Respondent Igloo-Vikski-Inc

79 Pages·2015·1.66 MB·English

File No. 36258

SUPREME COURT OF CANADA

(ON APPEAL FROM A JUDGMENT OF THE FEDERAL COURT OF APPEAL)

BETWEEN:

ATTORNEY GENERAL OF CANADA

APPLICANT
(Respondent)

- and -

IGLOO VIKSKI INC.

RESPONDENT
(Appellant)

RESPONSE TO APPLICATION FOR LEAVE TO APPEAL
(Rule 27 of the Rules of the Supreme Court of Canada)

Michael D. Kaylor
Lapointe Rosenstein Marchand Melançon L.L.P.
Suite 1400
1250, René-Lévesque Blvd. West
Montréal, Québec
H3B 5E9

Tel.: [phone]
Fax: [phone]
[email protected]

Counsel for Respondent

Henri A. Lafortune Inc. 2005 Limoges Street
Tel.: [phone] Longueuil, Québec J4G 1C4
Fax: [phone] www.halafortune.ca
[email protected] L-3856-15
- 2 -

Luc Vaillancourt Christopher Rupar
Department of Justice Civil Litigation Section
284 Wellington Street, TSA-6 Department of Justice
Ottawa, Ontario 5th Floor, Room 557
K1A 0H8 50 O’Connor Street
Ottawa, Ontario
K1A 0H8

Tel: [phone] Tel.: [phone]
Fax: [phone] Fax: [phone]
[email protected] [email protected]

Counsel for Applicant Agent for Applicant
- i -

TABLE OF CONTENTS

Respondent’s Response Page

RESPONDENT’S MEMORANDUM OF ARGUMENT
PART I – STATEMENT OF FACTS .............................................. 1
PART II – POINTS IN ISSUE .............................................. 1
PART III – GENERAL REPLY .............................................. 2
Specific Reply .............................................. 2
Applicant’s Application is Based on a Misconception of the Ratio
Decidendi of the Decision of the Federal Court of Appeal .............................................. 3
Standard of Review .............................................. 4
The Decision of the Federal Court of Appeal is in Compliance
With Rule 1 .............................................. 5
The Decision of the Federal Court of Appeal does Not Set a
Precedent Contrary to Rule 2(b) .............................................. 6
The Decision of the Federal Court of Appeal is not at Odds With
the Interpretation of Rule 2(b) by Other Members of the World
Customs Organization (“WCO”) .............................................. 7
Different Members of the WCO can Classify an Imported Good
in Different Headings Based on the Application of Rule 1 .............................................. 8
The Decision of the Federal Court of Appeal does not Place
Canada at Risk of Breaching its International Trade Obligations .............................................. 9
The Canadian Jurisprudence on Rule 1 ............................................ 10
Impact on the Canadian Economy ............................................ 12
PART IV – SUBMISSION AS TO COSTS ............................................ 14
PART V – ORDER REQUESTED ............................................ 14
PART VI – AUTHORITIES CITED ............................................ 15
PART VII – STATUTES, REGULATIONS, RULES ............................................ 16
- ii -

TABLE OF CONTENTS

Respondent’s Response Page

LIST OF SUPPORTING DOCUMENTS
Tab 1 WCO – Harmonized System Committee ........................................... 17
Tab 2 WCO, Compendium of Classification Opinions,
Section IV, Nos. 22 and 24 ........................................... 19
Tab 3 Memorandum D10-14-30 ........................................... 21
Tab 4 Customs Act, R.S.C., 1985, c. 1 (2nd Supp.) (Extract) ........................................... 26
Jurisprudence
Tab 5 Loblaw’s Companies Ltd. v. President CBSA,
AP-2010-022 ........................................... 27
Tab 6 Rona Corporation Inc. v. President CBSA,
AP-2006-033 ........................................... 47
Tab 7 Kraft Canada Inc. v. President CBSA, AP-2013-055 ........................................... 58

_______________
- 1 -

Respondent’s Memorandum of Argument Statement of Facts

RESPONDENT’S MEMORANDUM OF ARGUMENT

PART I – STATEMENT OF FACTS

1. Respondent’s position is that the issues of national importance raised by Applicant have no
application to the present Application.
----------
PART II – POINTS IN ISSUE

2. The question in issue is whether the decision of the Federal Court of Appeal in Igloo Vikski
contravenes the cascading interpretive principle which applies to tariff classification.
3. If it does, Applicant’s remedy does not lie in an Application for Leave.
4. If it does not, there is no basis for the Application for Leave.
5. The decision of the Federal Court of Appeal provides guidance with respect to the
interpretation of Rule 2(b) of the General Rules for the Interpretation of the Harmonized
System (GIR’s).
6. The Federal Court of Appeal remanded the matter to the Canadian International Trade
Tribunal (“CITT”) to determine the tariff classification of the goods in issue in accordance
with this guidance.
----------
- 2 -

Respondent’s Memorandum of Argument General Reply

PART III – GENERAL REPLY

7. The Federal Court of Appeal’s understanding of the cascading principle for the application
of the GIR’s is consistent with its prior decisions.
8. The cascading interpretive principle was described by Justice Noël (now Chief Justice) of
the Federal Court of Appeal in Canada (Customs and Revenue Agency) v. Agri Pack,1 as
follows:
[14] The General Rules are structured in cascading form: if and only
if General Rule 1 does not resolve the classification, then regard must
be had to General Rule 2, and so on as necessary. …
9. The decision of the Federal Court of Appeal in Igloo Vikski Inc. v. Canada (Border Services
Agency)2 represents the specific application of the cascading principle to a factual situation
in which the goods in issue could not be classified pursuant to Rule 1. Hence, Rule 2(b) was
applied.
SPECIFIC REPLY
10. Respondent disagrees with the statement in paragraph 12 of the Application together with
the restatement thereof in (B)(ii) (page 38) of the Application:
The CITT properly classified the goods pursuant to Rules 1 and 2(b) in
accordance with the cascading interpretative principle.

1 Canada (Customs and Revenue Agency) v. Agri Pack, 2005 FCA 414, at para. 14
2 Igloo Vikski Inc. v. Canada (Border Services Agency), 2014 FCA 266
- 3 -

Respondent’s Memorandum of Argument General Reply

11. The CITT erred in classifying the goods in issue based on a combination of Rule 1 and
Rule 2(b). Such an approach is prohibited by the cascading principle which governs the
application of the GIR’s.
12. Respondent contests Applicant’s position in (B)(iii) (page 39) and the assertion in
paragraph 17 of the Application.
13. Respondent’s position is that the decision of the Federal Court of Appeal concerning
Rule 2(b) comports with the cascading principle for the application of the GIR’s.
14. It is Respondent’s position that the Federal Court of Appeal correctly interprets Rule 2(b).
15. There is no basis for Applicant’s concern that the Federal Court of Appeal’s decision places
in doubt the tariff classification of future imported goods to which Rule 2(b) may apply.
16. The Federal Court of Appeal’s decision is salutary; its teachings concerning the
interpretation of Rule 2(b) provide certainty and predictability for importers and guidance
for the CITT.
17. The fact that Applicant does not like the result is not a reason which warrants intervention
by this Honourable Court.
APPLICANT’S APPLICATION IS BASED ON A MISCONCEPTION OF THE RATIO
DECIDENDI OF THE DECISION OF THE FEDERAL COURT OF APPEAL
18. Applicant misunderstands the statement at paragraph 11 of the Federal Court of Appeal’s
decision.
- 4 -

Respondent’s Memorandum of Argument General Reply

19. It was the CITT (paragraph 66 of its Reasons)3 which held that, before Rule 2(b) could be
invoked, the goods in issue first had to meet the description in a heading under Rule 1. The
Federal Court of Appeal rejected the CITT’s reasoning.
20. At paragraph 20 of its Application, Applicant sets forth its understanding of the essence of
the Federal Court of Appeal’s decision as follows:
“… In allowing classification of imported goods to skip Rule 1 and
apply Rule 2(b) to extend the terms of headings otherwise not
applicable to the goods at issue in this matter, the Court decision
effectively ignored the well-established cascading interpretative
principle”.
21. Applicant’s understanding is misplaced. The Federal Court of Appeal respected and applied
the cascading principle as is demonstrated at paragraph 12 of its Reasons as follows:
Since the goods in issue contain a textile material which is separate
from the plastic material, they do not meet the description found in
heading 39.26 under Rule 1. Contrary to the Tribunal’s finding, it is for
this very reason that Rule 2(b) and, more precisely, Explanatory Note
(XI) to that Rule must then be applied. …
STANDARD OF REVIEW
22. The decision of the Federal Court of Appeal complies with the reasonableness standard of
review.
23. The decision of the Federal Court of Appeal “falls within a ‘range of possible, acceptable
outcomes which are defensible in respect of the facts and law (Dunsmuir, at para 47).4 There
might be more than one reasonable outcome. However, as long as the process and the

3 Igloo Vikski Inc. v. President CBSA, AP-2009-046, para. 66
4 Canada (Minister of Citizenship and Immigration) v. Khosa, [2009] 1 S.C.R 339, para. 59,
quoting Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190
- 5 -

Respondent’s Memorandum of Argument General Reply

outcome fit comfortably with the principles of justification, transparency and intelligibility,
it is not open to a reviewing court to substitute its own view of a preferable outcome”.
24. Applicant alleges that the decision of the Federal Court of Appeal is unreasonable because
it fails to specifically address Note 2(m) to Chapter 39 and Explanatory Note (XII) to Note
2(b) of the GIR’s.
25. Under the reasonableness standard of review, a reviewing court must look at the “qualities
that make a decision” reasonable, referring both to the process of articulating the reasons and
to outcomes. Reasons may not include all the arguments, statutory provisions, jurisprudence
or other details the reviewing judge would have preferred, but that does not impugn the
validity of either the reasons or the result under a reasonableness analysis.5
THE DECISION OF THE FEDERAL COURT OF APPEAL IS IN COMPLIANCE
WITH RULE 1
26. Applicant’s assertion at paragraph 22 of its Application that Respondent “runs contrary to
Rule 1” is incorrect.
27. Subsection 10(1) of the Customs Tariff provides that the classification of imported goods
under a tariff item shall, unless otherwise provided, be determined in accordance with the
GIR’s and the Canadian Rules set out in the Harmonized System.
28. Rule 1 of the GIR’s states:
The titles of Sections, Chapter and sub-Chapters are provided for each
of reference only; for legal purposes, classification shall be determined
according to the terms of the headings and any relative Section or
Chapter Notes and, provided such headings or Notes do not otherwise
require, according to the following provisions.

5 Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board),
[2011] 3 S.C.R. 708, at paras. 13-22
- 6 -

Respondent’s Memorandum of Argument General Reply

29. Note 2(m) to Chapter 39 only applies to preclude the application of Chapter 39 to, inter alia,
goods which are classifiable in heading 62.16 under Rule 1.
30. In applying the cascading principle, the Federal Court of Appeal held at paragraph 12:
… It is also by the application of Rule 2(b) and Explanatory Note (XI)
that the goods in issue could be classified in the extended terms of
heading 62.16.
31. Given the Federal Court of Appeal’s conclusion that the goods in issue are not classifiable
in heading 62.16 under Rule 1, it was not necessary for the Federal Court of Appeal to
expressly address Note 2(m) to Chapter 39.
THE DECISION OF THE FEDERAL COURT OF APPEAL DOES NOT SET A
PRECEDENT CONTRARY TO RULE 2(b)
32. Rule 2(b) sets forth the circumstances under which the terms of a heading are extended; it
does not do so “artificially”.
33. Respondent disagrees with Applicant’s assertion at paragraph 29 that the Federal Court of
Appeal failed to consider Explanatory Note (XII) to Rule 2(b).
34. The decision of the Federal Court of Appeal specifically reproduces ALL of the Explanatory
Notes to Rule 2(b) at paragraph 6 of its Reasons.
35. At paragraph 9 of its Reasons, the Federal Court of Appeal addresses the Tribunal’s
consideration of Explanatory Notes (XI) to (XIII). The CITT dealt with Note (XII) at
paragraphs 65, 67, 68 and 75 of its decision.
36. The Federal Court of Appeal was alive to Note (XII).