Date: 20001123
Docket: T-6485-81
Toronto, Ontario, Thursday the 23rd day of November, 2000
| PRESENT: The Honourable Mr. Justice John A. O'Keefe |
BETWEEN:
HARRY D. SHIELDS LIMITED
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER
O'KEEFE J.
[1] This is a motion for summary judgment made by the defendant in the above-entitled action. The defendant argues that the plaintiff's case raises no genuine issue for trial. The plaintiff is suing Her Majesty the Queen (the "defendant") for various damages resulting from alleged negligent, discriminatory and malicious actions by crown servants employed by the Department of National Revenue.
Background Facts
[2] The plaintiff, Harry D. Shields Limited ("Shields" or the "plaintiff") was engaged in the importing and manufacturing of bicycles from 1973. Between 1973 and 1977, the company began considering the manufacture of bicycles in Canada, with the bicycles made almost wholly from parts imported from outside of Canada. Shields sought clarification of the customs tariff treatment of shipments of bicycle parts.
[3] A considerable amount of correspondence was exchanged between the plaintiff and representatives of the Department of National Revenue. The department took the position that in order to be considered to be a "Canadian manufacturer" of bicycles entitled to exemption from excise tax duties, 20% or more of the cost of manufacture of the bicycles (including labour and overhead) would have to be attributed to Canadian content. The department advised that representatives would be required to attend at the factories to observe the operation of the facility and would then be in a position to provide the exemption.
[4] In 1977, the plaintiff began importing the components as planned. The customs assessor applied a Most Favoured Nation tariff to the imported products. This resulted in a total liability to the government of $320,000.
[5] Under the provisions of the Customs Tariff Act, the plaintiff appealed this assessment to the Tariff Board. His appeal was successful. On January 3, 1980, the Board found that there was nothing in the tariffs which imposed "Canadian content requirements" on manufacturers. The Board found that all that was necessary was that the corporation be Canadian and that it be engaged in the manufacture of products. The Board held that since the plaintiff was an important link in the distribution chain, with some changes in the nature of the goods (i.e. 500 feet rolls of chain were cut to size), Shields qualified as a Canadian manufacturer and was therefore entitled to a rebate of the duties paid.
[6] The plaintiff filed an action for $10,000,000 of general damages; $730,000 of special damages, interest, exemplary damages and costs.
[7] According to the plaintiff, the loss accorded by the imposition of the tariff included lack of competitive pricing of the final product as a result of increased costs and lack of use of investment in the warehouse. The plaintiff's operations, at the particular plant manufacturing the imported bicycle parts, shortly afterwards went into receivership.
[8] In its statement of claim, Shields alleges wrongdoing on the part of officials employed by the Department of National Revenue. The plaintiff claims that officials granted preferential tariff treatment to certain manufacturers of bicycles, including Canadian Cycle and Motor Co. Limited ("CCM"), a company in which the government had a "secret and substantial" financial interest. According to the plaintiff, the government held a loan guarantee of about $10,000,000 from CCM. and representation on CCM.'s Board of Directors.
[9] As a result of the tariff being improperly assessed, the plaintiff's operations at the particular plant went into receivership, causing loss of investment and loss of future appreciation in the value of the business.
Moving Party Submissions
[10] The defendant argues that there is no genuine issue for trial in the case at bar, as the defendant did not owe a duty of care to the plaintiff. The Customs Tariff Act, with its appeal procedures, creates a complete statutory code for a resolution of disputes. The defendant submits in the alternative, that the plaintiff was owed a duty of care, the issues at stake in such a determination are issues of law which can be disposed of on the basis of the evidence already before the Court.
[11] The defendant also submits that the plaintiff has failed to plead a known action for discrimination: differential treatment of individuals undertaking statutes does not give rise to a cause of action.
[12] The defendant also submits that the material before the Court does not disclose an action for abuse of office and that the plaintiff has failed to plead the necessary constituent elements of such an action.
[13] The defendant states that any differential treatment in tariff rates was only due to parties endeavouring to meet Canadian content requirements in the future. This was only a temporary measure, as these parties did not meet their commitments and the department stopped exempting parties from the tariff requirement.
Responding Party Submissions
[14] The plaintiff argues that the defendant's servants had represented to it that it would qualify for the preferential tariff rate and in fact, granted such rate to the plaintiff initially. The plaintiff argues that the denial of tariff benefits was based on the improper consideration of the defendant's secret financial interest in the business of a major competitor of the plaintiff.
[15] With respect to the motion for summary judgment, the plaintiff claims that if there is an issue of credibility, a trial is required and summary judgment should not be granted. The plaintiff argues that there are issues of credibility at stake in the case at bar, including:
| [ · ] Whether the defendant made representations to the plaintiff that it would be granted tariff benefits and would not be treated differently from its competitors. |
| [ · ] Whether the plaintiff relied on these representations to its detriment. |
| [ · ] Whether the defendant had a financial interest in the plaintiff's largest competitor, CCM. |
| [ · ] Whether this financial interest influenced the defendant, causing it to act in bad faith and in abuse of public authority. |
[1] The plaintiff argues that it pleaded the cause of action of abuse of public authority at paragraph 30 of its amended statement of claim.
[2] The plaintiff finally argues that the Court cannot find the facts necessary to decide the questions of fact and law set out.
Issue
[3] Should summary judgment be granted to the defendant?
[4] The defendant's motion is for an Order:
| 1. Granting summary judgment dismissing the plaintiff's claim; |
| 2. Granting costs to the defendant on the claim and on this motion; and, |
| 3. Such other and further relief as this Honourable Court deems just. |
Law
Applicable Rules
[20] Rules 213 to 218 of the Federal Court Rules, 1998 read:
| 213. (1) Where available to plaintiff -- A plaintiff may, after the defendant has filed a defence, or earlier with leave of the Court, and at any time before the time and place for trial are fixed, bring a motion for summary judgment on all or part of the claim set out in the statement of claim. (2) Where available to defendant -- A defendant may, after serving and filing a defence and at any time before the time and place for trial are fixed, bring a motion for summary judgment dismissing all or part of the claim set out in the statement of claim. |
| 213. (1) Requête du demandeur -- Le demandeur peut, après le dépôt de la défense du défendeur -- ou avant si la Cour l'autorise -- et avant que l'heure, la date et le lieu de l'instruction soient fixés, présenter une requête pour obtenir un jugement sommaire sur tout ou partie de la réclamation contenue dans la déclaration. (2) Requête du défendeur -- Le défendeur peut, après avoir signifié et déposé sa défense et avant que l'heure, la date et le lieu de l'instruction soient fixés, présenter une requête pour obtenir un jugement sommaire rejetant tout ou partie de la réclamation contenue dans la déclaration. |
| 214. (1) Obligations of moving party -- A party may bring a motion for summary judgment in an action by serving and filing a notice of motion and motion record at least 20 days before the day set out in the notice for the hearing of the motion. (2) Obligations of responding party -- A party served with a motion for summary judgment shall serve and file a respondent's motion record not later than 10 days before the day set out in the notice of motion for the hearing of the motion. |
214. (1) Obligations du requérant -- Toute partie peut présenter une requête pour obtenir un jugement sommaire dans une action en signifiant et en déposant un avis de requête et un dossier de requête au moins 20 jours avant la date de l'audition de la requête indiquée dans l'avis. (2) Obligations de l'autre partie -- La partie qui reçoit signification d'une requête en jugement sommaire signifie et dépose un dossier de réponse au moins 10 jours avant la date de l'audition de la requête indiquée dans l'avis de requête. |
| 215. Mere denial -- A response to a motion for summary judgment shall not rest merely on allegations or denials of the pleadings of the moving party, but must set out specific facts showing that there is a genuine issue for trial. |
215. Réponse suffisante -- La réponse à une requête en jugement sommaire ne peut être fondée uniquement sur les allégations ou les dénégations contenues dans les actes de procédure déposés par le requérant. Elle doit plutôt énoncer les faits précis démontrant l'existence d'une véritable question litigieuse. |
| 216. (1) Where no genuine issue for trial -- Where on a motion for summary judgment the Court is satisfied that there is no genuine issue for trial with respect to a claim or defence, the Court shall grant summary judgment accordingly. (2) Where no genuine issue for trial -- Where on a motion for summary judgment the Court is satisfied that the only genuine issue is (a) the amount to which the moving party is entitled, the Court may order a trial of that issue or grant summary judgment with a reference under rule 153 to determine the amount; or (b) a question of law, the Court may determine the question and grant summary judgment accordingly. (3) Summary judgment -- Where on a motion for summary judgment the Court decides that there is a genuine issue with respect to a claim or defence, the Court may nevertheless grant summary judgment in favour of any party, either on an issue or generally, if the Court is able on the whole of the evidence to find the facts necessary to decide the questions of fact and law. (4) Where motion dismissed -- Where a motion for summary judgment is dismissed in whole or in part, the Court may order the action, or the issues in the action not disposed of by summary judgment, to proceed to trial in the usual way or order that the action be conducted as a specially managed proceeding. |
| 216. (1) Absence de véritable question litigieuse -- Lorsque, par suite d'une requête en jugement sommaire, la Cour est convaincue qu'il n'existe pas de véritable question litigieuse quant à une déclaration ou à une défense, elle rend un jugement sommaire en conséquence. (2) Somme d'argent ou point de droit -- Lorsque, par suite d'une requête en jugement sommaire, la Cour est convaincue que la seule véritable question litigieuse est: a) le montant auquel le requérant a droit, elle peut ordonner l'instruction de la question ou rendre un jugement sommaire assorti d'un renvoi pour détermination du montant conformément à la règle 153; b) un point de droit, elle peut statuer sur celui-ci et rendre un jugement sommaire en conséquence. (3) Jugement de la Cour -- Lorsque, par suite d'une requête en jugement sommaire, la Cour conclut qu'il existe une véritable question litigieuse à l'égard d'une déclaration ou d'une défense, elle peut néanmoins rendre un jugement sommaire en faveur d'une partie, soit sur une question particulière, soit de façon générale, si elle parvient à partir de l'ensemble de la preuve à dégager les faits nécessaires pour trancher les questions de fait et de droit. (4) Rejet de la requête -- Lorsque la requête en jugement sommaire est rejetée en tout ou en partie, la Cour peut ordonner que l'action ou les questions litigieuses qui ne sont pas tranchées par le jugement sommaire soient instruites de la manière habituelle ou elle peut ordonner la tenue d'une instance à gestion spéciale. |
| 217. Effect of summary judgment -- A plaintiff who obtains summary judgment under these Rules may proceed against the same defendant for any other relief and against any other defendant for the same or any other relief. |
217. Effet du jugement sommaire -- Le demandeur qui obtient un jugement sommaire aux termes des présentes règles peut poursuivre le même défendeur pour une autre réparation ou poursuivre tout autre défendeur pour la même ou une autre réparation. |
| 218. Powers of Court -- Where summary judgment is refused or is granted only in part, the Court may make an order specifying which material facts are not in dispute and defining the issues to be tried, including an order (a) for payment into court of all or part of the claim; (b) for security for costs; or (c) limiting the nature and scope of the examination for discovery to matters not covered by the affidavits filed on the motion for summary judgment or by any cross-examination on them and providing for their use at trial in the same manner as an examination for discovery. |
| 218. Pouvoirs de la Cour -- Lorsqu'un jugement sommaire est refusé ou n'est accordé qu'en partie, la Cour peut, par ordonnance, préciser les faits substantiels qui ne sont pas en litige et déterminer les questions qui doivent être instruites, ainsi que: a) ordonner la consignation à la Cour d'une somme d'argent représentant la totalité ou une partie de la réclamation; b) ordonner la remise d'un cautionnement pour dépens; c) limiter la nature et l'étendue de l'interrogatoire préalable aux questions non visées par les affidavits déposés à l'appui de la requête en jugement sommaire, ou limiter la nature et l'étendue de tout contre-interrogatoire s'y rapportant, et permettre l'utilisation de ces affidavits lors de l'interrogatoire à l'instruction de la même manière qu'à l'interrogatoire préalable. |
[21] Madam Justice Tremblay-Lamer of this Court in Granville Shipping Co. v. Pegasus Lines Ltd. S.A. et al. (1996) 111 F.T.R. 189 (F.C.T.D.) has summarized the general principles that apply in applications for summary judgment as follows:
| I have considered all of the case law pertaining to summary judgment and I summarize the general principles accordingly: |
1. the purpose of the provisions is to allow the court to summarily dispense with cases which ought not proceed to trial because there is no genuine issue to be tried (Old Fish Market Restaurants v. 1000357 Ontario Inc. et al.), at p. 222;
2. there is no determinative test (Feoso Oil Limited v. Sarla (1995), 184 N.R. 307 (F.C.A.)) but Stone, J.A., seems to have adopted the reasons of Henry, J., in Pizza Pizza Ltd. v. Gillespie (Pizza Pizza) (1990), 75 O.R. (2d) 225 (Gen. Div.). It is not whether a party cannot possibly succeed at trial, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial;
3. each case should be interpreted in reference to its own contextual framework (Blyth, supra, and Feoso, supra);
4. provincial practice rules (especially rule 20 of the Ontario Rules) can aid in interpretation (Feoso, supra, and Collie, supra);
5. this court may determine questions of fact and law on the motion for summary judgment if this can be done on the material before the court (this is broader than rule 20 of the Ontario Rules of Civil Procedure) (Patrick);
6. on the whole of the evidence, summary judgment cannot be granted if the necessary facts cannot be found or if it would be unjust to do so (Pallman, supra, and Sears, supra);
7. In the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge (Forde, supra, and Sears, supra). The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a "hard look" at the merits and decide if there are issues of credibility to be resolved (Stokes, supra).
[22] I have reviewed the pleadings and the affidavits filed on this motion. A review of this material establishes that the pleadings contain the following triable issues:
- . Has the defendant:
| . . . wilfully abused its public authority in bad faith in that by (i) refusing to permit the plaintiff to import the said components duty free and in assessing and requiring payment of duties as referred to in paragraphs 12, 14, 16 and 19 and (ii) in treating the plaintiff differently from its aforementioned competitors as referred to in paragraphs 16 and 19; it was influenced by a desire to protect the defendant's interest in CCM and to reduce the defendant's ability to compete with CCM. |
| 2. Did the defendant have a secret, substantial financial interest in the plaintiff's largest competitor and did this interest influence the defendant to deny tariff benefits to the plaintiff? |
| 3. Did the defendant make representations to the plaintiff that it would be granted tariff benefits and not be treated differently than its competitors? |
| 4. Did the plaintiff rely on the defendant's representations to its detriment? |
[23] In my opinion, these are all serious issues that should proceed to trial. The defendant can abuse its public authority (see Roncarelli v. Duplessis [1959] S.C.R. 121).
[24] The law states that I can make findings of fact and law on the motion before me if these findings can be made on the material before the Court. The affidavit evidence and documents that are before me do not allow me to make the finding of fact which would be necessary in order to deal with the triable issues listed in paragraph 22 of this decision.
[25] Factor 6 in Granville Shipping Co. v. Pegasus Lines Ltd. S.A. et al., supra states that I cannot grant summary judgment if the necessary facts cannot be found or it would be unjust to do so.
[26] The defendant suggests that there is no obligation on it not to treat the plaintiff differently than its competitors. It would seem that this is not a correct statement of the law (see Harris v. Canada, June 2, 2000, Docket A-25-99 (F.C.A.)). Leave to appeal to the Supreme Court of Canada was denied on October 26, 2000.
[27] Finally, although not necessary for the disposition of this motion, I find it hard to believe that there will not be issues of credibility arising when it comes time to decide what representations were or were not made to the plaintiff by the servants of the defendant. For example, what did the Minister tell the plaintiff about being "treated fairly"? These issues of credibility should be determined by the trial judge.
[28] Factor 2 in Granville Shipping Co., supra states that "it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial". I am of the opinion that this case does deserve consideration by the trier of fact at a future trial.
[29] I am also of the opinion that on the whole of the evidence that the necessary facts cannot be found to grant summary judgment.
[30] I am therefore of the opinion that the motion for summary judgment should be denied.
[31] As there was a request to make submissions as to costs, I would order that if necessary, these submissions should be submitted to me by December 20, 2000.
ORDER
| [32] IT IS ORDERED that the motion for summary judgment is dismissed. |
| [33] IT IS FURTHER ORDERED that the parties, if necessary, make submissions |
to me as to costs by December 20, 2000.
"John A. O'Keefe"
J.F.C.C.
Toronto, Ontario
November 23, 2000
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-6485-81
| STYLE OF CAUSE: HARRY D. SHIELDS LIMITED |
- and -
HER MAJESTY THE QUEEN
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: WEDNESDAY, JUNE 21, 2000
REASONS FOR ORDER AND ORDER OF O'KEEFE J.
DATED: NOVEMBER 23 , 2000
APPEARANCES:
Mr. Donald Zaldin
| FOR PLAINTIFF |
Ms. Elizabeth Richards
FOR DEFENDANT
SOLICITORS OF RECORD:
Mr. Donald Zaldin
Harry D. Shields Limited
5863 Leslie Street, #305
North York, Ontario
M2H 1J8
FOR PLAINTIFF
Department of Justice
Second Floor, East Memorial Building
284 Wellington Street
Ottawa, Ontario
K1A 0H8
| FOR DEFENDANT |
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20001123
Docket: T-6485-81
BETWEEN:
HARRY D. SHIELDS LIMITED
Plaintiff
- and -
HER MAJESTY THE QUEEN
Defendant
REASONS FOR ORDER AND ORDER