Court File and Parties

Date: September 28, 2017 Location: Toronto Old City Hall Ontario Court of Justice

Between: Her Majesty the Queen

— And —

Center City Sports Inc. and Alex Kalsatos

Before: Justice Brent Knazan

Reasons for Judgment released on: September 28, 2017

Counsel:

• Mr. D. Frost for the Crown
• Ms. A. Perera for the Defendants

Judgment

KNAZAN J.:

Introduction

[1] The Canadian Environmental Protection Act (CEPA) protects Canadians from excessive emissions from imported engines by requiring the Importer to provide evidence of conformity with Canadian standards. It is an offence to import an engine without the evidence of conformity that the regulations require, even if the engine conforms with Canadian standards. It is also an offence to import engines that do not conform.

[2] Alex Kalsatos and his corporation, Center City Sports Inc., are charged with five counts of importing engines without evidence of conformity. The regulations under the CEPA are specific to different engines, so much so that a different expert in the Canadian Environmental Protection Agency deals with each regulation. One of the counts refers to seven small engines. The other four counts refer to five diesel engines mounted in tractors. I have appended the five counts to this judgment.

[3] The section that creates the offence of importing without proof of conformity is s. 154, which, in turn, incorporates s. 153(1)(b) of the CEPA, as follows:

154. No person shall import any vehicle, engine or equipment of a prescribed class unless the requirements of paragraphs 153(1)(a),(b), (d) and (e) are met in respect of the vehicle, engine, or equipment.

155. (1) No company shall import any vehicle, engine or equipment unless

(a) the vehicle, engine or equipment conforms to the standards prescribed for vehicles, engines or equipment of its class at the time its main assembly or manufacture was completed;

(b) evidence of such conformity has been obtained and produced in the prescribed form and manner or, if the regulations so provide, in a form and manner satisfactory to the Minister.

[4] The Agency obtained the small engines and the tractor engines after seizures on December 9, 2009 and June 8, 2010 that I have dealt with in detail in my ruling on the defendants' application to exclude the engines and a seized computer from evidence: R. v. Alex Kalsatos; Center City Sports Inc., Applicants, 2016 ONCJ 353, [2016] O.J. No. 3249, 361 C.R.R. (2d) 71.

General Description of the Requirements of The Canadian Environmental Protection Act

[5] The Canadian Environmental Protection Act contains its purpose in its name. It establishes conditions precedent to importing engines into Canada, in order to protect the environment. Engines with a model year after a certain date must conform to prescribed standards. Further, they cannot be imported before evidence of such conformity is obtained and produced in a prescribed form.

[6] The evidence of conformity that the Importer must obtain before importing, and I stress "before", is set out in the regulations. The requirements are the same for both types of engines that Mr. Kalsatos and the company ("the defendants") are charged with importing, except that different model date years apply. For the small spark ignition engine, and the off-road compression-ignition engines in the tractors, the Importer is required to obtain and produce:

• A copy of the EPA certificate covering the engines;
• A document demonstrating that the engine covered by the EPA certificate is sold concurrently in Canada and in the United States;
• A copy of the records submitted to the EPA in support of the application for the issuance of the EPA certificate in respect of the engine; and
• A U.S. emission control information label that is permanently affixed in the form and location in a place set out in yet another regulation.

[7] EPA is the Environmental Protection Agency of the United States of America. That is, for the time being, Canada accepts approval by that agency as evidence that the engine is suitable for importation to Canada if evidence of that approval is obtained, and the Importer demonstrates that the engine is sold concurrently in Canada and the United States.

[8] This legislative scheme caused some confusion for Mr. Kalsatos, who is a knowledgeable businessman when it comes to engines and who was not defended by counsel until late in the case. The evidence establishes that Mr. Kalsatos never produced any evidence of conformity as defined for the seized engines. I am able to make this definitive statement at the outset because it stems from a lack of evidence. There is no evidence that Mr. Kalsatos ever obtained any document demonstrating that any engine was sold concurrently in Canada and the United States or that any records were submitted to the Minister in support of the application for the issuance of an EPA certificate in respect of the engine.

[9] Mr. Kalsatos did have an EPA certificate for at least one of his engines. However, the confusion that the legislation caused him stems from the requirements that the certificate be obtained before importing and be accompanied by the other evidence relating to concurrent sales and the supporting documentation for the obtaining of the EPA certificate. Mr. Kalsatos devoted energy in his defence to establishing that the Canadian Environmental Protection Agency showed no interest in his EPA certificate after his tractors were seized; in particular that the investigating officer did not forward them to the inspectors charged with determining whether the engines conformed.

[10] However, since the evidence of conformity is required before importing, the legislation providing that "No person shall import any engine of a prescribed class" "unless…evidence of conformity has been obtained…", the presentation of the certificate at the time of the investigation was irrelevant.

[11] The reasonableness and the fairness of the agents compounded the confusion because they gave Mr. Kalsatos an opportunity to present evidence of conformity even after importation. However, Mr. Kalsatos never did produce such evidence.

[12] Since no evidence of conformity within the meaning of the Act and Regulations was ever obtained, that essential element of the offence is established beyond a reasonable doubt.

[13] There are, however, other elements of the offence. The prosecution must prove that the engines in question were imported. Furthermore, the prosecution must prove that they are engines of a prescribed class, that is, engines to which the Regulations apply so as to require evidence of conformity.

[14] The importing element of the offence turns on whether the engines that the Agency seized and inspected were brought into Canada.

[15] The question of whether the engines were of the prescribed class consists of sub-questions: (1) Are the engines as described in the Regulations in the technical mechanical sense? And, (2) are the engines of the model year to which the Regulations apply.

[16] I now turn to those questions:

Description of the Engines Necessary For All Questions Relating to Importation and Applicability of the Regulations

[17] The five charges deal with two different types of engines, covered by two different regulations. One charge deals with the small engines that are not attached and the four other charges deal with the tractor engines. The corresponding statutory schemes for these charges are similar. No one may import the engines without evidence of conformity if they are engines described in the Regulations.

The Small Loose Engines

[18] With respect to the small engines not attached to the tractors, the description of the engines covered that applied at the time of the alleged offence is set out in the Off-Road Small Spark-Ignition Engine Emission Regulations (SOR/2003-355):

1.(1) "off-road engine" means an engine, within the meaning of section 149 of the Act,

(a) that is used or designed to be used by itself and that is designed to be or is capable of being carried or moved from one location to another, or

(b) that is used or designed to be used

(i) in or on a machine that is designed to be or is capable of being carried or moved from one location to another,

(ii) in or on a machine that is self-propelled,

(iii) in or on a machine that serves a dual purpose by both propelling itself and performing another function, or

(iv) in or on a machine that is designed to be propelled while performing its function. (moteur hors route).

PRESCRIBED ENGINES

5. (1) Subject to subsection (2), the off-road engines that are prescribed for the purposes of the definition "engine" in section 149 of the Act are those that

(a) operate under characteristics significantly similar to the theoretical Otto combustion cycle;

(b) use a spark plug or other sparking device; and develop no more than 19 kW of power measured at the crankshaft, or its equivalent, when equipped only with standard accessories (such as oil pumps or coolant pumps) necessary for their operation.

[19] Subsection (2) refers to exceptions, but there is no evidence of any of the exceptions applying in this case, so I omit setting it out.

[20] The definition of "engine" in section 149 of the Act, referred to in the Regulation is "any prescribed internal combustion engine", subject to exceptions that do not arise in this case.

[21] Also relevant are those parts of the Regulation referring to model year.

3. These Regulations apply to engines of the 2005 and later model years.

4. (1) A year that is used by a manufacturer of an engine as a model year shall

(a) if the period of production of a model of engine does not include January 1 of a calendar year, correspond to the calendar year during which the period of production falls; or

(b) if the period of production of a model of engine includes January 1 of a calendar year, correspond to that calendar year.

(2) The period of production of a model of engine shall include only one January 1.

The Engines in the Tractors

[22] The larger engines in the tractors covered by the other four counts are governed by the Off-Road Compression-Ignition Engine Emission Regulations (SOR/2005-32).

[23] The regulatory structure for these larger engines is the same as for the small off-road engines that I have just reviewed. What is different is the description of the engines to which the regulation applies, consisting again of two parts, how the engine works and the model year to which the regulation applies.

[24] The description of how the larger engine works incorporates first the same definition of off-road engine set out above in describing the small engines and then sets out the details of a prescribed engine set out in s.5 of this Regulation, SOR/2005-32:

(1) Subject to subsection (2), the off-road engines that are prescribed for the purposes of the definition "engine" in section 149 of the Act are those that operate as reciprocating, internal combustion engines, other than those that operate under characteristics significantly similar to the theoretical Otto combustion cycle and that use a spark plug or any other sparking device.

[25] Again, as in the case of the small engines, there are exceptions set out in ss. 2, but none apply here; it has not been argued that they do.

[26] Concerning the model year, s. 3 provides that:

3. These Regulations apply to engines of the 2006 and later model years.

[27] The definition of model year is the same as in section 4 of the small engine regulations above.

[28] I will deal with the three remaining issues in this order:

[29] Were the engines of a prescribed class in terms of coming within the definition. (apart from the model year)?

[30] Were the engines imported during the time period set out in the charge?

[31] Were the engines covered by the Regulation because they were manufactured in a model year to which the Regulation applies?

1) Were the Engines of Prescribed Class In Terms of Coming Within the Definition (apart from the model year)?

[32] I have chosen this question to begin with because it is the most easily answered.

[33] For both the small engines and the tractor engines, the definition of prescribed engines includes reference to the theoretical Otto combustion cycle. Although a judge must not defer to expert testimony to make findings of facts on the evidence, in this case, the only evidence whatsoever is that of the experts who have examined the engines. I, as the trier of fact, am not able to determine whether the engines are prescribed without that evidence. Additionally, there is effectively no other evidence.

[34] Mr. Kalsatos is also knowledgeable about engines. Although he testified that he did not import the engines as complete engines but sometimes assembled them from engine parts after importing the tractors, the defence did not take the position that the complete engines that were in the tractors when the investigators seized them were not covered by the Regulations as far as their operation goes.

[35] The only evidence then is that of the experts in engines.

[36] With respect to the small loose engines, Marc-André Bergevin, the Senior Program Engineer, Vehicles and Engines Testing and Emissions Verification with Environment Canada, testified that he inspected seven loose engines and that they were designed to operate under the theoretical Otto combustion cycle and that assuming that the model year of those engines is 2005 or later, they must comply with the Off-Road Small Spark-Ignition Engine Emission Regulations -SOR/2003 as per section 3 of the Regulations.

[37] Éric Bergevin, no relation, also a Senior Program Engineer with Environment Canada, inspected the engines on the tractors. He testified that they were diesel engines covered by the Off-Road Compression-Ignition Engine Emission Regulations. That is, of course, assuming that they are of a model year to which the Regulations apply. He also testified as to his findings and opinion on the model years for each of the tractor engines that he inspected, which is evidence I will consider when discussing the third question as to whether the model year applies.

[38] I accept the evidence of both Marc-André Bergevin and Éric Bergevin and find that subject to the model year of the engines subjecting them to the Regulations, that the all of the engines are described in the Regulations.

2) Were the Engines Imported?

[39] This evidence is particular to each count; different evidence applies so a general analysis applying to all of the counts is not possible. One observation covering all of the engines is that there are three sources of the evidence: the customs and importing documents, Mr. Kalsatos's statement to the investigators in August 2010 and his testimony.

2A) The Small Loose Engines

[40] These engines give rise to Count 3, in which the Crown alleges that the defendants imported "an engine".

[41] Count 3 as set out in the appendix alleges importation of the small engines between the 11th and 31st day of August 2007.

[42] The Crown seeks to prove importation in the following manner.

[43] Canada Customs and Border Agency keeps a list, called a "Firm Report of Items" released by date and number. They also maintain a Customs Tariff Schedule that describes the goods that correspond to the number in the Firm Report. These two documents show that reciprocating internal combustion piston engines of a cylinder capacity not exceeding 50 cc were imported from Yongkand Gamma Company Vehicles Limited.

[44] The prosecution then seeks to link these imported engines, that are similar to those described by Marc-André Bergevin, to the defendants through the affidavit of the representative of a freight forwarding company, who imported engine kits that were sold by Yongkand and loaded in China on July 23, 2007 and consigned to the two defendants, that is Mr. Kalsatos, in the capacity of his company.

[45] Before moving on to the final piece of evidence, which is Mr. Kalsatos's statement, I note that the documents I have been discussing are attached to the affidavits of Cathleen Grenc and Tony Leung that I admitted into evidence after voir dires to determine their admissibility. The defendants thoroughly litigated the issue of admissibility and sought to re-litigate the issue in their final submissions, but I need not deal with the same arguments again. Tony Leung also testified for the defendants but the combined effect of his evidence-in-chief, his cross-examination and his admissible affidavit is to re-enforce the accuracy of his affidavit and not his testimony in court in which he somewhat disclaimed it.

[46] The documentary evidence of the importation is a strong but not conclusive circumstantial case on the importation of the engines because the documents do not show that the engines imported were the exact engines that Officers Cayley and Lauzon seized and that M.A. Bergevin inspected.

[47] However, on the issue of importation only, the statement of Mr. Kalsatos, also admitted after a voir dire as to its voluntariness that I do not intend to review here despite the defendants' attempt to re-litigate that voir dire, proves that the engines were imported.

[48] On August 10, 2010, Mr. Kalsatos told the investigating officers that he only imported bike engines once. He said that it was in 2007 and at one point he could not remember, stating "2006 and 2007."

[49] Mr. Kalsatos was honest in his statement. He was cooperating. It is obvious in his answers and the way that the officers were relating to him. However, he was incriminating himself in certain ways.

[50] Mr. Kalsatos also said that the bicycle engines were 49 ccs because they had to be under 50, the description of the items in the import records.

[51] No other bicycle engines were found during the search and the prosecution has established that the bicycle engines were imported during the time period in Count 3.

[52] Before moving on to the importation of the tractors, that is answering the second question of importation relating to the four counts of importing tractor engines, I can dispose of Count 3 by addressing the issue of the model year of the bicycle engines.

[53] I have determined that the prosecution has not proven the model year of the bicycle engines was 2005 or later beyond a reasonable doubt. I have reviewed the importation evidence notwithstanding to try and determine if there was anything in the evidence of when the engines were imported that would assist with determining the model year.

[54] There is no evidence of the model year of the bicycle engines. Mr. M.A. Bergevin's opinion assumed the model year. His evidence was that he could not find a model year on the engines. There is no other evidence in the case and I understand Crown counsel's submission to be that I should infer that engines being manufactured before January 2005 would not be being imported in August 2007. However, I simply do not have the expert evidence or the contextual evidence to conclude that that is the case in the context of a specialized industry. It is certainly one inference that could be drawn, but August 2007, is only 2 ½ years after December 31, 2004 and if the engines were manufactured before that date, they would not be prescribed. The usual principles applying to circumstantial cases apply, that is "… that to convict on circumstantial evidence, the evidence must not permit any other rational conclusion but that the accused is guilty", R.v.Charemski, [1998] 1 S.C.R. 679, per Justice Bastarache at paragraph 4. Count 3 is dismissed.

2B) The Tractors

2B.i) Were the Five Tractors Imported?

[55] The five tractor engines are covered by four counts, specifically counts four to seven. None of the counts specify the tractor or tractors to which the count refers. They refer only to an engine. The only particulars in the charges that distinguish the tractors are the dates of importation.

[56] Although the defendants made many submissions about the charges, they never requested particulars. In their final submissions, they submitted that the prosecution failed to identify by marking or numbering the type of engines that were imported contrary to law.

[57] I interpret this submission to be an argument related to failure to prove the charges substantively as opposed to a complaint about the information. As the charges, in conjunction with the evidence and the submissions of Crown counsel, each cover at least one tractor, I, as well as the defendants, am able to determine what is alleged.

[58] The defendants' arguments can be stated this way. Even if the customs documents prove that the tractors that were seized and inspected were imported in the period alleged by the charges, the charges have not been proven because:

a. It has not been proven beyond a reasonable doubt that the engines were in the tractors when the tractors were imported and the Regulations and the charges deal only with engines, not tractors.

b. Even if the engines were in the tractors, that similar to the case of the small loose engines, it has not been proven that they have a model year of 2006 or later so as to be covered by the regulations.

[59] These are the arguments with merit. The other arguments that the defendants have made once again attempt to re-litigate the admission of evidence rulings made during the trial.

2B.ii) Were the Tractors Imported?

[60] The prosecution's allegation that the engines and the tractors were imported at the same time is intertwined with the manner in which it seeks to prove importation. I will therefore deal with the importation of the tractors first.

[61] I begin with Tractor No.1, Number "CCS-BY" 254 allegedly imported between June 26th and 17th day of July 2008.

[62] This tractor, that Officers Cayley and Lauzon seized and sent to Éric Bergevin is red. It had an identification plate that Mr. Bergevin stated appeared to be affixed to the tractor before the cabin was installed.

[63] The case for this tractor having been imported into Canada during the period set out in any count is circumstantial.

[64] The affidavit of Cathleen Grenc, the Criminal Investigator for CBSA shows that an import for Center City Sports Inc. was released on July 17th, 2008 and that the description of the goods, interpreting the code shown on the release schedule was, "Other new agricultural tractors powered by an internal combustion engine."

[65] The affidavit of Eddie Leung who worked for Scanwell Freight Forwarding shows a bill of lading for a Tractor TY254C-1 from Shangdon Weito Group in China to Center City Sports Inc.

[66] The evidence of importation for each of the other tractors is similar but each count requires some elaboration. The general manner of proving importation of the engine is to first examine the affidavit of Cathleen Grenc which shows a release date for an import that includes the shipper and the defendants. Then, one must turn to the affidavit of Eddie Leung, which shows a bill of lading, and an invoice that shows the importation of tractors.

[67] However, the numbers on the Eddie Leung documents do not correspond exactly with the identifiers on the tractors in all of the cases. For example, Count 4 refers to tractor CCS 254 but the documents say TY254C.

[68] In the case of Count 5, an importation of an engine between the 27th day of June and the 18th day of July 2008, the plate identifying one of the tractors (Tractor No. 4) is "CCS-BY" model "554" and the bill of lading describes an LZ554 tractor. The plate identifying another of the tractors, Tractor No. 5, is "CCS-BY" model "404" and the bill of lading identifies LZ404.

[69] In Count 7, an importation of an engine between the 20th day of May 2009 and the 10th day of June 2009, the tractor labels identify the tractors as "CCS-BY" model "354" and the bill of lading refers to a tractors with numbers TY224B-1 and TY303B-1.

[70] Finally in Count 6, the import of an engine between the 15th day of April 2009 and the 6th day of May 2009, the label on the tractor alleged to have been imported shows "CCS-BY" model 254.

[71] As can be seen, the documentary evidence in itself does not prove beyond a reasonable doubt that the tractors that the investigators seized and Éric Bergevin eventually inspected were imported on the dates in the counts that the prosecution submits covers the various tractors. It leaves confusion.

[72] However, it is not the only evidence. Even the investigators were confused and they called Mr. Kalsatos in to make a statement on August 23, 2010 after they had obtained the documentation from the CBSA and the people that Mr. Kalsatos used as custom brokers. In that statement, that I have admitted as voluntary, Mr. Kalsatos added some detail about the importation of the tractors.

[73] First of all, Mr. Kalsatos stated that he imported all of his engines and tractors, and imported them solely from China. This does not prove that the particular engines were imported when alleged, but it advances the Crown's case. It also complements the evidence of Éric Bergevin that no tractor engines are manufactured in Canada; even Canadian tractor manufacturers import the engines.

[74] While this does not completely answer Mr. Kalsatos's evidence in court that he assembled the engines after importing the tractors, it does prove that every tractor that Mr. Kalsatos had at Center City Sports Inc. was imported and that every complete engine was imported. It does not prove that either the tractors or the engines were imported on the dates alleged in the informations.

[75] In that regard, it is Mr. Kalsatos's detailed answers to the investigators that proves the importing dates in conjunction with the documentary evidence.

[76] He told the officers that the LZ tractors arrived in 2008.

[77] Officer Lauzon specifically asked Mr. Kalsatos about "CCS-BY 354" and he acknowledged that the tractor was imported, though he said it arrived in 2005 or early 2006.

[78] He also told the officers exactly which Chinese manufacturers he obtained the blue tractors and the red tractors from, but the statement was not videotaped and the officers did not identify the photographs they were showing to him. Therefore, those answers are of no assistance.

[79] However, although there was some confusion with the name of the Chinese manufacturer, Mr. Kalsatos told the officers that the red tractors were manufactured by Weito in China. Weito, Mr. Kalsatos explained, is the name of the factory, and Shangdong is the name of the province in China. The vendor on the CBSA Firm Report for the defendant company is Shangdong Weito.

[80] Mr. Kalsatos's cooperative answers on August 23, 2010 fill in the gaps left by the different letters in the tractor numbers. He identified the LZ tractors as his and the red tractors as being manufactured by Weito and stated that he was importing tractors from China. The customs description attached to Ms. Grenc's affidavit describe imports of tractors from that company. The numbers in the bills of lading are the same as the numbers on the tractors that the investigators found, if not the letters. With the exception of Count 4, that I discuss below, the entire circumstantial case proves beyond a reasonable doubt that Mr. Kalsatos, on the dates specified in the information, imported the tractors, and I emphasize "tractors" here as opposed to "engines", that the officers seized and Éric Bergevin inspected.

2B.iii) Were the Engines Also Imported?

[81] This leaves the question of whether the importation of the tractors proves the importation of the engines.

[82] The first piece of evidence is that the description of the objects imported in the Customs list is "Other new agricultural tractors powered by an internal combustion engine." This is ambiguous as it could be the generic description of the tractors, but is some evidence. It is conceivable that a tractor could be imported without the engine, but a tractor is a vehicle that moves and is not useful if it does not. In ordinary language, when one speaks of a tractor powered by an internal combustion engine, one means that there is an engine in the tractor; without requiring the listener to implicitly fill in any condition such as "if there is an engine in the tractor". Therefore, ordinary language and the description of the goods in the Customs List is the context for evaluating the evidence.

[83] In his August 23, 2010 statement, Mr. Kalsatos told the investigators that he knew when tractors were ordered that they had to be with EPA, that is comply. Cayley asked him "Since you became aware that the engines were eventually non-compliant, can you tell us a little bit about what you've done to—since that time?"

[84] Mr. Kalsatos answered: "Well, only on the tractors. The other stuff - I knew they were old, so I didn't even think to think EPA for generators because I didn't bring anything passed (sic per transcript but should be past) 2005. You know, I believe that's what I said in the beginning. 2005 could have been the last, you know, but it's like five years ago and I cannot remember to that exact dates."

[85] In this answer, Mr. Kalsatos was explaining that he did not know there were Regulations covering generators. He then went on to say:

"But as far as the tractors 2006 on I paid for EPA prices, EPA engines. I paid the difference to have EPA engines." So, I trust the supplier. You know, I am dealing straight from the factory. You know, so there's no reason for me to think I will be cheated"

[86] Mr. Kalsatos was honest with the investigators. He was trying to help them and himself. In this statement, he equated tractors with engines as he moved from tractors to engines requiring EPA. This makes sense. As far as the tractors go, he paid for EPA engines. Combining this with the evidence that he only imported from China, that Canada does not manufacture tractor engines, and the description in the Customs List, there is proof that the imported tractors had engines.

[87] The evidence to the contrary is Mr. Kalsatos's testimony that he assembled the tractors from kits and used some engines or parts of engines that were manufactured that he kept from old engines in case his customers needed parts for tractor engines. He thus suggested in his testimony that the tractors were not imported with engines as part of the tractor kits.

[88] Crown counsel submits that this evidence is incredible and fashioned to respond to the Crown's case. He emphasizes that the idea of the engine being constructed from parts separately from the tractor was never put to Éric Bergevin in cross-examination.

[89] The defendants submit that when they attempted to question Mr. Bergevin about the engines being assembled that I stopped them because it was not relevant to the expertise voir dire on which Mr. Éric Bergevin was testifying.

[90] After the voir dire and the qualification of Mr. Bergevin as an expert, there was no restriction on asking Mr. Bergevin about whether he could comment on whether the engines that he inspected could have been separately installed. Mr. Kalsatos conducted a detailed cross-examination on his own behalf including questioning of the technical details of the engine. He was not restricted in his cross-examination. Indeed, he touched on the issue of replacement parts when he questioned Mr. Bergevin if one could take the part number and get a replacement part. He also cross-examined Eric Bergevin on the issue of when the engines were manufactured. He had full opportunity to put directly to Mr. Bergevin that the engines did not come with the tractors.

[91] Sometimes, an unrepresented accused must take the consequences of their decision to represent themselves, or, in this case, by themselves and with a paralegal for the company. Mr. Kalsatos could have asked Mr. Bergevin anything he wanted.

[92] However, as he did touch on the question of the engines being manufactured at a different time during the voir dire and it was understood that the evidence on the expertise voir dire applied to the trial, I do not consider any failure to raise the issue in evaluating his evidence.

[93] Mr. Kalsatos testified that the engines that agency seized and that Éric Bergevin examined were manufactured at a date earlier than 2006 and that the regulation did not apply. He testified that there was no need to stamp dates on the engines if they were manufactured before the rules applied. He further testified that the bills of lading that described the importation of tractors and hole drillers did not say anything about engines and that hole drillers were not engines.

[94] He testified that he bought the engines very early in his importation of tractors, that he bought engines in advance to be able to service his customers because if an engine breaks down it takes three or four months to replace it.

[95] Mr. Kalsatos also testified that he then imported some tractors without an engine. He testified that he still had the engines because he was not able to sell them because no engines broke down on what he had previously sold.

[96] With respect to particular engines that he imported, one of the tractors, number 554, was to send on to Portugal and that that did have an engine. Mr. Kalsatos stated that he brought the other four tractors, by which I took, import, with a partial engine block, and the rest, he finished with engines that he already had and had been imported in 2005 and 2006.

[97] He drew a distinction between engines and engine kits.

[98] Mr. Kalsatos was sincere and testifying was traumatic for him because he attributes the seizure of the five tractors to the loss of his business and ultimately his home and even a separation from his wife.

[99] In cross-examination, he agreed that the tractors that he imported from China had partial engines. He testified that they had an engine block and a cylinder head.

[100] If Mr. Kalsatos is correct then the engines were not imported at the time alleged in the counts and all counts would fall. This is apart from the model year of the engines.

[101] Although I found Mr. Kalsatos sincere in his attempts to comply with the law, I cannot accept his evidence that he did not import engines in 2008 and 2009 with the tractors that he imported. His testimony starts from a position of inherent unlikeliness. In English, a tractor is a tractor, not a tractor chassis or chassis or cabin or a tractor without an engine. A tractor has an engine. However, some tractors do not, as Mr. Éric Bergevin testified that tractors are manufactured in Canada without engines. Mr. Kalsatos's evidence that the bills of lading say tractors and hole drillers but not engines and his assertion that this information is relevant is the same as saying that the bill of lading does not say doors or wheels. This is supported by the description of the item that was released that specifically refers to the engine. It would make no sense to categorize the tractor as having a certain type of engine on the Customs Tariff if the item being released did not have an engine.

[102] Although Mr. Kalsatos was entitled to save his defence and his testimony for when he did, that is his testimony in court, and I am not considering that any failure to cross-examine Mr. Bergevin detracts from the weight of his testimony, there is a prior statement in this case. In his statement Mr. Kalsatos said that he knew that all engines after 2006 were required to comply with EPA standards and that he depended on his suppliers to make sure that they complied.

[103] When he made this statement, he was talking about the blue and red tractors that Officers Cayley and Lauzon had seized. He did not say anything about their having old engines that had been imported in previous years and he did not have to. He did say, however, that he knew the engines for the tractors required compliance, and this statement contradicts his position and his testimony in court.

[104] In view of all of the evidence, I find that Mr. Kalsatos's statement, that contradicts his testimony in court is more accurate, admissible, and weakens his testimony in court. Therefore, I find that a tractor is a tractor with an engine and that is what the prosecution has proven that Mr. Kalsatos imported on the dates alleged.

[105] It is not necessary to go so far, but even if I accepted Mr. Kalsatos's evidence that he constructed the engine with old parts, he had imported part of the engine by his own honest admission that there was a partial engine block. Given the purpose of the Act, it cannot be that it is permissible to import a part of an engine necessary to the assembly of the whole engine and then complete it and maintain that it is not imported.

[106] The prosecution has established that Mr. Kalsatos and the Company imported at least one engine as charged on the dates specified in counts 4 through 7.

3) The Model Year of the Engines

[107] In view of my findings to this point, the determination of guilt or innocence is thus reduced to a determination of whether the prosecution has proven beyond a reasonable doubt that the engines had a model year of 2006 or later.

[108] The model year is an essential element of the offence for this reason. Each Count contains the allegation of engines, "prescribed of its class at the time of its main assembly or manufacture". Only engines of a model year of 2006 or later are prescribed.

[109] The evidence of model year is similar to the case of the small loose engines. It is the evidence of the expert in the context of all of the evidence. However, the expert opinion is the lynchpin of the prosecution's proof of this element. Mr. Kalsatos testified that the engines were manufactured prior to January 1, 2006 and I have rejected that evidence as not raising a reasonable doubt about the date of importation.

[110] However, that is not the same as finding that the time of the main assembly or manufacture was after January 1, 2006. They may have been assembled or manufactured in China before that date and still have been imported with the rest of the tractors on the dates alleged.

[111] In order for the prosecution to prove this element beyond a reasonable doubt, I must find evidence that the model year is 2006 or later. I cannot consider any likelihood or unlikelihood, not founded in the evidence, that the Chinese manufacturers would manufacture an engine in 2005 and then install it or sell it along with a tractor shipped in 2008 or 2009. That is not a subject of common knowledge and there was no evidence about tractor inventory or sales lags.

[112] I now turn to what evidence there is count by count and for the engines in the tractors that the prosecutor submits apply. Although it is the engines that are relevant, they were seized and inspected in tractors and the tractors that housed them provide a convenient way to distinguish among them and discuss them.

[113] There are five tractors in all: three red ones, and two blue ones identified by their Center City Sports labels and the numbers of the tractors.

[114] The two blue tractors (tractors 4 and 5) have the numbers 554 and 404.

[115] The three red tractors consist of two numbered 354 (tractors 2 and 3) and one numbered 254 (tractor 1).

[116] Mr. Eric Bergevin inspected them all.

[117] For the first tractor, Tractor No. 1, he inspected the tractor and found a label installed by rivets that had the number CCS_254. It showed a manufacturing date of March 2009.

[118] With respect to the engine, he located a label on the valve cover that has what are now familiar bar codes and a number KM385BT cover showing the model number of the engine and a sequential number 020950 preceded by the number 09 and a slash. His opinion was that the 09 appeared to refer to the calendar year 2009.

[119] Mr. Bergevin then removed the starter from the engine and was able to observe markings engraved into the engine block from a mold. He stated that the date of May 20th, 2008 was the date of manufacture of the engine block, that is the date at which the block was molded during the casting process. He also found molded numbers showing the engine model KMB385BT and again the sequential number 020950 preceded by the number 09 and this time a 3. His opinion was that the 09 referred to calendar year 2009 and the 3 referred to the month of March. He noted that this was consistent with the label attached to the tractor.

[120] Mr. Bergevin concluded that the markings found on the engine block indicate that the engine block was manufactured on May 20th, 2008. He could not conclude whether the dates of 2009 that he found on the engine, engraved and labeled referring to 2009 referred to the date at which the engine manufacture was completed, that date at which the engine was installed in the tractor, or any other important stage in the manufacturing process of the engine.

[123] This latter, entirely fair, conclusion demonstrates his professionalism and impartiality as he was fully aware of the importance of model year to the prosecution's case. Given his last statement, if the 2009 markings were the only markings, I would find a likelihood but not proof beyond a reasonable doubt of the model year. Two of the possibilities, completion of manufacture or another important stage in the manufacturing process could prove the model year, but the date at which the engine was installed does not in itself prove the model year.

[124] However, the conclusion that the engine block was manufactured on May 20th, 2008 supports the inference that the whole engine was completed after that and proves beyond a reasonable doubt that this engine has a model year later than 2006. There is no need to resort to any speculation about how long engines sit in Chinese factories after manufacture before being placed in or sold with a tractor.

[125] Therefore, all of the elements of the offence have been proven with respect to Tractor No. 1. However, a puzzling position taken by the prosecution confuses the case.

[126] Mr. Bergevin only inspected one tractor with the number 254. The prosecution has not specified the tractor numbers in the various counts. In closing submissions, Crown counsel submitted that both Count 6 and Count 4 related to the engine in Tractor No. 1.

[127] However, Count 4 refers to an importation period in 2008, that is before March 3, 2009 that Mr. Bergevin says may have referred to some important date related to the manufacture of the judgment. Clearly, that engine cannot have been imported in 2008 and just as clearly, one engine cannot support two counts.

[128] The bill of lading for the 254 tractor in Count 6 (mistakenly called Exhibit 14 in the material Crown counsel prepared for the assistance of the Court; it is Exhibit G referred to in paragraph 14 of the affidavit) for which the engine is alleged to have been imported between the 15th day of April 2009 and 6th day of May 2009 shows a front end loader being imported with it. The corresponding document for the 2008 importation shows a hole driller. Tractor No. 1 has a front end loader.

[129] It would be speculation to find that there was another tractor 254 with a front end loader imported between April 15th, 2009 and May 6th, 2009. There is no evidence of such an importation and no evidence that the defendants imported such a tractor and then sold it before the investigators arrived in December.

[130] There is no evidence that the records that were admitted do not correspond to the tractors that were seized.

[131] Therefore, Count 4 must be dismissed as there is no evidence of two 254 tractors and engines—the prosecution seeks two convictions based on one engine.

[132] However, I am satisfied beyond a reasonable doubt of all of the elements of the offence with respect to the engine in Tractor No. 1 and there will be a finding of guilt on Count 6.

4) Has the Crown Proven the Model Year For the Engines in Counts 5 and 7

[133] That leaves Counts 5 and 7.

[134] Count 5 alleges an importation between the 27th day of June and the 18th day of July 2008. The prosecution relies on either of two engines for each of the counts.

[135] For Count 5, the prosecution relies on the engines in Tractor No. 4, and Tractor No. 5 that Mr. Bergevin inspected.

[136] With respect to the engine in Tractor No. 4, Mr. Bergevin's evidence in itself raises a reasonable doubt. He found a marking on the engine block reading 070605 and was unable to say whether this was June 7, 2005 or June 5, 2007, but did say that it appeared to be the date of manufacture of the engine block. On the expert's own evidence it would be a guess as to the model year of this engine. If the defendants are guilty of Count 5, it must be on the basis of Tractor No. 5, the blue tractor numbered, "CCS BY 404."

[137] However, with respect Tractor No. 5, Éric Bergevin examined it but did not proffer any information about the model date of the engine in his conclusions. I am asked to conclude beyond a reasonable doubt that because the tractor was manufactured in 2008, so was the engine. However, it is noteworthy that Mr. Bergevin in his report, does not even provide optional explanations of what the numbers on the engine mean and does not provide an opinion of when the engine was manufactured. Count 5 is therefore dismissed.

[138] This leaves Count 7, which alleges importation of an engine between the 20th day of May 2009 and the 10th day of June 2009. Here, the prosecution relies on importation of the engines that Éric Bergevin inspected in Tractors No. 2 and 3. If it proves that either have a model year of 2006 or later, then there must be a finding of guilt on count 7.

[139] For Tractor No. 2, Mr. Bergevin found a label on the tractor fixing its date of manufacture as April 2009. Additionally, he found a label applied to the top of the engine on the valve cover. This label, of the bar code variety appeared to indicate the model of the engine, the sub model and a sequential number preceded by 09 that, he stated, appears to refer to calendar year 2009.

[140] The engine itself had an engraving on its right hand side that corresponded to the information on the label. Mr. Bergevin was similarly of the opinion that the digit "09" referred to a calendar year "2009" and that a "4" before the sequential date referred to the month, which would be consistent with the manufacturing date on the tractor.

[141] In April 2009, the bar code-like paper label with the sequential number and an "09" that could refer to the model year and the number "4" that appeared to be a month and would be consistent with the month that the tractor was manufactured.

[142] The evidence on the engines in tractors 2 and 3 is the same as that for the engine in Tractor No. 1 except that in these two tractors there was no stamp on the engine block showing the date of manufacture.

[143] For Tractor No. 1, Éric Bergevin's conclusion included a finding that the engine block was manufactured on May 20th, 2008. For engines in Tractors No. 2 and 3 there is no such conclusion but rather the same possibilities with regard to the other engine markings. I quote this again in relation to the engine in Tractor No. 2:

"There were markings found on the engine (i.e. engraved and labeled) that appeared to refer to calendar year 2009. However, it is unclear if this date refers to the date at which the engine manufacture was completed, the date at which the engine was installed in the tractor, or any other important stage in the manufacturing process of the engine."

[144] As far as other evidence goes, I have already rejected Mr. Kalsatos's evidence that he installed his own engines assembled from parts into the tractors. Mr. Kalsatos also testified that he knew that after 2006 he needed (an) EPA and was trying to, and indeed obtained it for some of the tractors. There would be no need to obtain an EPA for engines to which it did not apply.

[145] However, Mr. Kalsatos's understanding is not determinative of the model year of the engines. While I did consider his acknowledgement that engines after 2006 were regulated in determining the import dates, that was a basis of rejecting his evidence and not as a positive piece of evidence proving anything.

[146] Mr. Kalsatos also advertised one of the tractors as a 2009 model.

[147] However, Mr. Kalsatos does not have direct knowledge of the model years of the engines that he imports. That proof must come from the prosecution, in this case the evidence of Éric Bergevin.

[148] The proof in Count 6 was circumstantial and cumulative. Here, the conclusion as to when the engine block was constructed is absent. One branch of Éric Bergevin's hypothesis is that the 2009 date refers to the date the engine was installed and he uses the word "unclear" with regard to what the date signifies.

[149] In order for the model year to be before the applicable date, the company would have had to manufacture the engine substantially and complete that before December 31, 2005 and keep the engine as inventory or for installation until April 2009, a period of over 3 years. That may be unlikely, but I have no evidence on which to eliminate that as a reasonable possibility and it is not inconsistent with innocence. The rule regarding circumstantial evidence, that Justice Bastarache confirmed in R.v. Charemski that I have set out above, governs. Furthermore, as the Supreme Court held in R. v. Lifchus, [1997] 3 S.C.R. 320 Par.39, even if I believe that the accused is probably guilty, as here, he must be acquitted. The case is stronger than in the case of the loose engines or the blue tractors, but short of the burden of proof beyond a reasonable doubt. Count 7 is also dismissed.

Released: September 28, 2017

Brent Knazan Ontario Court of Justice