Date: 19980612
Docket: T-630-97
OTTAWA, ONTARIO, THIS 12th DAY OF JUNE 1998.
PRESENT: MCKEOWN, J.
BETWEEN:
JACK ROBERT BROUGH
Plaintiff
- and -
THE MINISTER OF NATIONAL REVENUE
Defendant
JUDGMENT
The appeal is dismissed with costs.
William P. McKeown
JUDGE
Date: 19980612
Docket: T-630-97
BETWEEN:
JACK ROBERT BROUGH
Plaintiff
- and -
THE MINISTER OF NATIONAL REVENUE
Defendant
REASONS FOR JUDGMENT
MCKEOWN, J.
[1] The plaintiff, a citizen of Canada, entered Canada from the United States on September 19, 1995, by way of his private aircraft purchased in the United States. He claimed U.S. residence on his entry. His aircraft was seized by Canadian Customs Inspectors on September 29, 1995, in Kingston, Ontario. The Customs Inspector determined that the plaintiff was a resident of Canada on the date of seizure, pursuant to the definition of resident provided in the Non-residents' Temporary Importation of Baggage and Conveyances Regulations, SOR/87-720, 10 December 1987, as amended, of the Customs Tariff.
[2] The plaintiff seeks a declaration that, at all material times, he was not a resident of Canada pursuant to the above definition of resident, and that he was entitled to import the aircraft into Canada without the payment of duties under Tariff Item 9803.00.00 of the Customs Tariff and seeks, inter alia, an order enabling the plaintiff to obtain the return of a bond in the amount of $24,321.60 posted with the Department.
The Issue:
[3] The issue is whether the plaintiff was a resident of Canada on September 29, 1995, when his airplane was seized by the defendant.
The Facts:
[4] The plaintiff is a Canadian citizen who entered Canada in his own private aircraft on September 19, 1995. He claimed he was a resident of the United States and produced an alien card. A Customs Inspector who had dealt frequently with the plaintiff recalled that he was formerly a resident of Canada and decided to look into the matter. As a result, Mr. Brough was called into an interview with Customs officials on September 29, 1995, without being informed of the purpose of the interview. The Customs Inspector determined that the plaintiff had contravened s. 13 of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.) and that payment was not made of duties lawfully payable. In essence, it was determined that the plaintiff continued to be a resident of Canada. The Department seized the aircraft as forfeit pursuant to s. 110 of the Customs Act, holding that a fine, duties and taxes were payable on the importation of the aircraft. On October 23, 1995, the plaintiff posted a bond of $24,321.60 and the aircraft was released to him.
[5] The plaintiff's agents and solicitors requested the Department to consider and weigh the circumstances of the case. On January 7, 1997, the defendant, through an adjudicator, decided that the Customs Act had been contravened. The plaintiff then brought this action seeking various relief, in particular: a declaration that he was not a resident of Canada pursuant to the definition of resident provided in the Non-residents' Temporary Importation of Baggage and Conveyances Regulations of the Customs Tariff and that he was entitled to import the aircraft without the payment of duties and G.S.T.; a declaration that the Department failed to observe the principles of natural justice and failed to act within its statutory discretion; and a declaration that the Department's s. 131 decision of January 7, 1997, was premised on an error of law and a finding of fact that was perverse or capricious or without regard to the evidence. The plaintiff further seeks an order disposing of the debt claimed owing to the defendant and which would enable the return of the bond to him.
[6] The plaintiff admits he was a Canadian resident until January 4, 1994. He received his green card from the United States on January 4, 1994, and claims to be a non-resident of Canada as of January 5, 1994.
[7] Mr. Brough had lived with Ms. Mannix in her home in Kingston since 1981. In 1993, he decided that he wished to become a U.S. resident and obtained advice from certain firms who provide advise to Canadian residents wishing to give up their Canadian residency. Ms. Mannix decided that she did not wish to become a U.S. resident; however, they continued to live common law in Kingston and Palm Springs in 1994 and 1995.
[8] Mr. Brough had a Cadillac car registered in Ontario, showing his name and address at 46 Lakeshore Blvd., Kingston, which was the address of Ms. Mannix and where the plaintiff had lived since 1981. This address was the one still showing on the registration on September 29, 1995. He purchased a boat in the U.S. and the aircraft that was seized was purchased in August of 1995 in the U.S. He owned no vehicles in the U.S. nor did he have a driver's licence in the U.S. as of September 29, 1995.
[9] Mr. Brough ceased being covered by OHIP at the end of April 1994. He did not surrender his OHIP card at that time, but there was no legal requirement to do so. He made no claims against OHIP in 1994 and 1995. He did attend on American physicians and paid them directly in 1994 and 1995. He did not acquire any U.S. medical insurance prior to September 29, 1995. He maintained his bank account at the Royal Bank of Canada after January 4, 1994. He cashed in his RRSPs and paid tax on them in 1994. He kept the proceeds invested in a term deposit at the Royal Bank in Kingston. The plaintiff did not have an investment portfolio in Canada, apart from the RRSP, prior to January 4, 1994, and he did not have one afterwards. He had two Canadian credit cards before January 4, 1994, and continued to hold them. The address to which his credit card bills were sent continued to be 46 Lakeshore Blvd. in Kingston. He had a bank account in Clayton, New York, and also in Palm Springs, California. He had American credit cards as well. He purchased some property in 1992 in Alexandria Bay, New York, but there is no home on the property. He was building a boathouse there in 1995 and intends to build a home. He uses a mailing address at a post office box in Clayton, New York, but owns no property there. Clayton is approximately six miles from Alexandria Bay.
[10] Mr. Brough obtained his alien card in Arizona in August 1994 as he was intending to live and work in the United States. He rented hangar space for his aircraft at the Kingston Airport for a three-month period terminating November 1995. The plaintiff purchased a home in Palm Springs, California, around 1989, with his future U.S. business partner, a Wisconsin businessman. He then purchased his partner's interest in 1992 or 1993, since he wished to make it into his permanent home and could not share it. He spends some four months of the year in Palm Springs, during the winter. Ms. Mannix spends most of the winter there as well. Prior to 1994, Mr. Brough had spent less time in Palm Springs because he was not the sole owner of the property. Most of his personal possessions were already in Palm Springs, as he had owned the property for some time. The rest of his personal possessions, mostly clothing, he brought by car from 46 Lakeshore Blvd. to Palm Springs in January 1994.
[11] The plaintiff and Ms. Mannix were directors of a business in Kingston called Fleetwind Aviation. This had been an active business until 1994. It then became an inactive business, but its address continued to be 46 Lakeshore Blvd., Kingston. Mr. Brough entered into business with a U.S. partner in Janesville, Wisconsin, and this business is called Fleetwind International. This business buys, sells and leases aircraft. According to Mr. Brough, it is a business which can be carried on anywhere in the world and certainly anywhere in the U.S., which is its prime source of business. Some of Fleetwind International's mail, albeit a very minor portion, was sent to 46 Lakeshore Blvd., Kingston.
[12] Mr. Brough was uncertain as to how often he crossed the border, particularly in the Kingston area. He estimated it to be 30 or 40 times but, on the other hand, he admitted that he generally stayed overnight at 46 Lakeshore Blvd. in Kingston and tended to his business in Alexandria Bay and Clayton during the day. Customs stated that his company vehicle had crossed the border 63 times in the three months prior to September 29, 1995. The plaintiff stated that this car was not always operated by him but, in light of the fact that he had no place to stay in Alexandria Bay or Clayton, I am satisfied that he spent several months in Kingston in each of 1994 and 1995. I accept that he did spend a few nights in a motel in Alexandria Bay.
[13] Mr. Brough continued to receive mail at the same address, i.e. 46 Lakeshore Blvd., Kingston. He did not have a key to 46 Lakeshore Blvd. after January 4, 1994, but he was always able to obtain one from Ms. Mannix or, in her absence, from the housekeeper. He was never denied access to the house.
Analysis:
[14] The issue is clear. It is whether Mr. Brough continued to be a resident of Canada on September 29, 1995. I am assisted by the definition of resident in the Non-resident's Temporary Importation of Baggage and Conveyances Regulations of the Customs Tariff, which reads as follows:
"Resident" means a person who, in the settled routine of that person's life, makes his home, resides and is ordinarily present in Canada.
The definition of resident under this section has not been judicially considered.
[15] This appeal is brought under s. 135 of the Customs Tariff, which provides that the appeal should be by way of an action in the Federal Court wherein the person appealing is the plaintiff and the Minister is the defendant. As Justice MacKay stated in Mattu v. Canada (1991), 45 F.T.R. 190 (F.C.T.D.) at 197:
Section 135 of the Customs Act does not set out in any detail the requirements or the nature of the appeal that is provided from the decision of the Minister, and those matters were not argued in this appeal. My interpretation of the section is that it provides for trial de novo in the sense that the court is not limited to consideration of evidence that was before the Minister. At the same time, as in the case of appeals from other administrative decisions or decisions of quasi-judicial bodies established by statute 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 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 agree with Justice MacKay and further note that the burden of proof is on the plaintiff as set out in ss. 152(3) of the Act.
[16] Before dealing with the issue of residence, I wish to note that I am not in agreement with the submission of the plaintiff that there was a breach of natural justice when the Customs Inspector had Mr. Brough attend on September 29, 1995, without informing him of the nature of the meeting. Mr. Brough was given several opportunities to make submissions to the Minister prior to the Adjudicator making a decision on January 7, 1997, and, in fact, submissions were made by various agents and solicitors on behalf of Mr. Brough during that period of time. While it would have been preferable that Mr. Brough was informed of the nature of the meeting on September 29, 1995, there was no denial of natural justice.
[17] Although there are no cases under s. 2 of the Regulations, there have been cases dealing with "resident" and "ordinarily resident" under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.). The leading case is Thomson v. The Minister of National Revenue, [1946] S.C.R. 209 where Rand J. states at 224:
The expression "ordinarily resident" carries a restricted signification, and although the first impression seems to be that of preponderance in time, the decisions on the English Act reject that view. It is held to mean residence in the course of the customary mode of life of the person concerned, and it is contrasted with special or occasional or casual residence. The general mode of life is, therefore, relevant to a question of its application.
For the purposes of income tax legislation, it must be assumed that every person has at all times a residence. It is not necessary to this that he should have a home or a particular place of abode or even a shelter. He may sleep in the open. It is important only to ascertain that spatial bounds within which he spends his life or to which his ordered or customary living is related. Ordinary residence can best be appreciated by considering its antithesis, occasional or casual or deviatory residence. The latter would seem clearly to be not only temporary in time and exceptional in circumstances, but also accompanied by a sense of transitoriness and of return.
[18] In my view, the "settled routine of a person's life" in s. 2 of the Regulations can be regarded in a similar fashion. The settled routine of one person is different from that of another. In my view, when I review the facts of this case, Mr. Brough's settled routine prior to January 4, 1994, is not very different from that on September 29, 1995. Mr. Brough did not own any property in Canada before or after January 4, 1994. He resided at 46 Lakeshore Blvd., Kingston, with his common-law wife, and this did not change for a substantial part of the year. He owned a house in California from 1992 or 1993, where he spent more time after January 4, 1994. He also owned property in Alexandria Bay, with no house or residence on it. He continued to use a post office box in Clayton, New York, as his mailing address. He continued to hold his Ontario driver's licence and had a car in Ontario. He continued to have the same bank account and credit cards in Canada, which he continued to use in Canada.
[19] As shown by the facts, Mr. Brough's ordinary routine never changed. The onus is on the plaintiff to show that there was such a change as to lead to the conclusion that he became a non-resident of Canada. As Mr. Brough stated with respect to his business interests in Fleetwood International, there was no requirement for him to be a resident of the U.S. He received mail for Fleetwood International at 46 Lakeshore Blvd. The plaintiff submitted that it was important to note that Revenue Canada had not questioned his change of status to non-resident for income tax purposes, since he had not filed any tax returns in Canada since 1994, which return covered the first five days of the year. However, he has not received any confirmation from Revenue Canada that he is a non-resident. The lack of filing just indicates that Mr. Brough is of the opinion that he is no longer a resident for income tax purposes, and this has not been tested.
[20] In my view, for purposes of the Customs Tariff Regulations, the plaintiff has failed to meet the onus of showing that he is no longer a resident of Canada and of showing that the defendant erred in finding that his settled routine remained the same after January 4, 1994, and in particular, on September 29, 1995. For some other purposes, he may be a resident of the United States.
[21] Accordingly, the appeal is dismissed with costs. There is no basis upon which to upset the Minister's decision.
William P. McKeown
JUDGE
O T T A W A, Ontario
June 12, 1998.
FEDERAL COURT OF CANADA TRIAL DIVISION
NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD
COURT FILE NO.: t-630-97
STYLE OF CAUSE: JACK ROBERT BROUGH v. THE MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: OTTAWA, ONTARIO
DATE OF HEARING: TUESDAY, JUNE 2, 1998
REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE MCKEOWN DATED: FRIDAY, JUNE 12, 1998
APPEARANCES:
Mr. Philippe M. Capelle FOR PLAINTIFF
Ms. M. Kathleen McManus FOR DEFENDANT
SOLICITORS OF RECORD:
Mr. Philippe M. Capelle FOR PLAINTIFF Ottawa, Ontario
George Thomson
Deputy Attorney General of Canada FOR DEFENDANT