Vancouver, British Columbia, September 5, 2006
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
SIMPLIFIED ACTION
BETWEEN:
ARTHUR MAINIL, in his personal capacity
and as agent for DON OLAH
and
THE MINISTER OF NATIONAL REVENUE
REASONS FOR ORDER AND ORDER
[1] The Plaintiff arranged for the delivery of a shipment of durum wheat to the border between the United States of America (U.S.) and Canada near Portal, North Dakota and North Portal, Saskatchewan. The wheat was refused entry by U.S. Customs because an export permit from the Canadian Wheat Board was not produced.
[2] When the wheat crossed back into Canada, it was seized on the grounds that it had been exported without having been reported in writing to Canada Customs, and without presentation of a valid export licence, in contravention of the Customs Act, R.S., 1985, c. 1 (2nd Supp.) (Customs Act), and the Canadian Wheat Board Regulations, C.R.C., c. 397 (CWB Regulations).
[3] The Plaintiff paid $3,062.00 to obtain the release of the goods. By way of simplified action, the Plaintiff seeks to recover the amount paid.
[4] Based on the facts adduced at trial, the Plaintiff’s standing to bring this action is suspect. The key issue, however, is whether the seized wheat was “exported” within the meaning of the Customs Act and the CWB Regulations.
Legislative background
[5] To place this case in context, a brief review of the legislation governing the exportation of wheat from Western Canada is in order.
[6] Section 14 of the CWB Regulations requires that an exporter of wheat or barley obtain a licence from the Corporation (defined as the CWB in the Canadian Wheat Board Act, R.S., c. C-12) before grain may be exported.
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14. The Corporation may grant a licence for the export, or for the sale or purchase for delivery outside Canada, of wheat, wheat products, barley or barley products if (a) the export, sale or purchase of the grain or products for which the licence is sought does not adversely affect the marketing by the Corporation, in interprovincial or export trade, of grain grown in Canada; and (b) the applicant pays to the Corporation a sum of money that, in the opinion of the Corporation, represents the pecuniary benefit enuring to the applicant pursuant to the granting of the licence, arising solely by reason of the prohibition of the export of that grain or those products without a licence, and the then existing differences between the prices of that grain or those products inside and outside Canada.
14.1 The Corporation may grant a licence for the transportation from one province to another, or for the sale or delivery anywhere in Canada, of wheat, wheat products, barley or barley products, but no fee shall be charged for such a licence. 14.2 Any person who exports wheat, wheat products, barley or barley products from Canada shall, at the time of exportation, give to a customs officer at the customs office at the point of exit specified on the export licence (a) the original export licence for that grain or product, and a copy of it; or (b) in the case of an export licence for multiple shipments of that grain or product (i) at the time of every shipment except the final shipment, two copies of the export licence, and (ii) at the time of the final shipment, the original export licence and a copy of it. |
14. La Commission peut octroyer des licences pour l’exportation ou pour la vente ou l’achat en vue de la livraison à l’étranger de blé, de produits du blé, d’orge ou de produits de l’orge si les conditions suivantes sont réunies : a) l’exportation, la vente ou l’achat des grains ou des produits pour lesquels une licence est demandée ne nuit pas, dans le cadre du commerce interprovincial ou de l’exportation, à la commercialisation par la Commission du grain cultivé au Canada; b) le demandeur verse à la Commission une somme qui, de l’avis de celle-ci, correspond à l’avantage pécuniaire que représente la licence, lequel avantage découle uniquement, d’une part, du fait que sans cette licence l’exportation serait interdite et, d’autre part, des différences existant à ce moment entre les prix intérieurs et extérieurs des grains ou des produits en question. 14.1 La Commission peut octroyer des licences pour le transport d’une province à une autre ou pour la vente ou la livraison en quelque lieu du Canada de blé, de produits du blé, d’orge ou de produits de l’orge, ces licences étant octroyées à titre gratuit. 14.2 Quiconque exporte du blé, des produits du blé, de l’orge ou des produits de l’orge doit, au moment de l’exportation, remettre à l’agent du bureau des douanes au point de sortie précisé sur la licence d’exportation : a) soit l’original de la licence d’exportation visant ces céréales ou produits céréaliers, et une copie de celle-ci; b) soit, s’il s’agit d’une licence d’exportation visant plusieurs expéditions de ces céréales ou produits céréaliers : (i) deux copies de la licence lors de chaque expédition sauf la dernière, (ii) l’original et une copie de la licence lors de la dernière expédition. |
[7] Section 95 of the Customs Act and section 3 of the Reporting of Exported Goods Regulations, SOR/86-1001 (Reporting Regulations) require that goods be reported in writing.
Section 95 of the Customs Act
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95. (1) Subject to paragraph (2)(a), all goods that are exported shall be reported at such time and place and in such manner as may be prescribed. (2) The Governor in Council may prescribe (a) the classes of goods that are exempted from the requirements of subsection (1) and the circumstances in which any of those classes of goods are not so exempted; and (b) the classes of persons who are required to report goods under subsection (1) and the circumstances in which they are so required.
(3) Every person reporting goods under subsection (1) shall (a) answer truthfully any question asked by an officer with respect to the goods; and (b) where an officer so requests, present the goods to the officer, remove any covering from the goods, unload any conveyance or open any part thereof, or open or unpack any package or container that the officer wishes to examine. (4) If goods are required to be reported in writing, they shall be reported in the prescribed form containing the prescribed information or in such form containing such information as is satisfactory to the Minister. |
95. (1) Sous réserve de l’alinéa (2)a), toutes les marchandises exportées doivent être déclarées selon les modalités réglementaires de temps, de lieu et de forme. (2) Le gouverneur en conseil peut, par règlement : a) désigner les catégories de marchandises exemptées des dispositions du paragraphe (1) et déterminer les circonstances où certaines de ces catégories ne sont pas exemptées; b) désigner les catégories de personnes tenues de déclarer des marchandises en application du paragraphe (1) et déterminer les circonstances des déclarations. (3) Le déclarant visé au paragraphe (1) doit : a) répondre véridiquement aux questions que lui pose l’agent sur les marchandises; b) à la demande de l’agent, lui présenter les marchandises et les déballer, ainsi que décharger les moyens de transport et en ouvrir les parties, ouvrir ou défaire les colis et autres contenants que l’agent veut examiner.
(4) Les déclarations de marchandises à faire par écrit sont à établir avec les renseignements et en la forme réglementaires ou satisfaisants pour le ministre. |
Section 3 of the Reporting Regulations
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3. Except as otherwise provided in these Regulations, all goods that are exported shall, prior to their exportation, be reported under section 95 of the Act in writing by the exporter, the agent of the exporter or the person transporting the goods (a) in the case of exportation of goods by mail, at the post office where the goods are mailed; (b) in the case of exportation of goods by vessel, at the last port of call of the vessel where a customs office is located; (c) in the case of exportation of goods by aircraft, at the customs office nearest the place of departure of the aircraft; or (d) in any other case, at the customs office nearest the place of exportation of the goods or at any other customs office designated for the purpose of reporting pursuant to section 5 of the Act. SOR/88-85. |
3. Sauf disposition contraire du présent règlement, toutes les marchandises exportées doivent être déclarées par écrit en vertu de l'article 95 de la Loi, avant leur exportation, par l'exportateur, son mandataire ou la personne transportant les marchandises : a) dans le cas de marchandises exportées par courrier, au bureau de poste d'où elles sont expédiées; b) dans le cas de marchandises exportées par bateau, au dernier port où ce bateau fait escale et où il y a un bureau de douane; c) dans le cas de marchandises exportées par aéronef, au bureau de douane le plus proche de leur point de départ; d) dans tout autre cas, au bureau de douane le plus proche du point d'exportation des marchandises ou à tout autre bureau de douane établi, en vertu de l'article 5 de la Loi, pour recevoir les déclarations. DORS/88-85. |
[8] In addition, section 5 of the Reporting Regulations requires that the exporter provide the export licence to Customs prior to exportation of the grain.
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5. For the purposes of these Regulations, the exporter of goods shall provide to the chief officer of customs on or before the day of exportation any information and all certificates, licences, permits or other documents relating to the goods that are required under the Act or any other Act of Parliament, or under any regulations made pursuant thereto, that prohibit, control or regulate the exportation of goods. |
5. Aux fins du présent règlement, l'exportateur des marchandises doit fournir à l'agent en chef des douanes, le jour où les marchandises sont exportées ou avant cette date, tous les renseignements et les certificats, licences, permis ou autres documents relatifs à ces marchandises qui sont requis en vertu de la Loi, d'une autre loi fédérale ou de leurs règlements d'application qui prohibent, contrôlent ou réglementent l'exportation de marchandises. |
Facts
[9] This action is governed by the simplified procedure set out in Rules 292 to 299 of the Federal Courts Rules, SOR/98-106 as amended. Accordingly, the parties’ evidence-in-chief was adduced by affidavit and the deponents were cross-examined at trial. Since statements were obtained from the persons involved in the failed shipment of wheat and its seizure contemporaneously with the events, there is no genuine dispute over the material facts.
[10] The Plaintiff is a farmer who owns a grain elevator located in Stoughton, Saskatchewan. He has long complained about what he perceives as discrimination against western Canadian grain producers, who are required by law to broker their grain exclusively through the CWB.
[11] According to the Plaintiff, he negotiated the sale of durum wheat on behalf of another local farmer, Don Olah, to Berthold Farmer’s Elevator in Berthold, North Dakota (Berthold Elevator) some time prior to February 11, 2002.
[12] Berthold Elevator made arrangements with an American trucker, Craig Grabow, to pick up the wheat at the Plaintiff’s elevator with a semi-trailer truck on February 11, 2002. The Plaintiff testified that he loaded the wheat onto Mr. Grabow’s truck that morning. He denies having anything else to do with transportation of the wheat or knowing its final destination. He also disclaimed any responsibility for securing an export permit since it “wasn’t (his) wheat”.
[13] After the wheat was loaded, both Mr. Grabow and the Plaintiff made their way in separate vehicles to the Canada-U.S. border, passing by the Canadian Customs office. Mr. Grabow reported to U.S. Customs at the port of entry at Portal, North Dakota, around 10:00 a.m.
[14] The shipment of wheat was refused entry into the U.S. because it was not accompanied by a valid export licence from the Canadian Wheat Board. The truck sat idle at U.S. Customs for over 4 hours while the Plaintiff attempted to locate a brokerage firm in Portal to obtain clearance for the wheat into the U.S. His attempts proved futile.
[15] Around 2:25 p.m., Canada Customs was notified by U.S. Customs that the shipment of wheat would be returning to Canada. The Plaintiff arrived at the primary area of Canada Customs at approximately 3:45 p.m., and was directed into an office, where he was cautioned by Customs Officer Tim Fogarthy and then interviewed about the “wheat incident on the U.S. side”.
[16] When asked who owned the durum wheat, the Plaintiff replied that Berthold Elevator was the owner. The balance of the interview is summarized as follows in a narrative report prepared in relation to the seizure action.
Officer FOGARTHY asked Mr. MAINIL who the truck driver was. Mr. MAINIL stated that he did not know. Officer FOGARTHY asked Mr. MAINIL “How did you know about the Wheat?” Mr. MAINIL stated that he had heard about it. Officer FOGARTHY stated that everyone who exports Wheat or Barley must have a Wheat Board Permit. Mr. MAINIL stated that the Brandon Court ruled that there was no such thing as a Wheat Board Permit. Officer FOGARTHY stated that everyone who exports Wheat or Barley must have a permit. Mr. MAINIL stated that a U.S. truck came to Canada, picked up a load of Wheat and was importing the wheat into the United States. Mr. MAINIL came down to see what would happen when the truck was American and the driver was American.
[17] At 3:47 p.m., Mr. Grabow pulled into the primary area in his truck loaded with wheat. His truck and contents were immediately placed under Customs seizure on the grounds that the wheat had not been properly exported from Canada in accordance with section 95 of the Customs Act.
[18] Mr. Grabow was cautioned and questioned regarding the wheat. He claimed that he was not aware that an export permit was required on exit of the grain from Canada. He also stated the Plaintiff told him he would be handling all of the paperwork and that it would be waiting for him at the border.
[19] The wheat was initially detained pending identification of the owner and exporter. Berthold Elevator initially claimed to be both owner and exporter. However, on February 12, 2002, the day following the seizure, Mr. Olah declared that he was in fact the owner and that he was getting an export permit to export the wheat to the US.
[20] Seizure action was taken in the name of the Plaintiff, as agent for Mr. Olah on the grounds that the wheat was exported without a report in writing to Canada Customs and without presentation of a valid export, contrary to section 95 of the Customs Act and the Reporting Regulations. In order to obtain the release of the wheat and trailer, the Plaintiff was required to pay $3,062.00.
[21] The Plaintiff submitted a Request for a Decision of the Minister in accordance with section 129 of the Customs Act. According to the Plaintiff, the wheat had not been exported to the U.S. and no offence had been committed. A ministerial decision was rendered on November 25, 2003, confirming the forfeiture of $3,062.00.
Analysis
[22] The Plaintiff has maintained throughout that the wheat in question was owned by Berthold Elevator and that Berthold Elevator was the exporter. According to the Plaintiff, “it was American grain and an American carrier”.
[23] In the absence of any proprietary claim to wheat or any role in its exportation, the Plaintiff’s standing to challenge the seizure action would appear to be tenuous. Canada Customs concluded, however, that the Plaintiff was the driving force behind the unlawful export and, in the absence of conclusive evidence of an actual sale, such as a bill of sale from Berthold Elevator, deemed the Plaintiff to be the exporter of record. There is ample evidence to support this conclusion.
[24] The Plaintiff attempted to portray himself as just an elevator operator, whose only role was to load a truck with wheat. In cross-examination, he stated that he wasn’t even sure whether the wheat was going to the U.S. or elsewhere in Canada. And yet, the Plaintiff negotiated the sale of wheat with an American company, loaded the wheat onto an American licensed truck, attended at the U.S. port of entry with an American driver, and spent over 4 hours trying to locate an American brokerage firm to broker the wheat. These are not the actions of a simple bystander. On the evidence before me, I conclude that the Plaintiff orchestrated the sale and export with American actors to test the CWB’s monopoly and will proceed on the basis that the Plaintiff was the true exporter.
[25] The Plaintiff submits that since the wheat was refused entry in the U.S. and was returned to an elevator in Canada, an export did not occur and therefore no offence has been committed. However, I conclude that an export did take place since the goods left Canada, albeit for only a few hours.
[26] Section 2 of the Customs Act provides a rather circular definition of export, stating that “export means export from Canada”. The case law cited by the parties is also of little assistance, since the focus is on intention to export, as opposed to the act of exportation itself. Therefore, in the absence of any different meaning attributed to the word in the Customs Act, export should be read in its grammatical and ordinary sense, harmoniously with the scheme and commercial context of the Act.
[27] According to Black's Law Dictionary, exportation is "the act of sending or carrying goods from one country to another". It follows that the mere crossing out of a country's border of goods for commercial purposes constitutes exportation. The fact that the Plaintiff failed to import the wheat into the U.S. is completely irrelevant, since importation is a separate transaction.
[28] Even if the wheat was not exported within the meaning of the Customs Act, the Plaintiff contravened the law. By operation of section 95 of the Customs Act, sections 3 and 5 of the Reporting Regulations, and section 14 of the CWB Regulations, an exporter of wheat is required to: (1) report in writing to Canada Customs prior to export of the grain; (2) present documentation that would allow Canada Customs to identify the goods, their quantity and destination, and; (3) provide evidence that the controlled or regulated goods may be lawfully exported, such as an export licence.
[29] A clear contravention took place in that no report in writing was made to Canada Customs and no export licence was obtained prior to the export (or attempted export) of the wheat.
[30] In the circumstances, the Plaintiff has failed to establish that the forfeiture was unlawful. The action must accordingly be dismissed, with costs.
ORDER
THIS COURT ORDERS that the action is dismissed, with costs.
“Roger R. Lafrenière”
Prothonotary
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-314-04
STYLE OF CAUSE: Arthur Mainil, in his personal capacity and as agent for Don Olah v. The Minister of National Revenue
PLACE OF HEARING: Estevan, Saskatchewan
DATE OF HEARING: June 21, 2005
APPEARANCES:
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Arthur Mainil
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Penny L. Piper
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SOLICITORS OF RECORD:
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Arthur Mainil Weyburn, Saskatchewan
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THE PLAINTIFF on his own behalf |
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John H. Sims, QC Deputy Attorney General of Canada Winnipeg, Manitoba
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FOR THE DEFENDANT |