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International Trade - Customs Act

. Canada (Attorney General) v. Pier 1 Imports (U.S.)

In Canada (Attorney General) v. Pier 1 Imports (U.S.) (Fed CA, 2023) the Federal Court of Appeal considered a joint appeal-JR against a ruling of the CITT (Canadian International Trade Tribunal), here addressing the calculation of 'value for duty' for imported goods (custom rates).

The relevant Customs Act (CA) provisions [CA s.67] purported to bar JR (a privative clause), leaving the aggrieved party with only a 'question of law' appeal right [CA s.68], an situation that has attracted recent judicial attention (Yatar):
A. Observations Regarding the Concurrent Appeal and Application for Judicial Review

[28] The present case addresses both an appeal and an application for judicial review brought concurrently. Our Court recently discussed the issue as to whether an application for judicial review can be considered notwithstanding the statutory appeal mechanism contemplated by Parliament in subsection 68(1) of the Customs Act.

[29] More specifically, in Canada (Attorney General) v. Best Buy Canada Ltd., 2021 FCA 161, [2021] F.C.J. No. 848 (Best Buy), our Court was unanimous on the disposition of the appeal but split on the question of whether the limitation in section 18.5 of the Federal Courts Act excluded applications for judicial review on questions of fact. The minority reasoned that only the statutory appeal mechanism under subsection 68(1) of the Customs Act was available to the parties to review the decision—i.e., only errors of law could be reviewed by our Court (Best Buy at paras. 36–61). The majority, however, found that such a complete bar to judicial review would be incompatible with the rule of law. Hence, the majority concluded that both errors were reviewable—errors of law are reviewable under the correctness standard via the statutory appeal mechanism in subsection 68(1) of the Customs Act, while errors of fact are reviewable under the reasonableness standard through an application for judicial review (Best Buy at paras. 112, 120). Our Court has since confirmed that the ability to bring an application for judicial review in parallel with an appeal, though on limited grounds, has been settled by Best Buy (BCE Inc. v. Québecor Média Inc., 2022 FCA 152, 2022 A.C.W.S. 5773 at para. 58 (BCE)).

[30] The above rulings are binding. The concurrent filing of an appeal and an application for judicial review in the same proceeding nonetheless raises certain practical considerations that will briefly be addressed in conclusion of these reasons.


[47] In conclusion, a few additional observations are apposite with respect to concurrent proceedings—appeal and judicial review—where the legislative intent is to limit an appeal to questions of law, as is the case in section 68 of the Customs Act (Vavilov at paras. 33, 36).

[48] The interaction between a right of appeal and judicial review has recently garnered judicial and academic interest across the country (See Yatar v. TD Insurance Meloche Monnex, 2022 ONCA 446, 2022 A.C.W.S. 1702 (leave to appeal to SCC granted, 40348 (9 March 2023)) (Yatar); Smith v. The Appeal Commission, 2023 MBCA 23, 479 D.L.R. (4th) 121; Best Buy; BCE; Canada (Citizenship and Immigration) v. Canadian Council for Refugees, 2021 FCA 72, [2021] 3 F.C.R. 294 (Canadian Council for Refugees); Neptune; Democracy Watch v. Canada (Attorney General), 2023 FCA 39, 2023 A.C.W.S. 707; Democracy Watch v. Canada (Attorney General), 2022 FCA 208, 2022 A.C.W.S. 5655; Paul Daly, “Vavilov on the Road” (2022) 35:1 Can. J. Admin. L. & Prac. 1; Paul Daly, “Rights of Appeal: Contracting or Expanding Judicial Review?” (3 October 2023), online (blog): Administrative Law Matters ˂www.administrativelawmatters.com/blog/2023/10/03/rights-of-appeal-contracting-or-expanding-judicial-review/˃; Mark Mancini, “Issue #71: Administrative Law Wrapped, 2022” (18 December 2022), online (blog): The Sunday Evening Administrative Review ˂sear.substack.com/p/issue-71-administrative-law-wrapped˃; Mark Mancini, “Issue #45” (19 June 2022), online (blog): The Sunday Evening Administrative Review ˂sear.substack.com/p/issue-45-june-19-2022˃; Mark Mancini, “Issue #4” (8 August 2021), online (blog): The Sunday Evening Administrative Review ˂sear.substack.com/p/issue-4-august-8-2021˃).

[49] The key issue emerging in this regard, except for Canadian Council for Refugees and the Democracy Watch cases, does not seem to be whether an application for judicial review remains available to a party concurrent to an appeal. Rather, the genuine issue is to what extent a judicial review application, which is by definition a discretionary remedy, should be entertained when filed concurrently with an appeal that has been expressly limited in scope.

[50] However trite, the duplication of proceedings has an impact on judicial economy (Mission Institution v. Khela, 2014 SCC 24, [2014] 1 S.C.R. 502 at para. 70). Recently, the Supreme Court in Vavilov reiterated the goal of judicial efficiency in administrative law (Vavilov at para. 29). The minority in Best Buy foresaw the consequences of the duplication of procedures, noting that the “process would be more burdensome and more complicated than the efficient and timely system of review contemplated by the Customs Act alone” (Best Buy at para. 68).

[51] The present circumstances are no different. This appeal and application for judicial review followed two sets of procedural requirements but were ultimately heard together (see Rule 301 and following and Rule 337 and following of the Federal Courts Rules, S.O.R./98-106). The parties, nonetheless, had to prepare and respond to two memoranda, which contained overlapping arguments. This may be explained by the fact that an application for judicial review must be filed within 30 days, whereas an appeal can be filed within 90 days (see s. 18.1(2) of the Federal Courts Act and s. 68(1) of the Customs Act). These timeline incongruences resulted in the parties including in their judicial review application memoranda arguments that should have fallen within the purview of the limited right of appeal. Consequently, at the hearing, the arguments were repetitive, or at best, repackaged and articulated differently in the context of either the appeal or the application for judicial review.

[52] The better approach to reflect Parliament’s intent and the rule of law might be the more restrictive stance adopted by the Ontario Court of Appeal, which reiterates that “judicial review is always available,” but mandates that courts ask themselves whether it is an “appropriate” exercise of their discretion, adding that this is so only in “rare cases” (Yatar at paras. 42, 48). However, the Ontario Court of Appeal did not expand on the meaning of “rare cases,” stating that they should be determined on a “case-by-case basis” (Yatar at para. 45). Perhaps because, as a matter of practice, and in the vast majority of cases, the statutory appeal will be sufficient to address the issue at hand, and the judicial review, although available, will be rendered superfluous (Yatar at para. 47; Best Buy at para. 129).
. R. v. Barac

In R. v. Barac (Ont CA, 2023) the Court of Appeal considers the law of border control:
(1) The Charter Application

(a) Legal Framework

[16] This court recently set out the legal framework that applies to the inspection of travellers at the border in R. v. Ceballo, 2021 ONCA 791, 408 C.C.C. (3d) 70, which was released after the present trial was completed.

[17] The appellant in Ceballo was subject to a lookout that identified her as a target for contraband when she arrived at Pearson International Airport from St. Maarten. She was referred to secondary inspection, where the contents of her purse tested positive on an ION swab for cocaine. During the secondary inspection, the BSO asked Ms. Ceballo whether she had drugs strapped to her body and she admitted that she did. Ms. Ceballo was arrested and charged with importing cocaine. She appealed her conviction on the basis that she was detained prior to her arrest and her s. 10(a) and (b) Charter rights had been breached. This court unanimously rejected that argument.

[18] First, Paciocco J.A. noted that it is settled law that the importance of Canada’s effective control over its borders means that no person entering Canada reasonably expects to be left alone by the state: Ceballo, at para. 18; R. v. Jones (2006), 2006 CanLII 28086 (ON CA), 81 O.R. (3d) 481 (C.A.), at para. 30. In this context,
routine inspection of persons entering Canada is not stigmatizing, and principles of fundamental justice permit greater interference with personal autonomy and privacy than would ordinarily be acceptable in a free and democratic society: Ceballo, at para. 18.
[19] As Paciocco J.A. observed, “[t]he concept of detention is tailored to this reality”, such that the restraints imposed upon a traveller to either comply satisfactorily with a customs inspection or be denied entry into Canada does not constitute detention for Charter purposes: Ceballo, at paras. 18-19.

[20] That said, the line between routine investigation and detention attracting Charter scrutiny is not always bright. As Paciocco J.A. noted in Ceballo, one way of identifying when the line has been crossed and a detention occurs is to look at the intrusiveness of the state action, keeping in mind that the importance of border security warrants “a robust concept of permissible ‘routine forms of inspection’”: at para. 21. For example, x-ray and ION scans, questions related to the contents of luggage and their provenance, questions intended to expose possible contraband, and questions intended to probe the credibility of the traveller’s answers are all routine forms of inspection: Ceballo, at para. 21. However, highly intrusive searches, such as strip searches, body cavity searches, and “bedpan vigils”, although permitted by s. 98 of the Customs Act, will trigger a finding of detention: Ceballo, at para. 22. As will questions that contain improper inducements, exert unfair pressure, or rise to the level of coercive or adversarial interrogation: Ceballo, at para. 22.

[21] The second way of identifying detention in the context of investigative questioning at the border was recognized in Jones. Writing for this court, Doherty J.A. left open the possibility that detention could be established where a BSO has subjectively “decided, because of a ‘sufficiently strong particularized suspicion’, to go beyond routine questioning” and “to engage in a more intrusive form of inquiry”: Jones, at para. 42. After considering some recent caselaw, Paciocco J.A. stated in Ceballo that it “may be” that for a detention to occur under this second approach, the BSO would additionally have to engage in some action that makes their subjective intention known to the traveller: at para. 26. This requirement would be consistent with the foundation for the constitutional concept of detention, which rests on the physical or psychological detention of the accused: Ceballo, at para. 26; R. v. Simmons, 1988 CanLII 12 (SCC), [1988] 2 S.C.R. 495, at pp. 515-21; R. v. Jacoy, 1988 CanLII 13 (SCC), [1988] 2 S.C.R. 548, at pp. 557-58.

(b) Analysis

(i) The trial judge correctly summarized the law

[22] The trial judge applied the correct legal considerations despite not having the benefit of Ceballo.

[23] It is common ground that the central question on the Charter application was whether the lookout in this case took the border inspection beyond “routine” such that the appellant’s Charter rights were engaged before his arrest. The appellant argues that the lookout placed the appellant under criminal investigation such that the Charter applied from the moment he arrived at the border, or at the very least, from the moment the border authorities decided to break open the upper bunk where the methamphetamine was found.


(iv) The warrantless search complied with the Customs Act

[40] There was no interference with the appellant’s reasonable expectation of privacy and therefore no breach of his s. 8 Charter rights.

[41] The trial judge concluded that the search of the appellant and his vehicle complied with the Customs Act, which places reasonable limits on an individual’s rights at the border. As such, there was no violation of the appellant’s s. 8 Charter rights.

[42] This was the inevitable outcome of the trial judge’s finding that the appellant was subject to nothing more than a routine customs examination. As this court held in Jones, routine questioning of travellers, the search of their luggage, and pat-down searches do not engage the rights protected by s. 8 of the Charter: at para. 32.

(2) The appellant’s answers to the BSOs’ questions were voluntary

[43] The appellant submits that his answers to the questions he was asked at the border were involuntary at common law and therefore inadmissible at trial. The core of his argument is that the compulsion to answer truthfully under the Customs Act operates as a threat within the meaning contemplated in R. v. Oickle, 2000 SCC 38, [2002] 2 S.C.R. 3. The appellant does not allege a violation of his s. 7 Charter right against self-incrimination, nor does he challenge the constitutionality of the Customs Act.

[44] It is settled law that statutory compulsion, on its own, does not render a statement involuntary at common law for the purpose of criminal proceedings: Walker v. The King, 1939 CanLII 2 (SCC), [1939] S.C.R. 214, at p. 217; Marshall v. The Queen, 1960 CanLII 18 (SCC), [1961] S.C.R. 123; R. v. Slopek (1974), 1974 CanLII 1553 (ON CA), 21 C.C.C. (2d) 362 (Ont. C.A.), at p. 365. The fact that the Customs Act allows for the imposition of fines and imprisonment makes no difference. So does the Highway Traffic Act, R.S.O. 1990, c. H.8, which was the statute at issue in Walker, Marshall, and Slopek.

[45] The appellant does not point to any other source of threat. Nor does he allege that the border authorities involved in this case made promises or created an atmosphere of oppression that could raise a reasonable doubt as to the voluntariness of his statements. Accordingly, this ground of appeal must fail.
. B. Erickson Manufacturing Ltd. v. Canada (Border Services Agency)

In B. Erickson Manufacturing Ltd. v. Canada (Border Services Agency) (Fed CA, 2023) the Federal Court of Appeal canvassed some Customs Act law, dealing an appeal from the customs tariff to the Canadian International Trade Tribunal - and interpretation of what must be rafts of thick manuals:
III. Nature of the appeal and standard of review

[10] This is a statutory appeal brought under s. 68(1) of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.). This provision permits an appeal from the Tribunal decision to this Court on a question of law.

[11] The appellant submits that several errors of law were made. The standard of review to be applied is correctness: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653 at para. 37.

IV. Applicable legal framework

[12] The applicable legal framework was described in detail by the Tribunal in its reasons at paragraphs 11-25 (See also Canada (Attorney General) v. Igloo Vikski Inc., 2016 SCC 38, [2016] 2 S.C.R. 80 at paras. 3-8). The salient principles are summarized below.

[13] Pursuant to s. 10(1) of the Customs Tariff, the classification of imported goods is generally to be determined by the General Rules for the Interpretation of the Harmonized System (General Rules). The General Rules are set out in the Schedule to the Customs Tariff.

[14] Importantly, Rule 1 of the General Rules provides that the classification of goods is determined in accordance with the headings in the tariff, and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the other rules. The provisions referred to in Rule 1 are also set out in the Schedule to the Customs Tariff.

[15] Under s. 11 of the Customs Tariff, regard must be had to Explanatory Notes to the Harmonized Commodity Description and Coding System published by the World Customs Organization.


B. Did the Tribunal err in law in applying an explanatory note to heading 84.79?

[28] The explanatory notes to heading 84.79 provide, among other things, that heading 84.79 does not apply to articles that are “covered more specifically by a heading in any other Chapter of the Nomenclature.” The Tribunal applied this note and concluded that heading 82.05 was more specific than heading 84.79.

[29] This Court has determined that explanatory notes should be respected “unless there is a sound reason to do otherwise”: Canada (Attorney General) v. Suzuki Canada Inc., 2004 FCA 131, 319 N.R. 299 at para. 13; see also Canada (Attorney General) v. Mattel Canada Inc., 2021 FCA 162 at para. 22.

[30] The appellant submits that the Tribunal erred in law in applying the explanatory note because it is inconsistent with the terms of heading 84.79. The appellant’s submission is reproduced below from its memorandum of fact and law:
23. The Explanatory Note is in fact patently incorrect, as heading 84.79 expressly limits the “residual” aspect of the heading to other headings of Chapter 84, and not the entire Nomenclature:
Machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter.
[31] The question is whether the explanatory note is inconsistent with heading 84.79. The plain meaning of heading 84.79 does not support the appellant’s submission. The heading provides that it is residual to other headings in the same Chapter. It does not state that it is residual only to that Chapter.

[32] The remaining question is whether the appellant’s submission is supported by a contextual or purposive interpretation of heading 84.79. The appellant has not provided a good reason why this would be the case, and in my view it is not the case.

[33] The appellant relies on Rule 1 and suggests that it directs that the classification “must initially be determined with reference only to the headings within a chapter, as well as any applicable Section or Chapter Notes”. I agree that Rule 1 should be applied first, but this does not mean that Rule 1 forecloses the application of an explanatory note that addresses priority between heading 84.79 and headings of other Chapters.

[34] I conclude that the explanatory note is not inconsistent with heading 84.79.
. Atlantic Owl (PAS) Limited Partnership v. Canada (Border Services Agency)

In Atlantic Owl (PAS) Limited Partnership v. Canada (Border Services Agency) (Fed CA, 2022) the Federal Court of Appeal engages in a useful walk-through of administrative and court appeal procedures regarding custom matters (even though it was found that the regime lacked jurisdiction to address their issues):
[1] The appellants appeal before our Court a decision of the Canadian International Trade Tribunal (the Tribunal), dated February 21, 2020 (Appeal no AP-2018-029) dismissing their appeal for lack of jurisdiction.

[2] Pursuant to subsection 68(1) of the Customs Act, R.S.C., 1985, c. 1 (2nd Supp.) (the Act), appeals from the Tribunal to this Court are limited to questions of law (Neptune Wellness Solutions v. Canada (Border Services Agency), 2020 FCA 151; Canada (Attorney General) v. Impex Solutions Inc., 2020 FCA 171; Canada (Border Services Agency v. Danson Décor Inc., 2022 FCA 205). As such, the applicable standard in the present case is correctness (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).

[3] The appellants argue that the Tribunal erred in interpreting its jurisdiction. We cannot agree. We are all of the view that the Tribunal correctly interpreted its jurisdiction according to the Act.

[4] The appellants imported two remotely operated vehicles (ROVs) into Canada at the same time as a vessel. The only good declared by the appellants was the vessel, the value of the ROVs was included in that of the vessel, and the import duties were calculated accordingly. The appellants then requested to separate these goods on the basis of an alleged classification and valuation error through requests for re-determination of the tariff classification of the ROVs and valuation of the vessel sought a refund of duties under paragraph 74(1)(e) of the Act. These requests were denied by Canada Border Services Agency (CBSA) and the President of the CBSA. The appellants then instituted appeal proceedings before the Tribunal.

[5] The Tribunal reviewed the legislative scheme in which its jurisdiction operates and in accordance with the text of section 67 of the Act, concluded that its jurisdiction is contingent on a prior decision having been rendered by the President of the CBSA (C.B. Powell Limited v. President of the Canada Border Services Agency (11 August 2010), AP-2010-007 and AP-2010-008 (C.B. Powell, CITT), aff’d 2011 FCA 137).

[6] Applying this legal principle to the facts of this case, the Tribunal found that no decision had been made capable of triggering its jurisdiction in relation to the ROVs. Indeed, since there was no declaration made in conformity with the requirements of section 32 of the Act and no determination of the tariff classification of the ROVs, there was no decision made by the President of the CBSA under section 60 of the Act regarding the tariff classification of the ROVs as they were never accounted separately from the vessel. As such, absent a determination of tariff classification, a refund of duties request under paragraph 74(1)(e) of the Act could not be granted for the ROVs. The Tribunal was thus correct in deciding as it did.

[7] As this Court observed in Canada (Border Services Agency) v. C.B. Powell Limited, 2010 FCA 61, [2011] 2 F.C.R. 332 at paragraphs 28-29, the self-reporting scheme under the Act is designed carefully to set up explicit and exacting procedures to deal with the flood of goods that arrive at Canada’s borders, with all the revenue and regulatory matters that entails. The scheme must be given its literal effect and there is no room for courts to ignore the statutory scheme, as the appellants here asks us to do, to remedy possibly harsh consequences in individual cases.
. Canada (Border Services Agency) v. Danson Décor Inc.

In Canada (Border Services Agency) v. Danson Décor Inc. (Fed CA, 2022) the Federal Court of Appeal considers the appeal system unders.68 of the Customs Act:
[13] Consequently, appeals filed pursuant to subsection 68(1) of the Customs Act such as this one are no longer subject to review based on administrative law standards, but rather on appellate standards. I am thus of the view that the assessment of the evidence, and in particular the expert evidence, is beyond the jurisdiction of this Court sitting on appeal of the Tribunal. Since subsection 68(1) grants a statutory right to appeal decisions of the CITT to this Court solely on questions of law, the applicable standard of review is correctness: Vavilov at para. 37. The first issue, therefore, is to examine the grounds of appeal to determine whether they do raise a question of law. As this Court noted in Neptune Wellness Solutions v. Canada (Border Services Agency), 2020 FCA 151, [2020] CarswellNat 4287 (at para. 16), it is not always easy to identify an extricable question of law when it is embedded in a question of mixed fact and law. In order to determine whether an appeal undertaken pursuant to subsection 68(1) of the Customs Act raises an extricable question of law, the Court must strive to identify the "“essential character”" or "“true substance”" of the appeal and the best way to do this is to look at the notice of appeal and, if necessary, to the appellant’s memorandum of fact and law: Canada (Attorney General) v. Impex Solutions Inc., 2020 FCA 171, [2020] CarswellNat 4332 at para. 37; Keurig Canada Inc. v. Canada (Border Services Agency), 2022 FCA 100, [2022] CarswellNat 1814 at para. 17 [Keurig].


[26] On this last point, as already mentioned, I am of the view that this Court has no jurisdiction to review the assessment of the evidence by the Tribunal. Pursuant to subsection 68(1) of the Customs Act, only questions of law can be raised before this Court. As such, the ultimate question before us is whether the goods have been processed beyond what is permitted by Chapter 25. There is no doubt that expert evidence, and the decision to accept the testimony of an expert or to prefer the testimony of one expert over another, can affect the construction given to a heading by the Tribunal. Yet, unless the Attorney General can identify an extricable error of law, it is not for this Court to reweigh the evidence in order to determine whether the CITT was correct in classifying the goods as it did: Keurig at para. 37.


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Last modified: 18-10-23
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