Martineau v. M.N.R., [2004] 3 S.C.R. 737, 2004 SCC 81
Normand Martineau Appellant
v.
Minister of National Revenue Respondent
and
Attorney General of Ontario and Attorney General of Quebec Interveners
Indexed as: Martineau v. M.N.R.
Neutral citation: 2004 SCC 81.
File No.: 29794.
Hearing and judgment: October 14, 2004.
Reasons delivered: December 16, 2004.
Present: McLachlin C.J. and Major, Bastarache, Binnie, LeBel, Deschamps, Fish, Abella and Charron JJ.
on appeal from the federal court of appeal
Constitutional law — Charter of Rights — Self-incrimination — Customs — Notice of ascertained forfeiture — Examination for discovery — Minister of National Revenue upholding decision of customs officer to serve notice of ascertained forfeiture on alleged offender — Offender contesting Minister’s decision by way of action pursuant to s. 135 of Customs Act — Motion by Minister to examine offender for discovery allowed — Whether offender may rely on protection against self-incrimination guaranteed by s. 11(c) of Canadian Charter of Rights and Freedoms — Whether offender “person charged with an offence” within meaning of that section — Whether ascertained forfeiture penal in nature — Canadian Charter of Rights and Freedoms, s. 11(c) — Customs Act, R.S.C. 1985, c. 1 (2nd Supp.), ss. 124(1), 135 — Federal Court Rules, 1998, SOR/98‑106, r. 236(2).
A customs officer demanded, pursuant to s. 124 of the Customs Act, that the appellant pay more than $315,000, that is, the deemed value of goods he allegedly attempted to export by making false statements. The respondent upheld the notice of ascertained forfeiture and the appellant appealed this decision by way of an action pursuant to s. 135 of the Act. The respondent filed a notice of motion for the purpose of examining the appellant for discovery pursuant to Rule 236(2) of the Federal Court Rules, 1998. The appellant contested the motion on the ground that it would violate his right against self-incrimination under s. 11(c) of the Canadian Charter of Rights and Freedoms. The prothonotary rejected the appellant’s argument and allowed the respondent’s motion. This decision was affirmed by the Federal Court and the Federal Court of Appeal. The Federal Court of Appeal concluded that forfeiture proceedings and the other sanctions in customs matters are administrative in nature and that, in respect of the action under s. 135, the appellant was not a “person charged with an offence” but a plaintiff, and the respondent was a defendant.
Held: The appeal should be dismissed.
The appellant is not a “person charged with an offence” within the meaning of s. 11 of the Charter. An analysis of s. 124 of the Customs Act and its related provisions shows that the ascertained forfeiture process is not penal in nature and that the sanction provided for does not have true penal consequences. Rule 236(2) of the Federal Court Rules, 1998, which requires the appellant, as plaintiff in an action under s. 135 of the Customs Act, to submit to an examination for discovery, therefore does not violate s. 11(c) of the Charter.
The objectives of the Customs Act are to regulate, oversee and control cross-border movements of people and goods. To enforce the Act and its self-reporting system, Parliament has implemented civil and penal mechanisms. Although the offence imputed to the appellant — that he made false statements — may give rise to criminal prosecution (s. 160), this does not in itself mean that a notice of ascertained forfeiture can properly be characterized as a penal proceeding (s. 124). The question of whether proceedings are criminal in nature is concerned not with the nature of the act which gave rise to the proceedings, but the nature of the proceedings themselves. In principle, ascertained forfeiture is a civil collection mechanism. This mechanism is not designed to punish the offender but is instead intended to provide a timely and effective means of enforcing the Customs Act and to produce a deterrent effect. Ascertained forfeiture is an administrative process, and there are many judgments in tax matters that support the conclusion that an administrative sanction is not penal in nature. In the case at bar, the amount demanded pursuant to s. 124, although large, does not constitute a fine that, by its magnitude, is imposed for the purpose of redressing a wrong done to society at large, as opposed to the purpose of maintaining the effectiveness of customs requirements. The fines provided for in s. 160, which vary from $50,000 to $500,000, and ascertained forfeiture are two distinct consequences that are completely independent of each other. A fine, which is clearly penal in nature, takes into account the relevant factors and principles governing sentencing, while ascertained forfeiture, which is civil in nature and purely economic, is instead arrived at by a simple mathematical calculation.
Even though the appellant is not a “person charged with an offence” within the meaning of s. 11 of the Charter, it is necessary to determine the scope of s. 11(c) in light of the Federal Court of Appeal’s interpretation, which would unduly restrict its purpose. Three conditions must be met for a person charged with an offence to benefit from the protection against self-incrimination under s. 11(c): (1) the person must be compelled to be a witness (2) in proceedings against that person (3) in respect of the offence. The first condition presents no difficulties. As for the second condition, although the appellant is designated a “plaintiff” in the Federal Court, it is the respondent who initiated the “proceedings” (poursuite in the French version of s. 11(c)) against the appellant. The service of the notice of ascertained forfeiture by the customs officer constituted a “proceeding”, and the appellant defended himself in that proceeding. The procedure provided for in s. 135 of the Customs Act does not alter the actual relationship between the parties. As for the third condition, the offence imputed to the appellant consists in having made false statements. This offence gave rise to the respondent’s “proceeding”. There is no doubt that both the “proceeding” against the appellant and the appellant’s appeal from the respondent’s decision are connected with the offence.
Cases Cited
Applied: R. v. Wigglesworth, [1987] 2 S.C.R. 541, aff’g (1984), 31 Sask. R. 153; distinguished: Canada v. Amway of Canada Ltd., [1987] 2 F.C. 131, rev’d [1989] 1 S.C.R. 21; referred to: R. v. Simmons, [1988] 2 S.C.R. 495; R. v. Shubley, [1990] 1 S.C.R. 3; R. v. Yes Holdings Ltd. (1987), 48 D.L.R. (4th) 642; R. v. Luchuk (1987), 18 B.C.L.R. (2d) 301; Lavers v. British Columbia (Minister of Finance) (1989), 41 B.C.L.R. (2d) 307; Time Data Recorder International Ltd. v. Canada (Minister of National Revenue), [1997] F.C.J. No. 475 (QL); Helvering v. Mitchell, 303 U.S. 391 (1938); Markevich v. Canada, [2003] 1 S.C.R. 94, 2003 SCC 9; Nowegijick v. The Queen, [1983] 1 S.C.R. 29; Canada v. Schmidt, [1987] 1 S.C.R. 500.
Statutes and Regulations Cited
Canadian Charter of Rights and Freedoms, ss. 11(c), 13, 14, 24(2).
Criminal Code, R.S.C. 1985, c. C‑46.
Customs Act, R.S.C. 1970, c. C‑40, s. 180(2).
Customs Act, R.S.C. 1985, c. 1 (2nd Supp.), ss. 95, 109.1‑109.5, 110, 124‑126, 124(1), 129, 130, 131, 135 [am. 1990, c. 8, s. 49], 153(a), (c), 160 [am. 1993, c. 25, s. 88; c. 44, s. 107], 161.
Federal Court Rules, 1998, SOR/98‑106, rr. 236(2), 288.
Authors Cited
Oxford English Dictionary, 2nd ed., vol. XII. Oxford: Clarendon Press, 1989, “proceeding”.
Petit Robert 1: Dictionnaire alphabétique et analogique de la langue française. Paris: Le Robert, 1990, “poursuite”.
APPEAL from a judgment of the Federal Court of Appeal (2003), 310 N.R. 235, [2003] F.C.J. No. 557 (QL), 2003 FCA 176, affirming a decision of the Trial Division (2002), 216 F.T.R. 218, [2002] F.C.J. No. 111 (QL), 2002 FCT 85, affirming a decision of a prothonotary, [2001] F.C.J. No. 1865 (QL), 2001 FCT 1361. Appeal dismissed.
Frédéric Hivon and Jacques Waite, for the appellant.
Pierre Cossette and Yvan Poulin, for the respondent.
Michel Y. Hélie, for the intervener the Attorney General of Ontario.
Richard Dubois and Gilles Laporte, for the intervener the Attorney General of Quebec.
English version of the judgment of the Court delivered by
Fish J. —
I
Introduction
1 The issue in this case is whether the appellant may, in the course of an action under s. 135 of the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.) (“CA”), avail himself of the right against self-incrimination guaranteed by s. 11(c) of the Canadian Charter of Rights and Freedoms.
2 Section 11(c) provides that a “person charged with an offence” cannot be compelled to be a witness “in proceedings against that person in respect of the offence”. At the conclusion of the hearing, we were all of the opinion that the appellant in this case is not a “person charged with an offence” within the meaning of s. 11 of the Charter. The Court therefore dismissed his appeal, stating that the reasons would follow at a later date. Here are those reasons.
II
Facts and Judicial History
3 On June 25, 1996, a customs officer demanded, by way of a written notice served pursuant to s. 124 of the CA, that the appellant pay $315,458, that is, the deemed value of the goods he allegedly attempted to export by making false statements. This set in motion the process commonly referred to as “ascertained forfeiture”.
4 The appellant subsequently exercised the recourse provided for in s. 129 of the CA, requesting that the respondent review the customs officer’s decision. He submitted his representations to the respondent. The respondent upheld the demand for payment on the ground that the goods had not been reported in accordance with ss. 95 and 153(a) and (c) of the CA. According to the respondent, the goods in question were stolen automobiles.
5 On September 25, 2001, the appellant appealed the respondent’s decision by way of an action, pursuant to s. 135 of the CA. He asked that the respondent’s decision be varied and replaced by a judgment cancelling the notice demanding payment. He also contested the constitutional validity of a number of provisions of the CA.
6 Before filing a defence, the respondent filed a notice of motion for the purpose of examining the appellant for discovery pursuant to Rule 236(2) of the Federal Court Rules, 1998, SOR/98‑106 (“FCR”). The appellant contested the motion on the ground that it would violate his right against self-incrimination under s. 11(c) of the Charter.
7 In an interlocutory judgment dated December 11, 2001, Prothonotary Morneau allowed the respondent’s motion ([2001] F.C.J. No. 1865 (QL), 2001 FCT 1361). In his view, the appellant could not rely on the protection afforded by s. 11(c) of the Charter because the appellant was not a person charged with an offence in a penal proceeding. On the contrary, the appellant was a plaintiff in a civil action and could hardly be characterized as a “person charged with an offence”. The prothonotary also found it inconceivable that a plaintiff such as the appellant could avoid submitting to an examination for discovery when the adverse party demanded one.
8 On January 28, 2002, Blais J. of the Federal Court dismissed the appeal and affirmed the prothonotary’s decision ((2002), 216 F.T.R. 218, 2002 FCT 85). He agreed with the prothonotary that a notice of ascertained forfeiture is not penal in nature and held that the appellant could not benefit from the protection of s. 11(c) of the Charter. However, Blais J. did mention that he found it strange that an appeal from a Minister’s decision should be by way of an action.
9 On April 3, 2003, the Federal Court of Appeal affirmed Blais J.’s decision ((2003), 310 N.R. 235, 2003 FCA 176). Létourneau J.A., writing for the court, concluded that the forfeiture of property pursuant to the CA is not equivalent to a “charge” that would attract the application of s. 11 of the Charter.
10 Létourneau J.A. considered that, in a voluntary reporting system in taxation and customs matters, the purpose of seizure and forfeiture proceedings and the other sanctions is to regulate the conduct of taxpayers with a view to preventively ensuring compliance with tax legislation. These proceedings are thus administrative in nature.
11 Létourneau J.A. acknowledged the severity of the sanction. However, it was his opinion that the forfeiture of property, or of an amount equal to its value, in response to a contravention of the CA, does not constitute a true penal consequence within the meaning of s. 11 of the Charter. Létourneau J.A. relied on R. v. Wigglesworth, [1987] 2 S.C.R. 541, in this regard.
12 Létourneau J.A. found it “surprising” and “puzzling” that an appeal from a Minister’s decision must be by way of an action. Nevertheless, since this was the procedure established by Parliament, he maintained that the FCR’s provisions pertaining to ordinary actions applied.
13 Adopting a text-based approach here, Létourneau J.A. regarded the appellant as a plaintiff in an action in which the respondent was the defendant. The appellant was therefore not a “person charged with an offence” in this proceeding. He was not being sued, nor was he being prosecuted. In fact, he himself was the “poursuivant” (“prosecutor”, or plaintiff) in the civil law sense of the word.
14 Létourneau J.A. thus concluded that the proceeding initiated by the appellant could not result in any conviction, fine or penal consequence that would make him a “person charged with an offence” within the meaning of s. 11 of the Charter.
15 The Court of Appeal therefore dismissed the appellant’s appeal, but without prejudice to his right to contest the constitutional validity of the legal process for reviewing and appealing the Minister’s decision in his main action.
III
Relevant Constitutional and Legislative Provisions
16 Canadian Charter of Rights and Freedoms
11. Any person charged with an offence has the right
. . .
(c) not to be compelled to be a witness in proceedings against that person in respect of the offence;
. . .
Customs Act, R.S.C. 1985, c. 1 (2nd Supp.)
124. (1) Where an officer believes on reasonable grounds that a person has contravened any of the provisions of this Act or the regulations in respect of any goods or conveyance, the officer may, if the goods or conveyance is not found or if the seizure thereof would be impractical, serve a written notice on that person demanding payment of
(a) an amount of money determined under subsection (2) or (3), as the case may be; or
(b) such lesser amount as the Minister may direct.
. . .
135. (1) A person who requests a decision of the Minister under section 131 may, within ninety days after being notified of the decision, appeal the decision by way of an action in the Federal Court in which that person is the plaintiff and the Minister is the defendant.
(2) The Federal Court Act and the Federal Court Rules applicable to ordinary actions apply in respect of actions instituted under subsection (1) except as varied by special rules made in respect of such actions.
160. Every person who contravenes section 12, 13, 15 or 16, subsection 20(1), section 31 or 40, subsection 43(2), 95(1) or (3), 103(3) or 107(1) or section 153, 155 or 156 or commits an offence under section 159 or 159.1
(a) is guilty of an offence punishable on summary conviction and liable to a fine of not more than fifty thousand dollars or to imprisonment for a term not exceeding six months or to both that fine and that imprisonment; or
(b) is guilty of an indictable offence and liable to a fine of not more than five hundred thousand dollars or to imprisonment for a term not exceeding five years or to both that fine and that imprisonment.
. . .
Federal Court Rules, 1998, SOR/98‑106
236. . . .
(2) Subject to subsection (3), a defendant may examine a plaintiff at any time after the statement of claim is filed.
IV
Issue
17 The issue in this case is whether Rule 236(2) of the FCR violates s. 11(c) of the Charter by requiring a plaintiff in an action under s. 135 of the CA to submit to an examination for discovery.
V
Analysis
A. Is the Appellant a “Person Charged With an Offence” Within the Meaning of Section 11 of the Charter?
18 Section 11(c) of the Charter reads as follows:
11. Any person charged with an offence has the right
. . .
(c) not to be compelled to be a witness in proceedings against that person in respect of the offence;
11. Tout inculpé a le droit :
. . .
c) de ne pas être contraint de témoigner contre lui-même dans toute poursuite intentée contre lui pour l’infraction qu’on lui reproche;
19 In Wigglesworth, supra, at p. 554, Wilson J., writing for the majority, interpreted the expression “person charged with an offence” to limit its application to “public offences involving punitive sanctions, i.e., criminal, quasi-criminal and regulatory offences”. She stated that a matter falls within s. 11 of the Charter where, first, by its very nature it is a criminal proceeding or, second, a conviction in respect of the offence may lead to a true penal consequence (Wigglesworth, at p. 559).
20 Section 124 of the CA must therefore be considered in light of these two tests.
(1) Does Section 124 of the CA Provide for a Penal Proceeding?
21 When a matter is of a public nature, intended to promote public order and welfare within a public sphere of activity, it falls, by its very nature, within s. 11 of the Charter. This is clearly true of federal prosecutions under the Criminal Code, R.S.C. 1985, c. C‑46, and of prosecutions of quasi-criminal offences under provincial legislation.
22 By contrast, proceedings of an administrative — private, internal or disciplinary — nature instituted for the protection of the public in accordance with the policy of a statute are not penal in nature (Wigglesworth, supra, at p. 560).
23 A distinction must therefore be drawn between penal proceedings on the one hand and administrative proceedings on the other. Only penal proceedings attract the application of s. 11 of the Charter.
24 To determine the nature of the proceeding, the case law must be reviewed in light of the following criteria: (1) the objectives of the CA and of s. 124 thereof; (2) the purpose of the sanction; and (3) the process leading to imposition of the sanction.
(i) Objectives of the CA and of Section 124
25 The objectives of the CA are to regulate, oversee and control cross-border movements of people and goods. As Dickson C.J. stated in R. v. Simmons, [1988] 2 S.C.R. 495, at p. 528: “It is commonly accepted that sovereign states have the right to control both who and what enters their boundaries. For the general welfare of the nation the state is expected to perform this role.” To this end, the CA provides for the collection of duties and taxes on imported goods.
26 The attainment of these objectives depends on the effectiveness of the voluntary or self-reporting system provided for in the CA. To enforce the CA, Parliament has implemented civil and penal mechanisms.
27 The civil mechanisms include the seizure as forfeit of goods and conveyances (s. 110 of the CA), the demand by written notice or “ascertained forfeiture” (ss. 124 to 126 of the CA), and the imposition of administrative penalties (ss. 109.1 to 109.5 of the CA). The penal mechanisms, properly so called, are provided for in ss. 160 and 161 of the CA.
28 The offence imputed to the appellant, that he made false statements (ss. 95 and 153(a) and (c) of the CA), may give rise to a notice demanding payment (s. 124 of the CA), to criminal prosecution by way of summary conviction or indictment (s. 160 of the CA), or to both a demand for payment and criminal prosecution. On this basis, the appellant argues that a distinction as regards the nature of the imputed offence cannot be drawn based solely on the respondent’s choice of proceeding (civil or penal). Thus, since the offence may have penal consequences, it must be considered penal in nature.
29 This argument must be rejected.
30 As stated by McLachlin J. (as she then was) in R. v. Shubley, [1990] 1 S.C.R. 3, at pp. 18‑19: “The question of whether proceedings are criminal in nature is concerned not with the nature of the act which gave rise to the proceedings, but the nature of the proceedings themselves” (emphasis added).
31 In the case at bar, the fact that the false statements could result in criminal prosecution does not in itself mean that a notice of ascertained forfeiture can properly be characterized as a penal proceeding. The fact that a single violation can give rise to both a notice of ascertained forfeiture and a criminal prosecution is irrelevant. The appropriate test is the nature of the proceedings, not the nature of the act.
32 Cameron J.A. of the Saskatchewan Court of Appeal stated the following (quoted with approval in Wigglesworth, supra, at p. 566):
A single act may have more than one aspect, and it may give rise to more than one legal consequence. It may, if it constitutes a breach of the duty a person owes to society, amount to a crime, for which the actor must answer to the public. At the same time, the act may, if it involves injury and a breach of one’s duty to another, constitute a private cause of action for damages for which the actor must answer to the person he injured. And that same act may have still another aspect to it: it may also involve a breach of the duties of one’s office or calling, in which event the actor must account to his professional peers.
(R. v. Wigglesworth (1984), 31 Sask. R. 153, at para. 11)
(ii) Purpose of the Notice of Ascertained Forfeiture
33 In principle, ascertained forfeiture is a civil collection mechanism. It is used where it would be difficult or even impossible to seize goods in respect of which a customs officer believes on reasonable grounds that an offence has been committed. In such cases, rather than seizing the goods as forfeit (an in rem proceeding), the officer may demand payment of an amount of money that is determined according to the value of the goods in question.
34 In the instant case, the appellant submits that the purpose of ascertained forfeiture, like that of a criminal prosecution, is to punish the offender in order to produce a deterrent effect and redress a wrong done to society.
35 This argument must fail for three reasons.
36 First, the purpose of a forfeiture mechanism is to ensure compliance with the CA by giving customs officers a timely and effective means of enforcing it. This mechanism is not designed to punish the offender. If the offender were not the actual owner of the seized property, he or she would not, in principle, be punished by the forfeiture thereof.
37 A notice of ascertained forfeiture is served only where the property cannot be seized because, for example, it has already been exported. Only then is the offender, who is not necessarily the owner of the property, directly exposed to civil consequences. Thus, although ascertained forfeiture may in some cases have the effect of “punishing” the offender, that is not its purpose.
38 Second, it is true that ascertained forfeiture is intended to produce a deterrent effect. This is completely understandable in a self-reporting system. Fraud must be discouraged, and offences punished severely, for the system to be viable. However, actions in civil liability and disciplinary proceedings, which are also aimed at deterring potential offenders, nevertheless do not constitute criminal proceedings.
39 Third, there is nothing that would indicate that the objective of ascertained forfeiture is to redress a wrong done to society. For example, s. 124 of the CA does not in any way take into account the principles of criminal liability or sentencing. I will address this point in greater detail in the next section.
(iii) The Ascertained Forfeiture Process
40 Ascertained forfeiture involves a four-step administrative process.
41 First, under s. 124 of the CA, a customs officer must have reasonable grounds to believe that a provision of the CA has been contravened. Once this precondition has been met, and once it has been established that it would be difficult to seize the goods and conveyances related to the customs offence, the officer may demand that the offender pay an amount of money equal to the value of the goods.
42 Second, the person to whom a notice of ascertained forfeiture applies has 90 days to ask the Minister to review the customs officer’s decision (s. 129(1)(d) of the CA). The Minister then serves notice of the reasons in support of the imposed sanction (s. 130(1) of the CA). Within 30 days after notice of the reasons is served, the alleged offender may make submissions and give evidence, in writing, to the Minister (ss. 130(2) and 130(3) of the CA).
43 Third, the Minister decides whether the ascertained forfeiture is valid (s. 131 of the CA). This decision “is not subject to review or to be . . . otherwise dealt with except to the extent and in the manner provided by subsection 135(1)” (s. 131(3) of the CA).
44 Fourth, and finally, the person who requested the Minister’s decision may, within 90 days after being notified of the decision, appeal by way of an action in the Federal Court (s. 135(1) of the CA).
45 This process thus has little in common with penal proceedings. No one is charged in the context of an ascertained forfeiture. No information is laid against anyone. No one is arrested. No one is summoned to appear before a court of criminal jurisdiction. No criminal record will result from the proceedings. At worst, once the administrative proceeding is complete and all appeals are exhausted, if the notice of ascertained forfeiture is upheld and the person liable to pay still refuses to do so, he or she risks being forced to pay by way of a civil action.
(iv) Case Law
46 Section 124 of the CA has not yet been interpreted by the courts. It will therefore be necessary to review similar cases in tax and customs matters to characterize the sanction provided for in this provision.
47 First of all, in Canada v. Amway of Canada Ltd., [1987] 2 F.C. 131 (C.A.), the Minister of National Revenue instituted proceedings against the Amway corporation under s. 180(2) of the former Customs Act, R.S.C. 1970, c. C‑40. That provision, like s. 124 of the current Act, authorized the Minister to demand payment of an amount equal to the value of the exported property where the Act had been contravened.
48 In that case too, the Minister wanted to examine the offender for discovery. The Federal Court of Appeal refused to authorize this, because the action to collect a fine in a civil proceeding constituted a penal action in which the defendant was a person charged with an offence. Consequently, Amway had the status of a “person charged with an offence” and was protected by s. 11(c) of the Charter.
49 The decision was appealed to this Court, which reversed the decision of the Federal Court of Appeal on another ground. The Court ruled that a corporation cannot as such be a witness and therefore does not come within s. 11(c) of the Charter. On the nature of proceedings under s. 180(2) of the former CA, Sopinka J., writing for the Court, said he was prepared to assume, “without deciding”, that the proceedings in question were such that Amway had the status of a “person charged with an offence” (R. v. Amway Corp., [1989] 1 S.C.R. 21, at p. 37).
50 Accordingly, the appellant cannot rely on Amway in support of the conclusion that s. 124 of the current CA is penal in nature. First, s. 180(2) of the former CA dealt in a single provision with the Minister’s authority to require payment of a fine equal to the value of the unlawfully imported property and with the penal consequence of such an offence, that is, summary prosecution or prosecution on indictment.
51 Civil and penal remedies were in a way intermingled in a single subsection. This inevitably gave the civil sanction a penal dimension. Unlike its predecessor, the new CA draws a clear distinction between seizure as forfeit (s. 124) and penal sanctions (s. 160). Moreover, in the case at bar, no criminal proceedings have been brought against the appellant.
52 Next, the sanction provided for in s. 180(2) of the former CA was explicitly characterized as a “fine”. This term is more closely associated with the terminology used in penal matters. Section 124 of the current CA instead uses the more neutral expression “amount of money”.
53 Finally, the remarks of Sopinka J. in Amway must not be taken out of context. Given his conclusion that a corporation cannot be a witness, his comments on the nature of the sanction imposed on Amway are necessarily restricted in scope.
54 A number of judgments in tax matters support the conclusion that an administrative sanction is not penal in nature: see, inter alia, R. v. Yes Holdings Ltd. (1987), 48 D.L.R. (4th) 642 (Alta. C.A.); R. v. Luchuk (1987), 18 B.C.L.R. (2d) 301 (C.A.); Lavers v. British Columbia (Minister of Finance) (1989), 41 B.C.L.R. (2d) 307 (C.A.). In Time Data Recorder International Ltd. v. Canada (Minister of National Revenue), [1997] F.C.J. No. 475 (QL) (C.A.), at para. 12, Pratte J.A. correctly summarized the Canadian case law on the subject as follows: “It is common ground that seizures and forfeitures under the Customs Act are not criminal but civil proceedings and penalties.”
55 The case law of the United States Supreme Court has for quite some time been to the same effect. According to Brandeis J. in Helvering v. Mitchell, 303 U.S. 391 (1938), at p. 400, the forfeiture of goods or their value and any other monetary sanctions provided for under tax legislation are civil in nature, regardless of their severity:
Forfeiture of goods or their value and the payment of fixed or variable sums of money are other sanctions which have been recognized as enforcible by civil proceedings since the original revenue law of 1789. . . . In spite of their comparative severity, such sanctions have been upheld against the contention that they are essentially criminal and subject to the procedural rules governing criminal prosecutions.
56 For these reasons, I find that the notice of ascertained forfeiture is not penal in nature, but is rather an administrative measure intended to provide a timely and effective means of enforcing the CA.
(2) Does the Written Notice Demanding Payment Under Section 124 of the CA Constitute a True Penal Consequence?
57 In Wigglesworth, supra, at p. 561, Wilson J. wrote that “a true penal consequence which would attract the application of s. 11 [of the Charter] is imprisonment or a fine which by its magnitude would appear to be imposed for the purpose of redressing the wrong done to society at large rather than to the maintenance of internal discipline within the limited sphere of activity”. In her view, in the rare cases where the two tests conflict, the “by nature” test must give way to the “true penal consequence” test (Wigglesworth, supra, at p. 561).
58 Wigglesworth is one example of this sort of unusual situation. In that case, the Court held that proceedings before the Royal Canadian Mounted Police Service Court failed the “by nature” test. However, since the accused was liable to imprisonment for a term of one year, he faced a true penal consequence.
59 In the case at bar, the appellant, unlike Mr. Wigglesworth, does not face imprisonment should he be found to have contravened the CA.
60 It remains to be determined whether the payment of $315,458 demanded pursuant to s. 124 of the CA constitutes a fine that, by its magnitude, is imposed for the purpose of redressing a wrong done to society at large, as opposed to the purpose of maintaining the effectiveness of customs requirements.
(i) Magnitude of the Fine
61 The appellant’s main argument in this regard is based on the magnitude of the amount claimed. He contends that $315,458 is six times greater than the maximum fine that could be imposed on him upon summary conviction under s. 160(a) of the CA and that it accordingly constitutes a true penal consequence.
62 This argument is based on a false premise. There can be no doubt that the amount of $315,458 demanded from the appellant is greater than the sanction he would face in a summary conviction prosecution. However, if the appellant had been proceeded against by way of indictment, the maximum fine would have been $500,000 (s. 160(b) of the CA). In either case, moreover, the fine does not replace the ascertained forfeiture. These are two distinct consequences that are completely independent of each other. One of them, the fine, is clearly penal in nature and thus takes into account the relevant factors and principles governing sentencing; the other, being civil in nature and purely economic, is instead arrived at by a simple mathematical calculation.
63 In addition, forfeiture is an in rem proceeding in which the subject is the thing itself. In such a proceeding, the guilt or innocence of the owner of the forfeited property is irrelevant. The notice of ascertained forfeiture, the amount of which is established based on the estimated value of the property, is the necessary counterpart of this in rem proceeding. If the property is subsequently seized, the notice will be immediately cancelled (s. 125 of the CA).
(ii) Redressing a Wrong Done to Society
64 Unlike a criminal conviction, the demand by written notice stigmatizes no one.
65 As has just been seen, the principles of criminal liability and sentencing are totally irrelevant when fixing the amount to be demanded. Such a notice does not result in a criminal record for either the offender or the owner of the property. Its purpose is neither to punish the offender nor to elicit societal condemnation. In short, the notice of ascertained forfeiture has neither the appearance nor the distinctive characteristics of a sanction intended to “redress a wrong done to society”.
66 To sum up, the notice of ascertained forfeiture does not lead to true penal consequences for the appellant. He cannot be characterized as a “person charged with an offence” within the meaning of s. 11(c) of the Charter and therefore cannot benefit from its protection in this case.
B. Is the Appellant Compelled to Be a Witness in Proceedings Against Him in Respect of an Offence With Which He Is Charged, Contrary to Section 11(c) of the Charter?
67 As the appellant is not a “person charged with an offence” within the meaning of s. 11 of the Charter, there is in principle no need to consider the scope of s. 11(c). Nevertheless, it seems appropriate to do so, since the Federal Court of Appeal’s interpretation of this provision would unduly restrict its purpose.
68 Three conditions must be met for a person charged with an offence to benefit from the protection against self-incrimination under s. 11(c) of the Charter: (1) the person must be compelled to be a witness (2) in proceedings against that person (3) in respect of the offence.
69 In this regard, the key passage from the Federal Court of Appeal’s decision reads as follows (at para. 10):
In this case, the appellant is a plaintiff in an action in which, as section 135 requires, the Minister is the defendant. He is not a person charged with an offence in this proceeding. Nor is he being prosecuted or sued. In fact, he is the prosecutor in the civil law sense of the word. The proceeding he has initiated himself cannot result in any conviction, fine or penal consequence in the criminal or penal sense of the word, making him a person charged with an offence under the Charter’s paragraph 11(c). The decision to carry out an ascertained forfeiture is already made and upheld by the Minister. The proceeding brought by the appellant to challenge the Minister’s decision is, when all is said and done, a proceeding to have the respondent’s claim and the action to collect this claim, the ascertained forfeiture, vacated.
70 The first condition presents no difficulties. It seems obvious that examining someone for discovery amounts to compelling that person to be a witness in proceedings against him or her. Rule 288 of the FCR provides that any part of an examination for discovery of an adverse party may be introduced into evidence at trial.
71 As for the other two conditions, the decision of the Federal Court of Appeal, which is essentially based on the wording of the French version of s. 11(c), can be summarized as follows: since the appellant is a plaintiff, there is no poursuite (proceeding) against him. Thus, the appellant himself is the poursuivant (“prosecutor”, or plaintiff) and the proceeding was not brought in respect of the offence with which the appellant is charged, as the respondent had already made a decision. The purpose of the proceeding is, rather, to have the appellant’s debt to the respondent cancelled.
72 With respect, this interpretation of s. 11(c) of the Charter risks being perceived as overly formalistic. I accordingly believe it would be preferable to address this aspect of the appeal as follows.
(1) “Proceedings Against That Person”
73 The purpose of s. 11(c) is to protect a person charged with an offence against self-incrimination. This protection should not depend solely on the terminology associated with the procedure established by Parliament.
74 In the instant case, Parliament decided that an appeal from a decision of the Minister must be made by way of an action in the Federal Court (s. 135 of the CA). However, this choice of procedure does not alter the actual relationship between the parties.
75 The Petit Robert (1990) defines the word “poursuite” as follows: [translation] “legal action taken against someone who has violated a law . . .” (p. 1501). In the case at bar, the customs officer, a representative of the state, served a notice of ascertained forfeiture on the appellant. There can therefore be no doubt that the service of the notice of ascertained forfeiture by the customs officer, who had reasonable grounds to believe that a provision of the CA had been contravened, constituted a “poursuite” against the appellant.
76 From that moment, the appellant was required to follow the path set out by Parliament for contesting the proceeding against him. To this end, he asked the Minister to review the officer’s decision (ss. 129 and 131 of the CA) and he subsequently appealed the Minister’s decision to the Federal Court. Thus, although the appellant is designated a “plaintiff”, it is not he who actually initiated the “poursuite”. On the contrary, he is simply defending himself in a proceeding against him that was initiated by the respondent.
77 In the English version of s. 11(c) of the Charter, the term “poursuite” is rendered as “proceedings”. The Oxford English Dictionary (2nd ed. 1989) defines “proceeding” as follows, at p. 545: “The instituting or carrying on of an action at law; a legal action or process; any act done by authority of a court of law; any step taken in a cause by either party” (emphasis added). It should be added that, in ss. 13 and 14 of the Charter, the word “proceedings” is rendered as “procédures” in the French version. In s. 24(2) of the Charter, “proceedings” is rendered as “instance”.
78 This shows that the word “proceedings” has a much broader meaning than “poursuite” (see, for example, Markevich v. Canada, [2003] 1 S.C.R. 94, 2003 SCC 9, at paras. 23‑37), and it applies regardless of whether the individual seeking the protection of s. 11(c) of the Charter is a “plaintiff” or a “defendant”.
79 Thus, although the appellant is designated a “plaintiff” in the Federal Court, it is nonetheless the respondent who initiated the proceeding (poursuite, procédure or instance) against the appellant.
(2) “In Respect of the Offence”
80 A literal interpretation of this expression implies that the proceeding must be in respect of the offence with which the appellant is charged. Relying on this assertion, the Federal Court of Appeal stated that the Minister’s decision was a thing of the past and that the purpose of the current proceeding was instead to release the appellant from his debt.
81 For this expression also, to understand its real meaning, the English and French versions of s. 11(c) of the Charter must be read together. The expression “pour l’infraction qu’on lui reproche” is rendered in English as “in respect of the offence”. The key element of this provision is the existence of “some link” between the offence and the proceedings (see Markevich, supra, at para. 26).
82 Dickson J. (as he then was) stated the following in Nowegijick v. The Queen, [1983] 1 S.C.R. 29, at p. 39:
The words “in respect of” are, in my opinion, words of the widest possible scope. They import such meanings as “in relation to”, “with reference to” or “in connection with”. The phrase “in respect of” is probably the widest of any expression intended to convey some connection between two related subject matters.
83 In the case at bar, the offence imputed to the appellant consists in having made false statements contrary to ss. 95 and 153(a) and (c) of the CA. The offence gave rise to a proceeding (poursuite, procédure or instance) initiated by the respondent against the appellant. The respondent used a notice of ascertained forfeiture to demand payment of an amount of $315,458. There is accordingly no doubt that both the “proceeding” against the appellant and the appeal from the respondent’s decision are connected with the offence.
84 In Canada v. Schmidt, [1987] 1 S.C.R. 500, at p. 519, this Court stated that the expression “person charged with an offence” must be interpreted consistently in relation to all the paragraphs of s. 11 of the Charter.
85 The Federal Court of Appeal’s interpretation would unduly reduce the scope of s. 11(c). This would be true where a “person charged with an offence” was compelled to be a witness in proceedings against him or her simply because Parliament required the person to bring an action to contest a decision. The person’s status as a “plaintiff” would deprive the person of his or her constitutional rights.
86 This interpretation must therefore be rejected.
VI
Conclusion
87 To characterize the appellant as a “person charged with an offence” would have a significant impact on the entire body of legislation whose purpose is taxation and economic regulation. To recognize an alleged offender in these spheres as a “person charged with an offence”, even where he or she is not in fact charged, would undermine the effectiveness of the system and substantially increase the cost of administering it.
88 In this context, an analysis of s. 124 of the CA and its related provisions shows that the process they establish is not penal in nature and that the sanction provided for does not have true penal consequences within the meaning of Wigglesworth.
89 Therefore, Rule 236(2) of the FCR does not violate s. 11(c) of the Charter by requiring the appellant, as plaintiff in an action under s. 135 of the CA, to submit to an examination for discovery.
90 For these reasons, the Court dismissed the appeal from the bench. The respondent shall have his costs in this Court.
Appeal dismissed with costs.
Solicitors for the appellant: Hivon et Beaulac, Montréal.
Solicitor for the respondent: Deputy Attorney General of Canada, Montréal.
Solicitor for the intervener the Attorney General of Ontario: Attorney General of Ontario, Toronto.
Solicitor for the intervener the Attorney General of Quebec: Department of Justice, Sainte-Foy.