Date: 20000609
Docket: T-1803-98
Ottawa, Ontario, June 9, 2000
Present: THE HONOURABLE MR. JUSTICE DENAULT
Between:
JYC AUTO INC.
Plaintiff
- and -
MINISTER OF NATIONAL REVENUE
Defendant
JUDGMENT
The plaintiff's action is dismissed with costs.
PIERRE DENAULT
Judge
Certified true translation
Martine Brunet, LL. B.
Date: 20000609
Docket: T-1803-98
Between:
JYC AUTO INC.
Plaintiff
- and -
MINISTER OF NATIONAL REVENUE
Defendant
REASONS FOR JUDGMENT
DENAULT J.
[1] The plaintiff is appealing pursuant to s. 135 of the Customs Act, R.S.C. 1985 (2d Supp.), c. 1 ("the Act"), from a decision by the Minister of National Revenue ("the Minister") pursuant to s. 131 of the Act. The plaintiff is seeking by this action to be reimbursed the $7,634.68 which it paid in customs duties when it attempted to import a used Ferrari automobile into Canada.
[2] On February 6, 1998 a 1985 Ferrari Mondial automobile, which the plaintiff said that it purchased from an individual in the U.S. for the sum of U.S. $11,000, was confiscated at a Canadian customs agency.
[3] The customs officer seized the vehicle pursuant to s. 110 of the Act. According to the officer there were reasonable grounds to believe that the vehicle had been undervalued for the purpose of avoiding the payment of legally payable customs duties, which constituted an offence under s. 32 of the Act. The amount required for releasing the vehicle was set at $13,828.79, which the plaintiff paid. It then filed a request for a decision by the Minister pursuant to s. 129(1) of the Act.
[4] On July 8, 1998 the Minister rendered a decision (P-11) pursuant to s. 131 of the Act, by which the ground of offence was found valid as a basis for the seizure for forfeiture. In that decision the Minister also determined, under s. 133 of the Act, that of the amount received $7,634.68 should be kept as forfeit and the remainder of the amount, $6,194.11, returned to the plaintiff.1 It should be noted that since February 21, 1998 the vehicle had been returned to the U.S. since, according to Transport Canada, it could not be licensed in Canada under the Automobile Safety Act (P-9).
[5] The plaintiff appealed the Minister's decision made under s. 131 of the Act.
[6] In the case at bar the question is whether, under ss. 131 and 135 of the Act, the alleged breach of the Act or its regulations, namely under-valuation of the vehicle at the time of importation, was validly held to justify the seizure for forfeiture of the vehicle. Put otherwise, the issue is whether the officer had reasonable grounds to believe2 that the deponent had not answered truthfully3 his questions about the value of the vehicle that the plaintiff sought to import.
[7] In such a case, the burden of proof is on the plaintiff to show that the Act has been observed with respect to customs duties.4
[8] The plaintiff's evidence may be summed up in a few words. Steve Maman, co-owner of the plaintiff, which specializes in the purchase and resale of unusual cars, stated that he bought the 1985 Ferrari from Fatima Fateh of Millburn, New Jersey, through her brother Dr. M. Fateh, for the sum of U.S.$11,000 paid in cash. To facilitate transport of the vehicle to Canada Mr. Maman, on Dr. Fateh's recommendation, obtained a temporary registration or "transit" document (P-2), issued by a New Jersey firm which had nothing to do with the transaction, Essex Sports Car Inc. Another witness for the plaintiff, Serge Attar, to whom the vehicle was given to assess the cost of repairs needed, testified that it would have cost $26,111 plus tax to recondition the vehicle.
[9] In defence, the customs officer Steve Halliday described the circumstances that led to seizure of the vehicle. The officer was intrigued by the very low price paid by the plaintiff for the vehicle, which according to the guide "The Gold Book: Automobiles 1981-1997" (D-2) could be worth, depending on its condition, between $26,500 and $37,000, and he decided to make certain inquiries of the issuer of the "transit", Essex Sports Car Inc., which according to Mr. Maman had nothing to do with the matter apart from accommodating the parties by issuing this temporary registration document. Following three telephone conversations between the officer Halliday and a representative of Essex Sports Car, the firm faxed three copies of a contract, the first two of which appeared to bear the signature of S. Maman. They indicated respectively that the sale was made for $0 and $11,000.5 The third, unsigned, contract indicated a selling price of $29,500.6 Confronted by so much contradictory information, the customs officer seized the vehicle despite the protests of S. Maman.
[10] In such a case the burden of proof, as I mentioned above, is on the plaintiff. Section 135(1) of the Act, under which this appeal by action is filed, is not very explicit. In Mattu v. Canada (M.N.R.),7 my colleague MacKay J. considered the nature of this remedy. He felt that that section of the Act provides for a trial de novo, "in the sense that the Court is not limited to consideration of evidence that was before the Minister". MacKay J. added:
| At the same time, as in the case of appeals from other administrative decisions . . . this Court will not readily vary the decision appealed from unless it is persuaded that the Minister or his agents failed to observe a principle of natural justice or failed to act within his or her statutory discretion, or that a [sic] the decision is based on an error in law, or is based on a finding of fact that is perverse or capricious or without regard to the evidence before the Minister. |
I concur in this analysis by my colleague judge. However, I would say that since in a trial de novo facts may be disclosed which were not brought to the attention of the customs officer when he made his decision, it is necessary to proceed with care when the time comes to decide whether the customs officer validly found a breach of the Act or its Regulations.
[11] In this connection, I would note at once certain facts disclosed at the hearing in this Court but which the customs officer did not know when he made his decision to seize the vehicle, namely (a) Essex Sports Car Inc. in fact had nothing to do with the transaction; (b) the signatures of S. Maman appearing on the first two contracts given to the customs officer by Essex were not his own, according to the defendant's own admission;8 (c) a subsequent investigation in the U.S., in particular concerning Dr. M. Fateh, apparently indicated that to the best of his recollection and that of his sister the sale was made for the sum of $18,000;9 (d) it would cost nearly $30,000 to recondition the car; (e) the plaintiff had already imported similar vehicles in the past, purchased from dealers (P-7 and P-8).10
[12] I repeat, these facts were not known to the customs officer . . . except through the vehement denial by the plaintiff's representative of those mentioned in (a) and (b).
[13] At the same time, there are several things to suggest that the plaintiff's representative did not truthfully answer the questions put to him on the goods (s. 13 of the Act). Thus, (1) although presumably bought from an individual, the contract regarding the purchase of the vehicle was drafted on a [TRANSLATION] "sale contract between dealers" (P-1); (2) as indicated by the photographs, the vehicle was operational and seemed to be in good enough condition, despite the objections of S. Maman to the contrary; (3) the "Gold Book" guide gave it a value, depending on its condition, of between $26,500 and $37,000; (4) three documents were issued by Essex in quick succession indicating that the vehicle was sold by that firm at prices of $0, $11,000 and $29,500 respectively.11
[14] In short, I consider that the plaintiff did not present evidence that the customs officer had no reasonable grounds to believe that an offence had been committed under ss. 32 and 110 of the Act. The penalty may undoubtedly seem harsh since -- as the plaintiff later learned -- the 1985 Ferrari could not be registered in Canada unless modifications were made to the shock absorbers, and the plaintiff preferred to send it back to the U.S. However, this fact was subsequent and unrelated to the seizure of the vehicle.
[15] For these reasons, the plaintiff's action is dismissed with costs.
PIERRE DENAULT
Judge
Ottawa, Ontario
June 9, 2000
Certified true translation
Martine Brunet, LL. B.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT No.: T-1803-98
STYLE OF CAUSE: JYC Auto Inc. v. Minister of National Revenue
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: June 6, 2000
REASONS FOR JUDGMENT BY: DENAULT J.
DATED: June 9, 2000
APPEARANCES:
Alain Saïman FOR THE PLAINTIFF
Josée Paquin FOR THE DEFENDANT
SOLICITORS OF RECORD:
Alain Saïman FOR THE PLAINTIFF
Montréal, Quebec
Morris Rosenberg FOR THE DEFENDANT
Deputy Attorney General of Canada
__________________
1 The decision did not indicated the basis on which these amounts were determined.
3 Sections 12 and 13 of the Act.
4 Section 152(3)(d) of the Act.
5 It must be assumed that the prices were indicated in U.S. dollars.
7 (1991) F.C.J. No. 539, T-675-89.
8 See order of Prothonotary Morneau on pre-trial conference and conduct of action, dated October 6, 1999, paragraph 2.
10 These vehicles were apparently purchased from dealers, not individuals.