Date:
20120620
Docket:
T-1094-11
Citation: 2012
FC 788
Ottawa, Ontario, June 20, 2012
PRESENT: The Honourable Mr. Justice Phelan
BETWEEN:
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CHI YUEN LAU
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Applicant
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and
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CANADA (MINISTER OF PUBLIC SAFETY AND
EMERGENCY PREPAREDNESS)
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
I. INTRODUCTION
[1]
The
Applicant, Ms. Lau, was either unlucky or unwise or both. She wired a large sum
of money ($133,000) to a Mr. Lee to buy her a luxury car in the US. Mr. Lee squandered the money and lied to Ms. Lau. She then gave him the same amount in
cash to take with him to the US to purchase the car. The money was seized by
the Canada Border Services Agency [CBSA] because Mr. Lee did not report its
export as required under the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act, SC 2000, c 17 [Act]. The Minister has refused
to return the money because he is not satisfied as to the origin of the funds.
This is the judicial review of the exercise of the Minister’s discretion under
s 29 of the Act confirming the forfeiture of the money to Her Majesty in Right
of Canada.
II. BACKGROUND
[2]
This
story began in April 2010 when Ms. Lau, a successful real estate agent in Vancouver, wired $133,000 to Mr. Lee for the purpose of buying a particular type of
Porsche from a Florida dealership. Curiously the money was to go into a casino
cage depository in Las Vegas. Ms. Lau had been introduced to Mr. Lee by a
colleague/friend as someone who could help her find and import this type of
car.
[3]
Shortly
after the transfer of funds, Mr. Lee informed Ms. Lau that the transfer had
been returned to her account and that, as he had already paid for the car
himself, he wanted her to pay him in cash.
[4]
On
April 30, 2010, Mr. Lee visited Ms. Lau at her home and provided a bank
document purporting to show that the wire transfer had been returned.
[5]
Although
Ms. Lau confirmed with her bank that the wire transfer had not been returned,
she acceded to Mr. Lee’s demand for money immediately. She arranged to give him
$133,000 in cash that very day.
[6]
The
following day Mr. Lee attempted to leave on a flight from Vancouver to Las Vegas carrying $131,000 CAD and $1,195 USD. Of the $131,000 CAD, $30,000 was wrapped
to bank standards with a Bank of Montreal stamp dated April 28, 2010 (two days
before Mr. Lee’s visit to Ms. Lau). The rest of the money was either wrapped in
plastic, brown paper or loosely contained in Mr. Lee’s pockets and wallet.
[7]
Upon
departure, Mr. Lee failed to report to CBSA that he was carrying more than
$10,000 as he was required to do under s 12 of the Act and was subsequently
questioned by CBSA officials.
[8]
Mr.
Lee stated initially that the money was his and that he was a professional
gambler. Later, when documents relating to the car in Florida were found, he
admitted that he was selling the car to Ms. Lau. Mr. Lee also admitted that in
2001 he was involved in the fraudulent sale of high-end vehicles. Having
admitted that he had lost Ms. Lau’s $133,000 gambling, Mr. Lee stated that he still
intended to buy the car for her; however, he did not have an onward air ticket
to Florida. The CBSA officer suspected that Ms. Lau had been defrauded of the
money.
[9]
Since
Mr. Lee also admitted that the $30,000 wrapped to bank standards had come from
a loan shark, the CBSA concluded that this amount was illegal and therefore
constituted proceeds of crime.
[10]
As
the whole amount in Mr. Lee’s possession had not been reported, it was seized
pursuant to s 18(1) of the Act and, due to reasonable grounds to suspect that
it was proceeds of crime, no terms of release were granted.
[11]
Subsequently
Ms. Lau took Mr. Lee to a law firm (not, unfortunately for her, the firm
representing her before this Court) to attempt to obtain the return of the
funds.
[12]
Initially
that firm wrote to ask for a Ministerial review indicating that the firm
represented Mr. Lee and that the funds were to be returned to him.
[13]
Approximately
six weeks later, on June 22, 2010, the firm informed CBSA by letter that it
represented both Mr. Lee and Ms. Lau and requested that the funds be returned
to Ms. Lau. The firm confirmed that Mr. Lee had been retained to purchase a
Porsche and that Ms. Lau had given him the funds.
[14]
On
July 20, 2010, CBSA provided Mr. Lee with its Notice of Reasons; however, it
turned out that Mr. Lee had died the previous month and before the July 20,
2010 letter was sent.
[15]
On
September 28, 2010, the law firm wrote to CBSA advising that it no longer
represented Ms. Lau. Approximately six months later, a relative of Mr. Lee advised
CBSA that the family (presumably his beneficiaries) were not interested in the
matter. The CBSA closed its file in respect of Mr. Lee.
[16]
Ms.
Lau had retained current counsel who continued the efforts to secure the return
of the money. The firm filed submissions and affidavits explaining that the
$133,000 came firstly from Ms. Lau by way of accumulated gifts over three years
from her boyfriend Mr. Lu (an artist who attested that he made approximately
$200,000 per annum and gave Ms. Lau $100,000). The other source was $30,000
borrowed from a Mr. Chen on April 28, 2010 for which there was no affidavit;
however, Ms. Lau provided a letter from his bank confirming the withdrawal on
that date.
[17]
What
followed was a series of expressions of concern by CBSA as to the source of
funds from Mr. Lu and Mr. Chen and a series of further submissions on behalf of
Ms. Lau, all to the same effect as the facts in paragraph 16.
[18]
By
letter dated June 7, 2011, the Minister issued his s 27 decision confirming
that s 12(1) of the Act had been contravened. He further indicated that
pursuant to s. 29, he would not exercise his discretion to provide relief from
forfeiture in light of the Applicant’s failure to demonstrate the legitimate
origin of the seized funds.
[19]
The
Minister’s discretionary decision was made under s 29 of the Act:
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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.
(2)
The total amount paid under paragraph (1)(a) shall, if the currency or
monetary instruments were sold or otherwise disposed of under the Seized
Property Management Act, not exceed the proceeds of the sale or
disposition, if any, less any costs incurred by Her Majesty in respect of the
currency or monetary instruments.
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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).
(2)
En cas de vente ou autre forme d’aliénation des espèces ou effets en vertu de
la Loi sur l’administration des biens saisis, le montant de la somme
versée en vertu de l’alinéa (1)a) ne peut être supérieur au produit
éventuel de la vente ou de l’aliénation, duquel sont soustraits les frais
afférents exposés par Sa Majesté; à défaut de produit de l’aliénation, aucun
paiement n’est effectué.
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(A more detailed description of the
scheme of the Act has been laid out in such cases as Kang v Canada (Minister of Public Safety and Emergency Preparedness), 2011 FC 798, 393 FTR 90; Sidhu
v Canada (Minister of Public Safety and Emergency Preparedness), 2010 FC
911, 374 FTR 128.)
[20]
The
s 29 decision was based on the Applicant’s failure to establish the legitimate
origins of the funds, in particular, and gave rise to reasonable suspicion
because:
·
There
was no documentation establishing the origins of the $100,000 seized. The
Minister was unable to identify which withdrawals from the boyfriend’s account
corresponded to the moneys given by the boyfriend.
·
CBSA
was unable to ascertain the origin of the numerous large deposits made into the
boyfriend’s bank account which would account for the origins of the funds
eventually gifted to the Applicant. These concerns had gone unanswered
throughout the process.
·
The
fact that the Applicant kept the $100,000 in her safe created an undocumented
void between a legitimate origin and the seized funds.
·
The
claim that the Applicant kept large amounts of currency outside banking
institutions was contradicted by her practice of using banks such as when she
wired money to Mr. Lee.
·
The
fact that the Applicant had sufficient funds in her bank account raised
suspicions about why she needed a personal loan and used funds from her
personal safe.
·
There
were no documents related to the $1,191 USD that was raised.
·
There
were no documents submitted establishing the legitimate origins of the $30,000
despite the CBSA requesting such evidence.
·
There
were additional concerns surrounding the $30,000 because Mr. Lee claimed that it
had been provided by a loan shark; the details of which had been provided by
Mr. Lee.
·
These
suspicions about the $30,000 also called into question the Applicant’s claim to
ownership of this amount.
III. ANALYSIS
[21]
The
issues in this judicial review framed by the Applicant are:
1) Did
the Minister’s delegate err in applying the wrong legal test when determining
the Applicant’s request for the return of the funds seized?
2) Was
the decision unreasonable?
[22]
On
the first issue, the Applicant says the standard of review is correctness
because it is a matter of law. The Respondent argues that the “proper test” is
a matter of statutory interpretation of the tribunal’s (the Minister’s) home
statute and therefore the standard of review is reasonableness.
[23]
In
my view, neither argument is applicable to the decision at issue.
[24]
The
Minister, in interpreting the statute (if that is what he does), does not enjoy
the deference that a true tribunal interpreting its statute enjoys. For the
reasons given by the Court of Appeal in Canada (Fisheries and Oceans) v
David Suzuki Foundation, 2012 FCA 40, (sub nom Georgia Strait
Alliance v Canada (Minister of Fisheries and Oceans)), [2012] FCJ No 157
(QL)), the Minister’s interpretation of law and his powers must be correct for
all the legal and policy reasons outlined by the Court of Appeal.
[25]
However,
the Minister did not interpret the law or apply a legal test in this instance.
The Minister exercised a broad discretion to grant relief from the usual result
of seizure – forfeiture to the Crown.
[26]
There
is no issue that there was a failure to report the funds and thus a
contravention of subsection 12(1) of the Act. Even if Ms. Lau is the owner
of the funds, Mr. Lee was her duly constituted agent for transporting the funds
across the Canada/US border.
[27]
If
the Applicant has challenges to the s 27 decision with respect to reporting or
ownership, these are dealt with under s 25 and s 32 and are subject to an
action or application (as the case may be) in the Federal Court where “rights”
are to be dealt with particularly under sections 32-33 with respect to the
rights of the “owner”.
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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.
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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.
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32. (1) If currency or
monetary instruments have been seized as forfeit under this Part, any person
or entity, other than the person or entity in whose possession the currency
or monetary instruments were when seized, who claims in respect of the
currency or monetary instruments an interest as owner or, in Quebec, a right
as owner or trustee may, within 90 days after the seizure, apply by notice in
writing to the court for an order under section 33.
(2)
A judge of the court to which an application is made under this section shall
fix a day, not less than 30 days after the date of the filing of the
application, for the hearing.
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32. (1) En cas de
saisie-confiscation effectuée en vertu de la présente partie, toute personne
ou entité, autre que le saisi, qui revendique sur les espèces ou effets un
intérêt en qualité de propriétaire ou, au Québec, un droit en qualité de
propriétaire ou de fiduciaire peut, dans les quatre-vingt-dix jours suivant
la saisie, requérir par avis écrit le tribunal de rendre l’ordonnance visée à
l’article 33.
(2)
Le juge du tribunal saisi conformément au présent article fixe à une date
postérieure d’au moins trente jours à celle de la requête l’audition de
celle-ci.
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[28]
In
my view, s 29 is a different process which engages the Minister’s discretion.
In exercising that discretion, the Minister put emphasis on establishing the
origins of the funds. Such emphasis is consistent with the objectives of the
Act:
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3. The object of this
Act is
(a) to implement
specific measures to detect and deter money laundering and the financing of
terrorist activities and to facilitate the investigation and prosecution of
money laundering offences and terrorist activity financing offences,
including
(i) establishing record keeping
and client identification requirements for financial services providers and
other persons or entities that engage in businesses, professions or
activities that are susceptible to being used for money laundering or the
financing of terrorist activities,
(ii) requiring the reporting of
suspicious financial transactions and of cross-border movements of currency
and monetary instruments, and
…
(c) to assist in
fulfilling Canada’s international commitments to participate in the fight
against transnational crime, particularly money laundering, and the fight
against terrorist activity.
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3. La présente loi a
pour objet :
a) de mettre en oeuvre
des mesures visant à détecter et décourager le recyclage des produits de la
criminalité et le financement des activités terroristes et à faciliter les
enquêtes et les poursuites relatives aux infractions de recyclage des
produits de la criminalité et aux infractions de financement des activités
terroristes, notamment :
(i) imposer des obligations de
tenue de documents et d’identification des clients aux fournisseurs de
services financiers et autres personnes ou entités qui se livrent à
l’exploitation d’une entreprise ou à l’exercice d’une profession ou
d’activités susceptibles d’être utilisées pour le recyclage des produits de
la criminalité ou pour le financement des activités terroristes,
(ii) établir un régime de
déclaration obligatoire des opérations financières douteuses et des
mouvements transfrontaliers d’espèces et d’effets,
…
c) d’aider le Canada à
remplir ses engagements internationaux dans la lutte contre le crime transnational,
particulièrement le recyclage des produits de la criminalité, et la lutte
contre les activités terroristes.
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[29]
With
respect to the Minister’s decision itself (the 2nd issue), the Court
of Appeal in Sellathurai v Canada (Minister of Public Safety and Emergency
Preparedness), 2008 FCA 255, [2009] 2 FCR 576, set out the standard of
review of the exercise of discretion as reasonableness.
53 … Within that framework, there may be various
approaches to the exercise of the Minister's discretion but so long as the
discretion is exercised reasonably, the courts will not interfere. In this
case, the Minister proceeded by asking Mr. Sellathurai to demonstrate that the
funds which were seized came from a legitimate source. The Minister concluded
that the evidence provided by Mr. Sellathurai did not satisfy him that the
funds came from a legitimate source. …
[30]
Given
the totality of the background of this case, it is hardly surprising that the
Minister (or his officials) had suspicions as to the source of funds and the
flow of monies.
[31]
It
is arguable that the Minister’s suspicion arising from the Applicant borrowing
money rather than using a line of credit is questionable. However, that
conclusion must be weighed in the overall context of the facts where traceability
of the origin of the funds was at least opaque.
[32]
The
comment regarding the Applicant not knowing the nationality of the currency is
an error; it was a peripheral comment at best.
[33]
In
the context of the questionable history of the source of the $30,000 in bank
standard wrapping, it was not unreasonable to put some weight on Mr. Lee’s
explanation that he obtained it from a loan shark, particularly as it was given
at a time when it was an “admission against interest”.
[34]
The
Applicant’s reliance on a loan agreement concerning the $30,000 legitimately
raises as many questions as it answers. The loan was taken out two days before
the Applicant says she knew Mr. Lee insisted on being paid $133,000. The loan
is at best a bare promissory note “I, Julia Chi Yuen Lau, borrowed $30,000 CAD
from Mai Lin Chen. I will pay him back the whole amount in one year”. This
agreement, lacking such fundamentals as interest rate (or even confirmation of
interest), place of payment and other terms granted, by a successful real estate
agent with a MBA, provides a reasonable basis to look for other evidence,
including that provided by Mr. Lee.
[35]
The
fact that there was no affidavit from Mr. Chen or additional objective evidence
as to the origins of the $30,000 showing how or when it was earned, gives
reasonable grounds for concern.
[36]
The
central thesis of the Minister’s decision is that he was not satisfied as to
the origins of the funds. There is a clear and rational basis for the
Minister’s concern and, in terms of standard of review, some deference is owed
to the Minister as to whether he ought to have been satisfied with the
explanations advanced.
[37]
I
conclude that the Minister’s decision falls within a range of acceptable
outcomes and is reasonable in the circumstances.
IV. CONCLUSION
[38]
For
these reasons, this judicial review will be dismissed with costs.
JUDGMENT
THIS
COURT’S JUDGMENT is that the
application for judicial review is dismissed with costs.
“Michael
L. Phelan”
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