T-2579-82
Donald Stanley Harris (Plaintiff)
v.
The Queen in right of Canada (Defendant)
Trial Division, Walsh J.—Vancouver, March 20
and 28, 1984.
Customs and excise — Forfeiture — Plaintiff importing car
into Canada — Customs officer appraising car at less than
price paid without asking plaintiff amount paid — Plaintiff
never importing car before — Plaintiff signing completed
Casual Import Entry form without reading declaration details
of entry true to best of knowledge and belief — Plaintiff
paying duty as calculated by customs officer — Car subse
quently seized and subject to forfeiture unless net undervalua-
tion and net additional duties and sales tax paid — Ss. 192
and 205 Customs Act not applying as plaintiff not smuggling
nor harbouring car — S. 180 not applying as no violation of s.
18 — Whether forfeiture should stand when no mens rea —
Minister's refusal to remit forfeiture made without awareness
of all facts — Plaintiffs brother importing same model and
year car subsequent to plaintiff and declaring same value
assigned to plaintiffs car by appraiser — Brother not acting in
good faith — Minister not knowing cases not identical as
customs appraisal form not accompanying report forming
basis for Minister's decision — Penalty reduced in more
serious cases of deliberately false declarations or intent to
mislead — Natural justice requiring release of car on payment
of additional duty and excise tax due — Customs Act, R.S.C.
1970, c. C-40, ss. 2, 18(a),(b),(c), 46(1)(6),(4)(6),(d),(5), 150,
163(1),(2), 165, 180(1),(2)(b), 192(1)(c), 205(1),(3) — Federal
Court Act, R.S.0 1970 (2nd Supp.), c. 10, s. 18.
Plaintiff seeks the return of a 1965 Corvette automobile
seized for an alleged infringement of the Customs Act. He also
seeks an assessment of the penalty taking into account his lack
of mens rea when importing the car and relief from forfeiture
and penalty. A declaratory judgment is sought, pursuant to
section 18 of the Federal Court Act, that he is the lawful owner
of the car and that the payment be levied for duty in accord
ance with the normal rate. The plaintiff purchased the car in
California for $7,500 U.S. At the time of importation the
plaintiff presented all the documents that he had received in
California, none of which referred to the sale price or the model
year. The plaintiff had not imported cars before and was not
questioned concerning the value of the car. The appraiser
completed a form showing the year and model of the car, serial
number, mileage and condition. The factory list price, which
was substantially less than the actual price paid, was used to
determine the value of the car. The plaintiff filled in his name
and address on a Casual Import Entry form to which the
appraiser added the figures from her appraisal form and cal
culated the duty owing. The plaintiff signed the form without
reading the declaration that the particulars of the entry were
true and complete to the best of his knowledge and belief, and
paid the duty. Seven months later the car was seized and
subject to forfeiture unless the plaintiff paid $9,286.33, being
the net undervaluation of the car and the net additional duties
and sales tax, within 30 days. The plaintiff objects to such
forfeiture, alleging that he acted in good faith and without
mens rea. When the Minister refused to remit the forfeiture, he
had before him as well the case of the plaintiffs brother who
had also imported a 1965 Corvette from California subsequent
to the importation by the plaintiff. The plaintiffs brother,
however, could not claim good faith as he had knowingly made
a declaration giving the same value that the appraiser had
assigned to the plaintiffs car without having undergone an
appraisal at customs. The Minister did not know that the cases
were not identical because the customs appraisal did not
accompany the report on which he based his decision. The
defendant invokes sections 180(1), 192(1)(c) and 205(1) of the
Customs Act.
Held, the forfeiture should not have been made and the
vehicle should be released to the plaintiff on payment of the
additional customs duty and excise tax due.
Only subsection 180(1) applies to this case. Sections
192(1)(c) and 205(1) deal with smuggling. Clearly the plaintiff
did not smuggle the car into Canada nor keep it for six months
"without lawful excuse" since he in good faith believed that his
payment of duties, established by the customs officer, was all
that was due. Section 180 deals with the failure to comply with
section 18 which requires a written report to the collector of all
"goods" in his custody and the value thereof. The definition of
"goods" includes vehicles. The only non-compliance with which
the plaintiff can be charged results from his negligently signing
the Casual Import Entry form containing the values placed
therein by the appraiser and not volunteering to tell her that
they were too low. His explanation that he assumed that her
calculations represented the manner in which a vehicle was
valued for customs purposes is credible and not unrealistic for a
layman not accustomed to making such imports.
In Lawson et al. v. The Queen, it was held that "The power
to remit a forfeiture lies only with the Governor in Council; the
Court can only order a release of the goods or declare that they
remain forfeited." The Queen v. Canabec Trailers Inc. is
authority for not imposing a penalty where good faith exists,
although that case involved the recovery of duties plus penalty
and did not deal with forfeiture. While it is doubtful whether
the Court can or should interfere with an administrative deci
sion of the Minister, the evidence indicates that it was made
without full awareness of all the facts, namely of the appraisal
made in good faith by the customs officer which the plaintiff
adopted in his declaration. In much more serious cases of
deliberately false declarations or intent to mislead the penalty
has frequently been reduced or remitted and natural justice
requires that the full rigours of the law should not be applied to
maintain the forfeiture.
CASES JUDICIALLY CONSIDERED
APPLIED:
Lawson et al. v. The Queen, [1980] 1 F.C. 767 (T.D.);
Marun v. The Queen, [1965] 1 Ex.C.R. 280; His Majesty
The King v. Krakowec et al., [1932] S.C.R. 134; His
Majesty The King v. Bureau, [1949] S.C.R. 367; The
Queen v. Sun Parlor Advertising Company, et al., [1973]
F.C. 1055 (T.D.); Allardice v. The Queen, [1979] 1 F.C.
13 (T.D.); The Queen v. Canabec Trailers Inc., [1982] 1
F.C. 788 (T.D.).
COUNSEL:
G. Angelomatis for plaintiff.
A. Louie for defendant.
SOLICITORS:
G. Angelomatis, Vancouver, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
WALSH J.: The plaintiff seeks the return of his
1965 Chevrolet Corvette, Serial No. VIN
194375S103181, seized on or about August 18,
1981, for alleged infringement of the provisions of
the Customs and Excise Acts. He also seeks an
assessment of the penalty having relation to the
facts of the case, his lack of mens rea bringing the
motor vehicle into Canada, and relief from forfeit
ure and penalty. The matter is referred to this
Court pursuant to the provisions of section 150 of
the Customs Act.'
On February 17, 1982, plaintiff was informed
that the said motor vehicle would be released upon
payment of $9,286.33, to be forfeited and in
default of such payment for 30 days that the car
be forfeited. The present proceedings were institut
ed on April 13, 1982, within the three-month time
limit from the decision as required by subsection
150(2).
' R.S.C. 1970, c. C-40.
Relief is sought pursuant to section 18 of the
Federal Court Act [R.S.C. 1970 (2nd Supp.), c.
10]; a declaratory judgment is sought that he is
the lawful owner of the car and the payment be
levied for duty in accordance with the normal rate
of duty, namely 13.6%. It is contended that the
decision made by the Minister of National Reve
nue is punitive and arbitrary and that the amount
levied by way of penalty should be reduced.
An agreed statement of facts was filed to the
effect that plaintiff, on or about January 16, 1981,
purchased the said car in California, paying
$7,500 U.S. for it. He imported it into Canada at
Canada Customs, Pacific Highway in the Province
of British Columbia on or about January 18, 1981
and at that time signed a Casual Import Entry
form bearing that date, which was presented to
him for signature by Carol McKinley, a customs
officer. He had submitted to her three docu-
ments—an application for vehicle registration with
the California Department of Motor Vehicles, a
transfer tax receipt from the California Depart
ment of Motor Vehicles, and a suspense receipt
dated January 16, 1981 in regard to the said
Corvette. Pursuant to the Casual Import Entry
form, plaintiff paid tax duties and sales tax in the
amount of $327.66. Following an investigation on
July 21, 1981, plaintiff admitted to one Constable
John Slattery of the Royal Canadian Mounted
Police, that, as they probably knew already, he had
paid $7,500 U.S. for the car. It was seized on
August 18, 1981 and still remains in the custody of
the Royal Canadian Mounted Police.
Plaintiff, in testifying, explained the somewhat
surprising value of the car by stating that 1965
Corvettes were of special interest to some purchas
ers. As a young firefighter in Vancouver, he was
certainly not a collector of vintage cars, but this
model had always been one of his favourite cars,
and had a particular option which he wanted. He
saw an advertisement for it in the Los Angeles
Times and felt that the price of $7,500 U.S. was
realistic as he believed it might be worth as much
as $10,000 in Canada. He intended to use it only
on Sundays and special occasions. The vendor, in
California, attended to all the transfer formalities
and the documentation received is not very reveal
ing. He was given a receipt for the sum of $174,
which is apparently a transfer tax, another docu
ment called a "suspense receipt" for $99, which
states on the obverse side that it is evidence of
payment of fees for registration of the vehicle and
must be retained until the registration card is
received. It need not be displayed. A third docu
ment, headed State of California Department of
Motor Vehicles, addressed to whom it may con
cern, merely states that he has made application
for registration of the above-described vehicle and
gives the engine number and tab number and his
home address. A fourth document, entitled Trans
fer of a Vehicle or Vessel, and what purports to be
the serial number of the car, plaintiff's name as
buyer and the name of the seller was mailed to
him later. On the obverse of the form is a state
ment "To protect yourself from possible liability
resulting from the operation of the vehicle by the
purchaser, immediately notify the Department of
Motor Vehicles when you sell or transfer a vehicle.
Such notice will also assist in preventing your
being charged with traffic violations that may be
incurred by the party to whom you sold or trans
ferred the vehicle." It also states "You are
required by law to report the sale or transfer of
any vehicle or vessel registered in your name. The
report is to be made to the Department of Motor
Vehicles immediately after sale or transfer. For
reporting purposes you may use the reverse side of
this notice." There are other instructions given for
completing the form. Written over this in printed
writing are the words: "As of January 16, 1981"
and what appears to be the signature of the
vendor, and evidently his address. At the top of
this notice and almost indecipherable on the photo-
stat, which was all that was produced as a copy, is
the word "thousand" on one side, the words
"important notice", and the words "two hundred"
on the other side. There is no indication whatso
ever as to who wrote this in or the significance of
it. Plaintiff testified that it was not he who did so
and there is nothing to indicate that it has any
thing to do with the value of the car. What
appears somewhat extraordinary is that none of
the California documents include any reference to
what one might assume constituted the most
important information, namely the sale price and
the year of the car model.
Plaintiff testified that, on arriving at Canada
Customs, he stated that he had a car to declare
and was given a form to take inside. He gave all
the documents which he had received in California
to the lady customs appraiser there. He stated that
he was not questioned as to the value of the car.
The examiner stated that it was the first time she
had occasion to make such a valuation. He said
that he had never imported cars before and was
under the impression that a car over fifteen years
old was duty-free. He has since learned the
requirement is twenty years. No other proof was
made as to whether this is so or not.
The appraiser filled in the form showing the
year and model of the car, serial number, the
53,000 miles on it and that it was in good condi
tion. The next line of the form has three headings
entitled respectively "Factory List Price", "Facto-
ry Delivered Price" and "Bill of Sale", with an
indication that the heading which is not applicable
should be struck out. Actually, what was done was
that the factory list price was circled and shown as
$4,321; freight to point of shipment of $144 was
added and $55 for power windows. California
State tax of 6% in the amount of $271.20 was
added for a total of $4,791.20 on which 75%
depreciation was deducted for 16 years in use,
bringing the final figure to $1,197.80. No further
deductions were made for the condition of the car.
This figure was then converted into Canadian
dollars at 1.19, making the final figure of
$1,425.38 and the form was signed by the apprais
er "C. McKinley".
He was then given what is called a Casual
Import Entry form on which he filled in his name
and address. Miss McKinley then filled in all the
figures taken from her appraisal form. The $50
deduction was made, being the duty-free allowance
at the time, duty at 13.6% was applied to the
balance of $1,375.38, amounting to $187.05 duty.
Sales tax in the amount of $140.61 was then
applied to the value which had been assigned to
the car plus duty, for a total amount of $327.66.
All these figures were inserted by the appraiser.
He then signed the form without reading the dec
laration which states in part:
I declare that the particulars of this entry are true and com
plete to the best of my knowledge and belief.
He paid the sum of $327.66 claimed and
brought the car into Canada. He subsequently
spent the sum of $4,879.02 at D.J. Corvette
Repairs for repairs and renovation to it. Some six
months later, in July 1981, Constable Slattery of
the Royal Canadian Mounted Police interviewed
him as to what he had paid for the car in Cali-
fornia and he told him the truth. On August 18 the
car was seized for violation of the Customs Act.
On September 23, 1981, he was sent a form
from the Adjudications Director of the Customs
Department in Ottawa, stating the car was seized
and subject to forfeiture for having been unlawful
ly imported into Canada or being goods whereon
duty lawfully payable had not been paid and that
pursuant to section 161 of the Customs Act he had
30 days to present any information considered
appropriate. It is common ground that all notices
and provisions in connection with appeals were
made. On February 17, 1982, a further document
was received from the Adjudications Director
saying that pursuant to section 163 a decision had
been rendered that the car be released on payment
of $9,286.33 to be forfeited and that in default of
such payment for 30 days, the car be forfeited.
Section 163 provides that the Minister may refer
the matter to the Court for decision and section
165 repeats this provided the owner within 30 days
after being notified of the Minister's decision gives
him notice in writing that such decision will not be
accepted. The Minister refused to do this in a
letter dated March 2, 1982, as a result of which
the present proceedings were brought pursuant to
subsection 150(2) on April 13, 1982, three months
after the decision, the time limit provided for
therein.
On cross-examination plaintiff was asked why
he paid the sum of $327.66 claimed if he was
under the belief that a car over 15 years old would
enter Canada duty-free. He replied that he never
gave any thought to it and merely paid the sum
demanded. He fully cooperated with the customs
officer, even showing her that the serial number
could be found under the dashboard. He does not
recall telling her that it was a 1965 car although
this appears on the appraisal sheet. He stated that
he believes that the serial number of the car will
disclose its year to someone who has the proper
code book. He subsequently received from Cali-
fornia in the mail another form which, of course,
he did not have with him to clear the car through
customs, which does show the model as being
1965, and the sum of $174 paid as fees for the
registration, as previously indicated on the tempo
rary receipt. Again no value is shown for the car.
Another form from customs entitled "Statement
of Goods Seized" was eventually received and
signed by him, indicating how the amount now
claimed is calculated. It commences by showing a
valuation of $7,500 U.S. for the car being the
"true value", converts this to Canadian funds
deducting the $50 duty-free allowance, resulting in
duty of $1,207 and sales tax of $970.38 being
claimed. From this is deducted the declared values
and the duty of $187.05 and sales tax of $140.62
resulting from same, showing an undervaluation of
$7,499.62 Can., net additional duties of $1,019.95
and sales tax of $766.76, being due. Instead of
merely claiming these amounts, however, the net
undervalued amount of the car of $7,499.62 is
added, making the total $9,286.33. Plaintiff is
quite prepared to pay the additional duties of
$1,019.95 and sales tax of $766.76 but objects to
the penalty of forfeiture of the car unless the
undervalued amount of it of $7,499.62 is also paid,
alleging that he acted in complete good faith
throughout and with a total absence of mens rea.
Carol McKinley, the appraiser, also testified
and substantially corroborated plaintiff's evidence.
She appears to have acted with complete propriety,
although she has no recollection whatsoever of
plaintiff or this particular appraisal three years
ago. She stated that he would have been given a
yellow card by the primary officer when he said
that he had a declaration to make. She would then
ask for the bill of sale of the car. The only respect
in which her evidence differed from plaintiffs is
that she had in fact appraised cars before. She
conceded she does not recall doing one in which
there was no bill of sale showing the price. She
stated quite frankly, however, that she does not
know why the heading "Bill of Sale" even appears
on the appraisal form as it is not customary to go
by this. They have a book showing the factory list
price for all cars. She is under the impression that
serial numbers will, by their sequence, indicate the
year of manufacture of the car even though the
actual number 65 does not appear anywhere in the
serial number of the subject car. She believes,
therefore, she got the model from this book and
she certainly obtained the factory list price, freight
and addition for power windows from it. 75 per
cent is the maximum depreciation allowed no
matter how old the car is. No further allowance
was made for the condition of the car since it
appeared to be in the normal condition which
might be expected for a sixteen-year-old car.
When questioned as to what would happen if there
were a bill of sale showing a much greater price
than that indicated in the book, then she said the
appraiser would, of course, use the price shown in
the bill of sale. Normally, the bill of sale is not
used. The reason for this is obvious as it might be
fraudulent, as frequently happens in importations
to show a price less than what was actually paid.
As already indicated there was nothing in any of
the documents received by plaintiff from the
vendor or the State of California when he bought
the car which indicated the price paid. She stated
that the regulation book used merely shows the
factory list price at the time the car was bought
and of course makes no provision for any increase
in value which might occur thereafter in the event
of the car becoming a collector's item or vintage
car, so the customs appraisers do not take this into
consideration.
The only discrepancy between her evidence and
that of plaintiff is easily explained as she stated
that it may have been the first appraisal she had
made of a car for which a bill of sale showing the
price was not produced. It would appear that
plaintiff may have misunderstood her as saying
that she had never made such an appraisal before.
She stated that when the papers were sent to her
for examination in preparation for giving evidence,
her appraisal form was not attached to the Casual
Import Entry form on which she had transcribed
the figures and which was, of course, signed by
plaintiff. Her appraisal form should have been
attached. In his examination for discovery Sgt.
Gordon Cameron White of the R.C.M.P., at that
time a corporal, admitted that he also did not have
a copy of the appraisal and was not aware that it
had been done other than what Harris had told
him. This is a most important point as will be seen
later. There is also a discrepancy, although of
considerably less significance, in the fact that
plaintiff's copy of the Casual Import Entry form
does not show the year or model of the car whereas
the original copy does. As plaintiffs copy is a
carbon, this must have been added later. The
witness stated that the addition was not in her
writing.
While defendant invokes sections 180(1),
192(1)(c) and 205(1) of the Customs Act, it
appears to me that it is only subsection 180(1)
which could be applied to the facts of this case.
Paragraph 192(1)(c) comes under the heading
"Smuggling" and reads as follows:
192. (1) If any person
(c) in any way attempts to defraud the revenue by avoiding
the payment of the duty or any part of the duty on any goods
of whatever value;
such goods if found shall be seized and forfeited, or if not found
but the value thereof has been ascertained, the person so
offending shall forfeit the value thereof as ascertained, such
forfeiture to be without power of remission in cases of offences
under paragraph (a).
Subsection (3) provides for penalty and prosecu
tion as an indictable offence of every one who
smuggles or clandestinely introduces into Canada
any goods subject to duty of the value for duty of
two hundred dollars or over.
Subsection 205(1) is also under the same head
ing dealing with a person harbouring, without
lawful excuse, any goods unlawfully imported into
Canada when the duties lawfully payable have not
been paid. Again, subsection (3) provides for a
penalty and prosecution as an indictable offence.
Whether or not the proper duties were paid, it is
clear that plaintiff did not smuggle the car into
Canada nor keep it for six months therein "with-
out lawful excuse" since he in good faith believed
that his payment of duties, the amount of which
had been established by the appraisal of the cus
toms officer, was all that was due.
Subsection 180(1) reads as follows:
180. (1) Where the person in charge or custody of any article
mentioned in paragraph 18(b) has failed to comply with any of
the requirements of section 18, all the articles mentioned in
paragraph (b) of that section in the charge or custody of such
person shall be forfeited and may be seized and dealt with
accordingly.
Section 18, to which reference is made, reads as
follows:
18. Every person in charge of a vehicle arriving in Canada,
other than a railway carriage, and every person arriving in
Canada on foot or otherwise, shall
(a) come to the custom-house nearest to the point at which
he arrived in Canada, or to the station of the officer nearest
to such point if that station is nearer thereto than a
custom-house;
(b) before unloading or in any manner disposing thereof,
make a report in writing to the collector or proper officer at
such custom-house or station of all goods in his charge or
custody or in the vehicle and of the fittings, furnishings and
appurtenances of the vehicle and any animals drawing it and
their harness and tackle, and of the quantities and values of
such goods, fittings, furnishings, appurtenances, harness and
tackle; and
(c) then and there truly answer all such questions respecting
the articles mentioned in paragraph (b) as the collector or
proper officer requires of him and make due entry thereof as
required by law.
Even in section 180, paragraph (2)(b) provides for
conviction as an indictable offence for "unlawful
importation" as well as to a penalty amounting to
the value of the articles.
This section does not deal with smuggling but
with failure to comply with the requirements of
section 18, which is a different matter. While
section 18 is clumsily worded in that the reference
in paragraph (b) to "all goods in his charge or
custody or in the vehicle and of the fittings, fur-
nishings and appurtenances of the vehicle" might
appear to exclude the vehicle itself, the definition
of "goods" in section 2 includes vehicles and in
practice there is no doubt that imported automo
biles must be declared.
Plaintiff complied with paragraph (a) by
making a declaration and complied with the letter
of paragraph (b) by making a written report of the
value of the car (as determined by the officer
making the appraisal, which was not however the
true value). He also complied with paragraph (c)
by answering any questions which were asked of
him by the collector and making due entry. In fact
he was not asked any questions as to the value of
the car. The collector does not remember him at
all. He denies that he was so questioned. The
collector partially confirms this by stating that she
would get the value from the book indicating the
factory list price in 1965 then deducting deprecia
tion. The only non-compliance with which plaintiff
can be charged results from his negligently signing
the Casual Import Entry form containing the fig
ures of value placed therein by the appraiser, and
not volunteering to tell her that this valuation was
far too low, as he had paid $7,500 U.S. for it. His
explanation that he assumed that her calculations
represented the manner in which a vehicle was
valued for customs purposes and accepted them, is
credible and not unrealistic for a layman not
accustomed to making such imports. It can even be
argued that the declaration that the particulars of
the entry are true and complete to the best of his
knowledge and belief is not false, since the Casual
Import Entry form does not have a heading
indicating the price paid for the vehicle but only
the valuation placed by the appraiser under the
heading "Value for Duty".
While plaintiff contends that section 180
requires existence of mens rea, not to be implied in
the same way as in sections 192(1)(c) and 205(1),
I hesitate to go that far in interpreting subsection
(1) of section 180. While it is true that subsection
(2) imposing a penalty of a sum equal to the value
of the articles imported, refers to "unlawful impor
tation" it may be that failure to declare and pay
customs duties and sales tax on the actual value of
the goods itself constitutes an "unlawful importa
tion" even in the absence of mens rea, the making
of any statements or production of any documents
intended to mislead the appraiser.
The right of customs appraiser to re-appraise
the value of the vehicle found in paragraph
46(2)(b) of the Act within two years in any case
where he deems it advisable, goes further than
paragraph (4)(b) which gives the Deputy Minister
the right to re-appraise the value at any time if the
importer has made any misrepresentation or com
mitted any fraud in making the entry of those
goods. As I have pointed out, I do not think any
misrepresentation or fraud was made by plaintiff.
Paragraph (4)(d), however, gives the Deputy Min
ister power to do so within two years of the date of
entry in any other case where it is deemed advis
able. When this is done subsection (5) provides
that the importer shall pay any additional duties or
taxes payable.
Section 163 provides that after notification of
seizure or detention is given to the owner pursuant
to section 161, and objection is taken by the owner,
a report is made by the Deputy Minister or such
other officer as the Minister may designate and
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. Subsection
(2) provides that he may authorize a Deputy Min
ister or other officer deemed expedient to exercise
these powers. It is by no means uncommon for the
Minister to release, on terms of payment of the
customs duty and excise taxes due, the goods
seized and remit the penalty or forfeiture. Not
only was that not done in the present case but by
letter of March 2, 1982 to the Chief of the West
ern Adjudications Directorate stated that the Min
ister would not use section 165 of the Customs Act
to refer notice of non-acceptance to the Court as
"these cases are not ones he would so refer". The
reference to "these cases" in the plural, the head-
note including customs seizure 49539 against
Daryl S. Harris, provide the clue as to why the
drastic step of forfeiture was maintained in this
case despite the apparent good faith of plaintiff.
While it is idle to speculate what the Minister's
motives may have been, there was another action
brought in this Court by Daryl S. Harris under
number T-2580-82 to be heard immediately fol
lowing the present action. The said Daryl S.
Harris, brother of the present plaintiff, had subse
quently imported an identical 1965 Corvette from
California and had made a declaration giving the
identical value which the appraiser had given for
plaintiff's car in the present case. In the case of the
said Daryl S. Harris, there had been no appraisal
at customs. The lack of an appraisal is a very
significant difference from the present case, so
that in completing his Casual Import Entry form
he had knowingly submitted a value considerably
less than what he paid for the car and therefore
could not claim good faith as in the case of the
present plaintiff. He recognized this and following
the conclusion of the hearing in the present case,
withdrew his action to set aside the forfeiture of
his car. The two cases are not identical, therefore,
but the Minister did not know this in declaring the
forfeiture of plaintiff's car, to be released only
upon payment of $9,286.33. The Minister was not
aware of this distinction because, either by design
or inadvertently, the appraisal made by Miss
McKinley had been mislaid and was neither in her
possession nor in the possession of Corporal White,
who made the report on which the decision was
based. He himself admitted in his examination for
discovery that standard policy on undervaluations
imposes the penalty of forfeiture, without taking
any mitigating factors into consideration. He
stated that he, and everyone else in his section,
always followed this policy since he has no discre
tion in the matter. That is no doubt so at his level
but in view of his not having a copy of the apprais
al or even being aware that it had been done, as he
also admitted, the most pertinent part of the infor
mation was missing in the report he made.
While it would undoubtedly only be at a higher
level that discretion as to remitting the forfeiture
would be exercised, the decision should certainly
have been made only with full awareness of all the
facts.
That now brings us to the question as to what, if
anything, the Court can do in the matter. In the
case of Lawson et al. v. The Queen, 2 Mahoney J.
stated at pages 771-772:
In considering an application to vacate a forfeiture, the Court is
bound to consider all grounds under which the evidence dis
closes the goods might have been forfeited. It cannot limit its
consideration only to the stated grounds of forfeiture. The
Court is, however, limited to a determination of whether or not
the goods were, in fact and law, liable to forfeiture. The power
to remit a forfeiture lies with the Governor in Council; the
Court can only order a release of the goods or declare that they
remain forfeited.
In that case dealing with forfeiture of a truck and
a trailer a definitely false statement had been
made to the effect that the trailer had been bought
in Ottawa. Both vehicles were forfeited. Eventual
ly the truck was released against a cash deposit of
which all but $500 was ultimately remitted, while
the trailer remained in forfeit. The Court found
that Rioux had recanted and probably told the
truth before the forfeiture was announced. Refer
ence was made at page 773 to section 2 of the Act
which reads as follows:
2. (1) In this Act, or in any other law relating to the customs,
"seized and forfeited", "liable to forfeiture" or "subject to
forfeiture", or any other expression that might of itself imply
that some act subsequent to the commission of the offence is
necessary to work the forfeiture, shall not be construed as
rendering any such subsequent act necessary, but the forfeit
ure shall accrue at the time and by the commission of the
offence, in respect of which the penalty of forfeiture is
imposed;
The judgment then concludes [at page 773]:
In law, the truck and trailer were forfeited when the lies were
told.
It is of interest to note that the words at the
time of the commission "of the offence" apparent
ly introduces the element of mens rea unless
2 [1980] 1 F.C. 767 (T.D.).
"offence" is given a very broad interpretation so as
to include a wrong declaration made in good faith.
A similar finding was made by Cattanach J. in
the case of Marun v. The Queen, 3 dealing with the
importation of diamonds, in which he stated at
page 295:
The forfeiture is not brought about by any act of the
Customs officials or officers of the Department, but it is the
legal unescapable consequence of the unlawful importation of
the goods by the suppliant, Marun. The goods thereupon
became the property of the Crown and no act by any officer of
the Crown can undo that forfeiture.
It is interesting to note, however, that at page
292 Cattanach J. states, with reference to sections
18 and following of the Act:
Accordingly there is a threefold obligation on any person
bringing goods into Canada, (1) to report the goods to Cus
toms, (2) to make due entry of them, and (3) to pay the taxes.
None of these obligations were carried out by the suppliant
Marun ... .
That is certainly not the situation here.
In an old Supreme Court of Canada case of His
Majesty The King v. Krakowec et al., 4 the Court
states at page 143:
It is not for the court to say if, in some cases,—such as, for
example, when the vehicle utilized was stolen from its owner—
the forfeiture may effect a hardship. Such cases are specially
provided for in subs. 2 of sec. 133 of the Excise Act. The power
to deal with them is thereby expressly vested in the Governor in
Council, thus leaving full play to the operation of sec. 91 of the
Consolidated Revenue and Audit Act (c. 178 of R.S.C.
(1927)), for the remission of forfeitures. *
In the case of His Majesty The King v. Bureau'
an automobile was forfeited when the owner on
entering Canada declared only a rifle he had in his
possession and neglected to declare a very large
quantity of cigarettes. The judgment of Rinfret
C.J. stated at page 377:
3 [1965] 1 Ex.C.R. 280.
4 [1932] S.C.R. 134.
5 [1949] S.C.R. 367.
* The sections referred to were, of course, those in effect at
the time of the judgment.
Referring again to subsection (o) of section 2, the words
"seized and forfeited", "liable to forfeiture" or "subject to
forfeiture", or any other expression which might of itself imply
that some act subsequent to the commission of the offence is
necessary to work the forfeiture, shall not be construed as
rendering any such subsequent act necessary, but the forfeiture
shall accrue at the time and by the commission of the offence,
in respect of which the penalty or forfeiture is imposed. There
fore, in acting as he did, the respondent made himself liable to
the seizure and forfeiture of the cigarettes and the automobile,
even if he had not subsequently got beyond the Customs Office
in possession of these goods.
The more recent case of The Queen v. Sun
Parlor Advertising Company, et al. 6 perhaps
resembles more closely the present case in that
Parr was, apparently in good faith, importing film
into Canada on 31 occasions in the belief that it
was not dutiable based on an appraisal notice
given by a customs officer on a previous occasion
so indicating. Urie J. found that goods were not
introduced into Canada by smuggling or clandes
tinely but, nevertheless, the requirements of sec
tions 18, 20, 21 and 22 of the Act, were not
complied with. Parr made an oral declaration on
each of the 31 occasions and was allowed to pass
with the goods in question.
At pages 1065-1066, Urie J. states:
Unlawful importation arises through the defendants' failure
to comply with the provisions of section 18(b) of the Act and,
therefore, under section 180(1) the goods are forfeited, and by
virtue of section 2(1) such forfeiture takes place at the time of
the commission of the offence.
The results of a finding to this effect by Cat-
tanach J. in the Marun case (supra) were referred
to. In the present case, however, there was no
non-compliance with paragraph 18(b).
Reference was also made to the case of Allard-
ice v. The Queen' in which Dubé J. states at page
23 in reference to the definition "seizure" and
"forfeiture" in section 2 of the Act:
Those expressions must receive the interpretation which best
protects the revenue and must not be construed so as to render
any subsequent act necessary to complete the forfeiture. In
other words, as stated before, forfeiture is established by the
commission of the offence, and the actual seizure or seizures by
6 [1973] F.C. 1055 (T.D.).
7 [1979] 1 F.C. 13 (T.D.).
customs officers are not necessary. Once the vessel and goods
were forfeited to the Crown, the Crown had every right to exact
all the duties, taxes and penalties pertaining thereto, whatever
the number of seizures subsequently effected by customs
officers.
In the case of The Queen v. Canabec Trailers
Inc., 8 Marceau J. in a case involving making a
false declaration in connection with nine trailers,
as a result of the owner's belief that refrigeration
units installed in them were not dutiable, refused
to impose any penalty other than the duty payable
on the total purchase price including the refrigera
tion units installed in the trailers. He stated at
page 791:
On the other hand, the claim for a penalty appears to me to
be without foundation. The defendant, through the testimony of
its manager at the time, has proved to my satisfaction that its
declarations were not made for the purpose of misleading or
avoiding the payment of duty. On the contrary, the defendant
acted in good faith, in my view, its error in interpreting the
scope of the exemption being quite understandable, as indicated
by the fact that it has been made by certain customs officers
themselves.
This is authority for not imposing a penalty where
good faith exists, but it must be pointed out that it
was rendered in an action taken by The Queen to
recover duties plus penalty and did not deal with
forfeiture of the vehicles in question.
Applying this jurisprudence to the present case,
there is no doubt that it was proper to re-assess the
customs duties and excise tax payable on the basis
of a valuation of $7,500 U.S. for the car. It is also
true that if the car was properly forfeited at the
time of entry as a result of non-payment of what
can now be considered as the correct amount of
duties payable, the Minister cannot remit this
forfeiture himself. The question which arises, how
ever, is whether the car can properly be considered
as forfeited in the first instance in the absence of
any mens rea by plaintiff who was induced by the
appraiser into signing the Casual Import Entry
form including figures inserted therein by her by
following the normal procedure, rather than by
any inducement by him or misleading or false
information given by him which resulted in these
figures. In much more serious cases of deliberately
8 [1982] 1 F.C. 788 (T.D.).
false declarations or intent to mislead the penalty
has frequently been reduced or remitted and natu
ral justice would seem to require that the full
rigours of the law should not be applied to main
tain the forfeiture in this case.
While it is doubtful whether the Court can or
should interfere with an administrative decision of
the Minister, the evidence in this case indicates
that it was made without full awareness of the
facts, namely of the appraisal made in good faith
by the customs appraiser, which plaintiff adopted
in his declaration.
In accordance with the conclusion of Mahoney
J. in the Lawson case (supra) that the Court
cannot remit a forfeiture but can only order a
release of the goods or declare that they remain
forfeited, I find that on the facts of this case the
forfeiture should not have been made and order
the release of the motor vehicle to plaintiff on
payment of the amount of additional customs duty
and excise tax due in the amount of $1,786.71,
without costs.
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.