Docket: T-1896-10
Citation: 2012
FC 130
Ottawa, Ontario, February 2, 2012
PRESENT: The Honourable Mr. Justice O'Reilly
BETWEEN:
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DAVID ALAN CHAPLIN
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Applicant
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and
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THE MINISTER OF PUBLIC SAFETY AND
EMERGENCY PREPAREDNESS
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Respondent
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REASONS FOR JUDGMENT AND
JUDGMENT
I. Overview
[1]
In
2008, while at the Vancouver International Airport on his way to Mexico, Mr.
David Alan Chaplin failed to disclose to an officer with the Canadian Border
Services Agency [CBSA] that he was carrying currency valued at more than
$10,000 contrary to the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, SC 2000, c 17. The officer seized the money, finding there
were reasonable grounds to believe that the money was derived from proceeds of
crime.
[2]
Mr.
Chaplin asked for a Ministerial Review of the seizure. The Minister’s delegate
found that there had been a contravention of the Act and that the money should
remain seized.
[3]
Mr.
Chaplin argues that the delegate’s decision was unreasonable on the evidence,
and was arrived at unfairly. He asks me to order that the seized currency be
returned to him. In the alternative, he asks that the decision be remitted to
another delegate for reconsideration.
[4]
There
are two issues:
1. Was the delegate’s
decision reasonable?
2. Did the delegate
breach the duty of fairness?
[5]
I
can find no grounds for concluding that the delegate’s decision was
unreasonable or that Mr. Chaplin was treated unfairly. Accordingly, I must
dismiss this application for judicial review.
II. Factual Background
[6]
On
December 10, 2008, CBSA officials stopped Mr. Chaplin while he was waiting to
board a flight to Mexico. An officer asked him about the amount of
currency he was carrying and explained the statutory reporting requirements to
him. He stated that he did not need to make a report. The officer examined him
and found that he was carrying $8,000 (US) and $2,580
(Canadian), the equivalent of about $12,500 in Canadian dollars. Because Mr.
Chaplin had not reported the money as required by s 12(1) of the Act (see Annex
for statutory references), the officer seized it.
[7]
The
officer found that there were reasonable grounds to believe that the currency
was the proceeds of crime because of the following factors:
• Mr.
Chaplin made a false report, despite being given an opportunity to declare the currency;
• He was fidgety,
nervous and refrained from eye contact;
• He
made several contradictory statements about the origin of the funds (he said he
was wealthy; that the money was from the bank; that he had kept it in a safe;
and that it was from a friend);
• He was travelling
across an international border with a large amount of money;
• He
made contradictory statements about owning two companies (Denco’s New Frontier
Auction and Pro-One Motorcycles), stating first that he owned the businesses,
then stating that he was an agent for them;
• He
had no legitimate source of income and could not explain travelling beyond his
means;
• He admitted to
being a previous offender;
• The bills were not
wrapped to banking standards; and
• His
plane ticket was paid for in cash by a third party, possibly indicating an
attempt to avoid law enforcement agencies.
[8]
After
he requested a Ministerial Review, the CBSA asked Mr. Chaplin to forward
credible documentary proof to establish the origin of the funds. In a letter,
Mr. Chaplin stated that the money was withdrawn from a Canadian bank by Mr.
Paul Deneau, Mr. Chaplin’s business partner and employer. Mr. Deneau then gave
the cash to Mr. Chaplin for future use. Mr. Chaplin and Mr. Deneau carry on a
business known as Denco’s New Frontier Auction, and Mr. Chaplin states he is a
silent partner and is paid in cash due to prior tax problems. The trip to Mexico was for a
period of six months, and Mr. Chaplin planned to use the currency for his
living expenses. He further stated that his plane ticket was purchased with a
credit card and not cash, and that the RCMP had not laid any proceeds of crime
charges in respect of the currency.
[9]
The
CBSA acknowledged Mr. Chaplin’s representations and again asked him to provide
documentary evidence to establish the legitimate origin of the currency.
[10]
Mr.
Chaplin made further written representations, including copies of bank
statements showing withdrawals from TD Bank. Mr. Chaplin contended this money
was the currency in his possession at the airport.
[11]
In
reply, the CBSA stated that the bank transactions did not provide a link to the
currency that was seized. Furthermore, the transactions occurred up to 10 months
before the seizure. Therefore, the evidence did not establish that the currency
had a legitimate origin.
[12]
Mr.
Chaplin then restated his previous submissions and requested 30 days to provide
additional information to the CBSA. He was advised that he had until March 19,
2010 to file additional information.
[13]
On
March 15, 2010, Mr. Chaplin submitted a sworn affidavit from Mr. Deneau
describing their business relationship and financial arrangements. Mr. Deneau
stated that he is the President of Denco’s New Frontier Auction, which is an
import/export business working in China, the US and Mexico; that Mr. Chaplin is
his employee, whom he pays $1,850 in cash per month; and that he would often
give Mr. Chaplin money for business trips. In support of the affidavit were
bank and Visa statements, CRA Notices of Assessment for Mr. Deneau for 2006 and
2007, and copies of company cheques indicating payments to Mr. Deneau.
[14]
The
CBSA replied to Mr. Chaplin on March 30, 2010, explaining that travelers must
report currency and/or monetary instruments equivalent to $10,000 or more. Lack
of knowledge or intent is not considered a mitigating circumstance, as the onus
is on the importer to be aware of the contents of his or her luggage and of the
reporting requirements. Because Mr. Chaplin had stated that Mr. Deneau paid him
for his services in cash (by writing a cheque from the business to himself,
then cashing the cheque and paying Mr. Chaplin), the CBSA asked Mr. Chaplin to
provide any documentary evidence showing his receipt of the money from Mr.
Deneau.
[15]
Mr.
Chaplin replied on April 1, 2010, resubmitting the materials he had previously
sent.
[16]
A
CBSA adjudicator found that the Act had been contravened, and that the currency
should be held as forfeit (under sections 27 and 29). The Minister’s delegate
then reviewed the evidence and the adjudicator’s recommendation and came to the
same conclusion.
III. The Delegate’s Decision
[17]
The
Ministerial delegate took account of Mr. Chaplin’s assertion that he thought he
was carrying less than $10,000, but explained that travelers must report
currency equivalent to $10,000 or more to the CBSA. Mr. Chaplin had failed to
report the currency he was carrying, and the delegate therefore concluded that
he had contravened the Act.
[18]
Although
Mr. Chaplin had stated that he had earned the funds as part of his business
partnership, he failed to submit evidence showing that the business had paid
him a salary, dividends or other direct payments. Mr. Chaplin provided
third-party cheques as evidence of the source of the currency; however, he had
not provided any evidence that the third party named on the cheques had
transferred the funds to him.
[19]
Because
Mr. Chaplin failed to provide satisfactory evidence to substantiate the
legitimate origin of the currency, the delegate determined that the money could
not be released and should be forfeited.
IV. Issue One – Was the Minister’s
decision reasonable?
[20]
An
officer who seizes currency based on reasonable grounds to believe that s 12(1)
of the Act has been contravened must return the money upon the payment of a
prescribed penalty unless “the officer has reasonable grounds to suspect that
the currency or monetary instruments are proceeds of crime within the meaning
of s 462.3(1) of the Criminal Code or funds for use in the financing of
terrorist activities” (s 18(2)).
[21]
Mr.
Chaplin submits that the officer did not state at the time of seizure that he
suspected the currency was the proceeds of crime or was for use in the
financing of terrorist activities. He also maintains that the officer
unreasonably relied on the following evidence:
• Mr.
Chaplin voluntarily told the officer that he had problems with the CRA and had
been deported from the US. The officer did not ask why Mr. Chaplin
had been deported from the US. He could have been deported for any
number of benign reasons.
• The
officer stated that “checks were conducted and proved to be positive for a
variety of offences”. The officer also reported that the “subject attested to
being a previous offender”. Mr. Chaplin maintains that he did not make that
statement. Rather, the officer had “tunnel vision” throughout the exchange with
Mr. Chaplin. For example, the criminal records check was conducted before the
officer sought any explanation from Mr. Chaplin.
• The
officer stated that the “[s]ubject made several contradictory statements
relating to the origin of the funds in his possession (funds acquired from
being wealthy, bank, friend, safe)”. Mr. Chaplin submits that these statements
are consistent, not contradictory. The currency came from a bank, through a
friend, and was kept in Mr. Chaplin’s safe. Furthermore, Mr. Chaplin viewed
himself as wealthy.
• The
officer stated that the “[s]ubject made several contradictory statements
relating to owning two companies before stating that he had been living
underground based on money laundering charges”. Mr. Chaplin did not state that
he was living underground “based on money laundering charges”. Further, he
submits that it is implausible that he would tell an officer he was living underground
for the very reason the officer was investigating him. In addition, Mr.
Chaplin’s statement that he was an owner, and then that he was an agent, is
consistent with his unofficial position as silent partner in the businesses.
• Mr.
Chaplin submits that, given the mixture of US and Canadian currency, as well as
the fact that the total amount (without considering the exchange rate) was only
slightly over $10,000, his error was an innocent mistake.
• The
officer relied on Mr. Chaplin’s uneasy demeanour, but it is natural for a
person under investigation to be nervous.
• The
officer relied on the fact that the funds were not wrapped “in accordance with
bank standards.” However, the officer was aware that the currency in Mr. Chaplin’s
possession had been withdrawn from a bank by a third party, transferred to Mr.
Chaplin, and intermingled with other funds received. He should not have
expected those funds to have been wrapped in accordance with bank standards.
• Plane
tickets are paid for in cash by a third party for many reasons, particularly
where an employee is going on a business trip and the employer often deals in
cash. The officer knew that this was Mr. Chaplin’s situation. In addition, Mr.
Chaplin told the officer at the time of seizure that the ticket was purchased
with a credit card, and raised this again through his counsel on July 29, 2009.
[22]
Mr.
Chaplin submits that, overall, the officer’s suspicions were unreasonable, and the
officer was, therefore, bound to return the currency to him subject only to
payment of the prescribed penalty.
[23]
Mr.
Chaplin concedes that he contravened the Act but argues that the Minister’s
delegate had a duty to correct the officer’s errors and take corrective action.
Since she failed to do so, her decision was unreasonable.
[24]
The
nature of a delegate’s decision was described by the Federal Court of Appeal in
Sellathurai
v Canada (Minister of Public
Safety and Emergency Preparedness), 2008 FCA 255, at para 36:
[T]he effect of the customs
officer’s conclusion that he or she had reasonable grounds to suspect that the
seized currency was proceeds of crime is spent once the breach of section 12 is
confirmed by the Minister. The forfeiture is complete and the currency is
property of the Crown. The only question remaining for determination under
section 29 is whether the Minister will exercise his discretion to grant relief
from forfeiture, either by returning the funds themselves or by returning the
statutory penalty paid to secure the release of the funds.
[25]
To
persuade the delegate to exercise her discretion in his favour, the onus was on
Mr. Chaplin to provide satisfactory evidence that the source of the currency
was consistent with the explanation he provided. He did not do so. Accordingly,
I cannot conclude that the delegate’s decision not to exercise her discretion
in his favour was unreasonable.
V. Issue Two – Did the delegate
breach the duty of procedural fairness?
[26]
Mr.
Chaplin submits that the Minister’s delegate did not consider the affidavit of
Mr. Deneau as evidence of the source of the currency, which was an error in
law. In the alternative, the delegate could reject the affidavit only if Mr.
Deneau’s credibility was impugned. Where credibility is at issue, an oral
hearing is required: Khan v University of Ottawa (1997), 34
OR (3d) 535 (CA) [Khan]. Mr. Chaplin also maintains that the duty of
fairness must be scrupulously protected in this context because he risks the
stigma of being labelled as a possessor of proceeds of crime, something akin to
being convicted of an offence.
[27]
Mr.
Chaplin submits that the Minister’s delegate also ignored other evidence, which
was a further breach of procedural fairness:
• In
a letter dated July 29, 2009, Mr. Chaplin suggested that “the bank notes are
very close to being sequentially numbered and would not be so if illegally
obtained”.
• In
the same letter, Mr. Chaplin advised that his plane ticket was purchased with a
credit card, not cash.
[28]
Mr.
Chaplin is not charged with any criminal, quasi-criminal or regulatory offence.
The fact that his conduct could give rise to a prosecution does not mean that
the forfeiture procedure set out in the Act can be characterized as a penal
proceeding. Still, the rules of fairness apply.
[29]
With
respect to the affidavit of Mr. Deneau, the CBSA adjudicator’s decision
explicitly referred to it. The delegate stated in her decision that she had
“reviewed the enforcement action, the evidence and the law as it applies to
your case. I have fully considered the documentation you provided as well as
the reports from the issuing office”. Later in her decision, she referred to
the third party cheques that were attached as exhibits to Mr. Deneau’s
affidavit. Clearly, the delegate relied on the adjudicator’s decision and had considered
the affidavit.
[30]
Further,
the delegate was clearly aware of the July 29 letter. Although it might have
been better if she had explicitly referred to it in her reasons, her failure to
do so was not material to her decision.
[31]
Regarding
the plane ticket, the delegate explicitly referred to this issue in her
decision. She clearly did not accept Mr. Chaplin’s assertion that the ticket
had been purchased with a credit card. In the absence of proof to substantiate that
claim, the delegate was entitled to come to the contrary conclusion. The
evidentiary burden was on Mr. Chaplin.
[32]
I
can see no grounds for Mr. Chaplin’s claim to have been treated unfairly.
VI. Conclusion and Disposition
[33]
The
delegate’s decision was transparent and intelligible, and represented a
defensible outcome based on the facts and the statutory scheme set out in the
Act. Her conclusion was not unreasonable; nor did she treat Mr. Chaplin
unfairly in arriving at it. Accordingly, I must dismiss this application for
judicial review, with costs.
JUDGMENT
THIS COURT’S JUDGMENT
is that:
1.
The
application for judicial review is dismissed with costs.
2.
No
question of general importance is stated.
“James
W. O’Reilly”
Annex
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Proceeds
of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17
Reporting of Currency of Monetary Instruments
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.
…
(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;
Seizures
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.
Decision of the Minister
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.
(2) If charges are laid with respect to a money
laundering offence or a terrorist activity financing offence in respect of
the currency or monetary instruments seized, the Minister may defer making a
decision but shall make it in any case no later than 30 days after the conclusion
of all court proceedings in respect of those charges.
(3) The Minister shall, without delay after making a
decision, serve on the person who requested it a written notice of the
decision together with the reasons for it.
If there is a contravention
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.
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Loi sur le recyclage des produits de la
criminalité et le financement des activités terroristes, LC 2000, ch 17
Déclaration des Espèces et Effets
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.
[…]
(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;
Saisie
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.
Décision du ministre
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).
(2) Dans le cas où
des poursuites pour infraction de recyclage des produits de la criminalité ou
pour infraction de financement des activités terroristes ont été intentées
relativement aux espèces ou effets saisis, le ministre peut reporter la
décision, mais celle-ci doit être prise dans les trente jours suivant l'issue
des poursuites.
(3) Le ministre
signifie sans délai par écrit à la personne qui a fait la demande un avis de
la décision, motifs à l’appui.
Cas de contravention
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).
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