T-973-73
The Queen (Plaintiff)
v.
Climbing Crane Service Limited (Defendant)
Trial Division, Sweet D.J.—Toronto, November 9
and 10 and December 8, 1976.
Customs and excise—Plaintiff claims that defendant passed
false invoice thereby incurring forfeiture under s. 192(1)(b) of
Customs Act—Whether section 164 of Act applicable to for-
feiture—Court's jurisdiction with respect to Minister's deci-
sion—Customs Act, R.S.C. 1970, c. C-40, ss. 51(3), 160, 161,
162, 163, 164, 249 and 250.
Plaintiff claims that the defendant passed a false invoice
contrary to section 192(1)(b) of the Customs Act by undervalu
ing imported goods contrary to sections 20 and 51 of the Act.
The defendant alleges that the difference between the purchase
price declared and the amount paid to the vendor represented
the cost of dismantling and transporting the item imported. The
plaintiff further contends that proceedings having been taken
pursuant to sections 160-163 of the Act and no notice of
objection having been given by the defendant as provided for by
section 164 of the Act, the Minister's decision is final and
cannot be challenged by the present proceedings although it
can be implemented by a judgment herein. The defendant
submits that section 164 is not applicable to a forfeiture and
that even if it is, the Court has jurisdiction to deal with the
whole matter.
Held, the plaintiff will have judgment for the amount
claimed. A forfeiture is a penalty and is therefore covered by
the provision of section 164 of the Act. If the defendant had
given notice that the Minister's decision would not be accepted
as provided for in section 164, the Minister could have referred
the matter to the Court and it would have had jurisdiction to
review the matter. In the absence of such notice, the defendant
is not entitled to have the matter reviewed in these proceedings.
In any event, the cost of dismantling and transporting the item
imported is an expense incident to placing the goods in condi
tion to be packed and expedited within the meaning of section
51(3) of the Act and is therefore to be included in the value of
the item for the purposes of assessing duty.
ACTION.
COUNSEL:
G. R. Garton for plaintiff.
T. Dunne for defendant.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
McTaggart, Potts, Stone & Herridge,
Toronto, for defendant.
The following are the reasons for judgment
rendered in English by
SWEET D.J.: The plaintiff seeks to recover
$8,245.35, the amount of a forfeiture claimed to
have been incurred by the defendant and to be
accruing to the plaintiff in connection with the
importation into Canada by the defendant of a
used climbing crane during or about April 1971.
The crane was purchased by the defendant from
McCloskey and Company, Philadelphia, Pennsyl-
vania, U.S.A. Two Canada Customs forms relat
ing to the crane in question were filed with the
Department of National Revenue, Customs and
Excise in connection with its importation. One was
form (M.A.), a copy of which is Exhibit 3. It was
admitted that it is a form to be filed by an
exporter, that in this case the original was pre
pared by McCloskey and Company and prepared
and filed with the defendant's authority. It indi
cates that both the fair market value and the
selling price of the crane was U.S. $35,000. It is
admitted that the original of the other form (a
copy of which is Exhibit 4) was prepared by the
defendant, filed with the Department of National
Revenue, Customs and Excise by the defendant
upon the entry of this crane into Canada and that
it relates to this crane. It shows the value for duty
to have been $35,125. The difference of $125
results from the money exchange.
It is also admitted that the defendant paid
McCloskey and Company the sum of $54,000 with
relation to the crane. Payment was by two
cheques, one dated April 12, 1971 for $13,000 and
the other dated April 23, 1971 for $41,000.
(Exhibit 2.)
The substance of the defendant's explanation
was that the defendant purchased the crane for
U.S. $35,000 as it was at a job site in the United
States and the defendant was also to reimburse
McCloskey and Company for the cost of labour in
dismantling and transporting the crane.
The way Mr. Leo Klein, president of the defend
ant company put it was that the defendant was to
take possession of the crane on top of the building.
Mr. Klein also said the crane had to be
overhauled.
According to Mr. Klein the original intention
was that the crane would go directly to a job in
Toronto but it actually ended up in McCloskey
and Company's yard and the defendant later
loaded it again at that yard preparatory to import
ing it into Canada. According to Mr. Klein the
defendant did that re-loading. It was the defend
ant's position that the difference between the
$54,000 paid McCloskey and Company and the
U.S. $35,000 was the reimbursement to McClos-
key and Company and that duty was payable only
on the U.S. $35,000.
The plaintiff does not accept the defendant's
explanation.
The statement of claim, inter alia, contains:
4. The defendant purchased the said crane from McCloskey
and Company, Philadelphia, Pennsylvania, U.S.A. for the sum
of $54,270.00 in Canadian funds in or about April 1971, but
entered the value thereof at the time of importation as
$35,000.00 in United States funds, being $35,125.00 in Canadi-
an funds, thereby undervaluing the said crane by $19,095.00
contrary to sections 20 and 51 of the Customs Act.
5. The defendant by reason of the under-valuation described
above passed a false invoice in respect of the said goods through
the Customs House contrary to section 192(1)(b) of the Cus
toms Act and since the said goods were not found and the
duty-paid value has been ascertained the defendant has
incurred a forfeiture of $69,899.76 in Canadian funds being the
total price paid for said crane in the amount of $54,270.00 plus
the duty properly payable of $7,489.26.
Proceedings provided by sections 160, 161(1)
and (2), 162 and 163(1) and (2) of the Customs
Act' were taken. These sections are:
160. Whenever any vessel, vehicle, goods or thing has been
seized or detained under this Act or any law relating to the
customs, or when it is alleged that any penalty or forfeiture has
been incurred under this Act or any law relating to the cus
toms, the collector or the proper officer shall forthwith report
the circumstances of the case to the Deputy Minister.
161. (I) The Deputy Minister may thereupon notify the
owner or claimant of the thing seized or detained, or his agent,
or the person alleged to have incurred the penalty or forfeiture,
or his agent, of the reasons for the seizure, detention, penalty,
or forfeiture, and call upon him to furnish, within thirty days
from the date of the notice, such evidence in the matter as he
desires to furnish.
' R.S.C. 1970, c. C-40.
(2) The evidence may be by affidavit or affirmation, made
before any justice of the peace, collector, commissioner for
taking affidavits in any court, or notary public.
162. After the expiration of the thirty days referred to in
section 161, or sooner, if the person called upon to furnish
evidence so desires, the Deputy Minister or such other officer
as the Minister may designate may consider and weigh the
circumstances of the case, and report his opinion and recom
mendation thereon to the Minister.
163. (1) The Minister may thereupon either give his deci
sion in the matter respecting the seizure, detention, penalty or
forfeiture, and the terms, if any, upon which the thing seized or
detained may be released or the penalty or forfeiture remitted,
or may refer the matter to the court for decision.
(2) The Minister may by regulation authorize the Deputy
Minister or such other officer as he may deem expedient to
exercise the powers conferred by this section upon the Minister.
It was admitted that all procedure, matters and
things provided for in those sections were duly
done, carried out and completed as provided for in
those sections. It was agreed that the Minister's
decision was to remit the forfeiture to the sum of
$8,245.35.
Section 164 of the Act is:
164. If the owner or claimant of the thing seized or detained,
or the person alleged to have incurred the penalty, does not,
within thirty days after being notified of the Minister's deci
sion, give him notice in writing that such decision will not be
accepted, the decision is final.
It was also admitted that a notice that the
Minister's decision would not be accepted, pro
vided for in section 164, was not given.
A position of plaintiff is that the procedure
provided for in sections 160, 161 and 162 having
been taken, the decision provided for in section
163 having been given and no notice of non-
acceptance provided for in section 164 having been
given, the Minister's decision is final by virtue of
section 164 and cannot be challenged in these
proceedings. It was also the position of the plain
tiff that such decision can be implemented by a
judgment in these proceedings. Counsel for the
plaintiff conceded that there might be some
defences raised, such as, say, payment, but submit
ted that the decision per se by virtue of section 164
cannot be attacked in this action.
At the trial, it was, in effect, submitted on
behalf of the defendant that (1) section 164 is not
applicable to a forfeiture and (2) even if the
section is applicable to forfeiture, it does not create
finality so as to prevent jurisdiction in this Court
on the matter of the forfeiture and that it is still
open to the defendant to have the whole matter of
forfeiture dealt with here.
In connection with the first of these, counsel for
the defendant pointed out that in section 163(1)
there is the wording "The Minister may thereupon
either give his decision in the matter respecting the
seizure, detention, penalty or forfeiture" whereas
in section 164 the word "forfeiture" does not
appear. Counsel submitted, in effect, that this
circumstance indicated that section 164 did not
apply to a forfeiture because if Parliament had
meant section 164 to apply to forfeiture, the word
"forfeiture" would have been inserted in section
164 as it had been in section 163(1). To be deter
mined in this connection is whether or not the
word "penalty" in section 164 in the phrase "the
person alleged to have incurred the penalty"
includes forfeiture.
I am mindful that in section 160 there are the
words "penalty or forfeiture"; in section 249(1)
there are the words "all penalties and forfeitures"
and the words "penalty or forfeiture"; in section
249(2) there are the words "penalty or forfeiture";
in sections 250 and 251 the words "penalties and
forfeitures" appear; in sections 252, 255, 256 and
257 one finds the words "penalty or forfeiture",
and something of the same is found in section 258.
I do not consider it necessary for the purposes of
this action to analyse the various sections of the
Act where those words appear nor the use of those
words in those sections. Suffice to say that the
words "penalty" and "forfeiture" appear together
in various portions of the Act in addition to section
163.
On the other hand, it seems to me that it cannot
be doubted that, according to common and natural
usage of the words "forfeiture" and "penalty",
forfeiture is a kind of penalty.
Included in the definitions of "forfeiture" in The
Shorter Oxford English Dictionary, Third Edition,
is "a penalty".
Furthermore, there is indication in the Act that
Parliament considered that one of the "penalties"
a person who contravened the Act incurred was
"forfeiture" so that the use of the word "penalty"
in section 164 would include "forfeiture".
In section 2 of the Act, in the paragraph dealing
with "seized and forfeited", there are the words
"penalty of forfeiture". It would, I think, be dif
ficult to get a clearer expression of what Parlia
ment considered a forfeiture to be.
In section 267(2) of the Act there is a reference
to "the amount of the penalty of forfeiture", again
indicating that forfeiture is a penalty.
Not to be overlooked is section 2(3):
2. (3) All the expressions and provisions of this Act, or of
any law relating to the customs, shall receive such fair and
liberal construction and interpretation as will best ensure the
protection of the revenue and the attainment of the purpose for
which this Act or such law was made, according to its true
intent, meaning and spirit.
Of course, the requirement of "a fair and liberal
construction and interpretation" neither compels
nor even permits a construction or interpretation
which the wording of the Act would not justify. It
is the wording of the legislation which is the
determining factor. Nevertheless, the Act must be
interpreted against the background of section 2(3).
The subsection is there and is not to be ignored. As
I read The King v. Racicot (1913) 11 D.L.R. 149,
cited by counsel for the defendant, it is not an
authority against my conclusions on this point.
One starts with the circumstance that a forfeit
ure is by common and natural usage a penalty
though, under the Act, not the only penalty. Then,
notwithstanding the not infrequent use in the Act
of the words "penalties and forfeitures" and
"penalty or forfeiture" there is definite indication
in the Act that Parliament considered a forfeiture
to be a penalty.
It would seem to me to be illogical to conclude
that Parliament, having in sections 160, 161, 162
and 163 set out a course of procedure to be
followed where certain situations, including for
feiture, exist, and culminating with a decision
pursuant to section 163 would intend in section
164 to establish finality in respect of all those
matters except forfeiture. As I see it, it was the
intention of Parliament that one of the penalties
included in the word "penalty" as it appears in
section 164 is the penalty of forfeiture. It is my
opinion that in section 164, Parliament has ade
quately expressed that intention.
I address myself now to the second of the
defendant's positions which is to the effect that
even if section 164 is applicable to forfeiture juris
diction nevertheless rests in this Court. Counsel for
the defendant submits that sections 249 and 250 of
the Act are sufficiently broad to entitle the defend
ant to have the Court determine in these proceed
ings all relevant matters including those which
were subject matters of sections 160, 161, 162 and
163.
Sections 249(1) and 250 are:
249. (1) All penalties and forfeitures incurred under this
Act, or any other law relating to the customs or to trade or
navigation, may, in addition to any other remedy provided by
this Act or by law, and even if it is provided that the offender
shall be or become liable to any such penalty or forfeiture upon
summary conviction, be prosecuted, sued for and recovered
with full costs of suit, in the Exchequer Court of Canada *, or
in any superior court having jurisdiction in that province of
Canada where the cause of prosecution arises, or wherein the
defendant is served with process.
250. All penalties and forfeitures imposed by this Act, or by
any other Act relating to the customs or to trade or navigation
shall, unless other provisions are made for the recovery thereof,
be sued for, prosecuted and recovered with costs by the Attor
ney General of Canada, or in the name or names of the Deputy
Minister, or any officer or officers, or other person or persons
thereunto authorized by the Governor in Council, either
expressly or by general regulation or order, and by no other
person.
Those sections must be read together with sec
tions 160, 161, 162, 163 and 164. Reading the
sections together, it is my opinion that, while the
plaintiff is entitled in these proceedings to imple
ment, by judgment of this Court, the decision
given under section 163, the defendant is not en
titled to have opened up and adjudicated upon in
this action those things which were the subject
matters of and decided upon in the proceedings
taken under sections 160, 161, 162 and 163. It is
my opinion that the general wording of sections
249(1) and 250 is not sufficiently broad and
encompassing to render nugatory nor to cut down
what I consider to be the clear intention of Parlia
ment in dealing with the specific situations which
* Now Federal Court of Canada—see R.S.C. 1970 (2nd
Supp.) c. 10, s. 64(2).
were the subject matters of sections 160, 161, 162,
163 and 164. Sections 249 (1) and 250 are not in
conflict with sections 160, 161, 162 and 163. They
are, in respect of the matters dealt with in this
action, complementary.
If the defendant had given the notice that the
Minister's decision would not be accepted as pro
vided for in section 164, the Minister could have
referred the matter to the Court and then the
Court would have had jurisdiction (sections 165
and 166).
In my opinion, the defendant is not entitled
under the circumstances to go behind the Minis
ter's decision in these proceedings nor to have it
reviewed here. 2
In the event that another tribunal may, on
appeal, find that I am wrong in my conclusions
stated above, it seems to me expedient that I also
deal with the defendant's contention that the value
for duty in this case was U.S. $35,000 ($35,125 in
Canadian funds). Counsel for the defendant
stresses that the sale price was U.S. $35,000, the
amount which the defendant's witness indicated in
his evidence was the agreed price of the crane as it
was at the job site where he saw it in Philadelphia.
Defendant's counsel submitted that the cost of the
labour involved in dismantling and making the
crane ready for shipment into Canada should not
be included in the value for duty.
On the view which I take of this phase of the
matter, it is not necessary to make a finding in
respect of the truth or otherwise of the defendant's
witness' evidence regarding the arrangements for
the acquiring of the crane.
Sections 20, 21, 35, 36, 51(1) and 51(3) of the
Customs Act have relevance in the matter of
determining the value for duty.
Section 51(3) is:
51. (3) All such invoices shall faithfully exhibit the transac
tion between the exporter and the importer, and contain a true
and full statement of the actual price payable for the goods,
including cartons, cases and coverings of all kinds and all
2 This is not to say that a decision given pursuant to section
163 cannot be reviewed by the Court of Appeal pursuant to
section 28 of the Federal Court Act. Whether or not it would
be reviewable would, of course, be for the Court of Appeal to
decide. In any event such a proceeding would be quite different
from that here.
expenses incident to placing the goods in condition, packed
ready for shipment to Canada, and no such invoice shall state
any discount other than such as has been actually allowed to
the importer.
As I understand the submission of counsel for
the defendant, it is that "packed" in the wording
"all expenses incident to placing the goods in
condition, packed ready for shipment to Canada"
in section 51(3) necessarily implies the use of some
type of container. There was no evidence that the
goods were so contained.
I do not agree that the word "packed" in this
context carries such an implication. Included in
the definitions of "pack" in The Shorter Oxford
English Dictionary, Third Edition, are: "to make
into a pack or package; to put together as a
bundle, or in a box, bag, etc. esp. for transport or
storing."
This crane is a very large piece of equipment. It
can reach a very substantial height. Mr. Klein said
the building at which it was located was approxi
mately twenty stories. It could not have been
shipped without being dismantled. Its importation
into Canada required disassembly. When disas
sembled, the parts are loaded onto trucks for
transporting.
I find that the cost of disassembling the crane is
an expense incident to placing the goods in condi
tion, packed ready for shipment to Canada within
the meaning of section 51(3) of the Act.
If indeed, by the agreement for purchase, the
defendant did deal with the two figures, one of
U.S. $35,000 on site and the other being the cost
of dismantling, etc. done by McCloskey and Com
pany, that other, the difference between the total
amount paid by the defendant to McCloskey and
Company and U.S. $35,000 is, in my opinion, to
be included in the value for duty.
By reason of the decision pursuant to section
163 of the Act the defendant's indebtedness to the
plaintiff became $8,245.35, the amount the plain
tiff seeks to recover in this action. There is no
evidence that anything has occurred subsequent to
the decision under section 163 to discharge or
reduce that indebtedness.
The plaintiff will have judgment for $8,245.35
and costs to be taxed.
Counsel for the plaintiff may prepare a draft of
an appropriate judgment to implement the Court's
conclusion and move for judgment accordingly
pursuant to the General Rules and Orders of the
Court.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.