R. v. Liu Date:, 2017 BCPC 103

Citation: R. v. Liu Date: 20170406 2017 BCPC 103 File No: CA42876 Registry: Richmond IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Criminal REGINA v. YAN RU LIU REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE T. GOVE Counsel for the Crown: J.M. Le Dressay Counsel for the Defendant: T.C. Paisana Place of Hearing: Richmond , B.C. Dates of Hearing: January 12, 13, 18; February 2; March 12, 2017 Date of Judgment: April 6, 2017

[ 1 ] The accused is charged: Count 1: Yan Ru Liu, on or about the 7 th day of April, 2015, at or near the Vancouver International Airport, Richmond, in the Province of BC, did verbally, and/or in writing, unlawfully make a false statement or deceptive statement pursuant to the Customs Act or the regulations thereto, to wit: that the value of goods she was importing into Canada did not exceed her exemption, contrary to s. 153 (

a) of the Customs Act , and did thereby commit an offence pursuant to s. 160 of the said Act . Count 2: Yan Ru Liu, on or about the 7 th day of April, 2015, at or near the Vancouver International Airport, Richmond, in the Province of BC, did, wilfully attempt to evade the payment of duties on imported goods, to wit: a ring, by not declaring it, contrary to s. 153 (

c) of the Customs Act , and did thereby commit an offence pursuant to s. 160 of the said Act . Count 3: Yan Ru Liu, on or about the 7 th day of April, 2015, at or near the Vancouver International Airport, Richmond, in the Province of BC, did have in her possession, goods, to wit: a ring, that had been unlawfully imported into Canada in respect of which the provisions of the Customs Act , or any other Act of Parliament that prohibits, controls or regulates the importation of goods, had been contravened, contrary to s. 155 of the Customs Act, and did thereby commit an offence pursuant to s. 160 of the said Act .

Count 4: Yan Ru Liu, on or about the 7 th day of April, 2015, at or near the Vancouver International Airport, Richmond, in the Province of BC, did smuggle into Canada, goods, to wit: a ring, which was subject to duties, contrary to s. 159 of the Customs Act , and did thereby commit an offence pursuant to s. 160 of the said Act . FACTS [ 2 ] Mrs. and Mr. Liu are Chinese citizens who immigrated to Canada in March 2011 and became permanent residents. Mrs. Liu continues to be a permanent resident. Mr. Liu is no longer a permanent resident and lives in China where he owns and operates a car parts factory.

They have three children: a 23-year-old daughter, Anna, and two younger children aged eight and seven. At the time of the alleged offences, Mrs. Liu and the children resided in Richmond, British Columbia. Mr. Liu testified at the trial; Mrs. Liu did not. According to Mr. Liu, in 2015, neither he nor Mrs. Liu could speak, read or write English. To understand any documents written in English, they relied upon Anna to translate. [ 3 ] Mr. Liu was visiting his wife and children in Canada during March 2015. As their 20 th wedding anniversary was approaching, he decided to visit the Tiffany & Co.

Jewellery Store at the Oakridge Shopping Centre in Vancouver. Mr. and Mrs. Liu along with the two younger children went to the store. Mrs. Liu tried on a diamond ring and then left with the children, leaving Mr. Liu in the store. His intention was to purchase the ring for her for their anniversary and to do so without her knowledge. Mr. Liu purchased the diamond ring that Mrs. Liu had tried on. He paid $93,000 by VISA.

The initial price quoted was higher and, when the sales clerk learnt that he lived in Guangzhou, China, suggested that if he picked up the ring in Hong Kong, which is near to Guangzhou, he could save some money. Mr. Liu testified that he thought that this was due to the to the currency exchange rates. Tiffany & Co. would ship the ring to Hong Kong for him. Mr. Liu agreed with the suggestion. He would save some money and it was convenient for him.

When cross- examined on why he could not recall the original price, it became clear that, due to his financial circumstances, the amount that he paid for the ring was of little significance to him, although he appreciated saving money and Hong Kong was next to where he lived. Mr. Liu provided the sales clerk with his name and the family’s Richmond address. These are on the receipt.

At no time did the sales clerk or anyone explain to him that if or when the ring was returned to Canada there would be any duties or taxes payable. [ 4 ] He did not know anything about duties or taxes that may due on the ring when it was brought back to Canada. [ 5 ] Ms. Thiessen-Onnick testified as an expert in the appraisal and value of jewellery. She said that the 2.68 carat diamond in this ring would have had what I understood to be a wholesale value in April 2015 of $65,719 Canadian and that the normal retail mark-up of 50 percent would bring the price to $98,578.

She testified that Tiffany and Co. charges a premium of approximately 20 percent so their price would be $118,294. There would also be the platinum ring and setting fees of $2,350. She estimated that Tiffany and Co. would sell this ring in April 2015 for $120,500. When shown the Tiffany Gemmological Laboratory Report for this diamond, she agreed that it indicated that it had less value than she estimated. She also said that stores can and do sell for less than the estimated price and she would accept a receipt from a retailer as the ring’s “retail value”. [ 6 ] Given the substantial mark up on this ring and Mr.

Liu’s understanding that somehow the exchange rate would be to his advantage if he physically took delivery in Hong Kong, the price he paid does not seem far off from the valuation given by the expert. [ 7 ] Mrs. Liu and the two younger children had already planned a trip to China. Mr. Liu planned to give his wife the anniversary ring during the visit. When Mr. Liu returned to China, he went to Hong Kong where he picked up the same diamond ring that he had purchased in Vancouver. That is evidenced by the distinct serial number on the receipt that is the same on the diamond. Ms.

Thiessen- Onnick, the jewellery expert, confirmed that each ring has a distinct number. [ 8 ] In April 2015, Mrs. Liu went to China with the two younger children to visit her husband. Mr. Liu gave her the diamond ring as planned as an anniversary present. [ 9 ] Mr. Liu explained that whereas neither he nor his wife could read English, they relied upon their older daughter who was educated in Canada. She told them that when entering into Canada from visits outside of the country, they needed to fill in a Declaration Form. She gave them a sample of how to fill in the form.

They took photos of the form and kept it on their on the cellular phones. He testified that their practice when entering Canada was to fill in the declaration form following the sample on their cellular phones. The sample that they copied stated $200 as the value of goods declared. [ 10 ] On April 7, 2015, Mrs. Liu returned to Canada from China. At Vancouver International Airport she prepared a Declaration Form. It included errors such as a misspelling of her address, the wrong flight number and she signed the children’s names when it was

not necessary. It gave $200 as the value of goods declared. Given the similarity to the sample prepared by her daughter and these errors, it is reasonable to conclude that Mrs. Liu did not understand the basic questions in English that she was supposedly answering on the form and that she was simply following the sample on her phone. [ 11 ] She was processed through an automated, electronic kiosk. The machine randomly selected her for a secondary screening, meaning that she would meet with a Canada Border Services Agency Officer.

Under the Customs Act she was required to answer questions related to the form that she had completed. [ 12 ] Mrs. Liu met with Officer Kirkbride in secondary screening. Officer Kirkbride has been a Canada Border Services Agency Officer for 20 years, including at Vancouver International Airport. Over his career, he has made over 1,300 seizures of goods that were brought into Canada and not properly declared. He is very experienced at dealing with people entering Canada and understands their obligations under the Customs Act .

He testified that when doing a secondary screening, he is to question travellers to determine if they have accurately filled in their Declaration Form to see if they have accurately declared goods acquired outside of Canada that they are now importing into Canada. Generally, when he turns his attention to a particular good, he asks for information on its country of origin or where it was acquired, who purchased the good, when it was purchased, and what the value is. [ 13 ] To speak with Mrs. Liu, Officer Kirkbride had the assistance of a Mandarin interpreter. Mrs.

Liu’s Declaration Form shows that she was bringing in $200 of goods. When asked, she told Officer Kirkbride that the goods were clothes. Over her shoulder, Mrs. Liu was carrying a handbag that Officer Kirkbride recognized to be of the expensive Louis Vuitton brand. It was pink in colour, quite noticeable. He asked about the handbag and Mrs. Liu told him that it was given to her by her daughter Anna, who had purchased it in Macau on some earlier occasion. At Officer Kirkbride’s request, Mrs.

Liu telephoned her daughter who informed her that it had not been declared when brought into Canada, duty had not been paid and it was worth approximately $1,100. As it had not been previously declared, Officer Kirkbride knew that it was subject to seizure by him and duties could be assessed. [ 14 ] Officer Kirkbride opened the handbag to examine the contents. Amongst other items in the handbag was a bright blue box with the brand name Tiffany & Co. Inside the box was a diamond ring. Officer Kirkbride asked Mrs. Liu about the ring. This is from his notes, made at the time: I asked Mrs.

Liu with the aid of interpreter P. Tong where she had acquired this said ring? She responded saying that she had got it in China on this trip, and that her husband had given it to her. I asked her where she believed her husband got the ring and she responded by saying ‘Hong Kong’. I asked if she had a receipt for the ring and she said that her husband had it in Guangzgou. She believed the value of the ring to be around $80,000 CDN. [ 15 ] As Officer Kirkbride put it, Mrs. Liu was relaying information about the ring from her husband. He believed that she was being truthful. She did not appear nervous or deceptive.

She was totally cooperative throughout. [ 16 ] Officer Kirkbride seized the hand bag and the ring as he believed that they were or had been brought into Canada without being declared and without duty paid. He said that this was a Level 1 seizure. More serious were Level 2 and 3 seizures where there were active attempts to deceive border agents. That was not the case here. [ 17 ] Officer Kirkbride testified that although he accepted Mrs. Liu’s stated value, the ring would need to be appraised to confirm authenticity and value. He told Mrs.

Liu that he believed that the value of the ring was substantial and would be forwarded to the customs investigation unit. He told her that she could be charged criminally with smuggling. He told her that she was not required to say anything further and could speak with a lawyer. He offered her an opportunity to telephone a lawyer but she declined. She responded to Officer Kirkbride that she did not realize that she had to declare the ring. [ 18 ] Officer Kirkbride was examined in chief and cross to a great extent on the significance of finding the items that had not been declared.

He made it clear that there is a distinction between what are contraventions of Customs Act and dealt with by civil penalty and what is proceeded with criminally. Such a decision is not made by him but by someone in the customs investigation unit. That determination, he understands, is based on the item in question, its value, and the degree to which the individual attempted to conceal it. He also was clear that the goods in question here were not in themselves illegal to import or have in Canada.

Rather the infraction or crime, if ultimately dealt with criminally, was the failure to accurately report the items on the Declaration Form. He distinguished this from what he referred to as contraband - goods that were illegal to import and possess such as drugs or guns. From his evidence it was clear that Mrs. Liu had made no effort to conceal the ring. In fact, the ring in its bright blue distinctive Tiffany & Co. box was in plain view inside the noticeable, expensive pink handbag. [ 19 ] As set out previously, the serial number on the ring that Officer Kirkbride seized from Mrs.

Liu was same as the one purchased by Mr. Liu at Tiffany & Co. in Vancouver. The serial number is on his receipt of purchase. The receipt states that Yong Liu (Mr. Liu) is the “purchaser” and “recipient”. In both instances, it gives his Richmond address. From the Tiffany & Co. receipt it is clear that he purchased and paid for the ring in Canada with the arrangement for it to be shipped to Hong Kong by Brinks where he would pick it up. The receipt shows: Tax exempt/Type tax/Duty Free V7A 1H7 Tax 5% [ 20 ] There was no evidence before the court as to what this means.

The first line appears to be a computer generated menu of three options. The second line shows the Lius’ postal code in Richmond and tax at 5%; which happens to be the federal GST on goods purchased in Canada. After this is “Total 93000.00”. The receipt sets out a GST number. Presumably this is Tiffany & Co.’s GST number. [ 21 ] There was no evidence called from Tiffany and Co. to explain items on the receipt nor what taxes were included in the total price of $93,000. At the bottom of the receipt is the following:

Customer shall be responsible for compliance with applicable laws and regulations regarding payment of applicable duties and taxes andthe declaration of goods in each jurisdiction outside the jurisdiction of purchase. Here, the jurisdiction of purchase was Canada. [22] Canada Border Services Agency investigator Sherill Clark testified that Mrs. Liu had between 2011 and 2015 entered intoCanada on numerous occasions and that there was no history of infractions under the Customs Act. She contacted Tiffany & Co. forinformation on the purchase of this diamond ring. She was told by them that she would need a warrant.

None was obtained. ISSUES [23] Has the Crown proven beyond a reasonable doubt: 1. Were duties owed on the ring when Mrs. Liu arrived at Vancouver International Airport on April 7, 2015? If so: 2, Did Mrs. Liu know or believe duties were owed? 3. If she did know duties were owed, was her comprehension of English such that she intentionally made a false statement orattempted to evade paying duties? 1. Were duties owed on the ring when Mrs. Liu arrived at Vancouver International Airport on April 7, 2015? [24] For Mrs.

Liu to be guilty of any of the four offenses, the Crown must prove that there were duties owing on the ring. TheCustoms Act (Canada) s. 2(1): “duties means any duties or taxes levied or imposed on imported goods under…” and goes on to refer tofederal statutes: the Customs Act, Excise Act, 2001, Excise Tax Act and Special Import Measures Act. The Customs Act alone containshundreds of sections. This area of law and regulation is complex. ANALYSIS [25] The ring was purchased at Tiffany and Co. in Vancouver, a high end retailer of jewellery. According to the expert, they sellwith a 20% premium.

Without any evidence to the contrary, the court can assume that this company knows what duties and taxes applyto the jewellery that it sells. No customer would be expected to look behind the price to see if various duties and taxes have been paid. The receipt specifically references “Tax 5%”. Where it purports to inform the purchaser of obligations related to duties and taxes, itrestricts such obligations to “each jurisdiction outside the jurisdiction of purchase”. If Mr. Liu had read and understood this, he wouldhave known that the jurisdiction of purchase in this case was Canada.

Tiffany & Co. were telling him that although he may haveobligations for duties and taxes in other countries, he did not in Canada. [26] Mr. Liu testified that the salesman he dealt with at Tiffany and Co. did not tell him about customs nor that he would have to payduties or taxes when his wife brought the ring back to Canada. He was not told that he was buying the ring duty-free. He was told that,given that he lived in China, near to Hong Kong, he could save some money by picking it up there. He thought that was because of theexchange rate. As far as Mr. Liu was concerned, he did not purchase the ring tax exempt.

Any knowledge by Mrs. Liu of the origin ofthe ring or obligations to pay duties and taxes upon return to Canada could only have come from her husband. [27] The Crown submits that the court ought to find that duties were payable when Mrs. Liu brought the ring back to Canada. TheCrown concedes that if duties were not payable, the accused could not be convicted on Counts 1, 2 and 4. The Crown says that count 3is one of strict liability. With respect, the court disagrees and follows the case of R. v. Ireco Canada (1998), (ONCA), 43 C.C.C. (3d) 482 (Ont.

C.A.) requiring the Crown to prove “a blameworthy state of mind or mental fault”. Unless the crown canprove that there was duty owing on the ring, Mrs. Liu could not be guilty of any of the counts. DECISION [28] The Crown has not proven beyond a reasonable doubt that the ring was purchased without the payment of applicable duties ortaxes. Therefore, it has not proven that there were duties or taxes to be paid on the ring when it was brought back into Canada. The ringwas in Canada when Mr. Liu purchased it from a retail store.

The court can draw no other conclusion than that Tiffany & Co. had paidthe required duties and taxes, pass them on to Mr. Liu and that none were owed when Mrs. Liu returned to Canada with the ring. Toconclude otherwise requires the court to speculate. [29] Having concluded that there were no duties or taxes owed on the ring when Mrs. Liu arrived at Vancouver International Airporton April 7, 2015, the court need not consider Issues 2 and 3 above. [30] Mrs. Liu is not guilty of the four counts. The Honourable Judge T. Gove Provincial Court of British Columbia