CC Havanos Corp. Ltd. (Re)

CC Havanos Corp. Ltd. (Re)
Court (s) Database
Federal Court Decisions
Date
2002-09-06
Neutral citation
2002 FCT 941
File numbers
T-185-99
Notes
Reported Decision
Decision Content
Federal Court Reports CC Havanos Corp. (Re) (T.D.) [2003] 2 F.C. 241
Date: 20020906
Docket: T-185-99
Neutral Citation: 2002 FCT 941
IN THE MATTER OF section 88 of the
Excise Act, R.S.C. 1985, c. E-14
AND IN THE MATTER OF some cigars, raw and manufactured tobacco and
other materials in stock, engines, machinery and utensils seized
[Application by CC Havanos Corporation Ltd.]
REASONS FOR JUDGMENT
ROULEAU J.
[1] This litigation has to do with an opposition by the plaintiff company, CC Havanos Corporation Ltd. ("CC Havanos") to an excise seizure carried out on December 17, 1998 by the Royal Canadian Mounted Police ("RCMP") under the provisions of the Excise Act, R.S.C. 1985, c. E-14 as amended ("the Excise Act"). In its notice of claim filed in the Court record pursuant to subsection 117(1) of the Excise Act, the plaintiff company is seeking an order declaring that its interest in the seized property is not affected by this seizure and that it is innocent of any complicity in the commission of the offences under the Excise Act resulting in the seizure, a remedy that is justifiable under section 88.2 of the Excise Act.
The Facts
[2] Dino Orsini is a businessman who decided to become involved in the manufacture of high-quality cigars. He spent two years developing his project. He incorporated his firm CC Havanos in May 1998 and retained on a recommendation the services of a management consultant, Mr. Marc Larochelle, for the purpose of preparing a business plan including a market study and an analysis of the legal aspect. The consultant contacted Revenu Québec, which informed him of the applicable taxes and the need to obtain a provincial cigar manufacturing and tobacco importing licence.
[3] Mr. Larochelle, the consultant, was directed by both Revenu Québec and Revenue Canada to Customs and Excise Canada. There, an official prepared a table for him of all the applicable taxes and duties and gave him the relevant documents. It appears from the evidence that he was told he did not need a federal manufacturing licence but that he should however pay the excise duties and taxes to the federal government. It was Mr. Larochelle's understanding, therefore, that in terms of cigar manufacturing it was Quebec law that applied. He made no inquiries as to whether it was necessary to stamp the tobacco products. Wherever he went, he explained that he was operating on behalf of a business for the manufacture of high-quality cigars. He did not consult a lawyer since he saw no need for this and wanted to reduce costs.
[4] Following the instructions of his consultant, Dino Orsini obtained his provincial tobacco importer's and manufacturer's licence and a federal tobacco import licence, but not the federal manufacturing licence required by the Excise Act for the manufacture of cigars. He undertook the renovation of some premises and in December 1998 opened a luxurious high-end cigar shop on Sherbrooke Street West in Montreal. Customers could savour in a lounge some cigars manufactured on site and make their selections within a vast humidor.
[5] However, the RCMP were keeping an eye on Mr. Orsini since they were planning to deploy a major search operation against a number of shops in the Montreal area that they suspected were manufacturing and selling imitation Cuban cigars. They were also aware that CC Havanos was to manufacture some cigars and that it had not obtained its cigar manufacturing licence. In the summer of 1998, while the premises were being renovated, some officers of the customs and excise division conducted an initial inspection.
[6] On December 15, 1998, Constable Marc Archambault was asked to return to CC Havanos shortly after the opening for a second inspection. He arrived on the scene around 12:01 p.m. and found two men who appeared to be of Hispanic origin sitting at a table rolling cigars. Behind them, Constable Archambault noticed what he thought to be about one hundred cigar boxes that did not bear any stamps confirming the payment of cigar manufacturing duties as required by subsection 240(1) of the Excise Act. It subsequently turned out that these were cigar moulds. He also noted on the wall that some provincial permits were posted - manufacturer's, importer's and collections officer's - as well as some certificates concerning the sales tax and tobacco tax.
[7] Constable Archambault, who did not identify himself as a police officer, said he was interested in the possibility of purchasing a box of Cuban cigars but that it was very expensive. One of the two men who appeared to be of Hispanic origin answered that the tobacco was imported from Cuba and that they were manufacturing the cigars on site in the shop and selling them at less expensive prices because there were no taxes or duties to pay. Later, the same man introduced Constable Archambault to the employer, a young white man who turned out to be Ian Orsini, the son of Dino Orsini, and he offered Constable Archambault a box of 25 cigars for $200.00. Constable Archambault also noted the presence on the premises of a large humidor, a specially designed container for regulating humidity for the purpose of preserving the cigars, which contained a large number of unstamped cigars spread out on a table. Since it was a Christmas gift, Mr. Ian Orsini suggested to Constable Archambault that he come back to get them on December 22 or 23, so they could be kept under cover in the humidor.
[8] On December 15, 1998, at around 2:20 p.m., Constable Archambault contacted Ms. Diane Demers of Revenue Canada, Montreal Excise Division, who confirmed, after a check in their commercial excise system, that as of December 14, 1998, CC Havanos had no cigar manufacturing licence and no steps had been taken by CC Havanos to obtain a licence pursuant to section 13 of the Excise Act.
[9] On December 17, 1998, acting pursuant to sections 88, 89, 226 and 240 of the Excise Act as excise officers, some members of the RCMP carried out a seizure of all the equipment located in the CC Havanos premises: the materials and equipment needed for the manufacture of cigars, a total of 3,106 cigars not stamped as required by the Excise Act, and 448 pounds of tobacco, and some documents proving that CC Havanos had been manufacturing cigars since at least October 1998. This seizure was conducted under a search warrant issued by Mr. Jean Charles Hamelin, a justice of the peace, based on an affidavit in which Constable Archambault stated that he had reasonable grounds to believe that the objects sought, identified on the document entitled "Schedule of Property Seized", were located on the premises of CC Havanos and would provide evidence in relation to the perpetration of the offences set out in sections 226(a) and 240(1)(b) of the Excise Act, namely, manufacturing cigars without the licence prescribed by the Excise Act and having in one's possession cigars that were not put up in packages and stamped in accordance with the Excise Act.
[10] Mr. Dino Orsini, his son Ian and his wife Louise Lemire-Orsini were arrested at the site of the search and escorted to the RCMP headquarters. They refused to make a statement in writing on the advice of their lawyer, who personally appeared at the RCMP office. However, Mr. Dino Orsini told Constable Archambault orally that his business for the past month or so had been manufacturing cigars and that he thought he was in legal compliance with his provincial licences. Later, Dino Orsini, Ian Orsini and Louise Lemire-Orsini, none of whom wished to make any statement, were released and advised of the possibility that criminal charges could be brought against them in the near future.
[11] It should be noted that at no point during their visits prior to the seizure of December 17, 1998 did the members of the RCMP inform Mr. Orsini of his failure to procure the federal manufacturing licence. On December 18, 1998, when Mr. Orsini learned for the first time that he had to obtain such a licence, he met with the licencing official of Revenue Canada, Montreal Excise Division, and explained to her that he wanted to obtain a federal licence for the manufacture of cigars. She gave him all the relevant information and a form. To get a licence, Mr. Orsini had to pay $50.00 in excise tax and obtain a bond from an insurance company, which he did. However, Mr. Orsini's application was rejected five months later, on April 16, 1999, for reasons of public policy. It was carefully explained to him that this decision would be reviewed once the criminal proceedings in the Superior Court of Quebec had been concluded.
[12] On January 6, 1999, a check with the Quebec government by Constable Archambault confirmed the invalidity of the provincial permits owing to the fact that they were issued in 1997 for 575 Lomme Street in St-Jean sur Richelieu, the street address of Mr. Dino Orsini's personal residence, and that the government had never been notified of the place of business of CC Havanos, which was situated at 1541 Sherbrooke Street West in Montreal. This was an offence under section 14(a) of the Quebec Tobacco Tax Act, R.S.Q. c. I-2.
[13] Mr. Dino Orsini and his son Ian were tried on the two aforesaid counts. In a decision handed down September 21, 1999 (docket no. 500-73-000980-991), Mr. Justice Sirois of the Superior Court of Quebec ruled that the accused had demonstrated by a preponderance of evidence that their error of law was the result of the advice solicited from a person in authority and of competent jurisdiction and consequently ordered a stay of proceedings on both counts.
[14] On April 24, 1999, CC Havanos, Dino Orsini, Louise Lemire-Orsini and Ian Orsini brought an action in damages in the Superior Court of Quebec against Her Majesty the Queen and various government employees for $25,000,000 (docket no. 500-05-049776-998). The plaintiff company's claim was based on its loss of business, the loss of its investment, income and profits, and the illegal and unreasonable nature of the seizure and confiscation by the RCMP of the property of its business. The CC Havanos claim was likewise based on the unreasonable refusal of the Revenue Canada officers, following the seizure, to issue a cigar manufacturing licence to it as required by the Excise Act. The individual claims were based on the personal and non-economic loss suffered as a result of the seizure, unlawful arrests, detentions, etc.
[15] On January 15, 1999, CC Havanos, represented by its counsel, gave notice within thirty days of the seizure, pursuant to subsection 117(1) of the Excise Act, indicating that it intended to claim all of the seized property. On February 8, 1999, the Deputy Attorney General of Canada, on behalf of the defendant, filed in the record of this Court a notice of information and an information under subsection 116(1) of the Excise Act seeking the forfeiture of the things seized on December 17, 1998. On or about February 15, 1999, the plaintiff company commenced proceedings in this Court under subsection 116(2) and around March 17, 1999 the defendant filed its defence. The validity of the seizure made on December 17, 1998 by the RCMP is the subject of parallel proceedings in this Court and the Superior Court of Quebec.
The issues
[16] I hasten to explain, as I stated at the hearing, that the action by the plaintiff company cannot by any means constitute in this case a justifiable proceeding under section 88.2 of the Excise Act, since that provision limits the appropriate proceeding to "any person, other than the person accused of an offence resulting in the seizure or person in whose possession the horse, vehicle, vessel or other appliance was seized". It is apparent from the record that all of the seized property belonged to and was in the possession of CC Havanos at all times during the seizure, and it is this company which is claiming the property. Furthermore, the purpose of this provision is to protect innocent third parties such as equipment rental companies, carriers, banks and other secured creditors, etc., which is not the case in this instance: Bank of Nova Scotia v. Canada (Minister of National Revenue - M.N.R.), [2000] 10 W.W.R. 641 (Sask. Q.B.), at par. 49. Accordingly, the statement of claim filed in the record of this Court by the plaintiff company seeks conclusions that are not proper to the action in claim provided in section 116 of the Excise Act, which is for the purpose of having the seized property released or condemned. Finally, even if this proceeding were available to the plaintiff company, which is not the case in this instance, the time for bringing it is prescribed, since the statement of claim was filed with the Court on February 12, 1999, close to 60 days after the seizure was made.
[17] At trial, the plaintiff company attempted to show that the search warrant and the seizure executed under its authority, itself issued under section 487 of the Criminal Code, R.S.C. 1985, c. C-46, were void and unlawful, and it asked that the seized property be remitted to it. As no ground based on the Canadian Charter of Rights and Freedoms was cited in challenging the validity of the excise seizure, this action by the plaintiff company can only be based on section 116 of the Excise Act and necessarily consists of an action in rem to condemn the seized property. At trial, the plaintiff company simply sought to have the seizure of December 17, 1998 declared illegal by trying to demonstrate the void and illegal nature of the search warrant and the unreasonableness of the seizure itself. It did not emphasize its own innocence and its ignorance of the unlawful activity alleged against it, defences for which - unfortunately for the plaintiff company - evidence is irrelevant in an action in rem directed against property and which therefore cannot result in the return of the seized property any more than can a stay of criminal proceedings in the Superior Court of Quebec: see Daigneault v. Minister of National Revenue (Customs and Excise) (1990), 44 F.T.R. 226 (F.C.T.D.). In my opinion, the lawfulness of the seizure can be questioned only if the property was not ipso jure liable to forfeiture under the Excise Act.
[18] In this context, this appeal raises only two very specific issues. First, was all of the property seized in the December 17, 1998 search liable to forfeiture ipso jure and through the application of the Excise Act? This question points to a further one. Should this first question be answered in the affirmative, would the fact that the possession of certain property at issue was not intrinsically unlawful be possible grounds for it to be legitimately returned to the plaintiff company even in the wake of a valid seizure under the Excise Act?
Submissions by the parties
[19] The plaintiff company claims not only that the December 17, 1998 seizure was unlawful and unreasonable but that it was itself the object of a conspiracy that effectively put an end to its business.
[20] First, the plaintiff company argues that the search warrant that was issued, and on which the seizure was based, was void and illegal since it was itself based on false allegations contained in the affidavit of Constable Archambault. For example, one of the reasons cited in the informations was that there were some boxes of cigars piled up in the CC Havanos commercial establishment that did not display the stamps required by the Excise Act, while in reality these were cigar moulds. Furthermore, the cigars located on the site, which according to the informations contained in Constable Archambault's affidavit were not packaged and stamped as required, were not yet ready for sale and consequently were not subject to excise. Thus, given these errors and the obvious insufficiency of the informations in support of the issuance of the search warrant, the plaintiff company argues that the warrant and the subsequent seizure were unlawful and void and consequently all the property that was seized should be returned to it.
[21] Second, the plaintiff company claims that the acts of the RCMP members during the seizure were excessive and went far beyond the limits set by the legislation. For example, in executing the search warrant, the RCMP could have exercised some discretion which would have had the effect of mitigating the damages, by seizing only the cigars and tobacco rather than all the materials and equipment used in the manufacture of the cigars. This is particularly true, the plaintiff submits, when one considers the language of section 88(2) of the Excise Act, which stipulates that "all such goods, materials or apparatus may likewise be seized as forfeited".
[22] Furthermore, the plaintiff company argues that it, along with Mr. Dino Orsini who was at all times the director, employer and majority shareholder of the firm, were misled in regard to the need to obtain the federal manufacturing licence and that they were peremptorily refused that licence when they requested one as well as later, after the stay of the criminal proceedings in the Superior Court of Quebec. Accordingly, the plaintiff company submits that this error of law defence, combined with the malicious conduct of the RCMP members during the seizure and subsequently, is a sufficient reason for this Court to vacate the seizure and order the return to it of all the property that was seized. In the alternative, it argues that this Court enjoys a certain latitude in the application of the Excise Act and asks that all of the seized property with the exception of the cigars and tobacco be restored to it.
[23] The Minister, for his part, submits that all of the property seized on December 17, 1998 was seized through the application of the Excise Act and ipso jure forfeited to the Crown from the time when the plaintiff company manufactured cigars without the requisite licence under the Excise Act. Accordingly, this property was forfeited even before the seizure was made, and not by some subsequent action taken by the RCMP. The Minister argues that the seizure in execution of the search warrant was entirely legal under section 88 of the Excise Act since the offences under sections 226(a) and 240(1)(b) were committed by the plaintiff company. In these conditions, the RCMP members acting as excise officers not only could but had to seize the cigars, the tobacco, the materials and equipment being used in the manufacture, etc. under section 88(1) of the Excise Act. In any event, the Minister submits, the plaintiff has not demonstrated that the discretion exercised by the RCMP officers was unreasonable or that their conduct was malicious in the circumstances.
[24] Furthermore, the Minister argues that the claim proceeding under section 117(1) is in the nature of a proceeding in rem and not in personam, and that neither ignorance of the law, the Excise Act, nor ignorance of certain facts could present an obstacle to the forfeiture of the property that was seized in this case, nor could they serve as a legal basis for this Court to order their return. Finally, the Minister submits that this Court has no discretion to mitigate the damages and asks that all of the seized property be declared forfeited.
Relevant statutory provisions
[25] Before getting into the analysis, it would be worthwhile reproducing the relevant provisions of the Excise Act:
88.(1) Any of the following things, namely:
(a) all grain, malt, raw tobacco and other material in stock,
(b) all engines, machinery, utensils, worms, stills, mash-tubs, fermenting-tuns, tobacco presses or knives,
(c) all tools or materials suitable for the making of stills, worms, rectifying or similar apparatus, and
(d) all spirits, malt, beer, tobacco, cigars and other manufactured articles, that are at any time found in any place or premises where anything is being done that is subject to excise, and for which a licence is required under this Act, but in respect of which no licence has been issued, shall be seized by any officer having a knowledge thereof and be forfeited to the Crown, and may either be destroyed when and where found or removed to a place for safe-keeping, in the discretion of the seizing officer.
Horses, vehicles, etc.
(2) All horses, vehicles, vessels and other appliances that have been or are being used for the purpose of transporting in contravention of this Act or the regulations, or in or on which are found any goods subject to excise, or any materials or apparatus used or to be used in contravention of this Act or the regulations in the production of any goods subject to excise and all such goods, materials or apparatus may likewise be seized as forfeited by the seizing officer and may be dealt with in the manner described in subsection (1).
Person who claims interest in things seized
88.2(1) Where a horse, vehicle, vessel or other appliance has been seized as forfeited under this Act, any person, other than the person accused of an offence resulting in the seizure or person in whose possession the horse, vehicle, vessel or other appliance was seized, who claims an interest in the horse, vehicle, vessel or other appliance as owner, mortgagee, or holder of a lien or other like interest may, within thirty days after the seizure, apply to any judge of any superior court of a province or to a judge of the Federal Court for an order declaring the claimant's interest.
[...]
Notice of information filed in court
116.(1) As soon as an information has been filed in any court for the condemnation of any goods or things seized under this Act, notice thereof shall be posted in the office of the registrar, clerk or prothonotary of the court, and in the office of the collector or chief officer in the excise division in which the goods or things has been seized.
Claims to property seized
(2) Where the owner or person claiming the goods or thing referred to in subsection (1) presents a claim to the court, gives security and complies with all the requirements of this Act in that behalf, the court at its sitting immediately after the notice referred to in that subsection has been posted during one month may hear and determine any claim that has been duly made and filed in the meantime and release or condemn the goods or thing, as the case requires, otherwise the goods or thing shall, after the expiration of that month, be deemed to be condemned and may be sold without any formal condemnation thereof.
[...]
88. (1) Les articles suivants _:
a) les grains, le malt, le tabac brut et les autres matières en magasin;
b) les machines, mécanismes, ustensiles, serpentins, alambics, cuves-matière, tonneaux à fermentation, presses ou hachoirs à tabac;
c) les outils ou matériaux propres à la fabrication d'alambics, de serpentins, de rectificateurs ou d'appareils similaires;
d) l'eau-de-vie, le malt, la bière, le tabac, les cigares et autres articles fabriqués, qui se trouvent dans un lieu ou établissement où il se poursuit des opérations sujettes à l'accise, et pour lequel une licence est exigée en vertu de la présente loi mais n'a pas été émise, doivent être saisis par un préposé qui en a connaissance et être confisqués au profit de Sa Majesté, et ils peuvent être soit détruits dans l'endroit et au moment où ils sont trouvés, soit transportés en lieu sûr, à la discrétion du préposé qui opère la saisie.
Chevaux, voitures, etc.
(2) Tous les chevaux, véhicules, vaisseaux et autres dispositifs qui, en contravention avec la présente loi ou les règlements, servent ou ont servi au transport de marchandises assujetties à l'accise ou de matières ou appareils employés ou à employer, en contravention avec la présente loi ou les règlements, à la production de quelque article assujetti à l'accise, ou sur ou dans lesquels sont trouvés de tels marchandises, matières ou appareils, peuvent être également saisis, avec ces marchandises, matières ou appareils, comme confisqués par tout préposé et peuvent être traités de la même manière.
Personne réclamant un intérêt dans les choses saisies
88.2 (1) Lorsque des chevaux, véhicules, vaisseaux ou autres dispositifs ont été saisis comme confisqués sous le régime de la présente loi, quiconque (sauf la personne accusée d'une infraction qui a eu pour résultat cette saisie ou la personne en la possession de qui ces chevaux, véhicules, vaisseaux ou autres dispositifs ont été saisis) réclame, à l'égard de ces chevaux, véhicules, vaisseaux ou autres dispositifs, un intérêt à titre de propriétaire, de créancier hypothécaire, de détenteur de gage ou de détenteur d'un intérêt similaire peut, dans les trente jours suivant cette saisie, s'adresser à un juge d'une cour supérieure ou à un juge de la Cour fédérale afin de faire rendre une ordonnance déclarant son intérêt.
[...]
Avis de dénonciation
116. (1) Aussitôt qu'une dénonciation a été déposée auprès d'un tribunal pour demander la confiscation de marchandises ou d'objets saisis en vertu de la présente loi, avis doit en être affiché dans le bureau du registraire, du greffier ou du protonotaire du tribunal, et dans le bureau du receveur ou du préposé en chef de la division d'accise dans laquelle les marchandises ou les objets ont été saisis.
Revendication des effets saisis
(2) Si le propriétaire des marchandises ou objets ou la personne qui prétend y avoir droit les revendique et donne une garantie, et observe toutes les autres formalités de la présente loi à cet égard, le tribunal, à sa prochaine séance après que l'avis a été affiché pendant un mois, peut entendre et juger toute revendication qui a été régulièrement faite et présentée dans l'intervalle, et libérer ou déclarer confisqués ces marchandises ou objets, selon que le cas l'exige; autrement, après l'expiration du mois, ils sont censés confisqués et peuvent être vendus sans déclaration formelle de confiscation.
[...]
Analysis
1. Was the seizure of December 17, 1998 illegal, which would justify the possible return of the seized property to CC Havanos?
[26] To succeed on this point, the plaintiff company, which has the burden of proof under section 113 of the Excise Act, had to prove in full that the property seized in the December 17, 1998 search was not ipso jure liable to forfeiture by mere application of the Excise Act and consequently could not be seized. In my opinion, it has not done so.
[27] If we examine, first, the merits of the first submission by the plaintiff, the issue for determination is whether the record indicates that the 3,000 or so cigars seized by the RCMP were manufactured for commercial purposes and intended for sale. If that was the case, they could be seized under section 88(1) of the Excise Act as being subject to excise and requiring a manufacturing licence. By a preponderance of evidence, I find that they were so manufactured for sale or commercial use, as early as November 1998, and not for a personal use or to be given free of charge. Consequently, it was necessary to obtain a licence to manufacture them, as provided in section 10 of the Excise Act.
[28] In regard to the argument based on the lack of evidence of the illegal and non-regulatory nature of the tobacco products seized in this case, I hasten to point out that after a careful review of the evidence filed in the Court record, including the testimony of the witnesses at the hearing, whose credibility I have no reason to doubt, I can say that the plaintiff company definitely, if only implicitly, acknowledges that these were cigars manufactured without a licence, and not packaged or stamped in accordance with the Excise Act, and that the excise duties in connection therewith had not been paid. Can any better and more definitive argument than that be imagined? Accordingly, this evidence generally persuades me that the ingredients of the offences set out in sections 226(a) and 240(1)(b) have been established, and this testifies to the illegal nature of the seized products. Finally, let us note that the plaintiff company at no time claimed to benefit from any of the exclusions set out in sections 239.1(2) and 240(2) of the Excise Act.
[29] As to the sufficiency of the informations contained in the affidavits pursuant to which the search warrant was issued, I must confess that the plaintiff's submissions do not persuade me. It seems to me that in this case we are a long way from mere allegations of vague "suspicion" for the purpose of conducting a "fishing expedition", as in R. v. Kokesh, [1990] 3 S.C.R. 3, at p. 29. Indeed, the statement of facts in this case appears to me to justify the rationality of the belief that the offences contemplated in sections 226(a) and 240(1)(b) of the Excise Act were being committed in the CC Havanos facilities. As to the error in observation committed by Constable Archambault during his visit of December 15, 1998, this is entirely a bona fide error that cannot have the effect of invalidating the search warrant. In my opinion, the informations, the affidavit and the description of the things to be seized left Justice of the Peace Hamelin with enough information to validly exercise his judicial discretion in verifying the reasonableness of the grounds for issuing the search warrant, in accordance with section 74 of the Excise Act: see also Lavoie v. Godbout, [1994] R.L. 387 (C.A.), at par. 10-11.
[30] The plaintiff further contends, citing the text of section 88(2) of the Excise Act, that in executing the search warrant the members of the RCMP had some discretion, which could be used to mitigate the damages suffered by the plaintiff; they could have seized only the cigars and tobacco instead of all the materials and equipment used in the manufacture of the cigars. The Minister's position is that section 88(2) of the Excise Act applies only to those assets that have been or are being used "[Translation] for the purpose of transporting in contravention of the Act or the Regulations thereunder", and that it therefore does not cover any of the assets seized on December 17, 1998. Thus, in the case at bar it is section 88(1) that would apply and it provides that all the things that are found in a place or premises where anything is being done that is subject to excise, and for which a licence is required under the Excise Act, but in respect of which no licence has been issued, shall be seized by any officer having a knowledge thereof and be forfeited to the Crown.
[31] The Excise Act is divided into six parts and has some 260 sections. Part I, entitled "General", comprises sections 8 to 128. Many of these sections are preceded by a short description of their content. For example, section 88(1) is preceded by the head "Goods and apparatus forfeited if no licence", while section 88(2) is preceded by the head "Horses, vehicles, etc." This distinction turns out to be quite important in this case since these two provisions cover different classes of property.
[32] In order to succeed, the plaintiff had to persuade the Court that the words "other appliances" used in subsection 88(2) encompass the manufacturing materials and equipment seized on December 17, 1998. However, a careful reading of this provision reveals that the "appliances" in question are things "that have been or are being used for the purpose of transporting ... goods subject to excise" or transporting "any materials or apparatus used or to be used in contravention of this Act or the regulations in the production of any goods subject to excise", or "in or on which are found any goods subject to excise". Thus, the presence of this restrictive language shows that this provision covers only the seizure of means of transportation and not the seizure of the items themselves. In the case at bar section 88(2) is inapplicable since no vehicle used in the transportation or storage of the unpackaged and unstamped cigars or the transportation of the materials and equipment used in their manufacture was seized.
[33] I agree with the Minister's position that it is rather section 88(1) that applies to all the property seized in this case, since that section expressly provides that the raw tobacco, engines, machinery, utensils, tobacco presses or knives and manufactured cigars that were found in the CC Havanos premises where cigar manufacturing activities were being carried on for which a licence is required under the Excise Act, but in respect of which no licence had been issued, were to be seized by the excise officers. The RCMP officers had no discretionary authority during the seizure of December 17, 1998. Finally, even if the excise officers did have discretion to seize only the cigars and tobacco, I am far from being persuaded that the seizure of all the property that was carried out in this instance can be characterized as unreasonable, malicious or excessive.
[34] That being said, what about the issue in dispute and the real problem posed in this case, namely, whether all the property seized on December 17, 1998 was forfeited as of right, which would justify its seizure under the Excise Act. This requires an analysis of the legal consequences of a finding that the offences in sections 226(a) and 240(1)(b) were committed by the plaintiff company.
[35] The doctrine of forfeiture in the laws of Canada and more particularly in the Excise Act has remained unchallenged for many generations and been upheld by the courts even when challenged. It has become firmly rooted in our consciousness as a measure of both compliance with and regulation of certain activities and reflects age-old principles of the action in rem, connecting the offence primarily to the thing and entailing its forfeiture through the straightforward operation of the Excise Act, whether the offence is a malum in se or a malum prohibitum: Porter v. Canada, [1989] 3 F.C. 403 at p. 416 (F.C.T.D.). From the standpoint of the Excise Act, an action in rem is therefore very much a reality which, in a sense, creates a personality out of the res. That personality is such that the blameworthy or unblemished behaviour of its owner is of no concern to the Act. The forfeiture itself is a legal fiction created by the Act and not a physical reality. It pertains to the jurisdiction over tax revenues and is designed to protect the Crown's interest in the revenues collected through excise taxes. The theory holds that property becomes forfeited by right to the Crown once an offence is committed in regard to the property, and the subsequent seizure by the excise officers restores this property, which already belongs to the Crown, to the Crown's estate until the property is declared definitively forfeited or is returned by a competent authority: Canada v. Bureau, [1949] S.C.R. 367, at p. 377; Allardice v. Canada, [1979] 1 F.C. 13, at p. 23 (F.C.T.D.) (although these decisions were rendered under the Customs Act, R.S. 1985, c. 1 (2nd Supp.), the notions of "seizure" and "forfeiture" remain the same).
[36] Section 88(1), under which all the property was seized in this case, in language identical to that in section 87(1) enacted in 1933, provides that all articles that are at any time found in any place or premises where anything is being done that is subject to excise, and for which a licence is required under the Excise Act, but in respect of which no licence has been issued, "shall be seized" by any officer having a knowledge thereof "and be forfeited to the Crown". The wording of this provision is hardly an example of precision and eloquence, and the somewhat clumsy language can certainly be confusing in regard to the time from which the forfeiture of these articles operates. However, this does not alter the fact that the forfeiture in regard to all the property seized on December 17, 1998 operated as of right once there was a manufacture of cigars without a licence and once the plaintiff company was in possession of cigars that had not been put up in packages and stamped in accordance with the Excise Act. It was only subsequently that the plaintiff was dispossessed of its property without its consent to the benefit of the Crown.
[37] This is clear from an analysis of the various provisions of the Excise Act. Section 88(1) was enacted by reference to section 239.1(2), which provides that "Manufactured tobacco or cigars that are not put up in packages and stamped with tobacco stamps or cigar stamps as required by this Act and the ministerial regulations... shall be forfeited to Her Majesty in right of Canada and shall be seized by any officer and dealt with accordingly." Section 226(a) replicates the language of section 239.1(2) and stipulates that "all goods subject to excise found on the premises in which the offence is committed shall be forfeited to Her Majesty in right of Canada and shall be seized by any officer ...." Section 71 complements the two aforesaid provisions: "Where any stock, steam-engine, boiler, still, fermenting-tun, machinery, apparatus, vessel or utensil, boat, vessel, vehicle or other article or commodity is forfeited under this Act, for any contravention thereof, it may be seized by the collector or other officer, or by any other person acting on the authority of that officer, at any time after the commission of the offence for which it is forfeited...." Finally, section 117(1), a provision dealing with the final automatic forfeiture of the unclaimed property, is categorical that its area of application extends to "All vehicles, vessels, goods and other things seized as forfeited under this Act or any other Act relating to excise...". The expression "seized as forfeited" was, incidentally, construed as follows in Canada v. Central Railway Signal Co., [1933] S.C.R. 555, a decision concerning the interpretation of section 125 of the 1933 Excise Act (former section 117), in which the Supreme Court of Canada held, at pp. 557-58 and 560-61:
It is not open to question on that evidence, that the goods were seized, and "seized as forfeited" for violation of the Excise Act. Nor is there any room for doubt as to the effect of such a seizure. It proceeds upon the assumption that the goods, having been forfeited ipso jure, in consequence of the violation of the Act, are at the time of seizure, and not as a consequence of it, the property of the Crown. There are several provisions of the statute under which forfeiture supervenes upon the commission of the offence, as a legal consequence of the offence, independently of any act on the part of the officers of excise or any conviction or other judgment of a court. [...]
There does not appear to be any ground of substance for imputing ambiguity or obscurity to this language or even doubt as to what it signifies. In light of the provisions of the statute the phrase "seized as forfeited" can have only one meaning, as already indicated. It can only mean a seizure in consequence of the goods having been forfeited, the title to which has, by virtue of the forfeiture, become vested to the Crown. The context shews also that it does not contemplate a forfeiture which has occurred in consequence of a condemnation, and beyond question it includes a forfeiture following, without any act or proceeding of the Crown's officers, the commission of the offence, in cases in which the statute under which the forfeiture takes effect so provides.
What then follows? "All ... goods ... seized as forfeited", the section declares, "shall be deemed and taken to be condemned and may be dealt with accordingly", unless the owner or the person from whom they are taken gives notice within one month that he intends to claim them. The consequence that the goods shall "be deemed and taken to be condemned" is declared, in unqualified words, to be the consequence of the seizure unless the notice provided for is given within the specified time. If the notice is given, the seizing officer may deliver up the goods to the owner on receiving