28 MARCH 1901

(1901) 9 S.L.T. 4, 1901 WL 18965 (OH)


Lord Stormonth Darling.


The defenders in this action were tweed merchants in Galashiels, and in connection with their business were in the practice of importing woollen goods into Canada. In December 1895 they landed three packages of tweeds at Montreal. These packages were seized by the Customs authorities at that port on 20th February 1896, for an alleged infraction of the Canadian Revenue Laws. After notification to the defenders of the reason for the seizure and consideration of evidence adduced by them to rebut the charge, the Controller of Customs, on 29th June 1896, declared the goods to be forfeited to the Crown. The defenders having given notice that they did not accept this decision, the matter was then referred by the Controller of Customs, with concurrence of the Minister of Trade and Commerce, to the Exchequer Court of Canada, the parties to the reference being the defenders as claimants and Her late Majesty as defendant. The Court allowed additional evidence to be taken, and on 10th July 1899 ordered and adjudged that the decision of the Controller of Customs declaring the forfeiture of the goods be confirmed; and, further, that Her Majesty do recover from the claimants her costs in the reference. The costs were thereafter taxed at the equivalent of £51, 5s. 1d. The defenders subsequently moved for leave to appeal to the Supreme Court, and leave having been refused, they were ordered to pay the costs of the application, which were taxed at the equivalent of £5, 4s. 2d. The present action was raised at the instance of the Attorney-General for Canada for recovery of these two sums of £51, 5s. 1d. and £5, 4s. 2d. The defenders pled:

“3. The defenders should be assoilzied with expenses from the conclusions of the action in respect that … (2) The sums sued for were awarded by virtue of the provisions of the Revenue Statutes of a self-governing British colony, and, separatim, they form part of or are incidental to a penalty or forfeiture authorised by such Statutes.”

The Lord Ordinary dismissed the action, with expenses.

Lord Stormonth Darling.

When foreign judgments are sought to be enforced in the Courts of Scotland, the extent to which they are examinable is now pretty well determined; and it seems to me that none of the objections to the proceedings in Canada, which are stated in the defences at great length and with much strong language, would entitle this Court to inquire into the grounds of the judgment sought to be enforced. The Exchequer Court of Canada had undoubted jurisdiction to determine the legality of forfeiture of goods at Montreal, and to decide as to the costs of that proceeding. There is no relevant allegation that in doing so they committed any gross irregularity of procedure or were imposed upon by anything of the nature of fraud. The word “fraud” is no doubt plentifully used in the defences, but, when the allegations are scrutinised, they come to no more than this, that the decision of the Court was wrong. That is not an allegation which this Court will entertain with reference to the judgment of a competent foreign Court. So far the case of Waygood & Co. v. Bennie (1885, 12 R. 651) is an authority in favour of the pursuer.

But then comes the real difficulty of the case. It is a well-established rule of international law that the Courts of one country will not execute or enforce the penal laws of another; and this rule applies “not only to prosecutions and sentences for crimes and misdemeanours, but to all suits in favour of the State for the recovery of pecuniary penalties for any violation of Statutes for the protection of its revenue or other municipal laws and to all judgments for such penalties”. I quote these words from the opinion of an American judge, because they were adopted with approval by their lordships of the Privy Council in the case of Huntington v. Attrill (1893, A.C. 150, at p. 157).

Accordingly, it was conceded by counsel for pursuer that, if he had been suing here for a penalty under the Revenue Statutes of Canada, the action would not have been maintainable. His argument that this is not an attempt to enforce the execution of Revenue laws, that the forfeiture of the goods was complete before the litigation in Canada began, and that the costs were awarded to the Crown not as part of penalty but as reimbursement of outlay occasioned by the fault of the defenders.

Now it is quite true that the litigation did not take the form of suit for a penalty, but it is not accurate to say that the forfeiture was complete, in the sense of being final, before the litigation began. The question between the parties was truly whether the forfeiture was lawful, and if the defenders had succeeded the forfeiture would have been annulled. Accordingly, the suit was truly a Revenue suit; that is to say, in the sense of the international rule, it was a penal suit. The only question, therefore is whether the costs of this penal suit can be so [*6] dissociated from the suit itself as to fall outside the rule of international law. I am of opinion that they cannot be so treated. I observe that Lord Watson in the case of Huntington (cit. supra) said that “No proceeding even in the shape of a civil suit, which has for its object the enforcement by the state, whether directly or indirectly, of punishment imposed for such breaches by the lex fori, ought to be admitted in the Courts of any other country”. Now this proceeding seems to me to have that object indirectly. Its success would be an additional punishment to the defenders, and again to the Canadian Revenue. Moreover, in our law, the expenses of an action have always been regarded as a mere accessory or incident of the principal claim. That was the ground upon which in Waygood & Co. v. Bennie (cit. supra) this Court gave decree for the costs of an English action, although the English Court had no direct jurisdiction over the defender. It is also the principle on which our Courts claim the right (as in Stavert v. Stavert, 1882, 9 R. 519) to deal with the expenses of an action, even where they finally dismiss it on the ground that they have no jurisdiction. Further, I think it has a good deal to do with the rule of process, that the expenses of one action cannot be sued for in another. If the Canadian suit had concluded for a penalty—and that circumstance would not have made it one whit more of a Revenue suit than it actually was—the pursuer would, I suppose, have required to come here to recover the penalty as well as the costs. But it would have been a strange result if he had failed (as he admits he must have done) in recovering his penalty, and yet succeeded in recovering his costs.

For these reasons, I am constrained to come to the conclusion that the action must fail. It is no doubt rather anomalous that the King, through his Courts in Scotland, should refuse to recognise a debt due to himself in Canada, merely because it arises out of the execution of a Revenue Statute. But it was not maintained, and I think is not maintainable that in the sense of international law, the mother country and herself-governing colonies stand in different relationship from that which exists between two foreign states. If that relationship is ever to be modified it must be done by reciprocal legislation.


Counsel for Pursuer, Ure, K.C., Clyde; Agents, Dove, Lockhart & Smart, S.S.C.

Counsel for Defenders, The Dean of Faculty (Asher, K.C.), M’Lennan; Agent, George Matthewson, S.S.C.