Tax & Trade Blog
Federal Court Reproaches CBSA for Abuse of Process
In AG v. Bri-Chem Supply Ltd. et al. (2016 FCA 257), the Federal Court of Appeal (FCA) reproached the Canadian Border Services Agency (“CBSA”) for administrative practices that amounted to an abuse of process.
Bri-Chem’s issue was whether in making corrections to tariff class, an importer that had first relied on most favored nation duty free rates was permitted to also make a new declaration of origin and rely on duty free status under the NAFTA or another PTA.
This issue was previously decided in the 2010 decision of the CITT in Frito-Lay Canada, Inc. v. President of the Canada Border Services Agency (21 December 2012), AP-2010-002 (CITT), where the CITT allowed Frito-Lay to make various corrections to customs declarations associated with the import of Cheeto’s brand corn chips. The corrections had been denied by the CBSA.
The CITT accepted Bri-Chem’s corrections of tariff classification and tariff treatment, and admonished the CBSA for disregarding the CITT’s prior direction in Frito-Lay and for essentially re-litigating the very same issues. The CITT found this to be an abuse of process.
The CBSA appealed to the FCA.
The FCA confirmed that a key principle of administrative law is that the decisions of one panel of an administrative tribunal do not bind later panels. Hence, the CITT’s decision in Frito-Lay did not technically bind the CITT in deciding Bri-Chem.
However, as the FCA further explained, while successive panels of the CITT are not technically bound by decisions of earlier panels, they should follow earlier decision absent a good reason to do otherwise. The need for securing efficiency, predictability, and finality in law were the FCA’s reasons for this approach to earlier decisions.
In the same vein, the FCA pointed out that while decisions of one CITT panel do not bind the CITT in subsequent decisions, they do bind the administrators over whom the tribunal adjudicates:
[T]ribunals bind those who are subject to their jurisdiction, including administrators”. The F.C.A. noted that while there are limited exceptions to this (i.e., administrators can depart from a tribunal’s decision when the facts are distinguishable or when the earlier tribunal decision is flawed and in need of correction), deviation was not permitted in the absence of these two factors. Where these factors did exist in the administrator’s view, it was also incumbent on the administrator to “identify and articulate good reasons (at para. 51).
In the FCA’s view, if the CBSA did not agree with the CITT’s decision in Frito-Lay, the CBSA should have appealed to the FCA and should not have simply attempted to undermine Frito-Lay at the administrative level.
By way of commentary, Bri-Chem is interesting because it is uncommon for a Canadian Appellate Court to characterize government actions as an “abuse of process”. CBSA has long been viewed as a sometimes slow-moving bureaucracy, and it is hoped that this decision will lead to a more dynamic approach to implanting judicial decisions in favour of importers.
Authors: Robert G. Kreklewetz and Kathryn Walker
A version of this article appeared in the November 2016 issue of Thomson Reuter's Sales Tax, Customs and Trade journal.