http://decisions.fct-cf.gc.ca/fc-cf/decisions/en/item/66730/index.do
Gestion J.F.-Houle Inc v. Canada (Attorney General ) (February 6, 2014 – 2014 FC 130) was a judicial review in the Federal Court dealing with customs duties on stolen chicken. The chicken had been imported into Canada for the purpose of processing and export. The theft prevented the export and the Minister levied customs duties:
[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was visiting the applicant’s offices was able to determine that the granting of the relief from the customs duties was no longer valid because the imported chicken could not be exported.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.
The court surveyed the case law on standard of review but concluded that the Crown had agreed to a “correctness” standard rather than a “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.
The court concluded that the applicant had not made a case based on the “reasonableness” standard and dismissed the application:
[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.