Date: 20100427
Docket: T-554-08
Citation:
2010 FC 453
Ottawa,
Ontario, April 27, 2010
PRESENT: The Honourable Mr. Justice Beaudry
BETWEEN:
FRANK KHATTAB
Plaintiff
and
MINISTER OF PUBLIC SAFETY
AND EMERGENCY PREPAREDNESS
Defendant
REASONS FOR JUDGMENT AND JUDGMENT
[1]
The
action at bar is an appeal by the plaintiff under section 30 of the Proceeds
of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17
(the Act), in relation to a ministerial decision upholding the contravention of
subsection 12(1) and the penalty that was paid pursuant to subsection 18(2) of
the said Act.
Facts
[2]
The
parties filed a statement of agreed facts and admissions (Tab 6, trial record).
I quote the document in full:
[translation]
a.
The
plaintiff is a businessman and immigration consultant who has financial
interests, clients and family in the Middle East.
b.
The
plaintiff’s daughter, Sahar Khattab, is a manager who was 23 years old during
the period in question.
c.
On
April 7, 2007, the plaintiff and his daughter went to the Middle East on a trip
that would take them to Lebanon, Egypt, Dubai and Jordan.
d.
The
purpose of this trip was partly for business and partly to visit family.
e.
On
May 11, 2007, two days prior to their return to Canada, the plaintiff’s
daughter underwent surgery on her nose in Lebanon that
required her to take medication to alleviate her headaches and pain.
f.
Given
her physical and mental state, the plaintiff’s daughter gave her father the
balance of the money that she had been given by her aunt and uncle, which
totalled approximately US$8,200, or less than 10,000 Canadian dollars.
g.
On
May 13, 2007, the plaintiff and his daughter landed at Pierre-Elliott Trudeau Airport from Lebanon, after about
15 hours of travel.
h.
They
were directed to a secondary counter to have their customs declaration cards checked
as a result of a ‘‘watch for’’ concerning the plaintiff.
i.
In
fact, about two years before, the plaintiff had been subject to a seizure under
the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (hereinafter
the Act) for a failure to report contrary to subsection 12(1) of the Act, under
circumstances which will be presented at the hearing.
j.
The
customs declaration card signed by the plaintiff and his daughter indicated
‘‘NO’’ in the following box: ‘‘I am / we are bringing into Canada currency and
monetary instruments totalling CAN$ 10,000.00 or more’’.
k.
A
customs officer asked the plaintiff and his daughter questions about the
amounts of money in their possession.
l.
They
answered the customs officer’s questions.
m.
The
customs officer’s version of the facts regarding the questions posed and
answers received was documented by the customs officer in his narrative reports
(Tabs 9 and 17 in the trial record) and in the defendant’s amended defence (Tab
2 in the trial record).
n.
The
plaintiff’s version of the facts was expressed in the written submissions made
by the plaintiff’s representatives during the adjudication process, as well as
in the Statement and in the Response (Tabs 1, 3, 18,15 and 21).
o.
The
parties are unable to agree on a version of the customs officer’s questions and
of the answers given by the plaintiff and his daughter. The evidence will
therefore be adduced at the hearing.
p.
The
plaintiff admits to having in his possession and in his baggage the amount of
18,309.21 Canadian dollars upon his arrival in Canada.
q.
He
nonetheless claims that, of that amount of 18,309.21 Canadian dollars, about
9,000.00 Canadian dollars belonged to his daughter.
r.
The
customs officer, after having checked through the baggage belonging to the
plaintiff and his daughter and after having found CAN$18,309.21 in the
plaintiff’s possession, determined that the plaintiff had contravened
subsection 12(1) of the Act and seized this money in accordance with subsection
18(1) of the Act (Tab 10).
s.
The
customs officer, not having reasonable grounds to suspect that these monies
were proceeds of crime or that they were destined for use in the financing of
terrorist activities, returned the money to the plaintiff on payment of a $2,500.00
penalty, pursuant to subsection 18(2) of the Act (Tab 14).
t.
The
plaintiff requested a decision of the Minister, who, on February 19, 2007,
rendered a decision under section 27 of the Act in which he determined that the
plaintiff had contravened subsection 12(1) of the Act (Tabs 15 and 8).
u.
In
the same letter, the Minister rendered a decision under section 29 of the Act
in which he declared that the amount of $2,500.00 should remain forfeited (Tab
8).
v.
The
plaintiff filed an action pursuant to section 30 of the Act on April 8, 2008,
challenging the ministerial decision that subsection 12(1) had been contravened
with regard to the money seized as forfeit by the customs officer (Tab 1).
[3]
The
Court heard three witnesses at the hearing and has no intention of repeating
the facts which are already admitted. The Court will point out only those facts
relevant to the disposition of this case:
a.
The
plaintiff, Frank Khattab:
i.Admits
that since the incident in 2005, every time he returns to Canada, he is taken
aside, checked, and has his money counted by customs officers.
ii.During
his trip to the Middle East, his brother and sister each gave his daughter $5,000
as a gift for her engagement.
iii.His
daughter underwent surgery on her nose the day before leaving for Canada, which
required stitches and medication.
iv.When
they showed up at the primary immigration counter with their declaration, he
was holding everything, namely, their passports and baggage (two handbags, two
regular suitcases and three or four plastic bags).
v.Both
of them were very tired from having had to get up early to fly from Beirut to Paris and
then from Paris to Montréal.
vi.Each
reported having less than $10,000 to the officer.
vii.At
the secondary counter, the inspection lasted three and a half hours; the
officer refused to allow his daughter to sit down and, after twice asking to go
to the bathroom, she was finally allowed to do so, accompanied by another woman.
viii.His
daughter was wearing oversized (running) clothes without pockets.
ix.The
plaintiff stated that he was not nervous, but that he felt bad because of his
daughter’s condition. He denied that he avoided making eye contact with the
customs officer.
x.On
cross-examination: he admitted to having $5,000 in a bag in one of his
suitcases and the rest of the money in his pockets. He did not recall the exact
amount.
b.
Sahar
Khattab:
i.
She
confirmed every aspect of her father’s testimony and added that when she
arrived in Montréal, she was tired, dazed and not at her best.
ii.
When
she and her father showed up at the primary and secondary counters, he was
holding everything. When asked about the money by the customs officer, her
father reported to the officer that they had less than $10,000 each.
iii.
She
did not like the way they were treated by the customs officer.
c.
Yannick
Hémond:
i.
At
the time of these incidents, he had been working for the Agency for about a
year and a half.
ii.
He
repeated, without having them on hand, what he had written in the two reports
at Tabs 9 and 17 of the trial record. The only difference was with regard to
the total amount of the currency he found and counted, namely, 19,776 Canadian
dollars instead of the 18,309.21 Canadian dollars as indicated in paragraph 18
of the statement of agreed facts and admissions.
iii.
This
difference arises from the fact that, at the time of the search, the Lebanese pounds
were not assessed at their fair value.
iv.
The
most important elements of his testimony centre on: how long he took to
question the plaintiff and his daughter, proceed with the search and issue a
seizure receipt for $2,500 (from 4:50 p.m. until 6:55 p.m.); the customs
officer asked the plaintiff and his daughter if they had more than $10,000 in
their possession; they answered no; the two had nine bags, namely, four large
suitcases and five travel bags; they had reported two cartons of cigarettes
each whereas the officer found eight, and three packs of Cuban cigarillos.
v.
It
was only when the officer explained that he had to seize the money that the
plaintiff then indicated to him that half of the money belonged to his daughter
and that he wanted to change the declaration.
vi.
The
officer stated that there were no bathrooms in his section and that there were
no chairs near the area where he questioned the plaintiff and his daughter.
vii.
On
cross-examination, he admitted to having seen a bandage on the young woman’s
nose but only saw the medical report afterwards. The conversation with the
plaintiff was conducted in English.
Legislation
[4]
The
relevant excerpts from the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, S.C. 2000, c. 17 and the Cross-Border Currency and
Monetary Instruments Reporting Regulations, SOR/2002-421 are reproduced in
Annex I of this judgment.
The law
[5]
The
Act and the Regulations are clear about the importation or exportation of
currency. They set out when a report must be made and to whom, who is obliged
to do so and why, when and how they are required to do so. Penalties are
provided for violations. The relevant excerpts are found in sections 12 and 18
of the Act, as well as sections 2, 3 and 11 of the Regulations.
[6]
All
persons entering or leaving Canada who have in their actual possession or in
their baggage currency or monetary instruments equal to or greater than $10,000
must make a written report. They are required to answer truthfully any
questions the officer asks with respect to the information in the report.
[7]
Reporting
is voluntary. The reporting requirement is the cornerstone of the system
established for monitoring cross-border movements (Tourki v. Canada (Minister of
Public Safety and Emergency Preparedness), 2007 FCA 186, [2008] 1
F.C.R. 331).
[8]
The
case law holds that proof of intention is not required since the system is one
of voluntary reporting and because strict liability attaches to those who fail
to report (Zeid v. Canada (Minister of Public Security and Emergency
Preparedness), 2008 FC 539).
[9]
In
the case at bar, the Court, referring to the statement of agreed facts and
admissions, can conclude that the plaintiff’s appeal must be dismissed without
even addressing the issue of the witnesses’ credibility.
[10]
The
plaintiff, accompanied by his daughter, arrived at Pierre-Elliott Trudeau Airport from Lebanon on May 13,
2007.
[11]
He
admitted that he and his daughter signed a written report and checked ‘‘NO’’ in
the box marked ‘‘I am/ we are bringing into Canada currency and
monetary instruments totalling CAN$10,000.00 or more’’ (paragraph 10).
[12]
When
asked by the customs officer if they had currency in the amount of 10,000 Canadian
dollars or more in their possession, he and his daughter answered ‘‘no’’ (paragraph
5).
[13]
The
plaintiff admitted to having the sum of 18,309.21 Canadian dollars in his
possession and in his baggage upon his arrival in Canada (paragraph 16).
[14]
The
Act specifically provides that it is actual possession that counts. Ownership
of the currency or monetary instruments is irrelevant.
[15]
By
signing his written report where he had checked ‘‘NO’’ in the box marked ‘‘I
am/ we are bringing into Canada currency and monetary instruments totalling
CAN $10,000.00 or more’’, the plaintiff contravened subsection 12(1) of the
Act, because he did in fact have more than 10,000 Canadian dollars in his
possession.
[16]
I
believe that the plaintiff and his daughter acted in good faith and that they
probably had every intention of explaining to the customs officers who the
seized currency belonged to. However, given that the plaintiff had previously
had property seized two years earlier and that he knew full well that he would
be searched when he arrived in Canada on May 13, 2007, it is, to say the least,
puzzling and problematic that he would choose to make his written report in the
way indicated above.
[17]
As
for the moment when the plaintiff made the oral statement to the customs officer
that a sum of US$8,200 belonged to his daughter, the Court prefers the
officer’s testimony. The officer provided much more detail and his testimony
was corroborated by his two written reports. One of the reports was written
immediately following the search of the plaintiff and the issuing of the receipt.
That statement, according to the officer, was made after the plaintiff had been
informed by the officer that the money was to be seized. It was only then that
the plaintiff decided that he wanted to change his written report.
JUDGMENT
THE COURT
ORDERS that the action be dismissed.
The plaintiff shall pay the defendant the sum of $3,000 in costs plus
disbursements.
‘‘Michel
Beaudry’’
Certified true
translation
Sebastian Desbarats,
Translator
ANNEX I
Proceeds
of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17.
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12.
(1) Every person or entity referred to in subsection (3) shall report to an
officer, in accordance with the regulations, the importation or exportation
of currency or monetary instruments of a value equal to or greater than the
prescribed amount.
(2)
A person or entity is not required to make a report under subsection (1) in
respect of an activity if the prescribed conditions are met in respect of the
person, entity or activity, and if the person or entity satisfies an officer
that those conditions have been met.
(3)
Currency or monetary instruments shall be reported under subsection (1)
(a)
in the case of currency or monetary instruments in the actual possession of a
person arriving in or departing from Canada, or that form part of their
baggage if they and their baggage are being carried on board the same
conveyance, by that person or, in prescribed circumstances, by the person in
charge of the conveyance;
(b)
in the case of currency or monetary instruments imported into Canada by
courier or as mail, by the exporter of the currency or monetary instruments
or, on receiving notice under subsection 14(2), by the importer;
(c)
in the case of currency or monetary instruments exported from Canada by courier or as mail, by
the exporter of the currency or monetary instruments;
(d)
in the case of currency or monetary instruments, other than those referred to
in paragraph (a) or imported or exported as mail, that are on board a
conveyance arriving in or departing from Canada, by the person in charge of
the conveyance; and
(e)
in any other case, by the person on whose behalf the currency or monetary
instruments are imported or exported.
(4)
If a report is made in respect of currency or monetary instruments, the
person arriving in or departing from Canada with the currency or monetary
instruments shall
(a)
answer truthfully any questions that the officer asks with respect to the
information required to be contained in the report; and
(b)
on request of an officer, present the currency or monetary instruments that
they are carrying or transporting, unload any conveyance or part of a
conveyance or baggage and open or unpack any package or container that the
officer wishes to examine.
(5)
Officers shall send the reports they receive under subsection (1) to the
Centre.
18.
(1) If an officer believes on reasonable grounds that subsection 12(1) has
been contravened, the officer may seize as forfeit the currency or monetary
instruments.
(2)
The officer shall, on payment of a penalty in the prescribed amount, return
the seized currency or monetary instruments to the individual from whom they
were seized or to the lawful owner unless the officer has reasonable grounds
to suspect that the currency or monetary instruments are proceeds of crime
within the meaning of subsection 462.3(1) of the Criminal Code or funds for
use in the financing of terrorist activities.
25.
A person from whom currency or monetary instruments were seized under section
18, or the lawful owner of the currency or monetary instruments, may within
90 days after the date of the seizure request a decision of the Minister as
to whether subsection 12(1) was contravened, by giving notice in writing to
the officer who seized the currency or monetary instruments or to an officer
at the customs office closest to the place where the seizure took place.
27.
(1) Within 90 days after the expiry of the period referred to in subsection
26(2), the Minister shall decide whether subsection 12(1) was contravened.
29.
(1) If the Minister decides that subsection 12(1) was contravened, the
Minister may, subject to the terms and conditions that the Minister may
determine,
(a)
decide that the currency or monetary instruments or, subject to subsection
(2), an amount of money equal to their value on the day the Minister of
Public Works and Government Services is informed of the decision, be
returned, on payment of a penalty in the prescribed amount or without
penalty;
(b)
decide that any penalty or portion of any penalty that was paid under
subsection 18(2) be remitted; or
(c)
subject to any order made under section 33 or 34, confirm that the currency
or monetary instruments are forfeited to Her Majesty in right of Canada.
The
Minister of Public Works and Government Services shall give effect to a
decision of the Minister under paragraph (a) or (b) on being informed of it.
Limit
on amount paid
30.
(1) A person who requests a decision of the Minister under section 27 may,
within 90 days after being notified of the decision, appeal the decision by
way of an action in the Federal Court in which the person is the plaintiff
and the Minister is the defendant.
(2)
The Federal Courts Act and the rules made under that Act that apply to
ordinary actions apply to actions instituted under subsection (1) except as
varied by special rules made in respect of such actions.
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12.
(1) Les personnes ou entités visées au paragraphe (3) sont tenues de déclarer
à l'agent, conformément aux règlements, l'importation ou l'exportation des
espèces ou effets d'une valeur égale ou supérieure au montant réglementaire.
(2)
Une personne ou une entité n’est pas tenue de faire une déclaration en vertu
du paragraphe (1) à l’égard d’une importation ou d’une exportation si les
conditions réglementaires sont réunies à l’égard de la personne, de l’entité,
de l’importation ou de l’exportation et si la personne ou l’entité convainc
un agent de ce fait.
(3)
Le déclarant est, selon le cas :
a)
la personne ayant en sa possession effective ou parmi ses bagages les espèces
ou effets se trouvant à bord du moyen de transport par lequel elle arrive au
Canada ou quitte le pays ou la personne qui, dans les circonstances
réglementaires, est responsable du moyen de transport;
b)
s’agissant d’espèces ou d’effets importés par messager ou par courrier,
l’exportateur étranger ou, sur notification aux termes du paragraphe 14(2),
l’importateur;
c)
l’exportateur des espèces ou effets exportés par messager ou par courrier;
d)
le responsable du moyen de transport arrivé au Canada ou qui a quitté le pays et à bord
duquel se trouvent des espèces ou effets autres que ceux visés à l’alinéa a)
ou importés ou exportés par courrier;
e)
dans les autres cas, la personne pour le compte de laquelle les espèces ou
effets sont importés ou exportés.
(4)
Une fois la déclaration faite, la personne qui entre au Canada ou quitte le pays avec les
espèces ou effets doit :
a)
répondre véridiquement aux questions que lui pose l’agent à l’égard des
renseignements à déclarer en application du paragraphe (1);
b)
à la demande de l’agent, lui présenter les espèces ou effets qu’elle
transporte, décharger les moyens de transport et en ouvrir les parties et
ouvrir ou défaire les colis et autres contenants que l’agent veut examiner.
(5)
L’agent fait parvenir au Centre les déclarations recueillies en application
du paragraphe (1).
18.
(1) S’il a des motifs raisonnables de croire qu’il y a eu contravention au
paragraphe 12(1), l’agent peut saisir à titre de confiscation les espèces ou
effets.
(2)
Sur réception du paiement de la pénalité réglementaire, l'agent restitue au
saisi ou au propriétaire légitime les espèces ou effets saisis sauf s'il
soupçonne, pour des motifs raisonnables, qu'il s'agit de produits de la
criminalité au sens du paragraphe 462.3(1) du Code criminel ou de fonds
destinés au financement des activités terroristes.
25.
La personne entre les mains de qui ont été saisis des espèces ou effets en
vertu de l'article 18 ou leur propriétaire légitime peut, dans les
quatre-vingt-dix jours suivant la saisie, demander au ministre de décider
s'il y a eu contravention au paragraphe 12(1) en donnant un avis écrit à
l'agent qui les a saisis ou à un agent du bureau de douane le plus proche du
lieu de la saisie.
27.
(1) Dans les quatre-vingt-dix jours qui suivent l’expiration du délai
mentionné au paragraphe 26(2), le ministre décide s’il y a eu contravention
au paragraphe 12(1).
29.
(1) S’il décide qu’il y a eu contravention au paragraphe 12(1), le ministre
peut, aux conditions qu’il fixe :
a)
soit restituer les espèces ou effets ou, sous réserve du paragraphe (2), la
valeur de ceux-ci à la date où le ministre des Travaux publics et des
Services gouvernementaux est informé de la décision, sur réception de la
pénalité réglementaire ou sans pénalité;
b)
soit restituer tout ou partie de la pénalité versée en application du
paragraphe 18(2);
c)
soit confirmer la confiscation des espèces ou effets au profit de Sa Majesté
du chef du Canada, sous réserve de toute ordonnance rendue en application des
articles 33 ou 34.
Le
ministre des Travaux publics et des Services gouvernementaux, dès qu’il en
est informé, prend les mesures nécessaires à l’application des alinéas a) ou
b).
30.
(1) La personne qui a demandé que soit rendue une décision en vertu de
l’article 27 peut, dans les quatre-vingt-dix jours suivant la communication
de cette décision, en appeler par voie d’action à la Cour fédérale à titre de
demandeur, le ministre étant le défendeur.
(2)
La Loi sur les Cours fédérales et les règles prises aux termes de cette loi
applicables aux actions ordinaires s'appliquent aux actions intentées en
vertu du paragraphe (1), avec les adaptations nécessaires occasionnées par
les règles propres à ces actions.
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Cross-Border Currency and Monetary Instruments Reporting Regulations, SOR/2002-412.
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2.
(1) For the purposes of reporting the importation or exportation of currency
or monetary instruments of a certain value under subsection 12(1) of the Act,
the prescribed amount is $10,000.
(2)
The prescribed amount is in Canadian dollars or its equivalent in a foreign
currency, based on
(a)
the official conversion rate of the Bank of Canada as published in the Bank
of Canada's Daily Memorandum of Exchange Rates that is in effect at the time
of importation or exportation; or
(b)
if no official conversion rate is set out in that publication for that
currency, the conversion rate that the person or entity would use for that
currency in the normal course of business at the time of the importation or
exportation.
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2.
(1) Pour l'application du paragraphe 12(1) de la Loi, les espèces ou effets
dont l'importation ou l'exportation doit être déclarée doivent avoir une
valeur égale ou supérieure à 10 000 $.
(2)
La valeur de 10 000 $ est exprimée en dollars canadiens ou en son équivalent
en devises selon :
a)
le taux de conversion officiel de la Banque du Canada publié dans son
Bulletin quotidien des taux de change en vigueur à la date de l'importation
ou de l'exportation;
b)
dans le cas où la devise ne figure pas dans ce bulletin, le taux de conversion
que le déclarant utiliserait dans le cours normal de ses activités à cette
date.
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