It does not happen often – but, from time to time, the Canada Border Services Agency (CBSA) destroys detained goods by mistake. Goods that are being imported or that are being exported may be detained and destroyed in error.
One of our clients experienced a shock when the CBSA wrote to them to say that goods they were to release could not be released because they had been destroyed. In this case, the goods were detained upon export and questions were asked by the CBSA about whether an export permit was required. After it was determined that an export permit was not required, the CBSA ordered the goods to be released to the shipper. When the CBSA went to retrieve the goods from the storage area, they shouted “OOOOPs”. After reviewing the paperwork, it was discovered that someone had mistakenly sent the goods for destruction.
In these circumstances, an aggrieved party must act quickly. Subsections 106(1) and (2) of the Customs Act (Canada) contains a short time limit for suing a CBSA officer (or the CBSA) and provides:
“(1) No action or judicial proceeding shall be commenced against an officer for anything done in the performance of his duties under this or any other Act of Parliament or a person called on to assist an officer in the performance of such duties more than three months after the time when the cause of action or the subject matter of the proceeding arose.
(2) No action or judicial proceeding shall be commenced against the Crown, an officer or any person in possession of goods under the authority” of an officer for the recovery of anything seized, detained or held in custody or safe-keeping under this Act more than three months after the later of:
(a) the time when the cause of action or subject matter of the proceeding arose; or
(b) the final determination or outcome of any action or proceeding taken under this Act in respect of the thing seized, detained or held in custody or safekeeping.”
The above provision starts a formal process in the courts. The CBSA also may want to resolve the proceeding out of court. There are unwritten procedures that permit an aggrieved party to seek compensation from the CBSA. The informal procedure is commenced with the writing of a letter asking for compensation on the basis that goods have been destroyed by the CBSA in error. All documentation concerning the import or export would have to be provided concerning the goods that were destroyed. All the circumstances concerning the detention need to be provided as part of the justification for the compensation claim. Most importantly, the amount of compensation being sought should be included. If the amounts are significant, the approval process for the compensation may be longer. If amounts of compensation are sought that exceed the replacement value of the goods, the CBSA may dispute the additional claims. However, there may be some justifiable damages claims (e.g. interest on financing of the destroyed goods, penalties charged by third parties for failure to deliver the goods in a timely manner, etc.).
Sometimes, it may be necessary to commence both the formal process and the informal process. The formal court proceedings may be held in abeyance after filing. It is important to satisfy limitation periods because failure to file an action within the 3 month limitation period may limit leverage and options should the negotaitions for compensation break down.