Liquor Mark-ups at the Border: Philip Anisman v Canada Border Services Agency et al

For those of you who have been “taxed” at the border for alcohol, you may find the Federal Court of Appeal’s (“FCA”) recent decision in Philip Anisman v Canada Border Services Agency et al, 2010 FCA 52, potentially useful.

Background

Pursuant to an agreement signed between the Government of Canada and the Liquor Control Board of Ontario (LCBO) in 1993, custom officers working for the Canada Border Services Agency (CBSA) collect mark-ups on imported alcohol. In January 2007, Mr. Anisman paid a mark-up of $537.13 to the CBSA, which was remitted to the LCBO. He made a request to the CBSA that the mark-up be refunded. After consulting the LCBO, the CBSA informed Mr. Anisman that the mark-up was non-refundable. In response, Mr. Anisman made an application to the Federal Court for judicial review of the CBSA’s decision to refuse the refund.

The CBSA filed a motion for an order dismissing the application for judicial review on the primary ground that the Federal Court did not have the jurisdiction to grant the requested remedy. Jurisdiction was lacking because the CBSA was not acting as a “federal board, commission or other tribunal” within the meaning of s. 2 of the Federal Courts Act, RSC 1985, c F-7 [FCA]. Mr. Anisman filed a cross-motion for an order granting summary judgment and requiring a refund of the mark-up on the primary ground that the CBSA was not authorized by federal legislation to enter into the aforementioned agreement to collect mark-ups on behalf of the LCBO. At the Federal Court, Barnes J. dismissed both motions. Nadon J.A., writing for the FCA, overturned portions of the lower court decision.

Motion to Dismiss the Application for Judicial Review

In regards to the CBSA’s motion to dismiss Mr. Anisman’s application for judicial review, Barnes J. relied upon the test in David Bull Laboratories (Canada) Inc v Pharmacia Inc (1994), 58 CPR (3d) 209 [David Bull]. In David Bull, Strayer J.A. held that an application for judicial review could be dismissed where the application was “so clearly improper to be bereft of any possibility of success”. Since such cases are exceptional, and excludes situations where the allegations in the application have questionable adequacy, Barnes J. held that the Federal Court could decide motions where the ground for dismissal is on the basis of jurisdiction.

He found that the CBSA was acting as an agent of the LCBO whenever it collected mark-ups on alcohol, pursuant to their 1993 agreement. The Ontario Liquor Control Act, RSO 1990, c L.18, allowed the LCBO to enter into such an agreement with the Government of Canada. Mr. Anisman conceded that the CBSA had authority to act as an agent of the LCBO to collect mark-ups under provincial law, but maintained that it did not have such authority under federal law. Barnes J. held that the CBSA currently has authority under federal law, but did not have such authority in 1993.

Although there was legislation supporting federal/provincial agreements regarding the collection of a tax in 1993, a mark-up is not a tax, and thus it was unclear to Barnes J. whether the CBSA had authority under federal law in 1993. Since the CBSA failed the David Bull test, Barnes J. ultimately refused to dismiss the application for judicial review.

Motion for Summary Judgment on Mr. Anisman’s Request for a Refund

The key issue in Mr. Anisman’s motion for summary judgment was whether the Federal Court had jurisdiction under s. 18 of the Federal Courts Act to deal with the CBSA’s decision to collect the mark-up. Since the agreement and the authority of the CBSA to act on behalf of the LCBO was rooted in the provincial Liquor Control Act, Barnes J. held that the provincial courts were the proper forum to deal with the matter. He explained that it is not the role of the Federal Court to enforce provincial law, specifically where the provincial law is the source of a decision-maker’s authority.

There are a few issues that arise out of Barnes J.’s decision. He emphasized that the matter should be before the provincial courts because the CBSA was an agent acting pursuant to provincial law. Based on his reasoning, it seems as though Mr. Anisman should have made a claim against the LCBO and not the CBSA, because the latter was merely acting as an agent. According to the common law concept of agency, the principal is vicariously liable for the acts of its agent. Since the CBSA was an agent that was executing its principal’s orders in the agreement, it should not have been exposed to Mr. Anisman’s claim. The common law can be overridden by express statutory language, but there was no such language here. The Federal Court of Appeal took issue with this particular portion of Barnes J.’s decision, but applied different reasoning.

The primary issue before the FCA was whether the CBSA was acting as a “federal board, commission or other tribunal” when it collected the mark-up. Nadon J.A. agreed with Barnes J.’s finding that the authority of the CBSA to collect the mark-up was rooted in the Ontario Liquor Control Act, but he disagreed with the finding that Mr. Anisman could make an application against the CBSA based on the definition of “federal board, commission or other tribunal” in s. 2 of the FCA.

The latter states that bodies that exercise or purport to “exercise jurisdiction or powers conferred by or under an Act of Parliament or by or under an order made pursuant to a prerogative of the Crown…” are federal boards, commissions or other tribunals that fall within the scope of the Federal Court’s jurisdiction. Since the source of the CBSA’s authority was neither federal legislation nor an order made pursuant to a prerogative of the federal Crown, the CBSA did not fall within the scope of s. 2. Thus, Mr. Anisman could only proceed against the LCBO in the provincial courts.

Conclusion

The Federal Court of Appeal’s decision in this matter will be highly welcomed among travelers attempting to seek relief from the plethora of government agencies involved. It is instructive on the proper party from whom a plaintiff should seek a mark-up refund, and the proper forum to hear such claims. As well, the decision can be appreciated on the basis that Nadon J.A.’s statutory interpretation is consistent with the common law concept of agency. While the decision does not provide relief against paying mark-ups, it does at least let you know which agency has its hand in your pocket, and where to go to get relief.