In suit by U.S. company and others challenging seizure and retention of aircraft by Canadian customs officer, Ontario Court of Appeal concludes that tort claims are time-barred but that allegations of intentional failure to protect seized planes from damage may go to trial
In October of 1995, with permission from the customs authorities, 144096 Canada Ltd. (corporate plaintiff) flew five Cessna aircraft from the United States to the airport in Ottawa, Canada, not as "imports" but for temporary winter storage until January 1996. In January, Ron Williams, the personal plaintiff and president of corporate plaintiffs 144096 Canada Ltd. and 144096 Canada Ltd. (USA) (a Delaware corporation), tried to have four of the planes flown back to the United States. Bad weather, however, forced four of them to turn back to Smith Falls, Ontario, and mechanical problems prevented the fifth plane from leaving Ottawa.
Nelson Plamondon (defendant), a customs officer, seized the five planes and one helicopter owned by one of corporate plaintiffs on April 13, 1996, on behalf of Canadian Customs for breaching the Customs Act. The plaintiffs filed a proceeding against the Minister of National Revenue under the Customs Act to challenge the seizure. In August, 2000, the Federal Court of Canada, held that plaintiffs had not violated the Customs Act.
Defendant had also taken possession of a Cessna 185 owned by 144096 Canada Ltd. on May 1, 1996, and returned it on or about June 25, 1996. Defendant did not send the helicopter back to Mr. Williams until June 26, 2001, and the other planes did not arrive until August of 2001. According to plaintiffs, the returned aircraft were damaged and not air-worthy and were "almost worthless" because of improper storage during the long period of government retention.
Plaintiffs filed this action in the Ontario courts against the Crown, Plamondon and the Attorney General of Canada on May 22, 1998. The first complaint alleged negligent and/or willful damage to the aircraft, and negligent and/or willfully wrongful storage. It also claimed that defendants falsely inflated the value of the aircraft to increase the penalties for breaching the Customs Act. In April 2001, plaintiffs amended the complaint to allege that all of the relief claimed rested on contravention of plaintiffs' rights at common law and under Sections 7 and 8 of the Canadian Charter of Rights and Freedoms.
The trial court gave summary judgment to defendants. It also dismissed the action for wrongful seizure and wrongful storage of the aircraft on the ground that Section 106(1) of the Customs Act, R.S.C. 1985, c.1 (2nd Supp.) barred the action. Plaintiffs filed this appeal, contending, inter alia, either that Section 106(1) does not apply at all on the facts of this case, or that it does not apply in the same way to each of the defendants.
According to the Court, the key issue in this case is whether the motions judge correctly dismissed the case based upon plaintiffs' failure to file the action within the three-month limitation period set out in Section 106(1) of the Customs Act. The Court of Appeal for Ontario allows the appeal in part.
The Court first rules on the timeliness of the tort claims. "With respect to the tort claims, there is no dispute that the seizures took place in 1996, and that this action was commenced in 1998. The defendant Plamondon is an officer as defined in Section 2(1) of the Customs Act. Section 106(1) of the Act requires that any proceeding be commenced against an officer within 3 months of when the cause of action arose. That was 1996. This action, brought 2 years later, is out of time as it relates to Plamondon."
"The Crown's liability can only be vicarious by reason of the operation of Section 3(a) and Section 10 of the Crown Liability and Proceedings Act (CLPA). Further, Section 24(a) of the CLPA gives the Crown the right to raise the limitation defence. For both of these reasons the tort claims are statute barred." [¶ 11]
First, with respect to the case against the Crown, plaintiffs urged that the liability is direct, not vicarious, under Section 3(b) of the CLPA. Accordingly, even if the vicarious liability of the Crown for the acts of Mr. Plamondon and other Crown employees would make Section 106(1) applicable, Section 106(1) does not apply because the Crown's liability is direct.
As a result, plaintiffs maintain, the applicable limitation period would be the six years set forth in the concluding clause of Section 32 of the CLPA or, possibly, the six years period under Ontario law, i.e., in Section 45(1)(g) of the Limitations Act, R.S.O. 1990, c. L.15. Significantly, plaintiffs also allege that Mr. Plamondon's acts respecting the plaintiffs were motivated by malice and intent to inflict damage.
The Court then addresses plaintiffs' position on the issue of the Crown's liability. "It is difficult to see how, by [the] terms [of Section 3(b)], it could have application to the claim based on wrongful seizure. ... [T]here is no necessary connection, in general or on the facts of this case, between a wrongful seizure of property and a subsequent wrongful treatment of the property. Separate acts are involved in each case."
"With this distinction in mind, it appears, according to the wording of Section 3(b), which includes "possession', that the Crown could be liable under this provision for damage to the aircraft while the aircraft were in the Crown's possession, assuming that the possession was that of the Crown and not of particular employees." [¶ 17]
"However, I am inclined to think that the better view is that Section 3(b) is not applicable to this case. It is a provision that recognizes cases at common law where the duty of the defendant to the plaintiff is direct and not vicarious as in occupier's liability cases." [¶ 18]
As to the negligent storage count, the Court next decides when the limitation periods involved began to run. "It cannot be April 13, 1996, the day of the seizure of the five aircraft and the helicopter because the storage only began on that date. The storage ended in June 2001 with respect to the helicopter and in August 2001 with respect to the aircraft. The allegation is that the damage occurred when the aircraft were in the respondents' possession. There is no evidence relating to when the damage ended. The action was commenced in May 1998. In these circumstances I do not think that a summary judgment can be granted based on the running of the limitation period in Section 106(1) of the Customs Act, assuming it to be applicable." [¶ 22]
"In summary ... I have concluded that the claim for the seizure of the aircraft does not come within Section 3(b) and, with respect to the damage caused by the storage, it cannot be concluded at this stage of the litigation when the limitation period, whatever it be, began to run. If Section 3(b) is applicable to the claim based on storage, ... the applicable limitation period would be six months as provided in Section 7(1) of the Public Authorities Protection Act (PAPA), and not six years as submitted by the [plaintiffs]." [¶ 23]
The Court of Appeal concludes that Section 7(1) of the PAPA applies to the Crown in this case. "The respondents submit, and the motions judge held, that by virtue of Section 24(a) of the CLPA, the applicable limitation period respecting the claim against the Crown is also the period provided for in Section 106(1) of the Customs Act."
"The reasoning is as follows. Section 24(a) provides that "in any proceedings against the Crown, the Crown may raise any defence that would be available if the proceedings were a suit or an action in a competent court between subject and subject.' Because the "subject', Plamondon, has available to him the "defence' of Section 106(1), the Crown may also rely on Section 106(1)." [¶ 24]
"While as a matter of principle and policy ... the limitation period governing claims against an employee should also be applicable to the claim against the employer based on the employer's vicarious liability for the employee's tort, I am not sure that this is brought about by Section 24(a) of the CLPA. I say this because the subject of limitation periods governing proceedings against the Crown (as well as proceedings by the Crown) is comprehensively dealt with in Section 32 of the Act, and while the pleading of a limitation period is often, in common parlance, referred to as pleading a defence, the word "defence' is capable of an interpretation that is confined to a substantive defence, such as a justification that defeats a claim. [Cites]" [¶ 25]
"In my view, by reason of Section 32 of the CLPA, Section 7(1) of the PAPA applies to this case... I acknowledge that before us the Crown did not rely on Section 7(1) of the PAPA. It relied exclusively on Section 106(1) of the Customs Act. It did, however, plead Section 7(1) of the PAPA in its statement of defence and I do not see how we can ignore it. It takes precedence over any six-year limitation period provided for in Ontario law and the six-year limitation provision provided for in the concluding part of Section 32 can have no application because the causes of action in this case arose entirely in Ontario." [¶ 30]
Plaintiffs further claimed that Section 106(1) is not germane because Plamondon's seizure and storage of the aircraft in question was motivated by malice rather than "done in the performance of his duties under [the Customs Act] or any other Act of Parliament." [¶31]
The Court deems the evidence of Plamondon's malice laid out in the affidavit of Mr. Williams to be enough to defeat summary judgment. "The [defendants] did not deliver an affidavit of Mr. Plamondon in response to the allegations of malice that are set out in Mr. Williams' affidavit. This could be regarded as adding strength to the allegations and, at the very least, it is hardly an example of parties to a summary judgment motion putting their best foot forward."
"In their factum in this court the [plaintiffs] stated as part of the facts that "none of the allegations of fact that Mr. Plamondon committed malicious or negligent conduct nor that the Crown failed to store the aircraft properly are disputed in the material before the Court.' There is no denial of this in the [defendants'] factum." [¶ 39] "... [B]y reason of the allegation and evidence of malice and intention to injure on the part of Mr. Plamondon, the application of the relevant limitation periods must await a trial." [¶ 40]
Finally, the Court briefly addresses plaintiffs' arguments based on the Canadian Bill of Rights, the Canadian Charter of Rights and Freedoms, Sections 7 and 8, and Section 109 of the Courts of Justice Act (CJA). "The amended claim in para. 1(f) appears to raise a claim for damages for breach of Sections 7 and 8 of the Charter. No facts are pleaded to support the claim."
"Assuming the challenge is to the validity of Section 106 of the Customs Act, there has been no compliance with the mandatory provisions of Section 109 of the CJA. Regardless, Section 7 of the Charter does not apply to the owners of the goods seized the corporate plaintiffs. Section 8 is not engaged unless a privacy right is infringed. Nothing in the material raises a privacy expectation. In this situation, there can be no expectation of privacy in planes imported for leasing out. [Cite] Section 8 has no application to a forfeiture order [Cite] and in my opinion, to a seizure. Accordingly there is nothing in the material to suggest a valid Charter damage claim." [Id.]
Citation: 144096 Canada Ltd. (U.S.A.) v. Attorney General of Canada, 2003 Ont. C. A. Lexis 28 (Ont. Ct. App. Jan. 24, 2003).
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