T-155-06
Citation: 2007 FC 208
Ottawa, Ontario,
February 23, 2007
PRESENT: The
Honourable Madam Justice Simpson
BETWEEN:
GOWRKUMARAN SELLATHURAI
Applicant
and
MINISTER OF PUBLIC SAFETY AND EMERGENCY
PREPAREDNESS
(SOLICITOR GENERAL OF CANADA)
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
This application for judicial review concerns
$123,000.00 CAD and $435.00 USD seized from the Applicant and forfeited at Pearson Airport in Toronto on November 10, 2003 (the Forfeited Currency). The forfeiture
was undertaken pursuant to the Proceeds of Crime (Money Laundering) and
Terrorism Financing Act, S.C. 2000, c. 17 (the Act).
[2]
The Forfeited Currency consists of the sums the
Applicant declared, $4,000.00 CAD and $400.00 USD (the Declared Currency) and
the amounts he did not declare $119,000.00 CAD and $35.00 USD (the Undeclared
Currency).
THE APPLICATION
[3]
The application is brought with respect to a
decision by the Minister of Public Safety and Emergency Preparedness (the
Minister) of October 6, 2005 in which he confirmed the forfeiture of the
Undeclared Currency under paragraph 29(1)(c) of the Act.
THE APPLICANT
AND OTHERS
[4]
The Applicant is Mr. Gowrkumaran
Sellathurai (the Applicant). Since its incorporation in 1994, he has operated
a wholesale jewellery business in Scarborough, Ontario called Jayasaji Jewellers (the
Business). His wife Palarani Gowrkumaran is listed in the company’s articles
of incorporation as its sole officer and director and the Applicant’s lawyer,
T. Jegatheesan, in his letter of March 2, 2004, describes her as the owner
of the business. However, the Applicant’s affidavit of March 1, 2004 (the
Applicant’s Affidavit) indicates that he has signing authority over the
Business accounts and that he and his wife run the Business as “complete partners”.
The Applicant has lived in Toronto with his wife and three children for thirteen years. He came to Canada in 1986 and became a Canadian
citizen in 1991.
[5]
Mr. George Montgomery Pathinather
and Mr. Shudhir Chawla are the Applicant’s business associates.
Their affidavits of January 29, 2004 (the Pathinather Affidavit) and
February 5, 2004 (the Chawla Affidavit) state that they provided the
Applicant $45,000.00 and $47,000.00 respectively for business purposes. Those
amounts are said to be included in the Forfeited Currency.
[6]
Mr. Sathi Sathananthan is the bookkeeper
for the Business. He swore an affidavit dated February 16, 2004 (the
Bookkeeper’s Affidavit) which describes a series of withdrawals from the
account of the Business totaling $37,000.00. This amount is also said to be
included in the Forfeited Currency.
THE HEARING
[7]
This application was set down for a one-day
hearing but more time was needed. Since counsel were not available to conclude
the hearing the next day, it was agreed that counsel for the Applicant would
complete his reply by filing written submissions on or before December 18,
2006 and that counsel for the Respondent could, if he wished, file written
observations thereon on or before January 12, 2007. Reply submissions
were filed and the Respondent delivered a Sur-Reply dated January 10,
2007.
THE LEGISLATIVE
FRAMEWORK APPLIED TO THIS CASE
[8]
The export of large amounts of currency from Canada is not prohibited but there is a
mandatory reporting requirement. Subsections 12(1) and (3)(a) of the Act,
together with subsection 2(1) of the Cross-border Currency and Monetary
Instruments Reporting Regulations, SOR/2002-412, obligate a person leaving
Canada to report currency and monetary instruments on their person or in their
accompanying luggage if they have a value equal to or greater than $10,000.00
CAD.
[9]
Subsection 18(1) of the Act provides that, if
currency and instruments are not reported, they may be seized and forfeited. Subsection 18(2) provides that,
instead of returning the seized items upon payment of a penalty, a customs
officer may decide to maintain the forfeiture, as was done in this case (the
Forfeiture). The Applicant concedes that the officer had reasonable grounds to
maintain the Forfeiture. The relevant subsection reads as follows:
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18. (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.
[my
emphasis]
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18. (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.
[je
souligne]
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[10]
With respect to proceeds of crime, subsection
462.3(1) of the Criminal Code provides:
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"proceeds
of crime" means any property, benefit or advantage, within or outside Canada, obtained or derived directly or
indirectly as a result of
(a) the commission in Canada of a designated offence, or
(b) an act or omission anywhere that, if it had occurred in
Canada, would have
constituted a designated offence.
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«produits de la criminalité » Bien, bénéfice ou
avantage qui est obtenu ou qui provient, au Canada ou à l’extérieur du
Canada, directement ou indirectement :
a) soit de la perpétration d’une
infraction désignée;
b) soit d’un acte ou d’une omission
qui, au Canada, aurait constitué une infraction désignée.
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[11]
A “designated offence” is essentially an
indictable offence and is defined as follows:
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(a) any offence that may be prosecuted as an indictable
offence under this or any other Act of Parliament, other than an indictable
offence prescribed by regulation, or
(b) a conspiracy or an attempt to commit, being an
accessory after the fact in relation to, or any counselling in relation to,
an offence referred to in paragraph (a);
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a) Soit toute infraction prévue par la
présente loi ou une autre loi fédérale et pouvant être poursuivie par mise en
accusation, à l’exception de tout acte criminel désigné par règlement;
b) soit le complot ou la tentative en
vue de commettre une telle infraction ou le fait d’en être complice après le
fait ou d’en conseiller la perpétration.
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[12]
The relevant regulations are entitled Regulations
Excluding Certain Indictable Offences from the Definition of “Designated
Offence”, SOR/2002-63. They exclude indictable offences under the
legislation listed in Schedule “A” hereto. That legislation has no impact on
this case.
[13]
The Canada Border Services Agency (CBSA) is
responsible for the seizure and forfeiture of undeclared currency and monetary
instruments under the Act. A CBSA officer (the Customs Officer) interrogated
the Applicant at Pearson Airport on November 10, 2003. She prepared handwritten notes as she
was interviewing the Applicant (the Customs Officer’s Notes). She also
prepared a report describing the Seizure and Forfeiture dated November 13,
2003 (the Seizure Report).
[14]
On November 19, 2003, the Applicant asked
for a Minister’s decision under section 25 of the Act. It states:
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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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[15]
After the Applicant asked for a ministerial
decision, his file became the responsibility of CBSA’s Recourse Directorate.
There, an adjudicator reviewed the file and prepared a document formally
described as a “Written Notice of Circumstances of Seizure” but informally
known as a “Notice of Reasons for Action”. In this case, it was dated
January 12, 2004 (the Notice of Reasons) and was served on the Applicant
pursuant to subsection 26(1) of the Act which says:
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26. (1)
If a decision of the Minister is requested under section 25, the President
shall without delay serve on the person who requested it written notice of
the circumstances of the seizure in respect of which the decision is
requested.
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26. (1) Le
président signifie sans délai par écrit à la personne qui a présenté la
demande visée à l’article 25 un avis exposant les circonstances de la saisie
à l’origine de la demande.
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[16]
Thereafter, subsection 26(2) of the Act afforded
the Applicant the opportunity to furnish evidence. It reads as follows:
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26. (2) The person on whom a notice is served under subsection (1) may,
within 30 days after the notice is served, furnish any evidence in the matter
that they desire to furnish.
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26. (2) Le demandeur dispose de trente jours à compter de la
signification de l’avis pour produire tous moyens de preuve à l’appui de ses
prétentions.
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[17]
The Applicant filed the Applicant’s Affidavit,
the Pathinather Affidavit, the Chawla Affidavit and the Bookkeeper Affidavit
described above. His counsel forwarded two letters which contained his
submissions and also supplied three letters giving character references for the
Applicant. This material will be discussed below.
[18]
In addition to receiving the Applicant’s
evidence, the Respondent was entitled to pursue its own inquiries and did so in
this case. The Applicant’s lawyer advised the adjudicator that Constable David
Kim of the RCMP had interviewed the Applicant on December 3, 2003 to address
the possibility that the Applicant had been attempting to fund Tamil terrorists
in Sri Lanka. The adjudicator
had not known of the interview but said she would make inquiries. After doing
so, she wrote to the Applicant’s lawyer on June 18, 2004 and advised that:
I have been
advised that Constable Kim only investigated whether the currency was to be
used for terrorist financing and there was no conclusive evidence to indicate
it was intended for terrorist financing. He advised that his investigation did
not entail whether the currency was money laundering or proceeds of crime.
[19]
The adjudicator also obtained a report dated
December 4, 2003 which described the Applicant’s previous history with
CBSA. It showed that on February 25, 1999, the Applicant had declared
commercial goods but had failed to declare personal items worth approximately
$400.00. As well, in 1994, he smuggled jewellery in saris. No particulars of
this incident were available. However, when, as a result of that incident, he
was subjected to a later search, nothing was found.
[20]
The Respondent also conducted a CPIC (Canadian
Police Information Centre) search which showed that the Applicant had not been
convicted of a criminal offence. Finally, the Minister’s Delegate acknowledged
during his cross-examination that there was no information in the adjudicator’s
file which linked the Applicant to organized crime.
[21]
From September 2004 to July 2005, the
Applicant’s application for a Minister’s decision was suspended while the
Applicant pursued an Access to Information Request. However, in July 2005, the
Applicant retained new counsel who revoked the suspension and asked for a
decision as soon as possible.
[22]
By this date, the first adjudicator had been
promoted and a second adjudicator had assumed responsibility for the
Applicant’s file. She prepared a document entitled Case Synopsis and Reasons
for Decision (the Synopsis and Reasons). It was signed by the adjudicator on
September 25, 2005.
[23]
The Synopsis and Reasons served as a
recommendation and was given to a Manager in the Recourse Directorate. He was
delegated to make the Minister’s decisions under sections 25 and 29 of the Act
(the Minister’s Delegate). He signed the Synopsis and Reasons on
October 3, 2005 and in so doing, he decided to confirm the Forfeiture of
the Undeclared Currency and return the Declared Currency to the Applicant.
[24]
The final step was communicating his decision
and by letter dated October 6, 2005, the Applicant was advised that the
Minister’s Delegate had concluded that subsection 12(1) of the Act had been
contravened and had confirmed the Forfeiture of the Undeclared Currency (the
Decision). These decisions were reached under subsections 27(1) and (3) and
paragraph 29(1)(c) of the Act. They provide that:
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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.
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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).
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…
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…
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(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.
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(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.
|
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29. (1) If the Minister decides that
subsection 12(1) was contravened, the Minister shall, subject to the terms
and conditions that the Minister may determine,
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29. (1) S’il décide qu’il y a eu
contravention au paragraphe 12(1), le ministre, aux conditions qu’il fixe :
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…
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…
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(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.
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c) soit confirme 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.
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THE EVENTS
LEADING TO THE SEIZURE AND FORFEITURE
[25]
On November 10, 2003, the Applicant arrived at
Pearson airport to board a flight to Paris. From there, he planned to travel to Dubai and on to Sri Lanka.
While at the airport, he did not report to the CBSA that he was transporting
currency in excess of $10,000.00 CAD. At 6:30 pm, the Applicant was approached
by the Customs Officer who asked what currency he was carrying at that time.
In response to her query, he stated that he had only the Declared Currency. The
Customs Officer examined his carry on luggage to verify his declaration and
found two gold bars which the Applicant valued at $20,000.00 CAD. At this
point, the Customs Officer noted that sweat was “pouring” down the Applicant’s
face. She then noticed a bulge in his pant’s pocket which, when produced,
turned out to be a large sum of money.
[26]
At that point, the Customs Officer was joined by
a supervisor and they escorted the Applicant to a private area in the jetway
for further questioning. There, she found a total of eight envelopes of bills
enclosed in elastic bands.
[27]
After those discoveries, the Applicant was moved
again to an area described as “Terminal I Secondary”. In that location, the
money was counted and forfeited and the Applicant was given a receipt. He was
left in possession of his two gold bars (which are not considered currency in Canada), a quantity of jewellery and the
petty cash in his wallet. The Forfeiture included both the Declared Currency
and the Undeclared Currency.
[28]
The Applicant advised the Customs Officer that
he travelled to Dubai in the United Arab Emirates about once a month. The Seizure Report shows that the Applicant’s
passport indicated that he had returned to Canada from Dubai on
October 13, 2003. The Customs Officer’s Notes show that the Applicant
also said that he did not usually travel with large sums of money and was doing
so only because it was close to Christmas.
[29]
The Applicant told the Customs Officer that he
had bought his ticket on the day of the flight (Monday, November 10th)
because the ticket office had been closed on Saturday the 8th. He
said he was travelling to attend his father’s funeral and that he would be away
for one week. However, when the Customs Officer examined his tickets, she
found that his ticket for travel that day to Paris had been issued on November
6th for a flight out on the 10th and returning on the 19th
and that his ticket from Dubai
to Colombo had been issued on
October 31st. She, therefore, concluded that his trip was not for
the purpose or for the duration he had stated.
[30]
The Customs Officer’s Notes show that the
Applicant indicated quite early in his conversation with the Customs Officer
that he was a jeweller and the Minister’s Delegate agreed during his
cross-examination on his affidavit sworn on April 12, 2006 that the Synopsis
and Reasons inaccurately suggested that the Applicant had withheld information
about being a jeweller until later in his interview with the Customs Officer.
[31]
The Applicant told the Customs Officer that
$47,000.00 of the Forfeited Currency had been lent to him by
Kanthy Wilberg, a Montreal
jeweller, to buy jewellery. Further, $45,000.00 had been lent to him by
George Mulhambery of Montreal also to buy jewellery. The Applicant provided Montreal telephone
numbers for both jewellers and said he had driven to Montreal two days earlier to meet with them. The Applicant did not explain
the source of the balance of the Forfeited Currency.
THE EVIDENCE
SUBMITTED ON THE APPLICANT’S BEHALF
[32]
In his affidavit of March 1, 2004, the
Applicant contradicted the information about the source of the currency that he
had given to the Customs Officer. He swore that he had been given $45,000.00
by Mr. Pathinather of Montreal, Quebec for the purchase of specified items of jewellery and that
$47,000.00 had been advanced to him by Mr. Chawla of Markham, Ontario for the purchase of gold bullion. In this regard, the Chawla
Affidavit contradicted the Applicant. Mr. Chawla said he gave the
Applicant $47,000.00 to buy 22 carat gold jewellery in Dubai. He made no mention of a bullion purchase.
[33]
The Chawla Affidavit exhibited an undated letter
without letterhead signed by Mr. Kurgan who confirmed that, in September
2003, he had loaned Mr. Chawla 93 oz. of fine gold from his personal
holdings and that it had a value of $47,750.00 CAD. Mr. Chawla swore that
the gold bullion he sold had been given to him as a loan to help him
re-establish himself after a difficult financial period. Mr. Chawla said
that the $47,000.00 in cash he provided to the Applicant was obtained when he
sold that gold bullion to jewellers for cash. However, in spite of repeated
requests from the adjudicator, no receipts or affidavits were provided to prove
that these sales had occurred.
[34]
The Pathinather Affidavit stated that, on
November 6 or 7, 2003, he had provided the Applicant with $45,000.00 in
cash which came from his business safe and which had been obtained from cash
sales of jewellery. Again, in spite of the adjudicator’s requests, no evidence
was provided to substantiate those sales.
[35]
Messrs. Chawla and Pathinather said they trusted
the Applicant because they had known and dealt with him over 3.5 and 10 years
respectively. They deposed that the East Indian Community prefers cash
transactions and that they commonly dealt with the Applicant in large sums of
cash. What they did not explain, in spite of the adjudicator’s expressions of
concern, was the absence of any proof to substantiate the sales which generated
the cash they said they gave to the Applicant.
[36]
The Bookkeeper’s Affidavit indicated his belief
that the balance of the Forfeited Currency (after deducting Mr. Chawla’s
$47,000.00 and Mr. Pathinather’s $45,000.00) was withdrawn from the
Business account. He based this belief on his finding that between
September 19 and November 10, 2003, the Applicant withdrew $37,000.00
“…through six cheques on the Business account issued to himself…”. The
particulars of the cheques are as follows:
September 19,
2003 $8,000.00
September 24,
2003 8,000.00
September 25,
2003 6,000.00
November 7, 2003
5,000.00
November 7, 2003
7,000.00
November 10,
2003 3,000.00
[37]
This evidence was inaccurate. The cheques were
not issued to the Applicant. Rather, they were payable to the Applicant’s
wife. However, in the Applicant’s Affidavit he says that he received the money
when the cheques were cashed.
[38]
The Applicant’s Affidavit also states that:
·
He is well-travelled and flies from Toronto to Dubai every one or two months.
·
He had never before carried a large amount of
currency. He normally uses bank transfers. He was not aware he had to declare
business currency.
·
He did not reveal the identities of
Mr. Pathinather and Mr. Chawla for fear that as members of Canada’s East Indian Community, they would
fall under suspicion.
·
He carried cash for jewellery purchases in Dubai on this trip because he was on a
tight schedule and would have had trouble using Canadian banking services on
Remembrance Day, November 11, 2003.
[39]
When the adjudicator reviewed the Chawla and
Pathinather Affidavits, she wrote to the Applicant’s counsel on March 15
and May 3, 2004 saying that they did not “substantiate the legitimacy of
their portion of the seized currency.” In her first letter, she suggested that
legitimate businesses keep records of their funds and she expressed concern
that the Applicant’s explanation for carrying cash did not make sense when she
indicated her understanding that Canadian cash is not easily used for purchases
in foreign countries. She asked for more information but none was forthcoming.
[40]
The three letters of reference for the Applicant
were ultimately discounted in the Synopsis and Reasons on the basis that they
did not address the specific problem of the legitimacy of the Forfeited
Currency.
THE DECISION
[41]
The Minister’s Delegate concluded that there
were reasonable grounds to suspect that the Undeclared Currency was proceeds of
crime.
[42]
The Reasons in the Minister’s Delegate letter of
October 6 read as follows:
The evidence
submitted has confirmed that you were specifically questioned by a Customs
officer at Pearson International Airport on November 10,
2003, and you advised the officer that you did not have currency in excess of
$10,000.00 CAD. Examination revealed $435.00 USD currency and $123,000.00
Canadian currency. Consequently, by virtue of section 12 and 18 of the
Proceeds of Crime (Money Laundering) and Terrorist Financing Act; the currency
was lawfully subject to seizure. No terms of release were offered for the currency
as the officer had reasonable suspicions to suspect proceeds of crime.
Although your
solicitor’s representations have been considered, mitigation has not been
granted in this case. The evidence provided is not verifiable and does not
substantiate the origin of the currency. Based on the totality of the evidence
and the lack of verifiable evidence to support the legitimate origin of the
currency, reasonable suspicion still exists. As such the currency has been
held as forfeit. However, it has been decided that the declared currency
($4,000.00 Canadian and $400.00 USD) should be returned to you.
[43]
The Synopsis and Reasons shows that the
Applicant had failed to address the adjudicator’s concerns regarding:
·
the packaging of the Forfeited Currency - Why
was it in eight envelopes, some with mixed denominations and bound with
elastics?;
·
the contradictory evidence – At Pearson, the
Applicant told the Customs Officer that the Forfeited Currency came from two Montreal jewellers. He gave their names
and phone numbers and said he had met them a few days earlier. But the
Applicant’s Affidavit gave two entirely different names, only one was in Montreal. As well, they were no longer the
only source of the funds. He added the Business as a source;
·
the fact that money had been withdrawn from the
Business account in September for a trip in November even though there was an
intervening trip to Dubai in
October 2003;
·
the lack of documentation showing that sales of
gold and jewellery had generated the funds from Messrs. Chawla and Pathinather;
·
the Applicant’s untrue statements to the Customs
Officer about the purpose of his trip and the date on which he purchased his
ticket for the November 10th flight;
·
the Applicant’s statement that he intended to
use the money for jewellery purchases in Dubai where Canadian currency is not readily accepted.
[44]
It is clear to me that the adjudicator’s focus
on proof of the actual source of the Forfeited Currency was appropriate. It
was not enough to merely show through bank statements and bald statements in
affidavits that the Applicant and his business associates had sufficient means
to have provided the Forfeited Currency. In this regard, see the decision of
Blais J. in Martirossian v. Canada (Minister of Citizenship and Immigration) 2001 FCT 1119 at paragraph 36.
[45]
In his affidavit of April 12, 2006, the
Minister’s Delegate expanded on his Reasons. I have deleted the passages in
paragraphs 14(b) and 19 which he acknowledged were inaccurate during his
cross-examination.
14. In my view,
this material demonstrated that there were reasonable grounds to suspect that
the undeclared currency seized from the Applicant on November 10, 2003 was
proceeds of crime within the meaning of subsection 462.3(1) of the Criminal
Code, the most significant of which were the following:
(a)
the fact that the Applicant was attempting to
export a very large amount of currency and chose to report only a small
fraction of this currency to the Customs officer;
(b)
the fact that when questioned about … the origin
of the currency by the Customs officer, the Applicant provided a conflicting
and unclear explanation;
(c)
the fact that further to his request for a
ministerial review of the seizure, the Applicant provided an explanation for
the origin of the currency that differed from that provided originally to the
Customs officer; and
(d)
the fact that the ultimate explanation provided
by the Applicant for the origin of the currency is implausible and not
corroborated by sufficient supporting documentation.
15. With respect
to the first ground, the material before me demonstrated that the Applicant was
traveling with $123,000 (Canadian) and $435 (U.S.). It also demonstrated that the Applicant was a frequent
international traveler who would have been aware of currency reporting requirements.
Yet when he was asked by a Customs officer how much currency he had in his
possession, the Applicant chose to only report $4,000 (Canadian) and $400 (U.S.). In my view, such behaviour raises a
suspicion that the currency in question is illicit.
16. In
particular, because of the risk of theft or loss, most individuals who
legitimately possess such large amounts of funds would not attempt to transport
these funds in the form of bulk currency. Instead, individuals who wish to
transfer large amounts of legitimate funds between countries generally do so
using the services of financial institutions (i.e., electronic funds transfers,
bank drafts, money orders, traveller’s cheques, etc.) because they are faster,
cheaper and more secure than bulk cash transportation.
17. In addition,
unlike currency of the United States of America, Canadian currency is not readily used or accepted in countries
other than Canada. Therefore,
it is implausible that large quantities of legitimate Canadian currency would be
brought by a traveler to a country such as the United
Arab Emirates in order to conduct legitimate business.
18. Furthermore,
while recognizing that an occasional traveller may nevertheless decide to incur
the risk and inconvenience of travelling with large sums of Canadian currency,
it is highly unlikely that such a traveller would then fail to truthfully
respond to specific questioning from a Customs officer about the amount of
currency being carried unless the currency is in fact illicit and the traveller
fears discovery and confiscation of the currency.
19. …When asked
by the Customs officer to explain the origin of the currency, the Applicant
initially advised that he was unsure of the identities of the individuals who
had given him the currency. Later, the Applicant stated that a certain
“Kanthy Wilkerg” and “George Mulhambery”, both from Montreal, provided him with $47,000
(Canadian) and $45,000 (Canadian) respectively to purchase jewellery. While
providing these vague and conflicting explanations, the Applicant was visibly
nervous with sweat pouring down his face. In my view, such behaviour raises a
suspicion that the currency in question is illicit.
20. In
particular, currency can either originate from a legitimate legal source or
from the proceeds of crime. For the reasons set out at paragraphs 16 to 18
above, the larger the amount of Canadian currency that is being transported
internationally yet not declared, the less likely it will have originated from
a legal source. For the rare individual who transports large sums of
legitimately earned currency destined for legal purposes, it can be expected
that he or she will be able to clearly explain both the source and intended use
of the currency. On the other hand, a traveller’s inability to clearly provide
such explanations is indicative that he or she is aware that the currency was
not earned through legitimate means or is intended for illicit use.
21. With respect
to the third ground, the material before me indicated that in March 2004, approximately
four months after advising the Customs officer that a certain
“Kanthy Wilkerg” and “George Mulhambery”, both of Montreal, provided
him with $47,000 (Canadian) and $45,000 (Canadian) respectively to purchase
jewellery, the Applicant provided a different explanation for the origin of the
funds. Now, the Applicant was stating that Shudhir Chawla of Markham, Ontario provided him with $47,000
(Canadian) while George Montgomery Pathinather of Montreal provided
him with $45,000 (Canadian) to purchase jewellery. In addition, for the first
time, the Applicant explained that the balance of the currency he was carrying
($31,000 (Canadian) and $435 (U.S.)) had been withdrawn from the business account of Jayasaji
Jewellery Ltd., a wholesale jewellery company that the Applicant owns with his
wife Palaran Gowrikumaran. In my view, the fact that the Applicant has
provided this new explanation for the origin of the funds which differs from
that provided at the time of the seizure raises a suspicion that the currency
in question is illicit for the reasons set out at paragraph 20 above.
22. With respect
to the fourth ground, the material before me indicated that while
Shudhir Chawla and George Montgomery Pathinather had stated that they
provided the Applicant with a total of $92,000 (Canadian) to purchase certain
vaguely described jewellery in the United Arab Emirates on their behalf,
neither provided contracts, receipts or any other documentation to support the
existence of such a significant financial obligation. In addition, while
copies of cheques and bank statements were provided to show that six cheques
made payable to the Applicant’s wife in September and early November 2003 were
drawn down against Jayasaji Jewellery Ltd. bank account, there was no indication
that the balance of the currency seized on November 10, 2003 indeed originated
from these accounts. In my view, the fact that the Applicant could not provide
persuasive documentation to establish a legitimate origin for the funds raises
a suspicion that the currency in question is illicit.
23. In
particular, it is not plausible that legitimate businesses seeking to purchase
$92,000 worth of jewellery in a foreign country would do so by entrusting
another person with currency in that amount and providing him with vague
instructions about the type and quantity of jewelerly [sic] to buy, without
documenting this arrangement in any form. The fact that the Applicant has
chosen to provide such an implausible and unsubstantiated explanation for the
origin of the currency renders it reasonable to suspect that the currency is in
fact proceeds of crime.
24. In sum, on
the basis of all of the material that was before me, with particular emphasis
on the grounds set out above and taken as a whole, I concluded that it was
reasonable to suspect that the unreported currency in the amount of $119,000
(Canadian) and $35 (US) was proceeds of crime within the meaning of subsection
462.3(1) of the Criminal Code.
THE STANDARD OF
REVIEW
[46]
The following pragmatic and functional analysis
has been prepared in light of the Supreme Court of Canada’s decisions in Pushpanathan
v. Canada
(Minister of Citizenship and Immigration), [1998] 1
S.C.R. 982 and Dr. Q v. College of Physicians and Surgeons of British
Columbia, [2003] 1 S.C.R. 226.
(i) Privative Clause/Appeal Provisions
[47]
The Act includes a strong privative clause. Section
24 states:
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The
forfeiture of currency or monetary instruments seized under this Part is
final and is not subject to review or to be set aside or otherwise dealt with
except to the extent and in the manner provided by sections 25 to 30.
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La
confiscation d’espèces ou d’effets saisis en vertu de la présente partie est
définitive et n’est susceptible de révision, de rejet ou de toute autre forme
d’intervention que dans la mesure et selon les modalités prévues aux articles
25 à 30.
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Further, there is
no statutory appeal in sections 25 to 30 of the Act from a decision to confirm
a forfeiture under section 29 of the Act. Review is only available in judicial
review proceedings. In this regard, see: Tourki v. Canada (Minister of Public Safety
and Emergency Preparedness), [2006] F.C.J. No. 52
at paragraphs 30 to 36 and Ha v. Canada (Minister of Public Safety and Emergency Preparedness, [2006] F.C.J. No. 1123 at paragraph 7.
[48]
In my view, these facts suggest a high degree of
deference.
(ii) Relative Expertise
[49]
Section 29 decisions about the appropriate
penalty to impose when currency is unreported are made by Minister’s
delegates. They are individuals who hold the position of “Manager” in the
Adjudications Division of the CBSA’s Recourse Directorate. The
cross-examination of the Minister’s Delegate on his affidavit in this case
discloses that managers and adjudicators receive training from RCMP and
Department of Justice specialists and that they are guided in their work by an
RCMP document entitled “Integrated Proceeds of Crime Investigator Indicator
List”.
[50]
There have been 307 decisions made under section
29 since it came into force on January 6, 2003 and in 216 of those cases,
forfeiture of the seized currency was confirmed. For these reasons, I
acknowledged that Managers have considerable expertise relative to the Court.
[51]
I should note that, after the hearing in this
case, Respondent’s counsel wrote the Court on February 7, 2007. The
letter referred to a decision of my colleague, Mr. Justice Beaudry, in Marc
Elie Thérancé c. Canada (Ministre de la sécurité publique), 2007 CF 136.
That case also involved an application for judicial review of a decision of a
Minister’s Delegate under section 29 of the Act. Following a pragmatic and
functional analysis, Beaudry, J. concluded, with the agreement of counsel for
both parties, that the Standard of Review was patent unreasonableness.
[52]
In Canada (Attorney General) v Sketchley,
2005 FCA 404 at paragraph 50, the Federal Court of Appeal emphasized the
importance of undertaking the functional and pragmatic analysis every time
judicial review of a decision is before the Court even if earlier judgments
have dealt with the standard of review to be applied to decisions under the
same statutory provision.
[53]
Accordingly, I am required to make a fresh
assessment of the standard of review on the facts of this case and in my view,
Justice Beaudry’s decision can be distinguished because in this case the
Minister’s Delegate was not required to use any special expertise in reaching
the Decision. The fact that the Applicant contradicted himself and failed to
supply adequate documentation are issues which the Court is also able to
address. Accordingly, in this case, this factor does not suggest a high degree
of deference.
(iii) The Purpose of the Act and of Section 29
[54]
The Act received Royal assent on June 29,
2000. Its objectives include detecting and deterring money laundering and
terrorist financing. They are set out at section 3. It reads in part:
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(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
|
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 :
|
|
…
|
…
|
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ii) requiring
the reporting of suspicious financial transactions and of cross-border
movements of currency and monetary instruments,
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(ii) établir
un régime de déclaration obligatoire des opérations financières douteuses et
des mouvements transfrontaliers d’espèces et d’effets,
|
|
…
|
…
|
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(b) to respond to the threat posed by organized crime by
providing law enforcement officials with the information they need to deprive
criminals of the proceeds of their criminal activities, while ensuring that
appropriate safeguards are put in place to protect the privacy of persons
with respect to personal information about themselves; and
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b) de combattre le crime organisé en fournissant aux responsables
de l’application de la loi les renseignements leur permettant de priver les
criminels du produit de leurs activités illicites, tout en assurant la mise
en place des garanties nécessaires à la protection de la vie privée des
personnes à l’égard des renseignements personnels les concernant;
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(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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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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[55]
In order to implement the objective specified at
paragraph 3(a)(ii), Part 2 of the Act provides for a currency reporting regime
under which importers and exporters of currency must make a report to a Customs
official whenever they import or export currency or monetary instruments valued
over $10,000.00 CAD.
[56]
Part 2 of the Act became effective with the
coming into force of the Cross-border Currency and Monetary Instruments
Reporting Regulations, SOR/2002-412 on January 6, 2003.
[57]
In the event of a failure to report, Parliament
has mandated serious sanctions including forfeiture in the event there are
reasonable grounds to suspect that the undeclared currency is proceeds of crime
or funding for terrorists. The existence of this sanction not only encourages
compliance with the reporting obligations but also ensures that suspected
proceeds of crime or funds for terrorists are not returned to persons who have
contravened the Act by not reporting.
[58]
The Respondent says that in enforcing Part 2 of
the Act, the Minister’s Delegate is engaged in a balancing of the interests of
the Applicant with those of the Canadian public. However, I do not accept this
characterization. In my view, the balancing of private and public interests
was done by Parliament when it established the legislative scheme. A
Minister’s Delegate has a much narrower role under section 29. He is simply
determining whether, on the facts in a particular applicant’s case, a
forfeiture should be confirmed. Accordingly, because, in my view, this factor
is not polycentric it does not suggest a deferential approach.
(iv) The Nature of the Question – Law or Fact
[59]
Once a Minister’s Delegate correctly applies the
correct burden of proof to an applicant’s evidence, the remainder of the
Decision is fact driven. This suggests significant deference on factual
matters but none on the burden of proof.
Conclusion
[60]
I have concluded that, in this case, primarily
because relative expertise does not actually play a significant role, I will
review the Decision using a reasonableness standard except when dealing with
the burden of proof faced by an applicant who wishes to dispel “reasonable
grounds to suspect”. On that issue, correctness will be the standard of
review.
THE ISSUES
[61]
The Applicant has raised the following issues.
The headings are mine.
No reasonable
grounds?
I. The
Minister erred in his decision that the funds in question are forfeit
insofar as there exists no reasonable grounds to suspect that the funds in
question are the proceeds of crime.
An improper
test?
II.
The Minister erred in his decision insofar as he
improperly reversed the burden of proof, finding, in effect, that the Applicant
failed to prove that the funds in question were not the proceeds of crime.
A
contradictory decision?
III.
The Minister erred in his decision insofar as
his decision is, on its face, contradictory and therefore unreasonable.
I. No reasonable grounds
[62]
The Applicant says that the sole reason for the
Decision was the Applicant’s failure to report. However, this submission is
not borne out by the facts. It is clear that the Applicant’s lies and failure
to provide documentation played a large part in the Decision.
II. An Improper Test
[63]
Section 29 of the Act is silent about the
principles to be used by a Minister’s Delegate in deciding whether to confirm a
currency forfeiture. However, the Decision makes it clear that, in this case,
the Minister’s Delegate was determining whether a reasonable suspicion still
existed. In other words, the Minister’s Delegate adopted for the Decision the
test the Customs Officer at the airport was required to use when she declined
to return the Forfeited Currency, pursuant to subsection 18(2) of the Act.
That subsection provides that she must have had “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”. In my view, the Decision stated the
correct test when it indicated that the Minister’s Delegate was determining
whether such reasonable grounds still existed.
[64]
However, the Applicant submits that the
Minister’s Delegate did not apply the test correctly because he relied on the
Synopsis and Reasons and it states:
…Mr. Sellathurai
broke the law by failing to declare $123,574.20 in Canadian currency. Having
broken the law and failed to declare, a person cannot regain currency seized as
forfeit, on a reasonable suspicion under the Act, by merely telling a
story that could be true. An innocent explanation as to the origin of the
funds must be proven in sufficient detail and with enough credible, reliable
and independent evidence to establish that no other reasonable explanation is
possible. Otherwise, reasonable doubts remain and the forfeiture stands.
[my
emphasis]
[65]
I am persuaded, having read the transcript of
the cross-examination of the Minister’s Delegate on his affidavit that he
relied to a considerable degree on the Synopsis and Reasons. This means that I
cannot discount the possibility that he may well have been influenced by the
adjudicator’s opinion about the burden of proof to be borne to the Applicant.
She appears to have thought that, to dispel reasonable grounds for suspicion,
an applicant must prove an innocent explanation beyond all doubt.
[66]
Before reviewing the law, it is helpful to
recall the context. The Applicant is not involved in a criminal proceeding or
indeed in any in personam matter. This is an administrative proceeding in
rem. It concerns only the Undeclared Currency and whether there are
reasonable grounds to suspect that it is proceeds of crime. In Martineau v.
Canada (M.N.R.), [2004] 3 S.C.R. 737 at paragraph 56, Justice Fish
writing for a unanimous court held that seizures and forfeitures under the Customs
Act are not penal in nature, but are rather administrative measures
intended to provide a timely and effective means of enforcing the Customs
Act.
[67]
Although this case concerns “reasonable grounds
to suspect”, the Supreme Court of Canada’s interpretation of the phrase
“reasonable grounds to believe” is an appropriate starting point. In Mugesera
v. Canada
(Minister of Citizenship and Immigration), [2005] 2
S.C.R. 100 at paragraph 114, the Court said the following:
The first issue
raised by s. 19(1)(j) of the Immigration Act is the meaning of the
evidentiary standard that there be “reasonable grounds [page 145] to believe”
that a person has committed a crime against humanity. The FCA has found, and
we agree, that the “reasonable grounds to believe” standard requires
something more than mere suspicion, but less that the standard applicable in
civil matters of proof on the balance of probabilities: Sivakumar v. Canada (Minister of Employment and
Immigration), [1994] 1 F.C. 433 (C.A.), at p. 445; Chiau
v. Canada (Minister of Citizenship and Immigration), [2001] 2 F.C. 297
(C.A.), at para. 60. In essence, reasonable grounds will exist where there
is an objective basis for the belief which is based on compelling and credible
information: Sabour v. Canada (Minister of Citizenship & Immigration) (2000), 9 Imm. L.R. (3d) 61 (F.C.T.D.).
[my
emphasis]
[68]
In the earlier case of R. v. Monney,
[1999] 1 S.C.R. 652, the Court had considered section 98 of the Customs Act,
R.S.C., 1985, c. 1 (2nd Supp.), which required a customs officer to
suspect on reasonable grounds that a person had narcotics secreted on or about
his person before conducting a strip search.
[69]
In this context, the Court said at paragraph 49:
…Having
determined, however, that the search conducted by the customs officers was
constitutionally permissible pursuant to s. 98 of the Customs Act on the
basis of reasonable grounds to suspect, which can be viewed as a lesser but
included standard in the threshold of reasonable and probable grounds to
believe, I see no reason to interfere with the implicit factual finding at
trial, confirmed on appeal, that Inspector Roberts had at the very least
reasonable grounds to suspect that the respondent had ingested narcotics.
[my
emphasis]
[70]
The question then is how to describe the lesser
but included standard. In my view, even reasonable grounds to suspect must
involve more that a “mere” or subjective suspicion or a hunch. The suspicion
must be supported by credible objective evidence. In this regard, see R v.
Calderon, [2004] O.J. No. 3474. There, the Ontario Court of Appeal
considered whether police officers had reasonable grounds to suspect that the
appellants had been implicated in the transportation of drugs. In that
connection, the Court noted that an objective assessment was essential. The
Court said at paragraph 69 that “… even a hunch born of intuition gained by
experience …” would not support a conclusion that reasonable grounds to suspect
were present.
[71]
If credible objective evidence is required to
support a suspicion, the question becomes where does the lesser standard
appear. To this point, both reasonable grounds to believe and suspect have
been treated identically. In my view, the difference must appear in the
characterization of the evidence. In Mugasera, supra, the Court said
that “compelling” evidence was needed to support reason to believe. In my
view, this is where the distinction is made. Evidence to support a suspicion
need not be compelling, it must simply be credible and objective.
[72]
With regard to the burden of proof on an
applicant who wishes to dispel a suspicion based on reasonable grounds, it is
my view that such an applicant must adduce evidence which proves beyond a
reasonable doubt that there are no reasonable grounds for suspicion. Only in
such circumstances will the evidence be sufficient to displace a reasonable
suspicion.
[73]
I have reached this conclusion because, if a
Minister’s Delegate were only satisfied on the balance of probabilities that
there were no reasonable grounds for suspicion, it would still be open to him
to suspect that forfeited currency was proceeds of crime. The civil standard
of proof does not free the mind from all reasonable doubt and, if reasonable
doubt exists, suspicion survives.
[74]
In this case, the adjudicator required proof
beyond all doubt and I am satisfied that this constituted an error in law
because proof beyond a reasonable doubt is sufficient to defeat reasonable
grounds for suspicion.
[75]
The next question is whether this error was material.
In this regard, I have concluded that it was not. There can be no suggestion
on the facts of this case that the Applicant met the correct standard. His
evidence failed to displace, beyond a reasonable doubt, the objective and
credible evidence supporting the Minister’s Delegate’s suspicion that the
Undeclared Currency was proceeds of crime.
[76]
In Canadian Cable Television Assn. v. American College Sports Collective
of Canada, Inc. (C.A.), [1991] 3 F.C. 626 at
paragraph 41, the Court said:
41. If a final
word needs to be said, let it be that an inconsequential error of law, or even
a number of them, which could have no effect on the outcome do not require this
Court to set aside a decision … The authorities have all required a real
possibility that the result was affected.
[77]
Since I can see no possibility that the error
affected the Decision, the application for judicial review will not succeed on
this issue.
III. Contradictory Decision
[78]
The Applicant says the Decision should be set
aside because it is “contradictory” in that the Declared Currency was returned
even though the evidence relating to its origin did not differ from that
relating to the origin of the Undeclared Currency. In other words, the
Applicant takes issue with the fact that the Decision differed as between the
Declared and the Undeclared Currency without a logical explanation for the
difference.
[79]
However, the Respondent points out that, under
section 28 of the Act, the Minister’s Delegate was obliged to return the
Declared Currency once he concluded that it had been reported. This was so
whether or not he still had reasonable grounds to suspect that it was proceeds
of crime. In light of this submission, I have concluded that the return of the
Declared Currency does not undermine the Decision.
NON ISSUES
[80]
Before the hearing adjourned, Applicant’s
counsel began his submissions in reply and asked for leave to raise the
sufficiency of the reasons in the Decision of October 6, 2005 as an issue.
Leave was refused as the request was made far too late in the process.
[81]
In his written submissions in reply, the
Applicant’s counsel raised a second new issue alleging that the adjudicator
never told the Applicant that she had concerns about the evidence in the
Bookkeeper’s Affidavit. Again, because it was first raised in reply, I have
not dealt with this submission.
JUDGMENT
For
all these reasons the application is hereby dismissed with costs.
“Sandra J. Simpson”
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