Date: 19990423
Docket: T-207-91
OTTAWA, ONTARIO, THIS 23rd DAY OF APRIL 1999
PRESENT: THE HONOURABLE MR. JUSTICE LUTFY
BETWEEN:
ASHOK AGRAWAL
Plaintiff
- and -
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
ORDER
UPON the trial in this proceeding on April 13, 1999 in Ottawa, Ontario;
THIS COURT ORDERS THAT:
1. This action is dismissed.
2. The plaintiff shall pay to the defendant costs on a party and party basis.
J.F.C.C.
Date: 19990423
Docket: T-207-91
BETWEEN:
ASHOK AGRAWAL
Plaintiff
- and -
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
REASONS FOR ORDER
LUTFY J.:
In February 1988, when the plaintiff was an importer of oriental crafts, he contravened the Customs Act.1 As a result of this contravention, a quantity of jewellery and watches owned by the plaintiff was seized as forfeit by Customs officials.2 The plaintiff commenced this action against the Crown for negligent misrepresentation, resulting in economic damage, for failing to inform him of the date of the auction at which the goods seized as forfeit from him were sold.
The plaintiff"s evidence is that he determined that he would repurchase the items at auction since he believed that they could be re-acquired for significantly less than the assessed amount. As will be seen below, the plaintiff"s belief proved to be correct.
The trial proceeded by way of an agreed statement of facts and was limited to the determination of liability.
FACTUAL BACKGROUND
On November 7, 1989, a letter was forwarded to the plaintiff advising him of decisions made by or on behalf of the Minister of National Revenue that he was in contravention of the Customs Act, and that the goods seized as forfeit would be returned to him on the payment of $88,399.83.3
The plaintiff did not pay the amount stipulated by the Minister. Nor did he appeal the Minister"s determination that a contravention of the Act had occurred.
Ninety days after the ministerial decisions were received by the plaintiff, the forfeiture of the goods seized became final.4 Once the forfeiture was finalized, the Minister was entitled to sell the goods by public auction. None of the statutory provisions required any notice to the plaintiff of the date of the public auction.5
During the first six months of 1990, there was an exchange of correspondence between the plaintiff and the Minister of National Revenue and his officials. Throughout this period, the plaintiff was residing in India. The parties were corresponding by mail.
On January 20, 1990, the plaintiff addressed two letters to the Minister of National Revenue concerning a number of issues with respect to the seizure. The most relevant of the points raised by the plaintiff, in the context of this litigation, was his request that he be advised of the date of the auction at which the goods seized from him by the Crown were to be sold.
On February 6, 1990, the plaintiff"s correspondence was received in the office of the Minister. On February 15, 1990, a departmental official wrote to the plaintiff that he should contact Customs personnel in Calgary, Alberta for information regarding the place and date of an auction.
On March 15, 1990, the plaintiff wrote to the manager of the Customs office in Calgary, requesting information on the date and place when the forfeit goods would be auctioned.
On April 2, 1990, the manager of the Customs office in Calgary informed the plaintiff by letter that the goods would be disposed of by public auction sometime in April 1990, although he could not give the plaintiff a date for the auction. However, he did provide the plaintiff with the name and address of the auctioneer. The relevant paragraph of this official"s response stated:
| The goods relating to the foregoing will be disposed of by public auction sometime in April. The auction will be conducted by Greenview Auction Ltd., 404-40 Avenue N.E., Calgary, Alberta T2A 2M5. Unfortunately I am unable to give you a date for the auction. |
On April 15, 1990, again from India, the plaintiff wrote to the Minister requesting that he be informed of the date of the auction of the forfeit goods. He added that this information was being requested in compliance with section 146 of the Customs Act. It is useful to set out the substantive paragraph of the plaintiff"s letter:
| Please kindly inform the date of Auction for the goods as per above seizure Nos. The information is requested in compliance with the Canada Customs Act s. 146. Please allow maximum time possible before the auction date so as reach at my above address [sic]. I wish to bring it to your notice that it takes anywhere from 2 to 4 weeks for an AIR MAIL to travel between India and Canada. |
The plaintiff"s estimate of a two to four-week air mail delivery period between India and Canada appears to be consistent with the dates of receipt in Canada of his correspondence from India.
On May 8, 1990, this last letter from the plaintiff was received in the Minister"s office. On May 15, 1990, a departmental assistant wrote to the plaintiff, on behalf of the Office of the Minister of National Revenue, a letter of acknowledgment advising that the Minister was asking his officials to look into the matter. This letter of acknowledgment read as follows:
| On behalf of the Minister, the Honourable Otto Jelinek, I wish to acknowledge your letter of April 15, 1990. |
| The Minister has asked officials of the Department to look into the matter and he will provide you with a reply as soon as possible. |
On June 13, 1990, the goods in question were transferred to the auctioneer Greenview Auction Ltd. Notice of the auction was published in two Calgary newspapers on June 16 and 17, 1990.
On June 18, 1990, the goods were sold for $4,617.50.
On June 22, 1990, the Minister signed his letter of reply to the plaintiff. This letter erroneously advised the plaintiff that the auction had yet to take place, and added that he would be advised once the auction was scheduled. The Minister"s response read as follows:
| Thank you for your letter of April 15, 1990, requesting the date of auction for the goods seized from you at Calgary International Airport on February 7 and 22, 1988. |
| In response to your request, I must indicate that, unfortunately, a date has not yet been set for auction of the goods in question. Nevertheless, I have directed my officials in Calgary to inform you accordingly, once the auction is indeed scheduled. |
| I understand your interest in this regard and regret that I cannot provide you with the information you requested at this time. |
The evidence discloses that departmental officials discussed arrangements to advise the plaintiff of the auction date subsequent to the mailing of the departmental assistant"s letter of acknowledgment of May 15, 1990, supra paragraph 13.
The plaintiff"s evidence is that he was not aware that the goods had actually been sold until he was so notified by a letter from a departmental official dated November 7, 1990, in response to queries made by his solicitor. The plaintiff also states that he relied on the Minister to advise him of the date of the auction so that he could make arrangements to purchase the forfeit goods and that this reliance arose wholly from the exchange of correspondence between himself and the Minister and Customs officials, in particular, the letter of May 15, 1990.
Analysis
In Hercules Managements Ltd. v. Ernst & Young,6 the Supreme Court of Canada held that a "special relationship", giving rise to a duty of care on the part of the defendant, exists in the context of an action based on a misrepresentation where: (a) the defendant ought reasonably to foresee that the plaintiff will rely on his or her representation; and (b) reliance by the plaintiff would, in the particular circumstances of the case, be reasonable.
The Customs Act creates no obligation for the Minister or for ministerial officials to inform a person, who has forfeited goods under the Act, of the date that these goods will be sold. However, an obligation to notify the owner of "detained goods", thirty days prior to the disposal of the goods, is created by section 146 of the Customs Act . The parties acknowledge that this action concerns a seizure of goods as forfeit, and that the notice provision concerning the detention of goods under section 146 has no application.
The plaintiff acknowledges that his success in this action depends directly on the representations one can reasonably infer in the letter of acknowledgment of May 15, 1990, which must be read in the context of his earlier exchange of correspondence with the department.
More specifically, the plaintiff argues that the statements "... the Minister has asked officials to look into the matter and he will provide you with a reply as soon as possible" constitute a twofold representation to him, as a reasonable importer, that: (a) the auction had yet to take place; and (b) he would be informed of its date and place prior to its occurrence.
I respectfully disagree. Reliance by the plaintiff on the twofold representation he urges would not, "in the particular circumstances of this case, be reasonable".7
First, the plaintiff had been advised in the letter of April 2, 1990, from the manager of the Calgary Customs office, that the auction would take place "sometime in April". He was also given the name and address of the auctioneer.
Second, there is no evidence of the substance of any communications between the plaintiff and the auctioneer.
Third, the parties stipulated that the departmental assistant"s correspondence of May 15, 1990 was a letter of acknowledgment which advised the plaintiff that the Minister was asking his officials to look into the matter. This is fully consistent with the text of the letter, which very much appears to be nothing more than a straightforward letter of acknowledgment. The burden is on the plaintiff to show that the letter means more than what it clearly states.
Fourth, the plaintiff knew that his letter of April 15, 1990 would take "anywhere from 2 to 4 weeks" to reach Ottawa. In fact, his letter was received in the Minister"s office on May 8, 1990, within some three weeks. A reply signed some seven days later, particularly one in the terms used by the departmental assistant, would indicate that this was not a substantive response written with knowledge of the relevant facts. I do not accept that the use of the past tense ("has asked") created an inference that the Minister was aware of the problem. In my view, it would have been unreasonable for the plaintiff to so infer. He knew that he was writing to the Minister of a large government institution in Ottawa concerning the seizure of goods which occurred in Calgary.
Fifth, the plaintiff referred to section 146 of the Customs Act in his letter of April 15, 1990. Section 146 provides thirty days notice prior to the disposal of detained goods. This provision, as noted earlier, has no application to this case. Section 142, which governs goods seized as forfeit, does not require notice of the sale by auction to anyone. The plaintiff cannot rely on an exchange of correspondence, which he initiated with a reference to the wrong statutory provision, as representing that he would be advised of the date of the auction when no such statutory requirement existed.
In summary, I conclude that in all of the circumstances of this case, a reasonable person with experience in the import-export business would not have assumed that the letter of May 15, 1990 created anything more than an obligation to respond to the plaintiff"s inquiries in a timely manner. A reasonable importer would not assume that the Minister had undertaken to inform a prior owner of goods seized as forfeit under the Act, of the date and location of the sale of those goods. No duty of care can arise, in relation to the sale of the goods in question, from the wording of the letter of May 15, 1990, even when read in the context of the earlier communications.
Accordingly, the plaintiff"s action will be dismissed.
I have considered whether the erroneous information communicated to the plaintiff in the Minister"s letter of June 22, 1990 should be a factor in the assessment of costs. The erroneous information in that letter is irrelevant to the substantive issues in this action. While the Minister"s letter may have created in the mind of the plaintiff an opportunity to pursue this action, I have concluded that it is also irrelevant to the issue of costs. Therefore, the plaintiff shall pay to the defendant costs on a party and party basis.
J.F.C.C.
Ottawa, Ontario
April 23, 1999
__________________
3 These two decisions were made pursuant to paragraph 131(1)(a ) and subsection 133(1) of the Customs Act.
4 Section 123 and subsection 135(1) of the Customs Act .
5 Paragraph 142(1)(c ) of the Customs Act. See also the Surplus Crown Assets Act, R.S.C. 1985, c. S-27, paragraph 3(1)(b) and the Sale of Goods Regulations, SOR/86-1010, section 3.