Lexpert Magazine

44 LEXPERT MAGAZINE | JULY/AUGUST 2017 | ART OF THE CASE | conduct," she says. "But when I understood what the issue in this case was really all about — whether the CBSA could simply ignore a CITT decision when faced with the same factual and legal issues — the agency's conduct seemed outrageous, un- reasonable and completely at odds with the core values of our judicial system." Shock value aside, Kirby found himself on the horns of a dilemma. "One of the most difficult things that a lawyer must do is explain what is going on to the clients," he says. "is is a very tech- nical area, one with which clients generally don't tend to engage. But the more arbitrary the decisions are, the more difficult it is to keep the clients — who in this case went so far as to ask how it was that such things happen in Canada — on board. When the clients see such irrational behaviour, they always ask themselves if there's any point in getting further involved." Getting further involved would be costly. Although Frito-Lay was a case with upwards of ten figures at stake, SP involved less than $1 million and both Bri-Chem and EGES had exposure under $500,000 each. "Deciding whether to continue is the kind of business decision that happens all the time, and it requires counsel to come up with a realistic budget," Kirby said. rough a combination of circumstanc- es, Kirby and his team were able to do that. To begin with, the fees could be spread across the three clients. But perhaps more importantly, the situation demonstrates how much experience counts. Kirby says. "Not only that, but we had to face the same stalling tactics and refusal to issue decisions that we encountered in Frito-Lay." The Trilogy proved even more complex than Frito-Lay. Aer Bri-Chem and EGES filed their simultaneous correc- tions to the treatments and classifications specified in the original declaration, CBSA rendered a decision accepting the change of classification but rejecting the change of treatment from MFN to NAFTA. "at meant we had a 'decision,' and we could move on to the next level," Kirby says. Not so with respect to Southern Pacific. CBSA backdated its final audit of SP to a date before SP filed its changes to both the tariff classification and treatment. For its part, the audit, by contrast, changed the original classification but did not affect the original treatment. However, by mak- ing the change of classification retroactive to a date before SP filed its own changes to the declaration, CBSA put SP in a situation where the company would now be seeking a refund, making it subject to the one-year NAFTA limitation on refunds. Had the audit not been backdated, SP's amend- ments would have amounted to a "reclassi- fication" not subject to that limitation. As a young lawyer called to the Québec Bar in 2015 in the midst of these proceed- ings, Mezouar was shocked by CBSA's conduct. "Originally I was more con- cerned about the legal challenge raised by the CBSA and not the legitimacy of their "We weren't starting from zero and probably knew the issues as well as anyone in the country," Kirby says. "Luckily, we had litigated Frito-Lay and had access to all the work and legal arguments in that case. So not only had a great deal of the work already been done, but in revisiting issues with which we were familiar, with the benefit of hindsight, we were able to make significant improvements to our case. Had these been cases of first instance, we may not have been able to put together a satis- factory budget." Indeed, the Fasken team's combination of experience, cost-effective approach and strategy impressed Southern Pacific so much that the company's investors decided to continue funding the case even aer the company went into receivership. To deal with the backdating issue on the SP file, Kirby and his team resorted to judicial review in Calgary, where the com- pany's Canadian operations were based. Kirby enlisted Chowdhury, who was based in Calgary and had an administrative law background, to file Federal Court applica- tions ordering the CBSA to process SP's corrections and cancel the backdated deci- sion. "e basis of our argument was that CBSA's conduct was procedurally unfair," Chowdhury says. "Essentially, we resorted to procedural tools to allow us to move for- ward with the substantive arguments." When CBSA filed a responding affidavit in the judicial-review proceedings, the affi- ant turned out to be from an individual de- void of useful knowledge. "Instead of pro- ducing the officer who made the backdated decision, CBSA produced someone whose knowledge about customs procedure was much more general," Kirby said. It had become apparent that CBSA wanted to avoid explaining the backdat- ing. Kirby ramped up the pressure by fil- ing a motion to strike the affidavit. With pressure building on the agency, the parties agreed to hold the judicial review in abey- ance and proceed directly by way of an ap- peal to the CITT. To facilitate that, CBSA processed SP's correction. Unsurprisingly, the agency rejected the NAFTA treatment change on the grounds that the original MFN treatment was not incorrect. Once again, the rejection blithely ignored the im- pact of Frito-Lay. When I understood what the issue in this case was really all about — whether the CBSA could simply ignore a CITT decision when faced with the same factual and legal issues — the agency's conduct seemed outrageous …" " AÏDA MEZOUAR > FASKEN MARTINEAU DUMOULIN LLP

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