Date : 20040630
Docket : T-1302-03
Citation : 2004 FC 949
BETWEEN :
1134166 Ontario Ltd., O/A Canada Garlic Company
Canada Garlic Company Inc.
Canadian Garlic Marketing Inc.
Jiang Tao Wang
Plaintiffs
AND :
MINISTER OF NATIONAL REVENUE
Defendant
ROULEAU, J.
[1] This is a motion for summary judgment by the Defendant pursuant to rule 213 of the Federal Court Rules, 1998, alleging that the relief sought and the issues raised in the Statement of Claim are beyond the jurisdiction of this Court and thus there is no genuine issue for trial. This motion arises in the context of an appeal brought by way of an action against the decision of the Minister of National Revenue ("MNR") pursuant to section 135 of the Customs Act, R.S.C. 1985 c.1, (the "Customs Act").
[2] The three corporate Plaintiffs (1134166 Ontario Ltd., Canada Garlic Company Inc., and Canadian Garlic Marketing Inc.) and Plaintiff Jiang Tao Wang, a director officer and a shareholder of the corporate Plaintiffs (the "Plaintiffs") are engaged in the business of importing garlic into Canada from the People's Republic of China ("China").
[3] On August 23, 1996, the Deputy Minister of the Department of National Revenue (the "DMNR") as the Commissioner of the Canada Customs and Revenue Agency (the "CCRA") (subsequently known as the Canada Border Services Agency), initiated an investigation under the Special Import Measures Act, R.S.C. 1985, C.S.-15, as amended (the "SIMA") pursuant to a complaint that fresh garlic originating in and exported from China was being "dumped" into Canada. Dumping occurs when imported goods have been sold at an "export price", defined under the SIMA, which is less than their normal value.
[4] On February 19, 1997, the DMNR made a final determination of dumping determining a final weighted average margin of dumping of 70% expressed as a percentage of the normal value. The basis for the determination of normal values was a Ministerial Specification made pursuant to the SIMA.
[5] On March 21, 1997, the Canadian International Trade Tribunal (the "CITT") found that the subject fresh garlic had caused injury to Canadian fresh garlic production. The final margin of dumping was thereafter applied by Revenue Canada and CCRA officials at all material times as SIMA anti-dumping duties, retroactively to imports between the dates of the preliminary determination of dumping (November 21, 1996) and March 21, 1997, and prospectively from March 22, 1997 onward.
[6] In February 1999, a Notice of Ascertained Forfeiture ("Notice") was issued by an Investigating Officer of the Investigations Division, Customs Section of Revenue Canada. The Notice alleged that the Plaintiffs contravened sections 12 and 13 of the Customs Act, R.S.C. 1985, c. C-1 (2ndSupp.), and that payment was not made of duties, principally SIMA anti-dumping duties, but also of ordinary customs duties, in contravention of sections 17 and 32 of the Customs Act.
[7] The Notice alleged that $614,683.04 in revenue was evaded by the Plaintiffs based on alleged undervaluation under the Customs Act and alleged overvaluation under the SIMA. The penalty for alleged undervaluation was set at $45,667.14, representing the amount of regular customs duty short paid plus an amount equal to two times this amount. The penalty amount for alleged overvaluation was set at $1,103,890.41 representing the alleged true value of the goods, plus the amount of Customs Act duty properly payable, plus the amount of SIMA duty properly payable. Thus the total of the alleged undervaluation and overvaluation penalties in the Notice amounted to $1,149,557.55.
[8] Following receipt of the Notice, the Plaintiffs exercised their appeal rights under sections 129 to 131 of the Customs Act and requested a decision of the Minister of National Revenue ("MNR"). The Plaintiffs' Administrative Appeal requested that the penalty of $1,149,557.55 imposed in the Notice be cancelled.
[9] On or about September 26, 2000, 44 separate counts relating to 22 separate import transactions were filed by Her Majesty the Queen against the Plaintiffs in the Ontario Superior Court of Justice, pursuant to subsections 153(a), 153(c) and section 160 of the Customs Act alleging that SIMA anti-dumping duties totalling $557,815.07 were evaded by the Plaintiffs in the period July 1997 through December 1997.
[10] On May 29, 2001, the Plaintiffs pleaded guilty to committing an offence under subsection 153(a) of the Customs Act, in connection with four of the 44 counts, and paid fines totaling $175,000.00: $50,000.00 for each one of the corporate Plaintiffs and $25,000.00 for the individual Plaintiff Jiang Tao Wang. All other counts against all the corporate Plaintiffs and Mr. Wang were withdrawn.
[11] On April 25, 2003 the Plaintiffs received written notification of the MNR's decision on the Plaintiffs' appeal pursuant to sections 129 to131 of the Customs Act. The MNR found that sections 12, 13, 17 and 32 of the Customs Act had been contravened and demanded payment of to $1,149,557.55 as set out in the Notice.
[12] On July 24, 2003 the Plaintiffs appealed the decision of the MNR by commencing an action in this Court pursuant to section 135 of the Customs Act.
[13] The Defendant submits that this Court has no jurisdiction to deal with the issues raised by the Plaintiffs in this action and therefore there is no genuine issue for trial.
[14] Indeed, the Defendant argues that in accordance with sections 131 and 135 of the Customs Act, this Court is precluded from determining any issue other than the strict question of whether or not there was a contravention of the Customs Act. However, the defendant underlines that upon review of the Statement of Claim, the Plaintiffs do not make any clear statements to refute the findings of contravention of the Customs Act made by the MNR.
[15] Furthermore, the Defendant argues that a mechanism exists in the SIMA wherein the Plaintiffs could have challenged the basis on which the normal values and the export prices were established, however they chose not to do so.
[16] Moreover, the Defendant argues that the Plaintiffs are not alleging that they did not contravene the Customs Act. In fact, the Defendant is of the opinion that the Plaintiffs acknowledge in the Statement of Claim to having pled guilty to a charge laid pursuant to subsection 153(a) of the Customs Act and, as such, have admitted to a contravention of the Customs Act.
[17] Thus, the Defendant submits that given this admission by the Plaintiffs and their failure to allege that they have not contravened the Customs Act, there is no genuine issue for trial.
[18] The Plaintiffs argue that the assertion that their Statement of Claim does not seek a review of the MNR's finding that the Customs Act has been contravened is incorrect. The Plaintiffs submit that they have put forward evidence establishing that MNR's Decision is based upon errors of law, which enables this Court to review the impugned decision pursuant to section 135 of the Customs Act.
[19] The Plaintiffs further argue that the Defendant's assertion that the Plaintiffs have, by entering pleas of guilty in a previous proceeding, made an admission that they have contravened the Customs Act with respect to each of the import transactions in question in an attempt to evade payment of duties under the Customs Act is incorrect. The pleas were limited to 4 (four) of the 44 (forty four) counts and, in any event, do not establish that the Plaintiffs have made admissions to the effect that they have evaded duty payable under the Customs Act or anti-dumping duty payable under the SIMA.
[20] Moreover, the Plaintiffs argue that the Defendant's assertion regarding the availability of an alternative appeal under the SIMA is misleading given the facts in the present case.
[21] Therefore, the Plaintiffs are of the view that they have raised a number of difficult and complex issues of fact and law that can only be resolved through a full trial and that Defendant has failed to discharge its onus to establish that the Plaintiffs' Statement of Claim discloses no genuine issues to be tried, all of which should warrant the dismissal of the present motion.
[22] It is well established that the test to determine if a motion for summary judgment should be granted is not whether a party cannot possibly succeed at trial, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial; (See Granville Shipping Co. v. Pegasus Lines Ltd. (T.D.) [1996] 2 F.C. 853.
[23] In the context of a motion for summary judgement, the moving party has the onus to establish that the Statement of Claim discloses no genuine issues to be tried. The rationale for this onus is founded in the extraordinary nature of summary judgment, as it is a summary proceeding which, if granted, serves to deprive a litigant of its right to have a case disposed of after full trial. In the case at bar, the Defendant has failed to meet its onus.
[24] Indeed the Statement of Claim raises a significant number of difficult and complex issues, including:
- the statutory paramountcy of the SIMA over the Customs Act with respect to the calculation and imposition of anti-dumping duty (para. 22-31);
- the inapplicability of the Customs Act to anti-dumping duty assessment matters (para. 32-41);
- whether overvaluation is a contravention of the Customs Act (para. 42-46)
- the Minister's erroneous statement that the Plaintiffs engaged in the "dumping" of Garlic imported from China (para. 47-64);
- the violation of the Plaintiff's rights under section 11(h) of the Charter of Rights and Freedoms (para. 82-114).
[25] These are complex issues of fact and law that can only be resolved by means of a trial. Furthermore, I find none of the arguments advanced by the Defendant to be of any merit which would warrant me to grant the motion for summary judgment.
[26] First, while the Plaintiffs pleaded guilty to 4 of the 44 charges contained in the indictment, the guilty pleas are admissible but not conclusive evidence of the issue in subsequent civil proceedings relating to the same or similar facts. The plea of guilty may be capable of explanation, adduced through evidence in the usual course of litigation and subject to determinations of credibility and weight by the trial judge. This Court has expressly found in the context of a seizure under the Customs Act that the results of the criminal court's findings binding on the court seized with the subsequent civil action; (See Time Data Recorder International Ltd. v. Canada (Minister of National Revenue - M.N.R.) [1993] F.C.J. No. 768 (F.C.T.D.) upheld on appeal [1997] F.C.J. No. 475 (F.C.A.)).
[27] Second, I find the Defendant's arguments that an alternative appeal procedure was available under the SIMA to be both erroneous and misleading.
[28] The SIMA sets out a scheme for the determination, re-determination and appeal of normal values and export prices in sections 56 to 62.
[29] The DMNR's designated officers made a determination of normal values and export prices with respect to Garlic from the People's Republic of China pursuant to section 56 of the SIMA. The section 56 determination therefore became final and conclusive two years after it was deemed made (i.e. thirty days after accounting). The designated officers did not re-determine the determination made under section 56 of the SIMA pursuant to section 57 of the SIMA. While section 58 of the SIMA allows an importer to seek a re-determination, such a request may only be made where the designated officers have re-determined the determination pursuant to section 57.
[30] Thus, by failing to redetermine the determination made under section 56 of the SIMA pursuant to section 57 of the SIMA, the designated officers denied the Plaintiffs the opportunity to challenge the determination pursuant to section 58 of the SIMA. Therefore, the Plaintiffs were left with no option other than to pursue the matter through this proceeding. The Notice pursuant to the section 124 of the Customs Act superseded the proper proceedings which should have been taken under the SIMA and precluded the Plaintiffs from appealing any re-determination of normal values, and hence SIMA duties payable thereunder.
[31] Finally, I find the Defendant's assertion that this Court cannot consider whether the imposition of the penalties at issue in this proceeding by the DMNR is in violation of section 11(h) of the Charter of Rights and Freedoms ("Charter") because section 135 of the Customs Act does not provide the Court with the jurisdiction to vary the penalty, to be absurd. The fact the Court may not vary the penalty imposed by the DMNR pursuant to section 135 in no way prevents the Court from finding that the imposition of the penalty violates section 11(h) of the Charter.
[32] For all the reasons above, the motion for summary judgment is dismissed. Costs to the Plaintiffs/Respondents.
JUDGE
OTTAWA, Ontario
June 30, 2004
FEDERAL COURT OF CANADA
SOLICITORS OF RECORD
DOCKET : T-1302-03
STYLE OF CAUSE : 1134166 ONTARIO LTD., O/A GARLIC COMPANY, CANADA GARLIC COMPANY INC., CANADIAN GARLIC MARKETING INC., JIANG TAO WANG
THE MINISTER OF NATIONAL REVENUE
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: May 31, 2004
REASONS : The Honourable Mr. Justice Rouleau
DATE OF REASONS: June 30, 2004
APPEARANCES:
Jesse I. Goldman
Darrel H. Pearson
Gottlieb & Pearson FOR THE PLAINTIFFS
Derek Rasmussen
Elizabeth Kikuchi
Department of Justice FOR THE DEFENDANT
SOLICITORS OF RECORD:
Gottlied & Pearson
Toronto, Ontario FOR THE PLAINTIFFS
Morris Rosenberg
Deputy Attorney General
of Canada
Ottawa, Ontario FOR THE DEFENDANT