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International Trade - Customs Act (2). R. v. Pike
In R. v. Pike (Ont CA, 2024) the Ontario Court of Appeal considers a Crown appeal of a Charter s.8 search and seizure strike-down of the s.99(1) ['Examination of goods'] Customs Act provision:[1] ... The principal issue in these appeals is whether s. 99(1)(a) of the Customs Act is constitutional.
[2] The answer is clear: It is not. Section 8 of our Charter of Rights and Freedoms guarantees everyone the right to be secure against unreasonable searches. I agree with the trial judge that s. 99(1)(a) of the Customs Act offends this basic guarantee because it authorizes border officers to search some of the most private information imaginable on the lowest possible standard to justify a search, namely that in the border officers’ own minds, they were sincerely trying to find evidence of border law violations. While sincerity is a good start, it is just not enough. Our Charter requires more because Canada’s border control interests temper but do not eliminate or gut its protections. A reasonable search in this context requires a reasonable suspicion, meaning objective facts that establish a reasonable possibility that officers will find evidence of border law violations on the device. The Crown in this matter has not justified the law’s failure to require those objective facts prior to conducting the searches, which the Customs Act requires for other highly intrusive searches and which the Canada Border Services Agency admits would not jeopardize its mandate. At paras 27-111 the court affirms the trial judge's finding that Charter s.8 overrides s.99(1) of the Customs Act.
. R. v. Pike
In R. v. Pike (Ont CA, 2024) the Ontario Court of Appeal considers a Crown appeal of a Charter s.8 search and seizure strike-down of the s.99(1) ['Examination of goods'] Customs Act provision.
In this context, the court summarizes the (pre-Charter strike-down) Customs Act regime:(1) Canada’s Border Law Framework
[10] In 1985, Parliament passed the Customs Act to regulate and control the movement of people and goods across its international border: Martineau v. M.N.R., 2004 SCC 81, [2004] 3 S.C.R. 737, at para. 25. The Act helps advance Canada’s national security, public health, crime control, immigration, tax collection, and other border policy objectives: R. v. Jones (2006), 2006 CanLII 28086 (ON CA), 81 O.R. (3d) 481 (C.A.), at para. 31 (“Jones (2006)”).
[11] Parliament tasked the Canada Border Services Agency (the “Agency”) via subsection 5(1)(a) of the Canada Border Services Agency Act, S.C. 2005, c. 38, with administering and enforcing the Customs Act and other border legislation. The Agency processes tens of millions of travellers, vehicles, and goods entering Canada each year. It is responsible for preventing the entry of unauthorized people into Canada and ensuring that travellers and importers pay taxes on lawful goods that they bring into Canada. Because not all goods brought into Canada are lawful, Parliament also charged the Agency with preventing the entry of prohibited goods: R. v. Simmons, 1988 CanLII 12 (SCC), [1988] 2 S.C.R. 495, at pp. 527-528. For example, subsections 159(1) and 160(1) of the Customs Act make it a penal offence punishable by up to 5 years in prison to import prohibited goods, including child pornography or illegal drugs. This conduct is also a crime under subsection 163.1(3) of the Criminal Code, R.S.C. 1985, c. C-46, and section 6 of the Controlled Drugs and Substances Act, S.C. 1996, c. 19. Both criminal statutes trigger even higher maximum sentences for importing, except for the least serious drugs.
[12] Parliament granted the Agency extensive powers to discharge its mandate and imposed corresponding obligations on travellers and importers to allow the Agency to conduct inspections to ensure compliance with the Customs Act. Agency officers have numerous powers to search people and goods, as outlined in sections 98-99.5 of the Act. People entering or importing goods into Canada, in turn, must present themselves to an Agency officer, report all goods they are importing into Canada, truthfully answer the officer’s questions, and make goods available for examination upon request, pursuant to sections 11-13 of the Act. All travellers complete primary processing and answer basic customs and immigration questions by either completing a physical declaration card and interacting with an Agency officer, or by using kiosk technology. Agency officers also have discretion to refer travellers to secondary examination, where officers can inspect goods and further question travellers to uncover non-compliance with the Customs Act.
[13] Section 2 of the Act defines “goods” to include “conveyances, animals and any document in any form.” The Agency has long taken the position that the electronic files which are contained within digital devices are documents and, thus, goods, and the Agency accordingly relies on the goods inspection powers the Act grants it to search the contents of digital devices. As summarized in R. v. Canfield, 2020 ABCA 383, 395 C.C.C. (3d) 483, at para. 69, leave to appeal refused, [2020] S.C.C.A. No. 367, most courts have agreed with this position.
[14] Many of the powers Parliament granted the Agency require its officers to reasonably suspect a border law violation before searching people and goods. For instance, subsections 98(1) and 99(1)(b), (c.1), (d), and (f) of the Act require border officers to form reasonable suspicion before strip searching travellers, examining imported or exported mail, and searching vehicles. Subsections 99.2(1) and 99.3(2) of the Act impose the same requirement to conduct searches of the person and intrusive examinations of goods in the custody or possession of people in customs controlled areas at Canadian international airports and marine ports.
[15] But subsection 99(1)(a) of the Act, whose constitutionality is at issue in this case and to which I refer in this decision as “the law,” does not require officers to meet an objective threshold before searching the contents of digital devices. This law provides, in relevant part, that “[a]n officer may, at any time up to the time of release, examine any goods that have been imported.” In other words, it authorizes Agency officers, without forming any reasonable suspicion that a border law has been violated, to search any goods that people bring across the border with them or otherwise import, until officers authorize those goods’ release from customs for use in Canada. The Agency relies on this law to search digital devices. In the past, until the Court of Appeal for Alberta decided Canfield in October 2020, most courts which had considered the question had treated the law as being constitutional: Canfield, at paras. 69, 163.
[16] Despite the law’s lack of an objective threshold, the Agency’s policy is that officers should only search digital devices if they can point to one or more objective facts that, taken together with other information, suggest that the device contains evidence of border law violations. The policy further provides that officers should also conduct “progressive” searches by targeting device-stored information relevant to their concerns about border law violations and intensifying their examination as their level of suspicion increases. Finally, the officers should take notes and record the areas and items searched. This policy guidance does not have the force of law.
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[35] The law at issue, s. 99(1)(a) of the Customs Act, authorizes border officers to search any goods that travellers bring across the border with them until officers authorize those goods’ release from customs for use in Canada. The Crown argues that the law authorizes digital device searches because the electronic files those devices contain are goods. The intervener, the Criminal Lawyers’ Association (Ontario) (the “CLA”), disagrees and argues that the law only authorizes searches of physical goods. I agree with the Crown. The law’s text, context, and purpose establish that it authorizes border officers to search the contents of those digital devices, which are electronic documents: Canada v. Loblaw Financial Holdings Inc., 2021 SCC 51, 464 D.L.R. (4th) 244, at para. 41.
[36] First, the text of the Customs Act establishes that electronic files are goods. Section 2 provides that documents are goods. At the relevant time, when Parliament enacted the Customs Act in 1985 (Perka v. The Queen, 1984 CanLII 23 (SCC), [1984] 2 S.C.R. 232, at pp. 264-265), “document” meant something that records information, no matter the recording medium: The Oxford English Dictionary, 2nd ed. (Oxford: Clarendon Press, 1989), vol. IV, at p. 916; Mouammar v. Brunner (1978), 1978 CanLII 1676 (ON SC), 19 O.R. (2d) 59 (S.C.), at pp 60-61; Hill v. R., [1945] 1 K.B. 329, at pp. 332-333. This covers electronic files because they record information on an electronic medium, as explained in Prism Hospital Software Inc. v. Hospital Medical Records Institute (1991), 1991 CanLII 11770 (BC SC), 62 B.C.L.R. (2d) 393 (S.C.), at paras. 6-12. Parliament made clear that it intended this broad meaning by defining goods to include not just some documents in certain forms, but “any document in any form” (Customs Act, s. 2, (emphasis added)), meaning “no matter which” form: National Bank of Greece (Canada) v. Katsikonouris, 1990 CanLII 92 (SCC), [1990] 2 S.C.R. 1029, at p. 1038. This broad, clear, and precise ordinary meaning shows that “document” includes new and emerging forms of recording information, such as electronic files, and plays a dominant interpretive role: British Columbia Telephone Co. v. M.N.R. (1992), 139 N.R. 211 (Fed. C.A.), at paras. 9 n.5, 15‑17, citing Perka, at p. 265; Loblaw, at para. 41.
[37] The definition of “document” in the French version of the Customs Act confirms that electronic documents are goods. Per the French version, a document is anything that records data that can be read or understood by a person, a computer system, or another device.[2] This unambiguous definition expressly includes electronic documents, resolves any potential ambiguity in the English version, and confirms that the common meaning of document includes electronic documents: R. v. Mac, 2002 SCC 24, [2002] 1 S.C.R. 856, at paras. 5-6. It also provides the distinct, specific authorization to search electronic documents that the CLA submits is necessary under the Supreme Court’s decision in R. v. Vu, 2013 SCC 60, [2013] 3 S.C.R. 657. The CLA’s argument that the French definition does not govern because it is broader than the undefined English term “document” must fail. Even assuming for the sake of argument that “document” has a narrower potential meaning in English as well as the broader meaning I outlined above, this would only establish that the English version is ambiguous. The French version would still govern in this scenario because it is unambiguous. The narrower official language version only governs if, unlike here, both versions are ambiguous or two unambiguous versions clash: R. v. Daoust, 2004 SCC 6, [2004] 1 S.C.R. 217, at paras. 28-29.
[38] Second, the statutory context confirms that electronic documents are goods. The Customs Act should be interpreted harmoniously with the Customs Tariff, S.C. 1997, c. 36, because they form an integrated border regulatory scheme by which the Act grants border officers authority to prevent the entry of goods that the Tariff prohibits and to ensure that travellers pay duties on other goods at Tariff rates: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 27. Tariff Schedule Item 9899.00.00 lists the electronic form of child pornography as a good. Because the Tariff adopts the Customs Act’s definition of goods, this shows that Parliament accepted that electronic documents are goods under that Act: Tariff, s. 4; R. v. Gibson, 2017 BCPC 237, at paras. 44, 90.
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[40] Third, statutory purpose favours treating electronic documents as goods. The purpose of the Act is to regulate the cross-border movement of people and goods: Martineau, at para. 25. This supports interpreting “goods” broadly to cover all items whose cross-border movement the state has an interest in regulating: Monney (SCC), at paras. 26-28. So does the related functional equivalence principle, which favours applying legislation to new technologies that play a similar role to the technologies in existence when it was passed: Lumberland Inc. v. Nineteen Hundred Tower Ltd., 1975 CanLII 196 (SCC), [1977] 1 S.C.R. 581, at p. 593. Courts have long used this principle to interpret the term “document” to cover new technologies like contemporary electronic documents that, similar to the written paper documents which were widespread when Parliament passed the Act in 1985, record information: Fox v. Sleeman (1897), 17 P.R. 492 (Div. Ct.) (photographs are documents); Mouammar, at pp. 60-61 (tapes are documents); Prism, at paras. 6‑12 (electronic files are documents); R. v. Whittaker, 2010 NBPC 32, 367 N.B.R. (2d) 334, at para. 8 (same). In contrast, restricting goods to physical items undermines the Act’s purpose by denying officers the power to search for electronic child pornography under the Act’s many powers to search goods. . Charoen Pokphand Foods Canada Inc. v. Canada (Border Services Agency)
In Charoen Pokphand Foods Canada Inc. v. Canada (Border Services Agency) (Fed CA, 2024) the Federal Court of Appeal dismissed a Customs Act [s.68(1)] appeal from an earlier CITT appeal, here on the proper classification of a food 'good' ['Charoen Pokphand Authentic Asia™ Hand-Wrapped Shrimp Wonton Soups']:[12] The first issue raised by the appellant relates to the analytical framework applied by the Tribunal, i.e. its application of the Rules. The appellant argues that the Tribunal erred by finding that Rule 1 was insufficient to dispose of the classification and, in the alternative, that the Tribunal erred in law by refusing to apply Rule 2(a) to classify the goods in issue.
[13] It is recalled that the Rules have been described as a hierarchy, meaning that Rule 1 is paramount and that subsequent Rules are only applied if the application of a previous Rule is inconclusive (Canada (Attorney General) v. Igloo Vikski Inc., 2016 SCC 38, [2016] 2 S.C.R. 80 at paras 7, 29).
[14] In the appellant’s view, Rule 1, if properly applied, would have been sufficient to dispose of the classification of the goods in issue. During the hearing, the appellant strongly urged the Court to find that the goods in issue were "“soup”" or "“preparations therefor”" and, as such, should be classified under heading 21.04. However, the Tribunal found that the goods in issue could not, as a whole, be classified solely with reference to Rule 1, as the distinct components of the goods in issue were prima facie classifiable under different headings, i.e. heading 19.02 (pasta, whether or not cooked or stuffed (with meat or other substances) or otherwise prepared) and heading 21.04 (soups and broths and preparations therefor) (Decision at para. 65). Specifically, the appellant challenges the Tribunal’s finding that the goods in issue do not constitute "“preparations therefor”" within the meaning of heading 21.04 and alleges that the Tribunal erred in law by not distinguishing Anderson Watts Ltd., 2019 CanLII 110939 (AP-2018-003) (Anderson Watts), a decision involving the interpretation of the term "“preparations therefor”" in the context of goods such as "“Instant Noodles”" and "“Noodles in a Cup”". In Anderson Watts, the Tribunal held that goods consisting of "“multiple edible components intended to be used and packaged together”" (in that case, powdered soup base and dry instant noodles) do not constitute preparations within the meaning of heading 21.04 due to their non-blended nature (Anderson Watts at paras 40–42).
[15] Although the interpretation of provisions of the Schedule to the Act can be a question of law (Impex at paras 29–42), "“the actual application of the provisions to a set of facts is more likely to be a matter of mixed fact and law”" (Canada (Attorney General) v. Best Buy Canada Ltd., 2021 FCA 161 at para. 24 (dissenting reasons with no disagreement from the majority on that point) (Best Buy)). Here, the appellant is taking issue with the Tribunal’s application of the analytical framework and the Anderson Watts decision. Contrary to what the appellant alleges, the Tribunal’s determination that the goods were not classifiable pursuant to Rule 1 is a question of mixed fact and law. The Tribunal clearly identified and followed the applicable framework for Rule 1 (Decision at paras 24, 38–46). Further, the Tribunal was entitled to consider and rely on its precedent in Anderson Watts. More importantly, the appellant is disagreeing with the evidentiary finding of the Tribunal that "“the wontons remain a distinct component and do not form part of the frozen soup concentrate”" and "“[t]he wontons are not ‘blended’ into the soup concentrate”" (Decision at para. 44). In doing so, the appellant is urging this Court to reassess and reweigh the evidence. This is not our role.
[16] Still, under the Tribunal’s Rule 1 analysis, the appellant alleges that the Tribunal incorrectly applied the Explanatory Note to heading 21.04. The Explanatory Notes provide for two subcategories of "“soups, broths and preparations therefor”": 1) "“preparations for soups or broths requiring only the addition of water, milk, etc.”" and 2) "“soups and broths ready for consumption after heating.”" As indicated above, the Tribunal made a finding that the goods in issue did not fall within either subcategory. The appellant contends that the Tribunal should have found that the goods in issue could fit within the first subcategory, and alternatively, disagrees with the Tribunal’s treatment of the subcategories as exhaustive rather than inclusive. The appellant is in disagreement with the Tribunal’s finding and I remain unconvinced by the appellant’s arguments that the Tribunal erred in law in its determination.
[17] In the alternative to its Rule 1 arguments, the appellant also challenges the Tribunal’s finding that Rule 2(a) does not assist in the classification of the goods. Rule 2(a) applies to unfinished goods. The Tribunal made a factual finding that the goods in issue are "“imported… ready for retail sale”" (Decision at para. 76). The Court cannot interfere with this finding on appeal. Further, I note that pursuant to Explanatory Note III on incomplete or unfinished articles, Rule 2(a) will generally not apply to Section IV goods, such as the goods in issue (Respondent’s Memorandum of Fact and Law at para. 29).
[18] The second issue raised by the appellant relates to the application of Rule 3(b) and the method used by the Tribunal to determine the "“essential character”" of the goods in issue. Rule 3(b) provides that goods made up of two different components are classified under the tariff of the component that gives them their essential character. Essentially, the appellant disputes the fact that the Tribunal placed greater emphasis on the relative weight of the goods’ components, i.e. wontons and soup concentrate, as opposed to the marketing and advertising of the goods in issue to determine their essential character. In other words, the appellant seems to imply that the marketing of the goods as a "“soup”" is determinative to the Tribunal’s determination of essential character.
[19] I disagree.
[20] The essential character of a good is always assessed on a case-by-case basis (Explanatory Note VIII to Rule 3(b)). The determination requires the assessment and weighing of evidence, a question heavily infused with factual determinations. For instance, in this case, the expert evidence before the Tribunal demonstrated that the goods in issue contain 76 percent shrimp wontons and 24 percent soup concentrate by weight, whereas the product labelling and literature demonstrated that the goods contain 55 to 60 percent shrimp wontons and 40 to 55 percent soup concentrate (Decision at para. 81). The Tribunal concluded, after considering the relative weight and other factors (Decision at para. 83), that the essential character of the goods in issue was imparted by the stuffed pasta component (Heading 19.02). Absent an egregiously incorrect and unsupported finding of fact, our Court cannot review factual findings in the context of an appeal pursuant to subsection 68(1) of the Customs Act (see Keurig at paras 17–19; Best Buy at para. 25; Canada (Border Services Agency) v. Danson Décor Inc., 2022 FCA 205 at para. 26). . Charoen Pokphand Foods Canada Inc. v. Canada (Border Services Agency)
In Charoen Pokphand Foods Canada Inc. v. Canada (Border Services Agency) (Fed CA, 2024) the Federal Court of Appeal dismissed a Customs Act [s.68(1)[ CITT appeal, here on the proper categorization of a food 'good' ['Charoen Pokphand Authentic Asia™ Hand-Wrapped Shrimp Wonton Soups'].
Here the court reviews the SOR for such court appeals:III. Standard of Review
[9] It is trite law that pursuant to subsection 68(1) of the Customs Act, this Court can only examine questions of law on appeal from a decision of the Tribunal (see Canada (Attorney General) v. Pier 1 Imports (U.S.), Inc., 2023 FCA 209 at para. 24; Canada (Attorney General) v. Impex Solutions Inc., 2020 FCA 171 at paras 29–31 (Impex); Keurig Canada Inc. v. Canada (Border Services Agency), 2022 FCA 100 at paras 15–16 (Keurig)). Accordingly, the correctness standard articulated in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, applies. . Michaels of Canada, ULC v. Canada (Attorney General)
In Michaels of Canada, ULC v. Canada (Attorney General) (Fed CA, 2023) the Federal Court of Appeal considered (and dismissed) an appeal from a denied customs JR:[1] This is an appeal from an Order of Fuhrer J. of the Federal Court (the motion judge), dated November 2, 2022 (2022 FC 1498), striking out the Notice of Application filed by the appellant, Michaels of Canada, ULC (Michaels), on the ground that the Federal Court lacks jurisdiction to judicially review a final report issued by the Canada Border Services Agency (CBSA) in the context of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp). The motion judge found that the Federal Court lacked jurisdiction to hear Michaels application or alternatively, that the doctrine of exhaustion barred the application.
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[6] We are of the view that the motion judge did not err in finding that Michaels’ application is premature due to its failure to avail itself of the multiple levels of administrative review provided for in the Act. We also are not persuaded that the administrative decision-maker—i.e., the President of the CBSA or the CITT—cannot address and determine the issues raised by Michaels. More particularly, we remain unconvinced that Jockey Canada Company v. President of the CBSA, 2012 CanLII 85177 (AP-2011-008) (CITT) and other cases referred to by the appellant in oral argument stand for the proposition that the CITT has definitively foreclosed consideration of issues akin to the ones raised by Michaels because they would allegedly fall outside of the scope of the statutory appeals. Further, in this case, there are no exceptional circumstances that meet the high threshold for bypassing the administrative process intended by Parliament (C.B. Powell Limited v. Canada (Border Services Agency), 2010 FCA 61, [2011] 2 F.C.R. 332 at paras 4, 28–29, 33, 39–40, 45 (C.B. Powell)).
[7] Ultimately, we agree with the respondent that the review process under the Act will result in a decision to maintain the additional imposition of duties on Michaels’ imports or not. If the President of the CBSA—or the CITT on appeal—decides that no additional duties should have been imposed, the dispute will effectively be resolved and Michaels will obtain the relief it seeks. The appellant must thus pursue the debate in the administrative forum. . Johnson v. Canada
In Johnson v. Canada (Fed CA, 2023) the Federal Court of Appeal considers the Customs Act (CA) appeal jurisdiction of the Tax Court:D. Appeals to the Tax Court under the CA
[44] Subsection 12(1) of the Tax Court of Canada Act provides that the jurisdiction of the Tax Court to hear appeals under the CA is limited to matters arising under Part V.1 of that Act.
[45] Section 97.53 of the CA (which is in Part V.1 of the CA) provides a right of appeal to the Tax Court in relation to an assessment issued under Part V.1, if a notice of objection to that assessment was filed. Section 97.44 of the CA (which is in Part V.1) grants the Minister the right to assess a person under section 97.28 or 97.29 of the CA. Sections 97.28 and 97.29 of the CA are collection actions that may be taken to collect unpaid amounts — section 97.28 is a garnishment provision and section 97.29 is a provision similar to section 160 of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) which allows the Minister to assess a non-arm’s length transferee of property for the unpaid amounts of the transferor, to the extent that the transferee did not pay fair market value for the property acquired.
[46] The rights to appeal to the Tax Court under Part V.1 of the CA are limited to collection matters. Since Mr. Johnson’s attempted appeal to the Tax Court does not relate to any collection matter (the amounts have already been paid by Mr. Johnson), there is no basis for any appeal to the Tax Court under Part V.1 of the CA.
[47] Subsection 12(3) of the Tax Court of Canada Act also provides that the Tax Court has jurisdiction in relation to questions that are referred to it under section 97.58 of the CA (which is also in Part V.1). However, this section only contemplates questions on an assessment or a proposed assessment being submitted following an agreement in writing between the Minister and another person:97.58 (1) If the Minister and another person agree in writing that a question arising under this Part, in respect of any assessment or proposed assessment, should be determined by the Tax Court of Canada, that question shall be determined by that Court.
97.58 (1) La Cour canadienne de l’impôt doit statuer sur toute question portant sur une cotisation, réelle ou projetée, découlant de l’application de la présente partie, que le ministre et une autre personne conviennent, par écrit, de lui soumettre.
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