R. v. Woodward, 2019 BCPC 39

Citation: R. v. Woodward 2019 BCPC 39 Date: 20190315 File No: 163664-1 Registry: Victoria IN THE PROVINCIAL COURT OF BRITISH COLUMBIA REGINA v. DENIS DONALD WOODWARD REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE C. ROGERS Counsel for the Crown: C. Peel Counsel for the Accused: R. Morahan Place of Hearing: Victoria , B.C. Dates of Hearing: June 1, 2018, October 10, 2018, January 11 & 24, 2019 Date of Judgment: March 15, 2019 I. INTRODUCTION [ 1 ] Mr. Woodward is charged with two offences under the Customs Act in relation to his entry into Canada, on October 8, 2012, with the motor vessel Angelique .

II. FACTS [ 2 ] In 2005, Mr. Woodward purchased the motor vessel Angelique . The vessel was manufactured in Asia and he took delivery in Seattle in 2007. He registered the vessel in New Zealand and moored it in Port Angeles, with a plan to travel to Mexico and perhaps further. [ 3 ] As a result of financial difficulties, Mr. Woodward’s plan to travel with the Angelique never came to fruition. The vessel remained in Port Angeles and Mr. Woodward remained in Victoria.

Between 2007 and 2012, he visited the Angelique from time to time but never took it out of the Port Angeles harbour. [ 4 ] During the years the vessel was moored in Port Angeles, Mr. Woodward had a number of discussions with American customs officials. The vessel was not legally in the United States as it did not have either a cruising license or United States registration. As a result, on October 9, 2012, Mr. Woodward was told that he had to leave the United States with the Angelique . [ 5 ] Because the Angelique had been in the United States for many years and because of Mr.

Woodward’s lack of attention to the legal requirements for keeping the vessel there, Mr. Woodward was surprised by the demand that he leave. He did not have plans to travel on the vessel and the vessel had only rudimentary navigation equipment. Nonetheless, he departed as required at approximately 10 a.m. on October 10, 2012. He was heading to Victoria with a vague plan to moor in or around the inner harbour. [ 6 ] The passage to the Victoria area was difficult. There was considerable fog in the strait and Mr. Woodward was not experienced with the passage.

The lack of navigation equipment made it difficult to know his exact location and he was fearful of an encounter with a ferry or other large ship if he ended up in the shipping lanes. [ 7 ] He eventually got close enough to shore and there was some lifting of the fog such that he was able to see Metchosin. He was able to follow the shore and make his way to his property in Sooke with the assistance of his friend, Alan Crow, who was fishing near the entrance to the Sooke Basin and was able to guide him in.

He tied the Angelique to his dock and left, exhausted, with little thought other than getting away from the water. [ 8 ] Mr. Woodward did not report to customs upon his arrival, or the arrival of the Angelique , on October 10 or any other day. He did not pay any duties or taxes owing as a result of bringing the Angelique to Canada. III. THE CHARGES [ 9 ] Mr. Woodward is charged in Count 1 with an offence under

section 153(

c) of the Customs Act .

Section 153(

c) makes it an offence to willfully evade the payment of duties. It is admitted that there were duties owing on the Angelique upon its importation into Canada and that Mr. Woodward did not pay those duties at any time. Mr. Woodward submits that his failure in this regard was not willful and that he never intended to evade the duties. [ 10 ] Mr. Woodward is charged in Count 2 with an offence under

section 155 of the Customs Act . [ 11 ] Section 12(1) of the Customs Act requires those entering Canadian waters to present themselves to customs. It is admitted that Mr. Woodward did not comply with this requirement when he entered Canada with the Angelique on October 10, 2012, or any day after, and that, during the dates alleged in the Information, the Angelique remained moored at his dock. [ 12 ]

Section 155 provides that it is an offence to possess an imported good, in this case the Angelique , in respect of which the provisions of the Customs Act have been contravened. Mr. Woodward submits that he did not “possess” the Angelique at the relevant time as he did not have control over it since he could not use or dispose of it because of the failure to pay the duties owing and the provisions of

section 155. Alternatively, he submits that he had a lawful excuse for his continued possession of the Angelique during this period in that he was not entitled to lawfully dispose of it because of the failure to pay the duties owing and the provisions of

section 155. IV. COUNT 1

i) Elements [ 13 ] By virtue of the admissions found in Exhibit 1, and the evidence before me, it is clear that, on October 10, 2012, Mr. Woodward entered Canada with the motor vessel Angelique , a vessel manufactured in Taiwan and delivered to Mr. Woodward in the United States. Mr. Woodward did not report his entry into Canada with the Angelique at the time of his arrival or at any time after. At no time did Mr. Woodward pay any duties or taxes related to the importation of the Angelique into Canada, although there were duties and taxes owing.

Between the offence dates of October 9, 2012 and June 2, 2013, the Angelique remained moored at his property in Sooke, British Columbia. [ 14 ] The only element of Count 1 that is in issue is that of mens rea . The mens rea requirement for Count 1 is that Mr. Woodward did “willfully evade” the payment of duties on the Angelique . ii) Mens Rea Evidence [ 15 ] Mr. Woodward testified that he planned, once he arrived with the Angelique in Victoria, to go to customs.

He testified that, by the time he arrived in Victoria, he was not thinking about customs, as a result of the difficult crossing, and it wasn’t until two or three days later that he thought about it. He knew he had a responsibility to report. He testified that he didn’t report later because “my mind went blank to that situation” and “I was just blank mentally on that not acting on it” (June 1, pp. 84 and 85).

He testified that he would plan to do it but then would forget or something else would come up that would overwhelm him and distract him from carrying out his intention. [ 16 ] He testified, the first time he was asked in direct examination (June 1, p. 85), that he was aware of duties in a general sense and

that there would be GST and sales tax but that he did not think about paying them. He later testified (p. 88) that, when he enteredCanada, he did not know whether he owed duties but that he slowly became aware after he was charged in 2015 (p. 89). He furthertestified (p. 89) that he wasn’t aware of a specific duty, just of taxes and that he later learned that there was a 9.5% duty. He was askedagain (p. 89) whether he was aware of any duties between October 9, 2012 and June 2, 2013 and he said yes. He said he wasn’t aware, atthat time, of the specific percentage.

Although he later testified that he was not aware of duties at all, this is inconsistent with his clearearlier testimony and I do not accept that evidence. Regardless, it is clear that he was aware that there would be taxes owing and, bydefinition in section 2(1) of the Customs Act, taxes are duties. [17] I find, based on all of his testimony that Mr. Woodward was aware that there would be duties owing on the vessel once it wasbrought into Canada but that, at the time of his entry, and perhaps for a significant time after that, he was not aware of the exact amountof the duty owing.

I find that he knew that there would be taxes owing. I base these findings on his own evidence. [18] Mr. Woodward and Mr. Crow both testified about Mr. Woodward’s difficulties in following through with tasks and projects,even when the failure to follow through is to his considerable detriment. Mr. Woodward’s evidence was that he gets distracted and hismind goes blank. He testified that he makes plans but then doesn’t do what needs to get done. He gets overwhelmed and distracted andforgets. [19] Mr. Crow gave evidence about the difficulties Mr. Woodward has in following through with things he has initiated.

He testifiedthat his behaviour in this regard is irrational as it often results in the deterioration and loss of value of things he has purchased or projectshe has initiated. [20] Dr. Dedzora diagnosed Mr. Woodward with Attention Deficit Disorder (ADD). She testified that this disorder results in, forMr. Woodward, a persistent pattern of inattention that interferes with function and results in disorganization and a failure to completetasks in a timely manner.

She testified that those with ADD are aware of their obligations but struggle to sustain the focus necessary tocomplete required tasks, even to the individual’s own detriment. Dr. Dedzora testified that those with ADD are not unable to accomplishtasks, it is just difficult for them. [21] I heard considerable evidence about Mr. Woodward’s financial and personal circumstances and it is clear that he struggles withtaking steps to deal with a wide variety of things, even when the failure to act is to his own detriment. It is, however, equally clear fromhis own evidence that, when necessary, he is able to act.

For example, he did not pay property taxes on one of his properties for so longthat he was about to lose it as a result. The day before this was to occur he managed to obtain the money and make the necessarypayment. [22] Mr. Woodward consistently testified that it was always his intention to report the Angelique, although he never managed to doso. He was asked directly if he was trying to evade, avoid or not pay duties and he answered “definitely no”. (October 10, p. 17, l 42). [23] The Crown drew my attention to Mr.

Woodward’s knowledge and familiarity with tax and tax planning, his ability to completemore complex tasks in this same time period, his acknowledgment that the task of reporting the Angelique was not particularly stressfulor overwhelming, and his communication to the Canadian Border Services Agency in October 2017, as circumstantial evidence that Icould use to conclude that Mr. Woodward was willfully evading taxes. iii) The Law [24] Counsel agree that the mens rea standard for Count 1 is a high standard that requires that Mr.

Woodward had knowledge thatduties were owing and did not report to avoid paying those duties. They agree that “evade” requires more than mere avoidance. There isno issue that the onus is on the Crown to prove all aspects of the offence, including the mens rea, beyond a reasonable doubt, and that Imust apply a reasonable doubt analysis to the credibility of Mr. Woodward, as set out in R. v. W.D., (SCC), [1991] 1SCR 742 and R. v.

C.W.H., (BC CA), [1991] BCJ No. 2753 (BCCA). [25] The law with respect to circumstantial evidence is well established and requires that, in order to draw a circumstantial inference,it must be the only rational conclusion from the facts. iv) Conclusion on Count 1 [26] I am unable to conclude that an intention to evade taxes is the only rational conclusion from the facts before me. I find that it isalso a rational conclusion that, given Mr.

Woodward’s challenges with focus and follow-through, and the fact that there was no cleardeadline that forced him to prioritize this task, he simply never got around to reporting. I do not find his communication from 2017 to beof assistance as it does not speak to his intent at the time of the offence. I find that, at the relevant time, he had either no clear intention atall, or that his intention was to report, but he just never managed to follow through. [27] Further, to reach the conclusion that Mr.

Woodward intended to evade the tax by not reporting would require me to reject hisevidence, or at least find that it does not raise a reasonable doubt. [28] The Crown acknowledged, and I find that, with some exceptions, Mr. Woodward’s evidence was generally credible. Although,as I have already indicated, I do not accept all of his evidence regarding his knowledge of taxes and duties owing, I do find that hisevidence raises a reasonable doubt about his intention to evade the payment of duties. In the result, the Crown has not met its onus and Ifind Mr. Woodward not guilty of Count 1. V. COUNT 2

i) Elements [29] Count 2 alleges that Mr. Woodward possessed the Angelique when the provisions of

section 155 of the Customs Act had beencontravened.

[30]

Section 155 requires that no person have in his possession, purchase, sell, exchange or otherwise acquire or dispose of, withoutlawful excuse, any imported goods in respect of which the provisions of the Customs Act have been contravened. [31] The Crown alleges, and it is without dispute, that Mr. Woodward did not comply with his reporting duties under

section 12 inthat he, at no time, reported the arrival of the Angelique into Canada to a customs office as he was obligated to do. [32] Mr. Woodward takes issue with two elements of this offence. First, he says that he did not import the Angelique. Second, hesays that he was either not in possession of the Angelique or had a lawful excuse. ii) Did Mr. Woodward Import the Angelique into Canada? [33] There is no issue that the Angelique originated in Taiwan, was delivered in the United States, and arrived in Canada from theUnited States on October 10, 2012.

It is also clear that the onus is on the Crown to prove that the vessel was imported. [34] The word “import” is defined in the Customs Act as meaning “import into Canada”. [35] Importing was judicially defined, for purposes of the Narcotic Control Act, in Bell v. The Queen, (SCC),[1983] 2 SCR 471 at pp. 488 to 489: In my view, since the Narcotic Control Act does not give a special definition of the word, its ordinary meaning should apply and thatordinary meaning is simply to bring into the country or to cause to be brought into the country. [36] In R. v.

Stacey, [1991] NJ No 204, the Newfoundland Provincial Court held, in a case dealing with offences under sections 155and 160 of the Customs Act, as follows: Accordingly, from this provision of the Customs Act it is clear that upon the introduction of goods into the country by way ofimportation, there arises a liability to pay to the Government of Canada duties assessed under the Customs Act. However, this is only thecase where the goods are imported and it is therefore necessary to consider when goods are imported.

No definition of the word"importation" is set out in the Customs Act, but Black's Law Dictionary, 5th Edition, defines it as being the "act of bringing goods andmerchandise into a country from a foreign country." In the result, if it is demonstrated, as it is alleged, that these goods were of origin in a foreign country duties are payable in respect ofsame under

section 17 of the Customs Act, 1986, Statutes of Canada. [37] In Abdelseed v. Canada (Border Services Agency), 2013 FC 581, the Federal Court addressed the definition of “import” in theCustoms Act and held: The definition of "import" in

section 2 is not very helpful - import means import into Canada. The Shorter Oxford English Dictionarydefines "import" as "that which is imported or brought in from abroad". Thus, to import is to bring something in from abroad - the Bus,for example. Importing is the act of bringing something into Canada. It is therefore clear that the Bus was "imported" into Canada. [38] It was also suggested that Mr. Woodward did not import the Angelique into Canada because he never intended to come to orstay in Canada with the vessel. [39] In Hoang v.

Canada (Minister of National Revenue), 2006 FC 182, the Federal Court addressed the issue of intent in relation toimportation. Mr. Hoang, lost, had taken a wrong turn and crossed into United States territory. Before going through the United Statesborder checkpoint he turned around. He then arrived at the Canadian border checkpoint and was questioned about whether he was inpossession of money in an amount greater than $10,000. He was, but responded in the negative. The money was seized.

At issue in thecase was whether he had imported the money into Canada in circumstances where he had never intended to leave or re-enter Canada. Mr. Hoang argued that intention was necessary for there to be importation. Although this matter was pursuant to the Proceeds of Crime(Money Laundering) and Terrorist Financing Act, the court made reference to the Customs Act: The reporting requirement under

section 12 of the Act is analogous to the duty to report imported goods under

section 12 of the CustomsAct. The jurisprudence under

section 12 of the Customs Act has held that this Act is contravened when an incorrect declaration is madeon behalf of the importer even if that error was made with a lack of intent to mislead customs. An inadvertent error in reporting importedgoods does not affect the validity of a seizure of those goods. . . . I conclude that

section 12 of the Act is not dependent upon an individual’s intention to import. (Paragraphs 28 and 30) [40] I find, based on the passages I have cited, that the Angelique was imported into Canada by Mr. Woodward on October 10, 2012. iii) Was Mr. Woodward in Contravention of the Customs Act? [41] It is admitted that at no point did Mr. Woodward report the entry of the Angelique into Canada. Having found that it wasimported,

section 12 creates a requirement that it be reported to Customs.

Section 15 makes this duty an ongoing one. [42] I find that Mr. Woodward had a duty to report the importation of the Angelique and that he failed to do so in contravention ofthe Customs Act. iv) Was Mr. Woodward in Possession of the Angelique? [43] Count 2 alleges that Mr. Woodward was in possession of the Angelique between May 31, 2013 and January 31, 2015. It isadmitted that, throughout this time period, the Angelique was tied up at a dock on Mr. Woodward’s property in Sooke, never havingbeen moved from that location after its entry into Canada with Mr. Woodward on October 10, 2012.

[44] Mr. Woodward alleges that the fact that the Angelique was on his property is not sufficient to establish possession in law as hewas not, by virtue of

section 155 of the Customs Act, able to sell, exchange or otherwise dispose of the vessel. He was, it is argued, notin possession of the Angelique as he had no control over it since he could not dispose of it. [45] This argument is, in essence, that because he was in violation of

section 155, and thus unable to dispose of his vessel, he can’tbe in violation of

section 155 by continuing to possess the vessel. [46] The

Interpretation Act, RSC 1985, c. I-21, says: 12. Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and

interpretation as best ensures theattainment of its objects. [47] In Rizzo & Rizzo Shoes Ltd., (SCC), [1998] 1 SCR 27, the Supreme Court of Canada stated: Today there is only one principle of approach [to statutory

interpretation], namely, the words of

an Act are to be read in their entirecontext and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention ofParliament. [48] If I were to accept the

interpretation urged on me on behalf of Mr. Woodward, this would lead to the absurd result that everyonewho had contravened the

section would not be in contravention of the section. [49] I am unable to accept this

interpretation as it would leave

section 155 without meaning. For the same reason, I do not find therequirements of

section 155 to create a lawful excuse for a violation of that same section. [50] I find, beyond a reasonable doubt, that Mr. Woodward was in possession of the Angelique. He knowingly had the vessel tied upon his property where he had moored it. At all times he owned the vessel. He retained practical control of it. The only restrictionsplaced on him by virtue of the Customs Act resulted from his failure to report, which was within his sole control.

v) Knowledge of Control [51] Mr. Woodward argues that the mens rea requirement for Count 2 has not been proven because he did not believe he had controlof the vessel, that is, he believed he could not sell or move it, and thus he didn’t have knowledge of control, and thus he didn’t haveknowledge of possession. [52] I find, if Mr.

Woodward believed he was not in possession of the Angelique by virtue of the restriction on disposing of it insection 155, that was an error of law and does not provide a defence. vi) Conclusion on Count 2 [53] I find that the Crown has proven the mens rea requirement of Count 2 by virtue of proof beyond a reasonable doubt that Mr.Woodward knew that he had brought the Angelique to Canada, knew that there was a reporting requirement, knew that he had notcomplied with this requirement, and knew that the Angelique remained on his property and in his ownership. [54] In the result, I find Mr.

Woodward guilty of Count 2. BY THE COURT ______________________________ The Honourable Judge C. Rogers