
Administration Act was not a valid avenue because of the nullifying
obstacle of subsection 23(7) in this case.
[32]
As such, the applications for judicial review in
dockets T-1807-12 and T-1808-12 must be dismissed with costs. The parties agreed
that costs fixed at $1,750 would be appropriate. I see no reason in exercising
the discretion conferred by Rule 400 of the Federal Courts Rules to
distance myself from that recommendation that applied regardless of the outcome.
Therefore, costs in the total amount of $1,750 for the two cases are ordered
against the applicant.
Email this Content