ONTARIO

SUPERIOR COURT OF JUSTICE

SUMMARY CONVICTION APPEAL COURT

COURT FILE NO.: SCA (F) 140/14
DATE: 20141212

B E T W E E N:

HER MAJESTY THE QUEEN

C. Afonso, for the Appellant

Appellant

• and -

JIAYU DU

J. Morton, for the Respondent

Respondent

HEARD: November 14, 2014

REASONS FOR JUDGMENT

[On appeal from the Judgment of Wolder J. dated February 4, 2014]

Justice Thomas A. Bielby

1The Crown is appealing the sentence rendered in this matter.

FACTS

2Upon return after a four day vacation in New York City with her boyfriend, the Respondent arrived at Pearson International Airport and declared that she and her boyfriend were importing $300.00 in goods purchased while away.

3On inspection, it was determined that the Respondent was in fact attempting to smuggle into Canada luxury goods that she purchased in New York City, having a value of $80,735.71.

4She sought to avoid the payment of what turned out to be $20,645.73 in duties and taxes owing and, as a result, was charged with two offences, pursuant to section 153(a) and section 153(c) of the Customs Act R.S.C. c. 1 (2nd Supp.).

5The Respondent plead guilty to both counts.

6Section 153(a) of the Customs Act states:

No person shall make, or participate in, assent to or acquiesce in the making of, false or deceptive statements in a statement or answer made orally or in writing pursuant to this Act or the regulations.

7Section 153(c) of the Customs Act states:

No person shall wilfully, in any manner, evade or attempt to evade compliance with any provision of this Act, or evade or attempt to evade the payment of duties under this Act.

8The sentencing judge accepted the pleas and entered findings of guilt on both counts.

9A sentencing hearing was conducted and the Respondent was sentenced to a conditional discharge, with two years’ probation on terms and was ordered to complete 200 hours of community service.

10The Crown submits that this sentence was demonstrably unfit and that the sentencing judge committed three errors set out as follows:

1. The sentencing judge erred in principle in finding that the actions of the respondent were not deliberate despite the respondent pleading guilty to “wilfully” evading duties.

2. The sentencing judge erred in placing undue emphasis on the civil duties and penalties owing and the potential immigration issues.

3. The sentencing judge erred in failing to take into account the principles of sentencing as set out in sections 718, 718.1 and 718.2 of the Criminal Code, particularly the principles of deterrence and denunciation.

11The Crown submits a proper sentence would require the imposition of a fine of $20,000.00 and some period of community service.

12Counsel for the Respondent argues that the sentencing judge committed no errors and that, in any event, the sentence imposed was fit and just.

13At the time of the incident, the respondent, who is a Chinese national, was in Canada on a student visa. She lived in St. Catharines and had been a student at Brock. Apparently, in her pre- sentence report it was noted she had only completed 1.5 credits and was on academic probation. At the time of her arrest, she was not even enrolled in school.

14In preparation of re-entering Canada, the Respondent and her boyfriend had completed a joint declaration card and told the Canada Border Services officer that they had only purchased one shirt, a coffee mug, and a t-shirt, together, having a value of $300.00. Secondary inspection by the Canada Border Services discovered in the Respondent’s purse, receipts totalling $80,735.71 for 26 items purchased in New York City.

15As noted, the duties and taxes on these items amounted to $20,645.73.

16The goods were seized and the Respondent had to pay, in total, approximately $35,000.00 in duty, taxes and penalties to have the goods returned to her.

17It is alleged by the Crown that, when asked by the Canada Border Service’s agent why she did not declare the items, the Respondent replied that she did not want to pay the tax.

18The Respondent was wearing a pair of shoes she bought while in New York but told the Canada Border Service’s Officer that they had been purchased prior to the trip to New York. One receipt located in her purse said otherwise.

19The Respondent is a seasoned traveller having travelled between Canada and China on many occasions and has also travelled to New York City on previous occasions as well as to Hawaii.

20It would appear that the respondent’s lifestyle, involving the purchase of such luxury goods, is financially supported by her parents who, I understand, also paid the $35,000.00 necessary to secure the return of the seized goods.

21It is noted that the Respondent is young and has no previous criminal record.

ANALYSIS

22In regards to the first ground of the appeal, notwithstanding the respondent pleaded guilty to wilfully evading duty and taxes (sec. 153(c)), the sentencing judge, at page 4 of the transcript of proceedings taken February 4, 2014, stated:

For all those reasons, I am prepared to give you the benefit of the doubt and find that you did not deliberately fail to pay the duties…

23I find this to be a clear error on the evidence. I reject the argument of the Respondent’s counsel that “wilfully” could be interpreted to mean reckless or something less than actual intent. No authority was submitted to support such an interpretation.

24Crown counsel provided the court with the decision of R. v. Park [1989] B.C.J. No. 1108, a decision of Boyd J., a judge of the British Columbia Count Court, sitting on appeal from a summary conviction. In that case, an accused attempted to bring into the country $13,000.00 in goods without declaring them. She testified that she was going to deliver the goods to relatives and thought she only had to declare goods she was going to keep.

25As in the case before me, Ms. Park was charged under subsections (a) and (c) of section 153 of the Customs Act.

26With respect to the charge under section 153(c), the issue in the Parks case was what mens rea was needed to obtain a conviction. From page 3, I quote:

In the case at bar, given the use of the word “wilfully” in s. 153(c), the offence is clearly one which falls into the first category - that is, the category requiring the Crown to prove mens rea. Our Canadian courts have consistently held that where the words “knowingly” or “wilfully” are included in a statutory provision creating an offence, the Crown must prove guilty intent and guilt will not follow mere proof of the proscribed act.

27I concur and adopt those comments. If the respondent did not deliberately fail to pay the duty owed, it cannot be said that she wilfully failed to declare the full value of the goods purchased to avoid paying the proscribed duty and taxes. A finding that the Respondent did not deliberately fail to pay the duty owed would be a defence to a charge under section 153(c) of the Customs Act.

28The Respondent did not appeal the issue of her plea and the findings of the trial judge. She does not seek to withdraw her plea of guilty. In fact, counsel for the Respondent, at the end of the sentencing hearing, waived his client’s right to appeal.

29The Respondent pleaded guilty to wilful evasion and the evidence substantiates the plea. Accordingly, I find that the trial judge erred in finding the Respondent did not deliberately fail to pay the duty owed. He erred in not sentencing the Respondent for wilfully attempting to evade the payment of duties and taxes.

30In regards to the second ground, I find no errors on the part of the sentencing judge. I find that it was appropriate for the sentencing judge to take note of the fact that the Respondent was required to pay over $35,000.00 in duties, penalties and fines. He properly noted that the funds likely came from the Respondent’s parents (February 4, 2014 transcript, page 10).

31I accept the Crown’s position that the imposition of a civil penalty does not preclude the imposition of a criminal fine and that each serve a different purpose. In Martineau v. Canada (Minister of National Revenue – M.N.R. [2004] 3 S.C. J. No. 58, at paragraph 62 the Supreme Court of Canada discussed civil and criminal penalties, and wrote:

These are two distinct consequences that are completely independent of each other. One of them, the fine, is clearly penal in nature and thus takes into account the relevant factors and principles governing sentencing; the other, being civil in nature and purely economic, is instead arrived at by a simple mathematical calculation.

32However, the authorities provided do not prevent a sentencing judge to take into account a civil fine. The fact is the Respondent was required to pay approximately $15,000.00 in fines and penalties over and above the duties and taxes owed of approximately $20,000.00.

33In regards to the immigration status issue, it is clear the sentencing judge took into account, in a general way, the Respondent’s immigration status in granting a conditional discharge. At page 9 of the sentencing hearing transcript the sentencing judge stated:

In granting the conditional discharge, I have taken into consideration the case law and the decision of Justice Langdon in R. v. Grosso 2008 40964 (On SC), as presented to me by your counsel, and I accept that it applies in this case, and that the sentence will allow you to maintain your student visa status, and allow you to continue your education, if you accept this opportunity which this court has given you, to do that. If you continue as you have in the past to focus on indulging yourself at the expense of others, and at the expense of your education, then, I fear your stay in Canada will be very short, indeed. The decision will be yours. What you do with this opportunity, but I trust you will take advantage of it, because there will not be a further opportunity.

34In Grosso, one of the issues was the relevance of the civil penalty. The matter was before Langdon J. on a summary conviction appeal and I note that there were no immigration issues in that case. The accused pleaded guilty to the wilful evasion of duties contrary to section 153(c) of the Customs Act. The accused attempted to smuggle into Canada a Rolex watch worth $300,000.00. When clearing Customs, the accused and his fiancée both declared purchases of $175.00.

35The accused had to pay taxes, duties and penalties of $145,000.00, the penalty alone being $120,000.00.

36The accused had no criminal record. The Crown seeks a substantial fine for reasons of general deterrence while counsel for the accused submitted the civil fine was already significant.

37Langdon J. found that the sentencing judge had over emphasized the factor of deliberation on the part of the accused and that this factor was a significant factor in the sentencing judge not awarding a conditional discharge. Langdon J. found the sentencing judge to be in error in not properly considering a conditional discharge.

38Langdon J. also determined that it was an omission on the part of the sentencing judge in not considering the deterrent factor in the imposition of civil penalties. Ultimately, Langdon J. set aside a fine of $20,000.00 and granted the accused a conditional sentence, with probation for a year and the accused was to perform 50 hours of community service.

39Returning to the immigration issue, in R. v. Pham 2013 SCC 15, [2013] S.C.J. No. 100 the Supreme Court of Canada made it clear that a sentencing judge may exercise his or her discretion to take collateral immigration consequences into account provided that the sentence ultimately imposed is proportionate to the gravity of the offence and the degree of responsibility of the offender. Immigration is but one of the factors to be taken into account.

40I conclude that the sentencing judge in the matter before me did not err on taking into account the civil duties, taxes and penalties nor did he err in considering the Respondent’s status as an immigrant to Canada. He was entitled to do so and did not over emphasize these factors.

41In regards to the third allegation of judicial error it is noted from page 6 of the sentencing transcript the sentencing judge stated:

Under all the circumstances, this court has to consider the elements of your prospects of rehabilitation against specific deterrence and general deterrence.

He then discusses the possibility of a conditional sentence and concluded such a sentence would be of benefit to the Respondent and society at large. From page 7 of the sentencing transcript I quote:

And for all those reasons, I am satisfied that it is in the broader public interest that this court focus on your rehabilitation, rather than on any elements of denunciation or general deterrence, and therefore, I have decided I am going to grant you a conditional discharge.

42I find that the sentencing judge appropriately considered the principles of sentencing, weighed the principles against each other, taking into account the facts of this case, and reached a conclusion that was available to him. Accordingly, the sentencing judge did not error in his consideration of the sentencing principles.

43I am left then with one error on the part of the sentencing judge. I find that the element of deliberation is an essential element of a charge under section 153 (c) of the Customs Act; to find guilt there must be an element of “deliberate act” based on the inclusion, in the section, of the word “wilful”.

44In the case before me, the Respondent deliberately or wilfully did not declare the goods she purchased and their value to evade the payment of duties and taxes.

45What is not known is when the decision was made. It could be argued that the fact she had the receipts in her purse suggests that the decision to evade was made sometime after she packed her luggage when leaving New York City. I do not think it matters when the decision to evade is made. What is important is the Respondent, when she completed her declaration card and presented herself to the Canada Border Service’s agent, deliberately, that is to say wilfully, had decided to misrepresent the truth for the purpose of evading duties and taxes.

46Having found such an error, I am at liberty to consider without deference to the sentencing judge, the appropriate sentence. I do agree, however, that the impositions of a term of probation and community service hours are appropriate. The issues to determine are: is a conditional discharge appropriate; and whether a fine should be imposed and for how much.

47In R. v. Chen [1996] O.J. No. 4946, at paragraph 2, notes that the crossing of borders, without paying taxes, should not be treated lightly.

48In R. v. Bragaglia [2010] Q.J. No. 9913, the two accused attempted to smuggle into the country $44,000.00 in goods and evade taxes of $8,000.00. On sentencing they sought an absolute discharge.

49Starting at paragraph 42, Marchi J. determined that such a discharge would be contrary to public interest and would hurt the public confidence in the administration of justice. Marchi J., in making this finding, commented on the fact that our customs controls are based on a good faith system with travellers self-declaring the goods imported. He took into account the fact that the two people before him conspired to deliberately to attempt to avoid taxes.

50R. v. Zhao [2014] B.C.J. No. 418 is a decision of the British Columbia Court of Appeal. The accused was a Chinese National in Canada on a student visa. She attempted to smuggle into Canada luxury goods and at trial was fined $5,000.00 on each of two counts. At trial, it was noted that it was not the accused’s first time for attempting to smuggle goods into Canada. The trial judge relied on the sentencing principle of specific deterrence.

51The B.C. Supreme Court, on a summary conviction appeal, set aside the fine and granted a conditional discharge. The Appeal Court restored the fine imposed notwithstanding it was made known to the Appeal Court that the accused, because of the conviction, would likely not be able to remain in Canada.

52The Appeal Court found, at paragraph 32, that the trial judge properly took into account on sentencing the likely immigration issues. From paragraph 33, I quote:

In my view, a sentencing judge may take into account immigration issues when crafting a fit sentence, but those issues must not divert the judge from a sentencing path that the judge considers appropriate. That is what happened in this case in the Supreme Court.

53At paragraph 37, the Appeal Court stated:

In my view, the Supreme Court judge erred in allowing potential immigration consequences to the respondent to set aside a fit sentence.

The Appeal Court imposed a fine of $10,000.00.

54In regards to the matter before me, in considering the appropriate sentence, I will consider the mitigating factors of the Respondent’s age, lack of a criminal record and her plea of guilty.

55I consider the value of the goods in issue to be an aggravating factor.

56The Crown submits that a fine of $20,000.00 is warranted and spoke of a rule of thumb that a fine equalling the amount of duties and taxes paid would be appropriate.

57I am not bound by the Grosso decision and, with the greatest respect to Langdon J., in my opinion, the granting of a conditional discharge is not appropriate. Contrary to the findings of the sentencing judge, the Respondent deliberately attempted to evade duties and taxes. It would be contrary to the public interest to order a conditional discharge in these circumstances.

58I do, however, accept the submissions of the Respondent’s counsel that if there is to be a fine, a fine of $5,000.00 would be appropriate. The respondent has paid or has had paid on her behalf $15,000.00 in civil penalties. A further criminal penalty of a fine of $5,000.00 would represent a total fine of $20,000.00, equally the amount of taxes and duties which the Respondent attempted to evade. As well, it is likely that the fine will not be paid by the Respondent personally but rather by her parents. Further, the need for a greater fine is offset by the considerable hours of community service ordered by the sentencing judge, which I think are appropriate and will continue to be part of the sentence.

59Accordingly, I reject the imposition of a conditional discharge and sentence the Respondent, Jiayu Du, to pay a fine of $2,500.00 on each count and give her 90 days to pay. I also place her on probation on the same terms as imposed by the sentencing judge, including the 200 hours of community service.