Date: 20071019
Docket: T-1994-06
Citation: 2007 FC 1075
BETWEEN:
ANTONIO CIAVAGLIA
Applicant
and
MINISTER OF PUBLIC SAFETY
AND EMERGENCY PREPAREDNESS
Respondent
REASONS FOR
JUDGMENT
Pinard J.
[1]
On
May 20, 2005, on his return to Canada from Venezuela, the applicant failed to
declare the importation of currency equivalent to US$17,271.00, thereby
contravening section 12 of the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act, S.C. 2000, c. 17 (hereinafter the Act).
[2]
Pursuant
to the Act a customs officer, considering he had reasonable grounds to suspect
that the currency was the proceeds of crime, seized the currency not declared
by the applicant as forfeit without release. In a decision dated November 2, 2006 the
respondent (the Minister) confirmed the forfeiture of the amounts. The
applicant is now seeking judicial review of that decision pursuant to section
18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7.
[3]
The
legislative and regulatory framework applicable here was fully described by
counsel for the respondent and is not really in dispute:
(A)
The purposes of the Act are clearly set out in section 3 and, inter
alia, require the reporting of suspicious financial transactions and of
cross-border movements of currency and monetary instruments. To achieve these
objectives, Part 2 of the Act provides for a system of currency reporting by
which an importer or exporter must report to a customs officer any importation
or exportation of currency of a value equal to or greater than an amount
prescribed by regulation.
(B)
The currency reporting requirement is set out in subsections 12(1)
and (3) of the Act and sections 2, 3 and 11 of the Cross-border Movements of
Currency and Monetary Instruments Regulations, SOR/2002-412 (the
Regulations). Those provisions require anyone importing or exporting currency
or monetary instruments worth Can$10,000 or more to declare such importation or
exportation to a customs officer forthwith. The report must be made in writing.
(C)
If a person fails to comply with the reporting requirement, the
unreported currency will then be subject to seizure as forfeit by an officer
pursuant to subsection 18(1) if the latter believes on reasonable grounds that
subsection 12(1) of the Act has been contravened.
(D)
Under subsection 18(2) of the Act, the officer must then decide
whether he suspects on reasonable grounds that the unreported currency is the
proceeds of crime or funds used to finance terrorist activities. If the officer
concludes that he has such suspicions, the seized currency cannot be returned.
If the officer concludes that there are no such suspicions, he will return the
currency seized subject to a penalty in accordance with section 18 of the
Regulations (between $250 and $5,000, as the case may be).
(E)
Under section 23 of the Act, currency seized pursuant to
subsection 18(1) of the Act will be forfeit to Her Majesty in right of Canada from the
time of the contravention of subsection 12(1) of the Act. No act or proceeding
after the forfeiture is necessary to effect the forfeiture.
(F)
Under section 24 of the Act, the forfeiture of currency seized
under Part 2 of the Act 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 of the Act.
(G)
Section 25 of the Act allows the person from whom currency has
been seized under section 18 (or its lawful owner), within 90 days after the
date of the seizure, to request a decision of the Minister as to whether
subsection 12(1) of the Act was contravened, by giving notice in writing to the
officer who seized the currency or to an officer at the customs office closest
to the place where the seizure took place.
(H)
Under subsection 26(1) of the Act, the President of the Canada Border
Services Agency shall without delay serve on the person who has made a request
under section 25 notice of the circumstances of the seizure in respect of
which the decision is requested. Under subsection 26(2) of the Act, that person
has 30 days after the notice is served to furnish any evidence in the matter
that they desire to furnish. Under section 27 of the Act, within 90 days after
expiry of the period referred to in subsection 26(2), the Minister shall decide
whether subsection 12(1) was contravened.
(I)
If the Minister decides that the reporting requirement contained
in subsection 12(1) of the Act was not contravened, the currency will be
returned pursuant to section 28 of the Act.
(J)
On the other hand, if the Minister decides that the reporting
requirement was contravened, he must then make a second decision pursuant to
section 29 of the Act as to the appropriate administrative penalty.
(K)
This second decision by the Minister involves a review of the
administrative penalty imposed by the officer, pursuant to subsection 18(2) of
the Act (that is, forfeiture or penalty between $250 and $5,000). Section 29 of
the Act requires the Minister to confirm the forfeiture of the currency seized
or reduce the penalty, as for example by requiring payment of a penalty.
(L)
Under section 30 of the Act, a person who makes a request under
section 25 of the Act may, within 90 days after being notified of the
Minister’s decision, appeal the decision by way of an action in the Federal
Court in which the person is the plaintiff and the Minister is the defendant.
(M)
However, the Federal Court’s jurisdiction under subsection 30(1) of
the Act is limited to determining the validity of the decision made pursuant to
subsection 27(1) in response to the application for review made pursuant
to section 25, namely whether section 12 of the Act was contravened.
(N)
Any person wishing to challenge the Minister’s decision made
pursuant to section 29 of the Act must proceed by an application for judicial
review in accordance with section 18.1 of the Federal Courts Act. (See Dokaj
v. Minister of National Revenue, 2005 FC 1437, [2005] F.C.J. No. 1783 (QL),
Tourki v. Minister of Public Safety and Emergency Preparedness, 2006 FC
50, [2006] F.C.J. No. 52 (QL), and Ha v. Minister of Public Safety and
Emergency Preparedness, 2006 FC 594, [2006] F.C.J. No. 1123 (QL)).
[4]
Moreover,
it is not in dispute that the standard of review applicable to a decision under
section 29 of the Act is the patently unreasonable standard, as confirmed by the
following pragmatic and functional analysis.
(A)
Whereas section 24 of the Act provides for a right of appeal by
action to the Federal Court from a decision made pursuant to section 27, it
makes no provision for a right of appeal from a decision made pursuant to
section 29. In my opinion, this shows that Parliament intended to give the
Minister quasi-complete deference on the review of appropriate administrative
penalties for failure to comply with the requirement that currency imported or
exported be reported.
(B)
Administration of Part 2 of the Act has essentially devolved on
institutions responsible for the administration of the Customs Act for
several decades. In Dokaj, supra, this Court compared the appeal
machinery contained in the Act with that set out in the Customs Act and
concluded that those responsible for implementing the Act had developed special
expertise, expertise which was applied in the case at bar, so that greater
restraint should be exercised in reviewing the ministerial decision made
pursuant to section 29 of the Act.
(C)
In administering section 29 of the Act, the Minister must weigh
the interests of a person from whom currency has been seized against the
interests of the Canadian public. In my view, this factor does not indicate
great restraint.
(D)
In general, greater deference is shown to an administrative
decision-maker on a question of fact. The question of whether the factual
record before the Minister disclosed reasonable grounds to suspect that the
unreported currency was the proceeds of crime is a mixed question of law and
fact, although the facts assume decisive importance in the outcome of the
decision. In my opinion, this factor requires a high degree of deference.
[5]
Accordingly,
analysis of the four factors mentioned requires that this Court show a decision
by the Minister pursuant to section 29 of the Act the highest level of
deference. I therefore agree with counsel for the parties that unless the
Minister has made a patently unreasonable error, this Court must refrain from
intervening.
[6]
It
is worth setting out the following passage from the decision contained in the
letter of November 2, 2006 from the Minister’s delegate to the applicant, the
decision which is the subject of the application for judicial review at bar:
[TRANSLATION]
You may be sure that all documentation was
taken into account before a decision was made in this matter. This review was
made on the basis of documents which you provided as well as the Agency’s
official reports.
. . . . .
You appealed the seizure and were asked
to provide credible, reliable and independent evidence regarding the origin of
the currency so as to remove the reasonable grounds for believing that it was
the proceeds of crime. Your explanations as to the origin of the currency were
not able to clarify the legitimate origin of the currency. You mentioned in
your letter of June 27, 2005 that you reported $27,000 in currency when you
entered Mexico; however, you failed to report the currency to the Canada Border
Services Agency at the time of export from Canada and you then tried to prevent
the detection of currency on your return to Canada by asking your companion to
carry part of it.
Finally, you did not disclose the actual
amount of currency in your possession to the customs officer in the secondary
examination. The e-mails which you provided as indication of an intention to
purchase a condo in Venezuela are not acceptable as
credible and verifiable evidence as to the origin of the currency. You
submitted affidavits from persons who you said had given you the currency;
however, this is contrary to the statement you made to the officer who made the
seizure. You have made several inconsistent statements as to the source of the
funds. You initially alleged that the funds were withdrawn from your personal
account in a single operation; you then altered your statement to say that you
withdrew the funds from a business account with your company X-Cargo. When you
were asked to provide a transaction statement, you again altered your statement
to indicate that you had withdrawn small amounts over an extended period. At no
time in the secondary examination did you report receiving currency from other
persons. At the same time no document, such as a financial transaction statement,
was submitted in support of the truth of the affidavits.
The reports of the agency which made the
seizure clearly indicate that you initially stated you were travelling on
business and that you altered the purpose of your trip when it was discovered
that you were travelling with a companion who was in possession of currency
which you had apparently given that individual to carry, according to the
person’s statement. I can only conclude that you did this in order to avoid the
currency reporting requirements. It is even more strange that you alleged you
were travelling on business and then altered the purpose of your trip to
indicate that it was the purchase of a condo when it was found you were
travelling with a companion. It is strange that if the currency was intended
for a legitimate real estate transaction you tried to avoid reporting it and
did not disclose the actual purpose of your trip to the customs officer (the
purchase of a condo) before it was found that you were in fact not travelling
alone. Further, it is strange that when this fact was brought to your attention
you denied that the currency in the possession of your companion belonged to
you.
Additionally, it was noted that the
officer who made the seizure discovered in your briefcase (which you did not
want the officer to look at) financial transaction statements by electronic
transfer to South America for your company (in your name) dated May 12, 2005,
about a week before the seizure took place, which further supports the
reasonable grounds for believing that the currency was the proceeds of crime.
These transactions indicated that you were aware of these services: it is
therefore strange for you to have carried such a large sum to a country such as
Venezuela, where the risk of loss or
theft is high, when for a real estate transaction you could have used a safer
method through financial institutions.
Nevertheless, the equivalent of US$7,000
which was in Mr. Garcia’s possession at the time of the offence will be
reimbursed . . .
[7]
The
applicant’s arguments were essentially related to the assessment of facts made
by the Minister’s delegate. In such a matter, especially with regard to a
decision made under section 29 of the Act, a person in the applicant’s position
must show that the decision is “clearly irrational” or “not in accordance with
reason” (Canada (Attorney General) v. Public Service Alliance of Canada,
[1993] 1 S.C.R. 941). The burden of proof imposed on the applicant is a very
heavy one. Tremblay-Lamer J. described it in her own way in Tourki v.
Minister of Public Safety and Emergency Preparedness, 2007 FC 746, [2007] F.C.J.
No. 995 (QL), at paragraph 28:
In short, in order to challenge the
Minister’s decision to the effect that the seized currency is proceeds of
crime, the applicant has the burden of proof and must adduce evidence beyond a reasonable
doubt that there are no reasonable grounds to suspect that it is proceeds of
crime.
[8]
In
the case at bar, the decision of the Minister’s delegate seems to the Court to
be based on significant evidence emerging from the record, in particular the
statements and omissions of the applicant himself and reports by the Agency
which seized the currency. The assessment made of the e-mails and affidavits
filed by the applicant seems to the Court to be reasonable, in view of the many
inconsistent statements made by the applicant as to the source of the funds. I
do not see anything arbitrary in the decision at bar, which prima facie
is fully supported.
[9]
In
the circumstances, it is not this Court’s function to substitute its own
assessment of the facts for that made by the administrative decision-maker. We
are not concerned here with a criminal charge. It will suffice if the evidence
before the Minister’s delegate reasonably allows him or her to conclude that reasonable
grounds exist to suspect that the currency seized is the proceeds of crime.
[10]
As
the applicant was unable to show in this regard that the decision at bar was
patently unreasonable, this Court’s intervention is not justified and the
application for judicial review is dismissed with costs.
“Yvon
Pinard”
Ottawa,
Ontario
October
19, 2007
Certified
true translation
Brian
McCordick, Translator
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