A-565-02
2004 FCA 110
Her Majesty the Queen (Appellant)
v.
CC Havanos Corporation Ltd. (Respondent)
Indexed as: CC Havanos Corp. (Re) (F.C.A.)
Federal Court of Appeal, Létourneau, Décary and Nadon JJ.A.--Montréal, March 11; Ottawa, March 17, 2004.
Customs and Excise -- Excise Act -- Appeal from decision of Trial Judge granting in part information for condemnation of goods seized, forfeited under Excise Act -- Trial Judge also ordering restoration of certain property lawfully seized -- Whether Trial Judge had discretion to order such restoration -- Trial Judge misconstruing, misapplying Excise Act, s. 116 -- Excise Act, s. 116(2) providing no discretion when goods legally seized, forfeited -- Appeal allowed.
Construction of Statutes -- Whether Excise Act, s. 116(2) giving Court jurisdiction to release/remit to respondent part of forfeited material -- Excise Act, s. 116(2) not ambiguous -- Supreme Court of Canada has clearly stated powers of Court under Excise Act, s. 116(2) -- Requirement to act "as the case requires" meaning that when goods legally seized and forfeited, court must condemn them.
This was an appeal from a decision of a Trial Division Judge who granted, in part, an information for the condemnation of goods seized and forfeited under the Excise Act pursuant to paragraphs 88(1)(a), (b) and (c) of the Act. The goods included tobacco and material used in the manufacturing of tobacco. The Judge found that the forfeiture was valid, but ordered that the material which assisted in the manufacturing and conservation of cigars be released and remitted to the respondent. The issue was whether the Judge had jurisdiction under subsection 116(2) to remit part of the forfeited material as he did.
Held, the appeal should be allowed.
The Judge misconstrued and misapplied section 116 of the Act and its relationship with section 88. Having found that all the material had been properly seized and forfeited pursuant to section 88, he had no discretion under subsection 116(2) to release any of the said material. Courts have stressed the great importance of forfeiture provisions in taxation statutes as law enforcement tools to ensure compliance in matters relating to revenue. Forfeiture is a reasonable measure to frustrate further criminal enterprise, protect the public welfare and secure the Crown revenue in the public interest. In The King v. Krakowec et al., the Supreme Court of Canada interpreted former section 124, the text of which is almost word for word that of section 116. It ruled that where goods have been properly seized and forfeited, the court thereunder is vested with no discretion, it must decide according to law. Both former subsection 124(2) and new subsection 116(2) stipulate that the court must act "as the case requires". This means that, when the goods have been legally seized and forfeited, the court has no other option than to condemn them. It cannot release them. Subsection 116(2) is not ambiguous. The Supreme Court of Canada has clearly stated what the powers of the Court are under that subsection. The interpretation given to subsection 116(2) of the Act does not leave a person whose property has been condemned without remedy. The authority to grant relief in such circumstances is vested with the Governor in Council pursuant to subsection 23(2) of the Financial Administration Act.
statutes and regulations judicially
considered
Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], ss. 1, 8, 11, 12.
| Criminal Code, R.S.C., 1985, c. C-46, ss. 2 "offence-related property" (as enacted by S.C. 1997, c. 23, s. 1; 2001, c. 32, s. 1), 490.1-490.9 (as enacted by S.C. 1997, c. 23, s. 15; 2001, c. 32, ss. 30-36). |
| Excise Act, R.S.C. 1927, c. 60, s. 124. |
| Excise Act, R.S.C. 1970, c. E-12, s. 163(3). |
| Excise Act, R.S.C., 1985, c. E-14, s. 88(1), 116, 117(1). |
| Financial Administration Act, R.S.C., 1985, c. F-11, s. 23(1) "penalty", 23(2) (as am. by S.C. 1991, c. 24, s. 7). |
cases judicially considered
applied:
The King v. Krakowec et al., [1932] S.C.R. 134; [1932] 1 D.L.R. 316; (1931), 57 C.C.C. 96; Porter v. Canada, [1989] 3 F.C. 403; (1989), 48 C.C.C. (3d) 252; 40 C.R.R. 263; 26 F.T.R. 69; 2 T.C.T. 4141; [1989] 1 T.S.T. 2115 (T.D.).
considered:
Industrial Acceptance v. The Queen, [1953] 2 S.C.R. 273; [1953] 4 D.L.R. 369; (1953), 107 C.C.C. 1.
referred to:
Zarowney, Joe v. The Queen, [1956] Ex. C.R. 16; [1956] C.T.C. 1; (1955), 56 DTC 1025; The King v. Central Railway Signal Co., [1933] S.C.R. 555; [1933] 4 D.L.R. 737; Becta Transport Ltd. v. Canada (1995), 93 F.T.R. 132 (F.C.T.D.); Daigneault v. Minister of National Revenue (Customs and Excise) (1990), 44 F.T.R. 226; 4 T.C.T. 6003 (F.C.T.D.); Duchesne v. Canada (1996), 120 F.T.R. 28 (F.C.T.D.); Excise Act & a 1970 Chrysler Automobile (In re), [1972] F.C. 1053 (T.D.); Gosselin, Marcel v. The Queen, [1954] Ex.C.R. 658; Industrial Acceptance Corpn. Ltd. v. The Queen, [1952] Ex. C.R. 530; James, Earl Anglin v. The Queen, [1952] Ex. C.R. 396; Lacourse v. Canada (1993), 65 F.T.R. 115 (F.C.T.D.); Lawson v. R., [1980] 1 F.C. 767 (T.D.); Mayberry, Herbert Frederick v. The King, [1950] Ex. C.R. 402; (1950), 98 C.C.C. 295; Pourvoirie Hart 2551-5651 Québec Inc. v. Canada (1992), 58 F.T.R. 114 (F.C.T.D.); Stacey (Re) (1994), 87 F.T.R. 303 (F.C.T.D.); Thul (Re) (1995), 92 F.T.R. 295 (F.C.T.D.).
APPEAL against a decision of the Trial Division ([2003] 2 F.C. 241; (2002), 220 D.L.R. (4th) 726; 223 F.T.R. 82) holding that a forfeiture under the Excise Act, section 88 was valid, but ordering the release of part of the forfeited material. Appeal allowed.
appearances:
Jacques Mimar for appellant.
Bruce Taub for respondent.
solicitors of record:
Deputy Attorney General of Canada for appellant.
Bruce Taub, Montréal, for respondent.
The following are the reasons for judgment rendered in English by
[1]Létourneau J.A.: This is an appeal against a decision of a judge of the Trial Division (Judge) who granted, in part, an information for the condemnation of goods seized and forfeited under the Excise Act, R.S.C., 1985, c. E-14 (Act) [[2003] 2 F.C. 241]. The goods were cigars, manufactured tobacco, raw tobacco and other material in stock, engines, machinery and utensils on the premises. They were seized pursuant to paragraphs 88(1)(a), (b) and (c) of the Act which makes their seizure and forfeiture mandatory:
88. (1) Any of the following things, namely,
(a) all grain, malt, raw tobacco and other material in stock,
(b) all engines, machinery, utensils, worms, stills, mash-tubs, fermenting-tuns, tobacco presses or knives,
(c) all tools or materials suitable for the making of stills, worms, rectifying or similar apparatus, and
(d) all spirits, malt, beer, tobacco, cigars and other manufactured articles,
that are at any time found in any place or premises where anything is being done that is subject to excise, and for which a licence is required under this Act, but in respect of which no licence has been issued, shall be seized by any officer having a knowledge thereof and be forfeited to the Crown, and may either be destroyed when and where found or removed to a place for safe-keeping, in the discretion of the seizing officer. [Emphasis added.]
[2]The learned Judge found that the forfeiture was valid, but ordered that the material which assisted in the manufacturing and conservation of cigars, such as moulds, boxes, tobacco presses or knives, work tables, humidifier, be released and remitted to the respondent. However, the tobacco itself, whether manufactured or raw, was condemned.
[3]The issue before this Court is whether the Judge had jurisdiction under subsection 116(2) of the Act to remit to the respondent part of the forfeited material as he did. It should be noted that the claim to property seized pursuant to section 116 is subject to specific conditions, including a limitation period. The section reads:
116. (1) As soon as an information has been filed in any court for the condemnation of any goods or thing seized under this Act, notice thereof shall be posted in the office of the registrar, clerk or prothonotary of the court, and in the office of the collector or chief officer in the excise division in which the goods or thing has been seized.
(2) Where the owner or person claiming the goods or thing referred to in subsection (1) presents a claim to the court, gives security and complies with all the requirements of this Act in that behalf, the court at its sitting immediately after the notice referred to in that subsection has been posted during one month may hear and determine any claim that has been duly made and filed in the meantime and release or condemn the goods or thing, as the case requires, otherwise the goods or thing shall, after the expiration of that month, be deemed to be condemned and may be sold without any formal condemnation thereof.
(3) No claim on behalf of any person who has given notice of intention to claim before the posting of the notice referred to in subsection (1) shall be admitted unless it is made within one week after the posting thereof, nor shall any claim be admitted unless notice thereof has been given in writing to the collector or superior officer within one month from the seizure of the goods or thing. [Emphasis added.]
[4]Within a month from the day of the seizure and forfeiture, the respondent gave notice to the appellant pursuant to subsection 117(1) of the Act that he intended to claim the goods. The appellant replied to this notice with a notice of information and information pursuant to subsection 116(1) seeking an order for the condemnation of the goods seized and forfeited. The respondent then sought relief under subsection 116(2).
[5]Counsel for the respondent did not file written submissions with the Court. At the hearing, he submitted that the Judge had the authority to make a distinction as he did between the objects seized, namely between the tobacco itself and the rest of the material which was used in the manufacturing of the said tobacco. He also supported the Judge's conclusion that section 116 was ambiguous and, therefore, should be interpreted in favour of the respondent. He shared the views of the Judge that subsection 116(2) gave him jurisdiction to order the release of part of the material seized and forfeited.
[6]With respect, I believe that the learned Judge misconstrued and misapplied section 116 of the Act and its relationship with section 88.
[7]The proceeding that was engaged pursuant to sections 88 and 116 is a proceeding in rem, that is to say "a proceeding against the thing": The King v. Krakowec et al., [1932] S.C.R. 134, at page 142. Such a proceeding seeks the condemnation of the thing itself seized and forfeited, not that of its owner or possessor. Section 88 identifies those things that are to be seized and forfeited in case of a violation of that section.
[8]The learned Judge having found that all the material had been properly seized and forfeited pursuant to section 88 of the Act, he had, according to a long and authoritative line of judgments, no discretion under subsection 116(2) to release any of the said material: see The King v. Krakowec et al., supra; Zarowney, Joe v. The Queen, [1956] Ex. C.R. 16; The King v. Central Railway Signal Co., [1933] S.C.R. 555; Becta Transport Ltd v. Canada (1995), 93 F.T.R. 132 (F.C.T.D.); Daigneault v. Minister of National Revenue (Customs and excise) (1990), 44 F.T.R. 226 (F.C.T.D.); Duchesne v. Canada (1996), 120 F.T.R. 28 (F.C.T.D.); Excise Act & a 1970 Chrysler Automobile (In re), [1972] F.C. 1053 (T.D.); Gosselin, Marcel v. The Queen, [1954] Ex. C.R. 658; Industrial Acceptance Corpn. Ltd. v. The Queen, [1952] Ex. C.R. 530; James, Earl Anglin v. The Queen, [1952] Ex. C.R. 396; Lacourse v. Canada (1993), 65 F.T.R. 115 (F.C.T.D.); Lawson v. R., [1980] 1 F.C. 767 (T.D.); Mayberry, Herbert Frederick v. The King, [1950] Ex. C.R. 402; Porter v. Canada, [1989] 3 F.C. 403 (T.D.); Pourvoirie Hart 2551-5651 Québec Inc. v. Canada (1992), 58 F.T.R. 114 (F.C.T.D.); Stacey (Re) (1994), 87 F.T.R. 303 (F.C.T.D.); Thul (Re) (1995), 92 F.T.R. 295 (F.C.T.D.).
[9]There is no lack of sympathy in many of these cases towards the persons whose property has been condemned: see for example Porter v. Canada, supra; Daigneault v. Minister of National Revenue (Customs and Excise), supra. Indeed, courts have alluded from time to time to the severity of forfeiture provisions in taxation statutes or their stern and draconian aspect: see Porter v. Canada, supra, at pages 407 and 420; James, Earl Anglin v. The Queen, supra, at page 404; Gosselin, Marcel v. The Queen, supra.
[10]However, they have also stressed their great importance as law enforcement tools to ensure compliance in matters relating to revenue. In Porter v. Canada, supra, the plaintiff constitutionally challenged the validity of subsection 163(3) of the Act [Excise Act, R.S.C. 1970, c. E-12] on the basis that the subsection offended sections 8, 11 and 12 of the Canadian Charter of Rights and Freedoms [being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]] (Charter). Joyal J. rejected the plaintiff's submissions and, in any event, expressed the view that the legitimacy of forfeiture could easily be justified as a reasonable measure to frustrate further criminal enterprise, protect the public welfare and secure the Crown revenue in the public interest. At page 423, he wrote:
. . . Parliament may justifiably be given some latitude in determining the appropriate remedy to ensure compliance in matters relating to revenue (including customs, excise and income tax) where voluntary disclosure is the rule and inspection and enforcement by the state the exception.
[11]Words to the same effect can be found in the reasons for judgment of Rand J., of the Supreme Court of Canada, in Industrial Acceptance v. The Queen, [1953] 2 S.C.R. 273, at page 277:
The forfeiture of property used in violation of revenue laws has for several centuries been one of the characteristic features of their enforcement and the considerations which early led to its adoption as necessary are not far to seek. Smuggling, illegal manufacture of liquors, illegal sale of narcotics and like activities, because of their high profits and the demand, in certain sections of society, for them, take on the character of organized action against the forces of law; and with the techniques and devices, varying with the times, that have been open to these enemies of social order, the necessity to strike against not only the persons but everything that has enabled them to carry out their purposes has been universally recognized.
At page 278, he went on to add, after a review of the legislative history of forfeiture provisions, that "[f]rom this uniform legislative judgment, it is at once apparent that forfeiture has from the beginning been treated as one of the necessary conditions for compelling substantial obedience to revenue laws".
[12]No constitutional challenge as to the validity of sections 88 and 116 of the Act has been raised in the present instance although I am very much inclined to believe, like Joyal J. did, that, if found to be in breach of the Charter, these provisions would be saved under section 1 of the Charter. I note in passing that Parliament, in its never-ending struggle to ensure compliance with the law, has seen fit to introduce recently in the Criminal Code [R.S.C., 1985, c. C-46] the concept of offence-related property and provide for their forfeiture by means, inter alia, of an application for an in rem forfeiture: see section 2 which defines "offence-related property" [as enacted by S.C. 1997, c. 23, s. 1; 2001, c. 32, s. 1] as a property by means or in respect of which an indictable offence is committed or that is used or is intended for use in the commission of an indictable offence and sections 490.1-490.9 [as enacted by S.C. 1997, c. 23, s. 15; 2001, c. 32, ss. 30-36] which deal with the forfeiture itself.
[13]The text of section 116 of the Act is, in essence, almost word for word, the text of former section 124 [R.S.C. 1927, c. 60] which was considered by the Supreme Court of Canada in The King v. Krakowec et al., supra:
Excise Act, R.S.C. 1927, c. 60, s. 124
124. So soon as an information has been filed in any court for the condemnation of any goods or thing seized under this Act, notice thereof shall be posted up in the office of the registrar, clerk or prothonotary of the court, and also in the office of the collector or chief officer in the excise division wherein the goods have been seized or thing has been seized as aforesaid.
2. If the owner or person claiming the goods or thing presents a claim to the same and gives security and complies with all the requirements of this Act in that behalf, the said court, at its sitting next after the said notice has been so posted during one month may hear and determine any claim which has been duly made and filed in the meantime, and release or condemn the goods or thing, as the case requires; otherwise the same shall, after the expiration of such month, be deemed to be condemned as aforesaid, and may be sold without any formal condemnation thereof.
3. No claim on behalf of any person who has given notice of his intention to claim before the posting of such notice as aforesaid shall be admitted, unless made within one week after the posting thereof; nor shall any claim be admitted unless notice thereof has been given in writing to the collector or superior officer within one month from such seizure. [Emphasis added.]
Excise Act, R.S.C., 1985, c. E-14, s. 116
116. (1) As soon as an information has been filed in any court for the condemnation of any goods or thing seized under this Act, notice thereof shall be posted in the office of the registrar, clerk or prothonotary of the court, and in the office of the collector or chief officer in the excise division in which the goods or thing has been seized.
(2) Where the owner or person claiming the goods or thing referred to in subsection (1) presents a claim to the court, gives security and complies with all the requirements of this Act in that behalf, the court at its sitting immediately after the notice referred to in that subsection has been posted during one month may hear and determine any claim that has been duly made and filed in the meantime and release or condemn the goods or thing, as the case requires, otherwise the goods or thing shall, after the expiration of that month, be deemed to be condemned and may be sold without any formal condemnation thereof.
(3) No claim on behalf of any person who has given notice of intention to claim before the posting of the notice referred to in subsection (1) shall be admitted unless it is made within one week after the posting thereof, nor shall any claim be admitted unless notice thereof has been given in writing to the collector or superior officer within one month from the seizure of the goods or thing. [Emphasis added.]
[14]In interpreting former section 124, the Supreme Court of Canada ruled that, where the goods have been properly seized and forfeited, as they were in this case pursuant to section 88, "the court thereunder is vested with no discretion, it must decide according to law": see page 143. Both former subsection 124(2) and new subsection 116(2) stipulate that the court must act "as the case requires". This means that, when the goods have been legally seized and forfeited, the court is left with no other option than to condemn them. It cannot release them. It would have the authority to release them if the seizure and forfeiture were found to be illegal.
[15]I cannot agree with counsel for the respondent that subsection 116(2) is ambiguous, especially after the Supreme Court of Canada clearly stated what the powers of the Court are under that subsection. If ever it could be said at one time that the meaning of that subsection was ambiguous, this is no longer the case. As Rinfret J. said in Krakowec, supra, at page 142, "even penal statutes must not be construed so as to narrow the words of the statute to the exclusion of cases which those words, in their ordinary acceptation, would comprehend . . . and it is surely not for the judge so to mould a statute as to make it agree with his own conception of justice": see also the statement of Cameron J. to the same effect in Industrial Acceptance Corpn. Ltd. v. The Queen, supra, at page 544.
[16]The interpretation given to subsection 116(2) of the Act does not leave a person whose property has been condemned without remedy. The authority to grant relief in such circumstances is vested with the Governor in Council pursuant to subsection 23(2) of the Financial Administration Act, R.S.C., 1985, c. F-11 [as am. by S.C. 1991, c. 24, s. 7]: see The King v. Krakowec et al., supra, at page 143; Lawson v. R., supra, at page 772. The Governor in Council may remit any forfeiture, whether in whole or in part, where it considers that the enforcement of the forfeiture is unreasonable or unjust or that it is otherwise in the public interest to remit the forfeiture: see the definition of "penalty" in subsection 23(1).
[17]For these reasons, I would allow the appeal without costs and set aside the decision of the Trial Division. Rendering the judgment that should have been rendered, I would dismiss with costs the action in claim of the respondent and I would condemn all the material seized and forfeited pursuant to section 88 of the Act.
Décary J.A.: I agree.
Nadon J.A.: I agree.